Abstract
Basic gravity models state that economic interactions between two geographically defined entities are proportional to the size of these entities and inversely related to the distance between them. They have great empirical explanatory power. The impact of distance is strong and not diminishing over time. Extended gravity models incorporate borders and contiguity effects and more sophisticated interaction cost measures. They can be theory grounded, which makes each country’s location vis-à- vis the rest of the world play a role in the bilateral relationship. Various empirical approaches have been proposed to tackle the econometric issues at stake in these more sophisticated frameworks.
This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume
This is a preview of subscription content, log in via an institution to check access.
Bibliography
Anderson, J. 1979. A theoretical foundation for the gravity equation. American Economic Review 69: 106–116.
Anderson, J., and E. van Wincoop. 2004. Trade costs. Journal of Economic Literature 42: 691–751.
Combes, P.-P., T. Mayer, and J.-T. Thisse. 2008. Economic geography. Princeton: Princeton University Press.
Disdier, A.C., and K. Head. 2008. The puzzling persistence of the distance effect on bilateral trade. The Review of Economics and Statistics 90: 37–48.
Feenstra, R.C. 2004. Advanced international trade. Princeton: Princeton University Press.
Harris, C. 1954. The market as a factor in the localization of industry in the United States. Annals of the Association of American Geographers 64: 315–348.
Helpman, E., M. Melitz, and Y. Rubinstein. 2008. Estimating trade flows: Trading partners and trading volumes. Quarterly Journal of Economics 123: 441–487.
McCallum, J. 1995. National borders matter: Canada-US regional trade patterns. American Economic Review 85: 615–623.
Peri, G. 2005. Determinants of knowledge flows and their effects on innovation. The Review of Economics and Statistics 87: 308–322.
Portes, R., and H. Rey. 2005. The determinants of cross-border equity flows. Journal of International Economics 65: 269–296.
Ravenstein, E.G. 1885. The laws of migration. Journal of the Royal Statistical Society 48: 167–227.
Redding, S., and A. Venables. 2004. Economic geography and international inequality. Journal of International Economics 62: 53–82.
Reilly, W.J. 1931. The law of retail gravitation. New York: Pilsbury.
Santos Silva, J., and S. Tenreyro. 2006. The log of gravity. The Review of Economics and Statistics 88: 641–658.
Stewart, J.Q. 1947. Suggested principles of ‘social physics’. Science 106: 179–180.
Tinbergen, J. 1962. Shaping the world economy: Suggestions for an international economic policy. New York: Twentieth Century Fund.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Copyright information
© 2008 The Author(s)
About this entry
Cite this entry
Combes, PP. (2008). Gravity Models. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_928-2
Download citation
DOI: https://doi.org/10.1057/978-1-349-95121-5_928-2
Received:
Accepted:
Published:
Publisher Name: Palgrave Macmillan, London
Online ISBN: 978-1-349-95121-5
eBook Packages: Springer Reference Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences
Publish with us
Chapter history
-
Latest
Gravity Models- Published:
- 25 March 2017
DOI: https://doi.org/10.1057/978-1-349-95121-5_928-2
-
Original
Gravity Models- Published:
- 30 November 2016
DOI: https://doi.org/10.1057/978-1-349-95121-5_928-1