The distance puzzle: on the interpretation of the distance coefficient in gravity equations

Buch, Claudia M.; Kleinert, Jörn; Toubal, Farid

doi:10.1016/j.econlet.2003.10.022

Cited by 102 publications

(70 citation statements)

References 9 publications

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“…They argue, in line with the gravity approach, that the driving force behind globalization is not lower distance-barriers, but increased dispersion of economic mass around the globe. More recently, Buch et al (2004) argue against the notion of a distance-puzzle in that globalization may work as much through affecting the intercept of the gravity equation, as through a change in the estimated distance-elasticity. However, the finding that today distance apparently restricts bilateral trade more than in earlier periods still constitutes a puzzle, since it suggests that, other things equal, distance-related trade barriers have become more important.…”

Section: Motivationmentioning

confidence: 99%

Exploring the Intensive and Extensive Margins of World Trade

2006

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Section: Motivationmentioning

confidence: 99%

Exploring the Intensive and Extensive Margins of World Trade

2006

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“…See Buch et al (2004), Carrère and Schiff (2005), Brun et al (2005), Boulhol and de Serres (2010), Lin and Sim (2012), Yotov (2012) Carrère et al (2013) and .…”

Section: Introductionmentioning

confidence: 99%

Distance, globalization, and international trade

Borchert

Yotov

2017

Economics Letters

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. For a long time globalization could be seen everywhere but in gravity estimates. We offer evidence how globalization affects manufacturing trade over the period 1986-2006 and show that, on average, the effect of distance has fallen whereas the effects of proximity and regional trade agreements have increased over time. We also document substantial cross-country heterogeneity in the extent to which distance elasticities have changed. Countries in the middle of the per-capita income distribution have seen the steepest fall in distance coefficients. At the same time, distance as a trade friction has not lost its bite for a number of low income countries, which may jeopardize their integration into global markets. We present suggestive evidence that the heterogeneous change in distance elasticities is related to secular shifts in the composition of exports. Terms of use: Documents inJEL-Codes: F130, F140, F160.Keywords: distance puzzle, missing globalization, structural gravity, poor countries. Ingo Borchert Department of EconomicsUniversity of Sussex United BN1 9SL I.Borchert@sussex.ac.uk Yoto V. Yotov School of EconomicsDrexel University USA -Philadelphia, PA 19104 yotov@drexel.edu December 18, 2016 Highlights• We offer solutions to the 'distance puzzle' and the 'missing globalization puzzle' in trade.• On average, the effect of distance on trade fell by 10% between 1986 and 2006.• The effects of globalization on trade vary widely across the 69 nations in our sample.• The relationship between the gains from globalization and income is U-shaped.• Globalization benefitted middle income countries the most.

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“…Nevertheless, scholars have been mostly bewildered by the fact that empirical estimation of 'distance coefficients' (measuring the effect of distance on trade) were practically constant over time [29]. In a widely cited book, Frances Cairncross [30], senior fellow at UCLA (University of California, Los Angeles), proclaimed the 'death of distances' as a result of advancements in communication and transport technologies.…”

Section: The 'Distance Puzzle'mentioning

confidence: 99%

The Prism of Elasticity in Rebound Effect Modelling: An Insight from the Freight Transport Sector

Ruzzenenti

2018

Sustainability

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Abstract:If the rebound effect is to be considered a major obstacle to sustainable freight transport, then action and timely policy must be made in advance. This, however, requires a theoretical understanding of the nature of the rebound effect and an empirical grasp of its underlying mechanism. Elasticity is the centrepiece of current models on the rebound effect (or Jevons paradox). Although elasticity is a metric of indisputable usefulness for empirical purposes, it may be misleading when applied to the complex rebound effect. Drawing on the parallel case of the 'distance puzzle' in international economics, it will be shown how elasticity can be misinterpreted or how it can misdirect an investigation of the phenomenon by following a predetermined mindset. This particular bias is shown to widen in the long term and evolving systems in which the elasticity metric continues to output a constant number, eliciting a persistent effect. Drawing on previous research, an alternative approach to studying the rebound effect based on complex network theory and statistical mechanics of networks will be described. It will be shown how the interplay between spatial and non-spatial effects in freight transport networks can inform us about the evolution of the effect of distances on trade relationships, upon which a new metric for the rebound effect can be built.

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The distance puzzle: on the interpretation of the distance coefficient in gravity equations

Cited by 102 publications

References 9 publications

Exploring the Intensive and Extensive Margins of World Trade

Exploring the Intensive and Extensive Margins of World Trade

Distance, globalization, and international trade

The Prism of Elasticity in Rebound Effect Modelling: An Insight from the Freight Transport Sector

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