Has Distance Died? Evidence from a Panel Gravity Model

By Jean-François Brun, Céline Carrère, P. Guillaumont, Jaime de Melo. 2002

472 citations recorded by the source corpus.

The estimated coefficient of distance on the volume of trade is generally found to increase rather than decrease through time using the traditional gravity model of trade. This distance puzzle proved robust to several ad hoc versions of the model using data for 1962-96 for a large sample of 130 countries. The introduction of an "augmented" barrier to trade function removes the paradox, yielding a decline in the estimate of the elasticity of trade to distance of about 11 percent over the 35-year period for the whole sample. However, the "death of distance" is shown to be largely confined to bilateral trade between rich countries, with poor countries becoming marginalized.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/8ed9fb7594c8f568f5178678619e080feb271eee

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Citations in the corpus

The globalization of technology in emerging markets: a gravity model on the determinants of international patent collaborations (2013, result): “This result is also in line with the ‘‘missing globalization puzzle’’ (e.g. Brun et al., 2005) in the gravity model of bilateral trade.”
Comparing alternative methods to estimate gravity models of bilateral trade (2010, background): “Over the last years, researchers such as Egger (2000), Rose and van Wincoop (2001), Mátyás (1998), Egger and Pfaffermayr (2003, 2004), Glick and Rose (2002), Brun et al. (2002), and Melitz (2007) have turned towards panel data.”
The Puzzling Persistence of the Distance Effect on Bilateral Trade (2008, unknown): “In a recent book, Frances Cairncross (1997) announces “the death of distance” due to advances in electronic communication.”
The distance puzzle: on the interpretation of the distance coefficient in gravity equations (2004, background): “Brun et al. (2002) argue that the increasing importance of distance which some empirical studies find might be due to the fact that some important variables (quality of infrastructure, changes in trade policy, freight costs, structure of exports) have been excluded.”
An Economic Vulnerability Index: Its Design and Use for International Development Policy (2009, background): “Let us note here that remoteness—as with smallness—is a structural handicap not only because it is a factor of vulnerability.12 Indeed, distance remains an important obstacle to trade despite decreased transport costs (Brun, Guillaumont, and de Melo 1999; Brun et al. 2005; Carrère and Schiff 2005).”
International trade and financial integration: a weighted network analysis (2010, methodology): “zIn the international trade literature, a large body of evidence have investigated the role of distance in the context of so-called gravity models (see for instance Brun et al. 2005). Recently, this methodology has been applied to financial data as well: Portes and Rey (2005) suggest that distance p”
The Euro Effect on Trade is not as Large as Commonly Thought (2007, unknown): “with earlier empirical evidence reporting stable distance coefficients with no tendency to decline over time (Leamer and Levinsohn, 1995) or increasing distance coefficients (Brun et al., 2005).”
Revisiting the effects of regional trade agreements on trade flows with proper specification of the gravity model (2006, unknown): “Most recently, in the estimation of models of geography and trade, the gravity model is, once again, holding center stage (Hummels, 2001; Redding and Venables, 2004; Limao and Venables, 2001; Brun et al., 2002).”
Comparative advantage, demand for external finance, and financial development (2006, methodology): “For the purposes of estimating the gravity equation (13), we retain information on bilateral trade, converting it once again into the 3-digit ISIC Rev.”
The Missing Globalization Puzzle: Evidence of the Declining Importance of Distance (2007, unknown): “Boisso and Ferrantino (1997) report distance coefficients that rise until the early to mid-1970s and fall thereafter.”
Determinants of International Student Migration (2016, unknown): “These different effects for distance in different income groups are consistent with the findings of Brun et al. (2005) who found that the impact of distance on bilateral trade is much greater for low-income countries.”
Estimating Trade Policy Effects with Structural Gravity (2016, unknown): “See for example Buch, Kleinert and Toubal (2004), Carrère and Schiff (2005), Brun et al. (2005), Boulhol and de Serres (2010), Lin and Sim (2012), and Larch et al. (2016). 95The structural gravity system is homogeneous of degree zero.”
African Regional Agreements: Impact on Trade With or Without Currency Unions (2004, methodology): “Hence, we avoid an omitted variable bias, which would be captured by the coefficients of the regional agreement dummies and could be particularly important for African countries (see Limao and Venables, 2001 or Brun et al., 2002). Whereas all the studies quoted above regarding the assessment of Afri”
Exploring the Intensive and Extensive Margins of World Trade (2004, unknown): “modifications, as discussed in Brun et al. (2004) and the meta analysis of Disdier and Head (2004).”
Is gravity linear (2008, methodology): “To assess the magnitude of these two biases in both the level and log specifications, we relax the functional form assumption in (7) that is commonplace in the literature and compare parametric estimates of (8) and (9) with estimates obtained from more flexible, nonparametric models.”