Heterogeneity and the distance puzzle
Archanskaia, Elizaveta; Daudin, Guillaume (2012), Heterogeneity and the distance puzzle. https://basepub.dauphine.fr/handle/123456789/10085
TypeDocument de travail / Working paper
Series titleOFCE Working Papers
MetadataShow full item record
Abstract (EN)This paper shows that reduced heterogeneity of exporter-specific goods can provide a direct explanation of the distance puzzle. Using COMTRADE 4-digit bilateral trade data we find that the elasticity of trade to distance has increased by 8% from 1962 to 2009. Theoretical foundations of the gravity equation indicate that the distance coefficient is the product of the elasticity of trade costs to distance and a measure of heterogeneity, e.g. the substitution elasticity between exporter-specific goods in the Armington framework. This parameter has increased by 13% from 1962 to 2009. The evolution of the distance coefficient is thus compatible with a 4% reduction in the elasticity of trade costs to distance.
Subjects / KeywordsGravity equation; distance puzzle; trade elasticity; trade costs
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Corlay, Guillaume; Dupraz, Stéphane; Labonne, Claire; Muller, Anne; Antonin, Céline; Daudin, Guillaume (2016) Document de travail / Working paper
Corlay, Guillaume; Dupraz, Stéphane; Labonne, Claire; Muller, Anne; Antonin, Céline; Daudin, Guillaume (2017) Article accepté pour publication ou publié