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The evolution of structural gravity: The workhorse model of trade
Journal article   Open access   Peer reviewed

The evolution of structural gravity: The workhorse model of trade

Yoto V. Yotov
Contemporary economic policy, v 42(4), pp 578-603
01 Oct 2024
url
https://doi.org/10.1111/coep.12666View
Published, Version of Record (VoR) Open

Abstract

Business & Economics Economics Public Administration Social Sciences
The gravity model is the workhorse model of trade. Yet, many economists still view gravity as a reduced-form estimating equation and apply it without guidance from theory, while others are skeptical about its usefulness for counterfactual projections. This paper offers a historical overview of the evolution of gravity, from an a-theoretical application to an estimating computable general equilibrium model, which can be nested in more complex frameworks. Along the way, I address some misconceptions about gravity, summarize the current recommendations for gravity estimations, highlight properties that have made gravity so successful, and review the latest contributions to the related literature.

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This publication has contributed to the advancement of the following goals:

#17 Partnerships for the Goals
#8 Decent Work and Economic Growth

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Web of Science research areas
Economics
Public Administration
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