Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/17901
Authors: 
Buch, Claudia M.
Kleinert, Jörn
Toubal, Farid
Year of Publication: 
2003
Series/Report no.: 
Kiel Working Paper 1159
Abstract: 
Globalization seems to have diminished the importance of geographical distance. However, empirical studies find that distance coefficients in gravity equations change little over time. This paper argues that changes in distance coefficients do not carry much information on changes in distance costs over time. Changes in distance costs are to a large extent picked up solely in the constant term of gravity models. The distance coefficient instead measures the relative difference between far way and close countries. A proportional fall in distance costs that leads to a proportional increase in economic activity would be consistent with constant distance coefficients.
Subjects: 
distance coefficients
gravity equations
globalization
JEL: 
F21
F0
Document Type: 
Working Paper

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