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1 OFCE - Observatoire Français des Conjonctures économiques 2 LEDa - Laboratoire d-Economie de Dauphine

Abstract : This paper shows that reduced heterogeneity of exporter-specific goods can provide adirect explanation of the distance puzzle. Using COMTRADE 4-digit bilateral trade datawe 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 theproduct 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 distancecoefficient is thus compatible with a 4% reduction in the elasticity of trade costs to distance.

Mots-clés : Gravity equation distance puzzle trade elasticity trade costs

Author: Elizaveta Archanskaia - Guillaume Daudin -

Source: https://hal.archives-ouvertes.fr/


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