erc/metu
INTERNATIONAL CONFERENCE IN ECONOMICS  IV
September 13-16, 2000, Ankara

Trade Flows and Spatial Effects: The Gravity Model Revisited

Anca Porajan (University of Bradford, UK)

Abstract  

The paper revisits the popular gravity model of trade in the light of the increasingly acknowledged findings of spatial econometrics and interprets the results in view of some recent theoretical developments from the economic literature that contribute to its foundation. When the inherent spatial effects are explicitly taken into account, the magnitude of the estimated parameters changes considerably and, with it, the measures on the predicted trade flows. This result is illustrated on the case of predicted trade flows between the EU and some of its potential members.

Economic Research Center
Middle East Technical University
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