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Back to the future: Gravity at sixty

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  • Anderson, James E.

Abstract

This essay travels back from its origin to the future with gravity. The return to (what we would now call) gravity’s non-parametric origin in Tinbergen (1962) takes a clue forward to improved non-parametric practice. In between, gravity became a structural parametric object widely used for policy projections and other counterfactuals. Non-parametric gravity described in Anderson (2023) leads to sufficient statistics for trade frictions, derived from the observable difference in welfare cost per unit in the observed and the observable as-if-frictionless equilibria. Relative resistance so defined is an origin for a renewed Tinbergen strategy of investigating trade friction determinants.

Suggested Citation

  • Anderson, James E., 2024. "Back to the future: Gravity at sixty," European Economic Review, Elsevier, vol. 161(C).
    • Handle: RePEc:eee:eecrev:v:161:y:2024:i:c:s0014292123002738
    DOI: 10.1016/j.euroecorev.2023.104645
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    References listed on IDEAS

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    1. Steven Berry & Amit Gandhi & Philip Haile, 2013. "Connected Substitutes and Invertibility of Demand," Econometrica, Econometric Society, vol. 81(5), pages 2087-2111, September.
    2. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
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    4. Costas Arkolakis & Arnaud Costinot & Andres Rodriguez-Clare, 2012. "New Trade Models, Same Old Gains?," American Economic Review, American Economic Association, vol. 102(1), pages 94-130, February.
    5. Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
    6. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-116, March.
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