Dynamic gravity: endogenous country size and asset accumulation

2012/02/01 by María Pía Olivero, Yoto V. Yotov · 2 citations
Economics, Econometrics and Finance · #Economic Growth and Productivity #Fiscal Policy and Economic Growth #Monetary Policy and Economic Impact

paper · doi:10.1111/j.1540-5982.2011.01687.x

openalex publication_date 2012/02/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/29

Abstract

Abstract Numerous gravity applications have resorted to panel data econometric techniques over the past decade. However, with the theory of gravity being so far only static, these estimations lack solid structural dynamic foundations. As a consequence, a consensus on a unified dynamic gravity estimation approach is yet to be reached. In this paper, (i) we build the theoretical foundations for a dynamic gravity model, (ii) we provide guidance for gravity‐type estimations with panel data and we consider applications, and (iii) we calibrate and simulate our model to compare its properties with those of the standard, static gravity setup.

Citations

• Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations
• Another look at the instrumental variable estimation of error-components models
• The Log of Gravity
• Biases in Dynamic Models with Fixed Effects

Cited by

• Unlocking New Methods to Estimate Country‐Specific Effects and Trade Elasticities With the Structural Gravity Model
• Accounting for trade deficits
• Estimating the effects of trade agreements: Lessons from 60 years of methods and data

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