Gravity equations explaining foreign affiliates' sales are ad hoc and hence, estimated coeffcients are hard to interpret. We therefore provide the theoretical underpinnings of the gravity equation applied to the analysis of sales of foreign affiliates of multinational firms. We argue that the...

We derive gravity equations from three different general equilibrium models incorporating multinational firms. We show that gravity equations are particularly adapted to the analysis of foreign affiliates' activities of multinational firms. However, the different theoretical models lead to...

We derive gravity equations from three different general equilibrium models incorporating multinational firms. We show that gravity equations are particularly adapted to the analysis of foreign affiliates' activities of multinational firms. However, the different theoretical models lead to...

This paper provides new evidence on the foreign direct investment stocks of German firms. We use firm-level data for the years 1990-2000 to describe the regional and sectoral patterns of German FDI through gravity-type equations. We provide evidence on the patterns of FDI by sector, by size of...

The opening up of Central and Eastern Europe has provided new investment opportunities for German investors. At the same time, importing capital from abroad can be an efficient mechanism towards increased factor accumulation for the accession states to the European Union. In this paper, we study...