The distance puzzle has been wildly discussed in the literature since Leamer and Levinsohn (1995) shed the light on it. This puzzle simply says that "the world is not getting smaller": distance still matters to account for trade. This is reflected in a decreasing distance of trade (DOT), or in a...

This volume was prepared by Benedikt Heid while he was working at the ifo Institute and the University of Bayreuth. It was completed in December 2013 and accepted as a doctoral thesis by the Department of Economics at the Ludwig-Maximilians-Universität München. It includes six self-contained...