This note discusses methodological issues and practical concerns for international economists and international business scholars who apply the gravity equation in their research. The most important message of the note is that this equation should correct for multilateral resistance factors. We...

We test the relationship between the size of regional trade agreements (RTA) and openness by using a gravity equation with multilateral trade factors. Our sample includes eleven RTAs, seven with constant membership and four with expanding membership. Regional trade bias declines with the size of...

We show that economic development is associated with lower trade costs by applying a gravity equation to exports from 103 Italian provinces to 188 countries over the period 1995-2004. Italian provinces are heterogeneous with respect to trade costs

We show that statistically and economically significant heterogeneity exists in the distance elasticity in trade gravity models. Distance elasticities critically depend on whether trading partners belong to the OECD and whether they are Christian or Islam countries

In the gravity equation of international trade, bilateral trade flows are regressed on trading partners' income and the distance that separates them along with other variables. This widely used equation is traditionally estimated by the ordinary least squares method. We employ an alternative...