The estimated coefficient of distance on the volume of trade is generally found to increase rather than decrease through time using the traditional gravity model of trade. This distance puzzle proved robust to several ad hoc versions of the model using data for 1962-96 for a large sample of 130...

This paper addresses the distance "puzzle" in the gravity model of trade according to which the estimated coefficient of distance is generally found to increase rather than decrease through time. After having shown that the puzzle is a robust finding in our large sample of 130 countries over the...