A calibrated gravity model of interregional trade. Issue 1 (2nd January 2023)

• Record Type: Journal Article
• Authors: Cai, Mattia
• Is Part Of: Spatial economic analysis. Volume 18:Issue 1(2023)
• Page Start: 89
• Page End: 107
• Publication Date: 2023-01-02
• Subjects: interregional trade -- gravity model -- RAS algorithm; C80 -- D57 -- F14 -- R12; Space in economics -- Periodicals; Economic geography -- Periodicals; Space in economics -- Econometric models -- Periodicals; Urbanization -- Periodicals; Espace (Économie politique) -- Périodiques; Économétrie -- Périodiques; Géographie économique -- Périodiques; Économie industrielle -- Périodiques; Économie du travail -- Périodiques; Économie urbaine -- Périodiques; Politique économique -- Périodiques; Relations économiques internationales -- Périodiques; 330.9
• DOI: 10.1080/17421772.2022.2081715
• Languages: English
• ISSNs: 1742-1772

Abstract

ABSTRACT: Lack of interregional trade data is often a major obstacle when doing economic analysis at the subnational level. This paper discusses a calibration procedure for estimating bilateral trade between the regions of a country. Our approach can be equivalently characterized as an application of the gravity-RAS or the doubly constrained gravity model method. Either way, a crucial element is represented by the distance elasticity parameter, which the user is expected to provide exogenously. We propose a way of estimating that parameter using standard econometric methods with readily available data and demonstrate our calibration procedure in a case study of Italy.