International Trade and Economic Theory: Testing the Gravity Model
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This paper offers an addition to the extensive body of research of the gravity model, which predicts that the volume of trade between two countries depends on their relative size and the distance between them. Using both simple and multiple linear regressions, the effects of the various factors of volume of trade, including distance, GNP, regulation, and service sector infrastructure are tested. Thus, relationships are drawn between these variables in a technologically driven age.