Measuring Trade and Trade Potential: A Survey

26 Pages Posted: 23 Feb 2011

See all articles by Shiro Patrick Armstrong

Shiro Patrick Armstrong

Australian National University (ANU) - Crawford School of Public Policy

Date Written: 2007

Abstract

This paper provides a survey and a brief critical review of the literature on the widely used gravity models of trade, as a prelude to the justification of its use with the stochastic frontier methodology. The important papers on the theoretical foundations of the gravity model are reviewed and related to papers applied to explain determinants of trade flows. Then some shortcomings of the gravity model are discussed. The paper introduces the stochastic frontier gravity model as a way of estimating trade resistances and overcoming some of the shortcomings of conventional gravity models in their use for that purpose.

Suggested Citation

Armstrong, Shiro Patrick, Measuring Trade and Trade Potential: A Survey (2007). Crawford School Asia Pacific Economic Paper No. 368, Available at SSRN: https://ssrn.com/abstract=1760426 or http://dx.doi.org/10.2139/ssrn.1760426

Shiro Patrick Armstrong (Contact Author)

Australian National University (ANU) - Crawford School of Public Policy ( email )

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

HOME PAGE: http://www.crawford.anu.edu.au/staff/sarmstrong.php

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