The gravity equation is a robust and enduring feature of the volume of trade between countries. During the last two decades research in international trade has delved beneath the surface of bilateral trade to examine trade at the level of individual products, their prices and quantities, and the firms exporting and importing them. These lectures will examine how gravity reveals itself at finer levels of disaggregation, and explore theories that explain the patterns in the data. Particular models will investigate the roles of quality and of matching between buyers and sellers in international markets.
The lectures are based on the following articles:
- Jonathan Eaton and Cecίlia Fieler, “The Margins of Trade“, NBER WP 26124
- Jonathan Eaton, Samuel Kortum, and Francis Kramarz, “Firm-to-Firm Trade: Imports, Exports, and the Labor Market“, NBER WP 29685