The Three Puzzles in the Gravity Model of International Trade

Author: Akira Sasahara
Date: 2026/2/20
No: DP2026-002
JEL Classification codes: F14, F43, O47
Language: English
[ Abstract / Highlights ]

This article provides an overview of three puzzles related to the gravity model of trade---the Glick–Rose puzzle, the border puzzle, and the missing globalization puzzle. It summarizes recent developments in estimation methods, including the shift from cross-sectional to panel settings, the inclusion of appropriate fixed effects, and the shift from log-linear specifications to nonlinear approaches.