Doubly constrained gravity models for interregional trade estimation

This paper discusses a family of methods grounded in the doubly constrained gravity model (DCGM) for the estimation of product-specific origin-destination matrices of interregional trade. We argue that several estimation procedures documented in the literature, although outwardly unrelated, can be conceptualized as applications of the DCGM framework. We show that DCGM estimation requires less restrictive assumptions and fewer data than commonly thought. We demonstrate that, in ideal conditions, the unknown trade flows can be recovered exactly through a standard application of the RAS algorithm. Finally, we examine how a DCGM estimator might fare in applications using Monte Carlo techniques and give an example of its use with real-world data.

CAI Mattia; 

2021-06-22

WILEY

JRC122374

1056-8190 (online),   

https://rsaiconnect.onlinelibrary.wiley.com/doi/10.1111/pirs.12581,    https://publications.jrc.ec.europa.eu/repository/handle/JRC122374,   

10.1111/pirs.12581 (online),