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Doubly constrained gravity models for interregional trade estimation
Author(s) -
Cai Mattia
Publication year - 2021
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/pirs.12581
Subject(s) - estimator , gravity model of trade , estimation , econometrics , monte carlo method , product (mathematics) , economics , bilateral trade , mathematical optimization , computer science , mathematics , international trade , statistics , geography , management , geometry , archaeology , china
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.