Week 2: World Trade

Question 1

The gravity model

Answer 1

Where
- Tij = the value of trade netween countires I and J
- Yi = GDP of country i
- yj = the gap of country j
- Dij = the distance between the two countries

Question 2

impediments to trade

Answer 2

• Distance
• Cultural affinity
• Geography
• Multinational corporations
• ## Borders