Author: Jitendra Rabada
DOI Link: https://doi.org/10.70798/Bijmrd/04011007
Abstract: The gravity model is one of the most influential and empirically robust frameworks in international economics for explaining bilateral trade flows. Over time, it has evolved from Tinbergen’s descriptive formulation into a theoretically grounded structural model incorporating multilateral resistance terms, advanced estimators such as PPML, and sector-specific extensions. This review synthesizes global research trends, methodological developments, and thematic applications across regions and sectors, highlighting the model’s expanding relevance in economics, political economy, development, agriculture, and environmental studies. The findings show that modern gravity models increasingly integrate variables such as exchangerate volatility, political risk, tariffs, migration, energy shocks, environmental stringency, and institutional quality, alongside methodological innovations including structural gravity, nonlinear modelling, spatial techniques, and wavelet or machine-learning hybrids. The review concludes that while the gravity model remains foundational, future research should emphasize deeper micro-foundations, nonlinear dynamics, interpretability in hybrid models, and richer datasets.
Keywords: Gravity Model; International Trade; Structural Gravity; PPML Estimation; Regional Integration; Exchange Rate Volatility.
Page No: 35-38