Question

General form of the gravity model that economists typically estimate is given​ by: upper t subscript ij baseline equals upper a times startfraction upper y subscript i superscript a baseline times upper y subscript j superscript b over upper d subscript ij superscript c endfraction . Empirical studies have found that the values of the​ exponents: ​'a​', ​'b​', and ​'c​' are very close​ to

Answer 1

a, b, and c are close to +1

Step-by-step explanation:

The gravity model is characterized as the model of international trade which helps in predicting the flow of bilateral trade on the basis of economic sizes, as well as, the distance between two units. The empirical studies have lately discovered that the values of the exponents in the formulae while determining the 'volume of trade from country i to country j' would be close to +1.'