Empirical gravity model

The empirical gravity model is a tool used to study trade patterns between countries. It compares trade flows to a "gravity" formula, similar to how gravity pulls objects together. Here, the size of each country's economy and their distance from each other determine trade volume: larger economies tend to trade more, while greater distances generally reduce trade. By analyzing these patterns, researchers can understand trade relationships better and make predictions about how changes in economies or policies might affect international trade.