Gravity Model: The Commercial Exchange between Spain and Germany

Abstract

The Gravity Model is a highly useful tool to study international trade between countries and understand which the factors are affecting it. Spain and Germany are two European Union countries with decades of commercial exchange between them. The methodology will be a regression model using numerical data regarding GDP, exports, and distance, among others. This study aims to apply the Gravity Model to understand how these two countries behaved regarding trade during the mandate of one of the key European Leaders of all times: Angela Merkel. Did the chancellor widen or shorten the distance between the two countries? This study shows that a new leader doesn’t necessarily affect the realtionship between one country and another as there may be other factors affecting it.