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Physica A Statistical Mechanics and its Applications
Article . 2017 . Peer-reviewed
License: Elsevier TDM
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zbMATH Open
Article . 2017
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https://dx.doi.org/10.48550/ar...
Article . 2016
License: arXiv Non-Exclusive Distribution
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Extracting geography from trade data

Authors: Li, Yuke; Wu, Tianhao; Marshall, Nicholas; Steinerberger, Stefan;

Extracting geography from trade data

Abstract

Understanding international trade is a fundamental problem in economics -- one standard approach is via what is commonly called the "gravity equation", which predicts the total amount of trade $F_ij$ between two countries $i$ and $j$ as $$ F_{ij} = G \frac{M_i M_j}{D_{ij}},$$ where $G$ is a constant, $M_i, M_j$ denote the "economic mass" (often simply the gross domestic product) and $D_{ij}$ the "distance" between countries $i$ and $j$, where "distance" is a complex notion that includes geographical, historical, linguistic and sociological components. We take the \textit{inverse} route and ask ourselves to which extent it is possible to reconstruct meaningful information about countries simply from knowing the bilateral trade volumes $F_{ij}$: indeed, we show that a remarkable amount of geopolitical information can be extracted. The main tool is a spectral decomposition of the Graph Laplacian as a tool to perform nonlinear dimensionality reduction. This may have further applications in economic analysis and provides a data-based approach to "trade distance".

Keywords

Physics - Physics and Society, Quantitative Finance - Trading and Market Microstructure, FOS: Physical sciences, geopolitics, Physics and Society (physics.soc-ph), Mathematical geography and demography, Trading and Market Microstructure (q-fin.TR), FOS: Economics and business, trade distance, spectral embedding, dimensionality reduction

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
2
Average
Average
Average
Green
bronze