`Dual Gravity', Spatial Interdependence of Trade Flows among European Countries

In this paper, we adopt the `dual gravity' model proposed in Behrens et al. (2012) and apply it to the trade ows data for European countries. We use new methodology and estimation techniques from the spatial econometric literature to study the e ect of spatial distribution of countries on trade ows within Europe. Regression result on data from 2006 to 2010 suggests that distance, wage, membership of EU do have di erent, but expected e ects on the normalized trade volumes.