Welcome to the website of our project "The Gravity of Mobility and International Trade", which has been made possible by the generous funding of the Jubiläumsfonds from the Österreichischen Nationalbank. The project addresses a number of timely questions of interest for both academic research and policy in the context of globalisation. We study mobility decisions, both domestically and internationally, and international trade, and how this interaction influences economic outcomes.
Project Details
Title: "The Gravity of Mobility and International Trade"
Principal Investigator: Univ.-Prof. Alejandro Cuñat, PhD
Co-investigator: Ashim Dubey
Project number: 18706
Awarded: July 2021
Start: October 2022
End: June 2026
Project Dissemination Workshop
Taking place on June 23, 2026, the draft program for the workshop is here.
Project Results
This project has resulted in the following five papers:
Bilateral Trade Imbalances (Alejandro Cuñat and Robert Zymek), Review of Economic Studies, 91(3), May 2024, pp. 1537-1583 [link]
Presented at: Institute for the World Economy (Kiel): 20.9.2022, University of Aarhus: 14.2.2023
Abstract: If sectoral trade flows obey structural gravity, countries’ bilateral trade imbalances are the result of macro trade imbalances, “triangular trade”, or pairwise asymmetric trade barriers. Using data for 40 major economies and the Rest of the World, we show that large and pervasive asymmetries in trade barriers are required to account for most of the observed variation in bilateral imbalances. A dynamic quantitative trade model suggests that eliminating these asymmetries would significantly reduce bilateral (but not macro) imbalances and have sizeable impacts on welfare. We provide evidence that the asymmetries we measure are in part related to the policy environment: trade inside the European Single Market appears to be subject to more bilaterally symmetric frictions. Extending the same symmetry to all parts of the global economy would give a large boost to the real incomes of several non-E.U. countries.
Unbalanced Trade 2.0 (Alejandro Cuñat and Robert Zymek), IMF WP/25/191, R&R at Journal of International Economics, [WP Draft]
Presented at:
[Seminars] CERGE-EI (Prague): 11.12.2025, VGSE Macro Seminar (Vienna): 28.10.2025, Corvinus University (Budapest): 22.10.2025
[Keynotes] XXII Inteco Workshop on Economic Integration, keynote talk: 28.11.2025, Madrid Mountain Macro, keynote talk: 18.09.2025 – 19.09.2025
[Conferences] 2026 Meeting of the OECD Trade and Chief Economists Network: 23.04.2026
Abstract: This paper introduces a small-open-economy model with international trade in goods and assets that can be used to analyse temporary and permanent changes in trade barriers. In the model, asset markets are incomplete and goods trade with the rest of the world obeys “gravity”. The model predicts that the size of trade imbalances changes non-monotonically with the level of trade barriers, and net exports are strongly negatively related with the growth of trade barriers, consistent with cross-country evidence. Two corollaries emerge from this result. First, empirically plausible changes in trade-barrier levels would have a smaller impact on trade balances and agents’ exposure to risk than changes in trade-barrier volatility. Second, the behaviour of the trade balance during an episode of trade (dis)integration is profoundly affected by the path of trade barriers along the transition.
Trade (Dis-)Integration and the Trade Balance (Alejandro Cuñat and Robert Zymek) [Slides] [older WP version]
Presented at:
[Seminars] Johannes Kepler University Linz: 04.06.2025, LUISS: 24.02.2025, Central European University (Vienna): 30.5.2023, International Monetary Fund: 13.3.2024
[Keynotes] XXII Emerging Markets Workshop, keynote talk: 27.11.2025
[Conferences] CEU Trade Workshop: 9.5.2025, CREI@30 Conference: 25.11.2024 – 26.11.2024
Abstract: We produce a two-country model with international trade in goods and assets that can be used to analyse temporary and permanent changes in trade barriers. In the model, asset markets are incomplete and goods trade with the rest of the world obeys “gravity”. The size of trade imbalances changes non-monotonically with the level of trade barriers when the former are a response to temporary shocks. Changes in trade barriers have more substantial effects on imbalances and relative incomes when trade imbalances are driven by structural cross-country differences.
Consumer Data, Productivity, and Trade (Ashim Dubey) [WP Draft]
Presented at: FIW International Economics Conference 2023, Midwest Trade Conference Spring 2023, CIREQ PhD Students' Conference 2023, CEA Conference 2023, ETSG Conference 2023, NOeG Conference 2023, Vienna Macro Café 2023
Abstract: Consumer preference data is being gathered at an accelerating pace. Firms leverage this market-specific information to enhance productivity, and access to this data may significantly influence their decisions when entering new export markets. We introduce a model of exporting that incorporates a productivity-enhancing data mechanism and analyse the equilibrium effects on the distribution of productivity, selection into exporting and data acquisition. We test these predictions using empirical data. Our theoretical findings indicate that heightened data restrictions have a dual impact: they reduce the amount of data acquired by foreign firms entering the market, while simultaneously driving up prices. Additionally, we find that allowing firms to access data results in stricter selection into exporting. Empirically, we find support for a reduction in trade flow between countries where the destination has higher data protection measures in place. This effect is more pronounced for manufacturing industries that heavily rely on market-specific adaptations of their products.
Migrants of Influence: Skill Levels and the Effects on International Trade (Ashim Dubey and Stefan Smutny) [WP Draft]
Presented at: FIW International Economics Conference 2024
Abstract: Migration plays a crucial role in circumventing trade barriers and, consequently, overcoming multilateral resistance by reducing information asymmetries. In this paper, we analyse the extent to which the skill level of migrants influences such trade factors. We develop a tractable model of international trade, adjusting for firm-level heterogeneity in worker's skill level. This approach enables us to establish a gravity model explicitly incorporating high-skilled in-migration as a means to reduce iceberg costs. We then test this hypothesis by estimating the structural gravity equation directly with PPML with a full set of fixed effects, allowing to control for the universe of potential multilateral resistances. Our analysis reveals a significant impact of migration on trade flows, and this impact is directly proportional to the skill level, thereby providing empirical support for our theoretical findings.