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1. (10 points) If a Gravity Equation is given as: In Xij = & + $1 In GDP + 82 In GDP; + y Indist;
1. (10 points) If a Gravity Equation is given as: In Xij = & + $1 In GDP + 82 In GDP; + y Indist; + Ejt where, i =exporter, j =importer, t =year. . Do you expect the coefficient on to be postive or negative, why? . Do you expect the coefficient on y to be postive or negative, why? . If you want to examine the effect of tariffs on exports, which variable should you include in the above equation? What the sign of the estimated coefficient on that variable would be? . Why is there no t in the varialbe In dist,? Does the variable you just included have t
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