If a Gravity Equation is given as: ln Xijt = + ₁ ln GDP_it + ₂ ln GDP_jt + ln distij + E_ijt

where, i =exporter, j =importer, t =year.

Do you expect the coefficient on ₁ to be postive or negative, why?

Do you expect the coefficient on 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 ln dist_ij? Does the variable you just included have t?