Trade in the spotlight: enhancing gravity model predictions with nightlights and population-weighted distance measures

Elizaveta Gonchar, Ian Helfrich

The distribution of population across and within countries naturally relates to the distribution of economic production. We explore differences in gravity-model estimates of trade that take spatial factors of population distribution seriously, introducing a novel geodesic distance measure between countries using population-weighted centroids as endpoints for bilateral distance. Canonical gravity models have relied on time-invariant CEPII distance measures since 2004; we show that incorporating annual VIIRS nightlight intensity and gridded population yields measurably better gravity fit. The OVDL (Origin-VIIRS to Destination-LandScan) measure is the headline construction. April 2025 preprint; the full panel and structural-gravity validation are in Paper 5 (Effective Distance, in preparation).