Thursday, January 10, 2013

13 Percent Reduction In Current Trade Between US States Due To Civil War Aftereffects, North South Cultural Differences And Regional Trust

Posted by Milton Recht:

From Economic Inquiry, "Within U.S. Trade And The Long Shadow Of The American Secession" by Gabriel Felbermayr and Jasmin Gröschl:
Using data from U.S. commodity flow survey, we show that the historical Union–Confederacy border lowers contemporaneous trade between U.S. states by about 13%. The finding is robust over econometric models, survey waves, or aggregation levels. Including contemporaneous controls, such as network or institutional variables, lowers the estimate only slightly. Historical variables, such as slavery, do not explain the effect. Adding U.S. states unaffected by the Civil War, we argue that the friction is not merely reflecting unmeasured North–South differences. Finally, the border effect is larger for differentiated than for homogeneous goods, stressing the potential role for cultural factors and trust.
Ungated earlier working paper version available on EconPapers.

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