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A Dissection of Trading Capital: Trade in the Aftermath of the Fall of the Iron Curtain

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  • Beestermöller, Matthias
  • Rauch, Ferdinand

Abstract

We study trade in Europe after the fall of the Iron Curtain, and show that the countries of the former Austro-Hungarian monarchy trade significantly more with one another after 1989 than predicted by a standard gravity model. Cultural trading capital, established under Habsburg rule and maintained in the period of the Iron Curtain, seems to have survived over four decades of separation and gives an initial boost to trade. This surplus trade disappeared rapidly after 1990 as countries rearranged themselves with the new geopolitical circumstances. We document the rate of decay of these forces.

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  • Beestermöller, Matthias & Rauch, Ferdinand, 2018. "A Dissection of Trading Capital: Trade in the Aftermath of the Fall of the Iron Curtain," The Journal of Economic History, Cambridge University Press, vol. 78(2), pages 358-393, June.
    • Handle: RePEc:cup:jechis:v:78:y:2018:i:02:p:358-393_00
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    2. David Chilosi & Stefan Nikolić, 2021. "Vanishing borders: ethnicity and trade costs at the origin of the Yugoslav market," Working Papers 0214, European Historical Economics Society (EHES).
    3. Santamaría, Marta & Ventura, Jaume & Yesilbayraktar, Ugur, 2021. "Borders within Europe," The Warwick Economics Research Paper Series (TWERPS) 1355, University of Warwick, Department of Economics.
    4. Beestermöller, Matthias & Rauch, Ferdinand, 2018. "A Dissection of Trading Capital: Trade in the Aftermath of the Fall of the Iron Curtain," The Journal of Economic History, Cambridge University Press, vol. 78(2), pages 358-393, June.
    5. Rauch, Ferdinand & Marczinek, Max & Maurer, Stephan, 2022. "Trade Persistence and Trader Identity - Evidence from the Demise of the Hanseatic League," CEPR Discussion Papers 16957, C.E.P.R. Discussion Papers.
    6. Santamaria, Marta & Ventura, Jaume & Yesilbayraktar, Ugur, 2021. "Borders within Europe," CAGE Online Working Paper Series 560, Competitive Advantage in the Global Economy (CAGE).
    7. Klein, Marius & Rauch, Ferdinand, 2023. "Market Access and the Arrow of Time," Working Papers 0724, University of Heidelberg, Department of Economics.
    8. Klein, Marius & Rauch, Ferdinand, 2023. "Market Access and the Arrow of Time," Working Papers 0724, University of Heidelberg, Department of Economics.

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