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Was Germany Ever United? Evidence from Intra- and International Trade 1885-1933

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  • Nikolaus Wolf

Abstract

This paper asks whether Germany was ever an economically integrated area. I explore the geography of trade costs in a new data set of about 40,000 observations on regional trade flows within and across the borders of Germany over the period 1885 - 1933. There are three key results. First, the German Empire before 1914 was a poorly integrated economy, both relative to integration across the borders of the German state and internally. Second, this internal fragmentation had its origins in administrative borders within Germany, in a geographical barrier that divided Germany roughly along natural trade routes into east and west, and in a considerable cultural heterogeneity within Germany prior to 1919. Third, internal integration improved along with external disintegration in the wake of the war, partly due to border changes along the lines of ethno-linguistic heterogeneity and again with the Great Depression. By the end of the Weimar Republic in 1933, Germany was reasonably well integrated.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0870.

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Date of creation: May 2008
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Handle: RePEc:cep:cepdps:dp0870

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Keywords: Aggregation Bias; Border Effects; Economic Integration; Germany;

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Citations

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Cited by:
  1. Volker Nitsch & Nikolaus Wolf, 2009. "Tear Down this Wall: On the Persistence of Borders in Trade," CESifo Working Paper Series 2847, CESifo Group Munich.
  2. Cletus C. Coughlin & Dennis Novy, 2009. "Is the international border effect larger than the domestic border effect? evidence from U.S. trade," Working Papers, Federal Reserve Bank of St. Louis 2009-057, Federal Reserve Bank of St. Louis.
  3. Axel Möhlmann, 2014. "Persistence or Convergence? The East-West Tax-Morale Gap in Germany," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, Mohr Siebeck, Tübingen, vol. 70(1), pages 3-30, March.
  4. Kopsidis, Michael & Wolf, Nikolaus, 2012. "Agricultural Productivity Across Prussia During the Industrial Revolution: A Thünen Perspective," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 72(03), pages 634-670, September.
  5. Giovanni Federico & Antonio Tena Junguito, 2013. "The ripples of the Industrial revolution: exports, economic growth and regional integration in Italy in the early 19th century," Working Papers in Economic History wp13-02, Universidad Carlos III, Departamento de Historia Económica e Instituciones.
  6. Crafts, Nicholas & Klein, Alexander, 2013. "Geography and Intra-National Home Bias: U. S. Domestic Trade in 1949 and 2007," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9309, C.E.P.R. Discussion Papers.
  7. Daniel Tirado & Marc Badia-Miró, 2012. "Economic integration and regional inequality in Iberia (1900-2000) : a geographical approach," Working Papers in Economic History wp12-03, Universidad Carlos III, Departamento de Historia Económica e Instituciones.
  8. Wahl, Fabian, 2013. "Does medieval trade still matter? Historical trade centers, agglomeration and contemporary economic development," FZID Discussion Papers 82-2013, University of Hohenheim, Center for Research on Innovation and Services (FZID).
  9. Friehe, Tim & Mechtel, Mario, 2014. "Conspicuous consumption and political regimes: Evidence from East and West Germany," European Economic Review, Elsevier, Elsevier, vol. 67(C), pages 62-81.

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