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

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  • Nikolaus Wolf

Abstract

When did Germany become economically integrated? Within the framework of a gravity model, based on a new data set of about 40,000 observations on trade flows within and across the borders of Germany over the period 1885 – 1933, I explore the geography of trade costs across Central Europe. 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 in absolute terms. Second, this internal fragmentation resulted from cultural heterogeneity, from administrative borders within Germany, and from geographical barriers that divided Germany along natural trade routes into eastern and western parts. Third, internal integration improved, while external integration worsened after World War I and again with the Great Depression, in part because of border changes along the lines of ethno-linguistic heterogeneity. By the end of the Weimar Republic in 1933, Germany was reasonably well integrated.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2424.

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Date of creation: 2008
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Handle: RePEc:ces:ceswps:_2424

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Keywords: Germany; economic integration; aggregation bias; border effects;

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Citations

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Cited by:
  1. Nitsch, Volker & Wolf, Nikolaus, 2009. "Tear Down this Wall : On the Persistence of Borders in Trade," The Warwick Economics Research Paper Series (TWERPS) 919, University of Warwick, Department of Economics.
  2. 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.
  3. Crafts, Nicholas & Klein, Alexander, 2013. "Geography and Intra-National Home Bias: U. S. Domestic Trade in 1949 and 2007," CEPR Discussion Papers 9309, C.E.P.R. Discussion Papers.
  4. Michael Kopsidis & Nikolaus Wolf, 2012. "Agricultural Productivity Across Prussia During the Industrial Revolution: A ThŸnen Perspective," Working Papers 0013, European Historical Economics Society (EHES).
  5. Cletus C. Coughlin & Dennis Novy, 2009. "Is the International Border Effect Larger than the Domestic Border Effect? Evidence from U.S. Trade," CESifo Working Paper Series 2853, CESifo Group Munich.
  6. Axel Möhlmann, 2014. "Persistence or Convergence? The East-West Tax-Morale Gap in Germany," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 70(1), pages 3-30, March.
  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. repec:cge:warwcg:111 is not listed on IDEAS
  9. 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).
  10. Friehe, Tim & Mechtel, Mario, 2014. "Conspicuous consumption and political regimes: Evidence from East and West Germany," European Economic Review, Elsevier, vol. 67(C), pages 62-81.

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