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Within US Trade and the Long Shadow of the American Secession

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  • Gabriel Felbermayr

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  • Jasmin Gröschl

Abstract

Using data from the US commodity flow surveys, we show that the historical Union-Confederacy border lowers contemporaneous trade between US states by about 16 percentrelative to trade flows within the former alliances. Amongst one million placebos, thereis no other constellation of state grouping that would yield a larger border effect. Thefinding is robust over different econometric models, treatment of the rest of the world,available survey waves, or levels of aggregation. Including contemporaneous controls,such as network, institutional or demographic variables, and Heckscher-Ohlin or Linderterms, lowers the estimate only slightly. Historical variables, such as the incidence ofslavery, do not explain the effect away. Adding US states unaffected by the Civil War,we argue that the friction is not merely reflecting unmeasured North-South differences.Finally, the estimated border effect is larger for differentiated than for homogeneousgoods, stressing the potential role for cultural factors and trust.

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Bibliographic Info

Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper No. 117.

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Date of creation: 2011
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Handle: RePEc:ces:ifowps:_117

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Keywords: American Secession; border effect; intranational trade; gravity; US state levels;

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  1. Alejandro Cuñat & Marc J. Melitz, 2007. "Volatility, Labor Market Flexibility, and the Pattern of Comparative Advantage," CEP Discussion Papers dp0799, Centre for Economic Performance, LSE.
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  7. Falck, Oliver & Heblich, Stephan & Lameli, Alfred & Sudekum, Jens, 2011. "Dialects, Cultural Identity, and Economic Exchange," Stirling Economics Discussion Papers 2011-01, University of Stirling, Division of Economics.
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  11. Juan Carlos Hallak, 2006. "A Product-Quality View of the Linder Hypothesis," NBER Working Papers 12712, National Bureau of Economic Research, Inc.
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  16. repec:bla:restud:v:76:y:2009:i:1:p:143-179 is not listed on IDEAS
  17. Hans-Christian Heinemeyer & Max-Stephan Schulze & Nikolaus Wolf, 2008. "Endogenous Borders? The Effects of New Borders on Trade in Central Europe 1885-1933," CESifo Working Paper Series 2246, CESifo Group Munich.
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Cited by:
  1. Heid, Benedikt & Langer, Julian & Larch, Mario, 2012. "Income and democracy: Evidence from system GMM estimates," Economics Letters, Elsevier, vol. 116(2), pages 166-169.

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