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Information in the First Globalization: News Agencies and Trade

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  • Pierre Cotterlaz
  • Etienne Fize

Abstract

This paper documents the effect of information frictions on trade using a historical large-scale improvement in the transmission of news: the emergence of global news agencies. The information available to potential traders became more abundant, was delivered faster and at a cheaper price between countries covered by a news agency. Exploiting differences in the timing of telegraph openings and news agency coverage across pairs of countries, we are able to disentangle the pure effect of information from the effect of a reduction in communication costs. Panel gravity estimates reveal that bilateral trade increased by 30\% more for pairs of countries covered by a news agency and connected by a telegraph than for pairs of countries simply connected by a telegraph.

Suggested Citation

  • Pierre Cotterlaz & Etienne Fize, 2021. "Information in the First Globalization: News Agencies and Trade," Working Papers 2021-02, CEPII research center.
    • Handle: RePEc:cii:cepidt:2021-02
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    References listed on IDEAS

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    7. Claudia Steinwender, 2018. "Real Effects of Information Frictions: When the States and the Kingdom Became United," American Economic Review, American Economic Association, vol. 108(3), pages 657-696, March.
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    Cited by:

    1. Bjørnskov, Christian & Schröder, Philipp J.H., 2023. "Press freedom, market information, and international trade," European Journal of Political Economy, Elsevier, vol. 76(C).

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    More about this item

    Keywords

    Information; International Trade; Economic History; News Agency; First Globalization;
    All these keywords.

    JEL classification:

    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F10 - International Economics - - Trade - - - General

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