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Tear down this wall: on the persistence of borders in trade

  • Volker Nitsch
  • Nikolaus Wolf

Why do borders still matter for economic activity? The reunification of Germany in 1990 provides a unique natural experiment for examining the effect of political borders on trade. With the fall of the Berlin Wall and the rapid formation of a political and economic union, strong and strictly enforced administrative barriers to trade between East Germany and West Germany were eliminated completely within a very short period of time. Remarkable persistence in intra-German trade patterns along the former East-West border suggests that border effects are neither statistical artefacts nor driven by administrative barriers to trade, but arise from economic fundamentals.

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Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 46 (2013)
Issue (Month): 1 (February)
Pages: 154-179

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Handle: RePEc:cje:issued:v:46:y:2013:i:1:p:154-179
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  1. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
  2. Hans Christian Heinemeyer, 2007. "The treatment effect of borders on trade. The great war and the disintegration of Central Europe," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 1(3), pages 177-210, October.
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  6. repec:hal:cesptp:hal-00268768 is not listed on IDEAS
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