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A Dissection of Trading Capital: Trade in the Aftermath of the Fall of the Iron Curtain

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  • Beestermöller, Matthias
  • Rauch, Ferdinand

Abstract

We study trade in Europe after the fall of the Iron Curtain, and show that the countries of the former Austro-Hungarian monarchy trade significantly more with one another after 1989 than predicted by a standard gravity model. Cultural trading capital, established under Habsburg rule and maintained in the period of the Iron Curtain, seems to have survived over four decades of separation and gives an initial boost to trade. This surplus trade disappeared rapidly after 1990 as countries rearranged themselves with the new geopolitical circumstances. We document the rate of decay of these forces.

Suggested Citation

  • Beestermöller, Matthias & Rauch, Ferdinand, 2018. "A Dissection of Trading Capital: Trade in the Aftermath of the Fall of the Iron Curtain," The Journal of Economic History, Cambridge University Press, vol. 78(2), pages 358-393, June.
    • Handle: RePEc:cup:jechis:v:78:y:2018:i:02:p:358-393_00
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    Cited by:

    1. Chiappini, Raphaël & Jégourel, Yves, 2021. "“The buck stops with the executives”: Assessing the impact of workforce composition and cultural distance on French firms’ exports," Economic Modelling, Elsevier, vol. 94(C), pages 45-57.
    2. Max Marczinek & Stephan E. Maurer & Ferdinand Rauch, 2022. "Trade persistence and trader identity - evidence from the demise of the Hanseatic League," CEP Discussion Papers dp1828, Centre for Economic Performance, LSE.
    3. Santamaria, Marta & Ventura, Jaume & Yesilbayraktar, Ugur, 2021. "Borders within Europe," CAGE Online Working Paper Series 560, Competitive Advantage in the Global Economy (CAGE).
    4. repec:osf:socarx:fsmch_v1 is not listed on IDEAS
    5. Chilosi, David & Nikolic, Stefan, 2021. "Vanishing borders: ethnicity and trade costs at the origin of the Yugoslav market," SocArXiv fsmch, Center for Open Science.
    6. Hinnerk Gnutzmann & Arevik Gnutzmann-Mkrtchyan & Tobias Korn, 2025. "Reversal of Economic Integration: Evidence from EU Enlargement," Working Papers 407, Leibniz Institut für Ost- und Südosteuropaforschung (Leibniz Institute for East and Southeast European Studies).
    7. Marczinek, Max & Maurer, Stephan & Rauch, Ferdinand, 2025. "Networks in trade — Evidence from the legacy of the Hanseatic league," Journal of International Economics, Elsevier, vol. 157(C).
    8. Lucie Coufalová & Fanny Dellinger & Peter Huber & Stepan Mikula, 2024. "Borders and Population Growth: Evidence from a Century of Border Regime Changes on the Austrian-Czech Border," WIFO Working Papers 680, WIFO.
    9. Santamaría, Marta & Ventura, Jaume & Yesilbayraktar, Ugur, 2021. "Borders within Europe," The Warwick Economics Research Paper Series (TWERPS) 1355, University of Warwick, Department of Economics.
    10. Beestermöller, Matthias & Rauch, Ferdinand, 2018. "A Dissection of Trading Capital: Trade in the Aftermath of the Fall of the Iron Curtain," The Journal of Economic History, Cambridge University Press, vol. 78(2), pages 358-393, June.
    11. Marius Klein & Ferdinand Rauch, 2023. "Market Access and the Arrow of Time," CESifo Working Paper Series 10279, CESifo.

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