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International trade and social connectedness

Author

Listed:
  • Bailey, Michael
  • Gupta, Abhinav
  • Hillenbrand, Sebastian
  • Kuchler, Theresa
  • Richmond, Robert
  • Stroebel, Johannes

Abstract

We use de-identified data from Facebook to construct a new and publicly available measure of the pairwise social connectedness between 170 countries and 332 European regions. We find that two countries trade more when they are more socially connected, especially for goods where information frictions may be large. The social connections that predict trade in specific products are those between the regions where the product is produced in the exporting country and the regions where it is used in the importing country. Once we control for social connectedness, the estimated effects of geographic distance and country borders on trade decline substantially.

Suggested Citation

  • Bailey, Michael & Gupta, Abhinav & Hillenbrand, Sebastian & Kuchler, Theresa & Richmond, Robert & Stroebel, Johannes, 2021. "International trade and social connectedness," Journal of International Economics, Elsevier, vol. 129(C).
  • Handle: RePEc:eee:inecon:v:129:y:2021:i:c:s0022199620301331
    DOI: 10.1016/j.jinteco.2020.103418
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    More about this item

    Keywords

    International trade; Social connectedness; Information frictions; Border effects;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • F6 - International Economics - - Economic Impacts of Globalization

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