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International Trade and Finance under the Two Hegemons: Complementarities in the United Kingdom (1870-1913) and the United States (1920-30)

  • Taylor, Alan M.
  • Wilson, Janine

Do international trade and finance flow together? In theory, trade and finance can be substitutes or complements, so the matter must be resolved empirically. We study trade and financial flows from the United Kingdom from 1870 to 1913 and the United States in the interwar years. Trade and finance are robustly correlated, even after allowing for simultaneity. Evidence from the British Empire casts doubt on the idea that trade is a punishment device in the event of default.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5846.

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Date of creation: Oct 2006
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Handle: RePEc:cpr:ceprdp:5846
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