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Cultural Proximity and Trade

  • Gabriel Felbermayr

    (CESifo - CESifo)

  • Farid Toubal

    ()

    (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)

Cultural proximity is an important determinant of bilateral trade volumes. However, empirical quantification and testing are difficult due to the elusiveness of the concept and lack of observability. This paper draws on bilateral score data from the Eurovision Song Contest, a very popular pan-European television show, to construct a measure of cultural proximity which varies over time and within country pairs, and that correlates strongly with conventional indicators. Within the framework of a theory-grounded gravity model, we show that our measure positively affects trade volumes even if controlling for standard measures of cultural proximity and bilateral fixed effects.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00641280.

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Date of creation: 01 Jan 2010
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Publication status: Published, European Economic Review, 2010, 54, 279-293
Handle: RePEc:hal:cesptp:halshs-00641280
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00641280
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