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Cultural Proximity and Trade

  • Gabriel Felbermayr

    (CESifo - CESifo)

  • Farid Toubal

    ()

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

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 in European Economic Review, Elsevier, 2010, 54, pp.279-293. <10.1016/j.euroecorev.2009.06.009>
Handle: RePEc:hal:cesptp:halshs-00641280
DOI: 10.1016/j.euroecorev.2009.06.009
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00641280
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