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A Dissection of Trading Capital: Cultural persistence of trade in the aftermath of the fall of the Iron Curtain

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  • Beestermöller, Matthias
  • Rauch, Ferdinand

Abstract

We show that the countries of the former Austro-Hungarian monarchy trade significantly more with one another in the aftermath of the collapse of the Iron Curtain than predicted by a standard gravity model. This trade surplus declines linearly and monotonically over time. We argue that these findings suggest that decaying cultural forces explain a significant part of trading capital. We document the rate of decay of these cultural forces.

Suggested Citation

  • Beestermöller, Matthias & Rauch, Ferdinand, 2014. "A Dissection of Trading Capital: Cultural persistence of trade in the aftermath of the fall of the Iron Curtain," Discussion Papers in Economics 21688, University of Munich, Department of Economics.
  • Handle: RePEc:lmu:muenec:21688
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    References listed on IDEAS

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    Cited by:

    1. Anna Maria Koukal, 2017. "How Vatican II influenced female enfranchisement: A story of rapid cultural change," CREMA Working Paper Series 2017-07, Center for Research in Economics, Management and the Arts (CREMA).
    2. Christoph Hammer & Aurélien Fichet de Clairfontaine, 2016. "Trade Costs and Income in European Regions," Department of Economics Working Papers wuwp220, Vienna University of Economics and Business, Department of Economics.

    More about this item

    Keywords

    Trade; Gravity; Culture; Borders; Habsburg Empire; Persistence;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • N33 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: Pre-1913
    • N34 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: 1913-
    • N94 - Economic History - - Regional and Urban History - - - Europe: 1913-

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