Replication data for: Real Effects of Information Frictions: When the States and the Kingdom Became United

Principal Investigator(s):  View help for Principal Investigator(s) Claudia Steinwender

Version:  View help for Version V1

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AER-2015-0681_onlineappendix_dofile.do text/plain 23.1 KB 10/12/2019 12:26:AM
AER-2015-0681_paper_dofile.do text/plain 28 KB 10/12/2019 12:26:AM
AER-2015-0681_readme.pdf application/pdf 81.6 KB 10/12/2019 12:26:AM
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Project Citation: 

Steinwender, Claudia. Replication data for: Real Effects of Information Frictions: When the States and the Kingdom Became United. Nashville, TN: American Economic Association [publisher], 2018. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E113066V1

Project Description

Summary:  View help for Summary This paper exploits a unique historical experiment to estimate how information frictions distort international trade: the establishment of the transatlantic telegraph in 1866. I use newly collected data on cotton prices, trade, and information flows from historical newspapers and find that the average and volatility of the transatlantic price difference fell after the telegraph, while average trade flows increased and became more volatile. Using a trade model in which exporters use the latest news about a foreign market to forecast expected prices, I estimate the efficiency gains of the telegraph to be equivalent to 8 percent of export value.

Scope of Project

JEL Classification:  View help for JEL Classification
      D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
      F12 Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
      F14 Empirical Studies of Trade
      L96 Telecommunications
      N71 Economic History: Transport, Trade, Energy, Technology, and Other Services: U.S.; Canada: Pre-1913
      N73 Economic History: Transport, Trade, Energy, Technology, and Other Services: Europe: Pre-1913
Geographic Coverage:  View help for Geographic Coverage United States, UK
Time Period(s):  View help for Time Period(s) 1865 – 1867 (daily cotton trade between New York and Liverpool; daily cotton prices in New York and Liverpool)
Collection Notes:  View help for Collection Notes transcribed from daily newspapers

Methodology

Data Source:  View help for Data Source The New York Times and the Liverpool Mercury
Unit(s) of Observation:  View help for Unit(s) of Observation city pair,

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Published Versions

V1 [2019-10-12]

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