Working Paper: CEPR ID: DP9309
Authors: Nicholas Crafts; Alexander Klein
Abstract: This paper examines home bias in U. S. domestic trade in 1949 and 2007. We use a unique dataset of 1949 carload waybill statistics produced by the Interstate Commerce Commission and 2007 Commodity Flow Survey data. The results show that home bias was considerably smaller in 1949 than in 2007 and that home bias in 1949 was even negative for several commodities. We argue that the difference between the geographical distribution of manufacturing activities in 1949 and that of 2007 is an important factor explaining the differences in the magnitudes of home-bias estimates in those years.
Keywords: Gravity equation; Intranational home bias; Manufacturing belt; Spatial clustering
JEL Codes: F14; N72
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Geographical distribution of manufacturing activities (F61) | Home bias (F14) |
| Home bias in 1949 (F14) | Home bias in 2007 (F65) |
| Concentration of manufacturing in the Northeast (L69) | Home bias in 1949 (F14) |
| Industrial activities dispersing towards the South (L99) | Home bias in 2007 (F65) |
| Changes in geographical distribution of manufacturing activities (O14) | Variations in home bias (F29) |