Working Paper: NBER ID: w9318
Authors: Antoni Estevadeordal; Brian Frantz; Alan M. Taylor
Abstract: Measured by the ratio of trade to output, the period 1870 1913 marked the birth of the first era of trade globalization and the period 1914 39 its death. What caused the boom and bust? We use an augmented gravity model to examine the gold standard, tariffs, and transport costs as determinants of trade. Until 1913 the rise of the gold standard and the fall in transport costs were the main trade-creating forces. As of 1929 the reversal was driven by higher transport costs. In the 1930s, the final collapse of the gold standard drove trade volumes even lower.
Keywords: No keywords provided
JEL Codes: F02; F10; F33; N10; N70
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| rise of the gold standard (N13) | increase in trade volumes (F10) |
| decline in transport costs (R41) | increase in trade volumes (F10) |
| rising transport costs (L91) | decrease in trade volumes (F19) |
| collapse of the gold standard (N14) | decrease in trade volumes (F19) |
| minimal role of tariffs before 1914 (N13) | increase in trade volumes (F10) |
| increasing importance of tariffs post-1914 (N14) | decrease in trade volumes (F19) |