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A Dissection of Trading Capital: Trade in the Aftermath of the Fall of the Iron Curtain

Published online by Cambridge University Press:  29 June 2018

Matthias Beestermöller  and
Ferdinand Rauch
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Abstract

We study trade in Europe after the fall of the Iron Curtain, and show that the countries of the former Austro-Hungarian monarchy trade significantly more with one another after 1989 than predicted by a standard gravity model. Cultural trading capital, established under Habsburg rule and maintained in the period of the Iron Curtain, seems to have survived over four decades of separation and gives an initial boost to trade. This surplus trade disappeared rapidly after 1990 as countries rearranged themselves with the new geopolitical circumstances. We document the rate of decay of these forces.

Type
Research Article
Information
The Journal of Economic History , Volume 78 , Issue 2 , June 2018 , pp. 358 - 393
Copyright
Copyright © 2018 The Economic History Association 

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Footnotes

This paper benefited from comments and suggestions of numerous colleagues and seminar participants including but not limited to: James Anderson, Franz Baltzarek, Daniel Baumgarten, Tibor Besedes, Johannes Van Biesebroeck, Felix Butschek, Ann Carlos (editor), Mary Cox, Carsten Eckel, Peter Egger, Peter Esö, Robert Evans, Thibault Fally, Gabriel Felbermayr, Lisandra Flach, Lionel Fontagne, James Harrigan, Keith Head, Harald Heppner, Michael Irlacher, Beata Javorcik, Amid Khandelwaal, Helmut Konrad, Anna Koukal, Christopher Long, Thierry Mayer, Guy Michaels, Peter Neary, Volker Nitsch, Jana Osterkamp, Chris Parsons, Steven Poelhekke, Kevin O’Rourke, Monika Schnitzer, Jens Südekum, Pierre-Louis Vezina, and Daniel Wissmann. We particularly thank two very helpful anonymous referees. Matthias Beestermöller gratefully acknowledges financial support from the DFG through GRK 1928 and the Egon-Sohmen-Foundation.

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