Was Germany ever United? Evidence from Intra- and International Trade 1885-1933

59 Pages Posted: 15 Oct 2008

See all articles by Nikolaus Wolf

Nikolaus Wolf

Centre for Economic Policy Research (CEPR); Humboldt University Berlin - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); London School of Economics - Centre for Economic Performance (CEP)

Multiple version iconThere are 2 versions of this paper

Date Written: October 2008

Abstract

When did Germany become economically integrated? Within the framework of a gravity model, based on a new data set of about 40,000 observations on trade flows within and across the borders of Germany over the period 1885 - 1933, I explore the geography of trade costs across Central Europe. There are three key results. First, the German Empire before 1914 was a poorly integrated economy, both relative to integration across the borders of the German state and in absolute terms. Second, this internal fragmentation resulted from cultural heterogeneity, from administrative borders within Germany, and from geographical barriers that divided Germany along natural trade routes into eastern and western parts. Third, internal integration improved, while external integration worsened after World War I and again with the Great Depression, in part because of border changes along the lines of ethno-linguistic heterogeneity. By the end of the Weimar Republic in 1933, Germany was reasonably well integrated.

Keywords: Germany, economic integration, aggregation bias, border effects

JEL Classification: F15, N13, N14, N90

Suggested Citation

Wolf, Nikolaus and Wolf, Nikolaus, Was Germany ever United? Evidence from Intra- and International Trade 1885-1933 (October 2008). Available at SSRN: https://ssrn.com/abstract=1284966 or http://dx.doi.org/10.2139/ssrn.1284966

Nikolaus Wolf (Contact Author)

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Humboldt University Berlin - Department of Economics ( email )

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