International Trade and Finance under the Two Hegemons: Complementarities in the United Kingdom (1870-1913) and the United States (1920-30)

Alan M. Taylor () and Janine Wilson

No 5846, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Do international trade and finance flow together? In theory, trade and finance can be substitutes or complements, so the matter must be resolved empirically. We study trade and financial flows from the United Kingdom from 1870 to 1913 and the United States in the interwar years. Trade and finance are robustly correlated, even after allowing for simultaneity. Evidence from the British Empire casts doubt on the idea that trade is a punishment device in the event of default.

Keywords: complementarities; international investment; international trade (search for similar items in EconPapers)
JEL-codes: F10 F30 F40 N10 N20 N70 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-his and nep-int
Date: 2006-10

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Working Paper: International Trade and Finance under the Two Hegemons: Complementaries in the United Kingdom 1870-1913 and the United States 1920-30 (2006)
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