Time zones, GDP & exports

Rishav Bista and Rebecca Tomasik

Applied Economics Letters, 2019, vol. 26, issue 6, 496-500

Abstract: Recent studies have established a negative effect of time zone differences on trade flows. We extend this literature by examining whether a country’s economic size is relevant in its’ response to an increase in time zone differences. We argue that the negative impact of time zone differences should be more important for low-income countries as these countries often face higher trade costs and have firms with lower productivity compared to its high-income counterparts. To examine this heterogeneous impact, we interact the time zone measure with various quartiles of GDP. We find that these low-income countries face a much higher negative impact of time zone differences on exports compared to high-income countries. Our results help explain why the small countries of Samoa and Tokelau changed time zones to closely align with their main trading partners, while high-income countries have not taken such steps.

Date: 2019
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DOI: 10.1080/13504851.2018.1486980

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