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History, Culture, and Trade: A Dynamic Gravity Approach

Douglas Campbell

EERI Research Paper Series from Economics and Econometrics Research Institute (EERI), Brussels

Abstract: What determines trade patterns? Habit persistence in consumer tastes and learning-by-doing in production imply that history and culture matter. Deriving a dynamic gravity equation from a simple model, it is shown that cultural similarity is a product of history, so that trade patterns are a function of bilateral GDP, current trade costs, and the past history of trade costs. Using a trade data set which spans from 1870 to 2000, I demonstrate that many gravity variables operate via lagged trade, that historical trade shocks matter, and that trade patterns are persistent, even across centuries.

Keywords: Dynamic Gravity Equation; Endogenous Preferences; Habit Persistence; Learning By-Doing. (search for similar items in EconPapers)
JEL-codes: F10 F12 F22 N70 (search for similar items in EconPapers)
Date: 2010-08-26
New Economics Papers: this item is included in nep-evo, nep-his, nep-int, nep-neu and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (29)

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Working Paper: History, culture, and trade: a dynamic gravity approach (2010) Downloads
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