10.17889/E110189V1
Steinwender, Claudia
Replication data for: Real Effects of Information Frictions: When the States and the Kingdom Became United
ICPSR Inter-university Consortium for Political and Social Research
2018
10.1257/aer.20150681
10.1257/aer.20150681
1
This paper exploits a unique historical experiment to estimate how information frictions distort international trade: the establishment of the transatlantic telegraph in 1866. I use newly collected data on cotton prices, trade, and information flows from historical newspapers and find that the average and volatility of the transatlantic price difference fell after the telegraph, while average trade flows increased and became more volatile. Using a trade model in which exporters use the latest news about a foreign market to forecast expected prices, I estimate the efficiency gains of the telegraph to be equivalent to 8 percent of export value.