Information in the First Globalization: News Agencies and Trade

37 Pages Posted: 6 Jun 2019

See all articles by Pierre Cotterlaz

Pierre Cotterlaz

Sciences Po - Department of Economics

Etienne Fize

Sciences Po Department of Economics

Date Written: May 17, 2019

Abstract

This paper documents the effect of information frictions on trade using a historical large-scale improvement in the transmission of news: the emergence of global news agencies. The information available to potential traders became more abundant, was delivered faster and at a cheaper price between countries covered by a news agency. By exploiting differences in the timing of telegraph openings and news agency coverage across pairs of countries, we are able to disentangle the pure effect of information from the effect of a reduction in communication costs. Panel gravity estimates reveal that bilateral trade increased by 30% more for pairs of countries covered by a news agency and connected by a telegraph than for pairs of countries simply connected by a telegraph.

Keywords: information, international trade, economic history, news agencies

JEL Classification: N70, F14, F15, F10

Suggested Citation

Cotterlaz, Pierre and Fize, Etienne, Information in the First Globalization: News Agencies and Trade (May 17, 2019). Available at SSRN: https://ssrn.com/abstract=3389918 or http://dx.doi.org/10.2139/ssrn.3389918

Pierre Cotterlaz (Contact Author)

Sciences Po - Department of Economics ( email )

28, rue des Saints-Pères
Paris, Paris 75007
France

Etienne Fize

Sciences Po Department of Economics ( email )

28, rue des Saints peres
Paris, 75007
France

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