Trade Persistence and Trader Identity - Evidence from the Demise of the Hanseatic League

42 Pages Posted: 4 Feb 2022

See all articles by Maximilian Marczinek

Maximilian Marczinek

University of Oxford - Nuffield College

Stephan Maurer

Department of Economics, University of Konstanz

Ferdinand Rauch

University of Oxford

Date Written: January 1, 2022

Abstract

How do trade networks persist following disruptions of political networks? We study different types of persistence following the decline of the Hanseatic League using a panel of 21,590 city-level trade flows over 190 years, covering 1,425 cities. We use the Sound Toll data, a dataset collected by the Danish crown until 1857 that registered every ship entering or leaving the Baltic Sea, forming one of the most granular and extensive trade data sets. We measure trade flows by counting the number of ships sailing on a particular route in a given year and estimate gravity equations using PPML and an appropriate set of fixed effects. Bilateral gravity estimation results show that trade among former Hansa cities only shows persistence after its dissolution in 1669 for about 30 years, but this persistence is not robust across different regression specifications. However, when we incorporate the flag under which a ship is sailing and consider trilateral trade (where an observation is a combination of origin, destination, and flag), we find that trade persistently exceeds the gravity benchmark: Hansa cities continued to trade more with each other, but only on ships that were owned in another former Hansa city and thus sailed under a Hansa flag. Similar effects are found for trade among former Hansa cities and their trading posts abroad, yet again only conditional on the ship sailing under a former Hanseatic flag. Trade flows among the same pair of origin and destination cities, but under a different flag, do not show this persistence. Our main result shows that the identity of traders persists longer and more strongly than other forms of trading relationships we can measure. Apart from these new quantitative and qualitative insights on the persistence of trade flows, our paper is also of historic interest, as it provides new and detailed information on the speed of decline of trade amongst members of the Hanseatic League.

Keywords: Gravity, Hansa, Hanseatic League

JEL Classification: F14, N73, N93

Suggested Citation

Marczinek, Maximilian and Maurer, Stephan and Rauch, Ferdinand, Trade Persistence and Trader Identity - Evidence from the Demise of the Hanseatic League (January 1, 2022). CEPR Discussion Paper No. DP16957, Available at SSRN: https://ssrn.com/abstract=4026863

Maximilian Marczinek (Contact Author)

University of Oxford - Nuffield College ( email )

Oxford
United Kingdom

Stephan Maurer

Department of Economics, University of Konstanz ( email )

Box D124
Konstanz, BW 78457
Germany

HOME PAGE: http://sites.google.com/site/stephanernstmaurer/

Ferdinand Rauch

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

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