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International Trade and Finance Under the Two Hegemons: Complementaries in the United Kingdom 1870-1913 and the United States 1920-30

40 Pages Posted: 2 Oct 2006  

Alan M. Taylor

University of California, Davis - Department of Economics; University of Virginia - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Janine Wilson

University of California, Davis - Department of Economics

Date Written: September 2006

Abstract

Do international trade and finance flow together? In theory, trade and finance can be substitutes or complements, so the matter must be resolved empirically. We study trade and financial flows from the United Kingdom from 1870 to 1913 and the United States in the interwar years. Trade and finance are robustly correlated, even after allowing for simultaneity. Evidence from the British Empire casts doubt on the idea that trade is a punishment device in the event of a default.

Suggested Citation

Taylor, Alan M. and Wilson, Janine, International Trade and Finance Under the Two Hegemons: Complementaries in the United Kingdom 1870-1913 and the United States 1920-30 (September 2006). NBER Working Paper No. w12543. Available at SSRN: https://ssrn.com/abstract=932900

Alan M. Taylor (Contact Author)

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
530-752-1572 (Phone)
530-752-9382 (Fax)

HOME PAGE: http://www.econ.ucdavis.edu/faculty/amtaylor/

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States
(434)-924-3177 (Phone)
(434)-982-2904 (Fax)

HOME PAGE: http://people.virginia.edu/~amt7u

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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HOME PAGE: http://nber.org

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

HOME PAGE: http://cepr.org

Janine Wilson

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States

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