A1 - Pierre Cotterlaz
A1 - Etienne Fize
TI - Information in the First Globalization: News Agencies and Trade
IS - 2021-02
T3 - Working Papers
KW - Information
KW - International Trade
KW - Economic History
KW - News Agency
KW - First Globalization
N2 -
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. 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.

ER -