TY  - JOUR
AU  - Eichengreen, Barry
AU  - Irwin, Douglas A
TI  - The Role of History in Bilateral Trade Flows
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5565
PY  - 1996
Y2  - May 1996
DO  - 10.3386/w5565
UR  - http://www.nber.org/papers/w5565
L1  - http://www.nber.org/papers/w5565.pdf
N1  - Author contact info:
Barry Eichengreen
Department of Economics
University of California, Berkeley
549 Evans Hall 3880
Berkeley, CA 94720-3880
Tel: 510/642-2772
Fax: 510/643-0926
E-Mail: eichengr@econ.Berkeley.edu

Douglas A. Irwin
Department of Economics
Dartmouth College
Hanover, NH  03755
Tel: 603/646-2942
Fax: 603/646-2122
E-Mail: douglas.irwin@dartmouth.edu
M1  - published as Barry Eichengreen, Douglas A. Irwin. "The Role of History in Bilateral Trade Flows," in Jeffrey A. Frankel, editor, "The Regionalization of the World Economy" University of Chicago Press (1998)

AB  - This paper investigates the theory and evidence that history plays a role in shaping the direction of international trade.  Because there are reasons to anticipate a positive correlation between the predominant direction of trade flows in the past and membership in preferential arrangements in the present, there may be a tendency to spuriously attribute to preferential arrangements the effects of historical factors and to exaggerate the influence of the former. Thus, the standard gravity-model formulation, which neglects the role of historical factors, suffers from omitted-variables bias.  We illustrate these points by analyzing the evolution of trade between 1949 and 1964.  We find that historical factors exercise an important influence on trade even after controlling for the arguments of the standard gravity model.
ER  -