Within US Trade and the Long Shadow of the American Secession

Using data from the US commodity flow surveys, we show that the historical Union-Confederacy border lowers contemporaneous trade between US states by about 16 percentrelative to trade flows within the former alliances. Amongst one million placebos, thereis no other constellation of state grouping that would yield a larger border effect. Thefinding is robust over different econometric models, treatment of the rest of the world,available survey waves, or levels of aggregation. Including contemporaneous controls,such as network, institutional or demographic variables, and Heckscher-Ohlin or Linderterms, lowers the estimate only slightly. Historical variables, such as the incidence ofslavery, do not explain the effect away. Adding US states unaffected by the Civil War,we argue that the friction is not merely reflecting unmeasured North-South differences.Finally, the estimated border effect is larger for differentiated than for homogeneousgoods, stressing the potential role for cultural factors and trust.American Secession, border effect, intranational trade, gravity, US state levels

The economic impact of weather anomalies

How do weather anomalies affect the economy at the local level? This paper presents a new data set that links weather data to annual average night-light emission data for 24.000 0.5°× 0.5° grid-cells around the globe for the period 1992–2013. Interpreting night-light emission as a proxy for economic activity, these data allow one to investigate how weather anomalies affect economic activity. Global coverage avoids selection bias, while high spatial resolution avoids averaging out heterogeneity in local impacts at higher aggregation levels. Our data show significant effects on the local growth of night-light for storms, excessive precipitation, droughts, and cold spells. Moreover, we find evidence for significant spatial spillovers to neighboring areas. Our results suggest that these offsetting spillovers are typically local. As positive and negative effects average out in larger areas, our results call for the analysis of economic effects of weather anomalies at a high geographical resolution. Finally, our results are driven by events in lower income regions. As climate change is expected to make weather patterns more erratic, our new data can inform emerging debates on how this will affect the economy in both science and politics