The Trade Impact of the Zollverein

45 Pages Posted: 19 Mar 2013

See all articles by Wolfgang Keller

Wolfgang Keller

University of Colorado; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Carol H. Shiue

University of Colorado at Boulder - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Date Written: March 2013

Abstract

The Zollverein was arguably the most important free-trade agreement of the 19th century. This paper investigates the economic impact of the Zollverein on trade in Germany. Although 1834 is the official date of the Zollverein's establishment, member states in fact joined in a non-random sequence over several decades. This was because the benefits of becoming a member increased, both as the size of the union increased, and as membership in the union became increasingly important for accessing foreign markets. Our key innovation in this paper is to incorporate the endogenous effects of accession into an estimate of the economic impact of the Zollverein customs union. We find these effects are important - our estimated effects are several times larger than the simpler estimates that do not take these effects into account. The paper discusses the implications of this for Germany's economic history as well as for other studies of trade liberalization.

Keywords: customs union, market integration, price convergence

JEL Classification: N73

Suggested Citation

Keller, Wolfgang and Shiue, Carol Hua, The Trade Impact of the Zollverein (March 2013). CEPR Discussion Paper No. DP9387, Available at SSRN: https://ssrn.com/abstract=2235485

Wolfgang Keller (Contact Author)

University of Colorado ( email )

Department of Economics
PO Box 256
Boulder, CO 80309
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Carol Hua Shiue

University of Colorado at Boulder - Department of Economics ( email )

Campus Box 256
Boulder, CO 80309
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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