“How do Trade Frictions Differentially Impact Trade Outcomes? Lessons from the US Transportation Revolution”
Job Market Paper
This paper explores the degree to which different trade frictions have distinct impacts on cross-city price behaviors. I demonstrate the usefulness of decomposing prices into trend, cycle, and seasonal frequencies by uncovering unique convergent behaviors at each frequency during the US transportation revolution. I then construct an arbitrage model to determine how these behaviors were driven by freight costs, information lags, and storage costs. I find that freight costs accounted for 94% of the decline in price trend differentials, storage costs accounted for 78% of the decline in the seasonal magnitude of prices, and information lags were important for determining cyclical price correlations. These results lead to three conclusions. First, there is an interesting mapping between trade frictions and frequencies of cross-city price behavior. Second, information lags and storage costs – two frictions that are often overlooked because they cannot be subsumed into iceberg transportation costs – are important determinants of cross-city price behavior. Third, the US experienced a massive convergence in commodity prices during the transportation revolution.
“What Hath God Bought: The Telegraph’s Impact on Trade Outcomes”
This paper examines how information frictions distort trade outcomes. I use the roll-out of the telegraph across the US as a historical experiment to test three theoretical predictions that have been previously established in the literature. Specifically, I test if a decrease in information frictions decreases price differentials between locations, decreases the volatility of these price differentials, and increases export volatility. I find that the telegraph reduced price differentials by 10%, reduced the volatility of price differentials by 70%, and increased export variation by 74%.
“Nominal Tariff Distortions: Deflation’s Impact on Nominal Tariffs during the Great Depression”
Work in Progress
This paper examines the role that deflation played in distorting nominal tariffs and import behavior in the US during the Great Depression. I use a newly digitized dataset of highly disaggregated US tariffs to construct a panel of over 1,000 good-specific tariffs, unit values, and quantities. I find that the deflation of the Great Depression substantially distorted nominal tariffs (e.g. $/lb) from their legislated ad-valorem equivalent rates. This distortion made the Smoot-Hawley tariff more onerous than its legislators intended as the import price index fell by nearly 60% during the Great Depression. I plan to calculate the share of quantity, price, and relative price distortions that are attributable to deflation’s impact on tariffs.
“The Grand Experiment: introducing a common currency to the United States”
Work in Progress
This paper examines how the introduction of the US dollar as a common currency impacted trade frictions and monetary stability within the post-Revolutionary United States. A newly digitized dataset of historical micro-prices is used to measure the impacts of decreased transaction costs and the increased centralization of monetary control associated with the issuance of a common currency.