“How do Trade Frictions Differentially Impact Trade Outcomes? Lessons from the US Transportation Revolution”
Job Market Paper
This paper explores how trade frictions impact price differentials of identical goods across locations. I decompose trade wedges into freight costs, information lags, and storage costs and map them into price behaviors at the trend, cycle, and seasonal frequencies, respectively. I find that throughout the US transportation revolution, price trend differentials declined, cyclical correlations increased, and seasonal magnitudes declined across a broad panel of wholesale commodities. I use an arbitrage model to structurally estimate the degree to which these behaviors are attributable to freight costs, information lags, and storage costs. I calibrate the model to a subset of the commodity price panel, the Cincinnati-New-Orleans flour market, and find that freight costs accounted for 94% of the decline in price differentials, storage costs accounted for 78% of the decline in seasonal price fluctuations, and the interaction between better information and lower freight costs increased cyclical price correlation. The results suggest that trade frictions that are typically under-analyzed by the trade literature, such as information lags and storage costs, may play a larger role in cross-city price dispersion than previously understood.
“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.