May 22, 2013

Culture and trade (Germany)

In this paper, we examine the effect of dialect similarity on intra-German trade patterns. Applying a standard gravity model of trade, we find that linguistic ties strongly promote trade. Since differences in local dialects do not hinder direct communication, and since all parts of Germany share a common institutional framework, we interpret our findings as evidence for the effect of culture on trade.
HT: Roberto Zanola.

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