NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
loading...

Does Trade Cause Capital to Flow? Evidence from Historical Rainfalls

Sebnem Kalemli-Ozcan, Alex Nikolsko-Rzhevskyy

NBER Working Paper No. 16034
Issued in May 2010, Revised in January 2019
NBER Program(s):Program on the Development of the American Economy, International Finance and Macroeconomics Program, International Trade and Investment Program

We use a historical quasi-experiment to estimate the causal effect of trade on capital flows. We argue that fluctuations in regional rainfall within the Ottoman Empire capture the exogenous variation in exports from the Empire to Germany, France, and the U.K., during 1859{1913. The provisionistic policy of the Ottoman Empire–that is, only a surplus production was allowed to be exported–combined with the fact that different products grow in different regions that are subject to regional variation in rainfall and Germany, France and the U.K. import different products, constitute the basis of our identification. When a given region of the Empire gets more rainfall than others, the resulting surplus production is exported to countries with higher ex-ante export shares for those products and this leads to higher investment by those countries in the Ottoman Empire. Our findings support theories predicting complementarity between trade and capital flows.

download in pdf format
   (1045 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w16034

Users who downloaded this paper also downloaded* these:
Pamuk and Williamson w14763 Ottoman De-Industrialization 1800-1913: Assessing the Shock, Its Impact and the Response
Bordo, Eichengreen, and Kim w6738 Was There Really an Earlier Period of International Financial Integration Comparable to Today?
Antràs and Caballero w13241 Trade and Capital Flows: A Financial Frictions Perspective
de Blas and Russ w16029 All Banks Great, Small, and Global: Loan pricing and foreign competition
Alessandria, Kaboski, and Midrigan w16059 The Great Trade Collapse of 2008-09: An Inventory Adjustment?
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us