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Time differences, communication and trade: longitude matters II

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  • Edward Anderson

Abstract

This paper uses a gravity model to examine the effect of time differences between countries on international trade. It builds on previous studies of this issue by including a wider set of control variables, focusing on a longer time period, and testing a series of related hypotheses. The results show that time differences have a negative impact on merchandise trade, with each hour of time difference reducing trade by between 2 and 7 %, although the size of the effect has fallen in recent decades. There is also evidence that the negative impact of time differences is smaller where mechanisms of formal contract enforcement are stronger, and where co-ethnic networks are more prevalent, and that time differences reduce bilateral telephone traffic as well as trade. These results are consistent with the hypothesis that time differences reduce trade by raising the non-pecuniary costs of travel and communication. Copyright Kiel Institute 2014

Suggested Citation

  • Edward Anderson, 2014. "Time differences, communication and trade: longitude matters II," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(2), pages 337-369, May.
    • Handle: RePEc:spr:weltar:v:150:y:2014:i:2:p:337-369
    DOI: 10.1007/s10290-013-0179-9
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    Citations

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    Cited by:

    1. Rishav Bista & Rebecca Tomasik, 2017. "Time Zone Effect and the Margins of Exports," The World Economy, Wiley Blackwell, vol. 40(6), pages 1053-1067, June.
    2. Mandal, Biswajit, 2015. "Distance, production, virtual trade and growth: A note," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 9, pages 1-12.
    3. Mandal, Biswajit, 2024. "Digital Mobility of Financial Capital Across Different Time Zones, Factor Prices and Sectoral Composition," GLO Discussion Paper Series 1371, Global Labor Organization (GLO).
    4. Biswajit Mandal & Sujata Ghosh, 2020. "Communication Cost, Skilled-Unskilled Wage, and Informality," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 18(4), pages 927-939, December.
    5. Messner, Wolfgang, 2024. "Distance is the spice, but not the whole enchilada: Country-pair psychic distance stimuli and country fixed effects in a deep learning implementation of the trade flow model," International Business Review, Elsevier, vol. 33(1).
    6. Rishav Bista & Erik Figueiredo & Brandon Sheridan, 2019. "Heterogeneous time zone effects and exports," Economics Bulletin, AccessEcon, vol. 39(2), pages 1039-1046.
    7. Joachim Wagner, 2019. "Time zones and German exports: first evidence from firm-product level data," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(1), pages 181-198, February.
    8. Biswajit Mandal & Alaka Shree Prasad, 2020. "A simple model of time zone differences, virtual trade and informality," Indian Growth and Development Review, Emerald Group Publishing Limited, vol. 14(1), pages 81-96, June.
    9. Munisamy Gopinath & Feras A. Batarseh & Jayson Beckman, 2020. "Machine Learning in Gravity Models: An Application to Agricultural Trade," NBER Working Papers 27151, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Trade; Gravity model; Time zones; Communication; F10; F15; F20;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F15 - International Economics - - Trade - - - Economic Integration
    • F20 - International Economics - - International Factor Movements and International Business - - - General

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