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On the Economic Consequences of the Peace: Trade and Borders After Versailles

Published online by Cambridge University Press:  14 November 2011

NIKOLAUS WOLF*
Affiliation:
Professor of Economics, Department of Economics, Humboldt University, Berlin, D-10178 Berlin, Germany. E-mail: nikolaus.wolf@wiwi.hu-berlin.de.
MAX-STEPHAN SCHULZE*
Affiliation:
Reader in Economic History, Department of Economic History, London School of Economics, Houghton Street, London WC2A 2AE, United Kingdom. E-mail: m.s.schulze@lse.ac.uk.
HANS-CHRISTIAN HEINEMEYER*
Affiliation:
Assistant Professor, Department of Economics, Humboldt University Berlin, D-10178 Berlin, Germany. E-mail: heinemeyer@wiwi.hu-berlin.de.

Abstract

The First World War radically altered the political landscape of Central Europe. The new borders after 1918 are typically viewed as detrimental to the region's economic integration and development. We argue that this view lacks historical perspective. It fails to take into account that the new borders followed a pattern of economic fragmentation that had emerged during the late nineteenth century. We estimate the effects of the new borders on trade and find that the “treatment effects” of these borders were quite limited. There is strong evidence that border changes occurred systematically along barriers which existed already before 1914.

Type
ARTICLES
Copyright
Copyright © The Economic History Association 2011

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