Claudia Steinwender, 11 April 2018

Flows of information, though critical for the efficient functioning of markets, are often limited in reality, potentially distorting trade flows and price patterns. This column uses the transatlantic telegraph connection of 1866 to explore how changes in information frictions affected cotton markets in the US and UK. The results show that information frictions decrease average trade flows and the volatility of trade, leading to substantial welfare losses.

Nicholas Crafts, Nikolaus Wolf, 22 October 2013

Europeans worry about competition from low-wage economies. This column looks at the basis of the success of the 19th-century Lancashire cotton industry faced with a similar situation. The message is that the productivity benefits of a successful agglomeration can underpin both high wages and competitive advantage in world trade. Policymakers can support such agglomerations by easing land-use restrictions, promoting investments in transport, and providing local public goods.

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