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Atlantic Trade and the Decline of Conflict in Europe

Author

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  • Ahsan, Reshad N
  • Panza, Laura
  • Song, Yong
Abstract
We use over 200 years of conflict and wheat price data to provide the first quantitative evidence that Atlantic trade contributed to Europe’s pacification between 1640 and 1850. While the decline in conflict in Europe during this period has been well documented, the role of Atlantic trade has not been previously explored due to a lack of historical trade data. We overcome this constraint by using wheat prices to calculate time-varying measures of price pass-through between Europe and the New World, which we use as a proxy for Atlantic trade. To identify the causal effects of Atlantic trade, we exploit exogenous changes in wind patterns and tropical cyclone activity over the Atlantic Ocean to instrument trade. Our results suggest that the growth in Atlantic trade between the mid-17th to the early 19th century lowered the likelihood of intra-European conflict onset by 19.22 percent from the baseline onset probability of 2.30 percent. We find empirical support for two channels driving our results: first, Atlantic trade led to an increase in real wages and a reduction in military sizes in Europe. Second, we show that the possibility of forgone Atlantic trade acted as a deterrent to conflict.

Suggested Citation

  • Ahsan, Reshad N & Panza, Laura & Song, Yong, 2022. "Atlantic Trade and the Decline of Conflict in Europe," CEPR Discussion Papers 14206, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:14206
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    References listed on IDEAS

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    Cited by:

    1. Nogues, Julio, 2020. "Europa, el comercio de esclavos y el subdesarrollo de África [European slave trade and Africa's underdevelopment]," MPRA Paper 102398, University Library of Munich, Germany.

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    More about this item

    Keywords

    Conflict; Atlantic trade; International relations;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • N43 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: Pre-1913
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • F10 - International Economics - - Trade - - - General

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