Claudia Steinwender (MIT Sloan) will give an ad hoc research seminar on how information and communication technology (ICT) transforms how firms operate.

Title: Spinning the Web: Codifiability, Information Frictions and Trade (joint with Réka Juhász)

Abstract: This paper uncovers a novel mechanism through which information frictions matter for trade in differentiated goods; the product specification mechanism. We estimate the effect of a reduction in communication time on imports of three product categories in 19th century cotton textile trade; yarn, plain cloth, and finished cloth. In order to identify causal effects, we use exogenous variation in the ruggedness of the submarine seafloor to predict in which year countries get connected to the global telegraph network. The telegraph dramatically reduced the time it took to exchange information expressed in words, but did not affect the exchange of physical objects such as product samples. Using evidence from cotton traders’ communication, we show that the examined three products differed in their codifiability, that is, in the extent to which merchants specified product attributes in words. Empirically, we find that communication time reductions had the largest effect on imports of the most codifiable product; yarn, and the smallest effect on the non-codifiable product, finished cotton cloth. Our results suggest that the effect of ICT on trade and fragmentation of production depends on the technology-specific codifiability of product specifications.

Link to Paper: https://drive.google.com/file/d/1jNdxwhEXR8bd0jwNP-Vg1l-p7nk7lQ8-/view

Claudia Steinwender is an applied economist studying the behavior of firms in the context of globalization and technological change. She specializes in international trade and innovation. In terms of methods, her work often makes use of historical natural experiments to understand what is similar, but also what is different between then and today.