Introduction to the Issue

Abstract

Pinilla analyze the determinants of world wine exports during the century preceding WWII. Employing an extended gravity model, the authors find that much of the trade volume is determined by external shocks (e.g., Russian Revolution, WWI, Prohibition) and by (lagged) grape yields. As expected, they find a positive effect of exporting countries' yields and a negative effect of importing countries' yields. The results also suggest the existence of a significant home bias. In addition, "as was the case with trade as a whole, the fall in transaction costs favored exports, at least those of lower-priced and lower-quality wine. However, the liberalization of trade had a lesser impact on wine than on other products" (p. 263).