Topography, borders, and trade across Europe

We create a novel data set on the European river network and for ruggedness of trade routes between countries integrate these new indicators into recently developed structural gravity models. Moreover, we propose approach how to differentiate contemporaneous historical costs. Applying two-stage estimations, assess impact topography by combining worldwide, European, domestic data. While border effect estimates remain largely robust, main part costs usually attributed non-contiguity can be accounted topography. Finally, counterfactual simulations suggest that positive effects rivers are less important than negative mountains.