Xu (2022) estimates the causal impact of bank failures on the level of
trades with a staggered difference-in-differences design and an IV strategy
with Bartik instrument, using the 1866 banking crisis as a quasi-natural experiment. Findings, based on historical data on the trades and loans between
London banks and banks around the world, show that countries exposed to
bank failures in London immediately exported significantly less and did not
recover their lost growth relative to unexposed places. Moreover, the effect
lasted for decades. First, we reproduce the paper’s main findings by running
the original code and uncover three issues, one of which that slightly affects
the main estimates reported in the study. Second, we test the robustness
of the results to (1) removing weights from the regressions, (2) using a spatial HAC correction for the standard errors, and (3) implementing a method
for possibly heterogeneous treatment effects with a staggered difference-indifferences design. Overall, we conclude that the main findings are valid and
robust.