East Asian Economic Review

Korea Institute for International Economic Policy (대외경제정책연구원)
권호 표지
DOI QR코드

DOI QR Code

Early Globalization and the Law of One Price: Evidence from Sweden, 1732-1914

  • Crucini, Mario J. (Vanderbilt University) ;
  • Smith, Gregor W. (Queen's University)
  • Received : 2016.10.06
  • Accepted : 2016.11.16
  • Published : 2016.12.31
Download PDF
⟨ Previous Next ⟩

Abstract

We review research using departures from the law of one price to measure the advent of globalization in Europe and Asia. In an application, we then study the role of distance and time in statistically explaining price dispersion across 32 Swedish towns for 19 commodities from 1732 to 1914. The resulting large number of relative prices (502,689) allows precise estimation of distance and time effects, and their interaction. We find an effect of distance that declines significantly over time, beginning in the 18th century, well before the arrival of canals, the telegraph, or the railway.

Keywords

References

  1. Atkin, D. and D. Donaldson. 2015. Who's Getting Globalized? The Size and Implications of Intra-national Trade Costs. NBER Working Paper, no. 21439.
  2. Cameron, A. C. and D. L. Miller. 2015. "A Practitioner's Guide to Cluster-robust Inference," Journal of Human Resources, vol. 50, no. 2, pp. 317-372. https://doi.org/10.3368/jhr.50.2.317
  3. Cameron, A. C., Gelbach, J. B. and D. L. Miller. 2011. "Robust Inference with Multiway Clustering," Journal of Business and Economic Statistics, vol. 29, no. 2, pp. 238-249. https://doi.org/10.1198/jbes.2010.07136
  4. Cheung, S. W. 2008. The Price of Rice: Market Integration in Eighteenth-Century China. Bellingham: Center for East Asian Studies, Western Washington University Press.
  5. Chilosi, D. and G. Federico. 2015. "Early Globalizations: The Integration of Asia in the World Economy, 1800-1938," Explorations in Economic History, vol. 57, pp. 1-18. https://doi.org/10.1016/j.eeh.2015.04.001
  6. Cole, A. H. and R. Crandall. 1964. "The International Scientific Committee on Price History," Journal of Economic History, vol. 24, no. 3, pp. 381-388. https://doi.org/10.1017/S0022050700060903
  7. Crucini, M. J. and G. W. Smith. 2014. Geographic Barriers to Commodity Price Integration: Evidence from US Cities and Swedish Towns, 1732-1860. NBER Working Paper, no. 20247.
  8. Dobado-Gonzalez, R. and G. A. Marrero. 2005. "Corn Market Integration in Porfirian Mexico," Journal of Economic History, vol. 65, no. 1, pp. 103-128. https://doi.org/10.1017/S0022050705050047
  9. Dobado-Gonzalez, R., Garcia-Hiernaux, A. and D. E. Guerrero. 2012. "The Integration of Grain Markets in the Eighteenth Century: Early Rise of Globalization in the West," Journal of Economic History, vol. 72, no. 3, pp. 671-707. https://doi.org/10.1017/S0022050712000332
  10. Dobado-Gonzalez, R., Garcia-Hiernaux, A. and D. E. Guerrero. 2015. "West versus Far East: Early Globalization and the Great Divergence," Cliometrica, vol. 9, no. 2, pp. 235-264. https://doi.org/10.1007/s11698-014-0115-9
  11. Elsas, M. J. 1936, 1949. Umriss einer Geschichte der Preise und Lohne in Deutsch-land vom ausgehenden Mittelalter bis zum Beginn des neunzehnten Jahrhunderts. 2 vols. Leiden: A. W. Sijthoff.
  12. Friis, A. and K. Glamann. 1958. A History of Prices and Wages in Denmark, 1660-1800. vol. I. London: Longmans, Green and Co.
  13. Hamilton, E. J. 1947. War and Prices in Spain, 1651-1800. Cambridge: Harvard University Press.
  14. Hauser, H. 1936. Recherches et documents sur l'histoire des prix en France de 1500 a 1800. Paris: Les Presses Modernes.
  15. Jacks, D. S. 2005. "Intra and International Commodity Market Integration in the Atlantic Economy, 1800-1913," Explorations in Economic History, vol. 42, no. 3, pp. 381-413. https://doi.org/10.1016/j.eeh.2004.10.001
  16. Jacks, D. S., O'Rourke, K. H. and J. G. Williamson. 2011. "Commodity Price Volatility and World Market Integration Since 1700," Review of Economics and Statistics, vol. 93, no. 3, pp. 800-813. https://doi.org/10.1162/REST_a_00091
  17. Jorberg, L. 1972. A History of Prices in Sweden 1732-1914. Vol. I: Sources, Methods, Tables. Lund: CWK Gleerup.
  18. Kaukiainen, Y. 2001. "Shrinking the World: Improvements in the Speed of Information Transmission, c. 1820-1870," European Review of Economic History, vol. 5, no. 1, pp 1-28. https://doi.org/10.1017/S1361491601000016
  19. Kent, N. 2008. A Concise History of Sweden. Cambridge: Cambridge University Press.
  20. Klovland, J. T. 2005. "Commodity Market Integration 1850-1913: Evidence from Britain and Germany," European Review of Economic History, vol. 9, no. 2, pp. 163-197. https://doi.org/10.1017/S1361491605001449
  21. Lagerlof, N.-P. 2015. "Malthus in Sweden," Scandinavian Journal of Economics, vol. 117, no. 4, pp. 1091-1133. https://doi.org/10.1111/sjoe.12119
  22. O'Rourke, K. and J. G. Williamson. 1994. "Late Nineteenth-Century Anglo-American factor-Price Convergence: Were Heckscher and Ohlin Right?," Journal of Economic History, vol. 54, no. 4, pp. 892-916. https://doi.org/10.1017/S0022050700015539
  23. O'Rourke, K. and J. G. Williamson. 2002. "When Did Globalisation Begin?," European Review of Economic History, vol. 6, no. 1, pp. 23-50. https://doi.org/10.1017/S1361491602000023
  24. Pippenger, J. and L. Phillips. 2008. "Some Pitfalls in Testing the Law of One Price in Commodity Markets," Journal of International Money and Finance, vol. 27, no. 6, pp. 915-925. https://doi.org/10.1016/j.jimonfin.2008.05.003
  25. Posthumus, N. W. 1946. Inquiry into the History of Prices in Holland. Vol. I: Wholesale Prices at the Exchange of Amsterdam, 1585-1914. Rates of Exchange at Amsterdam, 1609-1914. Leiden: E. J. Brill.
  26. Pribram, A. F. 1938. Materialen zur Geschichte der Preise und Lohne in Osterreich. Vienna: C. Veberreuters Verlag.
  27. Rogoff, K., Froot, K. A. and M. Kim. 2001. The law of one price over 700 years. IMF Working Paper, 01/174.
  28. Shiue, C. H. 2002. "Transport Costs and the Geography of Arbitrage in Eighteenth-Century China," American Economic Review, vol. 92, no. 5, pp. 1406-1419. https://doi.org/10.1257/000282802762024566
  29. Shiue, C. H. 2005. "From Political Fragmentation towards a Custom Union: Border Effects of the German Zollverein, 1815 to 1855," European Review of Economic History, vol.9, no. 2, pp. 129-162. https://doi.org/10.1017/S1361491605001437
  30. Shiue, C. H. and W. Keller. 2007. "Markets in China on the Eve of the Industrial Revolution," American Economic Review, vol. 97, no. 4, pp. 1189-1216. https://doi.org/10.1257/aer.97.4.1189
  31. Slaughter, M. J. 1995. The Antebellum Transportation Revolution and Factor Price Convergence. NBER Working Paper, no. 5303.
  32. Trenkler, C. and N. Wolf. 2005. "Economic Integration across Borders: The Polish Interwar Economy," European Review of Economic History, vol. 9, no. 2, pp. 199-231. https://doi.org/10.1017/S1361491605001450
  33. Weibull, J. 1993. Swedish History in Outline. The Swedish Institute.