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

Author

Listed:
  • Crucini , Mario J.

    (Vanderbilt University)

  • Smith, Gregor W.

    (Queen’s University)

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.

Suggested Citation

  • Crucini , Mario J. & Smith, Gregor W., 2016. "Early Globalization and the Law of One Price: Evidence from Sweden, 1732-1914," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 20(4), pages 427-445, December.
    • Handle: RePEc:ris:eaerev:0001
    DOI: 10.11644/KIEP.EAER.2016.20.4.316
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    Citations

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    Cited by:

    1. Luca Macedoni, 2021. "Has the Euro Shrunk the Band? Relative Purchasing Power Parity Convergence in a Currency Union," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(2), pages 593-620, April.
    2. Hałka, Aleksandra & Leszczyńska-Paczesna, Agnieszka, 2019. "Price convergence in the European Union – What has changed?," Economic Modelling, Elsevier, vol. 79(C), pages 226-241.

    More about this item

    Keywords

    Distance Effect; Law of One Price; Globalization; Historical Price Convergence; Market Integration in Sweden;
    All these keywords.

    JEL classification:

    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative

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