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Testing theories of economic fluctuations and growth in early development. (The case of the Chesapeake tobacco economy)

Author

Listed:
  • Rafael Flors de Frutos

    (Instituto Complutense de Análisis Económico. Universidad Complutense Madrid.)

  • Alfredo M. Pereira

    (University of California, San Diego)

Abstract

This paper suggests a general econometric approach to the empirical testing of the staple theory. The methodology is based upon a multivariate stochastic time series analysis adjusted to accommodate the presence of co-integration. Consistent with the nature of the problem under consideration, the methodology does not require any a priori strucrural assumptions about the dynamic relations among relevant variables. The empirical part of the paper focuses on the dynamic relationships among tobacco prices in the colonial Chesapeake economy and tobacco demand and supply conditions. The empirical evidence gives strong support to the basic tenets of the staple theory: the central role of the exogenous British demand; the existence of fluctuations in the price of tobacco; and, the high responsiveness of tobacco production with respect to prices relative to tobacco demand.

Suggested Citation

  • Rafael Flors de Frutos & Alfredo M. Pereira, 1993. "Testing theories of economic fluctuations and growth in early development. (The case of the Chesapeake tobacco economy)," Documentos de Trabajo del ICAE 9308, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
    • Handle: RePEc:ucm:doicae:9308
    as

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    References listed on IDEAS

    as
    1. Klingaman, David, 1969. "The Significance of Grain in the Development of the Tobacco Colonies," The Journal of Economic History, Cambridge University Press, vol. 29(2), pages 268-278, June.
    2. Zellner, Arnold & Palm, Franz, 1974. "Time series analysis and simultaneous equation econometric models," Journal of Econometrics, Elsevier, vol. 2(1), pages 17-54, May.
    3. Kulikoff, Allan, 1979. "The Economic Growth of the Eighteenth-Century Chesapeake Colonies," The Journal of Economic History, Cambridge University Press, vol. 39(1), pages 275-288, March.
    4. Galenson, David W., 1982. "The Atlantic Slave Trade and the Barbados Market, 1673–1723," The Journal of Economic History, Cambridge University Press, vol. 42(3), pages 491-511, September.
    5. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    6. Gwilym M. Jenkins & Athar S. Alavi, 1981. "Some Aspects Of Modelling And Forecasting Multivariate Time Series," Journal of Time Series Analysis, Wiley Blackwell, vol. 2(1), pages 1-47, January.
    7. Pereira, Alfredo M., 1991. "Boom and bust hypothesis in the colonial Chesapeake economy : Empirical evidence for the period 1676-1713," Economics Letters, Elsevier, vol. 37(3), pages 235-242, November.
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