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King's law and food storage in Saxony, c. 1790-1830

Author

Listed:
  • Martin Uebele
  • Tim Grünebaum
  • Michael Kopsidis

Abstract

This article presents new data on grain production, storage and prices in Saxony between 1789 and 1830. We contribute to three interrelated debates. First, we discuss whether monthly price increases were sufficient to cover storage costs, and how they relate to storage levels at the end of the harvest year. Second, we estimate price elasticity of demand, a test of “King’s Law”. Finally, we investigate the main determinants of grain storage in a framework that takes reverse causality into account. We find that price fluctuations within the harvest year were consistent with interest rates of about 5%. On the second subject, our findings are mainly consistent with “King’s Law”, according to which price elasticity of demand is relatively low with -0.4, and reject higher estimates of the recent literature. Finally, we show that storage quantity reacted in the predicted way to price shocks but way about as much driven by harvest variations. Between harvests, storage indeed smoothed food supply over time as theory predicts, however to a limited extent.

Suggested Citation

  • Martin Uebele & Tim Grünebaum & Michael Kopsidis, 2013. "King's law and food storage in Saxony, c. 1790-1830," CQE Working Papers 2613, Center for Quantitative Economics (CQE), University of Muenster.
  • Handle: RePEc:cqe:wpaper:2613
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    File URL: https://www.wiwi.uni-muenster.de/cqe/sites/cqe/files/CQE_Paper/CQE_WP_26_2013.pdf
    File Function: Version of July, 2013
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    References listed on IDEAS

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    1. Carol H. Shiue, 2002. "Transport Costs and the Geography of Arbitrage in Eighteenth-Century China," American Economic Review, American Economic Association, vol. 92(5), pages 1406-1419, December.
    2. Michael Kopsidis & Ulrich Pfister, 2013. "Agricultural development during early industrialization in a low-wage economy: Saxony, c. 1790-1830," Working Papers 0039, European Historical Economics Society (EHES).
    3. Stone,Richard, 2010. "Some British Empiricists in the Social Sciences, 1650–1900," Cambridge Books, Cambridge University Press, number 9780521128452, March.
    4. A'Hearn, Brian & Woitek, Ulrich, 2001. "More international evidence on the historical properties of business cycles," Journal of Monetary Economics, Elsevier, vol. 47(2), pages 321-346, April.
    5. Grünebaum, Tim & Uebele, Martin, 2013. "Food security, harvest shocks, and the potato as secondary crop in Saxony, 1792-1811," GGDC Research Memorandum GD-139, Groningen Growth and Development Centre, University of Groningen.
    6. Robert W. Fogel, 1989. "Second Thoughts on the European Escape from Hunger: Famines, Price Elasticities, Entitlements, Chronic Malnutrition, and Mortality Rates," NBER Historical Working Papers 0001, National Bureau of Economic Research, Inc.
    7. Ejrnaes, Mette & Persson, Karl Gunnar, 1999. "Grain Storage in Early Modern Europe," The Journal of Economic History, Cambridge University Press, vol. 59(03), pages 762-772, September.
    8. Shiue, Carol H., 2004. "Local Granaries and Central Government Disaster Relief: Moral Hazard and Intergovernmental Finance in Eighteenth- and Nineteenth-Century China," The Journal of Economic History, Cambridge University Press, vol. 64(1), pages 100-124, March.
    9. Bauernfeind, Walter & Reutter, Michael & Woitek, Ulrich, 2001. "Rational investment behaviour and seasonality in early modern grain prices," European Review of Economic History, Cambridge University Press, vol. 5(2), pages 281-298, August.
    10. Campbell, Bruce M.S. & Grã Da, Cormac Ó, 2011. "Harvest Shortfalls, Grain Prices, and Famines in Preindustrial England," The Journal of Economic History, Cambridge University Press, vol. 71(4), pages 859-886, December.
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    Cited by:

    1. Ulrich Pfister & Michael Kopsidis, 2015. "Institutions versus demand: determinants of agricultural development in Saxony, 1660–1850," European Review of Economic History, Oxford University Press, vol. 19(3), pages 275-293.

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    • A - General Economics and Teaching

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