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Geographic barriers to commodity price integration: evidence from US cities and Swedish towns, 1732-1860

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  • Mario J. Crucini
  • Gregor W. Smith

Abstract

We study the role of distance and time in statistically explaining price dispersion for 14 commodities from 1732 to 1860. The prices are reported for US cities and Swedish market towns, so we can compare international and intranational dispersion. Distance and commodity-specific fixed effects explain a large share - roughly 60% - of the variability in a panel of more than 230,000 relative prices over these 128 years. There was a negative \"ocean effect\": international dispersion was less than would be predicted using distance, narrowing the effective ocean by more than 3000 km. Price dispersion declined over time beginning in the 18th century. This process of convergence was broad-based, across commodities and locations (both national and international). But there was a major interruption in convergence in the late 18th and early 19th centuries, at apoleonic Wars, stopping the process by two or three decades on average.

Suggested Citation

  • Mario J. Crucini & Gregor W. Smith, 2014. "Geographic barriers to commodity price integration: evidence from US cities and Swedish towns, 1732-1860," Globalization Institute Working Papers 215, Federal Reserve Bank of Dallas.
    • Handle: RePEc:fip:feddgw:215
    DOI: 10.24149/gwp215
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    Cited by:

    1. Mario J. Crucini & Gregor W. Smith, 2016. "Distance And Time Effects In Swedish Commodity Prices, 1732-1914," Working Paper 1357, Economics Department, Queen's University.
    2. Boffa,Mauro & Varela,Gonzalo J., 2019. "Integration and Price Transmission in Key Food Commodity Markets in India," Policy Research Working Paper Series 8755, The World Bank.

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    JEL classification:

    • 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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