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Feeding the British: Convergence and Market Efficiency in 19th Century Grain Trade

Author

Listed:
  • Mette Ejrnæs

    (Institute of Economics, University of Copenhagen)

  • Karl Gunnar Persson

    (Institute of Economics, University of Copenhagen)

  • Søren Rich

    (Institute of Economics, University of Copenhagen)

Abstract

This paper traces the evolution of the international market for wheat from an emerging market structure after the repeal of the Corn Laws to a mature market characterized by efficient arbitrage after the introduction of the transatlantic telegraph and the growth of trade. Efficiency is documented using traditional price gap accounting as well as error correction modelling. Markets which traded directly with each other as well as markets which did not trade with each other were integrated. The traditional bi-lateral focus in market integration studies has been extended to a multi-variate approach which generates new insights as to the pattern of diffusion of price shocks in the international economy. Shocks in the major importing nation, Britain, dominated in the emerging market phase while shocks in the major exporting economy, United States, dominated international prices movements at the end of the 19th century.

Suggested Citation

  • Mette Ejrnæs & Karl Gunnar Persson & Søren Rich, 2004. "Feeding the British: Convergence and Market Efficiency in 19th Century Grain Trade," Discussion Papers 04-28, University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:kuiedp:0428
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    File URL: http://www.econ.ku.dk/english/research/publications/wp/2004/0428.pdf/
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    References listed on IDEAS

    as
    1. Liam Brunt & Edmund Cannon, 2004. "The Irish grain trade from the Famine to the First World War," Economic History Review, Economic History Society, vol. 57(1), pages 33-79, February.
    2. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    3. Kevin H. O'Rourke & Jeffrey G. Williamson, 2001. "Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650592, January.
    4. O'Rourke, Kevin H., 1997. "The European Grain Invasion, 1870–1913," The Journal of Economic History, Cambridge University Press, vol. 57(04), pages 775-801, December.
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    Cited by:

    1. Domingo Gallego Martínez, 2005. "La formación de los precios del trigo en España (1820-1869): el mercado interior," Historia Agraria. Revista de Agricultura e Historia Rural, Sociedad Española de Historia Agraria, issue 36, pages 263-285, august.
    2. Studer, Roman, 2008. "India and the Great Divergence: Assessing the Efficiency of Grain Markets in Eighteenth- and Nineteenth-Century India," The Journal of Economic History, Cambridge University Press, vol. 68(02), pages 393-437, June.

    More about this item

    JEL classification:

    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services

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