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Assessing market (dis)integration in early modern China and Europe

Daniel Bernhofen (), Markus Eberhardt (), Jianan Li and Stephen L. Morgan

No 11288, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper challenges established claims of comparable degrees of market integration in Europe and China on the eve of industrialization. Our empirical strategy focuses on the dynamics of price convergence and accounts for general equilibrium effects arising from common shocks and network effects. Using monthly grain prices for 1740-1820, our analysis uncovers a secular process of market disintegration in 221 prefectures of Qing China. Comparing our results with those for grain price panels from Western Europe we conclude that in terms of market integration the Great Divergence was well under way decades before the start of the 19th century.

Keywords: China; common factor model; cross-section dependence; Europe; market integration; price convergence; the Great Divergence (search for similar items in EconPapers)
JEL-codes: C23 F15 L11 O10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-his
Date: 2016-05
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Working Paper: Assessing Market (Dis)Integration in Early Modern China and Europe (2015) Downloads
Working Paper: Assessing Market (Dis)Integration in Early Modern China and Europe (2015) Downloads
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