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

Mette Ejrnæs, Karl Gunnar Persson and Søren Rich
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Karl Gunnar Persson: Institute of Economics, University of Copenhagen
Søren Rich: Institute of Economics, University of Copenhagen

No 04-28, Discussion Papers from University of Copenhagen. Department of Economics

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.

JEL-codes: N7 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2004-11
New Economics Papers: this item is included in nep-his
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