Market Integration

Real Effects of Information Frictions: When the States and the Kingdom Became United

“…This makes sense, and is in line with the model that I will present later: merchants react more strongly to more recent information, probably because they understand that it is a better predictor of future market conditions. 13 Liverpool prices also respond to information about prices in New York: in Table 5 we can see that the latest news about the New York price influences the Liverpool price, rather than a counterfactual telegraphed price or a counterfactual steam-shipped price. However, the elasticity of Liverpool prices to information about New York is much smaller than the elasticity of New York prices to information about Liverpool.…”

“…Notice however that importers in England would always have to send their import orders by mail to New York. By 13 This parsimonious specification is the most efficient regression to demonstrate the changing relevance of Liverpool's prices on the New York market, as it explicitly uses the timing of information arrivals. As an alternative specification I provide in the online Appendix a vector autoregression using both prices separately, before and after the telegraph.…”

Was Germany ever United? Evidence from Intra- and International Trade 1885-1933

“…Hence, in an integrated market the equilibrium level of prices must be equal (the famous law of one price) and prices must return quickly to their equilibrium level after any shock. A market should not be called integrated if equilibrium prices differ and/or if deviations from equilibrium last for long (see Federico 2008). However, price data with sufficient geographical coverage and at a sufficiently high frequency to estimate halflives of deviations is rarely available, in an historical context typically only for grain.…”

Economic History and Contemporary Challenges to Globalization

“…O'Rourke and Williamson argued, based on the evidence available to them at the time, that intercontinental price gaps only started to fall systematically in the nineteenth century. The claim gave rise to a large literature (for a recent survey see Federico (2018)). We now know that while the volume of trade and the speed of price convergence were indeed much more impressive in the nineteenth century than before, evidence of price convergence can also be found during the early modern period (e.g., Pim de Zwart (2016) on the trade between the Netherlands and Asia).…”