61st Annual Meeting
Finance and Economic Modernization
September 14-16, 2001
Philadelphia, Pennsylvania
ABSTRACTS
SESSION 5A. THE BIG PICTURE
II
Saturday, September 15
3 - 4:40
|
Jeffrey Williamson (Harvard) and Kevin O'Rourke (Trinity) |
| Abstract: This paper documents the size and timing of the world inter-continental trade boom following the great voyages in the 1490s of Columbus, da Gama and their followers. Indeed, a trade boom followed over the subsequent three centuries. But what was its cause? The conventional wisdom in the world history literature offers globalization as the answer: it alleges that declining trade barriers, falling transport costs and overseas “discovery” explains the boom. In contrast, this paper reports the evidence that confirms unambiguously that there was no commodity price convergence between continents, something that would have emerged had globalization been a force that mattered. Thus, the trade boom must have been caused by some combination of European import demand and foreign export supply from Asia and the Americas. Furthermore, the behavior of the relative price of foreign importables in European cities should tell us which mattered most and when. We offer detailed evidence on the relative prices of such importables in European markets over the five centuries 1350-1850. We then offer a model which is used to decompose the sources of the trade boom 1500-1800. |
|
Alan Taylor (Davis), Antoni Esteveordal (IDB), and Brian Frantz (USAID) |
| Abstract: An expanding and controversial contemporary literature examines the role of common currencies as a cause of trade expansion. Using the same augmented-gravity-model approach, we examine the role of the gold standard in the global trade boom from 1870 to 1914 and the global trade collapse from 1914 to 1939. We compare the quantitative effects of this kind of "monetary union" with the effects of tariffs and transport costs. The results do not always square with the conventional wisdom of the time as seen in political debates. In the nineteenth century national policy debates focused on tariff instruments and, for the most part, took the gold standard for granted as the default monetary arrangement. Yet the results show that the gold standard was an order of magnitude more important than tariff policy as a trade creating force in that era. In the 1920s, the reverse obtained -- policy debates revolved around the rise and fall of the reconstructed gold standard, but the results suggest that the slowdown in trade growth had more to do with the rise of protectionism. In the 1930s, the situation changed again -- being off gold was now almost taken for granted, and debates swung back more to the tariff wars, whilst the results show that it was the final and complete collapse of the gold standard that drove trade volumes to implode so dramatically. We speculate as to what these curious contradictions imply for the validity of the gravity model approach, the logic of public policy debates at the time, the traditional historical approach that treats trade and finance outcomes as disjoint, and the role of commercial and monetary policy co-operation in the postwar trade recovery. |
|
Greg Clark (Davis) |
| Abstract: When was the decisive break from the pre-industrial world of slow technological advance and stagnant living standards to the modern world of constant technological progress and steadily improving living standards? Most historians have assigned the dawn of the modern world to England in 1770. There has followed a long debate about the cause of the Industrial Revolution where, for example, the Financial Revolution of the 1720s has been promoted as a key cause. Here I argue that all attempts to conclusively link the Industrial Revolution to some precipitating factor have been inconclusive for a simple reason. There was no significant break in 1770 from the earlier world. That break only occurred later in the nineteenth century. Instead the Industrial Revolution was the last of a series of localized growth spurts stretching back to the Middle Ages, as in the Netherlands from 1500 to 1650, and northern Italy in the fourteenth century. Accidents of demand, demography, trade, and geography made this spurt seem different than what had come before - but it was really more of the same. Indeed the decline in English interest rates that preceded the Industrial Revolution can be also be explained by population growth. |
Return to:
List
of Sessions
Program
EHA
Annual Meetings Office Home Page
Page by Elizabeth
Cascio
Prepared 5/6/01
Updated 6/5/01