Feeding the British: Convergence and market efficiency in the 19th century grain trade

Mette Ejrnæs; Karl Gunnar Persson; Søren Rich

doi:10.1111/j.1468-0289.2007.00386.x

Feeding the British: Convergence and market efficiency in the 19th century grain trade

Mette Ejrnæs, Karl Gunnar Persson, Søren Rich

Department of Economics

21 Citations (Scopus)

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 bilateral focus in market integration studies has been extended to a multivariate approach, which generates new insights into 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, the United States, dominated international price movements at the end of the nineteenth century.

Original language	English
Journal	Economic History Review
Volume	61
Issue number	1
Pages (from-to)	140-171
Number of pages	32
ISSN	0013-0117
DOIs	https://doi.org/10.1111/j.1468-0289.2007.00386.x
Publication status	Published - 2008

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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 bilateral focus in market integration studies has been extended to a multivariate approach, which generates new insights into 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, the United States, dominated international price movements at the end of the nineteenth century.",

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Feeding the British: Convergence and market efficiency in the 19th century grain trade

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