Institute of New Structural Economics
Institutional Affiliation: University of Colorado Boulder
NBER Working Papers and Publications
|March 2018||Capital Markets and Grain Prices: Assessing the Storage Approach|
with Wolfgang Keller, Carol H. Shiue: w24388
This paper evaluates a well-known approach from the economic history literature that uses grain prices to shed light on interest rates. Although this method has been applied in influential work starting with McCloskey and Nash (1984) and has potentially wide applicability in situations where interest rates are not available, this paper provides the first analysis of how well the storage cost approach captures actual capital market performance on a number of different dimensions. Using matched data on bank interest rates and grain prices for early 19th century U.S. regions, we find that the storage cost approach is useful for quantifying the performance of capital markets. The storage cost approach captures well regional differences in market performance, also in comparison to interest rate...
|July 2015||Capital Markets in China and Britain, 18th and 19th Century: Evidence from Grain Prices|
with Wolfgang Keller, Carol H. Shiue: w21349
Based on the most comprehensive grain prices available, we employ a storage model to estimate consistent interest rates and compare capital market development in Britain and China. Interest rates for Britain were lower than China’s on average by about three percentage points from 1770 to 1860. Regional capital market integration in the Yangzi Delta comes close to the British average at distances below 200 kilometers, but at larger distances interest rate correlations in Britain are twice those of the Delta, and three or more times as high as elsewhere in China. Overall, our results suggest capital market divergence at an early date.