Not guilty? : agriculture in the 1920s and the Great Depression

Agricultural distress in the 1920s is routinely quoted among the causes of the Great Depression. This paper challenges the conventional wisdom. World agriculture was not plagued by overproduction and falling terms of trade. The indebtedness of American farmers, a legacy of the boom years 1919-1921, did jeopardize the rural banks, but the relation between their crises, the banking panic of 1930 and the Great Depression is tenuous at bes

A Tale of Two Oceans: Market Integration Over the High Seas, 1800-1940.

Long-range market integration is an essential component of globalization but it is still comparatively under-researched. The conventional wisdom relies heavily on the case of Atlantic trade in the period after 1870. This paper covers also the Indian Ocean and extends the period under consideration, from Waterloo to World War Two. Integration started in first half of the 19th century, and timing and extent of convergence differed substantially among products. The second part of the paper analyses the causes of the process with a panel regression and puts forwards a tentative estimate of its welfare effects. The key message of the paper is that simple generalizations about the first globalization are not good substitutes for empirical research.

Not guilty? Agriculture in the 1920s and the Great Depression

Agricultural distress in the 1920s is routinely quoted among the causes of the Great Depression. This paper challenges the conventional wisdom. World agriculture was not plagued by overproduction and falling terms of trade. The indebtedness of American farmers, a legacy of the boom years 1919-1921, did jeopardize the rural banks, but the relation between their crises, the banking panic of 1930 and the Great Depression is tenuous at best.

Did trade policy foster Italian industrialization evidences from the effective production rates 1870-1930

Trade policy, and its effects oftariffs on structural change and industrialization, is arguably the 1110st contentious topic in Italian economic history. However, so far the discussion has relied almost exclusively on few scattered data and anecdotal evidence. This article builds on a comprehensive data-base of nominal and effective protection rates to test the main hypotheses put forward in the literature. We show that there is little evidence of a deliberate strategy to foster industrialization, or of any consisted strategy at aH. So we argue that the actual lay-out of Italian duties was the somewhat haphazard outcome of several causes, notably the need for revenue and the lobbying by sectional interests

Openness and optimal monetary policy

We show that the composition of imports has important implications for the optimal volatility of the exchange rate. Using input-output data for 25 countries we document substantial differences in the import and non-tradable content of final demand components, and in the role played by imported inputs in domestic production. We build a business cycle model of a small open economy to discuss how the problem of the optimizing policy-maker changes endogenously as the composition of imports and of final demand is altered. Contrary to models where steady state trade openness is entirely characterized by home bias, we find that trade openness is a very poor proxy of the welfare impact of alternative monetary policies. Finally, we quantify the loss from an exchange rate peg relative to the Ramsey policy conditional on the composition of imports, using parameter values that are estimated from OECD input-output tables data. We find that the main determinant of the losses is the share of non-traded goods in final demand. JEL Classification: E52, E31, F02, F41Exchange Rate Regimes, international trade, Non-tradable Goods, Optimal Policy

Comparative Advantages in Italy: A Long-Run Perspective

The history of Italy since her unification in 1861 reflects the two-way relationship between foreign trade and economic development. Its growth was accompanied by a dramatic increase in the country’s integration with European and global commodity markets: foreign trade in the long run grew on average faster than the overall economy. Behind the dynamics of aggregate trade, Italy’s comparative advantage changed fundamentally over the last 150 years. The composition of trade, in terms of both commodities imported and exported and in terms of trading partners, developed from a high concentration of a few trading partners and a handful of rather simple commodities into a wide diversification of trading partners and more sophisticated commodities. In this chapter we use a new long-term database on Italian foreign trade at a high level of disaggregation to document and analyze these changes. We will conclude with an assessment of Italy’s prospects from a historical perspective.international trade, 19th-20th century, Italy

Was industrialization an escape from the commodity lottery? Evidence from Italy, 1861-1940

the specialization in exporting primary products is frequently deemed harmful for long-run development, because it increases volatility of terms of trade and thus the number and frequency of macroeconomic shocks. One would expect modern economic growth to solve the problem by changing the composition of trade. This paper tests this hypothesis with a new series of Italian terms of trade from 1861 to 1939, a period which spans the first stage of the industrialization of the country. The results do not tally with the hypothesis. The change in composition improved marginally the terms of trade, but it did not help much in terms of volatilityItalian trade, Terms of trade, Economic growth, Volatility

The Cost of Railroad Regulation: The Disintegration of American Agricultural Markets in the Interwar Period

We investigate the costs of transportation regulation using the example of agricultural markets in the United States. Using a large database of prices by state of agricultural commodities, we find that the coefficient of variation (as a measure of market integration between states) falls for many commodities until the First World War. We demonstrate that this reflected changes in transportation costs which in turn in the long run depended on productivity growth in railroads. 1920 marked a change in this relationship, however, and between the First and Second World Wars we find considerable disintegration of agricultural markets, ultimately as a consequence of the 1920 Transportation Act. We argue that this benefited railroad companies in the 1920s and workers in the 1930s, and we put forward an estimate of the welfare losses for the consumers of railroad services (i.e. agricultural producers and final consumers).market integration; price convergence; United States; agriculture; transportation regulation

Warfare, Taxation, and Political Change: Evidence from the Italian Risorgimento

We examine the relationships between warfare, taxation, and political change in the context of the political unification of the Italian peninsula. Using a comprehensive new database, we argue that external and internal threat environments had significant implications for the demand for military strength, which in turn had important ramifications for fiscal policy and the likelihood of constitutional reform and related improvements in the provision of non-military public services. Our analytic narrative complements recent theoretical and econometric works about state capacity. By emphasizing public finances, we also uncover novel insights about the forces underlying state formation in Italy

Did trade policy foster Italian industrialization evidences from the effective production rates 1870-1930

Trade policy, and its effects oftariffs on structural change and industrialization, is arguably the 1110st contentious topic in Italian economic history. However, so far the discussion has relied almost exclusively on few scattered data and anecdotal evidence. This article builds on a comprehensive data-base of nominal and effective protection rates to test the main hypotheses put forward in the literature. We show that there is little evidence of a deliberate strategy to foster industrialization, or of any consisted strategy at aH. So we argue that the actual lay-out of Italian duties was the somewhat haphazard outcome of several causes, notably the need for revenue and the lobbying by sectional interests.Italy, Protection, Industrialization