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Long Run Patterns in Market Efficiency and the Genesis of the Market Economy: Markets Around the Mediterranean from Nebuchadnezzar to Napoleon (580 BC and 1800 AD)

Category: Maritime History and Theory - Mediterranean Sea History
Type: Book
Author: Földvári, Péter and Leeuwen, Bas van and Zanden, Jan Luiten van and Centre for Economic Policy Research (Great Britain)
Pages: 42
Publisher: Centre for Economic Policy Research
Library catalog: Google Books
Year: 2011
URL: http://books.google.co.uk/books?id=K6UFNAEACAAJ
Language: en

Abstract:

Subject: Price volatility, reflecting the ability to absorb exogenous supply- or demand shocks, is an important dimension of market performance. In this paper we present a model to study the factors determining the price volatility of markets of basic foodstuffs in pre industrial societies. This model is used to explain the development of price volatility on markets in countries around the Mediterranean between 580 BC and 1800 AD. This is the region for which we have the oldest evidence of functioning markets (from Mesopotamia), so that we can track their development in time over a period of more than 2000 years. We find a break in market performance: medieval markets had a much lower level of volatility than ancient markets--a fact we try to explain within our model. Moreover, we suggest that this reduction in price volatility may have had important consequences for the economic behavior of farmers: price variability had to be reduced to the level that we find for the post-1000 period to induce farmers to specialize.



The research project is implemented within the framework of the Action “Supporting Postdoctoral Researchers» of the Operational Program "Education and Lifelong Learning" (Action’s Beneficiary: General Secretariat for Research and Technology), and is co-financed by the European Social Fund (ESF) and the Greek State.