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Export Growth and Economic Development in Colonial British America
Author(s) -
Pereira Alfredo M.,
Flores de Frutos Rafael
Publication year - 1998
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.00132
Subject(s) - cointegration , colonialism , economics , distributed lag , econometrics , macroeconomics , empirical evidence , multivariate statistics , economy , political science , mathematics , law , statistics , philosophy , epistemology
This paper analyzes the dynamic relationship between tobacco and the rest of the economy in the colonial Chesapeake to test the staple theory version of the export‐led growth hypothesis. The paper adopts a multivariate time‐series approach which accommodates the presence of cointegration and contemporaneous correlations among innovations. The empirical evidence strongly supports the staple theory. British demand for tobacco is statistically exogenous and found to induce cyclical fluctuations in the colonial price of tobacco as well as temporary over‐ or underproduction, as measured by a long‐term cointegration relationship between the British demand for tobacco and the colonial price of land.