Capital Goods Prices, Global Capital Markets and Accumulation: 1870-1950

48 Pages Posted: 12 Jul 2000 Last revised: 12 Oct 2010

See all articles by William J. Collins

William J. Collins

Vanderbilt University - College of Arts and Science - Department of Economics; The Brookings Institution; National Bureau of Economic Research (NBER)

Jeffrey G. Williamson

Harvard University - Department of Economics, Laird Bell Professor of Economics, Emeritus; Honorary Fellow, University of Wisconsin - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 1999

Abstract

Conventional wisdom has it that global financial markets were as well integrated in the 1890s as in the 1990s, but that it took several post-war decades to regenerate the connections that existed before 1914. This view has emerged from a variety of tests for world financial capital market integration ranging from the correlation of saving and investment aggregates to the dispersion of security prices and real interest rates. Presumably, we care about global capital market integration because it can have an impact on accumulation performance and the global distribution of the capital stock. Oddly enough, however, the relative price of capital goods, an important component of the user cost of capital, has never been incorporated into studies of capital market integration and almost never in comparative studies of pre-1950 economic growth. This could be an important omission. This paper explores the issue with a panel data base 1870-1950 for eleven OECD countries. It turns out that capital goods prices have been central to accumulation, and therefore to growth and convergence. They have also been as important to the evolution of global capital markets as have been interest rates and other financial costs.

Suggested Citation

Collins, William J. and Williamson, Jeffrey G., Capital Goods Prices, Global Capital Markets and Accumulation: 1870-1950 (May 1999). NBER Working Paper No. w7145. Available at SSRN: https://ssrn.com/abstract=227343

William J. Collins (Contact Author)

Vanderbilt University - College of Arts and Science - Department of Economics ( email )

Box 1819 Station B
Nashville, TN 37235
United States
615-322-3428 (Phone)

The Brookings Institution

1775 Massachusetts Ave. NW
Washington, DC 20036-2188
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jeffrey G. Williamson

Harvard University - Department of Economics, Laird Bell Professor of Economics, Emeritus ( email )

Littauer Center
Room 216
Cambridge, MA 02138
United States
617-495-2438 (Phone)
617-496-7352 (Fax)

Honorary Fellow, University of Wisconsin - Department of Economics

716 Langdon Street
Madison, WI 53706-1481
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
29
Abstract Views
855
PlumX Metrics