Testing theories of economic fluctuations and growth in early development. (The case of the Chesapeake tobacco economy)

摘要

This paper suggests a general econometric approach to the empirical testing of the staple theory. The methodology is based upon a multivariate stochastic time series analysis adjusted to accommodate the presence of co-integration. Consistent with the nature of the problem under consideration, the methodology does not require any a priori strucrural assumptions about the dynamic relations among relevant variables. The empirical part of the paper focuses on the dynamic relationships among tobacco prices in the colonial Chesapeake economy and tobacco demand and supply conditions. The empirical evidence gives strong support to the basic tenets of the staple theory: the central role of the exogenous British demand; the existence of fluctuations in the price of tobacco; and, the high responsiveness of tobacco production with respect to prices relative to tobacco demand.