Abstract: We use monthly prefectural data for Southern China (1740-1820) to implement a dynamic version of Shiue and Keller’s (2007) seminal analysis of spatial market integration. Our cointegration analysis is carried out for rolling windows of 20 years, rather than their static cross-section, and uncovers a secular decline in market integration across all bilateral distance categories of Southern China. When comparing Chinese prefectures less than 150 km apart with Belgian markets (1765-94) and English counties (1770-1820) in the same distance category, we observe similar degrees of market integration for 1740s China and mid-18th century Belgium and England. While the two European countries maintain stable levels of integration over time, we find substantial decline in China relative to the West, in particular when the analysis is limited to the economically most advanced Lower Yangtze region or the prefectures along the Yangtze River.
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Daniel Bernhofen, Markus Eberhardt, Jianan Li, Stephen Morgan
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