Friday, January 4, 2008

How Did the Mathusian Economy Really Evolve?

Interesting paper-"From Malthus to Solow: How Did the Mathusian Economy Really Evolve?" by Nicholas Crafts and Terence C. Mills

They seek to address the following questions-
  1. When did wages cease to be Malthusian?
  2. When did fertility and mortality stop exhibiting Malthusian responses to changes in real wages?
  3. Was the economy characterized by weak homeostasis?
  4. Why was population so much bigger in 1800 than in 1550?
  5. What can be inferred about the rate of technological progress prior to the industrial revolution?

And their conclusions;
  1. Wages ceased to be Malthusian at the end of the 18th century, after which they exhibited strong trend growth (Figure 7 and Table 2). This confirms earlier findings.
  2. Our analysis was unable to find evidence of a positive check at any time during the period 1541 to 1800 and the preventive check cannot be found in samples drawn after the mid-17th century (Tables 4, 6 and 7). These results are much less supportive of the fundamental Malthusian relationships between fertility, mortality and real wages than earlier work. In this sense the Malthusian economy was not very Malthusian after all.
  3. The economy was characterized by weak homeostasis up to the mid-17th century. Subsequently, equilibriating tendencies were extremely weak and the half-life of a shock is estimated at 431 years (Table 7).
  4. Population in 1800 was about three times the mid-16th century level and this demographic growth was underpinned by an absorption rate based on an expanding demand for labour that averaged a little under 0.5% per annum (Table 8). This result is very similar to earlier work.
  5. There is nothing to suggest that technological progress was accelerating long before the end of the Malthusian period and thus there is no explicit evidence of the positive feedback between population size and technological progress that is a key feature of unified growth models (Figure 13 and Table 8).

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