Warfare Ignited Price Contagion Dynamics in Early Modern Europe

TL;DR

This paper applies an econometric contagion model to early modern European markets, revealing how warfare significantly increased food price spillovers and disrupted economic stability across cities.

Contribution

It introduces the use of the Diebold-Yilmaz contagion framework to historical economic data, providing model-based evidence of warfare's impact on market integration.

Findings

Warfare periods increased food price spillovers across European cities.

The model captures historical trade dynamics effectively.

Economic shocks were more contagious during conflicts.

Abstract

Economic historians have long studied market integration and contagion dynamics during periods of warfare and global stress, but there is a lack of model-based evidence on these phenomena. This paper uses an econometric contagion model, the Diebold-Yilmaz framework, to examine the dynamics of economic shocks across European markets in the early modern period. Our findings suggest that key periods of violent conflicts significantly increased food price spillover across cities, causing widespread disruptions across Europe. We also demonstrate the ability of this framework to capture relevant historical dynamics between the main trade centers of the period.