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Max-Stephan Schulze & Oliver Volckart (London School of Economics): 
"A Century of Retardation? The Effects of the Thirty Years War on Market Integration in the Holy Roman Empire"

The Thirty Years War led to huge population losses and ranked amongst the most devastating conflicts experienced in Europe. Authors such as Wieland (1791) and, later, Freytag (1862) claimed the war ‘threw back’ Germany’s development by more than a century. Research so far has concentrated on its demographic consequences. There are few studies that focus on the war’s economic impact and none that use quantitative methods in order examine this issue. This paper asks whether and to what extent the war had lasting effects on economic activity and, more specifically, market integration.

Covering the period 1550-1789, the paper draws on an extensive new dataset of local grain prices that includes 135 markets, more than 10,000 market pairs and a total of over 850,000 observations of bilateral grain price differentials. As a starting point, we take the local incidence of warfare as a factor that likely increases the cost of trade between affected markets. On average, higher trade costs should limit the scope for arbitrage and, all else being equal, increase the price gap between cities in any pair of markets. Drawing on panel data analysis, the paper finds, first, that the immediate, short-run disintegration effects of the military campaigns waged between 1618 and 1648 were significant and, on average, stronger than those of other wars between the mid-16th century and the French Revolution. Second, the Thirty Years War was of longer-lasting consequence though cumulative effects in areas where trade was disrupted (again) by later wars. Third, the war interrupted but did not reverse market integration. The analysis suggests that by the early eighteenth century its disintegrative effects had largely worn out.