The significance of the Cape trade route to economic activity in the Cape colony: a medium-term business cycle analysis
Stellenbosch Working Paper Series No. WP23/2008Publication date: 2008
Author(s):
[protected email address] (Department of Economics, University of Stellenbosch)
Trade is a critical component of economic growth in newly settled societies. This paper tests the impact of ship traffic on the Cape economy using a time series smoothing technique borrowed from the business cycle literature and employing an econometric procedure to test for long-run relationships. The results suggest a strong systematic co-movement between wheat production and ship traffic, with less evidence for wine production and stock herding activities. While ship traffic created demand for wheat exports, the size of the co-movement provides evidence that ship traffic also stimulated local demand through secondary and tertiary sector activities, supporting the hypothesis that ship traffic acted as a catalyst for growth in the Cape economy.
JEL Classification:N17, E32, N77
Keywords:Colonial trade, Cape of Good Hope, Dutch East India, Band-pass filter, Medium-term fluctuations, Business cycle, South Africa, Ships, Harvest cycles, Colonial economy
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26 January 2024Domestically, the theme of the week centred around monetary policy and inflation, with the SA Reserve Bank (SARB) making its first repo rate decision of the year on Thursday. Furthermore, Stats SA released both consumer and producer price inflation data for December. Globally, monetary policy was also important, with the European Central Bank (ECB),...
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