Abstract
Four years after the French Revolution, in 1793 a series of wars among France and other major powers of Europe began and they lasted until 1815. There is disagreement among economic historians about the effects of these wars on the trend of US economic growth. This paper aims to answer the following question. Did America as a neutral nation take advantage of economic possibilities caused by Europe at war through trade? To put it differently, this paper questions whether there was an export-led growth due to the war. To answer this question, we re-examined the export-led growth hypothesis for the period 1790-1860 using the ARDL methodology. Based on this methodology, a cointegrated relationship is found among the variables of real GDP, labor, exports and exchange rates. The results suggest that the economic growth of the US was not export-driven. In addition, parallel to the results of unit root tests with structural breaks, the coefficient of the dummy variable was statistically significant in the long run, implying that the war did have a significant effect on the economic growth trend of the US.
Highlights
We believe that this paper contributes to the literature regarding the Napoleonic Wars and American growth since, to the best of our knowledge, this paper is the first one which uses econometric methods to investigate the relationship between the Napoleonic Wars and American growth at the beginning of the 19th century, with the aim of testing the export-led economic growth hypothesis
Even though the period could be extended to the later periods, the period 1794-1860 was chosen to focus on the effects of the Napoleonic War era with a reasonable data period before and after the Napoleonic Wars, and in accordance with the availability of data
The results indicate that all variables have correct signs, both the real exports and exchange rate variables are not statistically significant, suggesting that the export-led growth hypothesis is not supported for the US economy for the period 1796-1860
Summary
Morrow (1954) asserts that the years from 1792 to 1807 were extraordinarily prosperous not solely for the merchant marine, but for America as a whole, regardless of the intermittent problems caused by British warships, pirates from Tripoli, or French privateers men He explains that the rapid increase in exports was comprised mainly of provisions, for which the war had created a market. Adams (1980) suggests that the economic changes presented as evidence of prosperity during the wars had their roots in the pre-war period; that the benefits from neutrality were concentrated in the northeastern seaports; that the Continental Wars were burdensome to the belligerents, and to those who expected gains from this conflict; and that “the term unparalleled prosperity to describe the years from 1793 to 1807 is perhaps too strong a statement if applied to the United States as a whole”.
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