Mortality, interest rates, investment, and agricultural production in 18th century England

Abstract

This paper shows that the exogenous decline of adult mortality at the end of the 17th century can be one of the causes driving both the decline of interest rate and the increase in agricultural production per acre in pre-industrial England. Following the intuition of the life-cycle hypothesis, I claim that the increase in adult life expectancy must have implied less farmer impatience and it could have caused more investment in nitrogen stock and land fertility, the increase in agricultural land, and higher production per acre. I analyze this dynamic interaction using an overlapping generations model and show that the evolution of agricultural production and capital rates of return predicted by the model coincide fairly well with their empirical pattern.