Abstract
This paper explores regional price variation in early twentieth-century Spain. Using consumer price information from the bulletins published by the Instituto de Reformas Sociales between 1910 and 1920, we build a dataset with a total of 40,581 quotes covering 22 items for each of the 49 provinces. We then estimate provincial price levels following a country-product-dummy (CPD) approach. Our findings suggest that spatial price variation existed across Spanish provinces. In line with the Balassa–Samuelson conjecture, consumer prices and productivity levels were somewhat related. Additionally, it is shown that prices rose in all provinces after the outbreak of World War I. Even more, it appears that this demand-shock brought about spatial asymmetries in price growth.
Highlights
Using information from bulletins published by the Instituto de Reformas Sociales between 1910 and 1920, we first created a database of 40,581 prices quoted for 22 items for each of the 49 provinces
Overall we find marked regional disparities in consumer prices in early twentieth-century Spain
We find that price levels in provincial capitals were on average higher than in other municipalities
Summary
The System of National Accounts, established after the Second World War, enabled deeper economic analysis and stimulated further research. With the creation of the International Comparison Program in 1968, it became possible to make reasonable comparisons of per-capita income across countries. Subnational data are scant, even though there are noteworthy regional disparities in productivity and prices in large developing countries (Brazil, China, India...). In economic history there have been several efforts to reconstitute macroeconomic aggregates (i.e. GDP) at subnational level (Fukao et al, 2015, Rosés & Wolf, forthcoming). Few if any of these look at spatial price variation
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