Pre-industrial money supply typically consisted of multiple, often foreign currencies. Standard economic theory implies that this entails welfare loss due to transaction costs imposed by currency exchange. Through a study of novel data on Finnish nineteenth-century parish-level currency conditions, we show that individual currencies had principal areas of circulation, with extensive co-circulation restricted to the boundary regions in between. We show that trade networks, defined here through the regional co-movement of grain prices, proved crucial in determining the currency used. Market institutions and standard price mechanisms had an apparent role in the spread of different currencies and in determining the dominant currency in a given region. Our findings provide a caveat for the widely held assumption that associates multi-currency systems with negative trade externalities.
This article provides a novel method for estimating historical population development. We review the previous literature on historical population time-series estimates and propose a general outline to address the well-known methodological problems. We use a Bayesian hierarchical time-series model that allows us to integrate the parish-level data set and prior population information in a coherent manner. The procedure provides us with modelbased posterior intervals for the final population estimates. We demonstrate its applicability by estimating the long-term development of Finland's population from 1647 onward and simultaneously place the country among the very few to have an annual population series of such length available.
This article examines whether economic inequality intensified the adverse effects of harvest, price, and income shocks during a famine. Using a parish-level longitudinal dataset from the Finnish famine of the 1860s, it shows that a substantial proportion of the excess mortality experienced during the famine resulted from a decline in agricultural production, a decline in incomes, and a surge in food prices. The findings indicate that the adverse effects of food output fluctuations were intensified by increasing income inequality and decreasing average income, while the market-transmitted shocks were weakened by a contraction of disposable income. The results are corroborated with multiple alternative estimation techniques, including the introduction of spatial spill-overs. The results show that even a pre-industrial famine affecting an impoverished society was meaningfully defined by the distribution of incomes.
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