Template-type: ReDIF-Paper 1.0
Author-Name: N. H. Dimsdale
Author-Workplace-Name: The Queens College, University of Oxford
Author-Email:nicholas.dimsdale@queens.ox.ac.uk
Title: The Dynamics of Consumption and Investment in the Victorian Economy
Abstract: In the late 19th century Britain accumulated substantial overseas assets. It has been
generally accepted that overseas investment displaced domestic investment. This
paper questions this assumption by pointing to the rise in the savings ratio, which
enabled high capital exports to be combined without reducing the rate of domestic
investment. The determinants of consumption and savings are examined and it is
argued that the rise in savings can be attributed to the fall in the dependency ratio.
This phenomenon is familiar from modern studies of economic development and also
from US experience in the 19th century. The determinants of business investment are
analysed and the results indicate the importance of both real profits and accelerator
effects for investment, but there is no evidence of crowding out of home investment
by overseas issues. House building then is examined and demographic factors are
found to be important. Crowding out effects may have been present, but this is not the
only hypothesis, which is consistent with the data. The collapse in house building
could also be attributed to the massive boom and bust in the property market in the
period 1890-1914.
X-Classification-JEL: 
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Length: 31 pages
Creation-Date: 2013-10-30
Number: _122
File-URL: http://www.economics.ox.ac.uk/materials/papers/13123/Paper122.pdf
File-Format: application/pdf
Handle: RePEc:nuf:esohwp:_122