Weather effects on European agricultural output, 1850-1913.

Introduction The sectoral structure of the leading industrial economies of Europe in the late 19 Century suggests that the agricultural sector was still central to macroeconomic performance. In Germany the agricultural sector accounted for approximately 40% of GDP in 1870, declining to 23% by 1913. In France the sector accounted for 43% of GDP in 1872, declining to 35% by 1909. In Britain the sector accounted for 15% of GDP in the early 1870s, declining to 6% by 1907. The existing historical business cycle literature has emphasised macroeconomic variables in accounting for economic fluctuations (Eichengreen, 1983; Solomou, 1994). The aim of this paper is to evaluate the importance of an independent cyclical effect on agricultural output arising from the impact of weather shocks to the sector. The accepted view of economic historians (more implicit than explicit) is that weather ceased to be a significant shock to industrial economies. Consequently, little systematic research has been undertaken in this area. The formulation and dismissal of simplistic theories about weather and economic cycles has not helped. For example, Jevons (1884, p.235) argued: ...after some further careful inquiry, I am perfectly convinced that these decennial crises do depend upon meteorological variations of like period, which again depend, in all probability, upon cosmical variations of which we have evidence in the frequency of sunspot, auroras, and magnetic perturbations. The evidence we have at present suggests that the impact of weather shocks on the economy needs to be carefully re-evaluated. Feinstein et al. (1983) show that in Britain agriculture accounted for most of the aggregate fluctuations in total factor productivity