A Quantitative Model of the British Industrial Revolution, 1780-1850

A simple quantitative model is presented that is consistent with the available evidence about the British economy during the early phase of the Industrial Revolution. The basic model is a variant of a standard growth model, calibrated to data from Great Britain for the period 1780-1850. The model is used to study the importance of foreign trade and the role of the declining cost of power during this period. The British Industrial Revolution was an amazing episode, with economic consequences that changed the world. But our understanding of the economic events of this ¤Research Department, Federal Reserve Bank of Minneapolis, and Department of Economics, University of Chicago. I am grateful to Matthias Doepke for many stimulating conversations, as well as several useful leads on data sources. I also owe more than the ususal thanks to Joel Mokyr for many helpful comments, including several that changed the direction of the paper in a fundamental way. Finally, I am grateful to the Research Division of Federal Reserve Bank of Minneapolis for support while much of this work was done. This paper is being prepared for the Carnegie-Rochester conference in November, 2000.