Eric Strobl

A Storm in a Teacup? Hurricanes and Sugar Prices in the First Half of the Nineteenth Century

AbstractThis paper investigates the impact of hurricanes in the Caribbean on sugar prices in Britain between 1815 and 1841. The authors expect the news of hurricanes arriving at British harbors to drive up sugar prices mainly because the market anticipated that the supply of sugar from the Caribbean colonies would drop dramatically in the near future. The econometric results suggest a significant rise in prices due to hurricanes. Moreover this study finds that the lag between the hurricane strike and its transmission into sugar prices on the London market decreased over the sample period. This latter result might be explained by the technological innovations marking this era, where technological progress in transport reduced the time required for information to cross the Atlantic, making markets more reactive to the news of supply shocks.