The evolution of Ottoman--European market linkages, 1469--1914: Evidence from dynamic factor models

This paper exploits data on a set of traded goods to undertake the first comprehensive empirical analysis of market integration between the Ottoman Empire and Europe from 1469 to 1914. Computing dynamic factor models via Bayesian inference, we overcome such data constraints as missing observations and a small sample size. The results of this analysis suggest that there were persistent market linkages until the first half of the 19th century, followed by a decline in price convergence. We also find that the intensity of Ottoman--European conflict had a negative effect on integration, especially during the 1844--1914 period.