Instability, Cost of Living, and Real Wages in Venezuela in the 19th Century

Abstract

The 19th century was a tumultuous period in Venezuela history. Wars, social unrest, and political instability plagued this country. At the same time, the economy expanded at a healthy rate fueled by the growth of the export sector that heavily specialized in coffee and cacao. In this article, I present novel estimations on the cost of living and living standards for this country’s capital city, Caracas. The quantitative and qualitative evidence indicate that living in Venezuela was costly. Moreover, the standard of living, measured as the welfare ratio, improved throughout the century; however, it was low when compared to other cities in the developing and developed world. The analysis suggests that instability is costly. In the case of Venezuela, this country faced turbulent domestic conditions and the lack of diversification of the export basket added volatility to the already fragile economic situation.