nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2022‒03‒14
25 papers chosen by

  1. Pandemic Recession and Helicopter Money: Venice, 1629–1631 By Charles Goodhart; Donato Masciandaro; Stefano Ugolini
  2. Lives versus livelihoods in the middle ages: The impact of the plague on markets over 400 years By Jakob B. Madsen; Peter E. Robertson; Longfeng Ye
  3. Georges d'Avenel: an economic historian ahead of its time By Alain Alcouffe; David Le Bris
  4. Migration on the Rise, a Paradigm in Decline: The Last Half-Century of Global Mobility By Michael A. Clemens
  5. The Influence of Early-Life Economic Shocks on Aging Outcomes: Evidence from the U.S. Great Depression By Valentina Duque; Lauren L. Schmitz
  6. Selective Technology Choice, Adaptations, and Industrial Development: Lessons from Japanese Historical Experience By Tomoko Hashino; Keijiro Otsuka
  7. Costs of Financing US Federal Debt: 1791-1933 By George Hall; Jonathan Payne; Thomas J. Sargent; Bálint Szőke
  8. Structural change in the US Phillips curve, 1948-2021: the role of power and institutions By Mark Setterfield; Robert A. Blecker
  9. Monetary Policy and the Top 1%: Evidence from a Century of Modern Economic History By Mehdi El Herradi; Aurélien Leroy
  10. Rent-seeking, Reform and Conflict: French Parliaments at the End of the Ancien Régime By Jaaidane, Touria; Musy, Olivier; Tallec, Ronan
  11. Welfare costs of exchange rate fluctuations: Evidence from the 1972 Okinawa reversion By Kazuko Kano; Takashi Kano
  12. From waste to urban mines: a historical perspective on the circular economy By Franck Aggeri
  13. Can you move to opportunity? Evidence from the Great Migration By Ellora Derenoncourt
  14. Have unequal treaties fostered domestic market integration in Late Imperial China ? By Jean-Louis Combes; Mary-Françoise Renard; Shuo Shi
  15. Designing wartime economic controls: Productivity and firm dynamics in the Japanese cotton spinning industry, 1937–1939 By Tetsuji OKAZAKI
  16. Privatizations Spark Socialist Backlash: Evidence from East Germany’s Transformation By Hager, Anselm; Hennicke, Moritz; Krause, Werner; Mergele, Lukas
  17. Growth Factors in Developed Countries: A 1960–2019 Growth Accounting Decomposition By Gilbert Cette; Aurélien Devillard; Vincenzo Spiezia
  18. Domination française des marchés en Afrique francophone : Le post-colonialisme à son meilleur ? By Kohnert, Dirk
  19. Learning the HardWay: Expectations and the U.S. Great Depression By Pablo Aguilar; Luca Pensieroso
  20. The Great Margin Call: The Role of Leverage in the 1929 Stock Market Crash By Borowiecki, Karol; Dzieliński, Michał; Tepper, Alexander
  21. The Political Economy of Propaganda: Evidence from US Newspapers By Ottinger, Sebastian; Winkler, Max
  22. How (Un-)Informed Are Depositors in a Banking Panic? A Lesson from History By Kristian S. Blickle; Markus K. Brunnermeier; Stephan Luck
  23. Climate change and economic activity: Evidence from US states By Kamiar Mohaddes; Ryan N. C. Ng; M. Hashem Pesaran; Mehdi Raissi; Jui-Chung Yang
  24. Aggregate Implications of Changing Sectoral Trends By Andrew T. Foerster; Andreas Hornstein; Pierre-Daniel G. Sarte; Mark W. Watson
  25. A Personal View from the Wrong Side of the Subsequent Fifty Years By David Laidler

  1. By: Charles Goodhart; Donato Masciandaro; Stefano Ugolini (LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - UT2J - Université Toulouse - Jean Jaurès - Institut d'Études Politiques [IEP] - Toulouse - ENSFEA - École Nationale Supérieure de Formation de l'Enseignement Agricole de Toulouse-Auzeville)
    Abstract: We analyse the money-financed fiscal stimulus implemented in Venice during the famine and plague of 1629–31, which was equivalent to a ‘net-worth helicopter money' strategy – a monetary expansion generating losses to the issuer. We argue that the strategy aimed at reconciling the need to subsidize inhabitants suffering from containment policies with the desire to prevent an increase in long-term government debt, but it generated much monetary instability and had to be quickly reversed. This episode highlights the redistributive implications of the design of macroeconomic policies and the role of political economy factors in determining such designs.
    Keywords: Monetary policy,Helicopter money,Pandemic,Venice 1629-1631
    Date: 2022
  2. By: Jakob B. Madsen; Peter E. Robertson; Longfeng Ye
    Abstract: To what extent did outbreaks of bubonic plague disrupt daily economic activity? We estimate the impact of epidemics on regional markets over four centuries – from the Black Death in the 14th century, until the medieval form of the plague became extinct in the 17th century. Despite the extreme mortality risk of bubonic plague, we find that outbreaks only had a modest impact on trade costs and market integration, as measured by local variations in wheat prices. The results provide quantitative evidence on how the lives versus livelihoods tradeoff was managed through history and the extent to which people learned to live with plague. They suggest that economic activity in low income societies is very resilient to epidemics.
    Keywords: Epidemics, Trade Costs, Social Distancing, Black Death, Public Health, COVID-19
    JEL: I15 N33 I18 N13
    Date: 2022–01
  3. By: Alain Alcouffe (UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées); David Le Bris (TBS - Toulouse Business School)
    Abstract: At the end of the 19th, Georges d'Avenel produced a highly original work in various fields. Unsatisfied with the usual way to write history, he turned his attention to quantitative data to understand the past. In particular, he built series of prices of multiples goods and services from 1200 onwards. He proposed a documented analysis of long-term changes in prices as a result of the technical progress, in income and wealth inequalities as captured by the top 1%, as well as in the evolution of mentalities. His approaches were criticized both by both new professional "Republican" historians than by Conservative analysts. However, his data used by Pareto, Fisher, Frisch or Marshall are still used in current economic history and his analysis fertilized various fields in particular the Ecole des Annales.
    Keywords: economic history,distribution of wealth,history of prices,d'Avenel
    Date: 2021–10–08
  4. By: Michael A. Clemens (Michael A. Clemens)
    Abstract: The past several decades have witnessed a rebirth of global labor mobility. Workers have begun to move between countries at rates not seen since before World War One. During the same period, economists’ study of international migration has been framed by a particular textbook model of location choice. This paper reviews the evidence on the economic causes and effects of global migration during the past half century. That evidence falsifies most of the core predictions of the old model. The economics of migration will regain vitality and relevance by discarding and replacing its outworn paradigm.
    Keywords: immigration, emigration, globalization, labor, demographic, development, wages, employment, model, causes, effects, mobility, long run
    JEL: F22 J61 O15
    Date: 2022–01
  5. By: Valentina Duque; Lauren L. Schmitz
    Abstract: We show that earnings over the life cycle and health and productivity around retirement age vary with exposure to economic conditions in early life. Using state-year-level variation from the most severe and prolonged economic downturn in American history \'96 the Great Depression '96 combined with restricted microdata from the Health and Retirement Study, we find that changes in macroeconomic indicators during the in utero period and early childhood are associated with changes in accumulated earnings, human capital, metabolic syndrome, and physical limitations decades later. After evaluating changes in endogenous fertility responses and mortality rates for Depression-era birth cohorts in the U.S. Census and Vital Statistics Death Records, we conclude that these effects likely represent lower-bound estimates of the true impacts of the economic shock on aging outcomes. Our results could help inform the design of retirement and healthcare systems and pinpoint the long-term costs of business cycles.
    Date: 2021–12
  6. By: Tomoko Hashino (Graduate School of Economics, Kobe University); Keijiro Otsuka (The Kobe University Center for Social System Innovation and Graduate School of Economics, Kobe University)
    Abstract: It is well-known that Japan successfully imported advanced technology from Europe during the Meiji era (1868–1912). This was notable in the modern cotton-spinning industry, which used imported British ring machines and Indian cotton, resulting in Japan outcompeting India in the Asian cotton yarn market. It is also true that traditional industries, especially the sedentary silk-reeling and the cotton- and silk-weaving districts located in various parts of the country, successfully developed using imported technologies. This study explores key factors contributing to the successful industrial development in prewar Japan based on a review of the development paths of the modern cotton textile and silk-reeling industries and the traditional cotton- and silk-weaving and sedentary silk-reeling industries. We found that these industries commonly selected appropriate technologies and adapted them to the initially abundant endowment of labor followed by its growing scarcity.
    Date: 2022–02
  7. By: George Hall (Brandeis University); Jonathan Payne (Princeton University); Thomas J. Sargent (New York University); Bálint Szőke (Federal Reserve Board)
    Abstract: We use computational Bayesian methods to estimate parameters of a statistical model of gold, greenback, and real yield curves for US federal debt from 1791 to 1933. Posterior probability coverage intervals indicate more uncertainty about yields during periods in which data are especially sparse. We detect substantial discrepancies between our approximate yield curves and standard historical series on yields on US federal debt, especially during War of 1812 and Civil War surges in government expenditures that were accompanied by units of account ambiguities. We use our approximate yield curves to describe how long it took to achieve Alexander Hamilton’s goal of reducing default risk premia in US yields by building a reputation for servicing debts as promised. We infer that during the Civil War suspension of convertibility of greenback dollars into gold dollars, US creditors anticipated a rapid post war return to convertibility at par, but that after the war they anticipated a slower return.
    Keywords: Big data, default premia, yield curve, units of account, gold standard, government debt, Hamiltonian Monte Carlo, Julia, DynamicHMC.jl, pricing errors, specification analysis
    JEL: E31 E43 G12 N21 N41
    Date: 2021–09
  8. By: Mark Setterfield (The New School for Social Research); Robert A. Blecker (American University)
    Abstract: This paper provides an institutional-analytical account of changes in the structure of the US Phillips curve (PC) during the post-war period. It does so by restoring conflict and power to the forefront of macro theory and, in particular, the wage- and price-setting behaviour of workers and firms. The resulting account is consistent with the main stylized facts that characterize the evolution of the US PC since 1948: the disappearance and subsequent reappearance of a 'standard' PC (relating the level of the inflation rate, not the change in this rate, to the rate of unemployment); and the flattening of the PC since the 1990s.
    Keywords: Philips Curve, inflation, unemployment, natural rate hypothesis, bargaining power, institutions
    JEL: E12 E24 E25 E31 N12
    Date: 2022
  9. By: Mehdi El Herradi (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Aurélien Leroy (UB - Université de Bordeaux)
    Abstract: This paper examines the distributional effects of monetary policy in 12 OECD economies between 1920 and 2016. We exploit the implications of the macroeconomic policy trilemma with an external instrument approach to analyze how top income shares respond to monetary policy shocks. The results indicate that monetary tightening strongly decreases the share of national income held by the top 1 percent and vice versa for a monetary expansion, irrespective of the position of the economy. This effect (i) holds for the top percentile and the ultrarich (top 0.1 percent and 0.01 percent income shares), while (ii) it does not necessarily induce a decrease in income inequality when considering the entire income distribution. Our findings also suggest that the effect of monetary policy on top income shares is likely to be channeled via real asset returns.
    Date: 2021–12
  10. By: Jaaidane, Touria; Musy, Olivier; Tallec, Ronan
    Abstract: We analyze the conflicts between French kings and the office-holders who were members of the venal French Parliaments throughout the 18th century using an implicit contract approach in which Parliamentarians protect their rents, the king pays a financial bonus to office holders and obtains their cooperation. Stopping payments or introducing a competing body of civil servants (the intendants) leads to retaliation. We use the model to produce an analytic narrative of the end of the French Ancien Régime. We provide an empirical test of our predictions, which supports the idea that the political opposition of Parliaments was mainly dependent on the reform agenda of the king on matters that would lead to a decline in their income and political power.
    Keywords: Rent-seeking; Rent-protection; Institutional Reform; French Ancien Régime; Parliaments; State Capacity
    JEL: D74 E62 H11 H3 K00 N43
    Date: 2022–02–21
  11. By: Kazuko Kano; Takashi Kano
    Abstract: The main tenet of the New Keynesian (NK) paradigm is that price dispersion caused by nominal price stickiness is the primary source of allocative inefficiency. This study empirically evaluates the welfare implications of NK models by observing how internal and external price dispersion responds to two types of large aggregate shocks: high inflation and sharp currency depreciation. For this purpose, we consider the history of US military deployment on a small southern island in Japan called Okinawa following the Pacific War. We investigate unique data variations in micro-level retail prices surveyed in Okinawa and mainland Japan before and after the Okinawan reversion to Japanese sovereignty in May of 1972. By considering the Okinawan experience of three currency regimes during the high inflation period of the early 1970s as valid quasi-natural experiments, we identify statistically significant deteriorations of currency misalignment associated with the sudden exogenous large USD depreciation versus the JPY following the Nixon Shock. Furthermore, we observe that these massive aggregate shocks left the average absolute size of price changes mostly unchanged, but significantly increased the average frequency of price changes in Okinawa. Because a calibrated small open-economy menu cost model fits these empirical findings better than the Calvo model, the welfare costs of exchange rate fluctuations may be more elusive than suggested by the open economy NK literature.
    Keywords: Currency regime, Currency misalignment, Welfare cost, Okinawan reversion, Menu cost model
    JEL: F31 F41 F45
    Date: 2022–01
  12. By: Franck Aggeri (CGS i3 - Centre de Gestion Scientifique i3 - CNRS - Centre National de la Recherche Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres)
    Abstract: Contrary to a commonly held belief, the circular economy was the dominant economic model for a long period. Nothing was lost or discarded, everything was systematically recovered and reused. At the end of the 19th century, it was superseded by the linear economic model, based on extracting new raw materials and disposing of waste in landfills, that accompanied the industrial revolution and rise of the hygienist movement followed by the growth of the consumer society. The present-day challenge is to develop a new approach to the circular economy that meets expectations in terms of quality and traceability as well as exploring new economic models that are less resource-intensive. But while innovations are certainly needed, in recycling, for example, as a strategy it is not a magic bullet. This is because recycling corresponds to a weak circularity model that fails to challenge how we produce and consume. For a strong and less resource-intensive circularity model to emerge, we need to explore services-based strategies that seek to extend product lives via repair, reuse or rental, all of which require upstream efforts in terms of eco-designing products to improve their repairability and durability.
    Keywords: circular economy,urban mines,waste
    Date: 2021–11
  13. By: Ellora Derenoncourt (Princeton University)
    Abstract: This paper shows that racial composition shocks during the Great Migration (1940-1970) reduced the gains from growing up in the northern United States for Black families and can explain 27% of the region’s racial upward mobility gap today. I identify northern Black share increases by interacting pre-1940 Black migrants’ location choices with predicted southern county out-migration. Locational changes, not negative selection of families, explain lower upward mobility, with persistent segregation and increased crime and policing as plausible mechanisms. The case of the Great Migration provides a more nuanced view of moving to opportunity when destination reactions are taken into account.
    Keywords: migration
    JEL: R23
    Date: 2021–08
  14. By: Jean-Louis Combes (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique); Mary-Françoise Renard (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique); Shuo Shi (CCES - China Center for Economic Studies, Fudan University)
    Abstract: The objective of the paper is to study the relationship between international trade openness and domestic market integration in Late Imperial China. More specifically, we focus on a natural experiment namely the Unequal Treaties of the second half of the nineteenth century that lifted the long-existing international trade restriction system. The integration of domestic markets is analyzed while looking at the existence of a long term common movement in the grain prices between provinces. The econometric results show that trade openness did not lead to better integration of the Chinese domestic grain markets. Our results support the hypothesis according to which long-distance trade has not generated efficiency gains in domestic markets. We evidence a strong segmentation between domestic and international grain markets owing to different traded products and operators.
    Keywords: Market integration,Law of one prices,Late Imperial China
    Date: 2020–05–25
  15. By: Tetsuji OKAZAKI
    Abstract: In 1937, the Japanese government accelerated the expansion of its military expenditure and began to impose controls on the economy to maintain the balance of international payments. The controls were developed through trial and error. The cotton spinning industry was one of the industries most deeply affected by these controls. Initially, the government simply reduced the allocation of foreign exchange for raw cotton imports. However, because this measure prevented the export of cotton products, especially to countries outside the yen bloc, a new scheme of control, the export–import link system, was adopted from the second half of 1938. This scheme was intentionally designed to give firms incentives to export to non-yen bloc countries and to incorporate elements of market mechanism into economic control. Analyzing firm-level data, we find that under the link system, firms with higher labor productivity tended to grow faster, as occurs under a market economy. This relationship was not observed during the early stage of the control. This difference is reflected in the pattern of the change in aggregate labor productivity. Under the export–import link system, the positive reallocation effect was substantial, similar to a market economy, whereas it was almost zero under the early controls. These findings indicate that the design of controls matters for the performance of controlled economies. Key words: Economic control, war economy, World War II, productivity, textile industry, Japan JEL classification numbers: D22, L22, L52, L67, N45, N65
    Date: 2022–02
  16. By: Hager, Anselm; Hennicke, Moritz; Krause, Werner; Mergele, Lukas
    Abstract: The fall of the Berlin Wall marks one of the largest transformations of the 20th century. At its core, the year 1990 brought two new systems to Eastern Europe: capitalism and democracy. Yet, to this day, Eastern Europeans show distinctly negative attitudes toward the Western world order, and democratic and market institutions across the region are far from perfect. What explains this unsuccessful transformation? This paper points to the rushed privatization of East European economies as one plausible driver of citizens’ discontent with capitalism and democracy. Using micro-level data from East Germany, we show that firm privatizations led to a marked resurgence of the successor of the former Socialist Unity Party as early as 1994. We argue that this effect is likely due to perceived injustice: Socialist voting thrived whenever firms were sold to Western elites, which local residents took as a sign that capitalism is not meritocratic.
    Date: 2021–12–30
  17. By: Gilbert Cette (Banque de France - Banque de France - Banque de France, NEOMA - Neoma Business School); Aurélien Devillard (NEOMA - Neoma Business School, Centre de recherche de la Banque de France - Banque de France); Vincenzo Spiezia (OECD - The Organisation for Economic Coopération and Development)
    Abstract: Using a new and original database, our paper contributes to the growth accounting literature with three original aspects: First, it covers a long period from the early 60's to 2019, just before the COVID-19 crisis; second, it analyzes a large set of economies (30 plus the Euro Area) at the country level; finally, it singles out the growth contribution of information and communications technologies (ICTs) capital as well as robots. Our findings show that the main drivers of labor productivity growth over the whole 1960–2019 period appear to have been education, total factor productivity (TFP), non-ICT and non-robot capital deepening. The relative contribution of ICT capital is found to be declining from the mid-2000s, although our country-level economy dataset does not make it possible to estimate the TFP contribution of ICTs. The contribution of robots to productivity growth through capital deepening and TFP appears to be significant in Germany and Japan in the sub-period 1975–1995, in France and Italy in 1995–2005, and in several Eastern European countries in 2005–2019. Our findings also confirm the slowdown in TFP in most countries from at least 1995 onwards. This slowdown is mainly accounted for by a decrease in the contributions of non-ICT non-robot capital deepening and TFP.
    Keywords: Growth,Productivity,ICTs,Robots
    Date: 2022
  18. By: Kohnert, Dirk
    Abstract: Francophone Africa has been dominated to date by the political, economic and cultural repercussions of France’s colonial rule. A major instrument to assert France's interests was the upkeep of a common monetary policy and currency, the CFA Franc. Although this has been increasingly resented by African politicians and economists, who wanted to replace it by a West African currency (the ‘Eco’) the CFA still prevails, due to the social network of French and African political leaders, the ‘messieurs Afrique’ who benefit from the system. Controversial international discussion concentrates on questions of sovereignty and formal political and economic questions. However, the rules of the informal sector proved to be at least as crucial in structuring the CFA-zone as the institutions and policies of the formal economic sector, including its monetary institutions. For decades, for example, prices of French imports were overpriced, due to protection by tied aid and other political and cultural non-tariff barriers to trade. The cost of this rent-seeking was carried not only by the French Treasury, who guarantees the peg, but by the French and EU taxpayers, who financed budgetary bail-outs and development aid, and last, but not least, by the poorer African member countries and social strata. Although this applies strictly speaking only to the CFA zone, there are strong indicators that things haven't changed much since then for Francophone Africa in general. The repercussions of rent-seeking in Francophone Africat impact up to date negatively on economic performance. For example, growth levels have been significantly lower since two decades compared with Anglophone competitors.
    Keywords: : France, Afrique francophone, post-colonialisme, marché régulé, intérêts particuliers, capture réglementaire, politique monétaire, franc CFA, commerce international, zone de libre-échange, union douanière, études africaines
    JEL: E26 E31 E42 E52 F13 F15 F22 F35 F52 F54 L13 N17 N97 O17 R11 R58 Z13
    Date: 2022–02–19
  19. By: Pablo Aguilar (Bank of Spain and UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Luca Pensieroso (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: We introduce adaptive learning – a parsimonious, convenient way to model uncertainty – in a dynamic general equilibrium model of the U.S. Great Depression. We show that even the smallest departure from rational expectations increases significantly the data mimicking ability of the model, in particular for what concerns the lack of recovery in detrended GDP after 1933. We conclude that in the case of big, traumatic events like the Great Depression, uncertainty is particularly unfavourable to the recovery phase.
    Keywords: Learning, Great Depression, Dynamic general equilibrium, Bounded rationality
    JEL: E13 E32 N10
    Date: 2022–02–14
  20. By: Borowiecki, Karol (Department of Economics); Dzieliński, Michał (Stockholm Business School); Tepper, Alexander (Columbia University United States)
    Abstract: The reasons for the Great Crash and why it occurred at that particular time are still debated among economic historians. We contribute to this debate by building on a new model developed by Adrian et al. (2021), which provides a measure of the financial system's potential for financial crises. The evidence suggests that a tightening of margin requirements in the first nine months of 1929 combined with price declines in September and early October caused enough many investors to become constrained that the market was tipped into instability, triggering the sudden crash of October and November.
    Keywords: Leverage; financial crisis; stability ratio; great crash
    JEL: G01 G10 N22
    Date: 2022–02–23
  21. By: Ottinger, Sebastian (Northwestern University); Winkler, Max (Harvard University)
    Abstract: We study the impact of the first American party committed to redistribution from rich to poor on anti-Black media content in the 1890s. The Populist Party sought support among poor farmers, regardless of race, providing the segregationist Democratic establishment in the South with an incentive to fan racial outrage to alienate white voters from the Populists. Using text data from local newspapers and a difference-in-differences strategy, we find that stories of sexual assaults by Black men on white women became more prevalent in counties where the Populists threatened the Democratic dominance, and in Democratic newspapers only.
    Keywords: propaganda, divide and rule, political threat, media
    JEL: D72 J15 L82 N91 Z1
    Date: 2022–02
  22. By: Kristian S. Blickle; Markus K. Brunnermeier; Stephan Luck
    Abstract: How informed or uninformed are bank depositors in a banking crisis? Can depositors anticipate which banks will fail? Understanding the behavior of depositors in financial crises is key to evaluating the policy measures, such as deposit insurance, designed to prevent them. But this is difficult in modern settings. The fact that bank runs are rare and deposit insurance universal implies that it is rare to be able to observe how depositors would behave in absence of the policy. Hence, as empiricists, we are lacking the counterfactual of depositor behavior during a run that is undistorted by the policy. In this blog post and the staff report on which it is based, we go back in history and study a bank run that took place in Germany in 1931 in the absence of deposit insurance for insight.
    Keywords: bank runs; deposit insurance; financial crises
    JEL: G2
    Date: 2022–02–17
  23. By: Kamiar Mohaddes; Ryan N. C. Ng; M. Hashem Pesaran; Mehdi Raissi; Jui-Chung Yang
    Abstract: We investigate the long-term macroeconomic effects of climate change across 48 U.S. states over the period 1963 2016 using a novel econometric strategy which links deviations of temperature and precipitation (weather) from their long-term moving-average historical norms (climate) to various state-specific economic performance indicators at the aggregate and sectoral levels. We show that climate change has a long-lasting adverse impact on real output in various states and economic sectors, and on labour productivity and employment in the United States. Moreover, in contrast to most cross-country results, our within U.S. estimates tend to be asymmetrical with respect to deviations of climate variables (including precipitation) from their historical norms.
    Keywords: Climate change, economic growth, adaptation, United States
    JEL: C33 O40 O44 O51 Q51 Q54
    Date: 2022–01
  24. By: Andrew T. Foerster (Federal Reserve Bank of San Francisco); Andreas Hornstein (Federal Reserve Bank of Richmond); Pierre-Daniel G. Sarte (Federal Reserve Bank of Richmond); Mark W. Watson (Princeton University and NBER)
    Abstract: We find disparate trend variations in TFP and labor growth across major U.S. production sectors and study their implications for the post-war secular decline in GDP growth. Capital accumulation and the network structure of U.S. production amplify the effects of sector-specific changes in the trend growth rates of TFP and labor on trend GDP growth. We summarize this amplification effect in terms of sectoral multipliers that, for some sectors, can exceed 3 times their value added shares in the economy. We estimate that sector-specific factors have historically accounted for approximately 3/4 of long-run changes in GDP growth, leaving common or aggregate factors to explain only 1/4 of those changes. Trend GDP growth fell by nearly 3 percentage points over the post war period with the Construction sector alone contributing roughly 1 percentage point of that decline between 1950 and 1980. Idiosyncratic changes to trend growth in the Durable Goods sector then contributed an almost 2 percentage point decline in trend GDP growth between 2000 and the end of our sample in 2018. Remarkably, no sector has contributed any steady significant increase to the trend growth rate of GDP in the past 70 years.
    Keywords: trend growth, sectoral linkages, investment network
    JEL: C32 E23 O41
    Date: 2021–04
  25. By: David Laidler (University of Western Ontario)
    Abstract: Lucas (1972) was a paper that permanently changed the course of macroeconomics, even though its “money supply surprise†model lost its central place in the area within a decade because of empirical difficulties. However, Lucas’s novel methodology, based on clearing markets and rational expectations, still dominates orthodox macroeconomic theorising. An unfortunate side effect of this has been that, because mainstream models have no analytic room for money to play a key role in economic activity, the theoretical case for taking that role seriously was undermined just at the time when traditional monetarist macro-models were facing empirical problems. The consequences of all this for today’s monetary policy environment are briefly discussed.
    Keywords: Lucas; neutral money, monetarism, Keynesianism; micro-foundations; clearing-markets; inflation; recession
    JEL: E13 E31 E40 E52 N01
    Date: 2021

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