How history can contribute to better economic education
Coen Teulings11 July 2014
The financial crisis and the Great Recession have led to calls for more economic history in economic education. This column argues for a much broader use of history in economics courses, as a device for teaching both the logic and the empirical relevance of economics. A proposed curriculum would include the rise of agriculture, urbanisation, war, the rule of law, and demography.
Historians tend to stress the particularities in history. Each event is unique, caused by a set of conditions that will never reproduce themselves again. In turn, each event causes new events, which therefore are equally unique and equally irreproducible. Hence, historians conduct painstaking research into the details of these conditions to understand the course of history.
What explains political institutions? Evidence from colonial British America
Elena Nikolova17 August 2012
Why do some states develop as democracies while others remain authoritarian? The question continues to puzzle social scientists. This column presents new data from 13 British American colonies from before the American Revolution. It shows that democratic institutions had a lot to do with the need to attract workers.
Under what circumstances do democratic as opposed to authoritarian institutions emerge? Although a large literature has tackled this question (see Acemoglu et al. 2001, Acemoglu and Robinson 2012, Engerman and Sokoloff 2000), we still have an imperfect knowledge of how representative institutions originate and change. Political institutions are difficult to study not only because they are usually endogenous to other variables, such as inequality, culture, or geography, but also because institutional change is rare or may happen very gradually.
International trade can have profound effects on domestic institutions. This paper examines this proposition in the context of medieval Venice circa 800-1350, showing that increases in long-distance trade enriched a large group of merchants who used their new-found muscle to push for constraints on the executive.
How does a new form of knowledge enter the public sphere and what are the consequences for economic activity? Today, thousands of students are pursuing university degrees in biotechnologies and computer sciences in order to enter the high-tech labour force or to become entrepreneurs. Do the institutions that train them generate economic growth? What roles can governments play in establishing educational institutions and supporting investments in the new forms of human capital they produce?
Hatred transformed: How Germans changed their minds about Jews, 1890-2006
Hans-Joachim Voth, Nico Voigtländer01 May 2012
The persecution of Jews during WWII is one of the darkest and most puzzling chapters of recent history. This column asks how economics can help our understanding, particularly of how people’s attitudes to Jews have changed over time. It argues that ‘cultural economics’ shows that there is more to understanding how people behave than looking at their incentives.
How and when do people change their minds? For example, watching a popular television series like AMC’s Mad Men seems to transport us straight to another planet. It shows the lives of advertising executives on Madison Avenue in the 1960s who spend their days drinking heavily (from 9am), chain-smoking, and fornicating. While not necessarily an accurate portrayal of corporate life in the middle of the 20th century, it reminds us how deeply cultures can be transformed in a relatively short space of time.
Is it time for Eurobonds? This column argues that Eurobonds have always been the right solution. Every successful union throughout history has needed to create a proper financial instrument of sovereign debt – and the Eurozone is no different.
Debt crises and fiscal problems are nothing new. On 2 January 1672, King Charles II of England put a “stop on the exchequer,” suspending repayment of his debts for a year. Such events would have been more common for the Stuart kings if people had been prepared to lend them money in the first place. Few were. Prior to the stop, Charles had already been refused an “advance” from the bankers of Lombard Street. His father Charles I had resorted to “forced loans” when short of money.
The “Out of Africa” hypothesis, human genetic diversity, and comparative economic development
Quamrul Ashraf, Oded Galor01 August 2011
The reasons given for the vast divide in standard of living between different parts of the world are many, with some economic historians claiming the roots lie in the colonial period. This column goes back even further to the cradle of humankind in East Africa, suggesting that the genetic diversity of the tribes that dispersed to different parts of the globe determined their success many thousands of years later.
Existing theories of comparative development seek to explain the vast inequality in living standards around the world. The importance of geographical, cultural and institutional factors, human capital formation, ethnic, linguistic, and religious fractionalisation, colonialism and globalisation have all been at the centre of a debate regarding the origins of the differential timing of transitions from stagnation to growth and the remarkable transformation of the world income distribution in the last two centuries.
From lender of last resort to global currency? Sterling lessons for the US dollar
Marc Flandreau, Stefano Ugolini23 July 2011
Has the global financial crisis been bad news for the world’s reserve currency? This column argues that it needn’t be, citing the rise of sterling as a global currency after the financial crisis of 1866.
Opening Pandora’s box: A new look at the industrial revolution
Tony Wrigley22 July 2011
Before the industrial revolution, economists considered output to be fundamentally constrained by the limited supply of land. This column explores how the industrial revolution managed to break free from these shackles. It describes the important innovations that made the industrial revolution an energy revolution.
The most fundamental defining feature of the industrial revolution was that it made possible exponential economic growth – growth at a speed that implied the doubling of output every half-century or less. This in turn radically transformed living standards. Each generation came to have a confident expectation that they would be substantially better off than their parents or grandparents.