Why Economics Needs History

Barry Eichengreen's INET talk

NEP-HIS

Bernardo Batiz-Lazo's blog on new papers in economic history.

Trust Companies in the Panic of 1907

I recently posted "Sometimes Bad Things Happen to Good Trust Companies: A Reexamination of the Trust Company Panic of 1907" on SSRN

Abstract

The runs on trust companies during the Panic of 1907 have been blamed on unregulated financial innovation. New York trust companies are said to have taken advantage of gaps in regulation to engage in risky behavior, ultimately causing depositors to lose confidence in trust companies. This paper shows that there was not a general loss of confidence in trust companies. Runs were concentrated on a specific group of trust companies: the uptown trust companies. But there is no evidence of mismanagement or unusually risky asset allocation among these companies. Instead, it was the nature of their deposits that made them more susceptible to runs. While traditional trust companies focused on small numbers of large deposits from businesses, the uptown trust companies had large numbers of household deposits.

His Dark Materials and Economic History

According to the documents at the end of Philip Pullman's Once Upon a Time in the North Lyra went on to study economic history. Her dissertation for an M.Phil in Economic History was titled "Developments in patterns of trade in the European Arctic region with particular reference to independent cargo balloon carriage (1950-1970)."

Today in American Economic History

1794 Eli Whitney received a patent for the cotton gin.

1900 Congress passed The Gold Standard Act

government granted monoply

The FDA just granted KV Pharmaceutical a monopoly on the sale of a drug to prevent premature births. For years it had been produced by pharmacies that sold it for $10 to $20. Doctors can no longer use those versions of the drug. KV is increasing the price of a shot from $10 to $1,500. Read the story here.

North and Kuran Video

Douglass North and Timur Kuran discuss institutions and economic performance. Kuran gives a good taste of the argument in his latest book, The Long Divergence.

Great Stagnation

There has been a great deal of discussion regarding innovation prompted by Tyler Cowen's new book The Great Stagnation. Part of the argument is that the rate of innovation has slowed. He acknowledges innovation in information technology but seems to discount its importance to the general population. While I think its clear that innovation and changes in productivity are not constant over time, I'm skeptical that we are in the midst of period of unusually slow rates of innovation, or that the changes in information technology have not had a large and widespread influence. This is what I wrote in The National Economy in 2006

" Observation of everyday life appears to support the productivity data and suggests the rate of innovation accelerated during the 1990s and the first decade of the twenty-first century. In 1985, most college students, like students for decades before them, went to the library to do research with books and journals, took hand-written notes, and typed papers on typewriters while listening to vinyl records. In 2005, students use laptop computers, smaller than portable typewriters, to access more research material online than was available in many college libraries in the 1980s. They type up papers on the same laptop using a word processing program that points out spelling and grammatical errors, and allows them to edit by cutting and pasting without having to retype anything. The vinyl records, first replaced by CDs, are now replaced by other electronic forms of music storage, with thousands of songs stored in devices the size of on old tape cassette. They carry phones smaller than a wallet, and the phones can make calls, store phone numbers, send text messages, receive voice mail, take and send video images, store information, and serve as a calculator."

One might note that I was writing about college students, but looking around now I believe I could say virtually the same thing of 5th graders surfing the internet, while listening to iPods, and texting.