Economic history

Bruno Caprettini, Hans-Joachim Voth, 22 February 2020

Governments of modern states need to convince men and women to fight and possibly to die for their country, putting aside their ‘selfish’ instinct to stay alive. This column examines whether welfare spending under Roosevelt’s New Deal boosted US patriotism during WWII. It finds that higher welfare spending prior to 1940 is positively correlated with greater patriotism, as measured by war bond purchases, volunteering for the US Army, and exceptionally brave acts in battle. The findings suggest that when the federal government looks out for its citizens’ needs, men and women who benefit repay the largesse by becoming more patriotic.

Joao Gomes, Mete Kilic, Sebastien Plante, 09 February 2020

A joint resolution of US Congress in June 1933 invalidated gold clauses, which allowed for repayment in gold as well as paper, in public as well as private debt contracts. A series of lawsuits ensued, but in 1935 a complex and confused ruling by the Supreme Court determined that Congress’s action, while unconstitutional, could be maintained. This column argues that about one-third of the dramatic drop in the aggregate investment of public firms over 1933 and 1934 is explained by these events. By 1936 nearly all of the, now positive, net investment is accounted for by the elimination of these leverage risks to corporate balance sheets.

Gunes Gokmen, Wessel Vermeulen, Pierre-Louis Vézina, 01 February 2020

Throughout history, empires have facilitated trade within their territories by building and securing trade and migration routes, and by imposing common norms, languages, religions, and legal systems, all of which led to the accumulation of imperial capital. This column, based on novel data on the rise and fall of empires over the last 5,000 years, shows that imperial capital has a positive effect on current trade beyond historical legacies such as sharing a language or a religion. This suggests a persistent and previously unexplored influence of long-gone empires on current trade.

Walker Hanlon, Taylor Jaworski, 31 January 2020

The slowing pace of economic growth in the US and Europe have rekindled fears of reduced innovation and prompted calls for institutional changes meant to increase returns on spending for research and development. This column uses the case of the US interwar aircraft industry to suggest some unforeseen hazards of such change. It recommends considering the design of innovation and antitrust policy in tandem, especially where attempts to provide incentives for innovation may alter the extent of competition and endogenously reconfigure market structure.

Joel Mokyr, Assaf Sarid, Karine van der Beek, 30 January 2020

The consensus among economic historians has been that Britain’s leadership during the Industrial Revolution owed little to the school system. But recent work on human capital suggests that we should rethink this consensus on the role of human capital. This column shows how millwrights – highly skilled carpenters who specialised in constructing and repairing watermills – had a persistent effect on the mechanisation of textile- and iron-making and on the economic expansion that was taking place on the eve of the Industrial Revolution.

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