The Bank of England and the British economy, 1694-1844

New working paper by Patrick O’Brien and myself, avaliable here (open access), and also as a CEPR discussion paper (gated), here.

Not an ordinary bank but a great engine of state: the Bank of England and the British economy, 1694-1844

From its foundation as a private corporation in 1694 the Bank of England extended large amounts of credit to support the British private economy and to support an increasingly centralized British state. The Bank helped the British state reach a position of geopolitical and economic hegemony in the international economic order. In this paper we deploy recalibrated financial data to analyse an evolving trajectory of connections between the British economy, the state, and the Bank of England. We show how these connections contributed to form an effective and efficient fiscal-naval state and promoted the development of a system of financial intermediation for the economy. This symbiotic relationship became stronger after 1793. The evidence that we consider here shows that although the Bank was nominally a private institution and profits were paid to its shareholders, it was playing a public role well before Bagehot’s doctrine.

Here’s a picture of Patrick and me in my office in Manchester about two years ago, making progress:

Call of applications for a PhD at the Department of History of the University of Manchester

The PhD candidate will be writing a dissertation in Economic History under the supervision of Professor Philipp Roessner of the Department of History and Dr. Nuno Palma of the Department of Economics.

Funding for UK and international students is avaiable from the Department of History, from UKRI, from ESRC and from AHRC.

The successful applicant must have a good master’s degree in History, Economics, Economic History, or other closely related field. For candidates with a History background, prior knowledge of statistics would be useful but not mandatory. Good communication skills in English are required.

Information about the PhD program is available here.

Further information can be obtained from Professor Phillip Roessner [philipp.roessner@manchester.ac.uk]

The application must include: A detailed CV, a certified copy of your master’s degree certificate including all examination results, a letter of motivation, as well as a strong 1,500 word draft proposal outlining your proposed field of study, the state of the art, the innovative contributions that your research will make, why it is relevant, as well as a representative body of indicative historical primary sources that will help you to accomplish all this.

Please see the official university pages and follow the instructions there to apply. Please apply as early as possible to avoid disappointment.

The program starts on September 2021 and a student is expected to graduate in three years. In addition to the scholarship stipend, funding opportunities will be available for research trips abroad. During your PhD there is also the possibility of doing research visits to universities abroad.

The University of Manchester

Monetary Capacity: some background

New voxeu column and accompanying CEPR discussion paper, covering my work in co-authorship with Roberto Bonfatti, Adam Brzezinski, and K. Kivanç Karaman.

The paper touches a number of themes across economic history, historical political economy, and macro/monetary economics; but here’s a 1-sentence summary: we argue that monetary and fiscal capacity and, by extension, markets and states have a symbiotic relationship. And we provide causal evidence, too. If this peaked your curiosity, please have a look at the column and the paper itself.

In this short post, I’ll give some background about this work which makes more sense to be in a blog post than elsewhere.

We have been working in this paper for a long time – more than three years – and it feels great that we finally have a working paper. It’s worth pointing out our new paper is related to prior work by Kivanç Karaman and co-authors, as well as my own such as this piece, briefly summarized here.

For a long time, I’ve had the greatest admiration for Kivanç Karaman and the exciting work he has done, some of which with the equally impressive Sevket Pamuk, including the work they did in starting off a literature (which has since grown greatly) on empirical measures of historical state capacity. If you asked me who’s my favorite young economist in the world – and if I really can only pick one – then I’d have to answer it’s Kivanç. Whatever you do, do yourself a favor and read his work (you can thank me later!).

Our current work is in some sense the intersection of his research program with mine, and it has been wonderful working with him as well as my long-time friends and collaborators Adam Brzezinski and Roberto Bonfatti, who both also provided critical input and without whom the current paper would also not have been possible.

Economic History postdoc opportunity at the University of Manchester

BA Postdoctoral applications 2020

British Academy Postdoctoral Fellowships. Early career award, i.e. within a 3 year period from their VIVA (i.e. date of defense of the PhD).

This scheme provides funding to cover the costs of a 36 month fellowship. Earliest start date for the position: 1 September 2021.

Please pay attention to all the rules in the call (see the link above, as well as the guidance notes, here). In particular:

“Anyone of any nationality who has a doctorate from a UK university is eligible. If an applicant does not meet the prior categories, they may be accepted if they can demonstrate ‘strong prior association’ with the UK academic community. This typically means a current significant period – with a minimum period of one year, which will need to be completed prior to your application being submitted – of employment at a UK institution in either a teaching or research position which is not permanent. Postgraduate degrees (MA or MSc) do not count.”

“Eligible applicants are expected to be at an early stage in their career which is defined by BA as being within 3 years of their successful VIVA examination  between 1st April 2018 to 1st April 2021. Exemptions for maternity leave or illness may be considered. Applicants must not already have a permanent academic position. This is a two stage application whereby successful applicants at outline round are invited to submit a full application in spring 2021.”

Deadline of outline applications : 14/10/2020. You must write me well before this date (see below).

Each BA postdoctoral  application requires a UoM academic mentor. I wish to support one candidate who is an economic historian. Please note that the school will only allow one BA postdoctoral application per mentor so that each mentor may only support one application.

Since I can only support an application, this is expected to be a competitive call. Please send me by email a detailed research proposal and a short (2 pages max.) CV, by email. Please also ask an academic referee to email me a recommendation letter supporting you. Please do this as soon as possible, and for sure before mid September.

Fellowship in (macro)economic history

Opportunity in (macro)economic history – call for interest 

In antecipation of what will likely be a difficult year for job market candidates, I place this info here for those who may be looking for opportunities few months earlier than usual.

Please get in touch with Luís F. Costa, or alternatively, me, as soon as possible and surely before August 7, in case you are interested in applying to a well-paid temporary research position at 
ISEGUniversidade de Lisboa for an ambitious project. This is to be held at UECE/REM, a research centre of ISEG – Lisbon School of Economics & Management, Universidade de Lisboa, located in Lisbon, Portugal. This is a beautiful and historical city offering a rich array of cultural and social activities. Successful candidates will be provided with equipped office space, e-mail and internet access, as well as free access to library facilities.

We would be especially interested in collaborating with researchers aiming at identifying the effects of monetary shocks using Portuguese historical data from the early 20 th century. Given the nature of the project, extensive knowledge of Portuguese would be highly recommended. Researchers in both macroeconomics and (macro)economic history would be welcome to submit their pre-proposals.

This is to be held at UECEREM, a research centre of ISEG – Lisbon School of Economics & Management, Universidade de Lisboa, located in Lisbon, Portugal. This is a beautiful and historical city offering a rich array of cultural and social activities. Successful candidates will be provided with equipped office space, e-mail, and internet access, as well as free access to library facilities. ISEG has also very active research group in economic history GHES-CSG that may also be a source additional research interaction.

Expressions of interests for applications having UECE/REM as a Host Institution (beneficiary) will be evaluated within the framework of the following Marie Skłodowska-Curie Actions – Individual Fellowships (IF):European Fellowships (EF), including Career Restart, Reintegration, Society and Enterprise, and Standard European FellowshipsGlobal Fellowships (GF), which require a research period in a Third Country, followed by a reintegration period at the Host Institution. 

We particularly encourage applications from young scholars (i.e. think of this as a sort of postdoc), but applications from more senior scholars are also accepted.Please notice all the rules in the call, including:The Marie Skłodowska-Curie Individual Fellowships are available for experienced researchers of any nationality, who must have, at the date of the call deadline, a doctoral degree or at least four years of full-time equivalent research experience.Eligible candidates must comply with MSCA mobility rules:For European Fellowships: the researcher cannot have resided or carried out his/her main activity (work, studies, etc.) in the country of the beneficiary for more than 12 months in the three years immediately before the call deadline;For Global Fellowships: the researcher cannot have resided or carried out his/her main activity (work, studies, etc.) in the Third Country where the outgoing phase takes place for more than 12 months in the three years immediately before the call deadline. The deadline for submitting applications is August 7 2020, 11:59 pm (Lisbon time). The decision to host the candidate will be notified via e-mail by the end of August 2020.

Selected candidates will receive full support from UECE/REM and supervisors to develop their proposal throughout the submission process.The final deadline for submissions into the Funding & tender opportunities portal is September 9th, 2020, 5 pm (Brussels time).

About UECE/REM

UECE – Research Unit on Complexity and Economics is a research centre of ISEG – Lisbon School of Economics & Management, Universidade de Lisboa. UECE produces research, both theoretical and applied, mainly in Economics, but also in the Sciences of Complexity and in inter-disciplinary areas. The main UECE goals are: Promoting research on dynamical systems and on complexity, with an emphasis on economic applications, and also on other economic fields, such as game theory and macroeconomics. Developing new statistical methods applied to economics. Studying the consequences of dynamic, non-linear and complex systems in what concerns economic analysis and forecasting. Organising seminars, conferences and other events to disseminate scientific results. Participating in international research networks and promoting participation of researchers in international congresses and conferences. Promoting and publishing papers, working papers and other documents to stimulate research in these recent economic theory areas. 

UECE is part of REM – Research in Economics and Mathematics, a research consortium of ISEG – Lisbon School of Economics & Management, Universidade de Lisboa, founded in 2017, and aggregates two research centers, CEMAPRE and UECE. REM produces research, both theoretical and applied, mainly in Economics and in Mathematics, and also in inter-disciplinary areas. REM’s researchers are organized in six groups: Econometrics; Economics and Mathematics of Complex Systems; Mathematical Analysis and Computational Finance; Macroeconomics; Microeconomics; Statistics and Actuarial Science. REM also organizes seminars, conferences and other events to disseminate scientific results; participates in international research networks; and promotes and publishes papers, working papers and other documents to stimulate research in the abovementioned areas. REM supports XLAB – Behavioural Research Lab. REM is a member of the EconPol Europe – the European network for economic and fiscal policy research – a network of 14 policy-oriented university and non-university research institutes across 12 countries (Czech Republic, the Netherlands, Portugal, Spain, Switzerland, Germany, France, the UK, Finland, Austria, Italy and Belgium).

The efficiency of the Chinese silver standard, 1920-33

Market fragmentation prevailed in China during its Republican and Nationalist periods. That is what most of the existing literature says, at least: domestic markets were segmented due to a largely self-sufficient peasant economy, backward transport, and low state capacity. The latter led to political instability and various warlords controlling different regions of the country. As a consequence, port cities and the countryside had independent markets, which limited economic growth.

In a new CEPR discussion paper (joint with Liuyan Zhao of the school of economics of Peking University), we test for money market integration in China during 1920-1933 using a new dataset of daily domestic exchange rates. We consider four Chinese cities, all of which were on a silver standard, for 1920-1933. We find that despite political instability, domestic financial markets were highly integrated.

With the exception of the period of the Northern Expedition (09/1926-12/1928), the
exchange-market efficiency of the Chinese silver standard was not much different in magnitude to that of the classical Dollar-Sterling gold standard before World War I. We hence conclude that there was a substantial degree of Chinese financial markets integration before the Sino-Japanese War, and we attribute this fact to technological advancements
such as the rapidly explanding railway and telegraph lines, to monetary innovations, and
to China’s low labor costs which contributed towards low transportation costs.

Our study carries implications for the historical understanding of market integration
at a time of political disintegration during the Warlord Era and the early years of the
Nanjing Decade. The finding that the Chinese silver standard was remarkably efficient
at this time of political turmoil and weak state capacity implies that Chinese economic
development in the period up to the Sino-Japanese War was kept in check by factors
other than lack of domestic market integration.

A open access version of our paper is here. The CEPR discussion paper version is here.

Looking for an economic history fellowship?

Please get in touch with me, as soon as possible and surely before the end of the month, in case you are interested in applying to join an ambitious economic history team at ICS in Lisbon – Portugal’s elite social sciences institute, where I have a secondary appointment. I am part of the “power, society and globalization” research group.

ICS-ULisboa is an international, interdisciplinary academic research centre gathering researchers from many different areas of the social sciences as well as from various countries. The Institute, which was evaluated in 2019 as an ‘Institution of Excellence’ by international panels, offers excellent working conditions, financial support for research and international networks. Its premises are located in Lisbon, a beautiful and historical city offering a rich array of cultural and social activities.

Along with the possibility to join the Institute’s vibrant research environment and benefit from its wide international network, successful candidates will be provided with equipped office space, e-mail and internet access, as well as free access to library facilities.

Expressions of interests for applications having ICS-ULisboa as a Host Institution (beneficiary) will be evaluated within the framework of the following Marie Skłodowska-Curie Actions – Individual Fellowships (IF):

European Fellowships (EF), including Career Restart, Reintegration, Society and Enterprise, and Standard European Fellowships

Global Fellowships (GF), which require a research period in a Third Country, followed by a reintegration period at the Host Institution

See the call for details. We particularly encourage applications from young scholars (i.e. think of this as a sort of postdoc), but applications from more senior scholars are also accepted.

Please notice all the rules in the call, including:

The Marie Skłodowska-Curie Individual Fellowships are available for experienced researchers of any nationality, who must have, at the date of the call deadline, a doctoral degree or at least four years of full-time equivalent research experience.

Eligible candidates must comply with MSCA mobility rules:

For European Fellowships: the researcher cannot have resided or carried out his/her main activity (work, studies, etc.) in the country of the beneficiary for more than 12 months in the three years immediately before the call deadline;

For Global Fellowships: the researcher cannot have resided or carried out his/her main activity (work, studies, etc.) in the Third Country where the outgoing phase takes place for more than 12 months in the three years immediately before the call deadline.

The deadline for submitting applications to ICS-ULisboa is July 3rd, 2020, 11:59 pm (Lisbon time).

The decision to host the candidate will be notified via e-mail by 24 July 2020. Selected candidates will receive full support from the Institute’s R&D unit and supervisors to develop their proposal throughout the submission process.

The final deadline for submissions into the Funding & tender opportunities portal is September 9th, 2020, 5 pm (Brussels time).

For students: What’s the point of economic history?

Due to this post, I often get students from all over the world writing me for advice. Today, I got an email from a student. He writes a long email which includes the following, which I copy here with his permission, having edited it lightly:

I have a strong interest in economic-historical disciplines, especially in quantitative economic history. I would like to ask some sort of philosophical question (that is really important to me) about research in quantitative economic history, and about career perspectives in the field.

I really like the field of quantitative economic history. In my opinion, it represents a really beautiful unity of economics, history and mathematics […] It is always interesting to get to know new insights about how it all worked in the past and what was the precise quantitative effect of A on B. With no doubt, quantitative economic history helps us to expand our understanding of historical development.

But it has started to bother me that it is all just about the past. Yes, quantitative economic history can help us to shed new light on some aspects of historical events and processes, but how can it reflect on the contemporary world? How can we use the knowledge in our modern reality? I mean, all that researches are fascinating indeed, but the fact that even the most brilliant results of them can’t change the world and give humans something valuable (except the renewed and more comprehensive understanding of investigated historical processes, of course). Probably, it sounds a little bit dramatic, but now I am really concerned with the question: how (quantitative) economic history can be useful for society? I would appreciate much if you share with me what do you think about this all.

Also, tell me, please, what fields you think are the most perspective areas of research in (quantitative) economic history nowadays and near future? And what career opportunities do exist for a person who is interested in the area (for example, what to do after a PhD).

There are quite a few different questions here, but they are common ones, so allow me to break this down into two parts.

First, does economic history have any lessons for the present, and indeed the future? I suspect that the feeling that it perhaps does not is also present in the minds of some journalists, politicians, and members of the public. That perception is mistaken, yet it is curious that it doesn’t happen as often about economics. Part of the reason is that not many understand that economics itself needs economic history; just like “the past has useful economics” (a separate discussion, really). See also “Why historians and economists should study each other’s subjects” by Maxine Berg.

I recommend you read these essays which explain these issues better than I can do here in a short blog post. Although he focuses more on pedagogical aspects that on economic policy, the link should become more evident. Think for a moment: to understand the world we live in today, we need to understand how we got here. So, context matters, and history matters, especially given that so many development outcomes we are about are path-dependent.

Second, about career opportunities. What follows is my viewpoint and others may give you different advice, of course. In my personal opinion, no one should pursue a PhD in Economics or Economic History unless they are sure that they want an academic career. You can change your mind later, of course, and that’s fine. But if you already know that it’s not what you want, then it’s almost surely not for you, and your effort will reveal itself most likely a waste of everyone’s time. It is true that some international policy-type instituons such as the IMF or the World Bank may also require a PhD for certain jobs, and you may be interested in such opportunities too. But whatever you do, the key advice is this: don’t start a PhD just because you want to delay getting a “real” job.

For those who do want to pursue such a PhD in these fields, getting an academic or policy job afterwards is relatively easy compared with other areas of knowledge. There is almost no unemployment, though as in the rest of the labor market for high human capital, the best jobs are getting increasingly harder to get. The quality of the job you will ultimately get will depend of course on the quality of the work you did, and on the quality of the program you enrolled and how well it fit your profile, among other factors. It’s always a good idea to ask any given program which you are considering for their placement history: how well have recent graduates done? And before deciding, make sure to speak with a few current students there, too.

My main advice is: you should do it only if you really like what academic research is all about; financially, there are better opportunities out there, and potentially requiring less hard work too. So, you are now better informed but in the end of the day only you can answer your own question. My hope is that my advice can usefully contribute to your reflection!

The University of Manchester

Why did Latin America fall behind and what explains its human geography?

Leticia Abad and I recently released a new paper, avaliable here, and which is going to be published as a chapter in an edited volume, Globalization and the Early Modern Era: An Iberian Perspective (eds. R. Doblado and A. Garcia-Hiernaux), Palgrave (forthcoming 2020).

The title of the paper is: The Fruits of El Dorado: The Global Impact of American Precious Metals.

Despite the title of this post, the paper’s ambition is to also explain what happened to other parts of the world as well — such as the little divergence within Western Europe (and we also had something to say about Asia and Africa). Nonetheless, we mostly rely on previous work for that; the most innovative focus of our chapter is our argument about Latin America, hence the title of this post.

Here’s the paper’s abstract:

The quest for precious metals and trade routes during the early modern period fundamentally changed the world. What was the global impact of the large deposits of silver and gold which existed in the Americas? In this chapter, we take a global view. We find that in Europe, England and the Netherlands benefited the most. By contrast, the colonizers par excellence, Spain and Portugal, were unable to profit from their colonial expansion. In Latin America, the exploitation of precious mineral resources enabled the geographic expansion of the empire and shaped labor institutions, the fiscal apparatus, and economic activity. The direct impact on other parts of the world was negligible; but the long-term political consequences of European presence shaped the world as we know it today.

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Leticia Abad

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Nuno Palma

Big debates and economic history: the case of World War II

Economic history matters for big debates. This can be true of even historical national accounting work which to some observers can appear to be as dry a topic as any can be. Here’s an example of why it matters.

In this interview with Tyler Cowen, the notable historian Adam Tooze mentions (from around minute 32) how in writing his celebrated book “Wages of Destruction: the making and breaking of the Nazi economy”, he was critically influenced by the work of top economic historians Angus Maddison and Stephen Broadberry. Their work on productivity comparisons between the USA and Europe, as well as between the UK and continental European countries was of fundamental importance to the formulation of Tooze’s innovative arguments in his book, which relied in part on the rejection of anachronistic assumptions about German economic power prior to (and during) the war.

Tooze’s book rationalizes some of Hitler’s strategic military actions, such as the invasion of the Soviet Union, arguing that it was an ideological but also calculated move to grap resources in antecipation of war with all-mighty USA. The book has at times been criticized for downplaying the role of the UK, but is undeniably brilliant, and it deservingly won the Wolfson History Prize.

Watch the interview here: