Was Portugal’s growth miracle (c. 1950-1973) due to the exploitation of Africa?

It is commonly heard in Portugal today that if the country converged during Estado Novo’s dictatorship it was because of exploitation of Africa. This claim has become louder recently, in the wake of a series of polemics in the media involving me. In this post I give some background and show that the claim is false. Exports to Africa in the last phase of Portugal’s empire were only about 3% of GDP and involved large administrative and warfare-related costs. These were not the causes of Portugal’s fast convergence to European living standards, from around a third of the GDP per head of the core of Europe’s richest countries in 1940 to 60% in 1973. This progress was the fastest and most prolonged in Portugal’s history, and it was of course accompanied by pronounced improvements in living standards, notable for example in a dramatic fall of infant mortality, from 131 per thousand in 1940 to about a third of that by 1974.

Before I dig into the details, here’s a quick summary of the events leading to this debate. A few months ago, I participated in a policy discussion about the future of Portugal, where I discussed the economic history of the country. I gave a description of Portugal’s economic history, mentioning facts that are well-accepted in academic circles. Nonetheless, lots of ignorant people including politicians, journalists and pundits got very angry about what I said. They did not want to accept that Portugal converged to European living standards during the Estado Novo dictatorship, arguing that it only happened because of democracy. The content of my talk was much discussed on TV, radio, and in an endless number of newspaper op-ed articles. The whole thing was turned into a sectarian, partisan debate, even though I do not belong to any political party. Accusation letters were sent to the University of Manchester, the BBC and the Guardian with lies, calling me a fascist and trying to get me fired, even though in my talk I had explicitly condemned the Estado Novo on political grounds (for being a dictatorship; the regime was not in fact fascist). Although my talk was on youtube, and it was easy to check what I actually said, several people lied a lot about the content of what I had supposedly said, and this included journalists, pundits, MPs and a loud MEP. Fortunately, they were exposed for it by many including independent fact-checkers.

Anyway, this saga lasted for many weeks, but once the dust settled, two things became clear to all reasonable observers: 1) that I am not and never was a sympathiser of the far-right at all, as some had claimed; imagine, by analogy, how absurd it would be if one was accused of being a supporter of absolute monarchy for saying that there had been growth in the eighteenth century! my statements about the Estado Novo were descriptive, not normative, and in fact I had previously criticized the far-right in public [plus Brexit, Trump, Órban, etc]; 2) that my description of Portugal’s economic history was factually correct, even though it clashed with what people are taught at school and tend to hear in uninformed debates. Once these facts became clear, far-left politicians who pretend to be historians – and for some sinister and mysterious reason are often treated as impartial historians by much of the media in Portugal – had to change their strategy. So they decided to start claiming that Portugal grew and converged, yes, but that was thanks to the exploitation of Africa. This was repeated a few times, most recently last Wednesday in a well-known national newspaper by the far-left politician Fernando Rosas, who happens to also be a professor emeritus of History with many students but no relevant publications at all [he is in fact known mainly for his political activities in a Maoist party, first, and then as a founder of the reasonably successful party “Left Block”, one of the most radical parties in Europe, according to the Chapel Hill expert survey often used by political scientists]. He and and others frequently use their access to the media to lobby for the creation of endless commissions and reparations comitees – i.e. for jobs for their followers. It’s a rather decadent spectacle, typical of a country where most full professors in the humanities and social sciences don’t have a single article or mongraph in a decent academic journal or book publisher. In the case of Rosas, he had been one of the pundits attacking me in public; I left many links to these polemics in my other blog, for those who may be interested in more details and who understand the Portuguese language. (As some people may know, I have two blogs dedicated to dissemination of research in economic history. This one, which I started in 2016, and one in the Portuguese language, which I founded in 2015.)

Moving on, in order to answer the now often-heard claim that if Portugal grew in the postwar it was thanks to exploiting Africa, I wrote a short post in the Portuguese blog explaining why this could not have been the case. Although the calculations are very simple, dishonest politicians have no problem repeating quantitative claims while providing no evidence, even though such claims are easy to disprove. Pseudoerasmus – the great exception to the general rule that most anonymous Twitter accounts are useless trolls – and Anton Howes, both encouraged me to write an English version:

The proximate growth factors for Portugal’s economic growth and convergence from around 1950 to 1973 had little to do with Africa. Exports to the colonies were around 15% of total exports in 1972-3. Since total exports were around 20% of GDP then, this implies that annual exports to Africa were only around 3% of GDP. In the 1950s, exports to the colonies were 20-25% of total exports, but total exports were much smaller as a percentage of GDP than in 1973; as a result, exports to Africa should have been again around 3% of GDP. Even though there were some additional transfers, all of this could not have been enough to pull economic growth significantly – also because it did not come for free: there were large administrative (and from the 1960s) warfare-related costs associated with Africa. There was war in three fronts: Angloa, Guiné, and Mozambique. Revenues were not profits.

In fact, we know the true proximate reasons why the economy industrialized and grew. Portugal benefited from the European Golden Age, but there were also internal factors. Human capital – in particular, basic literacy among children – improved markedly with Salazar’s dictatorship from the late 1920s. 75% of people had been iliterate in Portugal in 1900, but this problem was largely solved (among children) by the 1950s. Partly as the result of solving this secular bottleneck, there was structural and demographic change and the economy industrialized a lot already in the 1950s. In 1961 it entered EFTA, and market integration with European markets deepened considerably. Portugal’s small economy benefitted from this openness and the opportunities that came with it as a result. There were similar integration stories in other backward parts of Europe: Spain and Greece also coverged at the time while did not having any important colonies to exploit. The external sector of Portugal’s economy grew due to market integration with Europe, not Africa. The Portuguese (white) elite in Africa were only around 600 to 700 thousand people who returned to Portugal during 1974-5, plus a few who stayed or moved to South Africa, and this corresponds to the peak of this population at the end of the regime. The Marxist-Leninist idea that it was because of exploiting Africa that Portugal grew and converged in this period is simply incorrect.

I end by noting that the myth that the Empire mattered a lot for Portugal’s economy during all kinds of other historical periods is common, but also incorrect. Another period for which this is often repeated is the sixteenth century; Leonor Costa, Jaime Reis and I showed that this was incorrect in a 2015 article published in the European Review of Economic History. This does not mean that colonial trade never mattered for other periods and countries (I provided a summary of my views on the state of the debate in an earlier post). But as far as Portugal is concerned, note that in fact, the long-run effects of the eighteenth-century empire of Brazil were in fact negative due to a resource curse. Traditional historians need to get into the habit of actually quantifying things if they wish to make claims about what mattered, how, and when. As for politicians who are into making claims about history simply to advance their agendas, we must do our best to expose them for the fraud which they represent.

The real effects of monetary expansions: evidence from a large-scale historical experiment

The main paper from my PhD dissertation is now forthcoming at the Review of Economic Studies. I explore the discovery of rich deposits of precious metals in America in the early modern period as a natural experiment for random variation in changes in money supply in Europe. An open access link to the paper is here.

I find that a 10% increase in production of precious metals led to a hump-shaped response of real GDP, with a cumulative increase up to 0.9% six to nine years later. The evidence suggests that this is because prices responded to monetary injections with considerable lags.

Different countries responded differently, in terms of timings and magnitudes. The first receivers of the metals, Spain and Portugal, responded earlier.

Now, some personal details about how this happened, in case it is useful advice to those starting out. This will be published more than 6 years after I have defended my PhD and a decade after I first had the idea. When I was still an undergraduate, I had a research idea. It was rough at the time, but I stuck with it. It eventually became a chapter of my PhD. When I graduated 6 years ago, I managed to get an R&R in the first journal I submitted to, the Review of Economic Studies. There were then several rounds of revision until acceptance.

When you are young, people often do not listen to you, especially if your idea is a bit out of the ordinary or not easy to implement. I told variations of my idea to several macroeconomists over the years, and not that many seemed to listen, but some did (you know who you are!), and that was important to me.

At the LSE I was given the freedom to work in a topic of my choice which was essential. A few senior professors at the Department of Economics liked my paper and one suggested I submit to the Review of Economic Studies. As my reputation grew, as I learned who to talk to, and as my idea became more concrete, the share of people actively listening grew accordingly.

To get this through successfully, discussions with co-authors of related papers helped enormously. Make sure you work with competent, motivated collaborators who complement you well and everything will go much smoother. Here, the research assistance of the outstanding Adam Brzezinski as well as experience from joint work with other co-authors (Yao Chen, Felix Ward, and Kivanç Karaman) was indispensable. My department at the University of Manchester also gave me excellent conditions and support.

Stay up to date with the literature. When I first had my idea, neither the data not the methods that I have used were available. Keep an eye to what researchers in related fields are doing and be ready to connect the dots and think outside the box. If parts of the puzzle are missing, build them. When I started working on this neither GDP for Portugal nor money supply for England existed. But I knew that these would be interesting and published them in JEH and EHR. I have used both for other purposes too, as have others.

Finally, you may need to be a bit lucky. The editor who handled my paper, Michèle Tertilt, clearly read the paper in full. She and the four referees provided helpful comments which ultimately greatly improved my paper.

Book Review: The Corsairs of Saint-Malo

Disclaimer: the publisher, Columbia University Press, kindly sent me a copy of this book. Sometimes publishers send me copies; I do not always read or review the books, but if a copy was given to me I will write a disclaimer on top as I am doing now.

This book was a pleasure to read. It tells the fascinting story of French privateers (corsaires, in French) who were legaly sanctioned by the French government during wartime. Its author is Henning Hillmann, a professor of economic and organizational sociology at the University of Mannheim. I initially noticed that the book had an endorsement from Phil Hoffman of Caltech, who is in my opinion one of the best economic historians or indeed social scientist alive. That was in itself somewhat of a guarantee that reading this would be worth it – and it was.

Hillmann’s book considers in detail a series of related questions (listed in p. 3 of the book):

  • How did the partnerships for these course ventures form?
  • How did they entwine with parallel partnerships that the same armateurs formed to promote their ventures in overseas trade?
  • How did these various partnership networks combine to yield social cohesion within the merchant community?
  • How and why did this social fabric wax and wane over the course of more than a hundred years, from 1681 through 1792, from the reign of Louis XIV, the Sun King, to the French Revolution?

The author then gives answers to these questions, for example arguing that “the course played a pivotal role in upholding social cohesion among the local merchant elite in Saint-Malo. When opportunities for the course were absent, however, fragmentation rather than cohesion prevailed”. The book has the merit of not being afraid to engage with numbers – unlike what is often the case in other historical or sociological books. The quantification of matters such as population, trade, or merchant elite wealth, is welcome and complements well the qualitative discussion that is also provided. The frequent reliance on primary sources from Brittany is also a plus.

However, there are pitfalls too. Chapter 5, for example, includes a worthwile attempt to estimate returns to privateering. But when attempting to build measures of estimated fitting costs (Table 5.1.), the author engages in the common error of comparing nominal amounts (i.e. values in the unit of account, here livres tournois) across long spans of time. A similar problem exists elsewhere, too, in Figure 2.9. when considering trends in foreign commerce. The fact that inflation isn’t accounted for makes such comparisons almost meaningless, or at least hard to interpret. And yet there is no excuse to do this, since price indexes for 18th century France are available, most recently from the Ridolfi’s Journal of Economic History paper (data available here).

The author also spends a great deal of time discussing the dynamics of partnership networks, which seems to be one of his main focus of interest here. To me, that was a bit too much. I enjoyed the descriptive aspects of the book more than the explanations provided, but at the same time I felt that there was a lot of micro detail given at times without an adequate motivation. For example, some of the readers of this post will know that with coauthors I have worked on a paper entitled “The vagaries of the sea: evidence on the real effects of money from maritime disasters in the Spanish Empire“. In that paper we show that the vast majority of shipwrecks and maritime disasters in fact happen as a consequence of weather accidents, not piracy, even though piracy has, of course, broader Hollywoodesque appeal. Still, our evidence is related to the American Treasure Fleets exclusively, and it was interesting to read here about priacy and privatering in a somewhat different context.

While some of the stories provided are fascinating, at the same time, felt that the book sometimes gets into so much detail about individual “trees”, indeed so much that “the forest” gets out of sight completely: why should the reader care? Perhaps I’m just more interested in more “macro” questions by nature, but it wasn’t always clear to me why I should care about some of the fine details here, or indeed why they mattered to the overall story. The matter of the forest, i.e. the macro picture and its implications, being lost of sight seems relevant, because we know, for example, that French intercontinental commerce was in fact rather small by comparison with other powers, in per capita terms – a matter which the issue of piracy could not overturn (see this paper for the sources of the figure below):

Per capita intercontinental trade, at constant £ per capita of 1700. Adapted from Palma, N. (2016). Sailing away from Malthus: Intercontinental trade and European economic growth, 1500–1800. Cliometrica10(2), 129-149.

Indeed, more effort to provide international comparisons (and discussion of their implications) would have been welcome in this book. Yet, at the same time, Hillmann’s work is not primarly aimed at economists, so perhaps this is understandable. While the book is in ways reminiscent of Peter Leeson’s The Invisible Hook: The Hidden Economics of Pirates, Hillmann’s effort is more scholarly and historical (and as a result, more targeted at a specialized audience too).

Overalll, despite my abovementioned relatively minor quibbles, the book is very much worth reading. For the most part, I enjoyed learning from it.

The Corsairs of Saint-Malo: Network Organization of a Merchant Elite Under  the Ancien Régime (The Middle Range Series): Hillmann, Henning:  9780231180399: Amazon.com: Books
Henning Hillmann’s “The Corsairs of Saint-Malo: Network Organization of a Merchant Elite Under the Ancien Régime”

The long-run effects of risk

Advanced economies tend to have large but unstable intermediation sectors. In a new paper (also avaliable as a CEPR discussion paper), we study how a higher degree of risk in the financial sector affects long-run macroeconomic outcomes when banks have limited liability in a general equilibrium model. With full deposit insurance, banks expand balance sheets when risk increases, leading to higher investment and output. With no deposit insurance, we observe substantial drops in long-run credit provision, investment, and output. These differences provide a novel argument in favor of deposit insurance. Our welfare analysis finds that increased risk reduces welfare, except when there is full deposit insurance and deadweight costs are small.

Cross-country evidence reveals substantial heterogeneity across countries with respect to bank risk-taking attitudes. More developed countries tend to have a larger, and more unstable, intermediation sector, with variation depending on a number of factors including the nature and extent of regulation (Bezemer et al., 2020, Calomiris and Haber, 2015). In new research, we consider a quantitative equilibrium model in which banks have limited liability which allows us to investigate how exogenous financial sector risk affects risk-taking by banks, and subsequently long run macroeconomic outcomes (Van der Kwaak et al., 2021). By financial risk we mean the volatility or standard deviation of idiosyncratic shocks to the return on banks’ assets (Christiano et al., 2014). Therefore, our paper contrasts with the baseline Real Business Cycle (RBC) or New Keynesian (NK) models where risk does not affect the steady state or balanced growth path.

In our model, intermediate goods producers issue corporate securities that are purchased by banks, which finance these securities through net worth and deposits. Banks have limited liability and freely choose the degree of leverage in the first period by paying out part of their net worth in the form of dividends. They face the above-mentioned shocks which affect the performance of their securities portfolios and therefore the profits they pay to their owners. Because bankers operate under limited liability, they only care about the distribution of financial risk conditional on survival when making their balance sheet decisions (Diamond and Rajan, 2011). Therefore, changes in the distribution of the shock affect credit provision, investment and output. In our model, the government is responsible for the degree of deposit insurance, which amounts to the fraction of deposits that are reimbursed in case of bank default (Clerc et al., 2015). For simplicity, we do not explicitly model other government regulations or capital requirements that the banks have to abide by, as in Gertler and Karadi (2011). However, we assume that the level of financial risk can be influenced by government regulation, but we take the extent of regulation itself and its political origins and motivations as exogenous. We interpret the standard deviation of shocks to bankers’ idiosyncratic risk as a proxy measure of the degree to which banks are regulated, with a large standard deviation representing a regime with little regulation, as the financial sector will be able to invest in riskier projects that have both a higher payoff in the good state of the world, as well as a much lower payoff in the bad state.

Our analysis focuses on long-run outcomes. The combination of limited liability and (partial) deposit insurance introduces moral hazard into our model (Kareken and Wallace, 1978): as a result, an increase in the shock’s standard deviation increases the expected return on corporate securities conditional on the bank surviving the realization of the shock next period, incentivizing bankers to hold more corporate securities (as in Diamond and Rajan, 2011). In Figure 1 we show that for the full deposit insurance case, banks expanding credit in this way leads to an increase of steady state investment and output with respect to no limited liability. Simultaneously, a higher level of financial risk increases the probability of bank default (and therefore the fraction of banks that default ex post), which raises the deadweight costs from default in equilibrium.

Figure 1: Impact on long run outcomes from changes in the level of financial risk shocks (the solid line shows the full deposit insurance case with limited liability and the black dotted the case without limited liability)

Moral hazard can be reduced by lowering the fraction of deposits that are reimbursed in case of bank default: the smaller the fraction the more the probability of default is priced in by banks’ creditors. However, we find that decreasing moral hazard in this way actually increases the probability of bank default in equilibrium because of a nonlinear feedback loop between banks’ funding costs and the probability of default: the larger the fraction of deposits that are not reimbursed, the more creditors increase interest rates to price in the probability of bank default (see Figure 2). This increase in funding costs, however, decreases banks’ (expected) profitability, which then further increases the probability of bank default. This, in turn, further increases banks’ funding costs, which then have amplification effects. As a result, we find that the strength of this feedback loop increases nonlinearly with the fraction of deposits that are not reimbursed by the deposit insurance agency. In equilibrium, the long-run probability of bank default under a regime with no deposit insurance is quadrupled with respect to the case where half of deposits are reimbursed by the government, which in turn is only slightly higher than in the case of full deposit insurance.

Figure 2: Impact on long run outcomes from changes in the level of financial risk shocks with different levels of deposit insurance (in addition to the previous cases, the black dashed line shows the 50% deposit insurance case with limited liability and the black solid line shows the no deposit insurance case with limited liability).

The impact on the real economy from a complete absence of deposit insurance is large: as a result of higher funding costs, credit provision can drop by 80% with respect to the case of no limited liability when moral hazard is entirely eliminated, causing long-run output to drop by more than 25%. This sharply contrasts with the case of full deposit insurance, where credit provision and output increase relative to no limited liability. The negative impact on the macroeconomy from a complete absence of deposit insurance is substantially mitigated when 50% of deposits are reimbursed, although credit provision, investment, and output still decrease with respect to the no limited liability case.

Therefore, our results provide a second argument in favor of deposit insurance, in addition to the Diamond and Dybvig (1983) argument of preventing bank runs (which are absent in our model): deposit insurance eliminates the above-mentioned feedback loop that would otherwise cause banks’ funding costs to increase to such an extent that the probability of bank default increases far above that under full deposit insurance. As such, financial stability increases with more deposit insurance, despite introducing moral hazard along the way.

We also analyze the deregulation of the financial sector that started in the 1980s in several Western economies, which we capture via simultaneously increasing the level of financial risk and the fraction of bank debt that is not covered by deposit insurance (the latter captures the fact that financial institutions started to rely more on non-deposit financing). Both gradually increase over a period of 50 quarters to mimic the progressive deregulation of the financial sector since the 1980s.  We find that simultaneously allowing for a decline in the long-run natural rate of interest (captured by an increase in the subjective discount factor) leads to an expansion in bank credit as has been observed in recent decades (Knott et al 2014). In the absence of a decline in the natural rate we find that under an increase in the level of risk leads to a higher probability of default and higher funding costs for banks which in turn decreases lending to the real economy leading to lower investment and output. These results suggest that the expansion of the financial sector in recent decades is primarily driven by the decline in the natural rate of interest.

Finally, we consider the consequences of an increase in financial risk on welfare, which is defined as the sum of expected discounted utility. In Figure 3, the vertical axis features welfare (defined as consumption equivalent from steady state consumption under no limited liability expressed in percentage). The two horizontal axes show the standard deviation of the idiosyncratic shock (which reflects the level of financial risk) and the deadweight costs from default (Bernanke et al., 1999). From the figure we see that welfare increases with the standard deviation when the deadweight costs are small, as financial intermediaries expand their balance sheet, thereby financing a larger capital stock which expands output. This allows consumption to increase leading to higher welfare. In the paper we additionally consider the cases of partial and no deposit insurance. Consumption is always decreasing with higher risk, which implies that welfare is so as well. For larger and empirically more realistic deadweight costs we see that the beneficial effect of higher risk is more than offset by deadweight costs absorbing a larger fraction of output, leading to lower consumption.

Figure 3: Steady state results for the model version with limited liability and full deposit insurance

Policy implications

We show banks expand their balance sheet when financial risk increases, by taking advantage of limited liability and deposit insurance to shift downside risk to others. Despite the existence of moral hazard this financial sector expansion has long run benefits, increasing investment and output. Eliminating moral hazard by abolishing deposit insurance would force creditors to correctly price in the probability of bank default, and thereby prevent banks from leveraging up. However in our paper we find that doing so in fact deteriorates financial stability (even in the absence of bank runs) because of a feedback loop between the probability of default and banks’ funding costs: depositors demand higher rates under no deposit insurance, which increases the probability of bank default. As a result depositors demand even higher rates, which then increase the probability of default even further. We also show that financial sector deregulation and the decrease in the natural rate of interest since the 1980s has increased the probability of bank default which has made the financial sector more unstable. Even under full deposit insurance we find that welfare decreases with higher financial risk, despite more credit provision and higher investment and output.


Bernanke, B. S., Gertler, M., & Gilchrist, S. (1999). The financial accelerator in a quantitative business cycle framework. Handbook of Macroeconomics, 1, 1341-1393.

Bezemer, D., Samarina, A., Zhang, L., 2020. Does mortgage lending impact business credit?

Evidence from a new disaggregated bank credit data set. Journal of Banking and Finance 113

Calomiris, C.W., Haber, S.H., 2015. Fragile by design: The political origins of banking crises and scarce credit. volume 48. Princeton University Press.

Christiano, L., Motto, R., Rostagno, M., 2014. Risk Shocks. American Economic Review 104, 27-65.

Clerc, L., Derviz, A., Mendicino, C., Moyen, S., Nikolov, K., Stracca, L., Suarez, J., Vardoulakis, A.P., 2015. Capital Regulation in a Macroeconomic Model with Three Layers of Default. International Journal of Central Banking 11, 9-63.

Diamond, D.W., and Rajan, R.G., 2011. Fear of Fire Sales, Illiquidity Seeking, and Credit Freezes. The Quarterly Journal of Economics 126, 557-591.

Gertler, M., Karadi, P., 2011. A model of unconventional monetary policy. Journal of Monetary Economics 58, 17-34.

Kareken, J.H., and Wallace, N., 1978. Deposit Insurance and Bank Regulation: A Partial-Equilibrium Exposition. The Journal of Business 51, 413-438

Knott, S., Richardson, P., Rismanchi, K., Sen, K., 2014. Understanding the fair value of banks’ loans. Bank of England Financial Stability Paper 31

Christiaan van der Kwaak, João Madeira and Nuno Palma, 2021. The long-run effects of risk: an equilibrium approach. CEPR Discussion Paper 15841

Historical gender discrimination does not explain comparative Western European development

Historical gender discrimination does not explain comparative Western European development: This is what we argue in a new paper (joint work with Jaime Reis and Lisbeth Rodrigues). Also available as a CEPR discussion paper.

Here’s the abstract:

Gender discrimination has been pointed out as a determining factor behind the long-run divergence in incomes of Southern vis-à-vis Northwestern Europe. In this paper, we show that there is no evidence that women in Portugal were historically more discriminated against than those of other parts of Western Europe, including England and the Netherlands. We rely on a new dataset of thousands of observations from archival sources which cover six centuries, and we complement it with a qualitative discussion of comparative social norms. Compared with Northwestern Europe, women in Portugal faced similar gender wage gaps, married at similar ages, and did not face more restrictions to labor market participation. Consequently, other factors must be responsible for the Little Divergence of Western European incomes.

Comparative gender wage gap (f/m) for unskilled casual workers

Slavery delayed the industrialization of Brazil

Slavery in Brazil was only abolished in 1888.

In a new paper we consider the relationship between slavery and development in 19th c. Brazil. The paper is forthcoming in Capitalism: A Journal of History and Economics.

We show that despite its centrality, slavery was not essential for the production of cotton or industrialization. Our paper provides a critical comparative perspective to the New History of Capitalism literature that has attracted a lot of attention from both scholars and the media in recent years by arguing that slavery was essential for economic development and industrialization in the USA.

We show that the Brazilian cotton export boom kickstarted by the American Civil War took place both in regions dependent on slave labor and those relying on free workers and was rooted in new seeds and technologies rather than an increase of violence.

We further show that large-scale slavery distorted and constrained industrial development by diminishing the ability of areas of Brazil well-suited for industrial development to leverage their comparative advantage.

We conclude that slavery enriched a small elite, while damaging Brazilian society and economy at large, as indeed was also the case for the U.S. south (e.g. as argued by Gavin Wright).

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.