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.