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Showing posts from May, 2015

The Railway Mania

My colleague and former PhD student Gareth Campbell has created a website about the British Railway Mania - click here. This episode has been described by the Economist as probably the greatest bubble in human history. Gareth's website provides background on the Mania and posits some explanations for the 'bubble'. In his explanation of why the bubble happened, Gareth places a lot of emphasis on investor myopia regarding future dividends and uncalled capital. His study of investors during the episode does not support the view that this episode was fuelled by naive and irrational investors. 

Alternatives to the Federal Reserve

A special issue of the Journal of Financial Stability, edited by George Selgin, has been published which examines past and present alternatives to the Federal Reserve system. Notable contributions to the the special issue include Matthew Jaremski (on clearinghouses as credit regulators), Hugh Rockoff (on Sprague and the founding of the Fed), Lawrence H. White (on returning to a commodity standard), Scott Sumner (on Nominal GDP futures targeting) and Gerald Dwyer (on Bitcoin).

Free Banking History

The Cato Blog has a great post based on an excerpt from Larry White's piece on Free Banking in History and Theory
Free banking is the view that money and banking are best left to the invisible hand of market forces - no need for a central bank, lender of last resort or bank regulation. Free bankers argue that these things tend to destabilise banking systems and economies. They point to historical episodes where monetary and banking systems were relatively free of interference by the government to show the efficacy of free banking - episodes where banks issued notes redeemable for a precious commodity. Of course, no historical system is perfectly free of government interference, but Australia in the second half of the nineteenth century probably comes closest.
I've dabbled in free banking history in the past - see my article on Australia here and my article on early joint-stock banking here. I find that free banking worked when there were credible constraints on the ability …

Love and Marriage During the Great Depression

In a recent Journal of Economic Historypiece, Matthew Hill studies the effect of economic conditions on marriage during the Great Depression. In the short-run, marriage was delayed. However, in the long-run, marriages formed during the tough times of the Great Depression were more stable. Here is the abstract to his paper: I examine the impact of the Great Depression on marriage outcomes and find that marriage rates and local economic conditions are positively correlated. Specifically, poor labor market opportunities for men negatively impact marriage. Conversely, there is some evidence that poor female labor markets actually increase marriage in the period. While the Great Depression did lower marriage rates, the effect was not long lasting: marriages were delayed, not denied. The primary long-run effect of the downturn on marriage was stability: Marriages formed in tough economic times were more likely to survive compared to matches made in more prosperous time periods.

Asset Management Is Transforming the Financial System

Below is a Milken Institute video which features a roundtable discussing the shape and size of the asset management industry and how it is changing the global financial system.

Innovation and Religion

Stuart Henderson, my PhD student, has a  great blog post at the NEP-HIS Blog, which reviews a paper by Roland Benabou, Davide Ticchi and Andrea Vindigni entitled Religion and Innovation. In this paper, the authors argue that greater religiosity is almost uniformly and very significantly associated to less favourable views of innovation. However, Stuart rightly points out that there may be difference across denominations - some religions may positively effect innovation. Indeed, the economic historian in me would point out that many of the founding fathers of modern science had a theistic worldview which underpinned their science - e.g., Kepler, Pascal, Boyle, Newton, Faraday, Lister, Maxwell, Kelvin, Pasteur etc. In other words, these pioneers believed that there is a God who has created all things in an orderly manner and that there are laws of science which can be discovered through human investigation. Without this presupposition, one has to ask would modern science exist? Now the…