Grasping Reality on TypePad, by Brad DeLong

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Introduction to Economic History

Economics 210A
Brad DeLong and Barry Eichengreen
Spring 2014
University of California, Berkeley
Wednesday 1:00-3:00 p.m.
597 Evans Hall

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Introduction

Economics 210a is required of Ph.D. students in the first year of the graduate program. The course is designed to introduce a selection of themes from the contemporary economic history literature ( not to present a narrative account of world economic history). Emphasis is on the insights that history can provide to the practicing economist.

Class meetings consist of a mixture of lecture and discussion. Because discussion will focus on issues raised by the assigned readings, readings should be completed before class.

Your grade will be based 50 percent on one-page memos due at the beginning of each class meeting in the instructors' mailboxes at 5 PM Tuesday, and 50 percent on the research paper (where the latter 50 percent will be based both on the synopsis you submit prior to spring break and the paper you submit at the end of instruction). Extra credit will be given for informed, constructive classroom discussion.

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Weekly Memos

A memo on each week’s readings is due at the beginning of the class during which those readings are discussed. You will find the memo questions on Professor DeLong’s and Professor Eichengreen’s 210a subpages:

• http://delong.typepad.com/sdj/econ-210a-spring-2014/
• http://emlab.berkeley.edu/users/webfac/eichengreen/e210a_spring13/e210b.shtml

Typically the week’s question will be posted on the Thursday six days before the class meeting when your memo is due. The memo is due at the start of the class meeting.

Your memos should be one-page, and certainly no more than two pages (12-point type). They cannot be exhaustive or provide definitive answers. But they can explain why a question is important, and they can draw on assigned readings in an effort to answer it.

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Research Paper

Your research paper is due on Friday May 9th. In addition to sending an electronic copy to both instructors, be sure to put a copy in Professor Eichengreen’s mail box in Economics Department reception on the 5th floor of Evans Hall. The office is open 9:00-4:00. The paper should not exceed 25 pages. This deadline will not be changed; plan in advance.

The writing and submission process requires that you meet two benchmarks. You should discuss your paper topic during office hours with one of your instructors during the first half of the semester and then submit a brief paper prospectus before spring break (by 4:00 PM Friday March 14th – electronic copies to both instructors, also to Professor Eichengreen’s mailbox). That prospectus should explain why the topic is important, state your hypothesis, and describe the materials and approach that you will use to analyze it. Your paper grade will depend in part on the quality of your prospectus.

The paper should provide new evidence and analysis of a topic in economic history. It should not simply summarize an existing literature. You should use the tools of economics to pose and answer an historical question. The paper must have historical substance. This is not a requirement in applied economics or econometrics that can be satisfied by relabeling the variables in theoretical models taught elsewhere or by simply applying new statistical techniques to old data.

Topic

The paper can cover almost any topic in economic history. The only requirement is that the topic must genuinely involve the past. (What is the economic past? One answer is a period when economic institutions were significantly different from today. You, as author and researcher, have to make the case.) Comparisons of past and current events are fine, but a focus on developments solely in recent decades is likely to be problematic.

Evidence

Historical evidence comes in many forms. The key evidence could be a list of goods traded or statements by government officials of what they were trying to accomplish. While economic historians sometimes use econometrics, tables and graphs displaying important variables can be enough to make a compelling argument.

Successful Paper Topics from Previous Years Your entire graduate career (indeed your entire career) will center on identifying interesting questions. For this reason we will not give you a list of topics (although we will describe some in class discussions). Instead, we describe here, by way of illustration, some topics that have been successful in the past and suggest ways of finding similarly successful topics.

• The easiest type of paper to write may be a comment on an existing paper. Such comments can be as important as the original work. Think about flaws in some paper that you read. Is there selection bias? Has the author left out a crucial variable? One student noticed a footnote in a paper that said one observation had been left out of the figure because it was large relative to the others. This same extreme observation was included in the empirical analysis. The student got the data and showed that the published results depended crucially on this one observation.

• Few events have no historical antecedents. If there is a modern development you are interested in, you could look for its historical roots or counterparts. For example, much has been written about the rise of the Internet. How does its development compare to the rise of the telegraph and the telephone? The rise of TV and radio? Did investment and financial markets respond similarly?

• While it is not a good idea to let data availability drive your topic, it is reasonable to let serendipity play a role. Have you come across an unusual source in the library or on the web? Is there an interesting question that this source could be used to answer? One student came across the catalogs for the 1851 World’s Fair. She had the idea that these descriptions of what each country exhibited could be used as a measure of innovation. She wrote a paper looking at the industrial composition of innovation across countries. (She is now a professor at Stanford.) Another student was looking through newspapers from San Francisco in the 1870s. He found many classified ads that read something like: "Wanted—man to work in store and loan store $1000." This student wondered why companies would tie employment and loans. He wrote a paper investigating whether ads such as these were a sign of credit market imperfections or a way of ensuring worker loyalty and honesty. (He is now a prominent economist at the World Bank.) Both of these papers went on to be published in respected journals.

• You might take well known hypothesis in the historical literature and come up with a new way of testing it. An example of this type of paper involves the debate over how business cycles have changed over time. One researcher suggested that instead of fighting over very imperfect estimates of real GDP, one could look at stock prices as an indicator of the volatility of the macroeconomy.

• Just as one should be on the lookout for interesting sources, one should also be thinking about interesting events. History is full of natural experiments--a weird tax is imposed, a war is fought, a new regulation is imposed. Often such experiments can be used to answer crucial questions in economics--for example, what the changing speed with which liberty ships were built during World War II tells us about the extent of learning by doing.

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Readings

Readings are available either on the web or, where there exists no web-based copy, at Graduate Services (http://www.lib.berkeley.edu/doemoff/grad/index.html) at 208 Doe Library. Access to readings available through JSTOR and other proprietary sources may require you to log on through a university-recognized computer and enter your Calnet ID. There can be high demand for the readings on reserve at peak times, and the library can make available only limited numbers of copies. In past years some students have found it useful to purchase some of the books from which material is assigned through their favorite online book seller and to assemble the materials for reproduction at a local copy shop.

January 22. The Malthusian Economy (Feudalism and Manorialism; Gilds and Trade) (DeLong)

Robert M. Solow (1985), "Economic History and Economics", American Economic Review 75:2 (May), pp. 328-331 http://www.jstor.org/stable/1805620

Kenneth J. Arrow (1985), "Maine and Texas", American Economic Review 75:2 (May), pp. 320-323 http://www.jstor.org/stable/1805618

Rick Steckel (2008), "Biological Measures of the Standard of Living", Journal of Economic Perspectives 22:1 (Winter), pp. 129-52 http://www.aeaweb.org/articles.php?doi=10.1257/jep.22.1.129

Thomas Malthus (1798), An Essay on the Principle of Population, Chapters 1-2, pp.1-11, Electronic Scholarly Publishing Project, 1998. http://www.esp.org/books/malthus/population/malthus.pdf

Gregory Clark (2007), A Farewell to Alms: A Brief Economic History of the World, Chapter 2, “The Logic of the Malthusian Economy,” pp. 19-39 and Chapter 3, “Living Standards,” pp. 40-70. Princeton: Princeton University Press. On reserve at Graduate Services. An earlier draft (not preferred) is available at

Moses Finley (1965), "Technical Innovation and Economic Progress in the Ancient World", Economic History Review NS 18:1, pp. 29-45 http://www.jstor.org/stable/2591872

January 29. Revolutions in Time (Literacy Revolution, Commercial Revolution, Agricultural Revolution, State and Market Building) (DeLong)

Karl Marx (1867), "The So-called Primitive Capital Accumulation," Capital, Vol. 1, Part VIII, Chapters 26-32. http://tinyurl.com/dl20090112k

Daron Acemoglu, Simon Johnson, and James Robinson (2005), "The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth," American Economic Review 95:3, pp. 546-79 http://www.jstor.org/stable/i387682

Robert Allen (2008), “The Nitrogen Hypothesis and the English Agricultural Revolution: A Biological Analysis,” Journal of Economic History 68, pp. 182-210 http://journals.cambridge.org/action/displayIssue?jid=JEH&volumeId=68&issueId=01&iid=1740956

February 5. Modern Economic Growth (the Industrial Revolution, Britain vs. China, Standard of Living Debate) (DeLong)

Michael Kremer (1993), "Population Growth and Technological Change: One Million B.C. to 1990", Quarterly Journal of Economics 108:3 (August), pp. 681-716 http://www.jstor.org/stable/2118405

Nicholas Crafts (2002), "The Solow Productivity Paradox in Historical Perspective," CEPR Discussion Paper no. 3142 http://www.j-bradford-delong.net/articles_of_the_month/pdf/Newsolow.pdf

Robert C. Allen (2011), “Why the Industrial Revolution Was British: Commerce, Induced Invention and the Scientific Revolution,” Economic History Review 64, pp. 357-384 http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0289.2010.00532.x/pdf

Stephen Broadberry (2013), “Accounting for the Great Divergence,” unpublished manuscript, London School of Economics http://tinyurl.com/dl20140114a

February 12. Extractive and Developmental Institutions (Westward Expansion, The “American System,” Railroads and Economic Growth) (DeLong)

Robert Fogel (1964), Railroads and American Economic Growth: Essays in Econometric History, Chapters 1 and 6, pp. 1-6 and 207-249. Baltimore MD: Johns Hopkins University Press. On reserve at Graduate Services.

Alfred Chandler (1990), Scale and Scope: The Dynamics of Industrial Capitalism, Chapter 3, pp. 47-89. Cambridge MA: Harvard University Press. On reserve at Graduate Services.

Dave Donaldson and Richard Hornbeck (2012), “Railroads and American Economic Growth: A ‘Market Access’ Approach,” unpublished manuscript, MIT and Harvard University http://scholar.harvard.edu/hornbeck/files/railroads_dh_mar2012.pdf

February 19. Slavery and Serfdom (the Ancient World, Two Europes, the Caribbean and the United States) (DeLong)

Robert Brenner (1976), “Agrarian Class Structure and Economic Development in Pre-Industrial Europe”, Past and Present 70 (1976), pp. 30–74 http://libcom.org/history/agrarian-class-structure-economic-development-pre-industrial-europe-robert-brenner

Stefano Fenoaltea (1984), “Slavery and Supervision in Comparative Perspective: A Model,” Journal of Economic History 44:3, pp. 635-668 http://www.jstor.org/stable/2124146

Stanley Engerman and Kenneth Sokoloff (1994), "Factor Endowments, Institutions and Differential Paths of Development among New World Economies: A View from Economic Historians of the United States," NBER Working Paper no. 10066 http://papers.nber.org/papers/h0066.pdf

February 26. Growth Accounting (Returns to Schooling, Returns to R&D)

Daron Acemoglu and Joshua Angrist (2001), “How Large are Human-Capital Externalities? Evidence from Compulsory Schooling Laws,” NBER Macroeconomic Annual 2000, pp.9-74 http://papers.nber.org/books/bern01-1

Petra Moser (2005), “How Do Patent Laws Influence Innovation? Evidence from 19th-Century World Fairs,” American Economic Review 95, pp. 1214-1236 http://www.aeaweb.org/articles.php?doi=10.1257/0002828054825501

March 5. Cities and Economic Growth (DeLong)

J. Bradford DeLong and Andrei Shleifer (1993), “Princes and Merchants: European City Growth Before the Industrial Revolution,” Journal of Law & Economics 36, pp.671-702 http://www.jstor.org/stable/725804

Paul Bairoch (1989), “Urbanization and the Economy in Preindustrial Societies: The Findings of Two Decades of Research,” Journal of European Economic History 18, pp.239-291.

Sukkoo Kim (2006), “Division of Labor and the Rise of Cities: Evidence from US Industrialization 1850-1880,” Journal of Economic Geography 6, pp.469-491 http://joeg.oxfordjournals.org/content/6/4/469.abstract

March 12. Capital Markets (Eichengreen)

Naomi Lamoreaux (1986), “Banks, Kinship, and Economic Development: The New England Case,” Journal of Economic History 46, pp. 647-667. http://www.jstor.org/stable/2121478

Jaremski, Matthew and Peter Rousseau (2013), “Banks, Free Banks and U.S. Economic Growth,” Economic Inquiry 51, pp.1603-1621 http://onlinelibrary.wiley.com/doi/10.1111/j.1465-7295.2012.00495.x/full

Jeremy Edwards and Sheilagh Ogilvie (1996), “Universal Banks and German Industrialization: A Reappraisal,” Economic History Review 49:3, pp. 427-446. http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0289.1996.tb00576.x/abstract

March 19. Labor Markets (Eichengreen)

Sanford Jacoby (1984), “The Development of Internal Labor Markets in American Manufacturing Firms,” in Paul Osterman (ed.), Internal Labor Markets, pp. 23-69. Cambridge, MA: MIT Press. On reserve at Graduate Services.

Susan Carter and Elizabeth Savoca (1990), “Labor Mobility and Lengthy Jobs in 19th Century America,” Journal of Economic History 50, pp. 1-16. http://www.jstor.org/stable/2123435

Joshua Rosenbloom (2002), “Employment Agencies and Labor Exchanges: The Impact of Intermediaries in the Market for Labor,” in Joshua Rosenbloom, Looking for Work, Searching for Workers: American Labor Markets during Industrialization, Chapter 3, pp. 46-79. Cambridge, MA: Cambridge University Press. On reserve at Graduate Services.

March 21. Paper Prospectus Due

March 26. SPRING BREAK

April 2. Women and Children First (the Demographic Transition, Child Labor, Universal Education, Modern Western Feminism) (Eichengreen)

Ronald Lee (2003), “The Demographic Transition: Three Centuries of Fundamental Change,” Journal of Economic Perspectives 17, pp.167-190 https://www.aeaweb.org/articles.php?doi=10.1257/089533003772034943

Goldin, Claudia and Kenneth Sokoloff (1984), “The Relative Productivity Hypothesis of Industrialization: The American Case, 1820 to 1850,” Quarterly Journal of Economics 99, pp. 461-487.

Claudia Goldin (2001), “The Human-Capital Century and American Leadership: Virtues of the Past,” Journal of Economic History 61, pp.263-292 . http://www.nber.org/papers/w8239

Martha Bailey (2013), “Fifty Years of Family Planning: New Evidence on the Long-Run Effects of Increasing Access to Contraception,” NBER Working Paper no. 19493 http://www.nber.org/papers/w19493

April 9. Globalization and Crisis (Eichengreen)

Richard Baldwin and Philippe Martin (1999), “Two Waves of Globalization: Superficial Similarities, Fundamental Differences,” NBER Working Paper no.6904 (January). http://www.nber.org/papers/w6904

Douglas Irwin (1998), “Did Late Nineteen Century U.S. Tariffs Promote Infant Industries? Evidence from the Tinplate Industry,” NBER Working Paper no. 6835 (December). http://www.nber.org/papers/w6835

Carmen Reinhart and Kenneth Rogoff (2013), “Financial and Sovereign Debt Crises: Some Lessons Learned and Those Forgotten,” IMF Working Paper no. WP/13/266 (December) http://www.imf.org/external/pubs/cat/longres.aspx?sk=41173.0

April 16. International Money and Finance (Eichengreen)

Arthur Bloomfield (1959), Monetary Policy under the International Gold Standard, pp. 1-62. New York, Federal Reserve Bank of New York. On reserve at Graduate Services.

Barry Eichengreen (1992), Golden Fetters: The Gold Standard and the Great Depression, 1919-1939, Chapter 2, pp. 29-66. New York: Oxford University Press. On reserve at Graduate Services.

Hugh Rockoff (1984), “Some Evidence on the Real Price of Gold, Its Costs of Production and Commodity Prices,” in Michael Bordo and Anna J. Schwartz (eds.), A Retrospective on the Classical Gold Standard,” pp. 613-650. Chicago: University of Chicago Press. http://ideas.repec.org/h/nbr/nberch/11139.html

April 23. Origins of the Great Depression (Eichengreen)

Milton Friedman and Anna Schwartz (1963), A Monetary History of the United States, 1867-1960, Chapter 13, pp. 676-700. Princeton: Princeton University Press. On reserve at Graduate Services.

Christina Romer (1990), "The Great Crash and the Onset of the Great Depression," Quarterly Journal of Economics 104, pp. 719-736. http://www.jstor.org/stable/10.2307/2937892

Ben Bernanke (1983), "Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression," American Economic Review 73:3, pp. 257-276. http://www.jstor.org/stable/1808111

Ben Bernanke (1995), “The Macroeconomics of the Great Depression: A Comparative Approach,” Journal of Money, Credit and Banking 27:1, pp. 1-28. http://www.jstor.org/stable/i336266

April 30. Recovery from the Great Depression (Eichengreen)

Barry Eichengreen (1992), Golden Fetters: The Gold Standard and the Great Depression 1919-1939, Chapter 1, pp. 3-28. New York: Oxford University Press. On reserve at Graduate Services.

Christina Romer (1992), “What Ended the Great Depression?” Journal of Economic History 52, pp. 757-784. http://www.jstor.org/stable/2123226

Gauti Eggertsson (2008), “Great Expectations and the End of the Great Depression,” American Economic Review 98:4, pp. 1476-1516. http://www.jstor.org/stable/i29730117

May 9. Paper Due