Thursday, 17 March 2011
finally... a radio program I have been waiting for for over a decade
If you visit a British bookstore, you can find the European history corner by looking for a monumental collection of swastikas on the shelves... It used to amuse me as a student in Oxford, and then became a curiosity. A normal weekend in the UK will include some re-run of a World War II movie, a documentary about the last Spitfire pilot alive, and a few book reviews in the Sunday papers. Apparently, 850 books on the Third Reich were published in the UK in 2010 alone, including one on Collectible Spoons of the Third Reich. Now, the BBC actually has a clever radio documentary about why this is - over here. It's pretty good, but I would say that - my own working hypothesis (Britain can't get enough of being reminded of the last time it was actually Great) gets a pretty strong endorsement. The journalist even gets close to spoofing my all-time I-hope-this-is-never-actually-written-title Hitler's Willing Gardeners.
Thursday, 10 March 2011
First UPF doctoral candidate to go on the RES tour
The Economist recently profiled some interesting research showing that European output of scholarly articles was growing faster than that of US departments. Maybe Europe is also catching up in terms of producing PhDs? One swallow does not make a summer, but here is a nice leading indicator... even abstracting for the parental pride factor.
The Review of Economic Studies does a nice thing - every year, it brings seven of the most promising young PhD students who did well on the US academic market over to Europe, where they give seminars at a number of universities. This year, my doctoral student Peter Koudijs will join the RES tour. If I am not mistaken, he is the first UPF doctoral candidate to do so. This is not a small thing - it's equivalent to semi-official confirmation that you were a star of the market in a particular year. What makes this particularly nice is that, until now, there were only a handful of Europeans (meaning, economists with doctorates from European schools) who were on the RES tour until now (Dave Donaldson, now at MIT, and Markus Brunnermeier, now at Princeton, come to mind). Before he goes, he will have to make a decision on where to start his career as an assistant professor, having received a string of top offers, from NWU-Econ and Chicago-Booth to Stanford GSB, LSE-EcHist, and Columbia GSB.
The Review of Economic Studies does a nice thing - every year, it brings seven of the most promising young PhD students who did well on the US academic market over to Europe, where they give seminars at a number of universities. This year, my doctoral student Peter Koudijs will join the RES tour. If I am not mistaken, he is the first UPF doctoral candidate to do so. This is not a small thing - it's equivalent to semi-official confirmation that you were a star of the market in a particular year. What makes this particularly nice is that, until now, there were only a handful of Europeans (meaning, economists with doctorates from European schools) who were on the RES tour until now (Dave Donaldson, now at MIT, and Markus Brunnermeier, now at Princeton, come to mind). Before he goes, he will have to make a decision on where to start his career as an assistant professor, having received a string of top offers, from NWU-Econ and Chicago-Booth to Stanford GSB, LSE-EcHist, and Columbia GSB.
Persistence over the very long run.
I am over at Harvard for a few days, giving a talk tomorrow. Nico Voigtländer and I have a bunch of papers on the long-run consequences of the Black Death. Since I have done some other work on Nazi Germany, one day, we wondered if there wasn't a parallel between the two periods worth exploring. As the plague sweeps through Europe, causing unprecedented mortality, people look for causes - and many blame the Jews for poisoning the wells. In many - but not all - towns and cities in Europe, the Jewish population is brutally murdered in 1348-50. We were wondering if there is some logic to the geographical pattern of violence - and in particular, if we can find the same pattern in the 20th century. It turns out that there seems to be a huge degree of persistence - areas where Jews were burned in the 14th century were much more antisemitic in the 20th. Here is the abstract of our paper [download HERE]:
Persecution Perpetuated: The Medieval Origins of Anti-Semitic Violence in Nazi Germany
How persistent are cultural traits? This paper uses data on anti-Semitism in Germany and finds continuity at the local level over more than half a millennium. When the Black Death hit Europe in 1348-50, killing between one third and one half of the population, its cause was unknown. Many contemporaries blamed the Jews. Cities all over Germany witnessed mass killings of their Jewish population. At the same time, numerous Jewish communities were spared these horrors. We use plague pogroms as an indicator for medieval anti-Semitism. Pogroms during the Black Death are a strong and robust predictor of violence against Jews in the 1920s, and of votes for the Nazi Party. In addition, cities that saw medieval anti-Semitic violence also had higher deportation rates for Jews after 1933, were more likely to see synagogues damaged or destroyed in the Night of Broken Glass in 1938, and their inhabitants wrote more anti-Jewish letters to the editor of the Nazi newspaper Der Stürmer.
With this, we are trying to contribute to the burgeoning literature on the long-run persistence of culture. Guiso, Sapienza and Zingales found that Italian cities with a history of independence had higher rates of trust and income even today; Jha shows that Indian cities with a mercantile past show less violence between Hindus and Muslims over a horizon of 300 years. Relative to these papers, we show a) persistence over a much longer horizon b) the survival of a pure cultural trait without obvious economic benefit, especially since Jews largely vanished from Germany after 1500.
*** Jonathan Haskel, whose intellectual judgement I hold in high esteem, actually called our results "the most amazing correlation he has ever seen". The title of his post? "Are the experts wrong?" ;-)
Persecution Perpetuated: The Medieval Origins of Anti-Semitic Violence in Nazi Germany
How persistent are cultural traits? This paper uses data on anti-Semitism in Germany and finds continuity at the local level over more than half a millennium. When the Black Death hit Europe in 1348-50, killing between one third and one half of the population, its cause was unknown. Many contemporaries blamed the Jews. Cities all over Germany witnessed mass killings of their Jewish population. At the same time, numerous Jewish communities were spared these horrors. We use plague pogroms as an indicator for medieval anti-Semitism. Pogroms during the Black Death are a strong and robust predictor of violence against Jews in the 1920s, and of votes for the Nazi Party. In addition, cities that saw medieval anti-Semitic violence also had higher deportation rates for Jews after 1933, were more likely to see synagogues damaged or destroyed in the Night of Broken Glass in 1938, and their inhabitants wrote more anti-Jewish letters to the editor of the Nazi newspaper Der Stürmer.
With this, we are trying to contribute to the burgeoning literature on the long-run persistence of culture. Guiso, Sapienza and Zingales found that Italian cities with a history of independence had higher rates of trust and income even today; Jha shows that Indian cities with a mercantile past show less violence between Hindus and Muslims over a horizon of 300 years. Relative to these papers, we show a) persistence over a much longer horizon b) the survival of a pure cultural trait without obvious economic benefit, especially since Jews largely vanished from Germany after 1500.
*** Jonathan Haskel, whose intellectual judgement I hold in high esteem, actually called our results "the most amazing correlation he has ever seen". The title of his post? "Are the experts wrong?" ;-)
Wednesday, 23 February 2011
I should be more careful what I work on...
you see, first I worked on (historical) bubbles, and then NASDAQ blew up... then I did research on the sovereign debt defaults, and Greece imploded. In the fall, for a conference at the Bank of Chile, I did a paper on social and political unrest - assassinations, riots, anti-government demonstrations, violent overthrows of the government... and look what we get in the Middle East. The pejorative term for scholars changing research focus as events unfold is "intellectual ambulance chasers"... but what is this? A reverse Midas touch? At any rate, for a sample of South American countries, I looked at what drove levels of unrest. In particular, I show that budget cuts have a strong effect on the likelihood of instability - over and above the effects of an economic downturn. Here is a link and the abstract:
Efforts at fiscal consolidation are often limited because of concerns over potential social unrest. From German austerity measures during the 1930s to the violent demonstrations in Greece in 2010, hard times have tended to go hand in hand with antigovernment violence. In this paper, I assemble cross-country evidence from eleven South American countries for the period 1937 to 1995 about the extent to which societies become unstable after budget cuts. The results show a clear positive correlation between austerity and instability. I examine the extent to which this relationship simply captures the fact that fiscal retrenchment and economic slumps are correlated, and conclude that this is not what is driving the effect. Finally, I test for interactions with various economic and political variables. While autocracies and democracies show a broadly similar response to budget cuts, countries with a history of stable institutions are less likely to see unrest as a result of austerity measures.The paper will be out later in the year in a volume edited by Jordi Gali and Luis Felipe Céspedes. Right now, with a doctoral student from UPF, Jacopo Ponticelli, I am working on a related paper to see how much of this holds over the long run in a wider set of countries.
Tuesday, 22 February 2011
ITFD => Yale PhD program
*** March 10 update **** Moritz also got into Stanford, and is waitlisted at Harvard and MIT. Congratulations again, and fingers crossed...
Monday, 14 February 2011
After you, please (it's only a matter of life and death)
Bruno Frey and friends have written a wonderful piece in the Journal of Economic Perspectives on who survived on the Titanic. They argue that social norms (women and children first) and class explain survival well. Being British, on the other hand, was bad for your chances to make it -- the downside of too much civilized queuing up...
Sunday, 13 February 2011
Inflation and diplomacy - Axel Weber edition
Axel Weber, the current President of the Bundesbank, is resigning in May of this year. He also won't seek office as head of the ECB. There is a good deal of gloating in the press about him going. A well-known inflation 'hawk' and an opponent of the ECB's bond-buying extravaganza to keep Greece & Co. afloat, he is widely considered not diplomatic enough for leading the ECB. For example, his open dissent about the bond purchases last year is seen as an unacceptable lack of esprit de corps.
To be honest, the whole logic of this line of reasoning is passing me by. Central bankers are not diplomats. At some point, Western countries decided that independent, technocratic institutions are better at making monetary policy than politicians. The Fed under Volcker, and the Bundesbank under Hans-Otto Pöhl, are excellent examples of how to do this right. Was there anything diplomatic about raising interest rates in the middle of a recession, as both of them did in the early 1980s? For sure not. They courted controversy, told smooth-talking politicians begging for some easy money to take a hike, and helped to bring inflation (and inflationary expectations) under control. In the long-run, there is no tradeoff between inflation and unemployment; only dead inflation is good inflation.
When the ECB was set up, it was meant to inherit the inflation-fighting prowess of the Bundesbank. One shouldn't exaggerate the implications of a single personnel decision, but I see a broader pattern that is turning the ECB into more of a mixture between the Bundesbank of old and, say, the bad old Bank of Italy or Banco de Espana, which presided over double-digit inflation for decades. Where Pöhl and friends would hike interest rates overnight by a few hundred basis points, with no warning, cold-turkey style (even the early Greenspan pulled one of these off), the new regime hopes to guide expectations through the most esoteric of shifts in bureaucratese, thinking that if they say "strong vigilance" against inflation instead of "vigilance", bond markets and the economy at large will get it. Interest rates? Almost never shall they be touched, and if so, by 25 basis points every 6 months, maybe.
So far, the inheritance of strong inflation-fighting credentials from the past, plus a benign macro environment, have ensured that this sort of magic worked surprisingly well. But at some point, I fear that stronger medicine will be needed - someone, at some point, will have to do the ugly thing of raising interest rates, big-time, perhaps even if growth is not looking pretty, because inflation is too high. Who are you going to call? Suave, smiling diplomats, who got their jobs by being nice to their home country politicians, or by working for Goldman Sachs? Or blunt, robust characters with solid academic qualifications, like Axel Weber? For my money, the fact that he was a bit rough around the edges, said what he thought, didn't take his views from the editorial pages of the FT, and wasn't afraid to p*** off some politicos, was the strongest set of recommendations anyone could have for the top job. Shame that it's not the kind of person who will lead the ECB.
To be honest, the whole logic of this line of reasoning is passing me by. Central bankers are not diplomats. At some point, Western countries decided that independent, technocratic institutions are better at making monetary policy than politicians. The Fed under Volcker, and the Bundesbank under Hans-Otto Pöhl, are excellent examples of how to do this right. Was there anything diplomatic about raising interest rates in the middle of a recession, as both of them did in the early 1980s? For sure not. They courted controversy, told smooth-talking politicians begging for some easy money to take a hike, and helped to bring inflation (and inflationary expectations) under control. In the long-run, there is no tradeoff between inflation and unemployment; only dead inflation is good inflation.
When the ECB was set up, it was meant to inherit the inflation-fighting prowess of the Bundesbank. One shouldn't exaggerate the implications of a single personnel decision, but I see a broader pattern that is turning the ECB into more of a mixture between the Bundesbank of old and, say, the bad old Bank of Italy or Banco de Espana, which presided over double-digit inflation for decades. Where Pöhl and friends would hike interest rates overnight by a few hundred basis points, with no warning, cold-turkey style (even the early Greenspan pulled one of these off), the new regime hopes to guide expectations through the most esoteric of shifts in bureaucratese, thinking that if they say "strong vigilance" against inflation instead of "vigilance", bond markets and the economy at large will get it. Interest rates? Almost never shall they be touched, and if so, by 25 basis points every 6 months, maybe.
So far, the inheritance of strong inflation-fighting credentials from the past, plus a benign macro environment, have ensured that this sort of magic worked surprisingly well. But at some point, I fear that stronger medicine will be needed - someone, at some point, will have to do the ugly thing of raising interest rates, big-time, perhaps even if growth is not looking pretty, because inflation is too high. Who are you going to call? Suave, smiling diplomats, who got their jobs by being nice to their home country politicians, or by working for Goldman Sachs? Or blunt, robust characters with solid academic qualifications, like Axel Weber? For my money, the fact that he was a bit rough around the edges, said what he thought, didn't take his views from the editorial pages of the FT, and wasn't afraid to p*** off some politicos, was the strongest set of recommendations anyone could have for the top job. Shame that it's not the kind of person who will lead the ECB.
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