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Lecture 1 EH
Economic History
| Question | Answer |
|---|---|
| What are the causal effects of money supply changes? | Maritime disasters in the Spanish empire |
| What are the effects of money supply changes? | Expansionary policies are correlated with low GDP growth |
| Talk about 1942 voyage | Columbian voyage to new world. Spanish exploit silver deposits 300 years silver coins shipped. money supply subjected to sea voyages. >30 losses. natural experiments |
| What were the effects of maritime disasters in the Spanish empire? | - Prices adjusted slowly (price rigidity) - Real output contracted around 1% for every 1% reduction in money arrivals -External validity? |
| What are examples of rare events? | -Financial crises -Pandemics -Wars |
| What are the economic consequences of pandemics and wars? | -Consistent with neoclassical growth model -P leads to labor scarcity and abundant capital, real wages increase, return on capital decreases -Wars have lead to capital scarcity and lack of capital per worker=returns on capital increase |
| How long do post war recoveries take? | Not enough historical data, but generally less than 2 decades and GDP returns back to normal. If war results in a deterioration of fundamental causes, long run growth is effected |
| Define systematic financial crisis | Bank runs, sharp increases in default rates and large losses of capital that results in public intervention, bankruptcy or forced merger |
| What are the economic costs of systematic financial crises? | -Normal recession 1-2% decrease in GDP -Financial crises recession >5% decrease in GDP |
| What are salient long cycles? | -International capital and goods market integration -Inequality -Debt-to-GDP ratios -Distant more relevant than recent past |
| What is path dependency? | Initial conditions and events have persistent effects. QWERTY keyboard, railway track gauge |
| Why did the industrial revolution start in 18th century England? | Combination of factor prices: 1) wages were high 2) coal was cheap 3) capital was cheap/ i was low Incentive to improve energy intensive and labour substituting machines. This was an onset of modern economic growth |
| Why the difference in spinning wheels in England and France? | Cost minimization effect. Not cost effective in France, employing more workers with old machines was cheaper given low french wages |
| Path dependency and historical events | - No steady state from which to start and return - Disruptive events can push world economy onto new path: tech, geopolitics, climate, epidemics |
Created by:
janasultan
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