Topics in Macro and Monetary History
Friday, Jan. 5, 2018 12:30 PM - 2:15 PM
- Chair: Michael Haupert, University of Wisconsin-La Crosse
The Impact of World War II on the Growth of United States Potential Output
AbstractRobert Gordon has argued that the case is “overwhelming” for the “economic miracle interpretation of World War II along every conceivable dimension…”. In particular, he argues that the experiences of wartime production – learning by doing and process innovation – laid the supply foundations for output and productivity growth in the postwar period. Gordon’s claims have formed the basis of the conventional wisdom for decades. They are not novel and, as this paper will show, they are almost certainly wrong. The learning achieved in the extraordinary, and never to be repeated mass production of ships, aircraft, and military hardware between 1942 and 1945 had little relevance for the postwar period. The disruptions of war retarded a strong prewar trajectory of productivity advance. Aggregate TFP and labor productivity growth was substantially lower across the war years than it had been between 1929 and 1941. Within US manufacturing, productivity advance between 1941 and 1948 was negative, and substantially lower between 1949 and 1973 than it had been in the interwar period.
Optimum Currency Areas and European Monetary Integration: Evidence From the Italian and German Unification
AbstractRecent events have sparked renewed research interest in international monetary integration and currency areas. This paper provides new empirical evidence on the predictive power and endogeneity of the Optimum Currency Areas (OCA) framework, by analyzing the wave of European monetary integration occuring between 1852 and the establishment of the international gold standard. This period witnessed to the creation of two national monetary unions lasting to this day, Italy and Germany, as well as monetary integration around Britain and France.
I estimate the ex-ante optimality of various monetary arrangements, relying on a newly collected dataset allowing to proxy the assymetry of shocks across European regions. My findings support the predictive power of the OCA framework. In particular, I find that, opposite to Germany, Italian pre-unitary states did not form an OCA at unification. I argue that this might have contributed to the arising of the Italian "Southern Question".
I then explore a possible channel through which monetary integration might aggravate regional inequality, by investigating the endogenous effects of monetary integration. Looking at the Italian monetary unification, I find evidence in support of Krugman's (1993) pessimist view on the endogenous effects of monetary integration, where integration-induced specialization and factor mobility increase the risk of asymmetric shocks and regional hysteresis phenomenons.
On the other hand, the experience of the Italian and German unification does not seem to be characterized by the OCA endogeneity theorized by Frankel and Rose (1998).
- N1 - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
- E0 - General