From The NEP-HIS Blog: Fifty Years of Growth in American Consumption, Income, and Wages

Fifty Years of Growth in American Consumption, Income, and Wages By Bruce Sacerdote (Darmouth) Abstract: Despite the large increase in U.S. income inequality, consumption for families at the 25th and 50th percentiles of income has grown steadily over the time period 1960-2015. The number of cars per household with below median income has doubled since […]

via Is the Glass Half Full?: Positivist Views on American Consumption — The NEP-HIS Blog

Ottoman stock returns during the Turco-Italian and Balkan Wars of 1910-1914

by Avni önder Hanedar (Dokuz Eylül University and Sakarya University, Turkey) and Elmas Yaldız Hanedar (Yeditepe University, Turkey)


Were the military conflicts of 19101914 related to higher risks for market investors at the İstanbul Stock Exchange? Wars are often perceived as bad news, correlated with increasing risks for investors and fluctuations in volatility: there would be fall in stock prices due to expected macroeconomic costs, such as higher inflation and lower production, as companies’ activities and expected returns decrease. On the other hand, if wars’ outcomes were perceived as unimportant for companies’ activities and expected returns, then there would be no significant changes in stock prices and volatility.

Many researchers on financial economics have created a large literature on the effects of different wars, and addressed mixed findings. A pioneering research for the political crises of 1880–1914 is Ferguson (2006), contributing to answering how did investors at the London Stock Exchange view the conflicts on the eve of the First World War. He showed the absence of higher war risk on bonds of Great Powers[1] traded on the London Stock Exchange. In addition, Hanedar et al. (2015) evince that the outbreak of the Turco-Italian and Balkan wars were correlated with a lower likelihood of Ottoman debt repayments, using data on two Ottoman government bonds traded on the İstanbul bourse. As the literature on the İstanbul bourse is limited, new light on this question required to explore risk perceived by stock investors due to the historical conflicts.

A column of Tanin presenting the value of bonds and stocks on 14 November 1910

We focus on the influence of stock returns at the İstanbul bourse during the Turco-Italian and Balkan wars, using unique data on stock prices of 9 popular domestic joint-stock companies in the Ottoman Empire. All these companies played a crucial role for the Ottoman economy and operated in the most attractive sectors, i.e. banking, mining, agriculture, and transportation. Some of them are the Ottoman General Insurance company (Osmanlı Sigorta Şirket-i Umûmiyesi), the Regie (Tobacco) company (Tütün Rejisi), and the Imperial Ottoman Bank (Bank-ı Osmanî-i Şâhâne). The data are manually collected from Tanin, which was a widely circulated daily Ottoman newspaper. This research is the first to provide a historical narrative explaining the changes of Ottoman stock returns due to the wars that took place on the eve of the First World War. It observes only small reactions to the Turco-Italian war, and only for three stocks out of ten examined (see Table 1). This is interesting, as previously (Hanedar et al., 2015) we observed higher responsiveness of government bond prices during the same period.



It would be possible to argue that investors might have believed that the war would not be that harmful for the non-governmental economic and financial sectors. An important aspect supporting the finding is that the companies were either established or supported by foreign investors. Great Powers protected their home countries’ investments both economically and politically. The companies obtained revenue guarantees and privileges from the Ottoman state, making the investors’ investments secure. Great Powers that invested in the Ottoman Empire were expecting its demise soon. Therefore, investors were likely to invest in the companies just for the sake of having territorial claim without much consideration of risk. During the nineteenth century, wars were important sources of the solvency problem, which could explain the sensitivity of government bond prices to the conflicts studied here.

The working paper can be downloaded here

References to this blog post here

[1] The UK, France, Germany, Italy, and Austria-Hungary.

From History&Policy – What does British imperial economic history tell us about the future of UK-EU trading relations?

by David Clayton, originally published on 25 April 2017 on History & Policy



Post-Brexit UK-European Union (EU) trading relations will take one of three forms:

(1) The UK will remain part of the EU customs union

(2) UK-EU trade will be governed by World Trade Organisation (WTO) rules

(3) The UK and EU will enter a free trade pact.

Option (1) is economically optimal but has been declared politically unfeasible because it requires the UK to commit to the free movement of labour between the EU and the UK. Such conditionality is essential because economies grow unevenly and, in the absence of independent currencies across Europe and/or a central European state to pool the risk of unemployment, free movement of labour is the mechanism for redistributing the gains from EU growth.

Economics (not history) is the best guide here.

Most parties agree that option (2) is the solution of last resort. Much has been made of its impact on complex cross-border trade in manufactured goods, but trade in services may be more problematic. The General Agreement on Trade in Services governs international trade, but can these rules handle disputes regarding trade in services across highly integrated economies subject to disintegration post-Brexit?

The law (not history) is the best guide here.

Britain’s economic history however is key to analysis of option (3).

Full article here:


Constructing Equality? Women’s wages, physical labor, and demand factors in Sweden 1550-1759

by Kathryn E. Gary, PhD candidate, Lund University


Women were important workers in the past, but they are still under-studied and their contributions largely absent from big-picture discussions of historical living standards. This is largely because women’s work remains to some extent a black box, but recent research has both challenged assumptions about how women participated in the paid labor market (c.f. Humphries and Sarasua 2012) and provided data about women’s payment for different kinds of labor (c.f. Humphries and Weisdorf 2015). The current work contributes to both these areas, by creating series of men’s and women’s wages in early modern Sweden, and by exploring both the mechanisms behind the gender gap in pay as well as the conditions under which women enter paid labor, with the goal of better understanding work in the past in general.

Primary data come from unskilled workers in the construction industry in Southern Sweden, predominantly from the towns Malmö and Kalmar; these are combined with published data from Stockholm, also from construction workers (Jansson, Andersson Palm, and Söderberg 1991). All data are for individuals paid by the day; relative wages are simply the percentage of men’s wages that women earn.


Figure 1 shows women’s relative wages from 1550 to 1759. Relative wages are high at the beginning of the period, around 80 percent, and increase to levels of parity in the early 17th century, after which they decline substantially, reaching as low as 40 percent during the end of the seventeenth century and into the eighteenth. This is a substantial decline over the period of not much more than a generation.
Some relative wage peaks are related to events that change both the demand for and supply of labor. Kalmar was a border town between Sweden and Denmark; from 1611 to 1613 the two countries fought the Kalmar War. Following these years women’s wages peaked, likely due to necessary rebuilding and a shortage in the supply of men. There is a wage spike in the same city following a fire in 1647 – while the national average weighs down the peak values, the deviations are still clear in the series, and when Kalmar is examined individually women’s relative wages peak as high as 1.33.


Table 1: Women’s work days as a percentage of all workdays in Kalmar, 1614-1710


Women’s ability to earn high wages goes against many of our theories about women’s earning potential – women are expected to earn less than men in physical tasks, because women are not as strong as men, and so are less productive physical laborers (Burnette 2008). Other theories suggest that women face constant wage discrimination (c.f. Bardsley 1999) – but this, too, is confounded by women’s ability to out-earn men, and by the large changes in the relative wage series. Something else is happening.

To understand we must look more closely at the data. In Kalmar workers are almost universally identifiable, allowing for deeper examination of the workforce. Table 1 shows the percentage of paid workdays that were worked by women, compared with the total number of paid work days in five year periods. Comparing the proportional feminization of the workforce with the amount of work, we see that the periods with the greatest amount of work are those in which the workforce is the most feminized – these periods are also those during which women’s relative wages are highest (see figure 1).

In combination with the relationship between total paid workdays and women’s relative wages across the whole country (figure 2), we are faced with a pattern that is familiar from the first and second world wars – when labor demand is high, women enter the labor force in higher numbers and are able to command higher wages. There is less evidence that women were systematically paid less either due to discrimination or because of their lower productivity – instead, women are responsive to economic forces, and especially to demand forces.

Figure 2: women’s relative wages and total paid workdays in Sweden, 1550-1759


It is simple to to extend our sense of what is ‘traditional’ deep into the past, and to apply broad categories of ‘men’s’ and ‘women’s’ work. However, when we are able to suspend our assumptions and dig deeper into the evidence, the data tell a less expected story; women in Sweden worked in physical occupations, alongside men, often for similar wages. They worked especially hard when the need was highest, and women’s wages only fell away from men’s when work became less regular and men and women weren’t employed together.

Accounting for women’s work shifts our understanding of household living standards in the long run, and provides strong evidence for what is intuitively clear: we cannot truly understand the past if we continue to discount the experiences or contribution of half the population.

The full working paper can be read here, and a shorter version from the EHS annual conference is available here.

Implicit or unconscious bias in universities

At the Women’s meeting at the Society Conference a couple of weeks ago Dr Amy L. Erickson, Senior Lecturer in History at the University of Cambridge, gave an overview of one of the most serious issues affecting women in research today; the issue of implicit or unconscious bias in University departments and decision making. Here she summarises the key points for those who missed it, with some useful links and tips for more information.

The EHS took a pioneering approach to tacking gender inequality in academia by establishing its Women’s Committee in 1988 and collating a directory of women in the profession, published in 1993 and 1996, to improve visibility. Since then the number of women in the higher reaches of the profession has increased dramatically but still does not reflect the lower reaches, as reported by the Women’s Committee’s ‘Census of economic historians’ in 2007. The Women’s Committee is currently looking to set up a mentoring scheme and is actively seeking ideas on how to further approach the problems of implicit bias.

Many of us might consider our institutions relatively free from overt gender and ethnic bias. Blatantly sexist or racist comments are gratifyingly rarer now but implicit bias is widely recognised as a significant problem and the approach of individual institutions to ensuring it does not affect behaviour and decision making varies enormously. Some institutions in the UK require all new staff to undergo extensive online and face-to-face training and induction to make staff aware of how bias affects them in hiring and in teaching. Others may regulate for bias, and have large programmes to ensure gender, ethnic and ability balance but don’t train staff to be aware of the implicit issue, and so leave micro outcomes to chance. This may be through lack of coordination, or it may be because management perceive the issue is not thought to be affecting their institution.

Most institutions are only just beginning to become aware of the problems of implicit or unconscious bias. Judging from the discussion at the London’s women historians conference in March few institutions train or manage the issue of implicit bias formally. [ /]. The term is not meant to excuse overt bias, but to understand the micro-assumptions that we all make on a daily basis without thinking about them.

The term ‘implicit bias’ has been popularised by Harvard’s Project Implicit site where anyone can test their unconscious assumptions about race, gender, sexual orientation, or mental health, while contributing to the project’s data collection. The Equality Challenge Unit prefers ‘unconscious’ bias, defined as ‘bias that happens automatically and is triggered by our brain making quick judgments and assessments of people and situations, influenced by our background, cultural environment and personal experiences’.[1]

A significant body of psychological research has demonstrated that these unconscious assumptions work to the detriment of women and members of ethnic groups other than white in a professional situation. Even very slight, incremental disadvantage adds up to significant professional disparities, as meticulously explained by Virginia Valian’s Tutorials for Change, which examines ‘gender schemas’ (implicit bias) and science careers. The distinction, identified since the 1970s, between our instinctive mind and our reflective, ‘rational’ mind, is the difference between thinking fast and thinking slow (Daniel Kahneman, Thinking Fast and Slow, 2011). We all need to think more slowly about the problems inherent in our fast thinking.

Why it matters

When a CV has a female name at the top it is ranked lower than if the same CV has a male name at the top. If it has a typically white British name at the top it is ranked higher than if the name is identifiably of a different ethnicity.[2]

Letters of reference for job or higher education applications differ systematically according to whether the applicant is female or male. Phrases to describe white males are more fulsome and attribute innate talent; everyone else is more likely to be described as hard-working, using more pedestrian adjectives.

Unconscious stereotypes that advantage white males are made by everyone – women and men, feminist and non-feminist, and all races (of those studied, which tend to be in the USA).

The unconscious assumptions made by our non-rational minds means that our judgments of merit are inseparable from sex and race. In other words, we are collectively incapable of operating a meritocracy. Instead, we operate a white male preference system — in graduate admissions, in hiring, and in teaching. Anyone who doubts the differential way in which academics are treated on the basis of sex may wish to read transgender scientist Ben Barres’ discussion of his experience in academia first as a woman and then as a man.[3] The interactive Gendered Language in Teaching Reviews allows you to investigate how female and male teachers are systematically described differently by students.

The effects of stereotypes on members of negatively stereotyped groups is another field of psychological research, known as ‘stereotype threat’. Interestingly, everyone (including white men) is vulnerable to stereotype threat in specific circumstances where they do not fit the stereotype of success in that field. The best introduction is Claude Steele’s Whistling Vivaldi: How Stereotypes Affect Us and What We Can Do (2010) which he summarises in his lectures on the topic, such as the recent one in the Distinctive Voices series. For an updated review of the literature, see

What we can do about it

We can all use our privilege as academics to improve the situation.

  • In terms of hiring, we can ensure as part of Athena Swan processes that implicit bias training is required of all those involved.
  • In reference letters, notice the language used and the attributes ascribed, remembering that women consistently have to meet a higher standard than men to get the same recognition.
  • For both committee meetings and academic seminars, train chairs in the active use of inclusive approaches. On seminar chairing, see David Chalmers’ ‘Guidelines for respectful, constructive, and inclusive philosophical discussion’ and the British Philosophical Association’s Good Practice Scheme on chairing, and these procedures can be applied to chairing committee meetings as well.
  • Take an active role in noticing contributions from negatively stereotyped group members which may get overlooked or underappreciated.
  • Double-check our reading lists, both for subject matter and authors. It matters whose stories we tell, and whose research is sanctioned by inclusion.
  • Use counter-stereotypical examples.
  • Columbia University’s Center for Teaching and Learning has an online review of the classroom issues and techniques that can be used to address them, at This can be incorporated in training for new teachers.

There are more good ideas for Taking Action from the blog of Anne Murphy, Women’s Committee chair at the EHS, from the Royal Historical Society’s 2014 report on Gender Equality in Higher Education, and from the British Philosophical Association’s 2011 report Women in Philosophy in the UK, and its Good Practice Scheme.

[1], p.1

[2] The most convenient place to find further references is in the 2013 literature review commissioned by the Equality Challenge Unit Other studies have been done in the USA and in Sweden.

[3] ‘Does gender matter?’, Nature 442 (13 July 2006) | doi:10.1038/442133a

New Researcher Prize: “Why sell oneself into (temporary) slavery?”

by Alexander Persaud, PhD student, University of Michigan
Winner of the New Researcher Prize – Economic History Society 2017

Free labour dominates our thinking about markets today, yet unfree labour has been and continues to be an important part of the economy.  For example, large numbers of workers from the Indian subcontinent and southeast Asia work in the Middle East under the kafala systemWest Germany recruited Gastarbeiter for decades in the mid-20th century.  Although not widely publicized, the US maintains guest worker programs that tie individuals to a particular employer for a set period and wage.
The existence of these and other contractual forms prompts the question, why do workers voluntarily forego their options and become temporary slaves?  In order to answer this, I turn to an historical example of bonded-labour contracts and international migration:  Indian indentureship in the nineteenth and early twentieth centuries.  I turn to new, unique, individual-level data collected and collated by me on roughly 250,000 Indian indentured servants sent around the world.
A key tenet of the indentureship contract is a guaranteed, fixed wage.  This in turn points to a key driver of unfree labour contracts:  uncertainty about the future and fear of bad economic outcomes may make temporary slavery a viable strategy.  The certainty from the contract outweighs the losses from lack of mobility.
This research traces Indians back to their home districts and calculate measures of volatility (to proxy for uncertainty) at the time of departure. It then models out-migration as a result of push factors (low wages, high prices, and volatility) vs. the pull factors from the guaranteed overseas wage.
The research finds that migration is consistent escaping volatility.  Districts in India with higher volatility were more likely to send immigrants and sent higher numbers than low-volatility districts.  The results were not uniform, though.  Castes heavily involved in owning and investing in land responded more than subsistence-only castes.  This reflects the different time horizons across castes.  Finally, Indians who left from more volatile areas were less likely to return to India.  Thus, not only did volatility affect Indians at the time of departure but also years later at the potential time of return.
Overall, volatility matters.  It caused Indians to sell themselves into temporary slavery and may have important other effects for people near subsistence who are unable to protect themselves against major economic shocks or even minor fluctuations.  More generally, this research highlights how uncertainty about economic conditions, not merely average wage differentials between markets, affects migration and labour choice.

Donald Trump, an American Original?


by Prof. Hugh Rockoff, Rutgers University

Ever since the American election, historians, economists and other assorted pundits have been searching for a precedent to help us understand how Donald Trump became president, and hopefully, to predict what will come next. It has not been easy. A number of observers have reached outside the United States for models. Silvio Berlusconi has been brought up many times. At Project Syndicate, Barry Eichengreen compared Trump to Enoch Powell. Eichengreen concluded that the rejection of Powell tells us something about the potential superiority of Parliamentary democracy. At BloombergView Tyler Cowen compared Trump to Robert Muldoon, prime minister of New Zealand from 1975 to 1984. One of Cowen’s conclusions is that Muldoon’s style helped him remain popular with his supporters despite obvious policy failures; perhaps a harbinger of what is to come. Michael Siegel, in a piece in the Wall Street Journal (February 17, p. A13) even compared Trump to the biblical King David. King David, as Siegel noted, like Trump, had a less than exemplary record for marital fidelity.

Who are the Americans with whom we can compare Trump? For understanding how Trump became president, two governors, Arnold Schwarzenegger and Jesse “the Body” Ventura, provide the best analogies. Schwarzenegger will be the more familiar figure to Europeans. Champion bodybuilder, successful movie actor, Schwarzenegger was attracted to the libertarian ideas of Milton Friedman. He provided the introduction to one episode of Friedman’s TV series “Free to Choose” in which Friedman celebrated the contribution of America’s relatively free immigration policy during the nineteenth century. Schwarzenegger had no experience in government when in 2003 he announced his candidacy for Governor of California on comedian Jay Leno’s Television show. In his campaign to replace Gray Davis, who was facing a recall, Schwarzenegger made effective use of one-liners that played on famous lines from his movies. He won a plurality of the votes, decisively beating the conventional candidates that opposed him. Schwarzenegger remained popular for a time, sometimes siding with Republicans and at other times with the Democrats. In 2006 he was reelected. Toward the close of his time in office, however, budget woes and related problems caught up with him and his approval ratings plummeted. At one time Schwarzenegger was friends with Trump, but he did not support Trump in the presidential election. Schwarzenegger replaced Trump on the television show, “the Apprentice,” but subsequently was let go.

Schwarzenegger proved that a celebrity with an outsized personality and no prior experience in government could win an important election. California is the most populous state, with nearly 40 million residents. But for understanding Trump’s remarkable legislative triumph, an even better analogy is the professional wrestler Jesse “the Body” Ventura who became governor of Minnesota in 1998. In a three way race Ventura won with 37 percent of the vote defeating a Republican Norm Coleman (previously a Democrat) and state Attorney General Hubert Humphrey III, son of the legendary Minnesota liberal Democrat Hubert Humphrey who had served as Senator and as Lyndon Johnson’s vice president.

Ventura served as mayor of a town in Minnesota and then ran successfully for governor of Minnesota in 1998 on a Reform party ticket. Minnesota wouldn’t seem a very promising stage for a Reform party candidate. But in debates Ventura used many of the tactics that Donald Trump would later use successfully. He avoided some debates, but proved effective when he took part. He let the candidates of the major parties stake out their positions and then used his unfamiliarity with policy details to highlight his position as an outsider. He used the language of the common man or woman (or at least some of them), and was not above aiming insults at ethnic minorities. He treated the press as the enemy: reporters were “official jackals.” By portraying the press as the enemy, he undermined the effectiveness of their criticism. The experts predicted that that Ventura would lose, but he won a surprising victory. In 2000 Trump campaigned for the Reform party Presidential nomination in 2000, and held a joint news conference with Ventura, although he later pulled out of the race. Trump had found his issue, and a successful model.

The examples of Schwarzenegger and Ventura help us understand how Trump won, but for predicting what will happen next we need to turn to Presidents. Again, many names have been suggested, including Dwight Eisenhower, John F. Kennedy, and Ronald Reagan. Newt Gingrich, the ubiquitous American politician, who has a Ph.D. in history, said that Trump was one third Andrew Jackson, one third Theodore Roosevelt, and one third P.T. Barnum. There is a great deal, I believe, to the comparison with Jackson (President 1829-1837), a comparison that has occurred to a number of writers. It has also occurred to Trump who has attempted to don Jackson’s mantle. Shortly after his election Trump hung a picture of Jackson in the Oval Office. And on March 15, the 250th anniversary of Jackson’s birth, Trump toured Jackson’s Tennessee plantation and laid a wreath on his tomb.

Jackson, like Trump, appealed to poor white Americans. But Jackson was an experienced politician and more importantly a war hero, having defeated the British at New Orleans and led successful campaigns against Native Americans. Jackson’s road to the White House was the one followed by William Henry Harrison, Zachary Taylor, Ulysses Grant, Dwight Eisenhower, among others, and of course, George Washington. But the Jackson comparison helps a good deal in understanding what the long run effects of a Trump Presidency might be. At one time Jackson was a liberal icon; but now that status is gone. His picture, which long adorned the $20 bill, is about to be replaced. What attracted earlier generations of historians to Jackson was his willingness to challenge the Eastern elite on behalf of poor whites and his willingness to aggressively wield the inherent power of the presidency.

Jackson’s antipathy for people who did not share his background is probably the main basis for the comparisons between Jackson and Trump. There is also Jackson’s personality. Prone to take offense, Jackson was the last American president to fight a duel. Indeed, in 1806 Jackson fought a duel that ended in the death of his opponent Charles Dickinson. Dickinson fired first lodging a shot in Jackson’s chest that troubled Jackson for the rest of his life. Jackson then fired killing Dickinson. While it hard to imagine Donald Trump risking his life on the field of honor, we can say that both Jackson and Trump were both overly sensitive to personal slights.

One thing that hasn’t changed since Jackson’s day is the importance of a President’s appointments to the Supreme Court. In 1836 Jackson appointed his close adviser Roger Taney to the position of chief justice of the Supreme Court. In 1857 the Court, under Taney, issued the famous Dred Scott Decision, which held that persons of African descent could not be citizens of the United States, and that Congress had no authority to prohibit slavery in any territory of the United States. Attacked by Lincoln and other opponents of the spread of slavery, the decision was a major milestone on the road to the Civil War. The Supreme Court is now evenly split between liberals and conservatives. Trump has nominated Neil Gorsuch to fill the ninth position on the court. The Jackson analogy does suggest that this may turn out to be one of the major events in the Trump Presidency.

It is tempting to blame all of America’s economic ills during the 1830s on Jackson’s attack on the Bank. But we have now learned that this is a mistake. Thanks to the work of George Macesich (1960) and Peter Temin (1969) we now know that the inflation was due to an increase in the stock of silver, ultimately the result of changes in the balance of payments. (I provided a summary of this literature in Rockoff 1971). On the other hand, Jackson’s “Specie Circular” which ordered government land offices to sell government land only in exchange for gold or silver (specie) probably helped bring on the subsequent financial panic (Rousseau 2002). The Specie Circular still sounds like a worthwhile measure, but it helped drain reserves from a vulnerable New York banking system and spark a financial panic. There is a lesson here: we should be wary of making direct connections between the economy and Trump’s economic policies, as tempting as it might be, because the economy is subject to many forces besides those emanating from the White House.

What about foreign policy? One aspect of Jackson’s foreign policy that does have some parallels with Trump’s issues is Jackson’s concern with the border between the United States and Mexico. Jackson was determined to purchase Texas, but his diplomatic efforts failed. He was saved from frustration on this score, however, when his old friend Sam Houston led a successful campaign for Texas Independence. In foreign affairs, the Jackson comparison provides little guidance. Jackson, fought many wars, but he never had access to a nuclear bomb.

Ultimately, the large crop of precedents that have been brought forward to try to understand Donald Trump – from Silvio Berlusconi, to Arnold Schwarzenegger, to Jesse “the Body” Ventura, to Andrew Jackson, to King David – attests to the difficulty of understanding how Donald Trump became president of the United States and predicting what the future will bring. But they all suggest that we have a lot to worry about.


The author would like to thank Hope Corman, Eva Marikova Leeds, and Eugene White for their comments on an earlier draft

Inching Towards the Meter: Britain, Europe and the Politics of Economic Integration

by Aashish Velkar (University of Manchester)


On Brexit day (23 June 2016), The Guardian reminded its readers about the ‘Euro myth’ of how European metrication laws had criminalised the use of the Imperial inch such that even the Queen was forced to ‘obey Europe’.[1] Since then, there have been several reports in the popular media about the need for Britain to abandon the ‘European’ metric system and return to its ‘traditional’ imperial measurement system.[2] These reports are yet another reflection of the festering anti-Europe sentiments and the perception that joining the EU led to the ‘loss’ of British sovereignty. Such popular sentiments may be traced to the EEC Directives aimed at harmonisation of ‘technical’ standards such as measurement units (e.g. 71/354/EEC). Harmonisation was one of the key principles of economic integration established by the Rome Treaty in 1957, primarily aimed at eliminating trade restrictions within the European communities. The case of the metrication policy in the 1970s clearly demonstrates how conflicting ‘framing’ of the pro- and anti-metrication arguments in popular politics led to the abandonment of the metrication policy, exacerbated the uncompetitiveness of British industry, and crystallised the popular perception that Brussels was imposing European laws that the British parliament had no choice but to implement.

The metric system was not imposed on Britain upon joining the European Communities between 1973 and 1975. This decision was made almost a decade earlier by Wilson’s government in 1965, when he promised at an EFTA meeting that the UK will adopt the metric system as its primary system of weights and measures. No doubt Wilson’s commitment to inch closer to Europe by giving up the imperial inch was made in anticipation of Britain’s application to join the EEC. The British industry had lobbied fervently between 1955 and 1965 for the adoption of international measurement standards. Most major associations such as the Confederation of British Industries, British Association for Advancement of Science, and the Trade Unions Congress (TUC) supported the policy of complete metrication.

In the early 1970s, even as political opposition to creeping metrication was crystallising, much of the popular literature on the subject conveyed a sense of inevitability concerning metrication in everyday lives. People did not like the change to metric measures – just as they had not liked currency decimalisation in 1971. However, most were prepared to go along with it. Popular opinion against the metric system really hardened following the high inflation in the mid-1970s. Opinion polls between 1972 and 1975 suggest that between a third and a quarter of those surveyed blamed currency decimalisation for high inflation (almost as high as those who blamed inflation on the decision to join the EEC). This view was exploited by several politicians who claimed that metric change was not in the interests of the consumers. In this period of ‘collective puzzlement’, when even experts were divided about the causes of inflation and how to tackle it, the linking of price increases to change of measurement units provided yet another reason to attack metric change. Media reports that EEC directives were compelling the British government to effect this change by 1978-79 added to the popular view that Europe was imposing its laws on Britain. The fact that Brussels had threatened to take the British government to court if it did not complete the metrication programme added fuel to this fire. The British government negotiated with EEC and secured a way of retaining the most popular Imperial units such as the pint and the mile in an amendment to the original EEC directive. The anti-metric lobby claimed this as a victory of how the principle of ‘free choice’ had triumphed over the ‘compulsory metrication’ that was being imposed upon Britain.

Meanwhile, British industry found themselves in an intractable position. Many firms had voluntarily converted to metric units anticipating economic gains in the long term. However, the political resistance to metrication of retail sectors meant that most industrial sectors could not entirely switch to metric units. This was a worst-of-both-worlds scenario. Using the imperial units for some operations in addition to using metric measurements meant firms had to carry extra inventory, incurred higher design costs, and added to the general confusion by operating on multiple standards.

The historical research shows that popular opinion was shaped by little factual information or over-simplification of quite complex economic issues. Framing of opposing arguments involved selecting particular bits of information to highlight, to the exclusion of other (often contradictory) information. The more that one group framed an issue in a particular way – such as EEC directives meant a loss of sovereign law-making powers for Britain – the more that particular bit of information gained salience over other information. Such historical analysis is useful in demonstrating how certain arguments dominated over others. The arguments that metrication of retail sectors was harmful for the consumer and that industry was exaggerating the consequences of dual measurement standards is an example of this. The argument that limiting metric conversion to industry was worse for Britain in economic terms received almost no traction. Analysing how people frame arguments potentially helps unpack why public opinion is shaped in ways that is contrary to ‘expert’ opinion. Certain frames, loaded with political rhetoric – such as metrication means giving up British tradition and heritage – can trump economic logic, as the Brexit debate has clearly demonstrated.

[1] The 10 Best Euro Myths’, The Guardian, 23 June 2016, (accessed online on 6 July 2016)

[2] (accessed online on 2 April 2017)

Do the rules of the game matter? Monetary regimes and financial stability since 1920

by German Forero-Laverde (Universidad Externado de Colombia / Universitat de Barcelona)

Financial crises come in many shapes and forms. They can occur in stock markets, private or public debt markets, housing markets or any asset class you may think of (yes, even tulips). Attempts to predict the timing and asset class where the next crisis will show its ugly head have been unsuccessful in part due to the amount and diversity of forces at play. The veil of uncertainty that surrounds them and the negative effect they have on long-run economic growth makes the study of crises both pertinent and challenging.

The research, presented at the 2017 EHS annual conference, studies one possible factor that may be related to the frequency and intensity of booms and busts in stock and credit markets: the rules of the game. It studies the possibility that the monetary regime, competing decisions on monetary policy, exchange rates and capital flows, is related to the evolution of financial aggregates to different time horizons. The underlying idea, following the Bank for International Settlements, is that different regimes endow the financial system with varying levels of elasticity, allowing for imbalances to accumulate in the form of booms and unwind in the form of crises at different rates and intensity.

This is a stepping stone in the road to answer a question that has troubled policy makers for over a century: Should authorities and regulators intervene in the market trying to anticipate crisis, or is the best course of action to react once crises ensue? If regimes do play a role, and the channels of accumulation of imbalances are contingent on the institutions at play, it is possible that authorities may have a wider array of tools at their disposal to avoid the accumulation of financial stability.

In order to do it, the research proposes three new measures for the evolution of the stock market and credit aggregates since 1922 until today for France, Germany, Italy, the Netherlands, Sweden and the UK. The new measures, the Boom Bust Indicators – BBIs, result from a variation on our earlier work, and allow us to characterize booms and busts depending on their effects to different horizons: explosive ones affect the short-run (up to one year); expansive ones have an effect up to the third year; and pervasive ones show effects after 5 years.

BBIs complement what has been traditionally done in the financial crisis literature. They depart from decomposition techniques such as spectral analysis in that they use all the information in the original series instead of extracting a part of the data. They depart from turning point analysis and other crises dating techniques since the outcome is a triplet of continuous series instead of a summary sequence of dates for booms and crashes. They complement measures like the severity index which pays unduly little attention to explosive booms and busts to the benefit of lengthier events. Finally, the measures allows for comparisons across countries and time. A sample of the three measures for the UK stock market is presented in Figure 1.

Figure 1: Boom Bust Indicator for the UK stock market 1922-2015

Forero-Laverde - Figure 1

The research studies the evolution of BBIs for credit and stock markets under five different regimes: the gold exchange standard (GES), the fixed peg rate of Bretton Woods (PEG), the managed float of the Exchange Rate Mechanism (MF), the periods of free floatation (FF) and the European Monetary Union (EMU). To characterize the differences in behavior under each regime we pool all countries together and measure the statistically significant differences in means and volatility for BBIs under each regime. They were graphed in a scatter plot, where the X axis represents volatility and the Y axis represents the mean. Results for the long-run measure are presented in Figure 2. The farther a regime appears from the origin, the more elastic it is as it coincides with stronger variability in the indicator.

Figure 2: Regimes according to mean value and volatility of long-run BBIs

Forero-Laverde - Figure 2

Although the mechanisms through which the regime impinges on the boom-bust cycle of credit and stocks still remains unclear, it is possible to highlight several findings. First, there is a role for the monetary regime on the evolution of asset prices and credit. Second, some sort of currency peg, with commitments to exchange rate stability and capital controls, favors financial stability both in the short and long run. However, stricter pegs are favorable for controlling stock market booms but increase both short run and medium run volatility of credit growth. Finally, a nominal anchor of the currency, through the gold exchange standard or the European Monetary Union, appears to be insufficient in generating financial stability as they coincide with booms and heightened volatility in stock and credit markets.


From losing an empire to leaving Europe: Brexit and the British public relations with the EEC (1961-75)

by David Thackeray (University of Exeter)


On referendum day in June last year, the 52-year old Nigel Farage expressed his satisfaction with being able to vote on the matter of Britain’s membership of the European Union (EU) for the first time. Brexiters like Farage have long claimed that membership of the EU/EEC (European Economic Community) lacked a democratic mandate.

This research argues that this notion is based on a ‘myth of 1975’. In fact, British public opinion was largely sympathetic towards EEC membership for much of the 1960s. During the first EEC application, Gallup polls demonstrate that approval of the idea of Britain joining the Community outstripped disapproval by a clear margin throughout the lifetime of the application, although there was an overall increase in disapproval rates too.

Gallup polls suggest enthusiasm for EEC membership grew in 1967 when Britain was dealing with the fall-out of a devaluation crisis. While there was some scepticism towards the original terms of entry in 1973 (a scepticism shared with the other new entrants, Denmark and Ireland), attitudes towards the EEC warmed thereafter and the renegotiation process was broadly popular.

Referendum claims that Britain’s first renegotiation relied purely on economic concerns are another example of the myth of 1975 (although the Common Market issue was undoubtedly prominent), which ignores the wider political and social appeals of EEC membership at the time.

Opinion polls produced in early 1975 suggested that the electorate was lukewarm in its support for the EEC. But the idea of renegotiating was popular, especially among Labour voters. The renegotiation process, however flimsy it may seem in hindsight, appeared to demonstrate that the EEC was willing to listen to Britain’s concerns and that Britain could lever authority within the Community.

The triumph of the Leave campaign in 2016 resulted from their ability to overhaul earlier perceptions that EU membership was vital to Britain’s economic future. Crucially, it was able to popularise a plausible rhetoric of EU failure.

Indeed, the Leave campaign’s ability to present Europe as a region of economic stagnation and a security threat on account of its porous borders would have seemed remarkable to audiences in 1975 (when the issue of free movement of labour barely featured and Britain was far from the healthiest of the EEC’s economies).

The Brexit vote requires us to produce new histories of Britain’s relations with Europe. Indeed, we should ask why references to this history in the public debate often turned to counterfactual discussions about what Winston Churchill or Margaret Thatcher would have done if they were alive in 2016, and why expert opinion was given short shrift in some quarters.

In much of the research literature on European integration, there seems to be an assumption that closer co-operation with Europe was the best course for post-war Britain and that in ‘missing the boat’ on several occasions, the country exacerbated its decline in world status.

Such an approach now seems problematic in light of the Brexit vote. As such, we need new histories of Euro-scepticism, but also of Euro-enthusiasm, aware of the differing experiences of the ‘four nations’, which can connect with a broad audience.

Of course, the EEC of 1975, which Britons voted two to one to remain a part of, was highly different in character to the EU of 2016 that the electorate narrowly voted to leave. In the post-Brexit world we need to develop a clearer understanding of how Euroscepticism has developed as a popular culture – its myths, conventional wisdoms, selective reading of history and, most importantly, how it has developed a plausible rhetoric of EU ‘failure’.

While a great deal of attention has been paid to Britain’s applications to join the EEC it is imperative that we get a clearer understanding of how Europe’s influence was understood in everyday popular culture and business life in the years after 1973, and in particular how this relationship (and its earlier history) has been reconceptualised through processes of globalisation, the eastern enlargement of the EU and experiences of mass immigration.

Finally, the result of the referendum is a useful reminder that we need to pay attention to the ‘cultural throw’ of economic theories, how they were articulated in everyday debate and received by the public.

We are now faced with a curious situation where Theresa May’s government appears likely to encourage aspects of globalisation through an economically liberal agenda (revivifying links with established and emerging markets through trade treaties and encouraging investment through a low corporation tax) while also promoting a populist agenda, which may be associated with anti-globalisation (curbing free movement of labour and presumably leaving the Single Market).

Britain now faces a period of profound uncertainty as we wait to see whether the (often conflicting) promises of Brexit campaigners can be made real.