Christopher M. Meissner

Exchange-Rate Regimes and International Trade: Evidence from the Classical Gold Standard Era

In this paper we show that the spread of the classical gold standard in the late nineteenth century increased international trade flows. This positive effect was compounded whenever a group of countries formed a monetary union. Applying the gravity model of trade to more than 1,100 country pairs during the 1870-1910 period, we find that two countries on gold would trade 60 percent more with each other than with countries on a different monetary standard. Moreover, a monetary union would more than double bilateral trade flows. Our findings are relevant for current discussions on alternative monetary arrangements for the twenty-first century.

Banking crises and mortality during the Great Depression: evidence from US urban populations, 1929–1937

Background Previous research suggests that the Great Depression led to improvements in public health. However, these studies rely on highly aggregated national data (using fewer than 25 data points) and potentially biased measures of the Great Depression. The authors assess the effects of the Great Depression using city-level estimates of US mortality and an underlying measure of economic crisis, bank suspensions, at the state level. Methods Cause-specific mortalities covering 114 US cities in 36 states between 1929 and 1937 were regressed against bank suspensions and income data from the Federal Deposit Insurance Corporation Database, using dynamic fixed-effects models and adjustments for potential confounding variables. Results Reductions in all-cause mortalities were mainly attributable to declines in death rates owing to pneumonia (26.4% of total), flu (13.1% of total) and respiratory tuberculosis (11.2% of total), while death rates increased from heart disease (19.4% of total), cancer (8.1% of total) and diabetes (2.9%). Only heart disease can plausibly relate to the contemporaneous economic shocks. The authors found that a higher rate of bank suspensions was significantly associated with higher suicide rates (β=0.32, 95% CI 0.24 to 0.41) but lower death rates from motor-vehicle accidents (β=−0.18, 95% CI −0.29 to −0.07); no significant effects were observed for 30 other causes of death or with a time lag. Conclusion In contrast with existing research, the authors find that many of the changes in deaths from different causes during the Great Depression were unrelated to economic shocks. Further research is needed to understand the causes of the marked variations in mortality change across cities and states, including the effects of the New Deal and Prohibition.

The Impact of International Trade on Democracy: A Long-Run Perspective

The likely endogeneity between democracy and trade is addressed with an instrumental variables strategy in this article about whether international trade fosters democracy. The authors use a measure of natural openness to obtain estimates of the causal impact of openness on democratization in three separate samples spanning the last 130 years. A positive impact of openness on democracy is apparent in the data over the long run. The post–World War II results suggest that with a rise in trade with other countries equal to a one standard deviation increase, countries such as Indonesia, Russia, and Venezuela could eventually become as democratic as the U.S., Great Britain, or France. There is some variation in the impact of openness by region that may be because trade seems to have a positive impact only when the capital-to-labor ratio is sufficiently high. This is consistent with the idea that openness promotes democracy when it strengthens the economic fortunes of the middle class.

Does investment in the health sector promote or inhibit economic growth

BackgroundIs existing provision of health services in Europe affordable during the recession or could cuts damage economic growth? This debate centres on whether government spending has positive or negative effects on economic growth. In this study, we evaluate the economic effects of alternative types of government spending by estimating “fiscal multipliers” (the return on investment for each

Foreign capital, financial crises and incomes in the first era of globalization

1 dollar of government spending).MethodsUsing cross-national fixed effects models covering 25 EU countries from 1995 to 2010, we quantified fiscal multipliers both before and during the recession that began in 2008.ResultsWe found that the multiplier for total government spending was 1.61 (95% CI: 1.37 to 1.86), but there was marked heterogeneity across types of spending. The fiscal multipliers ranged from −9.8 for defence (95% CI: -16.7 to −3.0) to 4.3 for health (95% CI: 2.5 to 6.1). These differences appear to be explained by varying degrees of absorption of government spending into the domestic economy. Defence was linked to significantly greater trade deficits (β = −7.58, p=0.017), whereas health and education had no effect on trade deficits (peducation=0.62; phealth= 0.33).ConclusionOur findings indicate that government spending on health may have short-term effects that make recovery more likely.

Riding the Wave of Trade: The Rise of Labor Regulation in the Golden Age of Globalization

We explore the association between income and international capital flows between 1880 and 1913. Capital inflows are associated with higher incomes per capita in the long run, but capital flows also brought incomes down in the short run via financial crises. Countries just barely made up for these losses over time, so that there is no conditional long-run income loss or gain for countries that experienced crises. This is in contrast to the recent wave of globalization when capital importing countries that experienced a crisis seemed to grow relatively faster over fixed periods of time. Some countries avoided crises and were able to raise incomes with foreign capital. We discuss some possibilities why.

Geography, Policy, or Productivity? Regional Trade in Five South American Countries, 1910-1950

The received view pins the adoption of labor regulation before 1914 on domestic forces. Using directed dyad-year event history analysis, we find that trade was also a pathway of diffusion. Market access served as an important instrument to encourage the diffusion of labor regulation. The type of trade mattered as much as the volume. In the European core, states emulated the labor regulation of partners because intra-industry trade was important. The New World exported less differentiated products and pressures to imitate were weak.

Growth from Globalization? A View from the Very Long Run

Regional trade in South America since independence has long been much smaller than would be expected if geography were the only constraint on trade. Several potential explanations exist: low technological and demand complementarities; low productivity; high natural and policy barriers to trade. Focusing on the latter explanations, policy makers have long advocated a South American/Southern Cone Free Trade Area–proposed as early as 1889. Would reductions in trade costs have been sufficient to significantly raise trade, or was trade low for other reasons? We study bilateral trade between 1910 and 1950, when large external shocks altered global supply and demand. These shocks help us show that intra-regional trade could have been boosted with reductions in trade costs. South American regional trade could have benefitted from more benign trade policy or better infrastructure. Regional trade in textiles, which took off from the 1930s, supports our argument that trade improved when trade costs fell.

Trade Costs, 1870-2000

What is the connection between different forms of globalization, economic growth, and welfare? International trade, cross-border capital flows, and labor movements are three areas in which economic historians have focused their research. I critically summarize various measures of international integration in each of these spheres. I then move on to discuss and evaluate the ongoing and active debate about whether globalization is significantly associated with growth in the past. I pay particular attention to the role of globalization in the Great Divergence, the tariff-trade-growth debate, and the globalization of capital markets in the 19th century.