Was Economic Growth Likely in Lower Canada?

Did Quebec experience economic growth (per capita) during the first decades of the 19th century? That question has been often debated in Quebec. In a recent paper co-authored with Mathieu Bédard, I argue that given the pronounced price deflation of the era and the increase in the money supply (faster than population growth), historians should discard entirely the possibility of negative growth. From this, we believe that historians should be able to assess likely results and attempt to construct estimates of living standards using either wage series and conjectural income estimates (à la Easterlin, Gallman, Lindert and Williamson).

The paper can be consulted here on SSRN and here on Academia. The abstract is below:

Generally, the historical literature presents the period from 1817 to 1851 in Lower Canada (modern day Quebec) as one of negative economic growth. This period also coincides with the rise of free banking in the colony. We study the effects of free banking on economic growth using theoretical and empirical validations. Using the Equation of Exchange, we propose that given the increase in the stock of money and the reduction in the general price level, there must have been a positive rate of growth of income per capita during the period. Our theoretical discussion should conclusively end any debate over whether or not Lower Canada enjoyed a positive rate of economic growth. The only question remaining is why it was slower than that of the United States and the rest of Canada.


Continuity under a different name: the outcome of privatisation in Serbia

I have a new working paper out there. It concerns privatisation in Serbia. More precisely, it concerns the process of privatisation in Serbia and how it can be co-opted by rent-seeking actors. Alongside Vladan Ivanovic, Vadim Kufenko, Boris Begovic and Nenad Stanisic, we argue that the process of privatisation was designed to allow rent-seekers to continue to extract rents through stripping former public firms of their assets.

I wish to thank my co-authors for inviting me to help on this paper. Institutions matter in economics, the manner in which they are designed (and emerge) is even more important.

The abstract is below and the paper can be found here:

Normally, privatisation is seen as beneficial. In the case of Serbia, the results are disappointing. This paper considers the failure of privatisation in Serbia – a latecomer in the matter – where privatisation was partly a result of exogenous pressures. In Serbia, a sizeable number of privatised firms were bought by bureaucrats and politicians and all firms were subjected to a period of supervision. We argue that this process of privatisation was designed to allow rentseekers to conserve their privileges through asset stripping and that this explains the failure. In order to do so, we perform empirical analysis of the determinants of liquidation, merger and bankruptcy of privatised firms from 2002 to 2015. We construct a novel data set from primary sources, free of the ‘survivorship bias’ and containing proxies for various types of owners, indirect signs of asset stripping strategy and a broad range of controls. Our results indicate that firms owned by politicians face significantly higher risks of bankruptcy, especially after the end of supervision