New Working paper: Can Geography Explain Quebec’s Historical Poverty?

I have a new working paper available, co-authored with my friend Louis Rouanet (Western Kentucky University) on whether geography explains Quebec’s relative poverty since the 19th century. Our answer is that “no”, geography does not explain the differences — institutions do. The abstract is below and the paper is available here on SSRN :

From the 19th century to the 1940’s, Quebec remained poorer and less economically developed than the rest of Canada in general and poorer than Ontario in particular. This placed Quebec at the bottom of North American rankings of living standards. One prominent hypothesis for the initiation of this gap is tied to disparities in agricultural land quality fail to explain this development gap. Using newly available data for the mid-19th century, we formally test this hypothesis and find it holds little explanatory power. We further argue that poor institutions in Quebec (i.e. notably seigneurial tenure) are at the root of the development gap.

Love on the rocks: The causal effects of separatist governments in Quebec

My paper with Kevin Grier on the causal effects of separatist electoral victories in Quebec on economic growth has been accepted at the European Journal of Political Economy. The paper is available here at the journal and the abstract is below:

Is separatism economically costly or is the violence associated with separatism to blame? Most separatist movements overlap with violent ethnic tensions and are associated with economically destructive outcomes. In this paper, we consider a (largely) peaceful separatist movement. Specifically, we use the synthetic control method to study the economic consequences of the surprising victory of the Parti Québécois in Quebec in 1976 and the subsequent referendum on Quebec’s independence in 1980. We find that, relative to our control, the election of separatists had a small positive effect on economic activity until 1980 after which a small negative effect appears. We find similar results following the 1994 election that returned the Parti Québécois to power. We further find that the size of the provincial government (relative to GDP) constantly and significantly exceeded the counterfactual. We argue that the economic costs of separatist movements may arise from the frequently associated violence and not be intrinsic to any sort of attempted political disintegration.

Forthcoming:Pandemics, Economic Freedom, and Institutional Trade-Offs

I have a new paper accepted. This time its with Kelly Hyde and Ilia Murtazashvili and its forthcoming at the European Journal of Law and Economics. The old version is here on SSRN but the new version is very different (and Kelly joined the team in the process). The abstract to the revised paper is below:

We argue that institutions are bundles that involve trade-offs in the government’s ability to provide public goods that affect public health. We hypothesize that the institutions underlying economic freedom affect the mix of diseases by reducing diseases of poverty relative to diseases of commerce (those associated with free movement of people, such as smallpox or COVID-19). We focus on smallpox and typhoid fever in the late nineteenth century and early twentieth century in order to build on recent work that make arguments similar to ours, especially the framework Werner Troesken sets forth in The Pox of Liberty. Our evidence shows that economic freedom, in multiple periods of time and settings prior to the eradication of smallpox in the second half of the 20th century, reduced typhoid mortality but had no effect on smallpox deaths. The implication for COVID-19 is that the trade-off between fighting the pandemic and preserving economic freedom may not be too severe in the short run. However, in the long run, the wealth benefits from economic freedom are likely to be crucial in reducing vulnerability to diseases of commerce primarily from their impact on comorbidities (such as diabetes and heart disease). Thus, economic freedom is on balance good for public health, which suggests that it, while requiring trade-offs, might be the best institutional bundle for dealing with pandemics.

New Working Paper: Economic Freedom Improves Income Mobility: Evidence from Canadian Provinces, 1982–2018

I have a new working paper available. This time, it is co-authored with James Dean of West Virginia University (a brave PhD student worth hiring). We study whether economic freedom is connected to income mobility. To do so, we concentrate on Canadian income mobility data and the subnational indexes of economic freedom. The paper is available here on SSRN and the abstract is below:

Economic freedom is robustly associated with income growth, but does this association extend to the poorest in a society? In this paper, we employ Canada’s longitudinal cohorts of income mobility between 1982 and 2018 to answer this question. We find that economic freedom, as measured by the Fraser Institute’s Economic Freedom of North America (EFNA) index, is positively associated with multiple measures of income mobility for people in the lowest income deciles, including a) absolute income gain; b) the percentage of people with rising income; and c) average decile mobility. For the overall population, economic freedom has weaker effects.

New working paper: Monetary Famine, Paper Money, and International Constraints on Economic Growth: The Case of Colonial Quebec

As I mentioned in the preceding post, my paper with Bryan Cutsinger and Mathieu Bédard on the strange history of the playing card money episode of New France has been accepted at European Review of Economic History. However, there is much more to be said about the strange episode especially at it relates to economic growth. Thus, Gabriel Mathy (American University) and I endeavored to complete the circle by writing up a paper exclusively on economic growth and paper money in colonial Canada. The paper is here on SSRN and the abstract is below. For those who are attending the meetings of the Canadian Economic Association (CEA), we will be presenting this paper in the panel organized by the Canadian Network for Economic History:

New France, like most European colonies in the New World, suffered from a persistent shortage of metal coins. As Quebec could only legally import from France, their standards of living were constrained by their ability to export a few primary products (mostly fur, cod, timber and wheat). Mercantilist restrictions and underdeveloped financial markets limited the ability to use the capital account to import coins and tightened the balance of payments constraint. The introduction of playing card money in New France in 1685, the first use of paper money in the West, provided a means of relaxing this constraint. It produced a substitute domestic money which allowed scarce metal coins to be used to purchase imports. The balance-of-payments constrained growth models that grew out of Thirlwall’s Law is applied to this experience, with discussions of the export constraints of Quebec’s reliance on a few primary exports (with furs being the most dominant one) with inelastic demand and facing the vagaries of changing tastes in Europe.