New Working Paper: Economic Freedom, Pandemics and Robust Political Economy

I have a new working paper available. This time, it is with my friend Rosolino Candela of George Mason University. The paper studies the relationship between economic resilience in the fact of pandemics since 1850 conditional on the level of economic liberty (as measured by Leandro Prados de la Escosura). The paper is available here on SSRN and the abstract is below:

What is the relationship, if any, between economic freedom and pandemics? This paper addresses this question from a robust political economy approach. As is the case with recovery from natural disasters or warfare, a society that is relatively free economically will embody institutional arrangements with greater flexibility and adaptiveness to pandemics. We argue that societies that are more economically free will be more robust to the impact from pandemics, illustrated by shorter time for economic recovery. We illustrate this relationship by testing how initial levels economic freedom (at the start of the major influenza pandemics of the 20th century) temper contractions and accelerate recoveries for 20 OECD countries.

New Working Paper: Dynamics of Interventionism and Economic Development in Quebec before 1854

I have a new working paper available. Well, its not exactly new. Its a paper that I had left to simmer for some time as I was highly unsatisfied with it. I recently revisited it and submitted it for publication. The version below is the version after I made revisions to satisfy referee concerns. It applies the logic of the Dynamics of Interventionism (linked) to the study of divergence. I use a neat econometric setup from Quebec’s history to make that case. The paper is here on SSRN and the abstract is below:

The theory of interventionism argues that government interventions are inherently destabilizing which helps explain the growth of government. I argue that the theory of interventionism is also useful process of economic growth. At first, an intervention reduces living as a level change. However, because the intervention alters entrepreneurial incentives, there is a second effect that decelerates economic growth (Czeglédi 2014). Any additional intervention to deal with the distortions generated by initial interventions merely accentuates these two effects. Thus, the dynamics of interventionism entail a cumulative process of divergence. To illustrate my argument, I use the example of milling regulations in colonial Quebec. Directly, these regulations reduced the quantity and quality of milling services. However, indirectly, they altered long-run specialization patterns notably in dairy production. As dairy exports later boomed due to exogenous factors, this alteration eventually led to greater divergence.

New working paper: The Political Economy of Lighthouses in Antebellum America

I have a new working paper, this time with Justin Callais of my alma mater of Texas Tech University. In this paper, we show that lighthouses in America — the textbook example of a public good that must be provided by goverments — were not allocated solely according to economic needs. Political considerations played an important role in determining where lighthouses were built. The abstract is below and the paper can be accessed here on SSRN:

Lighthouses are the quintessential public goods and thus constitute a key illustration of market failure in need of government remedy. Considerable debates have been waged over whether optimal private provision was historically possible. However, little to no attention has been devoted to how lighthouse systems operated once governments took charge of remedying the public goods problem. Using the fact that Antebellum America came close to following the ideal textbook solution to the provision of public goods, we assess how government allocated lighthouses before the Civil War. We find some evidence that the lighthouses were built according to commercial needs. However, we also find strong evidence that political considerations played a strong role in selecting where lighthouses would be built.

New working paper: Pandemics, Economic Freedom, and Institutional Trade-Offs

I have a new working paper, this time with Ilia Murtazashvili, of the University of Pittsburgh. In this paper, we revisit the work of economic historian Werner Troesken who argued that countries that were historically well-equipped in terms of institutions to generate fast economic growth were poorly equipped to deal with infectious diseases such as smallpox. We argue that, using economic freedom, institutions actually targeted the costliest sources of mortality (such as typhoid) and that the trade-off of high wealth/limited ability to deal with smallpox is incomplete. The paper has been submitted for a special issue of the European Journal of Law and Economics.

Are Anarcho-Capitalists Insane? Living Standards Under Medieval Icelandic Conflict Institutions

I have received news earlier this week that my paper with Peter Leeson on living standards in medieval Iceland had been accepted for a special issue of the Revue d’Économie Politique (the oldest economics journal in French but which also publishes English articles). The article, whose final version can be found here, argues that Iceland’s relative statelessness did not generate low living standards. Quite the reverse, living standards matched those in England and exceeded those of the most of the Western world at the time.