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.

Forthcoming: The Wild Card: Colonial Paper Money in French North America, 1685 to 1719

Yesterday, I received news that my paper with Bryan Cutsinger and Mathieu Bédard on the strange monetary experiment of playing card money in New France had been accepted at the European Review of Economic History. In the 1680s, the French colony began issuing money on the back of playing cards. However, the experiment did not lead to inflation for many years in spite of large issues. Bryan, Mathieu and I explain why that is the case. Essentially, it is a macroeconomic narrative of one the strangest monetary experiment we ever saw. In the process, it offers great insights on the debate between the quantity theory of the price level and the fiscal theory of the price level. The abstract for the paper is below, the SSRN link is here and I should note that I have another paper related to this experiment with paper money but this time (in collaboration with Gabriel Mathy) we explore the effects of playing card money on economic growth:

During the colonial era, the French colonial government in Canada experimented with paper money printed on the back of playing cards. The first experiment lasted from 1685 to 1719. In the first years, there was little inflation in spite of a rapidly expanding stock of playing card money. It is only in the later years of the experiment that prices rose. The behavior of the money stock and nominal output suggest that velocity fluctuated throughout the period. We argue here that these fluctuations can be explained by variations in the enforcement of legal tender laws. This interpretation provides insights into the debate over the inflationary impact of paper money in the colonial United States.

New Working Paper: Statogenic Climate Change? Julian Simon and Institutions

I have a new working paper which has been submitted to the Review of Austrian Economics for a special issue on the late Julian Simon. The paper is available here on SSRN and the abstract is below:

Outside of economics (and even within), Julian Simon is mostly remembered for his famous bet on resource prices against biologist Paul Ehrlich. The bet is frequently used to illustrate how some environmental scares are exaggerated. In the rare instances when more details are added, the emphasis is always on how the role of innovation in promoting socio-economic progress which, directly or indirectly, solves environmental problems. However, Simon had a rich and complex view of the role of institutions in modulating the pace of socio-economic progress (broadly defined) and the extent of environmental problems. In this paper, I highlight the unappreciated institutional conditions that Simon placed in his work. Institutions that foiled or distorted the market process had, in Simon’s view, the dual effect of reducing living standards and amplifying environmental problems. I show, using the case of climate change, that Simon’s forgotten nuances can help explain modern environmental problems such as climate change. Most notably, it allows a subtle shift from claiming that climate change is anthropogenic (i.e. man-made) to claiming that climate change is “statogenic” (i.e. government-made).