Historical comparisons of European monetary unions

The need to formulate a unified COVID response has placed pressure on European integration in recent days, with Germany and the Netherlands resisting Southern European calls for the issuing of “coronabonds.” A 2018 paper by John Ryan and John Loughlin assesses the history of the Latin Monetary Union (LMU), the Scandinavian Monetary Union (SMU), and the Austro-Hungarian Monetary Union (AHMU) in order to glean lessons for EU policymakers in the present.

From the paper:

“The LMU was originally envisaged as a bimetallic agreement, though it transitioned into an effective gold standard in 1878. French economist and politician Félix Esquirou de Parieu saw such a union as the first step in a process of European (even global) integration, which he hoped would culminate in the creation of a full common currency, and, as he predicted somewhat precociously, a ‘European Union’ directed by a ‘European Commission’. The disintegration of the union with the Great War illustrates the danger of insufficient coordination among member states. Partially inspired by the LMU, the SMU was deeply tied to the rise of a political Scandinavism. Like the LMU, it foundered as a result of the impact of the First World War. The conditions were propitious in the Scandinavian countries as they imitated each other’s policy approaches. There were, however, great economic disparities across the different countries, and this points to the dangers of a monetary union without sufficient economic convergence among its member states. Finally, The AHMU was created through an agreement known as the 1867 Compromise which ensured that Austria and Hungary shared a common currency while remaining fiscally sovereign. The main lesson of the AHMU is about the nature of institutional structures. Because of the relative size and power of Austria and Hungary, the union’s disintegration illuminates the game theoretic interaction of nations within a monetary union, including their asymmetric ability to exert power and influence over the terms of the supranational agreement.”

Link to the piece.

  • “The decision to create the monetary union, the decision of whom to admit, and the decision of whom to appoint to run the ECB are political decisions, taken by political leaders, subject to political constraints, not the social-welfare maximizing decisions of some mythical social planner.” Barry Eichengreen and Jeffry Frieden analyze “The Political Economy of European Monetary Unification.” Link.
  • A 2019 Max Weber lecture by Philippe Van Parijs discusses notions of justice and their (in)operability within the monetary union framework, featuring discussion from Rawls on the EU and a reading of Hayek on monetary unions. Link.
  • “Many regional currency institutions were established in sub-Saharan Africa under colonial rule. Surprisingly, a number of these colonial institutions survived the transition to national independence, and several have survived to the present day.” Scott Cooper and Clark Asay on the colonial legacy of the West African franc zones and the Southern African rand zone. Link.


When do policymakers listen to experts?

In his job market paper, Stanford political science PhD candidate Nathan Lee provides survey evidence of the impact of expertise on policymaking, finding a striking effect of expert evidence on policymaker’s beliefs.

From the paper:

“Across policies and empirical strategies, I find that providing the expert evidence causes an increase in belief accuracy of between eight and sixteen percentage points and an increase in preference congruence (i.e., congruence with the implied stance of the expert community) of between four and sixteen percentage points. These effects are not moderated by party affiliation but are moderated by the respondent’s prior attitude: the further the respondent’s prior attitude is from the expert evidence, the more the respondent updates in response to the message.”

Link to the paper, and to Lee’s website.

Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you’d like to see shared here? Send it our way:

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  • At the Phenomenal World, Gabriel Mathy diagnoses the present crisis as the “first services recession.” Link.
  • “War-economic production is often conceived of as a national enterprise. But most war economies in the 20th century were deeply international in their supply lines. The medical mobilization against COVID-19 will have to be similarly global.” Nicholas Mulder in Foreign Policy. Link.
  • New and timely research from Daniel Schneider and Kristen Harknett at the SHIFT project: 53% of hourly service sector workers at 91 large companies lack access to paid sick leave. Link.
  • “Using Charity Commission Reports for England and Wales, I document a dramatic mid-eighteenth-century shift by donors and trustees from investments in real estate and rent charges to perpetual government annuities. The heavy investment in this public debt product is what ultimately prompted the creation of the London Stock Exchange in 1801.” Carole Shammas on “Government Securities Investment in Early Modern England and Wales.” Link.
  • Matthew Klein: “Don’t ‘reopen’ the economy. Don’t let it crash. Put it on ice.” Link.
  • Spencer Strub in the New York Review: “Illness & Crisis, from Medieval Plague Tracts to Covid-19.” Link.
  • Nathan Nunn in Science with a review piece on the origins of economic development, and what the surging role of economic historical work on the causes of development means for policy-minded researchers. Link.
  • In Agrarian South, two articles on the theoretical legacy of Samir Amin. Link and link.
  • At VoxEU, a proposal for eurobonds as part of a coronavirus response package by Francesco Giavazzi and Guido Tabellini. Link.
  • “Drawing on geographic variation in mortality during the 1918 Flu Pandemic in the U.S., we find that the pandemic reduced manufacturing output by 18%. We also use variation in the timing and intensity of non-pharmaceutical interventions across U.S. cities to study their economic effects. We find that cities that intervened earlier and more aggressively grow faster after the pandemic is over.” Brand new paper by Sergio Correia, Stephan Luck, and Emil Verner collects evidence on the economic impact of health interventions in the 1918 flu. Link.
  • The role of statistical testimony as evidence in civil cases. Link. h/t reader Jeff J
  • A new article by Adriana Kocornik-Mina, Thomas K. J. McDermott, Guy Michaels, and Ferdinand Rauch “studies the economic impact of large urban floods using spatially detailed inundation maps and night lights data spanning the globe’s cities.” Link.
  • A report by Caitlin Rivers et al from Johns Hopkins on strengthening outbreak science capacity: “use of infectious disease modeling to support public health decision making.” Link.
  • “In the context of the plague and influenza epidemics of the early modern period, Emmanuel Le Roy Ladurie has coined the expression of the unification of the globe by disease. He argued that in this time a ‘common market of bacilli’ was created along trade routes and through the movement of troops. The phrase is even more suitable to describe the cholera epidemics of the nineteenth century, in which diseases could travel at a new speed from place to place and profit from the revolution in transport achieved by the development of steamships and railways. The international sanitary conferences mark the first attempt to tackle the problem of the propagation of disease through international co-operation and the standardization of procedures.” Valeska Huber on the International Sanitary Conferences on Cholera. Link.

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