This article re-examines the association between democratization and the cost of borrowing abroad in the first era of globalization. Using two representative datasets the literature offers but employing an improved method for panel event study, we find that democratization's impact on the costs of foreign borrowing is uncertain. In one case, the estimated coefficients are similar to the sign and magnitude of the original study but with larger standard errors, rendering the impact statistically insignificant. In the other case, the estimated coefficients hover around zero and are not statistically different from zero.

Why did the human brain evolve? This study develops a Malthusian growth model with heterogeneous agents and natural selection to explore the evolution of human brain size. We find that if the cognitive advantage of a larger brain dominates its higher metabolic costs, then the average brain size increases over time, which is consistent with the rising trend in human brain size that started over 2 million years ago. Furthermore, an improvement in hunting-gathering productivity (e.g., the discovery of using stone tools and fire in hunting animals and cooking food) helps to trigger this human brain size evolution. As the average brain size increases, the average level of hunting-gathering productivity also rises over time. Quantitatively, our model is able to replicate the trend in hominin brain evolution over the last 10 million years.

We extend the growth-at-risk (GaR) literature by examining US growth risks over 130 years using a time-varying parameter stochastic volatility regression model. This model effectively captures the distribution of GDP growth over long samples, accommodating changing relationships across variables and structural breaks. Our analysis offers several key insights for policymakers. We identify significant temporal variation in both the level and determinants of GaR. The stability of upside risks to GDP growth, as seen in previous research, is largely confined to the Great Moderation period, with a more balanced risk distribution prior to the 1970s. Additionally, the distribution of GDP growth has narrowed significantly since the end of the Bretton Woods system. Financial stress is consistently associated with higher downside risks, without affecting upside risks. Moreover, indicators such as credit growth and house prices influence both downside and upside risks during economic booms. Our findings also contribute to the financial cycle literature by providing a comprehensive view of the drivers and risks associated with economic booms and recessions over time.

We consider the debut of a new monetary instrument, central bank digital currencies (CBDCs). Drawing on examples from monetary history, we argue that a successful monetary transformation must combine microeconomic efficiency with macroeconomic credibility. A paradoxical feature of these transformations is that success in the micro dimension can encourage macro failure. Overcoming this paradox may require politically uncomfortable compromises. We propose that such compromises will be necessary for the success of CBDCs.

This is a review of Joel Mokyr's fascinating book entitled A Culture of Growth. The work is summarized, noting its focus on Darwin-style evolutionary explanations of cultural change. But Mokyr's emphasis on cultural entrepreneurs and positive feedbacks in the procreation of ideas is insufficient to explain the origins of modern economic growth. Too much explanatory weight is placed on too few extraordinary people. It is argued that Mokyr's analysis should be extended, to bring the evolution of institutions, as well as the evolution of culture, into the picture at an additional level. The role of inter-state rivalry and exogenous shocks has also to be underlined. This kind of analysis can be developed within the framework of generalized Darwinism, which Mokyr himself adopts. This is a major and highly stimulating book.

Advanced economies undergo three transitions during their development: (1) transition from a rural to an urban economy, (2) transition from low-income growth to high-income growth, (3) transition from high fertility and mortality rates to low modern levels. The timings of these transitions are correlated in the historical development of most advanced economies. I consider a nonlinear model of endogenous long-run economic and demographic change, in which child quantity-quality substitution is driven by declining child mortality. Because the model captures the interactions between all three transitions, it is able to explain three additional empirical patterns: a declining urban-rural wage gap, a declining rural-urban family size ratio, and most surprisingly, that early urbanization slows development. This third prediction distinguishes the model from other theories of long-run growth, and I document evidence for it in cross-country data.

Six decades ago, Cuba initiated a momentous social and economic experiment. This paper documents the effects of the experiment on Cuban living standards. Before the revolution, Cuban income per capita was on a par with Ireland or Finland. Indeed, Cuba was one of the richest of the Spanish-speaking societies. Growth is glacially slow after the revolution as GDP per capita increased by 40 per cent between 1957 and 2017 equal to an annual growth rate of 0.6 per cent—among the lowest anywhere. To be sure, other dimensions of well-being such as education and health improved, yet broader welfare measures do not change the conclusion that the revolution impoverished Cuba relative to any plausible counter factual.

This article offers a Japanese perspective on the debate about the international financial system immediately after the first oil shock of 1973–4. Using archival records from the OECD and Bank of Japan, I analyze the three key policy issues discussed at the meetings of Working Party 3 (WP3) of the OECD: petrodollar recycling, balance-of-payments adjustments, and the management of global growth. Documents show that the Japanese approach to capital controls, exchange rate management, state-led growth orientation and international banking strategies was rather strengthened by the impact of the oil shock. By 1975 the OECD viewed Japan, together with Germany and the United States, as one of the ‘locomotives’ that would trigger a revival of economic growth in the industrialized West.

We analyse the possible optimality of the path followed by the current account of the Spanish economy over a very long period of almost 170 years (1850-2016), according to the intertemporal approach to the current account and using a present-value model. In particular, from the estimation of a bivariate vector autoregression model for the current account, we attempt to assess the extent to which the latter has been used to smooth private consumption over time in the presence of temporary shocks that the economy might suffer. In general, evidence does not seem to be particularly favourable to the validity of the model over the period of analysis.

The Exchequer bills were a key component in Britain's financial revolution of the 1690s. Using a range of archival sources not examined in previous work, this article argues that closer study of how these bills were given credit and circulation between 1696 and 1698 can offer a more nuanced reading of the mechanisms which helped to create credible commitment in this period. Though proper institutional design did help to give the bills credit, it was only one part of a wider series of informal measures used by the Treasury to secure subscribers for the fund for circulating the bills and to manage the emission of bills to prevent high discounts. This reflects the fact that credit and confidence in this period were influenced by a wide range of factors, including commercial advantage, patriotism and the example offered by other investors, all of which could be manipulated by the Treasury to promote the credibility of the Exchequer bills. Proper institutional and financial incentives were therefore not the only factors which could create credible commitment in Britain's financial revolution.

This paper outlines the development of world trade from 1800 to 1938. It relies on a newly compiled database, which, unlike previous works (e.g. Lewis 1981), reports series of imports and exports at current and constant prices and at current and constant (1913) borders for almost all existing polities. In the first sections, we outline the estimation methodology and assess the reliability of the series (now available at http://www.uc3m.es/tradehist_db). World trade grew very fast throughout the «long» 19th century, but growth rates were higher before 1870. We measure the effects of war and the Great Depression on total trade and trade by continent and polity. Within this general upward trend, the performance of polities differed by geographical location, level of development, political status and factor endowment. Finally, we estimate trends in the share of primary products, which declined until World War One, with an acceleration in the second half of the 19th century.

The British monetary authorities have traditionally focused on broader monetary aggregates than their counterparts elsewhere. The reasons include: the willingness of UK banks to allow customers to make payments by drawing on time deposits, the particularities of the UK approach to managing the national debt and the foreign exchange reserves, and the flow-of-funds system of national accounts developed after World War II. This article outlines these reasons, and explores the implications for the UK's often fractious relationship with the International Monetary Fund during the 1950s and 1960s. It explains why IMF conditionality on loans to the UK focused on broad aggregates.

The peseta was the Spanish currency for more than a century and, during this time, it played a remarkable role in adjusting the balance of payments. This paper presents a chronology of the moments when the adjustment was crucial, which, consistent with the macro-trilemma, coincided with periods of external openness. Moreover, this paper provides empirical support to the thesis that links the exceptionality of a floating peseta during the gold standard with fiscal profligacy.

This article provides a historical overview of the factors leading up to debt crises and the default mechanisms used by governments to solve them, ranging from repudiation and restructuring to inflation tax and financial repression. The paper also analyses the Spanish governments’ graduation to responsible public debt management under democracy and the last debt crisis starting in 2010. After analysing the evolution of the outstanding public debt, budget deficits, the Spanish economy's ability to borrow, the central government's debt affordability and the profile of public debt, the article concludes that the Spanish case confirms the main hypotheses of concerning international debt crises: short-term borrowing enhanced the risk of a debt crisis; insolvency problems arose when governments were unwilling or unable to repay debt; debt crises took place after large capital inflows; most outright defaults ended up being partial defaults; public debt level became unsustainable when it rose above 60-90 per cent of GDP; default trough inflation became commonplace when fiat money displaced coinage; financial repression was used as a subtle type of debt restructuring; and defaults endangered the creditworthiness of the Spanish Finance Ministry and forced disciplined fiscal policies.

The US recession of 1937–8 is one of the deepest on record. Yet it did not produce a global depression – quite unlike 1930. According to the standard view, this reflected an unfettering of central banking after the collapse of the international gold standard circa 1931. We challenge this view. While Germany and a couple of Central and Eastern European countries were sheltered by binding exchange controls, most countries were still constrained by their golden fetters, as our new exchange rate regime classification suggests. The underlying policy regime was surprisingly similar to that of the 1929–30 downturn. What mattered was a quick reversal in US policy in 1938 and, for many countries, a more plentiful stock of international reserves.

The paper proposes an interpretation of the «Argentine failure» based on development accounting and econometrical approaches frequently used in the current cross-country income differentials literature. The main results are as follows: the development process of Canada — in term of per capita GDP –– moved away from that of Argentina around 1918, but there was a structural change in the determinants of aggregate productivity around 1935 that led Argentina to take a diverging path. Recovery — thanks to improved aggregate productivity –– was not possible after 1940. The results support the idea that Argentina fell into a «staple trap», while Canada embarked on a successful path due to the adjacency and political proximity with a larger and complementary economy.

Although central banks have pursued the same objectives throughout their existence, primarily price and financial stability, the interpretation of their role in doing so has varied. We identify three stable epochs, when such interpretations had stabilised, i.e. the Victorian era, 1840s–1914; the decades of government control, 1930s–60s; the triumph of the markets, 1980s–2007. Each epoch was followed by a confused interregnum, searching for a new consensual blueprint. The final such epoch concluded with a crisis, when it became apparent that macro-economic stability, the Great Moderation, plus (efficient) markets could not guarantee financial stability. So the search is now on for additional macro-prudential (counter-cyclical) instruments. The use of such instruments will need to be associated with controlled variations in systemic liquidity, and in the balance sheet of the central bank. Such control over its own balance sheet is the core, central function of any central bank, even more so than its role in setting short-term interest rates, which latter could be delegated. We end by surveying how relationships between central banks and governments may change over the next period.

The aim of this paper is to analyse the effects of land concentration prompted by the distribution of disentailed church land during the second half of the 19th century on the accumulation of human capital in early 20th century Colombia1. Using existing primary sources on the process of land disentailment and the 1912 National Census at the municipal level, descriptive statistics and econometric evidence show a significant and negative relationship between the amount of disentailed land during the 1870s and literacy and school enrolment rates of males in 1912.

The life and work of Miguel de Cervantes coincide with the first cycle of globalization. One of the main engines of the world economy was the silver trade between the Americas and the Asian markets. The new world economy was developing at the same time as the «military revolution» in Eurasia. The Spanish, Ottoman, Safavid, Mughal and Russian empires and other political entities used the new military «hardware» and «software» to expand their borders and to maintain their position employing the larger part of their financial resources. These new economic and political realities propelled ecological exchanges that would irrevocably change the history of the world. That was the time of Don Quixote.

This essay contends that Western Europe's economy started to grow at a more rapid pace than the rest of the World during the Early Modern or Late Medieval era. Using the latest quantitative information available it is argued that, between the years 1000 and 1820, GDP per head in Western Europe experienced a threefold increase whereas that of the rest of the World grew only 33 per cent. Among the factors responsible for this difference the author highlights the progress in navigation techniques, with its consequences on trade and the division of labour; the adoption of institutions that also favoured trade; the knowledge revolution which started during the Renaissance period; the political division of Europe, with its corollary of competition among states and enhanced freedom, as well as the development of individualism favoured by the Christian cultural tradition.