Economic history in Italy: A letter to the Minister of University and Scientific Research

Re: Abilitazione Scientifica Nazionale 2012, Storia Economica (13 C/1)

Dear Prime Minister, dear Minister,

We would like to express our concern about the results of the National Scientific Qualification (Abilitazione Scientifica Nazionale) in Economic History (13 C/1). In particular, we are puzzled by the failure of a number of applicants with an outstanding track record to obtain the “qualification” (abilitazione) for Full Professor (professore prima fascia) or for Associate Professor (professore seconda fascia). These individuals are well known outside Italy for their publications, their conference and seminar presentations, their refereeing of papers for leading journals, and their collaboration in international research projects. For example, we refer to three extremely valuable colleagues, Mark Dincecco (University of Michigan), Alessandro Nuvolari (Sant’Anna School of Advanced Studies) and Giovanni Vecchi (University  of Rome “Tor Vergata”), none of whom was awarded the qualification to Full Professor. It would be a terrible shame if these outcomes inhibited the full development of these scholars’ research agendas; economic history would be the poorer for it.

Another troubling feature of these results is the fact that candidates with a very limited track record of research in terms of international publications have been awarded the qualification. This is not the direction in which Italian economic history should go if it wants to secure its rightful place at the research frontier in our field.

Yours sincerely,

  

Robert C. Allen (New York University Abu Dhabi)

Stephen Broadberry (London School of Economics)

Gregory Clark (University of California, Davis)

Nicholas F. R. Crafts (University of Warwick)

Jane Humphries (All Souls College, University of Oxford)

Deirdre McCloskey (University of Gothenburg and University of Illinois at Chicago)

Joel Mokyr (Northwestern University)

Douglass C. North (Washington University in St. Louis; Nobel Memorial Prize in Economic Sciences 1993)

Kevin O’Rourke (All Souls College, University of Oxford)

Leandro Prados de la Escosura (Universidad Carlos III de Madrid)

Jan Luiten Van Zanden (University of Utrecht)

Jeffrey G. Williamson (Harvard University and University of Wisconsin)

Comment by Giovanni Federico, President of the European Historical Economics Society

Giovanni Federico is Professor in Economic
History at University of Pisa, and President of
the European Historical Economics Society.

This letter by twelve distinguished economic historians does not need much comment. However, some additional information might be helpful for readers not used to the byzantine procedures of the Italian university.  According to a 2010 law, professors are recruited in two distinct stages. In the first stage (Abilitazione Scientifica Nazionale), a national committee decides, on the basis of her publication record, whether a candidate is qualified (abilitato) to hold associate or full professor position in a given subject.  The qualification does not guarantee a position, but it is necessary to apply for actual jobs, which the universities will advertise in the next four years. Afterwards, the qualification would expire. There are 186 committees for as many fields (settori concorsuali), including Economic History, which must assess also candidates for History of Economic Thought. The deadline for application was  November 20, 2012  and 145 and 81  scholars applied respectively for associate and (full) professor (some of them applied for both positions). 

The CVs of  the candidates and the assessments of the committee (individual and collective) are available at https://abilitazione.cineca.it/ministero.php/public/esito/settore/13%252FC1/fascia/1  

and

https://abilitazione.cineca.it/ministero.php/public/esito/settore/13%252FC1/fascia/2

This transparency is highly praiseworthy, a welcome change from the bad habits of the past. 

The assessments show that the committee has denied the qualification to Nuvolari, Dincecco and Vecchi, at least officially, on a technicality. Its members have stated not to be able to distinguish the personal contribution of these three authors to the co-authored papers. This mention of the personal contribution to a joint paper may seem strange in the 21^st century. Indeed, it follows an old tradition of the Italian concorsi (competitions) for university positions, which prescribed that the contribution of each author must be recognizable. In fact, authors still use to add in Italian books and articles odd-looking footnotes such as 'although the work is the outcome of a joint work, author X has written Section 1,3,5 while author Y has written section 2 and 4'. Needless to say, such statements would be absolutely unthinkable in an international journal. Indeed, other committees in Economics have had no qualm to assess joint works, paying lip service to the tradition with formulas such as 'we ascertain as much as possible the individual contribution of the candidate to joint works’ or ‘we are able to assess the individual contribution of the candidate’. The committee for Economic History (with one dissenting voice) has decided otherwise and has labelled ‘non valutabili’ (impossible to assess) all the joint work without an explicit statement of the contribution. Thus it assessed only 4 out of the 18 publications submitted by Nuvolari and found them insufficient for qualifying him.

 A quick look at the candidates’ CVs can buttress the second claim of the letter – that the committee has qualified some candidates with a “very limited” number of international publications. One can define these latter as articles in the list of A-rated journals suggested by the  ANVUR, the official agency overseeing the Abilitazione, at an earlier stage of the procedure. The list (available at http://www.anvur.org/attachments/article/254/Area13_classeA.pdf) is not very selective. It includes nine Economic History journals (Journal of Economic History, Explorations in Economic History, Economic History Review, European Review of Economic History, Cliometrica, Australian Economic History Review, Financial History Review, Journal of Latin America and Iberian Economic History and Technology and Culture), three business history  journals (Business History, Business History Review and Enterprise and Society), four journal of history of economic thought (European Journal of the History of Economic Thought, Journal of the History of Economic Thought, Journal of Economic methodology and History of Political Economy).

 Yet, as of November 2012, only thirty candidates to full professor out of 81 had published at least one paper in any of these journals or in any of the long list of economics journals. Only ten candidates, including the three above mentioned, have published four paper or more. The results do not change much if we use a less demanding standard, the number of publications (books, chapter of books and articles) in the Econlit database. Thirty candidates have not a single title in the data-base - i.e. have no ‘international publications’ at all. Eighteen of them have been qualified. In contrast, 5 out of the top 10 candidates in terms of Econlit publications (ranging from 18 to 35) have not qualified. As a result, the average number of publications in Econlit is slightly higher for not qualified (5.80) than for qualified (5.65).  Both criteria would yield worse results if we concentrate on economic historians only. In fact, several specialists in the history of economic thought who applied are professional economists with a substantial publication record.

Of course, the international impact is not the only yardstick for good work. Econlit might omit  relevant work by Italian authors because it covers only very sketchily the Italian journals and publishing houses. However, if this is the case, it is arguably even worse. Any author who forfeits the opportunity of letting his work known outside the native borders not only damages his own standing but makes the international discourse poorer.

Giovanni Federico.

The letter has been reported on 26 March in Corriere della Sera, one of the most important newspaper in Italy.

Read it (in Italian) here.

Debating Big Ideas in Economic History

A tribute to Jaime Reis

Lisbon, 6 June 2014 

We are pleased to announce a conference in honour of Professor Jaime Reis who will retire in 2014. The conference is organized by the Social Sciences Institute, University of Lisbon and Nova School of Business and Economics, and will be held on 6 June 2014.

Jaime Reis is well-known for his contributions to Portuguese, European and International Economic History on a widespread range of topics that include studies on economic backwardness, on financial and banking history, on education and institutional developments, as well as on the determinants of long-term growth. These topics will be discussed in four panels with contributions from specialists in the fields and the public.

All those who wish to attend are welcome to join. For further details, including recommendations for accommodation and dinner registration, please contact the convenors or Marta Castelo Branco (at marta.castelobranco@ics.ulisboa.pt).

Programme

14:00-15:00 – Long-term growth

Leandro Prados de la Escosura (U. Carlos III) & Regina Grafe (EUI, Florence)

15:00-16:00 – The development of financial systems

Larry Neal (U. Illinois) & Rui Pedro Esteves (U. Oxford)

16:00-16:30 – Coffee-break

16:30-17:30 – Human capital and living standards

Cormac O’Grada (U. College, Dublin) & Joan Rosés (LSE)

17:30-18:30 – Portuguese economic history

Luciano Amaral (Nova, Lisbon) & Pablo Martín-Aceña (U. Alcalá)

19:30-20:30 – Tba

20:30 – Dinner at Nova School of Business and Economics

Convenors:

José Luís Cardoso, Leonor Freire Costa, Pedro Lains & Álvaro Ferreira da Silva

NEW EHES Working paper on “Debt Dilution in 1920s America: Lighting the Fuse of a Mortgage Crisis”

Much like the recent crisis, the U.S. Great Depression saw serious and widespread troubles among banks. Also like the recent crisis, the U.S. Great Depression was preceded by a large nationwide boom in real estate, peaking in 1926. Unlike in the current crisis, however, the interwar link - if any - between the real estate boom and the subsequent bank failures has been far from evident. An important argument against the existence of such a link has to do with the conservatism of mortgage contracts at the time. The average commercial bank mortgage contract had a maturity of only three to five years, and required a down payment of 50 per cent of the property value. This in theory would have significantly reduced both foreclosure risk and the negative consequences of foreclosures for banks.

NATACHA POSTEL-VINAY is a 

PhD Candidate in Economic History, 

London School of Economics

In this paper Natacha Postel-Vinay re-examines the question and uncovers the darker side of 1920s U.S. mortgage lending: the so-called “second mortgage system,” one of the most widespread and least well-known forms of debt dilution in the twentieth century. As a majority of borrowers in fact could not make a 50 per cent down payment, they took on a second, junior mortgage from another lender to help with the high down payment. As theory predicts, debt dilution, even in the presence of seniority rules, would have been highly detrimental to original lenders’ health, as it increases default risk on the original loan. In addition, second mortgages’ shorter maturity, higher interest rates and more frequent principal payments requirements created a seniority reversal effect which further impaired borrowers’ ability to repay first mortgages. Through foreclosure, banks would still be able to retrieve 50 per cent of the property value, but often after a protracted foreclosure process - a great impediment to bank survival in case of a liquidity crisis.

Using newly-discovered archival documents and a newly-compiled dataset from 1934, this paper thus sheds new light on a financial phenomenon President Hoover then described as “the most backward segment of [the US's] whole credit system.” In today's world of “piggyback” mortgage lending and multi-party over-the-counter trading in credit-default swaps, this paper provides timely empirical support to the idea that debt dilution, or “sequential banking” can be highly detrimental to credit.

The working paper can be found here:

http://ehes.org/EHES_No53.pdf

NEW EHES Working paper: “Market potential estimates in history: a survey of methods and an application to Spain, 1867-1930”

The distribution of economic activity in Spain by night.

New Economic Geography (NEG) stresses the role of accessibility as an explanatory factor of the spatial 
distribution of economic activity. According to this theoretical framework, when transport costs decline, production (mainly that characterised by increasing returns and imperfect competition) will tend to agglomerate in locations with a better access to demand. Hence, from a regional perspective, a rise in inequality may be expected to occur during the early stages of economic growth. To empirically test this prediction and others emanating from NEG models a sound measure of accessibility is needed. Economic historians have increasingly contributed on this topic seeking to explain a variety of experiences ranging from Victorian Britain to interwar Poland, the Habsburg Empire or the US at the turn of the 20^th century. In this study, the focus is placed on Spain, a country characterised by large regional disparities still today. Here, accessibility for the Spanish provinces is calculated using the Harris market potential equation, an indicator with a long-standing tradition among geographers and economists.

The period under study, going from 1867 to 1930, seems particularly relevant. First, industrialisation was going through the early stages. In addition, transport costs fell significantly leading to an increasing integration of the domestic market. The gradual expansion of railways (with a radial design of the network) and the improvement in coastal shipping navigation with the transition from sail to steam had a notable impact on the decline of transport costs. This was particularly important in a mountainous country like Spain where roads where scarce and in a poor state of conservation and which lacked of navigable rivers. Finally, trade policy also underwent changes all across Europe (and indeed in Spain), especially during the interwar period, affecting the relevance of the domestic and external markets. As a result of this changing context, the relative accessibility of regions may have experienced an asymmetric impact which may have had consequences on the economic fortune of Spain’s provinces.

The study finds that the main variations in the spatial distribution of market potential were experienced in the second half of the 19^th century, a period characterised by a marked centrifugal tendency. By 1900, a clear distinction in terms of accessibility between coastal and inland provinces, with the former showing a higher market potential than their inland counterparts, had emerged. The only exception was Madrid, located at the geographical centre of the Peninsula but with a market potential similar to that of the coastal regions. Thus, with the integration of the domestic market, the geographical periphery of Spain had become the core in terms of economic potential, and, in turn, inland central provinces suffered an increase in their relative remoteness. Interestingly, once established, this dual structure showed a considerable degree of persistence during the first decades of the 20^th century.

These changes in market potential can be considered as being a factor that turned out to have persistent effects on the spatial distribution of economic activity in Spain. The period under study witnessed a notable increase in the concentration of manufacturing in a limited number of regions and an upswing of regional inequality. Overall, the availability of an indicator of accessibility like the market potential becomes a key tool for undertaking empirical exercises in order to further examine the roots of the current spatial disparities through the lens of NEG. 

Julio Martinez-Galarraga is associate
professor at Universitat de València

The working paper can be found here:

http://ehes.org/EHES_No51.pdf

NEW EHES Working paper: How did the capital market evaluate Germany’s prospects for winning World War I?

Evidence from the Amsterdam market for government bonds

Tobias Jopp is Akademischer Rat 
(post-doc) at Universität Regensburg

Economic historians have increasingly used market prices for a country’s sovereign debt to learn more about the importance, or unimportance, of special events seen through the lens of contemporaries.  Such “special events” typically include war, political turmoil, and economic crisis. Especially the American Civil War and the Second World War have attracted much attention in this respect. As opposed to this, the First World War – the “great seminal catastrophe of the twentieth century”, to use this oft-cited expression – has been rather neglected. This is where this study kicks in – with focus on Germany: How did investors perceive the German Empire’s war effort? Which were the main turning points in war in their eyes? To answer the questions, Jopp looks at the stock exchange located in Amsterdam, one of the major trading places at the time. He analyses the price of the German three percent imperial loan between 24^th August 1915, when trading in the primary belligerents’ sovereign debt restarted, and 11^th August 1919 using standard methodology to detect structural breaks in a bond’s mean price.

The study finds that, seen through the lens of bondholders, a concise WWI narrative centering on Germany should consist of twelve events that, alone, determined the long-term trend of their confidence. Two events stand out due to their profound negative effects on investor’s confidence. The one arguably is the conscription controversy in Britain culminating in late January 1916, when general conscription was finally introduced. Bondholders seem to have perceived this as a signal that Britain was likely to get fully involved in the war now; price lastingly dropped by 14 percent. It seems as if historians usually do not attribute too much importance to the conscription controversy as it stood in January 1916. This may be due to the fact that, in hindsight, the conscription program in Britain was not a great success in mobilizing human resources. The other major event – sequence of events would be better, actually – is the groundbreaking and successful Allied Powers’ revival in the Western theatre between summer and early autumn 1918 leading to the speedy ultimate collapse of the German lines; price lastingly fell by another 17 percent. In contrast to the conscription controversy, the Allied Powers’ revival has been established in the historiography of the war as not only a major turning point, but the major turning point sealing the fate of the Central Powers. Evidence shows that the meaning contemporary observers ascribed to a particular event may well differ in some respect from the meaning historians, or the public mind, ascribe to it retrospectively.

The working paper can be found here:

http://ehes.org/EHES_No52.pdf

NEW EHES Working Paper about Bank Deregulation, Competition and Economic Growth

Bank Deregulation, Competition and Economic Growth: The US Free Banking Experience

Philipp Ager, assistant
professor at University of
Southern Denmark

What is the optimal level of bank competition? New research by Philipp Ager and Fabrizio Spargoli sheds light on this question by testing how the introduction of free banking laws between 1837 and 1863 affected bank competition and economic growth in US counties. With the introduction of free banking laws, governments gave up their power over bank chartering and allowed any individual to establish a bank provided that certain legal requirements were satisfied. Together with the change in bank-chartering policy, the other main feature of the 1837-1863 period was that the US did not have a central bank nor a prudential regulator as today. Hence, studying the US during the 1837-1863 period allows the authors to isolate the effects of bank competition from those of state implicit guarantees. Ager and Spargoli's central conclusion is that, in an institutional framework without a central bank and a prudential regulator, bank competition leads to more bank failures but enhances economic growth in the long run.

Their study finds that the introduction of free banking laws relaxed barriers to entry and allowed more banks to enter the market. Along with a higher degree of bank competition, the introduction of free banking laws also caused more bank failures. Since these two effects have opposite implications for the real economy, the authors assess whether the introduction of free banking laws had an overall beneficial or detrimental effect on economic growth. Their empirical evidence suggests that there is a positive and statistically significant link between the relaxation of barriers to bank entry and economic growth during the 1830-1860 period in US counties. Ager and Spargoli's estimates indicate that counties in states that adopted free banking laws experienced a 20% increase in output per capita.

The authors argue that the growth-enhancing effect of free banking laws is consistent with two explanations. First, bank competition promoted counties' financial development, as measured by loans per capita and money stock per capita. Second, bank competition determined efficiency gains in the banking industry. In particular, their estimates show that free banking laws decreased the probability of closure of incumbent banks, and led the inefficient incumbent banks to grow less than their more efficient counterparts. These findings are consistent with the literature on the finance-growth nexus, which argues that finance led growth.

Fabrizio Spargoli,
assistant professor at
Erasmus Research institute
of Management

An interesting implication of their empirical evidence is that, in a banking system without public safety nets, more frequent bank failures do not harm economic growth in the long run. Ager and Spargoli believe that their result might provide some guidance to regulators on the reform process that has started in the aftermath of the 2007-2009 financial crisis. Bank regulators should put more emphasis on reducing banks’ subsidy from state implicit guarantees rather than limiting bank competition. In order to have a banking system that stimulates economic growth, it is crucial to make additional efforts in promoting competition among banks. These efforts should be directed both to the resolution of banks in financial distress, which might hinder the growth of healthier banks, and to limit the risk of excessive concentration of banking activities, especially in those countries where a consolidation process took place in the aftermath of the 2007-2009 financial crisis.



The working paper can be found here: 
http://ehes.org/EHES_No50.pdf

The Florence FRESH Meeting

The Florence FRESH Meeting (European University Institute) opened with a session on Financial Markets. Andrea Papadia (LSE) showed that foreign debt repurchased by German citizens and companies in the 1930s helped the country to cope with sovereign risk, as recent advances in sovereign risk theory predict. Jérémy Ducros (Paris School of Economics) put forward possible explanations for the survival of the Lyon Stock Exchange during the expansion of a more centralized Stock Exchange in Paris. Pamfili Antipa (Bank of France) challenged the view that prices are exclusively determined by monetary policy, by illustrating the effect of fiscal shocks in Britan during the Napoleonic Wars.

In the session on International Flows of Goods and Labour, Gérladine Davide (Université Libre de Bruxelles and CentER at Tilburg University) compared the French art market during the Great War with that of the Second World War. She proves that art was not really perceived as a safe haven during the first global conflict, as the literature put forward.  Peter Bent (University of Massachusetts, Amherst) compared economic crises in US and Argentina at the end of the 19^th century, putting forward that stagnation and recovery were driven by global dynamics affecting the price of agricultural products, rather than by protectionist policies aimed at developing the manufacturing sector. Marc di Tommasi (University of Edinburgh) shed light on patterns of immigration in Edinburgh on the eve of the 20^th century. By drawing on an innovative analysis based on GIS, he suggested that clusters of migrants were mainly driven by occupation and by the workplace, rather than nationality itself and, as a consequence, chain migration.

The group discusses a paper in Sala del Capitolo.

Giovanni Vecchi (University of Rome Tor Vergata) presented the results of recent research on the well-being of Italians since the country’s unification (1861 – 2011). He focused particularly on the way economic inequalities were explored, by relying on a unique database of household budgets (IHBD, Italian Household Budget Database). His presentation was particularly fascinating for the audience: when the chair tried to say he was running out of time, many of the participants started to complain and asked him to go on!

One of the participant wrote: “I had a really great time at the meeting. It was stimulating to be exposed to such a wide range of research topics. Also, the feedback I received on my own work was extremely useful, and will help shape my future research. I appreciate having had this opportunity to connect with economic historians who are undertaking such innovative research”

The afternoon session was opened by Léa Rouanet (Paris School of Economics) who tracked health standards in former French West Africa. The project aims to reconstruct input and output measures of health to be compared to colonial health policies, towards a better understanding of the effect contemporary policies had on living standards. Laurent Heyberger (University of Technology Belfort-Montbéliard) outlined a reassessment of demographic trends in French Algeria, by relying on a new anthropometric dataset, which calls into question classic views on colonial history.

The participants enjoy the coffee break.

In the final session on Long-Term Perspectives and Institutional Legacies, Giulia Meloni (University of Leuven and LICOS) put forward convincing explanations for the rise and fall of Algeria in the wine market. While the country became one of the largest world producer and the largest exporter under the French rule (mainly as a result of a struggling French industry), its success led to increasing regulation and lobbying against Algerian wine by French winegrowers. When Algeria became independent, the tighter control of the wine industry by the state and the lack of native expertise led to its decline, which has persisted to the present day. Johannes Lessig (University of Jyväskylä) connected debt crises to money supply and cheap money, in an attempt to provide a comprehensive explanation of financial crises in the very long-term (1860 – 2010).

The last session of the Florence FRESH Meeting.

This blog post was written by:

 Gabriele Cappelli, PhD Researcher, European University Institute.

Essex FRESH meeting on migration history

The Essex FRESH meeting, with a theme on migration in history, was held at the University of Essex on October 18. The participants greatly appreciated an excellent keynote address by Tim Hatton, Essex, who focused particularly on how to measure the wage profiles of immigrants in American history.

Among many excellent presentations might be mentioned one by Costanza Biavaschi from IZA, Bonn, Germany. She used American edition Scrabble word scores as an instrument for the ‘foreignness’ of immigrant names in the United States, in order to identify a causal effect of changing your name to something more American on immigrant earnings.

The next FRESH meeting will be at the European University Institute in Florence on December 6. See www.sdu.dk/en/ivoe/fresh for more information on forthcoming FRESH meetings.

This blog post was written by: 

Paul Sharp, Associate Professor, Historical Economics and Development Group (HEDG), Department of Business and Economics, University of Southern Denmark

                                          The dinner at the FRESH meeting 

The lessons of the 1930s, by Nicholas Crafts in Odense

‘The Macroeconomic History of the 1930s’ given by Nick Crafts, Warwick, and organized by the University of Southern Denmark, October 21-23, 2013, was a popular PhD course which brought together 13 PhD students and 4 senior colleagues.

A common theme of interest for the participants was the quantitative economic-historical analyses of the depression in the 1930s. Here, one of the PhD students motivates her interest in this topic:

“The financial turmoil which began at the end of 2007 generated a renewed research interest in topics like banking crises, sovereign debt crises and monetary unions. Past episodes of such experiences, like the Great Depression of the 1930s can offer valuable insights for current issues. Hence economists’ fascination with the causes and the sources of recovery of the Great Depression are clearly understandable.”

Nick Crafts is a big name in economic history and a fantastic speaker, which gave further motivation for attending the lectures. Using a very structured set of slides and his gift for making clear even difficult concepts, Prof. Crafts helped the students to understand the main debates and the overall picture, to evaluate the important empirical contributions, and to draw out implications for today’s policy debates.

This blog post was written by: 

Andreea Maerean, PhD student, Historical Economics and Development Group (HEDG), Department of Business and Economics, University of Southern Denmark

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This is the blog of the European Historical Economics Society. Our aim is to promote European research and training in economic history. We publish posts from events organized by the society, articles published in our journal (European Review of Economic History), interviews with leading scolars in economic history and other news related to the society's aim and its members. If you are interested in contributing to the blog, just be in touch with me.

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