I took the economic history field exam today. Five essays in three hours meant a lot of rushed writing! I felt comfortable that I knew the subject matters and hope I was able to make my points clearly despite the rush. The exam covered the reading list from the first year economic history course taught by Brad Delong and Barry Eichengreen and from Eichengreen's European Economic History course.
So it was interesting to see that Eichengreen composed a summer reading list for Europeans, published at Project Syndicate. I have only read part of one of the four recommended books-- several chapters from Friedman and Schwartz' s A Monetary History of the United States. In fact, I discussed it on my field exam (probably incoherently, since I was down to the last 20 minutes!) I hope to get to the Kindleberger book at some point, but I've still got to finish Eichengreen's Golden Fetters for my book club, and a few more of his books that I bought.
I'm also on a Russian literature kick. This summer I read, and was blown away by, Anna Karenina by Tolstoy. I think it is worth a future post. Now I am reading Pnin by Nabokov, which is more laugh-aloud funny than Anna Karenina.
Showing posts with label Barry Eichengreen. Show all posts
Showing posts with label Barry Eichengreen. Show all posts
Wednesday, August 15, 2012
Monday, August 13, 2012
American Exceptionalism: A Sequel
A few posts ago, I wrote about American Exceptionalism. For economic historians, this typically refers to the United States' industrialization and efficiency gains in the second half of the nineteenth. Economic historians refer to the first two thirds of the twentieth century as the "American Century," due to the United States' considerable edge in productivity and wealth over the rest of the world. The American Century is thus the conceptual and chronological sequel to American Exceptionalism.
I previously explained how the concept of American Exceptionalism had become a rallying cry for Republican politicians. So too for the American Century. Here's Mitt Romney:
A few other grad students and I currently have a book club on Barry Eichengreen's "Golden Fetters." We read and discuss a chapter per week, and are on chapter 9 now. It has me convinced that the international monetary system, and especially the gold standard, is a key thread to understanding those remarkable decades. The pre-WWI gold standard worked well because of credibility and international cooperation. Eichengreen's intuition for political economy is strong, and he carefully traces why credibility and cooperation were sustainable before WWI but not in the interwar period.
The war greatly strengthened the U.S. balance of payments. Germany paid reparations to the Allies, who in turn repaid war debts to the U.S. American lending to Central Europe and Latin America rounded the circle of capital flows. But the balance of the whole system hinged on the U.S. keeping domestic interest rates low to encourage American gold to flow abroad. And for awhile, this worked just fine. The U.S. was more than happy to maintain low interest rates when it was also convenient for their domestic goals. However, starting in 1928, around the time of the Wall Street boom, Federal Reserve officials decided to tighten monetary policy, which curtailed foreign lending. To stay on the gold standard, other countries had to respond drastically, causing the U.S. downturn to both spread and deepen. The "golden fetters" also prevented policymakers from injecting liquidity into the banking system to contain bank runs. I strongly recommend reading at least the first chapter of Golden Fetters for more. The book is filled with examples of cooperation and coordination failures in the interwar period.
Anyhow, by the mid 1930s most countries dropped off of the gold standard and finally began to recover. The U.S. economy grew rapidly, save for a downturn in 1937-38. After that, monetary expansion in the form of huge gold inflows stimulated the economy. The gold inflows were at least in part due to fears of another war on European soil, causing capital flight from Europe. After WWII, the dollar was the dominant currency for international transactions and reserves. The Bretton Woods agreement of 1944 established a system of fixed exchange rates based on gold valued at $35 per ounce. Both world wars, then, were inadvertently beneficial to the United States relative to other countries. And our Great Depression was detrimental to the rest of the world. So it is hardly surprising that the United States' relative productivity and wealth grew in this era. Or that by the mid 1960s, Japan and Europe began to narrow the gap, and that Bretton Woods collapsed by 1971.
I will try to add more in future posts about what was going on in the American Century. So far it is not apparent that we want to repeat it. But maybe there are some features of the American Century worth striving for. For now I need to get back to studying for my economic history field exam on Wednesday. Today was macro-- quite difficult, a heavier than expected emphasis on stochastic dynamic programming.
I previously explained how the concept of American Exceptionalism had become a rallying cry for Republican politicians. So too for the American Century. Here's Mitt Romney:
In 1941, Henry Luce called on his countrymen -just then realizing their strength - "to create the first great American century." And they succeeded: together with their allies, they won World War II, they rescued Europe, they defeated Communism, and America took its place as leader of the free world. Across the globe, they fought, they bled, they led. They showed the world the extraordinary courage of the American heart and the generosity of the American spirit...Again, economic historians have to look for explanations other than the "extraordinary courage of the American heart and the generosity of the American spirit." Explanations of American Exceptionalism in the late nineteenth century largely focus on factors within the U.S.: factor endowments, technological development, railroadization, education, and so on. For the American Century--which included both world wars and the Great Depression-- international explanations are in order.
Like a watchman in the night, we must remain at our post - and keep guard of the freedom that defines and ennobles us, and our friends. In an American Century, we have the strongest economy and the strongest military in the world. In an American Century, we secure peace through our strength. And if by absolute necessity we must employ it, we must wield our strength with resolve. In an American Century, we lead the free world and the free world leads the entire world.
A few other grad students and I currently have a book club on Barry Eichengreen's "Golden Fetters." We read and discuss a chapter per week, and are on chapter 9 now. It has me convinced that the international monetary system, and especially the gold standard, is a key thread to understanding those remarkable decades. The pre-WWI gold standard worked well because of credibility and international cooperation. Eichengreen's intuition for political economy is strong, and he carefully traces why credibility and cooperation were sustainable before WWI but not in the interwar period.
The war greatly strengthened the U.S. balance of payments. Germany paid reparations to the Allies, who in turn repaid war debts to the U.S. American lending to Central Europe and Latin America rounded the circle of capital flows. But the balance of the whole system hinged on the U.S. keeping domestic interest rates low to encourage American gold to flow abroad. And for awhile, this worked just fine. The U.S. was more than happy to maintain low interest rates when it was also convenient for their domestic goals. However, starting in 1928, around the time of the Wall Street boom, Federal Reserve officials decided to tighten monetary policy, which curtailed foreign lending. To stay on the gold standard, other countries had to respond drastically, causing the U.S. downturn to both spread and deepen. The "golden fetters" also prevented policymakers from injecting liquidity into the banking system to contain bank runs. I strongly recommend reading at least the first chapter of Golden Fetters for more. The book is filled with examples of cooperation and coordination failures in the interwar period.
Anyhow, by the mid 1930s most countries dropped off of the gold standard and finally began to recover. The U.S. economy grew rapidly, save for a downturn in 1937-38. After that, monetary expansion in the form of huge gold inflows stimulated the economy. The gold inflows were at least in part due to fears of another war on European soil, causing capital flight from Europe. After WWII, the dollar was the dominant currency for international transactions and reserves. The Bretton Woods agreement of 1944 established a system of fixed exchange rates based on gold valued at $35 per ounce. Both world wars, then, were inadvertently beneficial to the United States relative to other countries. And our Great Depression was detrimental to the rest of the world. So it is hardly surprising that the United States' relative productivity and wealth grew in this era. Or that by the mid 1960s, Japan and Europe began to narrow the gap, and that Bretton Woods collapsed by 1971.
I will try to add more in future posts about what was going on in the American Century. So far it is not apparent that we want to repeat it. But maybe there are some features of the American Century worth striving for. For now I need to get back to studying for my economic history field exam on Wednesday. Today was macro-- quite difficult, a heavier than expected emphasis on stochastic dynamic programming.
Monday, May 2, 2011
Economic History
The Berkeley Economics PhD program is pretty unique in requiring that first year students take economic history as part of the core. The other core classes (macro, micro, metrics) involve lots and lots of problem sets. If I had been blogging the past year, about 95% of my posts, like 95% of my conversations, would have consisted of griping about "p-sets." (I'm surprised I still have any friends other than my classmates!)
History is a welcome difference. Instead of problem sets, we have weekly memos and a research paper. Professors Eichengreen and DeLong post a memo question each week related to that week's assigned readings, and often also related to current issues. The reading list is more thematic than chronological, and covers a lot of classics. Walter Bagehot's Lombard Street gets a week, as does the gold standard; the Great Depression gets three. Plenty of context for comparison with the past few years. Berkeley professors are pretty well represented in the readings, which I like. It fosters school spirit in a way. The lectures are once a week for two hours, and are a lot of fun. On the first day I had to sit on the floor because the room was so full, but attendance fell a bit after that. They were a nice break from the math-class-style lectures for the other courses, and helped put things in context.
I also really enjoyed writing the memos. We were directed to "flex our prose-writing skills," which I took to heart (although, my grades were always negatively correlated with the extent to which I did so; my driest papers got the better scores).
The main assignment is the history research paper. It is due on May 4 and I think I've finally finished. Proposals were due before spring break, and the end project is nothing nearly resembling what I proposed. I wrote partial drafts of several different papers en route to arriving at my eventual topic. I knew I wanted to do some sort of quantitative text analysis, and first thought of an idea related to geography-- an over-complicated scheme relating place mentions to interest rate and wage convergence. Then I saw a paper by one of my macro professors, Yuriy Gorodnichenko, that included a content analysis of speeches by recent Federal Reserve chairmen related to price-level targeting vs. inflation targeting. I got excited about the idea of Federal Reserve content analysis, especially because after really enjoying Professor David Romer's econ 202A course I became a big fan of the "Romer and Romer" papers and the narrative approach to fiscal and monetary policy history.
So I spent most of Spring Break (except for a lovely weekend in LA) learning to program in Python and writing some code using the Natural Language Processing Toolkit to be able to do text analysis of Federal Reserve documents. I ended up being able to do some pretty cool types of analysis, including some things in the style of Google Ngrams, but for .txt documents or html pages. Then I thought the hard part was done-- I would just "run the code" and have my results. Sigh. So naive.
The trouble was deciding what documents to analyze and what to analyze them for. I met with Prof. Gorodnichenko, who suggested I try to study the perceived tradeoff between inflation and unemployment. I wasn't entirely sure how to go about doing that, but decided to start trying things out with some historical Fed documents. Problem: lots of the historical documents (e.g. this one) are in secured pdf format. That means you can't save them as a text file or copy and paste the text from them into a text file. Which means you can't do anything with them except read them by eyeball. I figured that Prof. Romer might have access to unsecured pdfs and went to meet with him, but he didn't either.
Now, I was pretty aggravated not only because I couldn't run my code, but also because I used to do research related to people with disabilities and accessible digital technology, and know that secured pdfs are far from accessible. They are incompatible with screen readers, for example. And yet the Federal Reserve website claims:
The Freedom of Information Act, which requires public documents to be disclosed, has only nine exceptions and I can't see how Fed historical documents fit under any of the exceptions.
Being in Berkeley has taught me a thing or two about righteous indignation, so I called the FOIA office and explained what I was after, using every bit of Southern charm I could muster. They promised to get back to me in two days. Guess what? They didn't. So I called back and used my Berkeley voice and they took down my email address. At first I didn't get the email because they misspelled Berkeley, but then I finally got an email, which consisted of a link to the exact webpage where I got their phone number, and instructions that I could fill out a FOIA request but they were really backed up so I should expect a long wait.
I knew I wouldn't get any results in time to do my history paper, so I had to come up with a different topic. At this point I'm debating the wisdom of FOIA-ing the Fed as a first year grad student. A FOIA request would be more or less a matter of principle at this point. Maybe for future research too, but mostly I want them to put accessible versions of all the public documents on the website. I'm leaning towards doing it. Anyone have advice?
For awhile I got sidetracked into making fancier and fancier Python code with less and less clarity about what to use it for. But I happened to notice a very simple, but very striking, result. The frequency of mention of the word "unemployment" in the New York Times is highly correlated with the actual unemployment rate, and the relationship is stable over time (I started in 1914, before unemployment statistics were even published). I was reluctant to not use the more "high tech" functions I programmed, but could tell that this result would make for a better, less convoluted paper. I hope I was right! Here's my favorite line:
It's my first shot at independent economic research, and I'm pleased with how it turned out and glad I enjoyed the process. I'll be anxious for feedback from my professors and peers.
History is a welcome difference. Instead of problem sets, we have weekly memos and a research paper. Professors Eichengreen and DeLong post a memo question each week related to that week's assigned readings, and often also related to current issues. The reading list is more thematic than chronological, and covers a lot of classics. Walter Bagehot's Lombard Street gets a week, as does the gold standard; the Great Depression gets three. Plenty of context for comparison with the past few years. Berkeley professors are pretty well represented in the readings, which I like. It fosters school spirit in a way. The lectures are once a week for two hours, and are a lot of fun. On the first day I had to sit on the floor because the room was so full, but attendance fell a bit after that. They were a nice break from the math-class-style lectures for the other courses, and helped put things in context.
I also really enjoyed writing the memos. We were directed to "flex our prose-writing skills," which I took to heart (although, my grades were always negatively correlated with the extent to which I did so; my driest papers got the better scores).
The main assignment is the history research paper. It is due on May 4 and I think I've finally finished. Proposals were due before spring break, and the end project is nothing nearly resembling what I proposed. I wrote partial drafts of several different papers en route to arriving at my eventual topic. I knew I wanted to do some sort of quantitative text analysis, and first thought of an idea related to geography-- an over-complicated scheme relating place mentions to interest rate and wage convergence. Then I saw a paper by one of my macro professors, Yuriy Gorodnichenko, that included a content analysis of speeches by recent Federal Reserve chairmen related to price-level targeting vs. inflation targeting. I got excited about the idea of Federal Reserve content analysis, especially because after really enjoying Professor David Romer's econ 202A course I became a big fan of the "Romer and Romer" papers and the narrative approach to fiscal and monetary policy history.
So I spent most of Spring Break (except for a lovely weekend in LA) learning to program in Python and writing some code using the Natural Language Processing Toolkit to be able to do text analysis of Federal Reserve documents. I ended up being able to do some pretty cool types of analysis, including some things in the style of Google Ngrams, but for .txt documents or html pages. Then I thought the hard part was done-- I would just "run the code" and have my results. Sigh. So naive.
The trouble was deciding what documents to analyze and what to analyze them for. I met with Prof. Gorodnichenko, who suggested I try to study the perceived tradeoff between inflation and unemployment. I wasn't entirely sure how to go about doing that, but decided to start trying things out with some historical Fed documents. Problem: lots of the historical documents (e.g. this one) are in secured pdf format. That means you can't save them as a text file or copy and paste the text from them into a text file. Which means you can't do anything with them except read them by eyeball. I figured that Prof. Romer might have access to unsecured pdfs and went to meet with him, but he didn't either.
Now, I was pretty aggravated not only because I couldn't run my code, but also because I used to do research related to people with disabilities and accessible digital technology, and know that secured pdfs are far from accessible. They are incompatible with screen readers, for example. And yet the Federal Reserve website claims:
"The Board of Governors of the Federal Reserve System is committed to making its website accessible to all users and ensuring that it meets or exceeds the requirements of Section 508 of the Rehabilitation Act.
The majority of documents on our website are presented in PDF, HTML, or plain text format. When documents are provided in multiple formats, at least one version is designed to be accessible to users of assistive technology."
The Freedom of Information Act, which requires public documents to be disclosed, has only nine exceptions and I can't see how Fed historical documents fit under any of the exceptions.
Being in Berkeley has taught me a thing or two about righteous indignation, so I called the FOIA office and explained what I was after, using every bit of Southern charm I could muster. They promised to get back to me in two days. Guess what? They didn't. So I called back and used my Berkeley voice and they took down my email address. At first I didn't get the email because they misspelled Berkeley, but then I finally got an email, which consisted of a link to the exact webpage where I got their phone number, and instructions that I could fill out a FOIA request but they were really backed up so I should expect a long wait.
I knew I wouldn't get any results in time to do my history paper, so I had to come up with a different topic. At this point I'm debating the wisdom of FOIA-ing the Fed as a first year grad student. A FOIA request would be more or less a matter of principle at this point. Maybe for future research too, but mostly I want them to put accessible versions of all the public documents on the website. I'm leaning towards doing it. Anyone have advice?
For awhile I got sidetracked into making fancier and fancier Python code with less and less clarity about what to use it for. But I happened to notice a very simple, but very striking, result. The frequency of mention of the word "unemployment" in the New York Times is highly correlated with the actual unemployment rate, and the relationship is stable over time (I started in 1914, before unemployment statistics were even published). I was reluctant to not use the more "high tech" functions I programmed, but could tell that this result would make for a better, less convoluted paper. I hope I was right! Here's my favorite line:
If it’s hard to know what people know, and harder to know what people knew, it’s hardest to know what people knew but didn’t know they knew.
It's my first shot at independent economic research, and I'm pleased with how it turned out and glad I enjoyed the process. I'll be anxious for feedback from my professors and peers.
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