Financialization–History, Economics, Politics

The widely held belief that financial deepening benefits the economy by efficiently allocating capital and diversifying risk was shaken to its core by the breadth and scope of the 2008/09 financial crisis. This research project combines 140 years of economic history with state-of-the-art econometric methods to gain new insights into the relationship between finance, growth and crises.

Housing Markets in History

For economists there is no price like home—at least not since the global financial crisis. Fluctuations in house prices and their importance for the macroeconomy have become a rapidly expanding research field. The economic history of advanced economies is spattered with narratives about booms and busts in real estate prices. Yet we know surprisingly little about long-run trends and cycles in house prices. This research project aims to fill this void.

Long-term Economic Persistence

Simply put, economic persistence examines the historical factors that affect economic performance today. As such, it combines insights from economic development, history and growth. Ultimately, it is a quest for the deep-rooted geographic, institutional, educational, genetic and cultural determinants of comparative economic development. This research project will emphasize the long-lasting legacy of colonialism with a special focus on Latin America.

Size of Finance

In the years prior to the recent financial crisis, wages and value added of the financial sector skyrocketed relative to the rest of the economy. This research project aims to provide new insights into the growth and change of the financial sector and to advance our understanding of common trends and differences across countries in its historical evolution. As a central part of the project, we construct a dataset to measure the contribution of the financial sector to GDP in advanced economies since 1870.


with Moritz Kuhn and Ulrike Steins. This paper studies the distribution of U.S. household income and wealth over the past seven decades. We introduce a newly compiled household-level dataset based on archival data from historical waves of the Survey of Consumer Finances (SCF). Complementing recent work on top income and wealth shares, the long-run survey […]

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with Òscar Jordà, Björn Richter and Alan M. Taylor. Higher capital ratios are unlikely to prevent a financial crisis. This is empirically true both for the entire history of advanced economies between 1870 and 2013 and for the post-WW2 period, and holds both within and between countries. We reach this startling conclusion using newly collected […]

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with Òscar Jordà and Alan M. Taylor. Fixing the exchange rate constrains monetary policy. Along with unfettered cross-border capital flows, the trilemma implies that arbitrage, not the central bank, determines how interest rates fluctuate. The annals of international finance thus provide quasi-natural experiments with which to measure how macroeconomic outcomes respond to policy rates. Based […]

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Government debt: causes, effects and limits

with Carl-Ludwig Holtfrerich, Lars P. Feld, Werner Heun, Gerhard Illing, Gebhard Kirchgässner, Jürgen Kocka, Wolfgang Streeck, Uwe Wagschal, Stefanie Walter, Carl Christian von Weizsäcker. The Coordinating Committee of the National Academy of Sciences Leopoldina approved the establishment and funding of an interdisciplinary working group on government debt in the fall of 2011. The subject has […]

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with Yao Chen. External adjustment under the Gold Standard – a fixed exchange rate regime – was associated with few, if any, output costs. This paper evaluates how flexible prices, international migration, and monetary policy contributed to this benign adjustment experience. For this purpose, we build and estimate an open economy model for the Gold […]

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with Oscar Jordà and Alan M. Taylor — NBER Macroeconomics Annual, Vol. 31. In advanced economies, a century-long near-stable ratio of credit to GDP gave way to rapid financialization and surging leverage in the last forty years. This “financial hockey stick” coincides with shifts in foundational macroeconomic relationships beyond the widely-noted return of macroeconomic fragility […]

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