Economic Impact of War and Recovery

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Questions and Answers

What percentage of total war deaths is attributed to the USA and Germany combined?

10%

25% (correct)

34%

What was the GDP per capita trend recovery time following World War II?

30 years

2 decades (correct)

10 years

20 years

According to the content, what factor influences the speed at which a country's economy catches up post-war?

Per capita income level (correct)

Natural resources

Population density

Foreign investments

What effect does wartime destruction have on long-term city growth?

Resilience in city growth is observed Signup and view all the answers

What major aspect of economic activity increases at the end of the war period according to the discussed themes?

American economic activity Signup and view all the answers

What is one of the main focuses of the course regarding economic transitions?

The transition from pre-modern economic stagnation to modern economic growth Signup and view all the answers

What economic event does the course examine as a significant historical occurrence?

The Great Divergence Signup and view all the answers

In what format will the case studies be submitted?

One A4 historical case study per group Signup and view all the answers

What constitutes the majority of the final exam's evaluation?

MC questions and open questions combined Signup and view all the answers

What is one of the group project requirements regarding the case study?

Choose a course-related topic like the Great Depression in the Netherlands Signup and view all the answers

What aspect of the Great Depression does the course specifically analyze?

The economic and political consequences of the Great Depression Signup and view all the answers

Which of the following is NOT a key topic covered in the course?

The impact of climate change on economies Signup and view all the answers

What is a key goal of the course?

To understand the history of the world economy Signup and view all the answers

What is one way that economic history contributes to understanding non-experimental economic data?

By offering historical examples as natural experiments Signup and view all the answers

Which of the following is a limitation of controlled experiments in economics?

Many economic factors cannot be isolated in a controlled environment Signup and view all the answers

How does economic history address the scarcity of data in studying rare events?

It utilizes historical events to provide additional observations Signup and view all the answers

What does path dependency in economic history imply?

Past economic events significantly influence present economic conditions Signup and view all the answers

What is an example of a historical event that can illustrate economic effects?

The monetary policy changes following maritime disasters Signup and view all the answers

According to the content, what is the relationship between expansionary monetary policy and GDP growth?

There is a high correlation between expansionary monetary policy and low GDP growth Signup and view all the answers

What does the observation about economic data suggest regarding historical data's role in economics?

Historical data is vital for understanding current economic issues Signup and view all the answers

What important insight can be gained from studying the Great Divergence?

It highlights the impact of history on current economic inequalities among countries Signup and view all the answers

What is the threshold for a recession caused by a financial crisis in terms of real GDP per capita decline?

≥5% Signup and view all the answers

How long does a typical recession last compared to a recession caused by a financial crisis?

1-2 years vs. several years Signup and view all the answers

Which of the following is NOT considered a salient long cycle in economic variables?

Exchange rate fluctuations Signup and view all the answers

According to the content, the distant past can be more relevant for the present compared to which of the following?

Recent economic events Signup and view all the answers

What does the data on global goods market integration indicate about the average trade ratio based on developed economies from 1870 to 2020?

It has increased generally over time. Signup and view all the answers

What was the top decile income share in Europe and the United States during the period of 1950s-1970s?

30-35% Signup and view all the answers

Who are the authors associated with the analysis of monetary policy, leverage cycles, and financial crises from 1870 to 2008?

Schularick and Taylor Signup and view all the answers

What kind of changes do many important economic variables exhibit over time?

Long cycles Signup and view all the answers

What is defined as a systemic financial crisis?

Severe banking sector issues leading to interventions Signup and view all the answers

Which of the following regions is shown to have significant GDP per capita changes over time?

Both East-Germany and West-Germany Signup and view all the answers

According to the data, when did significant economic developments occur in Germany?

Between 1938 and 1950 Signup and view all the answers

What kind of dataset did Schularick and Taylor compile to study financial crises?

A dataset of systemic financial crises in advanced economies Signup and view all the answers

What are potential effects of regions facing fundamental institutional and political changes?

They could have long-run economic impacts. Signup and view all the answers

According to the content, how many observations of financial crises were noted post-WW2?

Relatively few observations Signup and view all the answers

What denotes the costs of systemic financial crises compared to normal recessions?

Higher income losses and longer recovery times Signup and view all the answers

Which authors are associated with the study of credit cycles and financial crises?

Schularick and Taylor Signup and view all the answers

What was a persistent effect of the inventions such as the steam engine and Spinning Jenny?

Onset of modern economic growth Signup and view all the answers

Based on the data presented, which city had the highest wages compared to the others listed?

London Signup and view all the answers

Which of the following inventions is associated with the industrial revolution and economic growth?

Steam engine Signup and view all the answers

Which value represents the lowest wage in grams of silver per day amongst the listed cities?

4 grams Signup and view all the answers

What metric is used to illustrate wages in the provided data?

Grams of silver per day Signup and view all the answers

Which city is NOT mentioned as having high wages in the data?

Paris Signup and view all the answers

What economic phenomenon is evidenced by high wages in England?

Modern economic growth Signup and view all the answers

Which other technology could be categorized alongside the steam engine for its impact on economic development?

Spinning Jenny Signup and view all the answers

In the economic data provided, which of the cities shows a wage close to 10 grams of silver per day?

Amsterdam Signup and view all the answers

What general trend does the graph imply about wages in major cities during the era referenced?

Significant variation in wages Signup and view all the answers

Study Notes

Economic History Introduction

This course explores the transition from pre-modern economic stagnation to modern growth.
It examines the "Great Divergence," the simultaneous variations in per capita income across the world.
The course analyzes the causes and consequences of the Great Depression and the role of different economic policies in ending it.

Course Goals

Students gain a comprehensive understanding of world economic history.
Students learn and understand the key theories related to the transition to modern economic growth and the Great Depression.

Course Schedule

Week 1, Session 1: Introduction
Week 2, Session 2: The pre-modern economy
Week 3, Session 3 & 4: The transition to modern economic growth, The Great Divergence
Week 4, Session 5: Prelude to the Great Depression
Week 5, Session 6: The Great Depression
Week 6, Session 7: The spread of the Great Depression
Week 7, Session 8: Recovery from the Great Depression
Week 9, Session 9: Q&A

Course Materials

Lecture slides
Book chapters/papers from Canvas
Online content (blog posts, video clips, etc.)
Quizzes

Evaluation

Final Exam (80%): 5 open-ended and 20 multiple-choice questions, 2 hours long
Case Study (20%): Group projects of 4 students, one A4 page

Case Study Details

Groups form on Canvas by Friday of Week 1, random allocation after that.
Group formation should be self-selected.
Student groups self-select and choose their own course-related topic (time period and region)
Case study examples are available on Canvas
Case study due on Friday of Week 7

How to Access Literature

University library (URL provided)
Google Scholar (URL provided)
Journal rankings (URL provided)

Why Economic History?

Natural experiments: History provides opportunities not available in controlled experiments
Rare events: Analyzing the economic impact of historical, infrequent events
Path dependency: Understanding lasting effects of past events

Why Economic History? - Further Details

History helps because economic data is often non-experimental, yet history sometimes offers "natural experiments".
Examples of natural experiments include causal effects of money supply changes and maritime disasters.
Historical data often allows for observation of rare events (e.g., financial crises), which are hard to analyze with standard data sets.
History provides relevant long-run datasets.
Understanding the past is crucial to comprehending the present; as some countries are rich and others not. This issue can be analyzed by understanding the Great Divergence.

The Spanish Empire Case

Maritime disasters in the 15th - early 19th centuries offer a repeated natural experiment.
The Spanish Empire experienced substantial silver losses, directly influencing money supply changes.
Analysis of these losses can be used to understand the effects of money supply changes.

Economic Consequences of Pandemics and Wars

Jordà, Singh, and Taylor (2022) conducted a study to analyze the economic consequences of events such as pandemics and wars back to medieval times.
Long-run datasets were used, including 19 large pandemics and over 200 wars, and covered indicators of interest rates and wages.
Countries studied include France, Germany, Italy, Netherlands, Spain, and the UK.

Predictions of Neoclassical Growth Models

Cobb-Douglas production function is a model used.
Predictions from the model include, that pandemics decrease labor force and increase wages, while wars decrease both labor and capital, affecting returns.

Recovery from Wars and Disruptions

Post-WW2 recoveries were relatively quick, with GDP per capita returning to pre-war levels within two decades.
Recovery of destroyed cities in post-World War II Japan and Hiroshima was also relatively rapid.

Fundamental Vs. Proximate Causes of Growth

Regions with greater political or institutional changes were more vulnerable to long-run impacts.
Regions subject to fundamental changes can experience long-run impacts. (e.g., institutional or political changes).

Financial Crises

Schularick and Taylor (2012) compiled a dataset on systemic financial crises, which examines banking sector experiences (e.g., bank runs, defaults).
They analyzed 17 advanced economies from 1870 to the present.
Financial crises produce substantial economic losses compared to regular recessions.

Long Cycles

Many factors of long cycles are relevant to the present, including inequality and debt-to-GDP ratios.
They are more relevant than recent past, given the long-run nature of these issues.

Path Dependence

Past events and initial conditions often have persistent effects in path-dependent systems.
The QWERTY keyboard layout or railway track gauge serve as examples of path dependence.
The Industrial Revolution in 18th-century England provides an example. This was due to the unique combination of factor prices (particularly high wages, cheap coal, and low interest rates).

Factor Prices and Technology Choices

Factor prices, such as wage levels, energy, and capital costs, have influenced technological choices in industries like textiles.
The different costs influenced technology development and use in different countries (e.g. England vs. France).

Summary of Economic History

The study of economic history provides a wealth of information about the causes and consequences of specific events, offering unique insights and perspectives.
It aids understanding of historical events which are relevant for the present.
Studying economic history contributes to economic analysis.

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Description

This quiz explores the economic aftermath of war, focusing on factors such as GDP trends, wartime destruction, and transitions in economic activities. It covers the historical significance of World War II and the Great Depression, along with group project requirements and evaluation methods. Join in to understand the complexities of economic recovery post-conflict.