Faculty Research Support

“Supplier Development Program and Export Growth Fund"

Fostering linkages between large firms and local suppliers can have significant positive effects on domestic suppliers through knowledge spillovers and quality improvements. Strengthening local suppliers’ access to larger buyers is therefore a policy priority in low-income countries. Studies have pointed to multiple constraints to domestic SMEs effectively supplying larger firms: access to finance, lack of capital, limited skills, limited scale of production, and poor product quality. Less well understood is the role of information frictions in limiting firm linkages. We are working with the Rwandan Development Board (RDB) to develop an RCT around these questions. Ultimately, we aim to run an experiment in which we randomize information (though the development of an online portal, managed by the RDB) to buyers about potential domestic suppliers. We will aim to run three arms to test the following information constraints to supplier linkages.

“Urban Growth and Urban Decline: A Firm-Level Perspective"

In this project we want to better understand the sources and distributional implications of productivity growth at the city-level. To do so, we aim to bring new theory and new data to the table. Our main conceptual contribution is the use of geo-referenced data on firm-dynamics. Why is this data helpful? A recent macroeconomic literature shows how firm-level data can be used to measure economic growth and its determinants. In particular, different moments of the process of firm-dynamics, such as entry and exit rates, firm-growth and the firm size distribution can be used to measure the relative importance of the primitive aspects of the growth process: creative destruction, variety creation, and intensive productivity growth of existing producers. These methodologies have been used to measure the sources of productivity at the national level.. We aim to use firm-level data at the city level, to build on these insights and measure the local sources of growth.

“Technology Adoption of Payment Methods and Financial Inclusion"

This study aims to learn about the challenges and opportunities faced by firms in developing countries when adopting digital payment methods. In particular, we focus on an app that was developed by the Central Bank of Costa Rica, and which allows people and firms to conduct money transfers using their cellphones (similar to Venmo or Paypal in the U.S). The app has been widely adopted by over 70% of the adult population in the country, yet, adoption by firms is very low in many parts of the country. We want to understand why firms in some areas of the country adopted the app very fast and successfully, while others did not. We then construct two interventions in which we ask firm managers about their knowledge on the app’s fees and adoption across the population. We then treat a subset of respondents with the true information on fees and adoption rates. Our hypothesis is that the distance of managers’ priors from the truth will explain the impact of our information treatment on firms’ adoption.

“US bank business loan rates, 1939–2017”

The cyclical behavior of bank business loan rates changed fundamentally around 1970. Before that time, business loan rates reacted only sluggishly to changes in short-term market rates. By contrast, by the mid-1980s loan rates moved essentially one-for-one with short-term market rates. The 1970s represent a transitional phase. This study constructs a consistent series for bank business loan rates starting in 1939 based on Federal Reserve surveys, and it then uses the series to demonstrate the change in loan pricing behavior. The study then explains the earlier muted response of loan rates to market rates as the result of an implicit contract between banks and their borrowers. The model can explain how changes in the banking environment – including an easing of regulatory constraints and improved access by firms to short-term capital markets – led to the change in the behavior of loan interest rates. The study also provides narrative evidence from around the time of the change that supports this explanation for the change.

“Geography, climate, and the impact of institutions” and “All Aboard! A reconstitution of all Migrants to the Spanish Empire, 1492-1790”

All Aboard!

Recent research on economic history argues that the roots of economic underdevelopment in Latin America, may lay in the different “styles” of colonization. Daron Acemoglu, Simon Johnson, and James Robinson argue that only in colonies with many European migrants were property rights protected. Kenneth Sokoloff and Stanley Engerman argued that high levels of inequality in colonial Latin America due to restricted European migration determined their poor economic performance. In both cases, the analysis assumes that the conditions observed in the present had persisted from the past, i.e., that property rights were poorly protected and inequality was high in Colonial Spanish America. Recent research has questioned both premises. Professor Espín-Sánchez will revisit this question using data on migrant from the Spanish Empire from Columbus to Independence, including migrants’ origin and destination and – something that is missing in the British sources – their occupation and human capital. With this dataset, he will test the previous hypotheses directly, and test new hypothesis such as whether the quality of European migration, and not the quantity, is what mattered for economic development. Professor Espín-Sánchez will use the Economic History award money to search and classify all the primary sources needed, as well as to explore how long it would take to complete the project, in order to apply further funding.

Geography, climate, and the impact of institutions

A long tradition of research investigates the relationship between geography/climate and economic outcomes – geographical determinism, as termed in Jared Diamond’s Guns, Germs and Steel (1997). New research argues that the effect of geography on economic development might be indirect via institutions: geography affects institutions and institutions affect economic development. In previous research Professor Espín-Sánchez focused on Catholicism in the Mediterranean and showed that geography, and in particular the local climate, affects religious institutions and religious beliefs. Religious institutions then affect both secular institutions and economic development directly. The same mechanisms could apply more broadly. The goal of the current project is to extend the analysis of this mechanism to the rest of the world, using the Ethnographic Atlas, which contains information on all ethnic groups in the planet, historically. Although the Atlas records detailed information regarding the culture of these societies, it contains only limited information regarding religious beliefs, i.e., whether each particular ethnicity has a ritual or a ceremony to ask the Divine for intervention by changing the weather or whether they pray for rain. Professor Espín-Sánchez will use the Economic History award money to create new variables for the Atlas, both in terms of their particular religious beliefs and detailed climate data.

“The transition to general laws in the United States, 1830–1885.” 

Equality before the law is a basic American principle that most people think was enshrined at the founding. In fact, however, most of what state legislatures (and the Congress) did until the middle of the nineteenth century was to enact special laws that granted privileges to specific individuals, groups, or localities. This fundamentally inequalitarian system was abolished constitutionally by most states, though not the federal government, beginning with Indiana in 1851. The aim of Professor Lamoreaux's project is to understand how the state constitutional mandate that laws be general changed the way state governments worked. She and John Wallis of the University of Maryland have been collecting the full set of laws enacted by state legislatures every five years from 1830 to 1885 and coding them according to whether the laws were general or special and, if they were special, what they did. They are interested in whether legislative behavior was already changing before the constitutional revisions, whether legislatures found ways to evade the constitutional mandates by making special laws look like general laws, and the extent to which the requirement that laws be general changed political norms and thus affected legislative behavior in venues (like the federal government) where it was not constitutionally mandated.

“A Big-data approach to the growth of the US economy in the late nineteenth and early twentieth centuries.” 

This project implements a big data approach to investigate forces behind the tremendous economic growth in the American economy in the late nineteenth and twentieth centuries. Lee employs artificial intelligence and machine learning techniques to link and then analyze the massive scale of historical records including the US federal demographic and manufacturing censuses, birth, death and marriage records to understand how people lived and how the business operated during the massive transition period of the United States from a rural nation to the world’s technological frontier. This extensive effort will create a database that would enable researchers to build a robust picture of the factors that shaped the American economic geography and to illuminate major aspects of America's economic growth. Lee plans to use this funding primarily on hiring research assistants and collaborating with archives for digitizing paper-locked historical documents, and for translating records that were originally written in foreign languages. 

“The impact of volcanic eruptions on the Nile and Euphrates valleys” 

Was climate change an important driver of major turning points in human history, from the Ice Age to the Bronze Age to Ancient Rome? This project examines the impact of large volcanic eruptions on the Nile and Euphrates watersheds during the first millennium B.C.E. and how these impacts drove socio-economic performance in the region. Part of a major National Science Foundation-sponsored study and an interdisciplinary effort bringing together experts in historical climatology, paleoclimatology, and environmental history – a fast-growing intersection of scholarship – the project integrates scientific data and powerful climate models with historical and economic analysis. Building on and updating pioneering works like Robert Rotberg and Theodore Rabb’s 1981 Climate and History: Studies in Interdisciplinary History, the team will probe vexing issues like measurement and historical causality: during some moments in history, climatic change may have been a very tiny part of historical change, while at other times it might have played a significant role. The challenge is to measure climate as an independent variable, and time scale is critical. Given the complexity of societies, the uncertainties of data, and the difficulties of assigning causality, is it possible to determine whether temperature or precipitation changes actually produced a crisis for ancient civilizations?