Contributions published at Economic History (Ulrich Woitek)

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The biological standard of living is a broad concept in welfare measurement: the well-being of a population is assessed by analysing the development of physical stature. On the one hand, there is a huge body of literature showing that in general, the economic conditions during the first three years of life are crucial determining average final height. On the other hand, average weight and body mass index (BMI) reflect present living conditions. The paper analyses the biological standard of living in Zurich from 1919 to 1951, examining Swiss Army conscript data (census 1938 to 1951). Analysing Swiss Army data is ideal for the purpose of the present study, because the Swiss Army is organized as a militia: to date, every male Swiss citizen is drafted to determine fitness for service, and therefore, there is no systematic bias in the data. The main findings of the paper are (1) average final height increases from 1919 to 1932, but the average height curve does not correspond to the economic development of the 1920s. Urban conscripts turn out to be taller than the rural ones. There are clear differences in height by social classes and occupations. (2) The average weight and BMI patterns during World War II can be explained by government intervention motivated by the requirements of a war economy (rationing, agricultural policies). (3) There is a significant seasonal pattern in the body measures.

This paper reconsiders the role of monetary policy in Sweden’s strong recovery from the Great Depression. The Riksbank in the 1930s is sometimes seen as an example of a central bank that was relatively innovative in terms of the conduct of monetary policy. To consider this analytically, we estimate a small-scale, structural general equilibrium model of a small open economy using Bayesian methods. We find that the model captures the key dynamics of the period surprisingly well. Importantly, our findings suggest that Sweden avoided the worst excesses of the depression by conducting conservative rather than innovative monetary policy. We find that, by keeping the Swedish krona undervalued to replenish foreign reserves, Sweden’s exchange rate policy unintentionally contributed to the Swedish growth miracle of the 1930s, avoiding a major slump in 1932 and enabling the country to benefit quickly from the eventual recovery of world demand.

We study international business cycles and capital flows in the UK, the United States and the Emerging Periphery in the period 1885-1939. Based on the same set of parameters, our model explains current account dynamics under both the Classical Gold Standard and during the Interwar period. We interpret this as evidence for Gold Standard mentality: the expectation formation mechanism with respect to major macroeconomic variables driving the current account – output, exchange rates and interest rates – has remained fundamentally stable between the two periods. Nonetheless, the macroeconomic environment changed: Volatility increased generally, but less so for international capital flows than for GDP. This pattern is consistent with shocks in the Interwar period becoming more persistent and more global.

In 1835, Edouard Mallet published a notable but today nearly forgotten study of the average height of Genevan conscripts. His individual data included 3 029 conscripts born between 1805 and 1814, examined and measured between 1826 and 1835. Mallet’s work was only the third auxological study to be based on a large sample of individual conscript data, the other two being those of Louis-René Villermé and Adolphe Quetelet, but as far as we know Mallet's was the first to note the law of normal distribution. Like Villermé and Quetelet, Mallet explained urban/rural and international differences in average height strictly in terms of environmental and economic determinants. In the recent past, references to Mallet’s work have been rare, and limited to citations of his computed averages. We postulate that Mallet and his study deserve greater consideration for their contribution to the field of anthropometric history than they have yet received.

Nous proposons une synthèse des recherches sur l'énigme de la baisse de la productivité totale des facteurs durant la Grande Dépression des années 1930. Cette nouvelle littérature met l'accent sur l'apport des modèles d'équilibre général dynamique et stochastique pour la compréhension de cette énigme.

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This paper contributes to the on-going empirical debate regarding the role of the RBC model and in particular of neutral and investmentspecific technology shocks in explaining aggregate fluctuations. To achieve this, we estimate the model’s posterior density using Bayesian methods. Within this framework we first extend Ireland’s (2001, 2004) hybrid estimation approach to allow for a vector autoregressive moving average (VARMA) process to describe the movements and comovements of the model’s errors not explained by the basic RBC model. Our main findings for the model with neutral technical change are: (i) the VARMA specification of the errors significantly improves the hybrid model’s fit to the historical data relative to the VAR and AR alternatives; and (ii) despite setting the RBC model a more difficult task under the VARMA specification, neutral technology shocks are still capable of explaining a significant share of the observed variation in output and its components over shorter- and longer-forecast horizons as well as hours at shorter horizons. When the hybrid model is extended to incorporate investment shocks, we find that: (iii) the VAR specification is preferred to the alternatives; and (iv) the model’s ability to explain fluctuations improves considerably.

Background/Objectives:We aimed to extend the actual overweight discussion with new unbiased Swiss conscript data from 2005 to 2006, and to present for the first time Swiss data on body mass index (BMI) before 1950 and for the late-nineteenth century.Subjects/Methods:For this study, 19-year-old Swiss male conscripts (draft army; Cantons Bern, Zurich, Basel-Stadt and Basel-Land) from the census of 1875-1879, 1933-1939 and 2005-2006 (N=28 033; 2005-2006 census) were included. BMI distribution (World Health Organization (WHO) classification) and social stratification (International Labour Organization classification) were main outcome measures.Results:Mean BMI of 19-year-old men in Switzerland increased in the 50 years between the 1870s and the 1930s by 0.80 kg/m(2) and between the 1930s and 2005 by 1.45 kg/m(2). The modern BMI sample is much more right skewed and s.d. is higher. Obesity prevalence (according to modern WHO classification) has increased by a factor of 105 from 1870s until present. Over 23% of our representative sample of Swiss men in 2005-2006 had a BMI of over 25 kg/m(2). In 2005-2006, contrary to the nineteenth century, unskilled workers had articulately higher BMI values at the 75th, 90th and 95th percentile than students; 12% of unskilled workers were obese against 2% of students.Conclusions:It thus seems that BMI relations between the upper and the lower end of the socio-economic strata changed inversely from the late-nineteenth century to 2005-2006. We further propose that the phenomenon of massive right-skewing BMI distribution between the 1930s and 2005-2006 affected the lower socio-economic strata to a far greater extent than the higher socio-economic group.

Class specific mortality in 17th and 18th Century Vienna shows a cyclical pattern which is related to grain price cycles in the 5-10 years range. This relationship is not stable over time. Applying spectral analysis based on time-varying VARs, it can be shown that at the beginning of the observation period, comovement of grain prices and mortality is considerably high in areas populated by lower classes of society. This comovement cannot be found in richer areas of the city and vanishes over time for the entire population of the city.

Using a two-sector endogenous growth model, this paper explores how productivity shocks in the goods and human capital producing sectors contribute to explaining aggregate cycles in output, consumption, investment and hours. To contextualize our findings, we also assess whether the human capital model or the standard real business cycle (RBC) model better explains the observed variation in these aggregates. We find that while neither of the workhorse growth models uniformly dominates the other across all variables and forecast horizons, the two-sector model provides a far better fit to the data. Some other key results are first, that Hicks-neutral shocks explain a greater share of output and consumption variation at shorter-forecast horizons whereas human capital productivity innovations dominate at longer ones. Second, the combined explanatory power of the two technology shocks in the human capital model is greater than the Hicks-neutral shock in the RBC model in the medium- and long-term for output and consumption. Finally, the RBC model outperforms the two-sector model with respect to explaining the observed variation in investment and hours.

This paper contributes to the on-going empirical debate regarding the role of the RBC model and in particular of technology shocks in explainingnaggregate fluctuations. To this end we estimate the model’snposterior density using Markov-Chain Monte-Carlo (MCMC) methods. Within this framework we extend Ireland’s (2001, 2004) hybrid estimation approach to allow for a vector autoregressive moving averagen(VARMA) process to describe the movements and co-movementsnof the model’s errors not explained by the basic RBC model. The results of marginal likelihood ratio tests reveal that the more general model of the errors significantly improves the model’s fit relative to the VAR and AR alternatives. Moreover, despite setting the RBC model a more difficult task under the VARMA specification, our analysis,nbased on forecast error and spectral decompositions, suggests that the RBC model is still capable of explaining a significant fraction of the observed variation in macroeconomic aggregates in the post-war U.S. economy.

The paper re-examines Sweden’s price level targeting during the 1930s which is regarded as a precursor of today’s inflation targeting. According to conventional wisdom, the Riksbank was the first central bank to adopt price level targeting, although in practice giving priority to exchange rate stabilisation. Based on Bayesian econometric techniques and the evaluation of new archival sources, we come to the conclusion that defending a fixed exchange rate is hard to reconcile with the claim of adopting price level targeting. This finding has implications for the prevailing view of the 1930s as a decade of great policy innovations.

This paper develops a DSGE model to examine the quantitative macroeconomic implications of counter-cyclical fiscal policy for France, Germany and the UK. The model incorporates real wage rigidity and consumption habits, as the particular market failures justifying policy intervention. We subject the model to productivity shocks and allow policy instruments to react to the output gap and the debt-to-output ratio. A welfare analysis reveals that the most effective instrument-target combination is to use public consumption to stabilize the output gap. Moreover, welfare gains from counter-cyclical fiscal policy are much stronger in the presence of wage rigidities compared with consumption habits. Finally, since active policy and automatic stabilizers are substitutes, it is possible that relatively undistorted economies may be in need of countercyclical fiscal action due to inadequate automatic stabilizers.