The crisis of 2008-09 has focused attention on money and credit fluctuations, financial crises, and policy responses. In this paper we study the behavior of money, credit, and macroeconomic indicators over the long run based on a newly constructed historical dataset for 12 developed countries over the years 1870-2008, utilizing the data to study rare events associated with financial crisis episodes. We present new evidence that leverage in the financial sector has increased strongly in the second half of the twentieth century as shown by a decoupling of money and credit aggregates, and we also find a decline in safe assets on banks' balance sheets. We also show for the first time how monetary policy responses to financial crises have been more aggressive post-1945, but how despite these policies the output costs of crises have remained large. Importantly, we can also show that credit growth is a powerful predictor of financial crises, suggesting that such crises are

Credit Booms Gone Bust: Monetary Policy, Leverage Cycles and Financial Crises, 1870-2008

Corruption and Growth

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Likelihood Based Inference In Cointegrated Vector Autoregressive Models

Kuznets (Simon) - Modem Economie Growth.

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Historical Statistics of the United States

The macro determinants of firms' and households' investment: Evidence from Italy

We analyse the evolution of capital and labour (mis)allocation across firms in five euro-area countries (Belgium, France, Germany, Italy and Spain) and eight main sectors of the economy during the period 2002-2012. Three key stylized facts emerge. First, in all countries with the exception of Germany, capital allocation has worsened over time whereas the efficiency of labour reallocation has not changed significantly. Second, the observed increase in capital misallocation has been particularly severe in services as opposed to industry. Third, misallocation of both labour and capital dropped in all countries in 2009 and again for some country-sectors in 2011-2012. We next take stock of the possible drivers of input misallocation dynamics in a standard panel regression framework. Controlling for demand conditions and for the initial level of misallocation, heightened uncertainty, restrictive bank credit standards and tight product and labour market regulation are found to have boosted input misallocation, whereas the Great Recession per se exerted a cleansing effect. JEL Classification: D24, D61, O47

Capital and labour (mis)allocation in the euro area: Some stylized facts and determinants

Building upon a Behavioural Equilibrium Exchange Rate model, estimated at a quarterly frequency since 1999 on a broad sample of 57 countries, this paper assesses both the size and the persistence of real effective exchange rate misalignments of countries that have adopted the euro and of those outside the euro area. The euro area is indeed a poignant example of a currency union in which the nominal exchange rate is irrevocably fixed; the non-euro area economies considered include countries with either flexible or pegged currencies. While misalignments are found to be smaller in the euro area than in the rest of the world, they are also more persistent; however, the persistence in the euro area has decreased after the global financial crisis. Finally, it is found that improvements in the quality of institutions – observed in particular after 2009 within the euro area – reduce the persistence of misalignments.

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Real Exchange Rate Misalignments in the Euro Area

Since the mid-2000s standard price-competitiveness indicators for euro-area countries have recently provided conflicting signals, particularly in Italy. The manufacturing unit labor cost (ULCM)-based indicator reports a major competitiveness loss in Italy. Owing to the internationalization of production processes and to the fading representativeness of labor on overall costs we argue that price-based measures are more appropriate than those based on ULCMs to assess external competitiveness and play a more important role in explaining export growth. Measuring non-price competitiveness and considering global value chains are also crucial to correctly identify the determinants of trade flows in the four largest euro-area countries.

Shedding Light on Price- and Non-price-competitiveness Determinants of Foreign Trade in the Four Largest Euro-area Countries

This paper offers the first quantitative assessment of labour productivity dynamics within Italy's industrial sector over the period 1911-1951 and of their links with competition policy. By relying on a newly compiled dataset and on fresh labour productivity estimates, we find that the earlier period of the Fascist era was characterised by a productivity boom, which ended and was reversed following the switch to a more interventionist industrial policy. In the overall period 1911-1951, new industries did not perform any better than the old ones and labour productivity growth was explained largely by internal productivity growth within industrial sectors rather than from the contribution of structural change from old to new industries. Finally, we find that reductions in the level of competition, induced by specific policies, were associated with lower productivity growth. This paper thus casts a shadow on the optimist accounts of Fascist industrial policy and confirms the findings of a revisionist literature minimising the positive role played by the State in the earlier stages of Italian industrialization.

/pdf/a-tale-of-two-fascisms-labour-productivity-growth-and-1e2spsz1yd.pdf

Claire Giordano

Papers

The macro determinants of firms' and households' investment: Evidence from Italy

Capital and labour (mis)allocation in the euro area: Some stylized facts and determinants

Real Exchange Rate Misalignments in the Euro Area

Shedding Light on Price- and Non-price-competitiveness Determinants of Foreign Trade in the Four Largest Euro-area Countries

A Tale of Two Fascisms: Labour Productivity Growth and Competition Policy in Italy, 1911-1951