Working Paper: CEPR ID: DP15348
Authors: Eric Monnet; François R. Velde
Abstract: We review developments in the history of money, banking, and financial intermediationover the last twenty years. We focus on studies of financial development, includingthe role of regulation and the history of central banking. We also review the literatureof banking and financial crises. This area has been largely unaffected by the so-callednew econometric methods that seek to prove causality in reduced form settings. Wediscuss why historical macroeconomics is less amenable to such methods, discuss theunderlying concepts of causality, and emphasize that models remain the backbone ofour historical narratives.
Keywords: Historical Macroeconomics; Money; Banking; Financial Intermediation; Causality
JEL Codes: N01; N10; N20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| financial development and crises (O16) | understanding through qualitative historical narratives and quantitative analysis (N01) |
| process tracing (C99) | establish causality (C22) |
| bank panics in the U.S. hinterland (N11) | crises in larger cities (H12) |
| legal regimes and institutions (P37) | financial development (O16) |
| survival bias in historical analysis (C41) | misunderstanding of legal regimes and institutions (P37) |
| historical context of financial systems (N20) | understanding their evolution (B15) |
| structural models (E10) | insights into causal dynamics of financial crises (G01) |