Working Paper: NBER ID: w10252
Authors: Donald R. Davis; David E. Weinstein
Abstract: Theories featuring multiple equilibria are now widespread across many fields of economics. Yet little empirical work has asked if such multiple equilibria are salient features of real economies. We examine this in the context of the Allied bombing of Japanese cities and industries in WWII. We develop a new empirical test for multiple equilibria and apply it to data for 114 Japanese cities in eight manufacturing industries. The data provide no support for the existence of multiple equilibria. In the aftermath even of immense shocks, a city typically recovers not only its population and its share of aggregate manufacturing, but even the specific industries it had before.
Keywords: No keywords provided
JEL Codes: D5; J1; N9; R1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Natural geographic features (Y91) | Aggregate activity (C43) |
| Temporary interventions (C41) | Large and permanent changes in urban industrial composition (L16) |
| Bombing of Japanese cities (L94) | City population recovery (R23) |
| Bombing of Japanese cities (L94) | Industrial composition recovery (L16) |
| Bombing of Japanese cities (L94) | Unique stable equilibrium (C62) |
| Bombing of Japanese cities (L94) | No support for multiple equilibria (D59) |