Working Paper: NBER ID: w17979
Authors: Davide Cantoni; Noam Yuchtman
Abstract: We present new data documenting medieval Europe's "Commercial Revolution'' using information on the establishment of markets in Germany. We use these data to test whether medieval universities played a causal role in expanding economic activity, examining the foundation of Germany's first universities after 1386 following the Papal Schism. We find that the trend rate of market establishment breaks upward in 1386 and that this break is greatest where the distance to a university shrank most. There is no differential pre-1386 trend associated with the reduction in distance to a university, and there is no break in trend in 1386 where university proximity did not change. These results are not affected by excluding cities close to universities or cities belonging to territories that included universities. Universities provided training in newly-rediscovered Roman and Canon law; students with legal training served in positions that reduced the uncertainty of trade in medieval Europe. We argue that training in the law, and the consequent development of legal and administrative institutions, was an important channel linking universities and greater economic activity.
Keywords: No keywords provided
JEL Codes: I25; N13; N33; O10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| No significant pre-1386 trend (N13) | Observed effects are not due to pre-existing trends (C22) |
| No new universities established in England and Italy (N93) | No significant changes in market establishment rates (D49) |
| Establishment of Germany's first universities in 1386 (N93) | Significant positive break in the trend rate of market establishment (L16) |
| Distance to a university decreased (R19) | Greater increase in market establishment rates (D40) |
| Establishment of universities (I29) | Changes in market establishment rates in cities (R23) |