Recent working papers
“Missing Markets: Microstructure and Liquidity on the 19th Century London Stock Exchange”, with Rui Esteves CEPR Discussion Paper No. 19008. 2024. CEPR Press, Paris & London. Link:
Abstract
This paper studies the behavior of specialist dealers in choosing to make markets in securities. Our setting is the 19th century London Stock Exchange and the universe of securities listed on the exchange in the 1870s. The LSE was a free-entry dealer market, where dealers were free to choose which securities to deal in. In this context, we show that up to 80% of securities were orphaned with no specialist offering immediate execution. In line with the findings of recent literature, our estimates show that specialist dealers concentrated their market-making in the most liquid securities. A combination of adverse selection and inventory costs prevented the development of liquid markets in most securities, with dealers opting instead to provide match-making services. Our findings are consistent with recent research on the possibility of liquidity bifurcation and market fragility.“The New Poor Law and the health of the population of England and Wales 1834-1860”, with D Green, G Mooney and S Szreter, CEPR Discussion Paper No. 18505. 2023. CEPR Press, Paris & London. Link:
Abstract
We estimate the impact of reductions in poor law expenditure following the 1834 Poor Law Amendment Act on rural life expectancy and mortality rates. We find that a 10 per cent decrease in poor law expenditure is associated with roughly a 1.5–2.0 per cent increase in early childhood mortality (ECMR). Our estimates imply 8–10 per cent increases in ECMR and 2–4 per cent falls in rural expectation of life at birth as a result of the spending cuts imposed by the Poor Law Amendment Act. These results help to explain the weak performance of mid-nineteenth century life expectancy measures during a period of rising real wages but falling welfare expenditure.Publications
“Private Benefits, Public Vices: Railways and Logrolling in the Nineteenth-Century British Parliament” with Rui Esteves, Journal of Economic History, Vol. 81, No. 4, 2021. Link:
Abstract
Vote trading among lawmakers (logrolling) can enable political rent-seeking, but is difficult to identify. We use social network methods to measure logrolling by British MPs in the 1840s in order to approve railway projects. MPs had vested interests in railways. Although parliamentary rules barred them from voting directly for their interests, they could trade votes to ensure their interests prevailed. We find logrolling to be prevalent and significant, accounting for nearly a quarter of the railway bills approved. We also find a negative short-term externality from logrolling adding up to an aggregate loss of c.1% of contemporary GDP.“Social networks in economic history: opportunities and challenges” with Rui Esteves, Explorations in Economic History, Vol. 74, 2019:
Abstract
In this paper we survey the study of social networks and their application to economic history. We take the perspective of the applied researcher and focus on empirical methods, leaving out structural models and the literature on strategic network formation (games on networks). Our aim is to assist economic historians in identifying whether networks may be useful frameworks for their research agendas. We highlight the main challenges in using social network methods, namely, measurement error, data completeness, and the usual threats to identification of causal effects. We also review the burgeoning literature in economic history that applies network methods, organized along four main themes: markets, financial intermediation, politics and knowledge diffusion.“Network Analysis”. In: Blum M., Colvin C. (eds) An Economist’s Guide to Economic History. Palgrave Studies in Economic History, 2018.
“The separation of information and lending and the rise of rating agencies in the USA (1841–1907)” with Marc Flandreau, Scandinavian Economic History Review, Vol. 14, No. 2, 2014, pp. 213-242:
Abstract
This paper provides a new interpretation of the early rise of rating agencies in the USA (initially known as ‘mercantile agencies’). We explain this American exceptionality through an inductive approach that revisits the conventional parallel with the UK. In contrast with earlier narratives that have emphasised the role of Common Law and the greater understanding of American judges that would have supported the rise of an ethos of ‘transparency’, we argue that Mercantile Agencies prospered as a remedy to deficient bankruptcy law and weak protection of creditor rights in the USA. The result was to raise the value of the nationwide registry of defaulters which the mercantile agencies managed. This ensured the Agencies' profitability and endowed them with resources to buy their survival in a legal environment that remained stubbornly hostile.“The Untold History of Transparency: Mercantile Agencies, the Law and the Lawyers (1851-1916)” with Marc Flandreau, Enterprise & Society, Volume 15, Issue 2, 2014, 213-251:
Abstract
This paper provides a new interpretation of the early rise of rating agencies in the USA (initially known as ‘mercantile agencies’). We explain this American exceptionality through an inductive approach that revisits the conventional parallel with the UK. In contrast with earlier narratives that have emphasised the role of Common Law and the greater understanding of American judges that would have supported the rise of an ethos of ‘transparency’, we argue that Mercantile Agencies prospered as a remedy to deficient bankruptcy law and weak protection of creditor rights in the USA. The result was to raise the value of the nationwide registry of defaulters which the mercantile agencies managed. This ensured the Agencies' profitability and endowed them with resources to buy their survival in a legal environment that remained stubbornly hostile.Working papers
“Fraud and Financial Manias: Estimating the Number of ‘Bubble’ Companies during the Railway Mania of the 1840’s”
Abstract
Financial manias are anecdotally associated with increasing cases of financial fraud, but few studies have successfully measured this quantitatively or addressed the degree to which fraud is a cyclical phenomenon. In this study I employ a novel methodology to estimate the prevalence of fraud and its variance over time in the case of the British Railway Mania of the 1840's. The Railway Mania provides a striking instance of the role of fraud in manias, as contemporary observers alleged widespread malfeasance stemming from the promotion of hundreds of railway companies in the UK in the years 1844 and 1845. Modern scholars, however, have failed to substantiate these allegations. I resolve this discrepancy by using case studies to reveal why fraudulent companies are likely to be omitted from the samples modern historians have used to analyze the mania. I build a more complete database of railway companies using administrative records, and identify fraudulent companies from court cases. Using the new database of railway companies, and positive instances of known frauds, I estimate the proportion of fraudulent companies in the population. My findings suggest extremely elevated instances of fraud, with as much as 20% to 30% of the population of companies promoted in the 1840's meeting the criteria for what contemporaries decried as 'bubble companies'. Moreover, I find the propensity for fraud to be highly procyclical, rising with the increasing railway share prices.“Havas and the Foreign Loan Market, 1889 to 1921”, Centre for Finance and Development, Student Working Paper, No 2, 2013: