Does Financial Integration Spur Economic Growth? New Evidence from the First Era of Financial Globalization

Does international financial integration boost economic growth? The question has been discussed controversially for a long time, and a large number of studies has been devoted to its empirical investigation. As of yet, robust evidence for a positive impact of capital market integration on economic growth is lacking, as documented by Edison et al. (2002). However, there is substantial narrative evidence from economic history that highlights the contribution European capital made to economic growth of peripheral economies during the so-called first age of financial globalization before 1914. For this paper, we have compiled the first comprehensive data set to test econometrically if capital market integration had a positive impact on economic growth before WW1. Using the same models and techniques as contemporary studies, we show that there was indeed a significant and robust growth effect of international financial integration in the first era of financial globalization. Our temptative explanation for this marked difference between now and then stresses property rights protection as a prerequisite for the standard neoclassical model to work properly.International financial integration; Economic growth; First era of globalization.

The Lucas Paradox and the quality of institutions: then and now

In the first era of financial globalization (1880-1914), global capital market integration led to substantial net capital movements from rich to poor economies. The historical experience stands in contrast to the contemporary globalization where gross capital mobility is equally high, but did not incite a substantial transfer of savings from rich to poor economies. Using data for the historical and modern periods we extend Lucas (1990) original model and show that differences in institutional quality between rich and poor countries can account for the sharply divergent patterns of international capital movements. --capital market integration,financial globalization,economic history

When credit bites back: leverage, business cycles, and crises

This paper studies the role of leverage in the business cycle. Based on a study of nearly 200 recession episodes in 14 advanced countries between 1870 and 2008, we document a new stylized fact of the modern business cycle: more credit-intensive booms tend to be followed by deeper recessions and slower recoveries. We find a close relationship between the rate of credit growth relative to GDP in the expansion phase and the severity of the subsequent recession. We use local projection methods to study how leverage impacts the behavior of key macroeconomic variables such as investment, lending, interest rates, and inflation. The effects of leverage are particularly pronounced in recessions that coincide with financial crises, but are also distinctly present in normal cycles. The stylized facts we uncover lend support to the idea that financial factors play an important role in the modern business cycle.Business cycles ; Financial crises

Exciting Collective Oscillations in a Trapped 1D Gas

We report on the realization of a trapped one dimensional Bose gas and its characterization by means of measuring its lowest lying collective excitations. The quantum degenerate Bose gas is prepared in a 2D optical lattice and we find the ratio of the frequencies of the lowest compressional (breathing) mode and the dipole mode to be $(\omega_B/\omega_D)^2\simeq3.1$, in accordance with the Lieb-Liniger and mean-field theory. For a thermal gas we measure $(\omega_B/\omega_D)^2\simeq4$. By heating the quantum degenerate gas we have studied the transition between the two regimes. For the lowest number of particles attainable in the experiment the kinetic energy of the system is similar to the interaction energy and we enter the strongly interacting regime.Comment: 4 pages, 4 figure

Detecting multi-atomic composite states in optical lattices

We propose and discuss methods for detecting quasi-molecular complexes which are expected to form in strongly interacting optical lattice systems. Particular emphasis is placed on the detection of composite fermions forming in Bose-Fermi mixtures. We argue that, as an indirect indication of the composite fermions and a generic consequence of strong interactions, periodic correlations must appear in the atom shot noise of bosonic absorption images, similar to the bosonic Mott insulator [S. F\"olling, et al., Nature {\bf 434}, 481 (2005)]. The composites can also be detected directly and their quasi-momentum distribution measured. This method -- an extension of the technique of noise correlation interferometry [E. Altman et al., Phys. Rev. A {\bf 79}, 013603 (2004)] -- relies on measuring higher order correlations between the bosonic and fermionic shot noise in the absorption images. However, it fails for complexes consisting of more than three atoms.Comment: 9 revtex page