Responding to Shocks: Australia's Institutions and Policies

The current economic crisis has taught another generation of Australians that their economy remains vulnerable to negative external shocks, as it has been since the depression of the early 1840s. So it is unsurprising that shocks and crises figure prominently in the economic history literature, with most attention given the depressions of the 1890s and 1930s. Less attention has been given to other negative shocks, or to a comparative treatment of shocks. In particular, the implications for long-run prosperity resulting from the policy responses to shocks have not received the scrutiny given their short run consequences.Australia; economic history; growth

Why Was Australia So Rich?

Between 1870 and 1890 Australian incomes per capita were 40 percent or more above those in the United States. About half this gap is attributable to Australia's higher labor input per capita, and half to its higher labor productivity. The higher labor input is due in part to favorable demographic attributes stemming especially from the gold rush era, and partly to a favorable workforce participation rate. The higher labor productivity appears to result from an advantageous natural resource endowment. By 1914 the income lead over the U.S. had all but disappeared. This is ascribed to declines in Australia's advantages both in labor input per capita and in labor productivity. It is argued that these declines are due neither to the effects of the 1890s depression, nor to changes in trade policy, but to the transitory or unsustainable nature of Australia's earlier sources of income advantage.comparative growth, Australian economic history

The Productivity of U.S. States Since 1880

This study identifies the determinants of interstate variation in labor productivity levels at twenty-year intervals between 1880 and 1980. Focusing on fundamental rather than proximate influences, we find that institutional characteristics, physical geography, and resource abundance can account for a high proportion of the differences in state productivity levels. States with navigable waterways, a large minerals endowment, and no slaves in 1860, on average, had higher labor productivity levels throughout the sample period. No consistent support was found for two other influences given prominence in cross-country analyses of differences in incomes or productivity levels: climate and the quality of government.economic growth, productivity levels, slavery, natural resources

Australian Growth: A California Perspective

Examination of special cases assists understanding of the mechanics of long-run economic growth more generally. Australia and California are two economies having the rare distinction of achieving 150 years of sustained high and rising living standards for rapidly expanding populations. They are suitable comparators since in some respects they are quite similar, especially in their initial conditions in the mid-nineteenth century, their legal and cultural inheritances, and with respect to some long-term performance indicators. However, their growth trajectories have differed markedly in some sub-periods, and over the longer term with respect to the growth in the size of their economies. Most important, the comparison of an economy that remained a region in a much larger national economy with one that evolved into an independent political unit helps identify the role of several key policies. California had no independent monetary policy, or exchange rate, or controls over immigration or capital movements, or trade policy. Australia did, and after 1900 pursued an increasingly interventionist and inward-oriented development strategy until the 1970s. What difference did this make to long-run growth? And what other factors, exogenous and endogenous, account for the differences that have emerged between two economies that shared such similar initial conditions?

The Productivity of U.S. States Since 1880

This study uses state-level variation in labor productivity levels at twenty-year intervals between 1880 and 1980 to examine the relative importance of institutional and geographical influences in explaining observed and persistent differences in standards of living over time and across regions. Focusing on fundamental rather than proximate influences, we find that both institutional characteristics and some physical geography characteristics account for a high proportion of the differences in state productivity levels: states with navigable waterways, a large minerals endowment, and no slaves in 1860, on average, had higher labor productivity levels throughout the sample period. However, we find little support for two other influences that have previously received attention climate and latitude.

Saving in Settler Economies: Australian and North American Comparisons

gross national product; income; growth rate; investments

The Supply of Gold Under the Pre-1914 Gold Standard

In this paper we attempt to relate the discussion of the discovery and production of gold which appears in the literature on international monetary economics to that found in writings on economic development in the regions of recent settlement. An examination of both national and regional evidence, with emphasis on U.S. experience in the late nineteenth century, suggests that the influence of real gold prices on production is not dominant, and that other economic conditions (such as prior levels of settlement) cannot be ignored.monetarism; economic development; prices; production

Trends in the Composition of Consumer Expenditure: Australia 1854-1913

This paper fust surveys available evidence on consumption patterns in the period between the gold rushes and the fust world war (Section 1), then attempts to integrate this evidence to achieve a reasonably consistent set of estimates across the period (Section 2). The changes in the composition of consumption activity are then compared with those occurring since 1914 in Australia, and also with evidence for the United States and several European countries between 1875 and 1914 (Section 3). The share of food items in total consumption has declined while the shares of clothing, housing and "other" items increased between the 1850s and 1914, though this did not occur steadily across the period. Australian and U.S. consumption patterns seem broadly comparable at the end of the nineteenth century.historical analysis; income; growth rate; household