The Economic History Podcast Macroeconomic (In)stability in UK Economic History, 1700-2010
May 30, 2024
Join Jason Leonard, an assistant professor at the London School of Economics, as he delves into UK economic history from 1700 to 2010. Discover the nature of business cycles and the impact of sticky wages during downturns, particularly in the Great Depression. Leonard presents his research on wage rigidity using detailed data, revealing surprising flexibility. He also discusses the evolution of monetary policy and its effectiveness, emphasizing how historical shifts in causes and responses shape today’s economic landscape.
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Consistent Dating Reveals True Cycle Changes
- A business cycle is simply the upswing and downswing of economic activity measured by depth, duration, and diffusion.
- Consistent long-run dating is essential to compare cycles across centuries without methodological bias.
Frequency Fell But Severe Recessions Persist
- Recession frequency in the UK fell from ~50% of years in the 18th century to about one per decade in the 20th century.
- The depth of major recessions remained large, suggesting policy prevented small shocks but not the largest ones.
Causes Shifted From Harvests To Policy Mistakes
- Causes shifted from sectoral shocks (especially agriculture) in the 18th–19th centuries to policy failures in the 20th century.
- Active policymaking introduced new failure modes like pro-cyclical fiscal and tight monetary responses.
