The trade route between Manila and Mexico was a monopoly of the Spanish Crown for more than 250 years. The ships that sailed this route — the Manila Galleons, were “the richest ships in all the oceans”, but much of the wealth sank at sea and remains undiscovered. We introduce a newly constructed dataset of all of the ships that traveled this route, and construct a model showing how monopoly rents that allowed widespread bribery would have led to inefficient cargo loading and delayed ship departure, which increased the probability of shipwreck beyond normal levels. Empirically, we demonstrate not only that ships that sailed late were more likely to shipwreck, but also that the effect is stronger for galleons carrying more valuable, higher-rent, cargo. This sheds new light on the relationship between, and social costs from, monopoly rents and corruption.
How the Mexican state came to be? How were its borders and political subdivisions established? I provide a brief historical overview of Mexico’s governance structures throughout its first three hundred years. I focus on its two main junctures: its origins after the Spanish conquest of Mesoamerica in the 1518–1535 period, which required a careful but steady incorporation of indigenous communities into a Spanish state; and the global conflicts that led to Mexico’s secession from the larger Hispanic community in 1808–1821, by which the empire imploded after failed governmental reforms that aimed toward centralization. I follow a framework that emphasizes the co-evolution of institutions that foster trade, exchange, and markets and institutions that limit conflict and predation. In tandem, they produce different stable political equilibriums.
Under what conditions elite competition may disrupt political stability? I study the Spanish Empire on the eve of the wars of independence. I emphasize the role merchant elites played in maintaining the empire unified, and how their interests misaligned in the late eighteenth century creating incentives for political secession. An implicit political arrangement existed, where the Crown maximized tax revenue through its control of the transatlantic trade. It did so by coopting specific American elites located at key nodes (mainly in Lima and Mexico City), which themselves gained rents from their privileged trading positions. The political organization was stable while Spain held sea supremacy in the oceans. The advent of the British Navy after the 7 years war disrupted the Spanish trade networks, affecting the distribution of rents and the corresponding institutional equilibrium. The Spanish Crown tried to adapt by decentralizing its oceanic trade routes, and by coopting a larger set of regional elites within the empire. The tactic backfired: it gave major power to new de-attached local elites creating incentives for political fragmentation.
What is the long-term impact of pre-colonial ethnic institutions? I examine the consequences of the fragmentation of local indigenous communities produced by Spanish rule in Mexico. To do this I make use of unique data from 18th century pueblos—the basis of modern-day counties—to study the institutional impact that the formation of these pueblos had on current development in Mexico. I find that after controlling for alternative mechanisms, counties encompassing more historical pueblos, are more developed, and have less poverty, but are more unequal today. The effects are stronger in places where pre-hispanic roots are deeper (historical Mesoamerica and high altitude areas), suggesting the institutional impact has a pre-colonial basis.
What is trust and how can we measure it? Social scientists widely accept as an intuitive truth that trust impacts positively on the economic success of societies. By now there is a large empirical literature studying and quantitatively assessing such a relationship. Yet, there is no consensus on how trust can be properly measured. In this paper, I survey the literature and present an alternative to the common approaches on measuring trust. Traditionally, trust has been identified by relying on surveys—directly asking people if, and how much, they trust their fellow countrymen—and/or on experiments—creating a perfectly controlled environment where the role of trust can be properly isolated and identified. Both approaches have important limitations: the former is prone to misidentification, while the latter is limited by scale issues. I argue that it is possible to capture trust-levels in a real-world context by locating proxies: refund policies implicitly account for the level of trust that retailers posit in their customers and represent a tacit measure of their client’s overall trustworthiness. By constructing an index of refund policies of stores that sell a similar set of homogeneous goods across different regions/countries, we can get a reliable estimate of trust-differences across these regions/countries. I use IKEA as a study case of how such a proxy can be built.
What were the determinants of Christianity's spatial arrangement following the Reformation? Additionally, what factors have contributed to the continued prevalence of Catholicism over time? Our study focuses on Catholicism's spatial distribution and longevity in Western Europe during the Reformation period. We posit that spatial linkages play a significant role in this context. While existing literature extensively examines Wittenberg as a pivotal hub of Protestantism, our research focuses on the connectivity to Rome as a key determinant of Catholic persistence. Our analysis underscores the significance of local connections and networks in the formation and endurance of initial Catholic clusters. The Roman Empire's infrastructure played a role in enhancing said connections.
We study the long term effects of Spanish evengelization in the Philippines using a novel dataset where we locate the many parishes across the country-for the 16th to 19th centuries for both secular and mendicant orders (Franciscans, Jesuits, Dominicans).
I provide an alternative framework to study the size of nations through a robust behavioral paradigm based on standard political economy and neoinstitutional tenets---identifying the existence of two classes: a general population and a governing elite. I explore this framework through an agent based model that allows me to generate a flexible yet rigorous setup to test different scenarios.
In today’s world the possibility of competition in the money market is unthinkable; the central bank regime is thought as if it were the only viable institution. Historically this has not been the case: Most monetary economists of the past have discussed the appropriate role of the State in the money market. In general terms it is possible to identify certain schools of thought through time. It is the aim of this thesis to accurately describe and analyze the main points of each one and to provide a rough classification of them: 1) First of all, from times of Plato and Aristotle to the 14th century we can acknowledge the existence of two postures–Free minting, which ascribes a mere supervisory role or no role at all to the State and State Minting which posits that the government has the duty and the obligation to intervene in the coinage trade; 1.1) A transitional period in the 15th and 16th centuries in which the discussion is centered around the nature of “interest” and the banking industry; 2) A period that goes from the 18th to the 19th centuries. The role of the banking business has been accepted and the debates are conformed around the inter dependence of the monetary and financial systems. Three different schools emerge: a Free Banking School which adheres to the principles of Laissez-faire in the money market; a Central Banking rule bounded School which states that it is necessary to have a central monopolist entity that could centralize the national metallic reserves, by which it could provide a stable and redeemable money supply; a Central Banking discretionary School that manifests that money is endogenous to the economy, yet a Central Bank is needed for financial stability purposes. 2.1) We can identify a second transitional period in times of the Bellé Epoque of capitalism (1870-1930) which correctly takes the name of “monetary orthodoxy” and accepts the need of a Central Bank both to provide sound money–via a gold standard– and because its role as the lender of last resort of the economy; 3) A third period comes about the end of the great depression to our own time. First, a renewed Central Banking discretionary School gains prominence and articulates a second role for the Central Bank: to actively pursue policy objectives (economic activity and employment). For which it is necessary to adopt a fiat monetary system; given the stagflation problems of the 70s, a rehabilitated Central Banking rule bounded School emerges and pinpoints the importance of stabilizing consumer prices via an unchanging fiat money supply; as an alternative to this school, a Modern Laissez-Faire School appears which emphasizes the possibility of free market solutions to the money market through several available schemes: Hayek-Klein, a fiat private competition system; Selgin-White, a modern free banking approach; and Salerno-Huerta de Soto and Greenfield-Yeager as heterodox approaches. Who must manage the money supply and how it must be done, have been the greatest questions in monetary and banking history. By answering them we can also resolve the main inquires about the nature of money. It is necessary to understand the past theories in order to regain lost knowledge. I hope this thesis serves as an introduction to the topic for those who think that having a Central Bank is the only way