Grant launches Berkeley Economic History Lab

The University of California, Berkeley's Department of Economics is the recipient of a $1.25 million grant from the Institute for New Economic Thinking (INET) to develop a Berkeley Economic History Laboratory. The new lab will train economists to be more historically literate so they can better contribute to policy debates and help avoid devastating economic crises.

The award is the largest of 30 first round grants announced recently by the institute, which was established in 2009 with a $50 million pledge from financier George Soros to improve economics through educational initiatives, conferences and grants.

It further boosts the field of economic history at UC Berkeley's economics department, already home to one of the nation's leading graduate programs for economic historians. The Berkeley Economic History Laboratory (BEHL) was proposed by UC Berkeley economic historian Barry Eichengreen, who will serve as its principal investigator.

"It took the most serious financial crisis in 80 years – unfortunately – to remind economists of the value of historical knowledge and analysis," said Eichengreen. "We now need to capitalize on that awareness by increasing the supply of young scholars with historical training and skills who can contribute to the debate over economic and financial reform."

"If there is a 'Berkeley School,' its distinguishing characteristic is the use of historical materials to address policy-relevant issues of current concern," Eichengreen wrote in the lab proposal.

Eichengreen was joined last Thursday in a conversation on campus about the new lab with INET executive director Robert Johnson and fellow UC Berkeley economic historians Bradford J. DeLong and Christina Romer.

"You guys are going to be the generators of new economic thinking," Johnson told economics students in the audience.

Romer, recently back at UC Berkeley after serving as chair of President Obama's Council of Economic Advisors, stressed the importance of using history as a tool to help answer "enormous questions that have effects on the entire planet." As examples, she cited the economic crisis's impact on long-term growth, impacts of the federal stimulus package on jobs and prospects for the Federal Reserve Bank's anticipated quantitative easing to boost the banking system's money supply.

Eichengreen said the lab should help leverage UC Berkeley's existing strengths in economic history, encourage other institutions to forge similar paths, and "not only train specialist economic historians, but also infuse a historical sensibility into the work of economists who self-identify as working in other areas." All this, he said, will help make economics a more fundamentally historical, institutional and empirical social science.

With INET funds, the department will increase the number of historically literate economists doing policy-relevant research and newly-minted UC Berkeley graduates with Ph.Ds in economic history.

The new grant will fund graduate student and postdoctoral fellowships, expand economic history seminar budgets to present and discuss more research in progress, and support exploratory data gathering and field research, archival visits and the digitization of historical data.

As an example of the latter, Eichengreen mentioned information about the early history of the San Francisco Stock Exchange from original 19th century sources that is now being painstakingly collected by a UC Berkeley economics student.

Eichengreen said that "careful economic history based on archival materials, sensitive to the limitations of historical sources, and grounded in the institutions and political economy of the day is not taught and practiced in many university economics departments."

"Seeing a good archival researcher is like watching a detective…zoom in and create illumination," noted Johnson.

UC Berkeley's Department of Economics has one of the only top-ranked Ph.D. programs in the nation that requires a semester-long introduction to economic history for all first-year students, who must earn a B- or better to advance their studies and write a dissertation.

UC Berkeley's economics faculty roster further reflects the commitment to the study of economic history. In addition to Eichengreen, others noted for work in the field include:

• Brad DeLong, author of a popular blog about economics and of the forthcoming book, "Slouching Toward Utopia: An Economic History of the 20th Century"
• Christina Romer
• Jan deVries, professor of economics and history and past president of the Economic History Association
• Ronald Lee, professor of economics and demography and an authority on the history of economic growth and demographic history
• Martha Olney, adjunct professor of economics and an expert on the Great Depression, history of consumer credit and history of economic growth
• Noam Yutchman, assistant professor of business at the Haas School of Business and an authority on business history and historical perspectives on China's economic growth

Recent UC Berkeley student research has examined the incidence and macroeconomic impacts of 19th century banking panics, the management and resolution of sovereign defaults before and after 1913 and the historical roots of economic development in the Middle East.

Eichengreen said UC Berkeley graduates specializing in economic history have also served as consultants at institutions such as the Bank of Japan, International Monetary Fund and Bank of England, influencing how research is conducted there.

The lab, he said, should help leverage UC Berkeley's existing strengths in economic history, encourage other institutions to forge similar paths, and "not only train specialist economic historians, but also infuse a historical sensibility into the work of economists who self-identify as working in other areas."

More information about INET is available online. Click here to learn more about UC Berkeley's economics department.