We show that the heavy use of legal services relative to output in the US is not a peculiarity of the country but applies to common law countries in general. It can likely be attributed largely to better ability to contract and adapt to changes in the environment. Yet common law also opens significantly more room for rent seeking by lawyers than civil law. Thereby the costs could outweigh the benefits. In supporting this last thesis, we control for other factors besides common law favouring legal services, including real output per capita, openness, and ease of entry into the legal profession.

We perform the first econometric test to date of the influences of inflows of precious metals and population growth on the Great Inflation in Europe following the discovery of the New World. The English evidence strongly supports the near-equivalent importance of both influences. For 1500-1700, silver is the only relevant precious metal in the estimates. The study controls for urbanization, government spending, mortality crises and climatic changes. The series for inflows of the precious metals into Europe from America and European mining are newly constructed based on the secondary sources.

The scale of the rise in personal wealth following the Black Death calls the life-cycle hypothesis of consumption into consideration. Based on price level evidence, this paper shows for the first time that the wealth effect of the Black Death on economic activity continued in England for generations, up to 1450. Indeed, in the absence of consideration of the wealth effect, other influences on the price level do not even appear in the econometric analysis. The shift in tastes toward higher quality goods, luxuries and imports stemming from the per capita windfall for the survivors in the mid-fourteenth century plays a substantial part in the analysis. So does England’s little influence on the relative prices of its imports relative to home goods. The separate effects of coinage, population, trade, wages and annual number of days worked for wages on the price level all also receive major attention and new results follow for adjustment in the labor market.

This paper produces estimates of regional redistribution and stabilization through the central government budget in Canada, France, the United Kingdom and the United States. The estimates rest on panel data econometrics and an adherence to certain accounting principles that have occasionally been violated in the past. As a result of the statistical method and the accounting, the peak estimates for Canada and the United States in the earlier literature are never attained. In addition, panel data econometrics yields estimates of stabilization which are entirely reasonable for France and the United Kingdom, whereas the estimates based on the previous literature are not so. Regional stabilization through the central government budget emerges as close to 20% in France, the United Kingdom and the United States, but only 10–14% in Canada.

In the spring of 1981 a socialist government took power in France. With the unemployment rate above 7 percent, the new government introduced an expansionary demand policy and raised the minimum wage. Even with the demand expansion, the unemployment rate continued to rise. The rise of the real wage rate relative to productivity since the early 1970's can, with any reasonable estimate of the elasticity of demand for labor, explain ail the rise in unemployment. The industrial world has been in a protracted slump since the early 1970's. This has imposed an external constraint in the form of slow export growth for most European countries. The French economy is sufficiently open to trade that it may be best to adopt a program of gradual adjustments of the nomind exchange rate to prevent appreciation of the red rate. This is obviously politically difficult within the European monetary system, but it might be an appropriate objective for French policy.

Somatic distance; or differences in physical appearance; proves to be extremely important in the gravity model of bilateral trade in conformity with results in other areas of economics and outside in the social sciences. This is also true independently of survey evidence about bilateral trust. These findings are obtained in a sample of the 15 members of the European Economic Association in 1996. Robustness tests also show that somatic distance; as well as co-ancestry; has a more reliable influence on bilateral trade than the other cultural variables. The article finally discusses the interpretation and breadth of application of these results.

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Somatic distance, or differences in physical appearance, proves to be extremely important in the gravity model of bilateral trade in conformity with results in other areas of economics and outside of it in the social sciences. This is also true quite independently of survey evidence about bilateral trust. These findings are obtained in a sample of the 15 members of the European Economic Association in 1996. Robustness tests also show that somatic distance has a more reliable influence on bilateral trade than the other cultural variables. The article finally discusses the interpretation and the breadth of application of these results.

How much further can we expect the spread of English to go? What are the gains? What are the costs? The paper first tries to identify the areas of life where English already serves as a lingua franca in the world and those where the language faces sharp competition. The discussion goes on to show that the future advance of English will depend heavily on the motives to learn the other major languages in the world as well. The cultural market is the single one where the extraordinary progress of English threatens to go too far.

The paper takes issue with the mainstream economic analysis of the enormous flow of silver into China in 1550–1820. First, I challenge the view that arbitrage between gold and silver in European trade with China was important except for one twenty-year spell. Next, I argue that had China imported gold, its history would have been much the same. I also dispute the idea that the persistence of the silver inflows from 1550 to 1820 implies any persistent disequilibrium, and I maintain that economic theory can easily accommodate the view that the inflow of silver into China sponsored growth in China.

There have been important advances by archeologists and numismatists in recent decades in the study of the beginnings of coinage in Ionia, Lydia, and Greece before the fifth century B. C. This paper provides a model of the birth of coinage that brings these advances into a broad analysis of the subject-matter. It pulls together many factors that are often treated separately. In addition, the model yields one important new result. Contrary to popular assumption, early coinage was not highly profitable. The Lydian government and the Greek city-states provided an extremely wide array of denominations of coins in a single precious metal at considerable cost. Their willingness to bear this cost must have reflected a political strategy of promoting coinage. Such a political strategy would also be easy to explain. As a large payer and recipient of money in the form of precious metals, the government had much to gain from the spread of coinage in order to economize on transaction costs in its own affairs.

This is the first attempt to model the beginnings of coinage in Ionia, Lydia and Greece before the fifth century B.C. Apart from bringing together all of the influences on the essential choices facing the government and the private sector within a coherent whole, the effort yields one important result. Contrary to popular assumption, early coinage was not highly profitable. The Lydian government and the Ionian and Greek city-states provided an extreme-ly wide array of denominations of coins in a single precious metal at considerable cost. Their willingness to bear this cost must have reflected a political strategy of promoting coinage. Such a political strategy would also be easy to explain. In addition, the paper examines the fact that the early Ionian and Lydian coins were composed of electrum, a subject of consider-able interest and importance in itself.

The paper is devoted to an econometric analysis of learning foreign languages in all parts of the world. Our sample covers 193 countries and 13 important languages. Five factors significantly explain learning: the world population of native speakers of the home language, literacy, the world population of speakers of the target language, trade with foreign speakers of the target language, and the linguistic distance between the home language and the target language. All five factors affect the broad decision to learn but the last three also point to the choice of the particular language to learn. The world population of speakers of the native language discourages learning in general while literacy promotes it in general. Instead, the world population of speakers of a specific target language and trade with speakers of the specific language prompts learning of that language while the linguistic distance between the home and the foreign language discourages learning of that language. Trade may well deserve special emphasis, not only for its quantitative effect, but also because its direction can change faster and by a larger order of magnitude than the other factors. Controlling for individual acquired languages, including English, is of no particular importance.

The paper is devoted to an econometric analysis of learning foreign languages in all parts of the world. Our sample covers 193 countries and 13 important languages. Four factors significantly explain learning, two of which affect the broad decision to learn, while two concern as well the choice of the particular language to learn. Literacy generally promotes learning while the world population of speakers of the native language generally discourages it. Trade with speakers of a specific language prompts learning of that specific language while the linguistic distance between the home and the foreign language discourages learning of the specific language. Trade is highly significant and may well deserve more emphasis than the other three key variables (literacy rate, linguistic distance, and world population of native speakers) because its direction can change faster and by a larger order of magnitude. Controlling for individual acquired languages, including English, is of no particular importance.

We construct new series for common native language and common spoken language for 195 countries, which we use together with series for common official language and linguistic proximity in order to draw inferences about (1) the aggregate impact of all linguistic factors on bilateral trade, (2) the separate role of ease of communication as distinct from ethnicity and trust, and (3) the contribution of translation and interpreters to ease of communication. The results show that the impact of linguistic factors, all together, is at least twice as great as the usual dummy variable for common language, resting on official language, would say. In addition, ease of communication plays a distinct role, apart from ethnicity and trust, and so far as ease of communication enters, translation and interpreters are significant. Finally, emigrants have much to do with the role of ethnicity and trust in linguistic influence.

By taking a new approach to the study of the impact of EMU on consumption smoothing, centering on consumption volatility and therefore on smoothing more directly, we find that even though EMU tends to smooth consumption, it is not through cross-country property and claims. Rather it comes through the promotion of the tradability of goods, capital in particular: specifically, the encouragement of price competition, contestable home markets, ability to borrow and buy insurance at home, and the harmonization of regulations. Some of the consumption smoothing may also depend on EU membership rather than EMU as such but EMU adds to it. As a fundamental part of the analysis, the paper uses a new index of currency union which focuses on the ratio of trade with other countries sharing the same currency relative to total foreign trade.