Experience and Expectations in the age of globalization
This session explores the impact of historical experience on the formation of economic expectations in the modern economy. Economic expectations that are often shaped by individual experiences guide actors when making decisions under fundamental uncertainty, and thus are essential for understanding the behavior of economic agents. However, the historical dimension of economic expectations has not been systematically explored. We argue that the manner in which expectations were formed underwent significant changes over time. In this panel, we examine how the formation of expectations by enterprises, economic experts, investors, states, and households was affected by structural change and crises, and emphasize two aspects: globalization and methodological problems. By presenting our ongoing research projects at the WEHC in Boston, we hope to initiate several co-operations with international scholars who research similar topics.
Globalization worked as a major force on expectation formation on the operational and the analytical level. The integration of markets and the emergence of an international financial regime since the later 19th century increased the complexity and uncertainty of transactions and provoked attempts to mitigate new forms and magnitudes of risk. State and private finances were affected to an unprecedented degree by international debt crises, and actors were forced to develop new methods for assessing credit worthiness and mechanisms to cope with failure to service debts. Business cycles research and economic forecasting evolved together with this new, increasingly synchronized global economy and struggled to integrate the different speeds and rhythms of the international economies into plausible models, while at the same time the economic discipline itself became more international. Economics was baffled by the Great Depression of the 1930s and forced to revise fundamental assumptions just at the time when enterprises, governments and households faced existential threats. The globalization backlash of the interwar period can be explained partly by a shift in expectations that was triggered by the fundamental uncertainty and learning effects of the Great Depression. Crises, shocks, and structural ruptures are central determinants of the formation of experience. Expectations do not only play a relevant part in the emergence of crises, but themselves are modified and revised over the course of crises as part of a learning process of economic actors that might be a precondition for attaining a new stability. In so far, the globalization backlash of the 1930s also can be attributed to a breakdown of the trust to reliably predict the expectations of others and an international failure to communicate.
However, studying the expectations of historical actors poses serious methodological problems that are best tackled by an interdisciplinary approach. The formation of economic expectations is widely understood as a complex process shaped strongly by historical events and individual (and social) experience. Still, we know little about the specific impact of experiences on expectations. How are expectations perceived by actors in a specific situation, and how does this affect economic behavior? How can historians detect cognitive processes of actors in the past? The study of written sources might yield insights into the expressed motivations of individual actors, yet in order to arrive at plausible statements about shared sentiments and expectations towards the economic future, the study of individual sources is not sufficient. Quantitative methods, on the other hand, heavily rely on qualitative input in order to build adequate models and interpret the results. Media analysis and topic modelling seem to be promising tools for the analysis of serial sources that provide quantifiable insights into a society‘s communication about its economic state and anticipated future.
In the panel, we present selected empirical studies from the Priority Programme „Experience and Expectation“ financed by the German Science Foundation, and the methodology involved. We invite scholars that work on the historical dimension of economic expectations to join the panel and exchange ideas.
If you are interested in joining us, please send an abstract of 500 words maximum to firstname.lastname@example.org until 15 January 2018.
- Alexander Nützenadel, Humboldt University, Berlin , email@example.com, Germany
- Streb Jochen, University of Mannheim, firstname.lastname@example.org, Germany
- Mark Jakob, Humboldt University, Berlin , email@example.com, Germany
- Ingo Köhler, Georg August University, Göttingen, Ingo.Koehler@wiwi.uni-goettingen.de
- Christoph Trebesch, Kiel Institute for the World Economy, firstname.lastname@example.org
- Sibylle Lehmann-Hasemeyer, University of Hohenheim, email@example.com
- Michael C Schneider, University of Duesseldorf, firstname.lastname@example.org
- Louis Pahlow, Goethe University Frankfurt a. M., email@example.com
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