Alan Taylor on His Recent Research and Princeton Visit

Friday, Nov 6, 2015
by Rachel Estrada Ryan

Alan M. Taylor, professor of economics and finance at the University of California, Davis, came to Princeton’s campus October 26-30 during a visit co-sponsored by The Julis-Rabinowitz Center for Public Policy and Finance, the International Economics Section, and the Bendheim Center for Finance. 

During his visit, he shared much about his current research with JRCPPF staff. 

One of his most recent working papers, “Leveraged Bubbles” (written with longtime research partners and co-authors Moritz Schularick and Òscar Jordà), is among the “fifth or sixth in a series of papers on financial crises and the role of credit,” he explained. What distinguishes Taylor’s work from that of many economists studying bubbles and crises is the novel data set he’s built—one of extraordinary breadth, from a historical perspective, that sheds new light on economic growth, crashes, recessions, and banking sector developments in advanced economies from as far back as the 19th century that have been, to date, quite poorly understood.

“Together with a crack team of research assistants, we have spent 6 years unearthing information from primary and secondary sources in order to create this new data set,” Taylor continued. “We’ve opened up a ‘black box,’ so to speak. A lot of the questions we’re asking now were unanswerable as recently as ten years ago. It’s this kind of detective work that makes economic research fun.” 

At Princeton, an innovative economics scholar like Taylor finds good company; he spoke in particular of JRCPPF director Atif Mian’s equally groundbreaking data set creation. “We’re both trying to increase the statistical power of our analyses. He is doing something remarkable in taking one recent event, the Great Recession, and drilling down to an unprecedented level of ‘micro detail,’” he said. The works of Mian and Taylor are very much of the same spirit, he continued: Mian's data’s county-level depth on par with Taylor's data's global and historical breadth.

Taylor’s future work will continue to explore historical linkages across advanced economies; “past and future international spillovers and interactions,” as he put it. “That will be one of our next ten papers,” he said, with a laugh. “If you’re doing this work properly, there always seems to be another ten papers to write.”

Taylor is hopeful that the innovative research of his contemporaries will inform better policy decisions. “Visiting a place like Princeton, where you have the Woodrow Wilson School, and the Bendheim Center, but no business school, I see a unique connection here between scholarship and policy not seen at many other universities,” he concluded. “There is a doorway here, a level of exposure between disciplines that will give our future political leaders a sense of connection to the flow of research early on in their careers; down the road, when they are the ones making or advising on decisions, they will carry our ideas forward."

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