By Davide Cantoni and Noam Yuchtman
Paper given at the New Frontiers in Economic History conference at Stanford University (2010)
Abstract: Europe experienced a “Commercial Revolution” in the late Middle Ages. We present new data that document this transformation using information on city incorporation and market establishment. We then test whether universities played a causal role in expanding economic activity, examining the consequences of their exogenous establishment in Germany following the Papal Schism in 1378. We find that the trend rate of market establishment breaks upward just when the first German university was established; this break is greatest where the distance to a university shrank most. We argue that the link between universities and greater economic activity involved the development of formal legal and administrative institutions.