 Art and policy: “History vs Expectations†?Jorge Braga de Macedo and Joaquim Oliveira Martins Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics Abstract: This paper uses the Painéis de São Vicente as an interpretive framework to explore a central issue in economic theory: whether development paths are determined mainly by historical initial conditions or by forward-looking expectations in contexts with multiple equilibria. The polyptych, which portrays a broad cross-section of Portuguese society of the mid-XVth century, is read as a visual representation of collective alignment at the onset of maritime expansion. The study treats the painting as symbolic evidence of a shared national project emerging during a moment of geopolitical opportunity. The economic interpretation draws on Paul Krugman’s “History vs. Expectations†model, where equilibrium selection depends on interest rates, increasing returns, and transaction costs. An expectations-driven equilibrium is more likely under low interest rates, strong external economies, and institutional flexibility. The paper argues that mid-fifteenth-century Portugal displayed several of these features: relatively stable and low borrowing costs supported by early monetary institutions; dynamic increasing returns linked to maritime technology, knowledge accumulation, and the formation of a global trading network; and comparatively low transaction costs associated with governance quality, parliamentary activity, and social coordination under the Aviz dynasty. Subsequent periods illustrate how deteriorating institutions, rising costs, and resource dependence can reimpose path dependence. The case suggests that expectation-led development requires a rare conjunction of favorable macroeconomic conditions, institutional effectiveness, and a compelling narrative about the future—lessons that remain relevant for contemporary economic strategy. Pages: 8 pages Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:unl:unlfep:wp695 Access Statistics for this paper More papers in Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics Contact information at EDIRC. |
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