I think Luigi Zingales is Italian, which might explain why he doesn’t seem to understand why the Founders established a capital in Washington, but Greg Mankiw who links to it has no such excuse and anyone ought to be able to see how illogical this is:
The biggest threat of all to the Big Apple’s financial supremacy, however, comes from Washington. The Founding Fathers wisely decided that the nation’s political capital should be separate from its financial capital (in both senses of the word).
As Ryan Avent points out the combo arrangement, though not what we do in the United States, is very common. Surely Professor Mankiw has heard of London, Tokyo, Paris, etc.
But as someone interested in cities, it is interesting to think about the different ways in which this works. One model, seen in France and the UK, is of a single dominant city. Another model, seen in Italy, is where your capital is also your largest city (Rome), but the main financial and business center is elsewhere (Milan). Then you have your scenarios, seen in the US and Canada, where a capital is established someplace a bit random specifically to avoid choosing between major cities. This tends to lead to capital cities with a reputation as “boring.”
It’s interesting that in the United States it’s extremely common to see this done with state capitals. It’s very rare to see the Boston/Providence scenario where the state capital is put in the state’s major city. You also see some of the Austin/Olympia model where the state capital is also a college town. But the most common thing seems to be the Albany/Sacramento model of putting the state government in some pretty random town that rapidly attracts a reputation (whether deserved or not I couldn’t say in the case of most places, but Albany is pretty terrible and August, ME is far down my list of nice spots in Maine) for being unpleasant.