New Economics Papers
on Business, Economic and Financial History
Issue of 2005‒03‒13
four papers chosen by

  1. Financial Crises, 1880-1913: The Role of Foreign Currency Debt By Michael Bordo; Christopher Meissner
  2. House prices in Norway 1819-1989 By Øyvind Eitrheim; Solveig K. Erlandsen
  3. Changes in the world distribution of output-per-worker 1960-98: how a standard decomposition tells an unorthodox story By ; Paul Beaudry; ; Fabrice Collard; ; David A. Green
  4. INTERNATIONAL BUSINESS AND DEVELOPMENT ECONOMICS: A WINNING COMBINATION Generating a World’s View based on Buckley and Casson and Hirschman’s Books By Tamir Agmon

  1. By: Michael Bordo; Christopher Meissner
    Abstract: What is the role of foreign currency debt in precipitating financial crises? In this paper we assemble data for nearly 30 countries between 1880 and 1913 and examine debt crises, currency crises, banking crises and twin crises. We pay special attention to the role of foreign currency and gold clause debt, currency mismatches and debt intolerance. We find fairly robust evidence that more foreign currency debt leads to a higher chance of having a debt crisis or a banking crisis. However, a key finding is that countries with noticeably different backgrounds, and strong institutions such as Australia, Canada, New Zealand, Norway, and the US deftly managed their exposure to hard currency debt, generally avoided having too many crises and never had severe financial meltdowns. Moreover, a strong reserve position matched up to hard currency liabilities seems to be correlated with a lower likelihood of a debt crisis, currency crisis or a banking crisis. This strengthens the evidence for the hypothesis that foreign currency debt is dangerous when mis-managed. We also see that countries with previous default histories seem prone to debt crises even at seemingly low debt to revenue ratios. Finally we discuss the robustness of these results to local idiosyncrasies and the implications from this representative historical sample.
    JEL: F33 F34 N20
    Date: 2005–03
  2. By: Øyvind Eitrheim (Norges Bank); Solveig K. Erlandsen (Norges Bank)
    Abstract: Annual house price indices for four Norwegian cities are presented for the period from 1819 to 1989. The indices are constructed on the basis of nominal housing transaction prices compiled from the real property registers of the cities. Existing Norwegian house prices indices generally cover a few decades and usually start in the mid-1980s. Hence, we present new information about Norwegian house prices for more than 160 years. The house price indices seem to fit well in with historical events and available indicators of the Norwegian economy. The overall trend in nominal house prices is upward sloping over the two centuries. However, in real terms the picture looks different, in particular in the first half of the twentieth century.
    Keywords: Economic history, house prices, repeat sales indices
    JEL: N10 E31 C81
    Date: 2004–11–11
  3. By: ; Paul Beaudry; ; Fabrice Collard; ; David A. Green
    Abstract: Why have some countries done so much better than others over the recent past? In order to shed new light on this issue, this paper provides a decomposition of the change in the distribution of output-per-worker across countries over the period 1960-98. The main finding of the paper is that most of the change in shape of the world distribution of income between 1960-1998 can be accounted for by a very substantial and previously unrecognized change in the parameters driving the growth process. In particular, we show that the role of capital deepening forces - that is the role of investment rates and population growth in affecting output - increased dramatically over the period 1978-98 versus 1960-78, and that this increase can account for almost all the observed changes in the world distribution. In contrast, we do not find any significant effects coming through non-linear convergence mechanisms or increased importance of education; both of which have played prominent roles in recent discussion of economic performance. Our results therefore highlight that the period 1978-98 was particularly advantageous to countries which strongly favored capital accumulation and hence suggests that research aimed at understanding recent differences in economic performances across countries needs to focus on explaining why the social returns to physical capital accumulation where abnormally high over the period 1978-98.
    JEL: O33 O41
    Date: 2004–09
  4. By: Tamir Agmon
    Abstract: Much of the discussion in economics is concerned with growth. Economic growth can be discussed and measured in terms of a national state. It can be also discussed and measured in terms of a corporation, (often using the term value rather than growth). Development Economics is concerned with growth of countries run by governments; International Business is concerned with the behavior and the value of multinational enterprises run by management. This paper is about the interface between the two. The vehicle used in this paper to explore the interface is a comparative analysis between two very influential books; “The Strategy of Development” by Hirschman, (1958), and the “Future of the Multinational Enterprise” by Buckley and Casson, (1976). The main argument of the paper is that Development Economics and International Business do approach a very similar issue, but they do it from two different dimensions perpendicular to each other. Looking at the whole picture, (the matrix as a whole rather than along the two separate vectors), gives the observer a more meaningful picture. This is done in the paper through a critical comparison of the two texts focusing on the two dimensions on internalization, growth and internalization, investment choices and strategies, and multinational enterprises and the dynamics of development.
    Keywords: Development Strategy, International Business Theory
    JEL: F23
    Date: 2004–11–01

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