New Economics Papers
on Business, Economic and Financial History
Issue of 2005‒12‒20
five papers chosen by

  1. Understanding financial derivatives during the South Sea Bubble: the case of the South Sea subscription shares By Gary S. Shea
  2. Recovery from Depression: Australia in an Argentine Mirror: 1895- 1913 By Ian W. McLean
  3. The Great Japanese Stagnation: Lessons for Industrial Countries By Michael M. Hutchison; Takatoshi Ito; Frank Westermann
  4. Trade, Production-Sharing and the Exchange Rate: A Decade of U.S.-Mexican Integration By Sven W. Arndt; Alex Huemer
  5. Developments in the Organization and Finance of Public Agricultural Research in the United States, 1988-1999 By Huffman, Wallace

  1. By: Gary S. Shea
    Abstract: South Sea Company subscription shares were compound call options on the firm’s own original shares. From the description of shares found in 6 Geo. 1, c.4, a theory of their pricing is developed. A method for computing subscription share values is also developed. Calculated theoretical values for subscription shares are compared to the shares’ historical values and a close correspondence between the two is demonstrated. The pricing of the subscriptions appears to have been quite rational and explainable using simple financial economic theory.
    Keywords: South Sea Company, financial revolution, bubble act, compound options, partly-paid shares.
    JEL: N23 G13
    Date: 2005–12
  2. By: Ian W. McLean (University of Adelaide)
    Abstract: The recovery from the 1890s depression in Australia was prolonged, and economic growth 1895-1913 was below that in the comparable settler economies of Argentina and Canada. Why? Australia’s hesitant initial recovery is typically attributed to the imbalances in the economy resulting from the preceding boom, and its further delay to severe drought. Drawing on Argentine experience, it is suggested that additional factors need to be considered. Unlike Argentina, the unwillingness or inability of Australian governments to reschedule foreign debt or devalue the exchange rate exacerbated the slump. And the era of low-cost pioneer farming ended earlier than in Argentina (or Canada).
    Keywords: Australia, 1890s depression, Argentina
    JEL: N10 N16 N17
    Date: 2005–12–13
  3. By: Michael M. Hutchison (University of California, Santa Cruz); Takatoshi Ito (Tokyo University); Frank Westermann (University of Munich)
    Date: 2005–12
  4. By: Sven W. Arndt; Alex Huemer (Lowe Institute of Political Economy, Claremont McKenna College)
    Abstract: This paper examines the effect of cross-border production sharing on the sensitivity of trade to the exchange rate and to other key variables. Theoretically, the response of a country's exports to the exchange rate should decline as the share of exported components for use in the manufacture of its imports rises. Similarly, the response of its imports of end products should decline as the share of its exported components in those imports rises. The response of a country's imports to domestic GDP should decline and the response to the exporting country's GDP should rise as the share of imported components for use in the manufacture of exports rises. These propositions are tested for trade between the U.S. and Mexico, using OLS and VEC techniques and allowing for the impact of NAFTA. The findings broadly confirm the aforementioned priors. In addition to their implications for trade-balance adjustment, these results have potentially important implications for the choice of exchange-rate regime.
    Keywords: trade balance; fragmentation; intra-industry trade; exchange rates; NAFTA.
    JEL: F14 F15 F32
  5. By: Huffman, Wallace
    Abstract: This paper describes major external changes to the U.S. public agricultural research system over 1988-1999; describes the reactions of the public agricultural research system to the external changes, specifying the innovations that have occurred over the last decade; and draws conclusions about the present and future performance of the U.S. research system. The decade of the 1990s brought slow growth to public agricultural research funding. CSREES tried to stimulate greater interests in competitive grant programs. The states have generally resisted this move. A major asymmetry exists in the sharing of transactions costs associated with external peer-reviewed competitive grant programs. This is especially true when the average grant size is small and the average award rate is low.
    Date: 2005–12–09

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