nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2006‒01‒24
35 papers chosen by
Bernardo Batiz-Lazo
Bristol Business School

  1. The Evolution of Top Incomes: A Historical and International Perspective By Thomas Piketty; Emmanuel Saez
  2. 'Home Biases', 19th Century Style By Flandreau, Marc
  3. Did Vasco da Gama Matter for European Markets? Testing Frederick Lane's Hypotheses Fifty Years Later By O'Rourke, Kevin H; Williamson, Jeffrey G
  4. Real Business Cycle Theory and the Great Depression : The Abandonment of the Absentionist Viewpoint By Michel, DE VROEY; Luca, PENSIEROSO
  5. Marshall’s Influence on Swedish Economic Thought By Sandelin, Bo
  6. War and the American Economy By Hugh Rockoff
  7. Stock Markets and Business Cycle Comovement in Germany Before World War I: Evidence from Spectral Analysis By Ritschl, Albrecht; Uebele, Martin
  8. Steam Power, Establishment Size, and Labor Productivity Growth in Nineteenth Century American Manufacturing By Jeremy Atack; Fred Bateman; Robert Margo
  9. The 1920s and the 1990s in Mutual Reflection By Gordon, Robert J
  10. Hours of Work in Old and New Worlds: The Long View, 1870-2000 By Michael Huberman; Chris Minns
  11. Does Financial Integration Spur Economic Growth? New Evidence from the First Era of Financial Globalization By Moritz Schularick; Thomas M. Steger
  12. Sustainability of Portuguese Fiscal Policy in Historical Perspective By Carlos José Fonseca Marinheiro
  13. Capitalizing Patriotism: The Liberty Loans of World War I By Sung Won Kang; Hugh Rockoff
  14. Marion Clawson's Contribution to Forestry By Sedjo, Roger
  15. Border Wars: Tax Revenues, Annexation, and Urban Growth in Phoenix By Carol E. Heim
  16. Hope springs eternal… French bondholders and the Soviet Repudiation (1915-1919) By John Landon-Lane; Kim Oosterlinck
  17. Rethinking Scientific Management By Nelson, Robert
  18. The Determinants of Multinational Banking during the First Globalization, 1870-1914 By Stefano Battilossi
  19. The Long Run Impact of Bombing Vietnam By Edward Miguel; Gerard Roland
  20. Long Memory at the Long Run and at the Cyclical Frequencies:Modelling Real Wages in England: 1260-1994 By Luis Alberiko Gil-Alana; Guglielmo M.Caporale
  21. The 1975-78 Anti-Inflation Program in Retrospect By John Sargent
  22. The Negative Trade-off Between Risk and Incentives: Evidence from the American Whaling Industry By Eric Hilt
  23. Travelling Along the Third Way. A Swedish Model of Stabilisation, Equity and Growth By Erixon, Lennart
  24. La demanda por importaciones en Colombia 1959--1972 By Jorge García García
  25. Y-a-t-il des lois naturelles en économie ? Histoire et portée du concept de "taux de chômage naturel" By Christophe Lavialle
  26. Did Medicare Induce Pharmaceutical Innovation? By Daron Acemoglu; David Cutler; Amy Finkelstein; Joshua Linn
  27. U.S. Antitrust and EU Competition Policy: Where has the Former Been, Where is the Latter Going? By Stephen Martin
  28. Silvio Frondizi y el surgimiento de la nueva izquierda By Samuel Amaral
  29. Economía matemática: antecedentes, evolución y algunos desarrollos recientes By Álvaro Hernando Chávez
  30. ‘Chariots of Fire’: The Evolution of Tank Technology, 1915-1945   By Castaldi, C.; Fontana, R.; Nuvolari, A.
  31. Connecticut's Spending Cap: It's History and An Alternative Spending Growth Rule By Stan McMillen; Mark Sheridan; Bryant Goulding; Patrick Flaherty; Sharan Sharma; Bingbo Hu
  32. Two decades of reform : the changing organization dynamics of Chinese industrial firms By Nabeshima, Kaoru; Yusuf, Shahid
  33. Scientific Revolution. A Farewell to EconWPA. By Alexander Harin
  34. Fast-Falling Barriers and Growing Concentration: The Emergence of a Private Economy in China By Sean Dougherty; Richard Herd
  35. John Rawls's Justice as Fairness: anti-foundationalism, deliberative democracy, and cosmopolitanism By Fabrizio Trifiró

  1. By: Thomas Piketty; Emmanuel Saez
    Abstract: This paper summarizes the main findings of the recent studies that have constructed top income and wealth shares series over the century for a number of countries using tax statistics. Most countries experience a dramatic drop in top income shares in the first part of the century due to a precipitous drop in large wealth holdings during the wars and depression shocks. Top income shares do not recover in the immediate post war decades. However, over the last 30 years, top income shares have increased substantially in English speaking countries but not at all in continental Europe countries or Japan. This increase is due to an unprecedented surge in top wage incomes starting in the 1970s and accelerating in the 1990s. As a result, top wage earners have replaced capital income earners at the top of the income distribution in English speaking countries. We discuss the proposed explanations and the main questions that remain open.
    JEL: D3 J3
    Date: 2006–01
  2. By: Flandreau, Marc
    Abstract: This paper discusses the existence of 'home' biases in the 19th century global capital market, whereby colonies appear to have received a 'disproportionate' amount of capital from their metropolis. Starting from a discussion of the Bulow Rogoff (1989) problem, we argue that imperial links provided a natural institutional framework to make pre-commitment credible by ensuring an adequate degree of willingness to pay. This was not because imperial rule provided coercion or punishment, but rather because it supplied a legal framework that effectively suppressed the « sovereign » nature of colonial debts. We conclude that the greater facility with which capital migrated in the 19th century has much to do with the fact that colonies were more akin to the 'regions' of modern countries
    Keywords: colonies; home bias; Lucas paradox; willingness to pay
    JEL: F31 N32
    Date: 2005–12
  3. By: O'Rourke, Kevin H; Williamson, Jeffrey G
    Abstract: In his seminal publications between the 1930s and 1960s, Frederick Lane offered three hypotheses regarding the impact of the Voyages of Discovery that have guided debate ever since. First, pepper and other spice prices did not rise in European markets in the century before the 1490s, and thus could not have ‘pulled in’ the oceanic explorations by their rising scarcity. Second, Portuguese circumnavigation of Africa did not lower European spice prices across the 16th century, implying that the discovery of the Cape route had no permanent effect on Euro-Asian market integration. Third, 15th century Venetian spice markets were already well integrated with those in Iberia and northern Europe, implying that Portugal could not have had an intra-European market integrating influence in the 16th century. Lane developed these influential hypotheses by relying heavily on nominal spice prices from Venice and the Levant. This paper revisits Lane’s hypotheses by using instead relative spice prices, that is, accounting for inflation. It also draws on evidence from Iberia and northern Europe. In addition, it explores European market integration before and after 1503, the year when da Gama returned from his financially successful second voyage. Lane’s three hypotheses are rejected: the impact of the Portuguese was profound on all fronts. We conclude by using a simple model of monopoly and oligopoly to decompose the sources of the Cape route’s impact on European markets.
    Keywords: market integration; spice trade; Voyages of Discovery
    JEL: F14 N7
    Date: 2005–12
    Abstract: Is the Great Depression amenable to real business cycle theory ? In the 1970s and 1980s Lucas and Prescott took an abstentionist stance. They admitted that, because of its exceptional character, an explanation of the Great Depression was beyond the grasp of the equilibrium approach to the business cycle. However while Lucas stuck to this view, we show that Prescott changed his mind at the end of the 1990s breaking his earlier self-imposed restraint. In this paper we document this evolution of opinion and produce a first assessment of real business cycle models of the Great Depression. We claim that the fact of having consctructed an equilibrium model of the Great Depression constitutes a methodological breakthrough. However, as far as substance is concerned, we argue that the contribution of real business cycle literature on the Great Depression is slim, and does not gain the upper hand over the works of economic historians. We conclude suggesting that historical episodes may exist for which the modelisation method of real business cycle theory is inferior to the ‘tick’ sort of analysis that is proper to econoic historians.
    Keywords: Great Depression, New Classical Marcroeconomics, Real Business Cycle Theory, Equilibrium, Unemployment
    JEL: B22 N10 E32
    Date: 2005–11–15
  5. By: Sandelin, Bo (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Alfred Marshall was by no means ignored, but his influence on Swedish economic thought at the end of the 19th and beginning of the 20th century was limited. On the general level,science and culture in Sweden were more dependent on the German-language countries. In a small country like Sweden, where there were only two chairs in economics in 1900, and eight in 1940,a few individuals embodied the development of the discipline. Knut Wicksell’s theory of value and capital was mainly influenced by Jevons, Menger, Walras and, especially, Böhm-Bawerk. Gustav Cassel was inspired especially by Walras, but preferred Marshall to Böhm-Bawerk. There are not many references to Marshall in Heckscher's writings, but there may have been an indirect influence. Myrdal was well aware of Marshall's positions, but Marshall does not seem to have been an especially important source of inspiration. Marshall's Principles and Economics of Industry can be found in students' reading lists at Swedish universities during the first decades of the 20th century, often as optional literature. <p>
    Keywords: Marshall; Sweden; Wicksell; Cassel; Heckscher; Myrdal
    JEL: B13 B20 B31
    Date: 2006–01–03
  6. By: Hugh Rockoff (Rutgers)
    Abstract: This paper provides brief introductions to four questions: (1) to what extent did economic forces cause America's wars, (2) after going to war, how has the United States managed the reallocation of resources, (3) how has the United States financed the reallocation of resources, and (4) what have been the economic legacies of war.
    Keywords: War;
    JEL: N4
    Date: 2005–04–21
  7. By: Ritschl, Albrecht; Uebele, Martin
    Abstract: This paper examines the comovement of the stock market and of real activity in Germany before World War I under the efficient market hypothesis. We employ multivariate spectral analysis to compare rivaling national product estimates to stock market behaviour in the frequency domain. Close comovement of one series with the stock market enables us to decide between various rivaling business cycle chronologies. We find that business cycle dates obtained from deflated national product series are severely distorted by interference with the implicit price deflator. Among the nominal series, the income estimate of Hoffmann (1965) correlates best with the stock market, while the tax based estimate of Hoffmann and Müller (1959) is too smooth especially before 1890. We find impressive comovement between the stock market and nominal wages, a sub-series of Hoffmann's income estimate. We can show that a substantial part of this nominal wage series is driven by data on real investment activity. Our findings confirm the traditional business cycle chronology for Germany of Burns and Mitchell (1946), and lead us to discard later attempts to date the business cycle.
    Keywords: business cycle chronology; efficient market hypothesis; Imperial Germany; spectral analysis
    JEL: E32 E44 N13
    Date: 2005–12
  8. By: Jeremy Atack; Fred Bateman; Robert Margo
    Abstract: We use establishment level data from the 1850-80 censuses of manufacturing to study the correlates of the use of steam power and the impact of steam power on labor productivity growth in nineteenth century American manufacturing. A key result is that establishment size mattered: large establishments, as measured by employment, were much more likely to use steam power than smaller establishments. Controlling for firm size, location, industry, and other establishment characteristics, steam powered establishments had higher labor productivity than establishments using hand or animal power, or water power. We also find that the impact of steam on labor productivity was increasing in establishment size. The diffusion of steam power was an important factor behind the growth of labor productivity, accounting for 22 to 41 percent of that growth between 1850 and 1880, depending on establishment size.
    JEL: N61
    Date: 2006–01
  9. By: Gordon, Robert J
    Abstract: This paper develops a new analysis of the U. S. economy in the 1920s that is illuminated by contrasts with the 1990s, and it also re examines the causes of the Great Depression. In both the 1920s and the 1990s the acceleration of productivity growth linked to the delayed effects of previously invented 'general purpose technologies' stimulated an increase in fixed investment that became excessive and proved to be unsustainable, while the productivity acceleration helps to account for low inflation in both decades. The uncanny parallel of the stock market boom, bubble, and collapse in 1995-2001 as in 1924-1930, reminds us that business cycles emerge from the complex interplay of multiple factors, not just one. Common elements between the two decades are overshadowed by differences, including the much larger share of agricultural output in the 1920s, the weakness of farm prices throughout the decade, and the role of collapsing farm prices in the pervasive post-1929 downward shift in aggregate demand. Another partly related difference was a high volatility of inventory accumulation that reflected the larger share of agriculture and manufacturing in the economy of the 1920s. Failures of public policy in the 1920s included the absence of deposit insurance, the unit-banking regulations that prevented the diversification of financial risk across regions, and the low margin requirements that exacerbated swings in stock market prices. Further, the 1920s witnessed the advent of protectionism and the sharp curtailment of immigration. The stability of the American economy after the 2000-01 collapse of investment and the stock market proves that good public policy matters, going beyond the narrowly defined operations of monetary and fiscal policy. Such highly diverse policies as banking regulation, deposit insurance, margin rules, reduction of tariffs, and loose restrictions on immigration all combine to make today's American economy more stable and less fragile than in the 1920s.
    Keywords: bubble; consumption; Great Depression; investment; overinvestment; Productivity; Stock Market
    JEL: E0 E21 E22 E32 N00 N12
    Date: 2005–12
  10. By: Michael Huberman; Chris Minns
    Abstract: This paper brings a long-term perspective to the debate on the causes of worktime differences among OECD countries. Exploiting new data sets on hours of work per week, days at work per year, and annual work hours between 1870 and 2000, we challenge the conventional view that Europeans began to labor fewer hours than Americans only in the 1980s. Like Australians and Canadians, Americans tended to work longer hours, after controlling for income, beginning around 1900. Labor power and inequality, which are held to be important determinants of worktime after 1970, had comparable effects in the period before 1913. To explain the longstanding predisposition of the New World to give more labor time, we examine the effects of three initial factors in 1870, culture, human capital, and geography on hours of work in 2000. We find that geography – the low population density of the New World that has led to shorter commutes and lower fixed costs of getting to work – has had an enduring impact on supply of labor time.
    Date: 2005–12–15
  11. By: Moritz Schularick; Thomas M. Steger (Institute of Economic Research (WIF), Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: Does international financial integration boost economic growth? The question has been discussed controversially for a long time, and a large number of studies has been devoted to its empirical investigation. As of yet, robust evidence for a positive impact of capital market integration on economic growth is lacking, as documented by Edison et al. (2002). However, there is substantial narrative evidence from economic history that highlights the contribution European capital made to economic growth of peripheral economies during the so-called first age of financial globalization before 1914. For this paper, we have compiled the first comprehensive data set to test econometrically if capital market integration had a positive impact on economic growth before WW1. Using the same models and techniques as contemporary studies, we show that there was indeed a significant and robust growth effect of international financial integration in the first era of financial globalization. Our temptative explanation for this marked difference between now and then stresses property rights protection as a prerequisite for the standard neoclassical model to work properly.
    Keywords: International financial integration; Economic growth; First era of globalization.
    JEL: F15 F21 F30 N10 N20 O11 O16
    Date: 2006–01
  12. By: Carlos José Fonseca Marinheiro (Universidade de Coimbra and GEMF)
    Abstract: This paper analyses the sustainability of Portuguese public finances, making use of a long dataset with more than a full century of observations. The use of such a long dataset is appropriate because both unit root and cointegration tests require a long period of data. The sustainability testing procedure is based on unit root and cointegration tests. We find considerable evidence in favour of sustainability for the 1903-2003 period. The overall conclusion of sustainability for the 1903-2003 period is not maintained for the more recent 1975-2003 period, which is characterised by the largest GDP deficit ratios of our sample. This latter period appears to signal a shift to an unsustainable path in Portuguese fiscal policy. Hence, our results suggest that fiscal consolidation efforts must, in fact, be continued in Portugal.
    Keywords: Fiscal sustainability, sustainability of public debt, intertemporal budget constraint, government deficits and debt, Portugal
    JEL: E60 H60
    Date: 2005–12
  13. By: Sung Won Kang; Hugh Rockoff
    Abstract: In World War I the Secretary of the Treasury, William Gibbs McAdoo, hoped to create a broad market for government bonds, the famous Liberty Loans, by following an aggressive policy of "capitalizing patriotism." He called on everyone from Wall Street bankers to the Boy Scouts to volunteer for the campaigns to sell the bonds. He helped recruit the nation's best known artists to draw posters depicting the contribution to the war effort to be made by buying bonds, and he organized giant bond rallies featuring Hollywood stars such as Douglas Fairbanks, Mary Pickford, and Charlie Chaplin. These efforts, however, enjoyed little success. The yields on the Liberty bonds were kept low mainly by making the bonds tax exempt and by making sure that a large proportion of them was purchased directly or indirectly by the Federal Reserve. Patriotism proved to be a weak offset to normal market forces.
    JEL: N2
    Date: 2006–01
  14. By: Sedjo, Roger (Resources For the Future)
    Abstract: Marion Clawson passed away in April 1998 at the age of 92. He was a giant in the field of resource and environmental economics who devoted the last decade and one-half of his professional career to forest and forest related issues. He produced over 30 professional books and hundreds of papers. This paper presents a broad overview of his career as an economist, with a focus on his work in and influence on forestry and forest policy. From the early 1970s through to his last professional book in 1983, and his final professional contributions in the mid 1990s, Clawson devoted most of his professional efforts to forest issues. His influence on forests and forest policy was substantial, especially in the context of public policy toward America's publicly owned forested lands. He served as an external critic of the Forest Service, regularly calling for greater attention to be given to issues of economic efficiency in the management of public lands. His influence was probably greatest during the period from the early 1970s, when his service on the President's Advisory Panel on Timber and the Environment stimulated his interest in forestry, through the mid 1980s. During this period he authored several books on forestry and a number of influential articles.
  15. By: Carol E. Heim (University of Massachusetts Amherst)
    Abstract: Phoenix and neighboring municipalities, like many in the South and West, pursued a growth strategy based on annexation in the decades after World War II. This paper explores the link between annexation and competition for tax revenues. After discussing arguments for annexation, it traces the history of annexation in the Phoenix metropolitan area. A long-running series of "border wars" entailed litigation, pre-emptive annexations, and considerable intergovernmental conflict. The paper argues that tax revenues have been a key motivation for annexation, particularly since the 1970s. It then considers several related policy issues and argues that while opportunities for annexation are becoming more limited, competition for tax revenues (particularly sales tax revenues) continues to be fierce and to create dilemmas for municipalities in the region. JEL Categories: H71, H77, N92, R51
    Keywords: annexation, municipal revenues, sales tax, Phoenix, urban growth, intergovernmental relations
    Date: 2006–01
  16. By: John Landon-Lane (Rutgers University); Kim Oosterlinck (Université Libre de Bruxelles)
    Abstract: By their extreme nature, repudiations rarely occur. History is therefore crucial to analyze their impact on bond prices. This paper provides an empirical study based on an original database: prices of a Tsarist bond traded in Paris before and after its repudiation by the Soviets. A structural vector autoregression is used to identify shocks to this bond that are orthogonal to shocks hitting a proxy for the Paris bond market, the French 3% rente. French market shocks are thus disentangled from repudiation specific shocks hitting the Russian bond. Consistent with expectations no major Russian shocks appears before the 1917 revolution. For 1918, shocks are mainly related with bailouts or hopes of partial bailouts. In 1919, however, the nature of shocks changes as they can be explained either by the negotiations with the Soviets or by the fate of the White Armies. In view of these elements, we argue that the bonds’ value were subject to a “Peso problem”. Their prices essentially reflected expected extreme events that never took place.
    Keywords: repudiation; sovereign debt;
    JEL: F34 G1 N24
    Date: 2005–11–16
  17. By: Nelson, Robert
    Abstract: The U.S. Forest Service was founded early in the twentieth century with the progressive mission to achieve the scientific management of the forests of the United States. Scientific management was in part a political theory, holding out a model by which social values and technical considerations should function separately in the political process. However, since the 1970s the autonomy of Forest Service professionals to manage the national forests has been undermined by judicial decisions, White House and other executive branch oversight, and routine Congressional interference. Ecological management is a new attempt in the 1990s to revive scientific management but it is not likely to be any more successful than previous efforts. Instead, a new governing paradigm is needed for the national forests. This new vision is likely to involve a turn towards greater decentralization of governing responsibility than is prescribed by the scientific management model.
  18. By: Stefano Battilossi
    Abstract: What determined the multinational expansion of European banks in the pre1914 era of globalization? And how were banks’ foreign investments related to other facets of the globalizing world economy such as trade and capital flows? The paper reviews both the contemporary and historical literature, and empirically investigates these issues by using an original panel data based on a sample of more than 50 countries. The dependent variable, aiming at measuring the intensity of crossborder activities operated by banks from foreign locations, is the number of foreign branches and subsidiaries of British, French and German banks. Explanatory variables are mainly selected on the base of the eclectic theory of multinational banking, but also include geographical factors (as suggested by gravity models) and institutional indicators advanced by recent studies inspired by new institutional economics, such as legal families and adherence to the Gold Standard. These regressors captures the impact of economic integration (trade and capital flows), informational development, institutional and economic characteristics of the hostmarket, as well as exchange rate and country risk factors, on banks’ foreign investment decisions. The results suggest that, due to its prevailing ‘colonial’ features, pre1914 multinational banking does not fit easily into augmented gravity models. The role of trade as a key determinant of banks expansion overseas is qualified, and both institutional factors as well as competitive interaction emerge as critical determinants of banks’ decisions to invest in foreign countries. Moreover, the systematic comparison of determinants of foreign investiments of banks from major core countries reveals that multinational banking was not a homogenous phenomenon, as banks of different nationality responded differently to economic, geographical and institutional factors.
    Date: 2005–12
  19. By: Edward Miguel; Gerard Roland
    Abstract: We investigate the impact of U.S. bombing on later economic development in Vietnam. The Vietnam War featured the most intense bombing campaign in military history and had massive humanitarian costs. We use a unique U.S. military dataset containing bombing intensity at the district level (N=584). We compare the heavily bombed districts to other districts controlling for baseline demographic characteristics and district geographic factors, and use an instrumental variable approach exploiting distance to the 17th parallel demilitarized zone. U.S. bombing does not have a robust negative impact on poverty rates, consumption levels, infrastructure, literacy or population density through 2002. This finding suggests that local recovery from war damage can be rapid under certain conditions, although further work is needed to establish the generality of the finding in other settings.
    JEL: E2 O5 P5 H7
    Date: 2006–01
  20. By: Luis Alberiko Gil-Alana; Guglielmo M.Caporale
    Abstract: This paper examines historical data on daily real wages in England for the time period 1260-1994 by means of new statistical techniques suitable for modelling long memory both at the long run and the cyclical frequencies. Specifically, it uses a procedure due to Robinson (1994) which is based, for the cyclical component, on Gegenbauer processes. We test for the presence of unit (and fractional) roots at both the zero and the cyclical frequencies, and find that the root at the zero frequency plays a much more important role than the cyclical one, though the latter frequency also has a component of long memory behaviour. It also appears that the trending (zero frequency) component is nonstationary while the cyclical one is stationary, with shocks having permanent effects on the former, but transitory effects on the latter. Similar conclusions are reached when allowing for a break in 1875 (the beginning of the Second Industrial Revolution).
    JEL: C15 C22
  21. By: John Sargent
    Abstract: The author provides an overview of the 1975–78 Anti-Inflation Program (AIP), in a background document prepared for a seminar organized by the Bank of Canada to mark the AIP's 30th anniversary. After reviewing Canada's experience with, and policy response to, inflation in the decade preceding the introduction of the AIP, the author sets out the elements of the AIP's monetary and fiscal policy, and prices and incomes controls. He then compares the program's inflation objectives with the actual course of inflation and aggregate demand during, and immediately after, the AIP. Drawing on existing analyses of the program's monetary and fiscal policy and controls elements, the author discusses why the program's specific targets and general objectives were not met. He concludes, with the benefit of hindsight, that-while external factors contributed to the failure to meet objectives-monetary and fiscal policy were not suc h as to give the AIP a strong chance of fully succeeding. The program's controls element has generally been assessed more favourably, although certain specifics of the controls design can be questioned. The author briefly considers parallels with recent retrospective considerations of monetary and fiscal policy over the same period in the United States. He also attempts to draw some general lessons from the AIP experience and, more generally, from the 1970s experience. Given that the AIP was an early attempt at a form of inflation targeting, these include lessons that may be relevant to current policy with respect to inflation.
    Keywords: Credibility; Fiscal policy; Inflation and prices; Inflation targets; Monetary policy framework; Monetary policy implementation
    JEL: E31 E52 E63 E64 E65
    Date: 2005
  22. By: Eric Hilt
    Abstract: This paper analyzes the trade-off between risk and incentives in the share contracts of the American whaling industry. Using a newly-collected panel of 5,378 individuals who sailed on whaling voyages from 1855-68, the response of sailors' compensation to an increase in risk is estimated. The risks used to identify this response resulted from the commerce-raiding naval vessels of the Confederacy during the Civil War. As the Confederate cruisers sailed primarily in the Atlantic, and therefore posed far less of a threat to whaling voyages to other oceans, a quasi-experimental approach, focussing on the differences between Atlantic voyages compared to others, is implemented. The results support the existence of a negative trade-off between risk and incentives in the industry's contracts. Moreover, evidence is found of selection among less risk-averse sailors and merchants into riskier voyages during the war.
    JEL: N5 L2 J3
    Date: 2006–01
  23. By: Erixon, Lennart (Dept. of Economics, Stockholm University)
    Abstract: The Swedish economic policy to combine full employment and equity with price stability and economic growth was developed by two trade union economists shortly after World War II. Through the use of extensive employment policy measures, a tight fiscal policy and a wage policy of solidarity, the Rehn-Meidner model represents a unique third way between Keynesianism and monetarism. This essay analyses the application and performance of the Rehn-Meidner model in Sweden. Although never consistently applied, it is possible to distinguish a golden age for the model from the late 1950s to the early 1970s. In the 1970s and the 1980s, governments abandoned the restrictive macroeconomic means of the model and were thus unable to combine low rates of unemployment with low inflation and high economic growth. Since the early 1990s, Sweden has not met the requirement of full employment in the Rehn-Meidner model. Recent declarations by the EU to prioritise full employment once again but without giving up the objectives of price stability and growth legitimise a renewed <p> interest in the model.
    Keywords: Swedish model; Rehn-Meidner model; third way; labour market policy; solidarity wage policy; productivity growth; fiscal policy; unemployment; inflation
    JEL: E24 E31 E62 J23 J31 J62 O23
    Date: 2005–12–01
  24. By: Jorge García García
    Abstract: El Centro de Estudios Económicos Regionales (CEER) del Banco de la República en Cartagena, ha decidido incluir dentro de la serie de Cuadernos sobre Historia Económica y Empresarial el artículo inédito del economista cordobés Jorge García García, “La Demanda por Importaciones en Colombia 1959 – 1972” , que fue escrito en 1973. La razón por la cual consideramos pertinente la publicación de este artículo es que la evaluación de los efectos redistributivos entre las regiones que tuvieron las políticas de industrialización por sustitución de importaciones (ISI) no se ha hecho aun en forma sistemática en nuestro país. Cuando ello se haga se podrá ver todo lo que contribuyeron esas políticas al rezago económico de la Costa Caribe. Desde fines de la década de 1940, el país se embarco en forma activa en una serie de políticas de comercio exterior, de crédito de fomento y de compras del Estado, que subsidiaron el avance de la ISI. Pero esas políticas no fueron neutrales para la actividad económica regional, pues se subsidió principalmente al eje Bogotá-Medellín-Cali, en detrimento de la periferia del país y de las regiones agropecuarias. El trabajo de Jorge García García, constituye una evaluación rigurosa, con los métodos estadísticos que eran usuales a comienzos de la década de 1970, del costo fiscal para el gobierno colombiano entre 1959 y 1972 de haber utilizado restricciones cuantitativas en vez de aranceles o ajustes de la tasa de cambio para solucionar los problemas de desequilibrio en el mercado de divisas. Los cálculos a que llega García García muestran la magnitud de solo un aspecto de las políticas de fomento de la industrialización por sustitución de importaciones. Como lo podrá analizar el lector, entre 1959 y 1972 el costo fiscal de las restricciones cuantitativas al comercio exterior como porcentaje de los ingresos corrientes del gobierno fue como mínimo del 25%, pero llego a ser del 73% en 1964 y 1965. Debido a que los subsidios a los importadores (concentrados en Bogotá, Cali y Medellín) los financiaban las regiones agropecuarias del país, como la Costa Caribe, ello contribuyo al rezago relativo de la Costa Caribe en el período 1945 – 1989.
    Date: 2006–01–30
  25. By: Christophe Lavialle (LEO - Laboratoire d'économie d'Orleans - - CNRS : FRE2783 - Université d'Orléans)
    Abstract: L'objet de la communication est de décliner le thème du colloque d'une manière spécifique, en s'interrogeant sur la question de savoir s'il existe, non pas des lois, mais des lois "naturelles" en économie, et ce à propos d'un thème très précis : le taux de chômage "naturel".<br />L'article comprend deux directions :<br />- une première partie consiste à revenir sur l'histoire et l'actualité du concept forgé par Friedman, et relève ainsi de la direction "historique" suggérée dans l'appel à communication ("Quelles sont les petites ou grandes lois que les économistes ont énoncées au cours des temps modernes, et comment ont évolué les représentations qu'ils s'en sont donné à cette occasion ?") Elle est l'occasion de souligner les limites de l'analogie revendiquée par Friedman entre sa propre théorie du taux naturel de chômage et la théorie wicksellienne du taux naturel d'intérêt, et, en conséquence, les divergences dans la représentation qu'ont les deux auteurs de l'économie monétaire , de la monnaie et des politiques monétaires. Elle est aussi l'occasion, à la lumière de ces développements, de souligner les glissements que Friedman introduit du même coup (en usant d'une forme "d'argument d'autorité") dans le contenu du débat macroéconomique.<br />- une seconde partie relève de la direction "épistémologique" ("Quelle signification donne-t-on ou a-t-on donné aux notions de lois naturelles ?"). Elle s'interroge en l'occurence sur la portée de la référence à la notion de "taux de chômage naturel", en s'efforçant de mettre en parallèle la critique de la notion de "naturalité" du chômage, véhiculée en particulier par les travaux sur les phénomènes d'hystérèse des taux de chômage d'équilibre, et celle menée en son temps par Sraffa (1932) à propos du concept de "taux d'intérêt naturel" forgé par Wicksell et repris par Hayek.<br />L'article se conclut sur une discussion de la portée normative de la référence à la "naturalité" des lois économiques.
    Keywords: Taux naturel de chômage ; taux naturel d'intérêt ; hystérèse des taux de chômage ; lois économiques ; lois naturelles ; Friedman ; Sraffa ; Wicksell ; Hayek
    Date: 2006–01–10
  26. By: Daron Acemoglu; David Cutler; Amy Finkelstein; Joshua Linn
    Abstract: The introduction of Medicare in 1965 was the single largest change in health insurance coverage in U.S. history. Many economists and commentators have conjectured that the introduction of Medicare may have also been an important impetus for the development of new drugs that are now commonly used by the elderly and have substantially extended their life expectancy. In this paper, we investigate whether Medicare induced pharmaceutical innovations directed towards the elderly. Medicare could have played such a role only if two conditions were met. First, Medicare would have to increase drug spending by the elderly. Second, the pharmaceutical companies would have to respond to the change in market size for drugs caused by Medicare by changing the direction of their research. Our empirical work finds no evidence of a "first-stage" effect of Medicare on prescription drug expenditure by the elderly. Correspondingly, we also find no evidence of a shift in pharmaceutical innovation towards therapeutic categories most used by the elderly. On the whole, therefore, our evidence does not provide support for the hypothesis that Medicare had a major effect on the direction of pharmaceutical innovation.
    JEL: H51 I18 O33 O38 L65
    Date: 2006–01
  27. By: Stephen Martin (Department of Economics, Krannert School of Management, Purdue University)
    Abstract: The earliest U.S. antitrust laws were adopted after technological changes — most importantly, the development of a national railway network — made the U.S. political union a single economic market. They were adopted with the stated, and no doubt largely sincere, purposes of preventing collusion and strategic entry-deterring behavior. Early application of the antitrust laws relied on a rule of competition to determine whether business conduct was or was not permitted. This has evolved into an explicit evaluation of the impact of businesses practices on consumer welfare, conceived of and measured in an economic sense. EU competition policy was adopted in advance of economic integration. It differed sharply from the traditional policies of the original EC6 member states toward business behavior. It was adopted with the stated, and most likely sincere, purpose of furthering economic integration, and to this end prohibited practices that were seen as distorting competition. Early applications of competition policy, particularly in the European Coal and Steel Community, may have had perverse effects. There are indications of an evolution towards an economic performance standard in the European Union as well.
    Keywords: US antitrust policy, EU competition policy, European Union, Economic governance, regulation
    JEL: L40 L41 L42 L51 L97 L98
    Date: 2005–12
  28. By: Samuel Amaral
    Abstract: Silvio Frondizi fue uno de los teóricos que dio origen a la nueva izquierda de los sesenta. Aunque ésta surgió alrededor de 1960. Las raíces teóricas de la nueva izquierda se hunden en los debates del marxismo de las décadas anteriores. El papel de Silvio Frondizi, sin embargo, fue más de partero que de guía teórico. Su principal contribución fue la creación, a mediados de la década del cincuenta, del primer grupo de izquierda que no reconocía sus antecedentes en el Partido Comunista (PC) ni en sector alguno del trotskismo, el Movimiento Izquierda Revolucionaria (MIR) Praxis. Es interesante la interpretación de Frondizi del peronismo quien lo hizo desde la perspectiva de su teoría de la integración. Según ésta, la economía mundial se había unificado bajo el predominio del imperialismo norteamericano, por lo que las condiciones objetivas de la revolución estaban presentes en la Argentina y América Latina. Esa revolución no podía ser sino la revolución socialista, porque la burguesía nacional había fracasado, al menos en la Argentina, en su último intento de revolución democrático burguesa, que había sido el peronismo. Caracterizó al peronismo como demagogismo y dictadura policial (pero no clasista), encontró que tenía aspectos positivos y negativos. Los aspectos positivos eran la integración de la masa a la vida política y el desarrollo de su conciencia de clase. El aspecto negativo era que el peronismo tras su fracaso en concretar la revolución democrático burguesa estaba siendo abandonado por la clase obrera y tras ganar el apoyo de la pequeña burguesía se deslizaría hacia el fascismo clerical o falangismo. La solución para esto era la revolución socialista.
    Date: 2005–12
  29. By: Álvaro Hernando Chávez
    Abstract: Se presenta aquí, en forma breve, el origen de la matematización económica y el campo de la economía matemática. Un enfoque histórico inicial divide dicho campo en un primer periodo denominado marginalista, otro donde se utiliza la teoría de los conjuntos y modelos lineales y por último un periodo que integra los dos anteriores. Posteriormente, se analiza la evolución de la Teoría del Equilibrio General desde Quesnay, pasando por Walras y desarrollos posteriores hasta su culminación con los trabajos de Arrow, Debreu y sus contemporáneos. Finalmente, se describe la influencia de las matemáticas, en especial de la optimización dinámica, en la teoría macroeconómica y a otras áreas de la economía.
    Date: 2005–07–01
  30. By: Castaldi, C. (Ecis, Technische Universiteit Eindhoven); Fontana, R. (Bocconi University, Milan); Nuvolari, A. (Ecis, Technische Universiteit Eindhoven)
    Keywords: simulation, models
    Date: 2006
  31. By: Stan McMillen; Mark Sheridan; Bryant Goulding; Patrick Flaherty; Sharan Sharma; Bingbo Hu
    Abstract: State spending growth rules and an alternative for Connecticut
    Keywords: state tax policy, spending growth rules, tax and expenditure limits, TELs
    JEL: H72 H20
    Date: 2005–09
  32. By: Nabeshima, Kaoru; Yusuf, Shahid
    Abstract: Since the early 1980s, China has begun gradually integrating with the global system. In doing so the country has moved toward its own unique brand of market socialism, which recognizes private ownership, and is adopting market institutions and pursuing industrial change within the framework of an urban economic environment. The process of transition has now permeated every corner of Chinese life and no organization has been left untouched. Yet industrial organization in China-especially in the state sector-has been slow to shed many of the distinctive structural characteristics of the old line Maoist era state enterprises. The main prong of the industrial strategy in support of urban change is ownership reform that transforms state-owned enterprises into corporate entities with majority state ownership or places them wholly in private hands, in the process also bolstering the incentives for and the dynamism of the private sector. While the central government spearheads the ownership reform initiative, in the majority of cases the actual implementation is in the hands of municipal, county, and prefectural governments that must coordinate their efforts with other factors influencing urban changes. This paper situates industrial change in China within the context of urban development and examines the interplay of broad reform strategy with local implementation, and its actual practice by the reformed firms.
    Keywords: Municipal Financial Management,Private Participation in Infrastructure,Economic Theory & Research,State Owned Enterprise Reform,Microfinance
    Date: 2006–01–01
  33. By: Alexander Harin (Modern University for the Humanities)
    Abstract: This is a paper in honor of EconWPA and of those who have supported it. The role of EconWPA in creating and developing the feasible future scientific revolution in one or more fields of economic theory is reviewed.
    Keywords: scientific revolution, scientific evolution, bank, market, industry, development, investment, risk
    JEL: C D E G C7 D81
    Date: 2005–12–31
  34. By: Sean Dougherty; Richard Herd
    Abstract: This paper assesses the progress of China’s transition toward a market economy by examining the structure of ownership, productivity, and profitability, as well as the concentration of production across firms, industries and regions. It does this by analyzing a database of firm microdata of the quarter of a million industrial companies in operation during the 1998–2003 period. Results show that the private sector now accounts for more than half of industrial output, compared with barely more than a quarter in 1998, and operates much more efficiently than the public sector. Higher productivity has fed through to profitability, motivating greater regional specialization of production. These changes are consistent with what would be expected in a market-based economy, and suggests that reforms are making rapid progress. This Working Paper relates to the 2005 OECD Economic Survey of China ( <P>La chute rapide des barrières et la concentration croissante de l’activité économique Ce document examine les progrès réalisés par la Chine dans la transition vers une économie de marché en étudiant plus particulièrement la structure de la propriété, la productivité et la rentabilité, ainsi que la concentration de la production à l'échelle des entreprises, des secteurs d'activité et des régions. Pour cela, il analyse une base de microdonnées portant sur 250 000 entreprises industrielles qui étaient en activité au cours de la période 1998-2003. Les résultats montrent que le secteur privé représente désormais plus de la moitié de la production industrielle, contre à peine plus d'un quart en 1998, et qu'il est bien plus efficace que le secteur public. Par ailleurs, l'accroissement de la productivité et ses effets positifs sur la rentabilité de l'activité économique ont entraîné une plus grande spécialisation régionale de la production. Ces évolutions, conformes à ce que l'on peut attendre dans une économie fondée sur le jeu du marché, sont sans doute le signe que les réformes progressent rapidement. Ce Document de travail se rapporte à l'Étude économique de l'OCDE de la Chine, 2005 (
    Keywords: productivity, productivité, transition, transition, restructuring, restructuration, private sector, secteur privé, firm microdata, micro-données d'entreprise, regional concentration, concentration régionale, market economy, économie de marché
    JEL: D4 F15 L11 O12 P23
    Date: 2005–12–16
  35. By: Fabrizio Trifiró
    Abstract: This paper aims at illustrating through a close reading of the works of John Rawls the anti-foundationalist cosmopolitan deliberative democratic approach to liberalism that I have sketched in the IIIS Discussion Paper N.47. I shall argue that despite what some of his critics believe Rawls' liberal theory of justice 1) is not concerned with foundational preoccupations (e.g. Michael Sandel); 2) does not ignore concrete processes of collective deliberation over matters of public interests (e.g. Amy Guttman, Dennis Thomson, Brian Barry); 3) nor does it endorse rigid limits to the scope of democratic deliberation (e.g. Jeremy Waldron, John Gray, Richard Bellamy ). Yet I shall claim, following Andrew Kuper, that 4) there is a real risk of infringing individuals' primary moral significance in trying to stretch too much the limits of liberal toleration in order to accommodate political liberalism with multiculturalism in the international sphere.
    Date: 2005–12–15

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