New Economics Papers
on Business, Economic and Financial History
Issue of 2006‒03‒18
ten papers chosen by

  1. The process of opening. An historical perspective (nineteenth and twentieth centuries) (In French) By Jean-Charles ASSELAIN (CMHE-IFReDE-GRES); Bertrand BLANCHETON (CMHE-IFReDE-GRES)
  2. The Standard of Living in Latin America During the Twentieth Century By Pablo Astorga; Ame E. Bergés; Valpy Fitzgerald
  3. Endogenous Growth and Exogenous Shocks in Latin America during the Twentieth Century By Pablo Astorga; Ame E. Bergés; Valpy Fitzgerald
  4. Unemployment and Real Wages in Weimar Germany By N H Dimsdale; N Horsewood; A van Riel
  5. The Missed Opportunity of IPOs by Tender: A Case Study in British Capital Market Failure By David Chambers
  6. From Farmers to Merchants:A Human Capital Interpretation of Jewish Economic History By Maristella Botticini; Zvi Eckstein
  7. Capital Accumulation, Technological Change, and the Distribution of Income during the British Industrial Revolution By Robert C. Allen
  8. Popish Habits vs. Nutritional Need: Fasting and Fish Consumption in Iberia in the Early Modern Period By Regina Grafe
  9. Fluctuations in a Dreadful Childhood: Synthetic longitudinal height data, relative prices, and weather in the short-term health of american slaves By Richard Steckel
  10. The Markup for Lemons: Quality and Uncertainty in American and British Used-Car Markets, c. 1953-1973 By Avner Offer

    Abstract: Comparing the degree of openness of different national economies or the variations of openness during different periods is a difficult task. Using the historical data existing for France since the beginning of the 19th century, we try to show how an accurate and consistent picture of the gradual internationalisation of the French economy can be drawn from this set of indicators. The historical outlook we tried to establish for France may provide a new insight into the original features of the recent times, since the 1970s. The internationalisation process is not of course something new in itself. But, according to all available quantitative indicators, it is now more continuous and more intense than ever before. The coefficients measuring specifically the degree of openness of the manufacturing sector show the most significant progression, now surpassing by far the previous exceptionally high peaks reached during the 1920s – and this in both directions: for the growing share of imported manufactures in the French market goes together with the unchallenged pre-eminence of the manufacturing sector among French export trades. This new conjunction is relevant to explain the most negative characteristic of the present situation: for the first time, an acceleration in the process of opening is accompanied by a protracted weakening of the French (and European) economic growth.
    Keywords: process of opening, globalization
    JEL: F10 N70
    Date: 2006
  2. By: Pablo Astorga (Latin American Centre, St Antony’s College, Oxford OX2 6JF); Ame E. Bergés (Latin American Centre, St Antony’s College, Oxford OX2 6JF); Valpy Fitzgerald (Latin American Centre, St Antony’s College, Oxford OX2 6JF)
    Abstract: Assessing the economic development of Latin America during the twentieth century requires reliable estimates of living standards as measured by per capita income, life expectancy, and literacy. New comparable series for Latin America suggest that these three indicators made the greatest strides during the period from 1940 to 1980. This progress is probably related to state-led industrialisation, improvements in public health, and urbanisation. Comparison with US levels reveals that while average per capita income has generally remained steady, relative living standards (measured by a composite welfare index) have risen gradually as life expectancy in the two regions has converged.
    Keywords: Economic History, Welfare and Poverty, Demography, Education, Income and Wealth
    JEL: I31 N36
    Date: 2006–03–16
  3. By: Pablo Astorga (Latin American Centre, St Antony’s College, Oxford); Ame E. Bergés; Valpy Fitzgerald
    Abstract: Using a new database for the whole 1900–2000 period, this paper estimates the relative contribution of endogenous and exogenous factors in GDP and productivity growth in each of the six larger Latin American economies with multivariate annual models, and complements these with a single aggregate model using panel data by decade to test for convergence within the region and with the US. Our method is innovative as it includes external economic shocks as well as endogenous growth variables. The main findings are: (i) that investment contributed most to growth during the middle of the century when the region was relatively closed to the world economy and state was proactive; (ii) that the six main economies did converge considerably over the century due to improvements in resource allocation, advances in health and education and increased investment effort; (iii) that these improvements were not, however, enough to produce convergence between Latin America and US; and (iv) that terms of trade volatility, trade and interest rate shocks were major obstacle to both sustained economic growth and catching up.
    Keywords: Economic History, Economic Growth, Latin America
    JEL: I31 O47 N16
    Date: 2006–03–15
  4. By: N H Dimsdale (The Queen's College, Oxford); N Horsewood (Department of Economics, University of Birmingham); A van Riel (Social Policy, Netherlands Economic Institute, Rotterdam)
    Abstract: This paper contributes to the debate on the causes of unemployment in interwar Germany. It applies the Layard-Nickell model of the labour market to interwar Germany, using a new quarterly data set. The basic model is extended to capture the effects of the tariff wage under the Weimar Republic and the Nazis. The estimated equations suggest that demand shocks, combined with nominal inertia in the labour market, were important in explaining unemployment. In addition real wage pressures due the political processes of wage determination were a major influence on unemployment. Negative demand shocks appear to have been initially domestic and to have started before the impact of the World Depression. Both negative developments on the demand side of the economy and pressures coming from the supply side raised unemployment in the slump. In the recovery the wage policies of the Nazis and the revival of demand both contributed to the fall in unemployment. The mutual reinforcement of these factors may help to explain the severity of the interwar cycle in Germany. It also serves to emphasize the close connection between political and economic processes in this important episode in macroeconomic history.
    Keywords: Great Depression, Germany, real wages, unemployment
    JEL: N14 E24 E32
    Date: 2006–03–16
  5. By: David Chambers
    Abstract: Allegations of British capital market failure are numerous, range from claims of domestic investor bias before 1914 to charges of short-termism against institutional investors towards the end of the last century, and are frequently contentious. This paper revisits this literature by pointing up the post-1945 IPO market as a clear example of capital market failure. Despite the tender offer method delivering 10% lower underpricing than the dominant IPO method, it was adopted by fewer than 1 in 10 firms going public. This missed opportunity cost issuing firms £1.4 billion in "money left on the table" between 1960 and 1986 at 2004 prices and can be attributed to a lack of competition among issuing houses and brokers pre-Big Bang.
    Keywords: IPO, British capital market failure, Tender offer
    JEL: N24 G34 G24
    Date: 2005
  6. By: Maristella Botticini (Department of Economics, Boston University); Zvi Eckstein (‡Tel Aviv University, University of Minnesota, and Federal Reserve Bank of Minneapolis.)
    Abstract: Since the early Middle Ages almost all the Jews have been engaged primarily in urban, skilled occupations. The transition from farmers to merchants occurred between the eighth and the ninth centuries in the Muslim Empire where the Jews moved from villages to the newly developed urban centers. They continued to be engaged in urban occupations throughout their history. We explain this occupational selection as the outcome of (i) the Jews’ investment in education prompted by a change in religious norms during the first and second centuries, and (ii) the increased urbanization in the Muslim Empire. Our theory also predicts that the change in religious norms would lead some Jews to voluntarily convert to other religions. A substantial reduction in Jewish population between the second and the sixth centuries confirms this prediction.
    Keywords: first millennium, human capital, Jewish economic history, migration, occupational choice, religion and social norms.
    JEL: J10 J20 N30 O10
    Date: 2004–05
  7. By: Robert C. Allen
    Abstract: The paper reviews the macroeconomic data describing the British economy during the industrial revolution and shows that they contain a story of dramatically increasing inequality between 1800 and 1840: GDP per worker rose 37%, real wages stagnated, and the profit rate doubled. The share of profits in national income expanded at the expense of labour and land. A "Cambridge-Cambridge" model of economic growth and income distribution is developed to explain these trends. An aggregate production function explains the distribution of income (as in Cambridge, MA), while a savings function in which savings depended on property income (as in Cambridge, England) governs accumulation. Simulations with the model show that technical progress was the prime mover behind the industrial revolution. Capital accumulation was a necessary complement. The surge in inequality was intrinsic to the growth process. Technical change increased the demand for capital and raised the profit rate and capital`s share. The rise in profits, in turn, sustained the industrial revolution by financing the necessary capital accumulation.
    Keywords: British Industrial Revolution, Kuznets Curve, Inequality, Savings, Investment
    JEL: D63 N13 O41 O47 O52
    Date: 2005
  8. By: Regina Grafe (Nuffield College, Oxford)
    Abstract: Studies of consumption in early modern Europe fall into two groups. Some have looked at the overall supply of nutritional components to the average consumer in an attempt to trace standards of living. Others have examined the changing demand for particular goods by specific consumers to understand the way in which new goods and cultural and taste changes impacted on the economy. Few have tried to look at the interactions between both. By combining the contradictory evidence coming from supply and demand sides, new interpretations of the evidence emerge. Data on the supply of dried salted codfish (bacalao) to the Iberian markets and data available on the consumption of this good by specific groups of consumers are used to explain how this fish became a staple foodstuff in the Iberian diet. The existing literature has invoked both religion and cheapness as explanatory variables. This paper argues that both played an important role but that the overall increase was ultimately driven by the slow but continuous integration of more consumers into the market between 1600 and 1800.
    JEL: N33
    Date: 2006–03–16
  9. By: Richard Steckel (Economics, Anthropology, and History Departments, Ohio State University, Research Association, NBER, and Visiting Fellow, All Souls College, Oxford)
    Abstract: For over a quarter century anthropometric historians have struggled to identify and measure the numerous factors that affect adult stature, which depends upon diet, disease and physical activity from conception to maturity. I simplify this complex problem by assessing nutritional status in a particular year using synthetic longitudinal data created from measurements of children born in the same year but measured at adjacent ages, which are abundantly available from 28,000 slave manifests housed at the National Archives. I link this evidence with annual measures of economic conditions and new measures of the disease environment to test hypotheses of slave owner behavior. Height-by-age profiles furnish clear evidence that owners substantially managed slave health. The short-term evidence shows that weather affected growth via exposure to pathogens and that owners modified net nutrition in response to sustained price signals.
    Date: 2006–03–15
  10. By: Avner Offer (All Souls College, Oxford)
    Abstract: Automobile depreciation rates and dealer markups in the United States and Britain during the 1950s and 1960s provide evidence on the effect of asymmetric information on market structures. Initial depreciation was not exceptional, and trade was not disabled. ‘Lemon’ effects were evident in some periods but not others. Depreciation and markups increased with mechanical and styling uncertainty. Adverse selection kicked in as cars aged: high selling costs caused dealers to withdraw from trading older cars. Despite their lower quality, British makes depreciated less, probably due to different novelty signals and longer styling cycles.
    Date: 2006–03–15

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