New Economics Papers
on Business, Economic and Financial History
Issue of 2006‒04‒08
thirteen papers chosen by

  1. African-American and White Living Standards in the 19th Century American South: A Biological Comparison By Scott A. Carson
  2. The Empirics of International Currencies: Historical Evidence By Flandreau, Marc; Jobst, Clemens
  3. Political Conflict and Power-Sharing in the Origins of Modern Colombia By Mazzuca, Sebastián L; Robinson, James A
  4. Does Financial Integration Spur Economic Growth? New Evidence from the First Era of Financial Globalization By Moritz Schularick; Thomas Steger
  5. From Farmers to Merchants, Voluntary Conversions and Diaspora: A Human Capital Interpretation of Jewish History By Botticini, Maristella; Eckstein, Zvi
  6. Deprivation and Disease in Early Twentieth-Century America By Karen Clay; Werner Troesken
  7. China's Long-Term International Trade Statistics: By Commodity, 1952-1964 and 1981-2000 By Kyoji Fukao; Kozo Kiyota; Ximing Yue
  8. Bloodshed or Reforms? The Determinants of Sovereign Bond Spreads in 1870-1913 and Today By Mauro, Paolo; Sussman, Nathan; Yafeh, Yishay
  9. The Greenspan Era: Discretion, Rather Than Rules By Benjamin M. Friedman
  10. Sovereign Risk in the Classical Gold Standard Era By Gavin Cameron; Kang Yong Tan; Prasanna Gai
  12. PRATIQUES FINANCIERES DECENTRALISEES ET<br />RECOMPOSITION DES SYSTEMES FINANCIERS AFRICAINS<br /><br />L'évolution de la finance informelle et ses conséquences sur l'évolution des systèmes financiers By Michel Lelart
  13. The Role of R&D in Productivity Growth: The Case of Agriculture in New Zealand: 1927 to 2001 By Julia Hall; Grant M Scobie

  1. By: Scott A. Carson
    Abstract: By using a new source of 19th century Texas state prison records, the present study contrasts the biological living conditions of comparable blacks and whites in the American South between the Civil War and Reconstruction. White stature exceeded black stature. Between 1850 and 1870, black sub-adult stature declined by over one centimeter. Postbellum sub-adult white stature declined by over one and a half centimeters and never recovered over the same period. The secular trend for adult blacks improved by two and one half centimeters between the 1850s but declined after the Civil War.
    JEL: I12 I31 J15 J70 N31
    Date: 2006
  2. By: Flandreau, Marc; Jobst, Clemens
    Abstract: Using a new database for the late 19th century, when the pound sterling circulated all over the world, this paper provides the first review of critical empirical issues in the economics of international currencies. First, we report evidence in favor of the search-theoretic approach to international currencies. Second, we give empirical support to strategic externalities. Third, we provide strong confirmation of the existence of persistence. Finally, we reject the view that the international monetary system is subject to pure path dependency in that it cannot remain locked into some past equilibrium. Our conclusion is that, for the late 19th century at least, money and trade were complements.
    Keywords: dollar; international currencies; persistence; search theoretic approach to money; sterling; strategic externalities
    JEL: F31 N32
    Date: 2006–03
  3. By: Mazzuca, Sebastián L; Robinson, James A
    Abstract: In this paper we present historical evidence and a theoretical analysis of the origins of political stability and instability in Colombia for the period 1850-1950, and their relationship to political, particularly electoral, institutions. We show that the driving force behind institutional change over this period, specifically the move to proportional representation (PR), was the desire of the Conservative and Liberal parties to come up with a way of credibly dividing power to avoid civil war and conflict, a force intensified by the brutal conflict of the War of a Thousand days between 1899 and 1902. The problem with majoritarian electoral institutions was that they did not allocate power in a way which matched the support of the parties in the population, thus encouraging conflict. The strategic advantage of PR was that it avoided such under-representation. The parties however could not initially move to PR because it was not `fraud proof' so instead, in 1905, adopted the `incomplete vote' which simply allocated 2/3 of the legislative seats to the winning party and 1/3 to the loser. This formula brought peace. The switch to PR arose when the Liberals became confident that they could solve problems of fraud. But it only happened because they were able to exploit a division within the Conservatives. The switch also possibly reflected a concern with the rising support for socialism and the desire to divide power more broadly. Our findings shed new light on the origins of electoral systems and the nature of political conflict and its resolution.
    Keywords: conflict; electoral institutions; political institutions; power
    JEL: D7
    Date: 2006–04
  4. By: Moritz Schularick; Thomas Steger
    Abstract: Does international financial integration boost economic growth? The question has been discussed controversially for a long time. As of yet, robust evidence for a positive impact is lacking (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 before 1914. We have compiled the first comprehensive data set to test this hypothesis. The main finding is that there was indeed a significant and robust growth effect. Our theoretical explanation 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
  5. By: Botticini, Maristella; Eckstein, Zvi
    Abstract: From the end of the second century C.E., Judaism enforced a religious norm requiring any Jewish father to educate his children. We present evidence supporting our thesis that this exogenous change in the religious and social norm had a major influence on Jewish economic and demographic history. First, the high individual and community cost of educating children in subsistence farming economies (2nd to 7th centuries) prompted voluntary conversions, which account for a large share of the reduction in the size of the Jewish population from about 4.5 million to 1.2 million. Second, the Jewish farmers who invested in education, gained the comparative advantage and incentive to enter skilled occupations during the vast urbanization in the newly developed Muslim Empire (7th and 8th centuries) and they actually did select themselves into these occupations. Third, as merchants the Jews invested even more in education - a pre-condition for the extensive mailing network and common court system that endowed them with trading skills demanded all over the world. Fourth, the Jews generated a voluntary diaspora by migrating within the Muslim Empire, and later to western Europe where they were invited to settle as high skill intermediaries by local rulers. By 1200, the Jews were living in hundreds of towns from England and Spain in the West to China and India in the East. Fifth, the majority of world Jewry (about one million) lived in the Near East when the Mongol invasions in the 1250s brought this region back to a subsistence farming economy in which many Jews found it difficult to enforce the religious norm regarding education, and hence, voluntarily converted, exactly as it had happened centuries earlier.
    Keywords: human capital; Jewish economic and demographic history; migration; occupational choice; religion; social norms
    JEL: J1 J2 O1 Z12 Z13
    Date: 2006–03
  6. By: Karen Clay; Werner Troesken
    Abstract: This paper explores how early life exposure to poverty and want adversely affects later life health outcomes. In particular, it examines how exposure to crowded housing conditions and impure drinking water undermines long-term health prospects and increases the risk of age-related pathologies such as cancer, heart disease, kidney disease, and stroke. Exploiting city-level data from early-twentieth century America, evidence is presented that cities with unusually high rates of typhoid fever in 1900 had elevated rates of heart and kidney disease fifteen years later; also cities with unusually high rates of tuberculosis in 1900 had elevated rates of cancer and stroke fifteen years later. The estimated coefficients suggest that eradicating typhoid fever (through water purification) and tuberculosis (through improved housing and nutrition) would have reduced later death rates from heart disease, cancer, stroke, and kidney disease by 23 to 35 percent.
    JEL: I3 N3
    Date: 2006–03
  7. By: Kyoji Fukao; Kozo Kiyota; Ximing Yue
    Abstract: International trade has been a key engine driving Chinese economic growth in recent decades. Yet, long-term analyses of China's trade are still difficult because the country's trade statistics for the post-war period up to the mid-1980s have many shortcomings For example, official customs statistics published by the Chinese government during this period, if they were published at all, do not provide any breakdown by commodity classification. Against this background, we recently compiled new statistics of China's trade during 1952-1964 and 1981-2000 at the 3-digit level of the Standard International Trade Classification, Revision 1 (SITC-R1). The statistics for 1952-1964 and 1981-1987 are based on data we purchased from China's National Statistical Bureau. The data for 1988-2000 are compiled from the Commodity Trade Statistics of the United Nations (UN Comtrade) as a part of our joint work with scholars at the Institute of Development Economies, Japan External Trade Organization (IDE-JETRO). In this paper, we provide an overview of existing statistics of China's international trade and present our newly compiled statistics.
    Date: 2006–03
  8. By: Mauro, Paolo; Sussman, Nathan; Yafeh, Yishay
    Abstract: Drawing on a newly-collected data set on bond yields, macroeconomic variables, and news of various categories for a panel of emerging markets, we provide the first comparative analysis of the determinants of sovereign bond spreads in the first era of financial globalization and bond finance (1870-1913) and today (1994-2002). We find that news about wars or episodes of politically-motivated violence are a significant and robust determinant of spreads; fiscal variables also play a role; in contrast, news about institutional reforms seldom have a rapid and significant impact. There are also important differences between the two eras: country-specific fundamentals account for a greater share of variation in spreads during the pre-WWI period than today.
    Keywords: bond yields; emerging markets; financial globalization
    JEL: F34 G15 N20
    Date: 2006–03
  9. By: Benjamin M. Friedman
    Abstract: What stands out in retrospect about U.S. monetary policy during the Greenspan Era is the ongoing movement away from mechanistic restrictions on the conduct of policy, together with a willingness on occasion to depart even from what more flexible guidelines dictated by contemporary conventional wisdom would imply, in the interest of carrying out the Federal Reserve System’s dual mandate to pursue both stable prices and maximum employment. Part of this change was procedural – for example, the elimination of money growth targets. The most substantive demonstration of policy flexibility came in the latter half of the 1990s, as unemployment fell below 6% (in 1994), then below 5% (in 1997), and then remained below 5% for more than four years, yet the Federal Reserve did not tighten monetary policy. This policy stance was consistent with a view of the economy, including faster productivity growth and increased exposure to international competition, that Chairman Greenspan had articulated nearly a decade before.
    JEL: E52
    Date: 2006–03
  10. By: Gavin Cameron; Kang Yong Tan; Prasanna Gai
    Abstract: This paper explores the determinants of sovereign bond yields during the classical gold standard period (1872-1913). Using the Pooled Mean Group methodology, we find that the main benefit of the gold standard can be seen as a short-hand device that enhanced a country`s reputation in international capital markets. By conveying important information to investors and enhancing the speed of adjustment of sovereign bond spreads to long-run equilibrium levels, the gold standard allowed country risk to be priced more effectively. In contrast to other studies, our results indicate that fundamental factors appear to be more important in determining a country`s creditworthiness in the long-run than the exchange rate regime per se.
    Keywords: Gold Standard, Sovereign Risk, Heterogeneous Dynamic Panels, Pooled Mean Group Estimator
    JEL: F33 F34 F41 N10 N20
    Date: 2006
  11. By: Mauricio Avella Gómez
    Abstract: El acceso de Colombia y otros países latinoamericanos al financiamiento externo durante el siglo XX estuvo dominado por fases alternas de auge y receso en los mercados internacionales de capitales. Las relaciones entre los acreedores y los deudores fueron afectadas frecuentemente por el incumplimiento de los compromisos contractuales, incluyendo la cesación de pagos. Pero las renegociaciones, en unos casos, o los acercamientos entre acreedores y deudores, en otros, constituyeron el mecanismo mediante el cual se restableció la relación de largo plazo entre acreedores y deudores.
  12. By: Michel Lelart (LEO - Laboratoire d'économie d'Orleans - - [CNRS : UMR6221] - [Université d'Orléans] - [])
    Abstract: Les années 80 ont été marquées par l'émergence de la finance informelle. Depuis quelques années c'est la microfinance que l'on voit apparaître et progresser dans la plupart des pays en voie de développement, en Afrique, en Asie, en Amérique latine... <br /><br />Cet article s'interroge sur les raisons de cette évolution et de la montée en puissance des institutions de microfinance. Il analyse quelques-uns des problèmes posés par les nouvelles institutions : quelle réglementation leur appliquer, quelles peuvent être leurs relations avec les banques et leur place au sein des systèmes financiers...?
    Keywords: Finance informelle ; micro-finance ; micro-crédit
    Date: 2006–03–30
  13. By: Julia Hall; Grant M Scobie (New Zealand Treasury)
    Abstract: Productivity growth is a key determinant of rising living standards. The agricultural sector has been an important contributor to the overall growth of productivity in New Zealand. The average rate of multifactor productivity growth in agriculture from 1926-27 to 2000-01 was 1.8%. We find evidence that this rate has been increasing especially since the reforms of the 1980s. This paper estimates the contribution that R&D has made to agricultural productivity. It develops a theoretical framework based on the stock of knowledge available to producers. This model incorporates foreign stocks of knowledge and the spill-in effect for New Zealand. The estimation allows for extended lag effects of research spending on productivity. We find that foreign knowledge is consistently an important factor in explaining the growth of productivity. It appears that the agricultural sector relies heavily on drawing on the foreign stock of knowledge generated off-shore. The contribution of domestic knowledge generated by New Zealand’s investment in R&D is less clear cut. However, there is typically a significant positive relation between domestic knowledge and the growth of productivity. We find a wide range of estimates of the return to domestic R&D. The results are sensitive to the type of model used and the specification of the variables. Based on our preferred model we estimate that investment in domestic R&D has generated an annual rate of return of 17%. The results underscore the importance of foreign knowledge in a small open economy. The very existence of foreign knowledge may be a necessary condition for achieving productivity growth in a small open economy. However in no way could it be argued that this was sufficient. Having a domestic capability that can receive and process the spill-ins from foreign knowledge is vital to capturing the benefits. The challenge is to be able to isolate those effects from aggregate data for the agricultural sector. In that task we claim only modest success.
    Keywords: New Zealand; technological change; R&D; productivity; economics of knowledge; spillovers; rates of return; agriculture
    JEL: O30 O40
    Date: 2006–03

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