nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2006‒12‒16
23 papers chosen by
Bernardo Batiz-Lazo
Bristol Business School

  1. Bank Distress during the Great Depression: The Illiquidity-Insolvency Debate Revisited By Gary Richardson
  2. Painting by Proxy: The Conceptual Artist as Manufacturer By David W. Galenson
  3. Quarterly Data on the Categories and Causes of Bank Distress During the Great Depression By Gary Richardson
  4. Correspondent Clearing and the Banking Panics of the Great Depression By Gary Richardson
  5. Historical Roots of the Nonprofit sector in France By Edith Archambault
  6. Monetary and financial forces in the Great Depression By Satyajit Chatterjee; Dean Corbae
  7. Liquidity creation without a lender of last resort: clearinghouse loan certificates in the Banking Panic of 1907 By Ellis W. Tallman; Jon R. Moen
  8. Taxing Consumption and Other Sins By James R. Hines Jr.
  9. Inventive Activities, Patents and Early Industrialization. A Synthesis of Research Issues By Christine MacLeod; Alessandro Nuvolari
  10. A Comment Concerning Deposit Insurance and Moral Hazard By Gary Richardson
  11. Japan's alternating phases of growth and outlook for the future By Kyoji Fukao; Osamu Saito
  12. Developing and Transition Economies in the Late 20th Century: Diverging Growth Rates, Economic Structures, and Sources of Demand By Codrina Rada; Lance Taylor
  13. Sub-Saharan Growth Surprises: Geography, Institutions And History in an all African Data Panel By Matthias Cinyabuguma; Louis Putterman
  14. Consolidation of Cooperative Banks (Shinkin) in Japan:Motives and Consequences By Kaoru Hosono; Koji Sakai; Kotaro Tsuru
  15. Getting Rid of Keynes ? A reflection on the history of macroeconomics By Michel, DE VROEY
  16. Social services in France : A public/private partnership By Edith Archambault
  17. Ressources, compétences et stratégie de la firme : Une discussion de l’opposition entre la vision Porterienne et la vision fondée sur les compétences. By Fernand AMESSE; Arman AVADIKYAN; Patrick COHENDET
  18. Les institutions sans but lucratif en France ; principales évolutions (1995-2005) et nouveaux enjeux By Edith Archambault
  19. The Political Economy of Warfare By Edward L. Glaeser
  20. Dictators, Repression and the Median Citizen: An “Eliminations Model” of Stalin’s Terror (Data from the NKVD Archives) By Paul R. Gregory; Philipp J.H. Schr oder; Konstantin Sonin
  21. Competition and Participation in Religious Markets: Evidence from Victorian Scotland By Robert I. Mochrie; John W. Sawkins; Alexander Naumov
  22. The Effect of Economic Reforms of 1980s and of the Customs Union 1996 upon the Turkish Intra-Industry Trade By Sule Akkoyunlu; Konstantin A. Kholodilin; Boriss Siliverstovs
  23. The Latin American and Spanish Stock markets By Henry Aray

  1. By: Gary Richardson
    Abstract: During the contraction from 1929 through 1933, the Federal Reserve System tracked changes in the status of all banks operating in the United States and determined the cause of each bank suspension. This essay analyzes chronological patterns in aggregate series constructed from that data. The analysis demonstrates both illiquidity and insolvency were substantial sources of bank distress. Periods of heightened distress were correlated with periods of increased illiquidity. Contagion via correspondent networks and bank runs propagated the initial banking panics. As the depression deepened and asset values declined, insolvency loomed as the principal threat to depository institutions.
    JEL: E0 E42 E44 E65 N01 N12 N2
    Date: 2006–12
  2. By: David W. Galenson
    Abstract: In 1958, the French philosopher Etienne Gilson observed that "painters are related to manual laborers by a deep-rooted affinity that nothing can eliminate," because painting was the one art in which the person who conceives the work is also necessarily the person who executes it. Conceptual innovators promptly proved Gilson wrong, however, by eliminating the touch of the artist from their paintings: in 1960 the French artist Yves Klein began using "living brushes" - nude models covered with paint - to execute his paintings, and in 1963 Andy Warhol began having his assistant Gerard Malanga silkscreen his canvases. Today many leading artists do not touch their own paintings, and some never see them. This paper traces the innovations that allowed a complete separation between the conception and execution of paintings. The foundation of this separation was laid long before the 20th century, by conceptual Old Masters including Raphael and Rubens, who employed teams of assistants to produce their paintings, but artists began exploring its logical limits during the conceptual revolution of the 1960s and beyond. Thus by the end of the twentieth century Jeff Koons explained that he did not participate in the work of painting his canvases because he believed it would interfere with his growth as an artist, and Damien Hirst defended his practice of having his paintings made by assistants on the grounds that their paintings were better than his. Eliminating the touch of the artist from painting is yet another way in which conceptual innovators transformed art in the twentieth century.
    JEL: J0
    Date: 2006–12
  3. By: Gary Richardson
    Abstract: During the contraction from 1929 through 1933, the Federal Reserve System tracked changes in the status of all banks operating in the United States and determined the cause of each bank suspension. This essay introduces quarterly series derived from that hitherto dormant data and presents aggregate series constructed from it. The new data series will supplement, and in some cases, supplant the data currently used to study banking panics of the Great Depression, which was published by the Federal Reserve Board of Governors in 1937.
    JEL: E0 E4 E44 N1 N12 N2
    Date: 2006–12
  4. By: Gary Richardson
    Abstract: Between the founding of the Federal Reserve System in 1913 and the depression of the 1930s, three check-clearing systems operated in the United States. The Federal Reserve cleared checks for members of the system. Clearing houses cleared checks for members of their organizations. Correspondents cleared checks for all other institutions. The correspondent-clearing system was vulnerable to counter-party cascades, particularly because accounting conventions overstated reserves available to individual institutions and the system as a whole. In November 1930, a correspondent system in the center of the United States collapsed, causing the closure of more than one hundred institutions. Bank runs radiated from the locus of events, and additional correspondent networks succumbed to the situation. For the remainder of the contraction, banks that relied upon correspondents to clear checks failed at higher rates than other banks. In sum, weaknesses within a check-clearing system played a hitherto unrecognized role in the banking crises of the Great Depression.
    JEL: E42 E44 E65 N1 N12 N2
    Date: 2006–12
  5. By: Edith Archambault (MATISSE - Modélisation Appliquée, Trajectoires Institutionnelles et Stratégies Socio-Économiques - [CNRS : UMR8595] - [Université Panthéon-Sorbonne - Paris I])
    Abstract: Though deeply rooted in the Middle Ages, as in every European Country, the French nonprofit sector differs in that it was secularized and restricted at the beginning of the 19th century by the centralized state. According to a tradition dating back to the 1789 Revolution, the state had the monopoly of public interest concerns. This tradition gradually lost force in the twentieth century, and nonprofit organizations multiplied during the last three decades in every field of public interest. This trend was encouraged by the central and local governments in a period of decentralization and European integration. Decentralization offers a great opportunity for the French nonprofit sector; conversely, nonprofit organizations provide collective services in an alternative way and can offer an antidote to latent centralization tendencies.
    Keywords: nonprofit sector; associations; foundations; decentralization; private-public partnership; social policies.
    Date: 2006–12–05
  6. By: Satyajit Chatterjee; Dean Corbae
    Abstract: What caused the worldwide collapse in output from 1929 to 1933? Why was the recovery from the trough of 1933 so protracted for the U.S.? How costly was the decline in terms of welfare? Was the decline preventable? These are some of the questions that have motivated economists to study the Great Depression. In this paper, the authors review some of the economic literature that attempts to answer these questions.
    Keywords: Depressions
    Date: 2006
  7. By: Ellis W. Tallman; Jon R. Moen
    Abstract: Existing research on liquidity provision during National Banking Era (1863–1913) financial crises examines aggregate issuance of clearinghouse loan certificates by the New York Clearinghouse. We employ previously unexploited disaggregate data on clearinghouse loan certificate issues in New York City to document how the dominant national banks provided liquidity during the Panic of 1907. The large New York City national banks acted as private liquidity providers by requesting (and the New York Clearinghouse issuing) a volume of clearinghouse loan certificates far beyond their own immediate liquidity needs, in accord with their role as central reserve city banks in the national banking system.
    Date: 2006
  8. By: James R. Hines Jr.
    Abstract: Throughout American history, the U.S. federal and state governments have imposed excise taxes on commodities such as alcohol and tobacco (and more recently, gasoline and firearms). Rates of such "sin" taxation, and consumption taxation broadly (including sales taxes and value-added taxes), are currently much lower in the United States than they are in Europe, Japan, and other affluent parts of the world. In part, this reflects relative government sizes, but that is not the whole story, since even controlling for total tax collections, levels of national income, government decentralization, and openness to international trade, the United States imposes unusually low excise and consumption taxes. As a result, the United States relies to a much greater degree than other countries on personal and corporate income taxes, thereby affording fewer opportunities to use the tax system to protect individuals and the environment by discouraging the consumption of "sinful" commodities, and instead simply discouraging saving and investment.
    JEL: H20 H23 H71
    Date: 2006–12
  9. By: Christine MacLeod; Alessandro Nuvolari
    Abstract: The aim of this paper is to provide an overview of recent research on the role of patent systems in the early phases of industrialization. Perhaps surprisingly, no consensus has been reached yet as to whether the emergence of modern patent systems exerted a favourable impact on inventive activities. However, the recent literature has shed light on a number of fundamental factors which affect the links between inventive activities and the patent system. The concluding section of the paper outlines some "history lessons" for the current debate on the role of Intellectual Property Rights in economic development.
    Date: 2006
  10. By: Gary Richardson
    Abstract: Hooks and Robinson argue that moral hazard induced by deposit insurance induced banks to invest in riskier assets in Texas during the 1920s. Their regressions suggest this manifestation of moral hazard may explain a portion of the events that occurred during the 1920s, but some other phenomena, hitherto overlooked, must also be at work. Economic logic and evidence form the archives of the Board of Governors suggest that phenomenon is mismanagement and defalcation by corporate officers, which increases when insurance reduces depositors' incentives to monitor and react to the safety and soundness of banks.
    JEL: E42 E44 E65 N1 N13 N2
    Date: 2006–12
  11. By: Kyoji Fukao; Osamu Saito
    Date: 2006–12
  12. By: Codrina Rada; Lance Taylor
    Abstract: This study reviews the growth and development performance of developing countries in the latter part of the 20th century. Sustained growth among “successful” countries was accompanied by structural change in terms of output and labour share shifts, trade diversification, sustained productivity growth with some strong reallocation effects due to movements of labour from low to high productivity sectors. Neither the widely accepted “twin deficits” nor the “consumption-smoothing” behaviour views of macro adjustment seem to apply, though macroeconomic flexibility may be very important. Finally, neither human capital accumulation nor foreign direct investment are sufficient, by themselves, to stimulate growth.
    Keywords: economic development, structural change, comparative studies, development policy
    JEL: O11 O57
    Date: 2006–09
  13. By: Matthias Cinyabuguma; Louis Putterman
    Date: 2006
  14. By: Kaoru Hosono; Koji Sakai; Kotaro Tsuru
    Abstract: We investigate the motives and consequences of the consolidation of cooperative banks (Shinkin) in Japan during the period 1984-2002. Our major findings are as follows. First, less profitable and less cost efficient banks are more likely to be an acquirer and a target, though even less profitable and less cost efficient banks are more likely to be a target rather than an acquirer. In addition, a larger bank is more likely to be an acquirer and smaller one a target. These results are consistent with the regulators' motive for stabilizing the local banking system.¡¡Second, acquiring banks improved cost efficiency after the consolidation. M&As also raised the loan interest rate and improved profitability and X-efficiency particularly since the latter half of the 1990s. Nonetheless, the improvement of ROA after the merger was not sufficient to fill in the initial gap of the capital ratio between merging banks and peers, resulting in the deterioration of the capital ratio of consolidated banks relative to peers. M&As did not contribute to sufficiently stabilize the local banking system despite the regulators' motive. Third, the consolidation tended to improve the profitability of merging banks when the difference in profitability and healthiness between acquiring banks and target banks were large, which is consistent with the relative efficiency hypothesis (e.g., Akhavein, Berger, and Humphrey, 1997).Length: 48 pages
    Date: 2006–08
  15. By: Michel, DE VROEY (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)
    Abstract: The aim of this paper is to give an account of the unfolding of macroeconomic from Keynes to the present day. To this end I shall use a grid of analyses resulting from the combination of two distinctions. The first is the Marshall-Walras divide, the second is the distinction between Keynesianism viewed as a conceptual apparatus and Keynesianism viewed as a policy cause. On the basis of these distinctions, I construct two box diagrams. Box diagram No.1 has complex general equilibrium and simple general equilibrium (I.e. macroeconomics) models as its columns, and the Marshallian and Walrasian approaches as its rows. Box diagram No.2 has the Keynesian policy cause (justifying demand activation) and the anti-Keynesian policy cause (a defence of laissez-faire) as its columns, and the Marshallian and Walrasian conceptual apparatuses as it rows. This framework allows me to recount the history of macroeconomics as if it were a matter of filling in, step by step, the different slots in my two box diagrams. One of the claims made in the paper is that the rise of new classical macroeconomics can be encapsulated as the replacement of Marshallian by Walrasian macroeconomics, on the one hand, and, on the other hand, as the emergence of models that are anti-Keynesian on the score of both their analytical apparatus and their policy cause.
    Date: 2006–10–15
  16. By: Edith Archambault (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I])
    Abstract: After a brief overview of the historical background, the main object of this chapter is to analyse the type of relationship that have been developed between the government, at its different levels, and the non-profit organisations, in the recent years, and the consequences of these new relationship on the traditional functions of non-profit organisations
    Keywords: nonprofit organisations; public/private partnership; welfare mix; decentralisation; social services; antiselection
    Date: 2006–12–08
  17. By: Fernand AMESSE; Arman AVADIKYAN; Patrick COHENDET
    Abstract: En distinguant information et connaissance nous développons une approche de la firme fondée sur les compétences intégrant les perspectives stratégiques et évolutionnistes. Nous insistons particulièrement sur la dynamique de co-construction des compétences distinctives au niveau de la firme et des compétences communes au niveau de l’industrie. Nous illustrerons ce processus de co-construction à travers les cas de la modularité et de la gestion de plateforme s cognitives dans un contexte inter organisationnel.
    Keywords: information, connaissance, approche fondée sur les compétences, dynamique de coordination inter organisationnelle ; compétences distinctives et communes, modularité.
    JEL: L10 L22 O32 M10
    Date: 2006
  18. By: Edith Archambault (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I])
    Abstract: Parmi les traits qui ont caractérisé l'évolution des institutions sans but lucratif sur la dernière décennie, on a privilégié la prise de conscience de leur importance croissante , le partenariat renforcé avec les pouvoirs publics et, enfin, la professionnalisation rapide et l'avènement de nouvelles associations contestataires. Parmi les enjeux futurs, on a choisi les conséquences ambigües de la seconde phase de la décentralisation, la compétition accrue à laquelle font face les associations et l'exigence renforcée de transparence et d'évaluation dans les années à venir.
    Keywords: institutions sans but lucratif; partenariat public-privé; concurrence; professionalisation; financement public; transparence; évaluation
    Date: 2006–12–12
  19. By: Edward L. Glaeser
    Abstract: Warfare is enormously destructive, and yet countries regularly initiate armed conflict against one another. Even more surprisingly, wars are often quite popular with citizens who stand to gain little materially and may lose much more. This paper presents a model of warfare as the result of domestic political calculations. When incumbents have an edge in fighting wars, they may start wars even if those wars run counter to their country's interests. Challengers are particularly likely to urge aggression when they are unlikely to come into power and when the gains from coming to power are large. Leaders who start wars will naturally try to create hatred by emphasizing the threat and despicable character of the rival country. Wars will be more common in dictatorships than in democracies both because dictators have stronger incentives to stay in power and because they have greater control over the media.
    JEL: A1
    Date: 2006–12
  20. By: Paul R. Gregory (University of Houston and Hoover Institution, Stanford University); Philipp J.H. Schr oder (Aarhus School of Business, Denmark); Konstantin Sonin (CEFIR/NES)
    Abstract: This paper sheds light on dictatorial behavior as exemplified by the mass terror campaigns of Stalin. Dictatorships – unlike democracies where politicians choose platforms in view of voter preferences – may attempt to trim their constituency and thus ensure regime survival via the large scale elimination of citizens. We formalize this idea in a simple model and use it to examine Stalin’s three large scale terror campaigns with data from the NKVD state archives that are accessible after more than 60 years of secrecy. Our model traces the stylized facts of Stalin’s terror and identifies parameters such as the ability to correctly identify regime enemies, the actual or perceived number of enemies in the population, and how secure the dictators power base is, as crucial for the patterns and scale of repression.
    Keywords: Dictatorial systems, Stalinism, Soviet State and Party archives, NKVD, OPGU,Repression
    JEL: P00 N44 P26
    Date: 2006–11
  21. By: Robert I. Mochrie; John W. Sawkins; Alexander Naumov
    Abstract: In 1885, the largest churches in Scotland were engaged in a dispute about state funding. We use data generated in the course of that dispute to examine the standard economics of religion hypothesis that higher levels of competition in 1032 local markets for religious services, proxied by the number of denominations active in each, were associated with higher religious affiliation, proxied by measures of attendance and voluntary congregational giving. Adapting the complexity order approach of Montgomery (2003), we find evidence that is congruent with the hypothesis. However, we contend that the evidence is better explained by an alternative proposition that, given the particular institutional structure of markets and denominations at this time, market complexity does not decline with increasing market size
    Keywords: Competition, institutional structure, Presbyterian, Scotland
    JEL: L88 N93
    Date: 2006
  22. By: Sule Akkoyunlu; Konstantin A. Kholodilin; Boriss Siliverstovs
    Abstract: In this paper we analyze the impact of the economic reforms implemented in 1980s and of the Custom Union Agreement of 1996 on the intra-industry trade in Turkey. Using the panel data for 15 trading partners of Turkey and the sample period 1970-2005, we record the positive impact of both reforms with the former reforms exercising stronger influence on the intra-industry trade measured either by the Grubel-Lloyd or the Brülhart's indices. We also control for other factors like economic size, difference in income per capita and in economic size between Turkey and its trading partners in our empirical regressions.
    Keywords: Intra-industry trade; Customs Union Agreement; panel data estimation.
    JEL: C23 F14
    Date: 2006
  23. By: Henry Aray (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: In this article I analyze the Spanish stock market in an international setting. Using a simple Markov regime switching model I get a time varying measure of the effect of the return on a Latin American portfolio on the Spanish stock returns. The evidence can be summarized as follows. First, I find that this effect is positive and no so large. However, it has increased since the mid-nineties. Second, evidence for the returns on size portfolios shows that most of the effect accrues indirectly through common risk factors. The portfolio composes of stocks with small capitalization is the most affected. Nevertheless, the relative effect of the Latin America to the effect of the world only increases for the portfolio composes of stocks with big capitalization since the mid-nineties. Third, evidence for the returns on sector portfolios shows that the most active sectors investing in Latin America are the most affected. Fourth, I conclude that there is no a positive relationship between â-risk and flows of foreign direct investment.
    Keywords: Markov switching model, maximum likelihood estimation, stock returns.
    JEL: C22 G15
    Date: 2006–12–14

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