New Economics Papers
on Business, Economic and Financial History
Issue of 2007‒02‒03
twelve papers chosen by

  1. Was Weber Wrong? A Human Capital Theory of Protestant Economic History By Becker, Sascha O.; Wößmann, Ludger
  2. Representation in Econometrics: A Historical Perspective By Christopher L. Gilbert; Duo Qin
  3. Horizontal Merger Antitrust Enforcement: Some Historical Perspectives, Some Current Observations By Lawrence White
  4. Understanding the Old and New Bretton Woods By Paul Wachtel
  5. Economic Reform and Social Sector Expenditures: A Study of Fifteen Indian States 1980/81-1999/2000 By Tsujita, Yuko
  6. Economic Reforms and Income Inequality in Urban China By Okushima, Shinichiro; Uchimura, Hiroko
  7. Reputational Risk and Conflicts of Interest in Banking and Finance: The Evidence So Far By Ingo Walter
  8. Frontiers of the New Economic Geography By Fujita, Masahisa; Mori, Tomoya
  9. Family Business in Mexico: Responses to Human Resource Limitations and Management Succession By Hoshino, Taeko
  10. When Is a Central Bank Governor Fired? Evidence Based on a New Data Set By Axel Dreher; Jakob de Haan; Jan-Egbert Sturm
  11. Regional Cooperation of Small & Medium Firms in Japanese Industrial Clusters By Arita, Tomokazu; Fujita, Masahisa; Kameyama, Yoshihiro
  12. Does membership on the UN Security Council influence IMF decisions? Evidence from panel data By Axel Dreher; Jan-Egbert Sturm; James Raymond Vreeland

  1. By: Becker, Sascha O.; Wößmann, Ludger
    Abstract: Max Weber attributed the higher economic prosperity of Protestant regions to a Protestant work ethic. We provide an alternative theory, where Protestant economies prospered because instruction in reading the Bible generated the human capital crucial to economic prosperity. County-level data from late 19th-century Prussia reveal that Protestantism was indeed associated not only with higher economic prosperity, but also with better education. We find that Protestants’ higher literacy can account for the whole gap in economic prosperity. Results hold when we exploit the initial concentric dispersion of the Reformation to use distance to Wittenberg as an instrument for Protestantism.
    Keywords: Human capital; Protestantism; economic history
    JEL: N33 Z12 I20
    Date: 2007–01
  2. By: Christopher L. Gilbert (Università degli Studi di Trento); Duo Qin (Queen Mary, University of London)
    Abstract: Measurement forms the substance of econometrics. This chapter outlines the history of econometrics from a measurement perspective – how have measurement errors been dealt with and how, from a methodological standpoint, did econometrics evolve so as to represent theory more adequately in relation to data? The evolution is organized in terms of four phases: ‘theory and measurement’, ‘measurement and theory’, ‘measurement with theory’ and ‘measurement without theory’. The question of how measurement research has helped in the advancement of knowledge advance is discussed in the light of this history.
    Keywords: Econometrics, History, Measurement error
    JEL: B16 B23 C10 C50
    Date: 2007–01
  3. By: Lawrence White
    Date: 2006
  4. By: Paul Wachtel
    Date: 2006
  5. By: Tsujita, Yuko
    Abstract: This paper examines social sector expenditures in fifteen Indian states between 1980/81 and 1999/2000 to find out whether the far-reaching economic reforms that began in 1991 had any significant impact on the level and trend of these expenditures; and if there was any such impact, what were the reasons behind the ensuing changes. The empirical analysis in this study shows that revenue became a major determinant of social sector expenditures from the mid 1980s with the result that real per capita social sector expenditures in most states started to decline even before the economic reforms began as states' fiscal deficits worsened in the 1980s. Economic reforms, therefore, largely did not have a major negative impact on expenditures. In fact there was a positive impact on some states, which often were those that received more foreign aid than other states. By the late 1990s, states expending more on the social sector changed from states with a traditionally strong commitment to the social sector, such as Kerala, to states having higher revenues including aid from outside the country.
    Keywords: Economic reform, Public expenditures, Social sector, Economic policy, India
    JEL: H51 H52 H72 I19 I22
    Date: 2006–10
  6. By: Okushima, Shinichiro; Uchimura, Hiroko
    Abstract: This paper reports the results of an analysis of changes in income inequality, and in its determinants, in urban China since the economic reforms that began in 1978. The intention is to identify new characteristics of economic inequality. It first shows that income differentials acrossand in provinces widened and that their economic rankings were becoming fixed during the period from 1988 to 1995. Second, age was the major factor in inequality in 1988, while education became the important factor in 1995. Third, education significantly contributed to increasing inequality during the period. Fourth, the higher education-level groups had less within-group inequality. These changes reflect the penetration of the market mechanism into China after the reforms. However, this will be problematic without equality of opportunity.
    Keywords: Asia, China, Income inequality, Economic reform, Education, Urban, Income distribution, Economic policy
    JEL: D31 J31 P20
    Date: 2006–10
  7. By: Ingo Walter
    Date: 2006
  8. By: Fujita, Masahisa; Mori, Tomoya
    Abstract: This paper presents an overview of recent development in the new economic geography (NEG), and discusses possible directions of its future development. Since there already exist several surveys on this topic, we focus on the selected features of the NEG which are important yet have attracted insufficient attention, and also on the recent refinements and extensions of the framework.
    Keywords: New economic geography, Agglomeration, International trade, Economic growth, Transport costs, Economics, Transportation, Costs, Economic geography, G World,others
    JEL: F12 F23 R11 R12 R13 R14
    Date: 2006–10
  9. By: Hoshino, Taeko
    Abstract: Indigenous firms in Mexico, as in most developing countries, take the shape of family businesses. Regardless of size, the most predominant ones are those owned and managed by one or more families or descendent families of the founders. From the point of view of economics and business administration, family business is considered to have variety of limitations when it seeks to grow. One of the serious limitations is concerning human resource, which is revealed at the time of management succession. Big family businesses in Mexico deal with human resource limitations adopting measures such as the education and training of the successors, the establishment of management structure that makes control by the owner family possible and divisions of roles among the owner family members, and between the owner family members and the salaried managers. Institutionalization is a strategy that considerable number of family businesses have adopted in order to undergo the succession process without committing serious errors. Institutionalization is observed in such aspects as the establishment of the requisite condition to be met by the candidate of future successor and the screening by an institution which is independent of the owner family. At present these measures allow for the continuation of family businesses in an extremely competitive environment.
    Keywords: Family business, Ownership, Management, Succession, Mexico, Home-based businesses, Family concern, Human resources, Industrial management
    JEL: K22 L22 M12 M13
    Date: 2006–10
  10. By: Axel Dreher (Department of Management, Technology, and Economics, ETH Zurich); Jakob de Haan (University of Groningen, The Netherlands and CESifo, Munich, Germany); Jan-Egbert Sturm (Department of Management, Technology, and Economics, ETH Zurich)
    Abstract: This paper uses a new data set on the term in office of central bank governors in 137 countries covering the period 1970-2004 to estimate a model for the chance that a central bank governor is replaced. We formulate a number of hypotheses based on the literature on the determinants of central bank independence that are tested using conditional logit models and the Extreme Bounds Analysis. We conclude that, apart from the share of the current term in office elapsed, high levels of political and regime instability, the occurrence of elections, and high inflation increase the probability of a turnover.
    Keywords: central bank governors, central bank independence
    JEL: E5
    Date: 2006–07
  11. By: Arita, Tomokazu; Fujita, Masahisa; Kameyama, Yoshihiro
    Abstract: This study examines the effects of intra-regional cooperation among firms and institutions on the growth of firms, using the unique data set of questionnaire survey collected in the three major industrial clusters in Japan. In contrast to the existing studies on regional innovations or agglomeration economies, this study explicitly focuses on the detailed contents of cooperative activities with two specific viewpoints: 1) the contents of regional cooperation in each of the three production stages of R&D, commercialization, and marketing, and 2) the detailed types of alliance partners. Our results demonstrate three points: 1) positive correlations are observed between the intensity of regional cooperation and the firm growth rate and R&D expenditure, 2) horizontal cooperation such as alliances with universities and cross-industry exchange organizations has positive significant effects on the growth rate of firms, which is in contrast with the previous studies that stressed only the role of vertically integrated inter-firm linkages in Japan, and 3) contents and partners of regional cooperation are different among the three clusters based on different dominant industries.
    Keywords: Industrial clusters, Industrial agglomeration, Knowledge externalities, Japan, Regional economic cooperation, Small and medium-scale enterprises, Research & development, Marketing, Commerce
    JEL: O18 O53 R3
    Date: 2006–12
  12. By: Axel Dreher (Department of Management, Technology, and Economics, ETH Zurich); Jan-Egbert Sturm (Department of Management, Technology, and Economics, ETH Zurich); James Raymond Vreeland (Yale University, Department of Political Science, USA)
    Abstract: We investigate whether temporary members of the UN Security Council receive favorable treatment from the IMF, using panel data for 191 countries over the period 1951 to 2004. Our results indicate a robust positive relationship between temporary UN Security Council membership and participation in IMF programs, even after accounting for economic and political factors, as well as regional and country effects, and duration dependence. There is also evidence that UNSC membership reduces the number of conditions included in IMF programs. The size of the loan, however, is not affected by UNSC membership.
    Keywords: IMF, UN Security Council, Voting, Aid
    JEL: E5
    Date: 2006–09

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