New Economics Papers
on Business, Economic and Financial History
Issue of 2007‒05‒04
twelve papers chosen by

  1. Da integração territorial às aglomerações econômicas: a organização espacial e as políticas regionais nos Estados Unidos (1800-2000) By Ricardo Machado Ruiz
  2. Did U.S. Safeguard Resuscitate Harley Davidson in the 1980s? By KITANO Taiju; OHASHI Hiroshi
  3. Economics Research in Canada: A Long-Run Assessment of Journal Publications By James B. Davies; Martin G. Kocher; Matthias Sutter
  4. Descensos memorables en las cotizaciones: Telepizza y Boston Chicken By Fernandez, Pablo
  5. Growth in the Dominican Republic and Haiti: Why has the Grass Been Greener on One Side of Hispaniola By Cemile Sancak; Laura Jaramillo
  6. Modeling the evolution of Gini coefficient for personal incomes in the USA between 1947 and 2005 By Ivan O. Kitov
  7. Financial Market Risk and U.S. Money Demand By David Cook; Woon Gyu Choi
  8. What do we really know about when technological innovation improves performance (and when it does not)? By Adegbesan, Tunji; Ricart, Joan E.
  9. NFL Governance and the Fate of the New Orleans Saints: Some Observations By Robert Baade; Victor Matheson
  10. International financial linkages of Latin American banks - the effects of political risk and deposit dollarisation By Francisco Ramon-Ballester; Torsten Wezel
  11. Dynamic Incentives and the Optimal Delegation of Political Power By Eric Le Borgne; Gauti B. Eggertsson
  12. Volatility and Growth in Latin America: An Episodic Approach By Rishi Goyal; Ratna Sahay

  1. By: Ricardo Machado Ruiz (Cedeplar-UFMG)
    Abstract: The paper summarizes and analyses the spatial organizations of US and their regional development policies. The first part describe the evolution of the US economy during the period 1800-2000, and the second part presents the regional policies and agencies that shape the regional development. The US regional policy was split into three periods. In the first period the regional policy was fully connected to the national development strategy. In the second period the regional policy turned to the regions that did not developed by their own: the so-called “regional problems”. In the third period, the regional policies showed a clear decline, they became more local and social-aid geared, and less structuralist or systemic.
    Keywords: US; industrial belt; TVA; regional policy; Appalachia
    JEL: R58 R11 O14 O18 O25
    Date: 2007–04
  2. By: KITANO Taiju; OHASHI Hiroshi
    Abstract: This paper examines the effect of U.S. safeguard on motorcycle imports in the period from 1983 to 1987. After receiving the temporary protection with the maximum tariff of more than 45%, Harley Davidson drastically recovered its sales. The paper conducts structural analyses of the motorcycle market, and finds that the safeguard contributed merely a fraction of Harley Davidson's profit. This finding is primarily due to small cross-price elasticity of demand between American and Japanese motorcycle models.
    Date: 2007–04
  3. By: James B. Davies (University of Western Ontario); Martin G. Kocher (University of Innsbruck); Matthias Sutter (University of Amsterdam)
    Abstract: We examine the publications of authors affiliated with an economics research institution in Canada in (i) the Top-10 journals in economics according to journals' impact factors, and (ii) the Canadian Journal of Economics. We consider all publications in the even years from 1980 to 2000. Canadian economists contributed about 5% of publications in the Top-10 journals and about 55% of publications in the Canadian Journal of Economics over this period. We identify the most active research centres and identify trends in their relative outputs over time. Those research centres successful in publishing in the Top-10 journals are found to also dominate the Canadian Journal of Economics. Additionally, we check the robustness of our findings with respect to journal selection, and we present data on authors' Ph.D.-origin, thereby indicating output and its concentration in graduate education.
    Keywords: research in economics; Canadian economics; top journals
    JEL: A14
    Date: 2007
  4. By: Fernandez, Pablo (IESE Business School)
    Abstract: En este documento se analizan dos empresas con actividades muy similares: Boston Chicken, una cadena de más de 1.700 restaurantes especializados en comida casera, y TelePizza, una cadena de más de 700 pizzerías. Ambas crecieron mucho en la década de los noventa y tuvieron un período de enorme crecimiento en la cotización de sus acciones, seguido por otro período de descenso vertiginoso de la cotización. Dicho de otro modo, ambas tuvieron un período de gran rentabilidad y gran creación de valor para sus accionistas, al que siguió otro período de rentabilidad negativa y destrucción de valor para los accionistas. El objetivo del documento es identificar, considerar y clasificar los factores y las circunstancias que propiciaron los acusados descensos (y los previos ascensos) de las cotizaciones.
    Keywords: creación valor; rentabilidad requerida recursos propios; coste capital; valoración empresa; coste recursos propios;
    JEL: G12 G31 G32
    Date: 2006–12–03
  5. By: Cemile Sancak; Laura Jaramillo
    Abstract: The Dominican Republic and Haiti share the island of Hispaniola and are broadly similar in terms of geography and historical institutions, yet their growth performance has diverged remarkably. The countries had the same per capita real GDP in 1960 but, by 2005, the Dominican Republic's per capita real GDP had tripled whereas that of Haiti had halved. Drawing on the growth literature, the paper explains this divergence through a combined approach that includes a panel regression to study growth determinants across a broad group of countries, and a case study framework to better understand the specific policy decisions and external conditions that have shaped economic outcomes in the Dominican Republic and Haiti. The paper finds that initial conditions cannot fully explain the growth divergence, but rather policy decisions have played a central role in the growth trends of the two countries. This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
    Keywords: Growth , income divergence , Dominican Republic , Haiti , Economic growth , Dominican Republic , Haiti , Economic policy , Economic models ,
    Date: 2007–03–15
  6. By: Ivan O. Kitov (Russian Academy of Sciences)
    Abstract: The evolution of Gini coefficient for personal incomes in the USA between 1947 and 2005 is analyzed and modeled. There are several versions of personal income distribution (PID) provided by the US Census Bureau (US CB) for this period with various levels of resolution. Effectively, these PIDs result in different Gini coefficients due to the differences between discrete and continuous representations. When all persons of 15 years of age and over are included in the PIDs, Gini coefficient drops from 0.64 in 1947 to 0.54 in 1990. This effect is observed due to a significant decrease in the portion of people without income. For the PIDs not including persons without income, Gini coefficient is varying around 0.51 between 1960 and 2005 with standard deviation of 0.004, i.e. is in fact constant. This Gini coefficient is practically independent on the portion of population included in the PIDs according to any revision of income definitions. The driving force of the model describing the evolution of individual incomes (microeconomic level) and their aggregate value (macroeconomic level) is the change in nominal GDP per capita. The model accurately predicts the evolution of Gini coefficient for the PIDs for people with income. The model gives practically unchanged (normalized) PIDs and Gini coefficient between 1947 and 2005. The empirical Gini curves converge to the predicted one when the number of people without income decreases. Asymptotically, the empirical curves should collapse to the theoretical one when all the working age population obtains an appropriate definition of income. Therefore the model Gini coefficient potentially better describes true behavior of inequality in the USA because the definitions of income used by the US Census Bureau apparently fail to describe true income distribution.
    Keywords: Gini index, personal income distribution, Pareto distribution, microeconomic modeling, USA, real GDP, macroeconomics
    JEL: D01 D31 E17 E64 J1 O12
  7. By: David Cook; Woon Gyu Choi
    Abstract: This paper examines empirically U.S. broad money demand emphasizing the role of financial market risk. We find that money demand rises with the liquidity risk of stock markets or the credit risk of corporate bond markets. After controlling for the effect of financial market risk, money demand becomes relatively stable over the last 35 years. At the sectoral level, household money holdings continue to be stable in a traditional model controlling for a decline in transactions costs for investing in mutual funds in the early 1990s. In contrast, business money holdings have been consistently (positively) associated with credit risk.
    Keywords: Money demand , financial market risk , stock market liquidity , money market mutual funds ,
    Date: 2007–04–17
  8. By: Adegbesan, Tunji (IESE Business School); Ricart, Joan E. (IESE Business School)
    Abstract: Most approaches to innovation bear the implicit assumption that increased innovativeness leads to improved organizational performance. Thus, more attention has been focused on innovativeness than on innovation performance; on novelty than on value. However, recent empirical evidence calls into question the unqualified optimism surrounding innovation, and leads us to ask what we really know about when technological innovation improves performance. In this paper, we seek to make a contribution by presenting the results of an exhaustive review of extant knowledge on the outcomes of technological innovation. Our synthesis of the literature allows us to relate in one parsimonious model the drivers and moderators of the antecedents, technical outcomes, and performance outcomes of technological innovation and technological change. We also make sense of the proliferation of terms, and consequent terminological ambiguity, which characterizes a lot of work on technological innovation. Finally, in the light of the model presented and recent developments in work on firm capabilities, we indicate possible avenues for further development of this critical area of research.
    Keywords: Technological innovation; organizational performance; innovation and innovativeness;
    Date: 2007–01–15
  9. By: Robert Baade (Department of Economics and Business, Lake Forest College); Victor Matheson (Department of Economics, College of the Holy Cross)
    Abstract: Prior to 2005, New Orleans had struggled to retain its NFL franchise. The Saints remained in the city, despite an outdated stadium and small media market, only through generous direct public subsidies to the team. Paradoxically, the devastation wrought by Hurricane Katrina in September 2005 actually improved the short-term viability of the franchise by spurring an outpouring of local support for the team and by making relocation of the Saints politically untenable for the league. The long-term outlook for the team, however, appears grim. Already a small market, New Orleans’ population and business community has declined considerably due to Katrina. The NFL’s G-3 loan program for stadium construction is tapped out. Finally, the financial success of other NFL franchises has both raised the cost of fielding a competitive team and increased the value of the Saints as a target of relocation.
    Keywords: sports, NFL Governance, New Orleans, Hurricane Katrina, football
    JEL: L83
    Date: 2007–04
  10. By: Francisco Ramon-Ballester (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Torsten Wezel (Deutsche Bundesbank, Wilhelm-Epstein-Str. 14, 60431 Frankfurt am Main, Germany.)
    Abstract: This paper empirically investigates the extent to which the financial linkages of Latin American banks with the exterior are influenced by political risk and deposit dollarisation. We find that the sum of banks’ foreign assets and liabilities is a function of risk-return considerations and excess domestic credit demand. An increase in political risk is shown to be associated with a build-up of foreign positions by the banking sector, but this adverse effect on the banking system is mitigated in economies with a high share of dollarised deposits. These relationships largely hold when the determinants of foreign assets and liabilities are estimated separately, with risk-induced capital flight being moderated by a high degree of deposit dollarisation. While changes in overall country risk including the risk of macro collapse drive official capital outflows, for a wider measure of capital flight including informal flows only changes in political risk matter. In each case, deposit dollarisation is shown to possess a risk-mitigating property. The results suggest caution with active dedollarisation strategies in highly dollarised economies where political instability remains an issue. JEL Classification: E42, F36, G21.
    Keywords: Dollarisation, political risk, banking systems, financial integration, Latin America.
    Date: 2007–03
  11. By: Eric Le Borgne; Gauti B. Eggertsson
    Abstract: This paper proposes a theory to explain why a politician delegates policy tasks to a technocrat in an independent institution. It formalizes the rationales for delegation highlighted by Hamilton (1788) and by Blinder (1998). Delegation trades-off the cost of having a possibly incompetent technocrat with a long-term job contract against the benefit of having a technocrat who (i) invests more effort into the specialized policy task and (ii) is better insulated from the whims of public opinion. One natural application of the theory is in the field of monetary policy where the model provides a new theory of central bank independence.
    Keywords: Delegation , elections , career concerns , learning-by-doing , insulation , Central Bank Independence ,
    Date: 2007–04–17
  12. By: Rishi Goyal; Ratna Sahay
    Abstract: This paper compares the pattern of macroeconomic volatility in 17 Latin American countries during episodes of high and low growth since 1970, examining in particular the role of policy volatility. Macroeconomic outcomes are distinguished from macroeconomic policies, structural reforms and reversals, shocks, and institutional constraints. Based on previous work, a composite measure of structural reforms is constructed for the 1970-2004 period. We find that outcomes and policies are more volatile in low growth episodes, while shocks (except U.S. interest rates) are similar across episodes. Fiscal policy volatility is associated with lower growth, but fiscal policy procyclicality is not. Low levels of market-oriented reforms and structural reform reversals are also associated with lower growth.
    Keywords: Growth , volatility , structural reforms , Latin America , episodic approach , Economic growth , Latin America , Economic reforms , Economic policy , Economic models ,
    Date: 2007–01–04

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