New Economics Papers
on Business, Economic and Financial History
Issue of 2007‒07‒20
ten papers chosen by
  1. Tawney's Century (1540-1640): the Roots of Modern Capitalist Entrepreneurship in England By John H. Munro
  2. The Equity Premium Puzzle: Australia and the United States in Comparative Perspective By Ville, Simon
  3. Lebanon’s Fiscal Crisis and Economic Reconstruction after War: the case of a bridge too far? By Harvie, Charles and Saleh, Ali Salman
  4. French Wine and the U.S. Boycott of 2003: Does Politics Really Affect Commerce? By Orley Ashenfelter; Stephen Ciccarella; Howard J. Shatz
  5. Monetary Policy, Vagabonding Liquidity and Bursting Bubbles in New and Emerging Markets By Schnabl, Gunther; Hoffmann, Andreas
  6. Marriage and Divorce since World War II: Analyzing the Role of Technological Progress on the Formation of Households By Greenwood, Jeremy; Guner, Nezih
  7. Islamic Banking Performance in the Middle East: A Case Study of Jordan By Saleh,Salman, Ali and Zeitun, Rami
  8. A Comparison of Macroeconomic Performances of Governments in Turkey, 1987-2007 By Kibritçioğlu, Aykut
  9. Great Surges of development and alternative forms of globalization By Carlota Perez
  10. Examining the Social Infrastructure of Berlin Adlershof-City of Science, Technology, and Media By Eva Chang
  1. By: John H. Munro
    Abstract: Richard Tawney (1880-1962), who taught at the London School of Economics from 1917 to 1949, was unquestionably one of the very most important economic historians that England has ever produced: so much so, indeed, that the era of his major research and publications, 1540 - 1640, has justly come to be known as ‘Tawney’s Century’. Those publications, and the debates that they provoked, concern the origins or roots of modern capitalism and (implicitly) capitalist entrepreneurship that were supposed to have been established in this century. Though the roots of those economic developments, in particular those leading to more modern forms of industrial capitalism, may indeed lie in that century, nevertheless the main thesis of this study is that most of their positive fruits are instead to be found in the ensuing century of 1640 - 1740, the century preceding the advent of the modern Industrial Revolution. Tawney’s seminal scholarship, towards these ends, was concerned with two major issues. The first considered in this study is his 1926 monograph: Religion and the Rise of Capitalism, which in part was designed to promote, in the English-speaking world, Max Weber’s famous thesis (1905) on ‘The Protestant Ethic and the Spirit of Capitalism’. Both works focused on how three elements of one Protestant sect in particular, the Calvinists (from 1536), came to influence so deeply that Protestant Ethic and new ethos of modern capitalism: Predestination, the Calling, and ‘Worldly Asceticism’. The significance of this form of Protestantism in England is that Calvinists and other Non-Conformists or Dissenters, those who refused to conform to the Church of England after the 1660 royalist Restoration, constituted about one half of the known scientists, innovators, and entrepreneurs from the later 17th century and through the Industrial Revolution era (1760-1820), though constituting only 5 percent of the population. The debate concerns the roles of their restricted (legislated) minority status and of schools and superior educational systems that they had to establish, but also the applicability of the Weber-Tawney thesis, in explaining their superior economic performance. Tawney’s second major issue was that of ‘agrarian capitalism’, along with the supposed ‘rise of the gentry’: involving the transfer of vast amounts of land from the old aristocracy, the crown and church together, and finally the free-holding yeomanry into the hands of a non-aristocratic upper class who were far more predisposed and able to engage in profit-maximizing agriculture, especially through enclosures and the technology of the New Husbandry. But if Tawney dates this shift from Henry VIII’s Dissolution of the Monasteries, in 1536, this study contends that the real shift, but certainly a major shift, to ‘agrarian capitalism’, involving enclosures and the New Husbandry, again came only after the 1660s. To provide a contrast to Tawney’s work, this study examines two alternative theses on the origins of modern industrial capitalism within Tawney’s century (1540-1640): (1) Earl Hamilton’s thesis of ‘Profit Inflation’, one fully endorsed by Keynes; and (2) John Nef’s ‘Early Industrial Revolution in Tudor-Stuart England’. The Hamilton thesis is rejected in this study, with the contention that its true importance was to inspire Nef’s counter-thesis: on the decisive shift from wood and charcoal fuels to coal fuels, which in turn required very major technological changes (in furnace designs), which in turn led to major increases in industrial scale, and (for Nef) to true ‘industrial capitalism’. This study, noting the importance of Wrigley’s similar thesis on a shift from an organic (wood-based) to an inorganic (coal-based) industrial economy, supports the essence of the Nef thesis — but only for the period after 1640 (with new data). Finally, this study considers two other related changes so necessary for the development of early-modern capitalism, in this era: the development of the Full Rigged or Atlantic Ship (but from the 1450s) and the overseas joint-stock trading companies. Again, their major impact came after 1660, with the ‘New Colonialism’ (Hobsbawm) or ‘Commercial Revolution’ (Davis). The study also considers the history of the English joint stock companies, from the first joint-stock company, in overseas trade (the Muscovy Company of 1553) to the Bubble Act of 1720, which restricted their formation until 1825. Also included is their role in the so-called ‘Financial Revolution’ from 1694 to 1757 (‘Pelhams’s Conversion’ of the national debt).
    Keywords: entrepreneurship; capitalism; Calvinism; Weber-Tawney thesis; Dissenters; the Gentry; New Husbandry; joint-stock companies; Financial Revolution
    JEL: B11 B52 D23 D74 I20 L20 N43 N54 N64 N83
    Date: 2007–07–11
    URL: http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-295&r=his
  2. By: Ville, Simon (University of Wollongong)
    Abstract: The equity risk premium puzzle has received regular attention by economists since it was first invoked by Mehra and Prescott (1985) twenty years ago. In a recent paper, they revisit the question and reject many of the explanations offered but we are left with no clear alternative account. The current paper seeks to do two things. We provide matching historical evidence of the equity premium for Australia and compare the results for the two nations. Resulting from this, we argue that a closer understanding of phases of economic history helps to explain the puzzle.
    JEL: G12 N2
    Date: 2006
    URL: http://d.repec.org/n?u=RePEc:uow:depec1:wp06-25&r=his
  3. By: Harvie, Charles and Saleh, Ali Salman (University of Wollongong)
    Abstract: Since the onset of the Civil War in 1975 Lebanon has experienced burgeoning fiscal deficits and an unsustainable public debt overhang. Much of this arose from the loss of revenues during the period of the Civil War 1975-90 and attempts to maintain basic public expenditure, while from 1990-2006 it reflected post Taif rebuilding and reconstruction of key infrastructure with limited revenue capacity. Considerable progress from the 1990s has been achieved in rebuilding the shattered economy from both public and private international and domestic sources, but its legacy is a huge public debt and a servicing requirement that currently absorbs alone almost 30 per cent of total government revenue and is the highest in the world on a per capita basis. While the need to reduce this debt to a sustainable level would be daunting enough in itself, Lebanon’s fiscal predicament was further compounded by the outbreak of war with Israel during July-August 2006. The consequence of this 34 day conflagration was the devastation of residential property, vital infrastructure, agricultural production, industrial production, exports, environmental damage, the collapse of tourism and a further erosion of the influence and power of the central government. Estimates of the direct and indirect costs for Lebanon of this relatively brief but devastating war conservatively vary from US$10-15 billion. The implications of such reconstruction and rebuilding costs for the budget and public debt are potentially calamitous for Lebanon. A key question is whether Lebanon can tackle this enormous task in insolation. This paper explores the background to the fiscal crisis, identifies from available literature the extent, nature and cost of the war damage, analyses the options available to the authorities in rebuilding the economy and highlights key policy issues and measures that will be required if a sustainable economic recovery is to be achieved. Despite its demonstrated and remarkable resilience to past trauma the paper concludes that the fiscal crisis makes it impossible for Lebanon to tackle the reconstruction and rebuilding task on its own and particularly in the wake of the events of summer 2006. The country will require substantial and ongoing financial support from international lenders and donors. The success of these efforts in the case of Lebanon is of particular interest as it could well be a microcosm of possible future outcomes for the region more generally.
    JEL: E60 E61 E62 E65
    Date: 2007
    URL: http://d.repec.org/n?u=RePEc:uow:depec1:wp07-04&r=his
  4. By: Orley Ashenfelter; Stephen Ciccarella; Howard J. Shatz
    Abstract: In early 2003, France actively tried to thwart the plans of the Bush administration to build international support for a war to depose Iraqi ruler Saddam Hussein. In response, calls in the United States for a boycott of French products, wine in particular, rebounded through all forms of media. In the spring of 2003, French business people even reported that the boycott calls were hurting their U.S. sales. Using a dataset of sales of nearly 4,700 individual wine brands, we show that there actually was no boycott effect. Rather, sales of French wine dipped for two reasons. First, they experience a cyclical peak at holiday time, from November through early January, and the boycott was called during the February to May period. Second, sales of French wine have been in a secular decline in the United States. Sales in February through May 2003 merely stayed on trend. We contrast our results with other recent work that has found evidence of a boycott effect but that omits the holiday effect from several specifications. French wine producers may be having economic problems, but it is not because of their government's foreign policy.
    JEL: D12 F14 L66 Q17
    Date: 2007–07
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:13258&r=his
  5. By: Schnabl, Gunther; Hoffmann, Andreas
    Abstract: We show how since the mid 1980s expansionary monetary policies in the large economies and “vagabonding liquidity” have contributed to bubbles in the new and emerging markets. Based on the monetary overinvestment theories of Hayek and Wicksell we describe a wave of bubbles and crises that was initiated in Japan by an expansionary monetary policy in the mid 1980s. After the burst of the Japanese bubble and sharply declining interest rates in Japan, carry trade transmitted the bubbles to East Asia (Asian crisis) and the new markets in the developed economies. After the end of the irrational exuberance in the new markets, new bubbles emerged in the US real estate market and possibly currently in China and Central and Eastern Europe. Because particularly Japan and the US have tended to lower interest rates in response to financial crisis, the low interest rate policies in the large countries and thereby speculative exaggerations may continue. According to Wicksell and Hayek a higher level of interest rates in the large countries would reveal the structural distortions that have come along with the ample liquidity supply.
    Keywords: Bubbles; Boom-bust cycles; Capital Flows; Emerging Markets; Hayek; Wicksell.
    JEL: E52 E44 B53 E32
    Date: 2007–04–05
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:4019&r=his
  6. By: Greenwood, Jeremy; Guner, Nezih
    Abstract: Since World War II there has been: (i) a rise in the fraction of time that married households allocate to market work, (ii) an increase in the rate of divorce, and (iii) a decline in the rate of marriage. What can explain this? It is argued here that technological progress in the household sector has saved on the need for labour at home. This makes it more feasible for singles to maintain their own home, and for married women to work. To address this question, a search model of marriage and divorce is developed. Household production benefits from labour-saving technological progress.
    Keywords: Divorce; Hours Worked; Household Production; Marriage; Technological Progress
    JEL: E13 J12 J22 O11
    Date: 2007–07
    URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:6391&r=his
  7. By: Saleh,Salman, Ali and Zeitun, Rami (University of Wollongong)
    Abstract: Islamic banking in Jordan started around two decades ago. Since then it has played an important role in financing and contributing to different economics and social sectors in the country in compliance with the principles of Shariah rules in Islamic banking practices. Since there have been limited studies on the financial performance of Islamic banks in the country. The aim of this paper is to examine and analyse the Jordanian experience with Islamic banking, and in particular the experience for the first and second Islamic bank in the country, Jordan Islamic Bank for Finance and Investment (JIBFI), and Islamic International Arab Bank (IIAB) in order to evaluate the Islamic banks’ performance in the county. The paper goes further to shed some light on the domestic as well as global challenges, which are facing this sector. However, this paper used the performance evaluation methodology by conducting the profit maximization, capital structure, and liquidity tests. This paper found that the efficiency and ability of both banks has increased and both have expanded their investment and activities and had played an important role in financing projects in Jordan. Another interesting finding of the paper that these banks have focused on the short-term investment, perhaps this seems to be the case in most Islamic banking practices. Another finding is that the Bank for Finance and Investment (JIBFI) has a high profitability that encourages other banks to practice the Islamic financial system. The paper also found that Islamic banks have a high growth in the credit facilities and in profitability.
    Keywords: Islamic banking, Performance, Efficiency, Challenges, Jordan
    Date: 2006
    URL: http://d.repec.org/n?u=RePEc:uow:depec1:wp06-21&r=his
  8. By: Kibritçioğlu, Aykut
    Abstract: In this paper, a macroeconomic performance index (MEP10) which consists of selected ten indicators is proposed to evaluate the relative performance of Turkish governments by using monthly data for the period of December 1987 – April 2007. According to the multi-staged evaluation process applied in the study, the governments are grouped in three classes: (1) Relatively successful governments: 46. government (December 1987 – November 1989), 48. government (June 1991 – November 1991), 54. government (June 1996 – June 1997), and 59. government (March 2002 – April 2007), (2) Relatively unsuccessful governments: 47. government (November 1989 – June 1991), 49. government (November 1991 – June 1993), 55. government (June 1997 – January 1999) and 53. government (March 1996 – June 1996), and (3) Most unsuccessful governments: 50.-52. governments (June 1993 – March 1996) and 56.-57. governments (January 1999 – November 2002). The monthly performance index is also used to test some hypotheses regarding the relationship between the length of the governments’ term of office and their macroeconomic performances.
    Keywords: Okun's misery index; macroeconomic performance; macroeconomic stability; governments; political stability; general elections; economic crises; Turkish economy
    JEL: O53 E65 C43
    Date: 2007–07–10
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:3962&r=his
  9. By: Carlota Perez
    Abstract: The present understanding of globalization is inextricably tied to the free market ideology for both proponents and opponents. This paper will argue that globalization has many potential forms of which the neo-liberal recipe, applied up to now, is only one. Globalization need not be neo-liberal. A pro-development version of globalization has not yet been designed or defended as such. It will be argued that, without it, not only would it be very difficult to relaunch development in the South but also to overcome the present instabilities, imbalances and recessionary trends in the economies of the North.
    Date: 2007–07
    URL: http://d.repec.org/n?u=RePEc:tth:wpaper:15&r=his
  10. By: Eva Chang
    Date: 2007–06–22
    URL: http://d.repec.org/n?u=RePEc:wiw:wiwneu:neurusp111&r=his
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