New Economics Papers
on Business, Economic and Financial History
Issue of 2007‒10‒06
fourteen papers chosen by

  1. Industrial Property Institutions, Patenting, and Technology Investment in Spain and Mexico, c. 1820-1914. By Beatty, Edward; Saiz, J. Patricio
  2. Farmers and Capitalism By Carney, Richard
  3. History of Economics or a Selected History of Economics? By Palma, Nuno
  4. Why Did Ghettos "Go Bad"? Evidence from the US Postal Service By Leah Platt Boustan; Robert A. Margo
  5. Successes and Failures of Monetary Policy Since the 1950s By David Laidler
  6. Creating the Canada/Quebec Pension Plans: An Historical and Political Analysis By Kristina Babich; Daniel Béland
  7. Poverty in Britain in 1904: An Early Social Survey Rediscovered By Ian Gazeley; Andrew Newell
  8. Professor Becker on Free Banking: A Comment By van den Hauwe, Ludwig
  9. Trade Restrictiveness and Deadweight Losses from U.S. Tariffs, 1859-1961 By Douglas A. Irwin
  10. How Airline Markets Work...Or Do They? Regulatory Reform in the Airline Industry By Severin Borenstein; Nancy L. Rose
  11. CONSTRUCTING HISTORICAL EURO AREA DATA By Heather Anderson; Mardi Dungey; Denise R. Osborn; Farshid Vahid
  12. Migration Creation, Diversion, and Retention: New Deal Grants and Migration: 1935-1940 By Todd Sorensen; Price Fishback; Samuel Allen; Shawn Kantor
  13. Keynesian cross: diagrammatical interpretations of effective demand By Heller, Claudia; Dessotti, Marina
  14. The Antebellum U.S. Iron Industry: Domestic Production and Foreign Competition By Joseph H. Davis; Douglas A. Irwin

  1. By: Beatty, Edward (University of Notre Dame); Saiz, J. Patricio (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid)
    Abstract: This paper explores the nature and implications of nineteenth century patent law in two late-industrializing countries: Spain and Mexico. Both inherited earlier ancien regime monopoly practices, both adopted aspects of modern, codified patent systems in the early nineteenth century, and both sought primarily to encourage innovation and especially the introduction of foreign techniques. Mexico, however, abandoned this orientation in 1890 in favor of an emphasis on supporting inventive activity while Spain retained this orientation until recently. After presenting an overview of the conceptual and historical issues regarding comparative patent systems in section one; section two compares the nature of the Spanish and Mexican systems in the nineteenth century; while sections three and four examine the implications of patent law: its impact on trends in patenting behavior and —more tentatively— its probable consequences for investment in technological change.
    Keywords: Spain and Mexico Economic History; Patents; Technological Change; Technology Transfer.
    JEL: N40 N43 N46 O31 O33 O34
    Date: 2007–01
  2. By: Carney, Richard
    Abstract: Most analyses of modern capitalism focus on bargains struck between workers, managers, and owners (and the different types of firms they inhabit). But considering the substantial influence of institutional inertia on modern outcomes, it is necessary to examine the origins, and to consider which actors were most important in the early construction of capitalist systems. In this regard, farmers have played a critical role. I examine four cases - early 19th Century United States, early 20th Century United States, post-WWII France, and post-WWII Japan - to assess farmers’ influence on the origins of contemporary institutions, and find that they have played an important, though frequently overlooked, role.
    Keywords: political economy; capitalism; financial institutions; economic development
    JEL: P0 N20
    Date: 2007–09–24
  3. By: Palma, Nuno
    Abstract: While research on the history of economics can be important to modern economics, the work of historians of economics is more often than reasonable associated with either non-contemporary or heterodox issues. I provide quantitative evidence of this, by analyzing the publications in the three main history of economics journals over the last fourteen years (1993-2006). This trend must change if the work of historians of economics is to be taken seriously by mainstream economists.
    Keywords: History of Economics
    JEL: B4 B0
    Date: 2007–09–10
  4. By: Leah Platt Boustan; Robert A. Margo
    Abstract: In 1990 and 2000, residential segregation was associated with poor economic outcomes for African-Americans. Earlier in the century, the opposite was true. The economic deterioration of African-American enclaves has been attributed either to the departure of the black middle class or to the decline in centrally-located jobs. Postal employment -- well-paid work that has, for largely exogenous reasons, remained in central cities -- is a useful test case to distinguish between these explanations. Black postal employment is unrelated to segregation before 1960, when middle class role models, including a large contingent of postal employees, were close at hand. From 1960 onward, as other employment opportunities disappeared, blacks in segregated cities were more likely to work for the postal service (relative to whites in their area). This relationship is true only for postal clerks, many of whom work at centralized processing plants, not for mail carriers who work throughout the metropolitan area. We interpret this pattern as broadly consistent with the importance of job availability for the economic health of black neighborhoods.
    JEL: J71 N32 N92
    Date: 2007–10
  5. By: David Laidler (University of Western Ontario)
    Abstract: Successes and failures in monetary policy stem mainly from coherence or lack thereof in the monetary order, rather than the tactical skills of policy makers. Crucial here are questions of consistency among the economic ideas that the policy regime embodies, the way in which the economy actually functions, and the beliefs of private agents and policy makers about these matters. These postulates are used to frame accounts of the Bretton Woods System and its collapse, the Great Inflation that followed, the subsequent disappointing performance of money-growth targeting, the breakdown of the Japanese "bubble economy" the onset of theEMS crisis at the beginning of the 1990s, and since then, the launch of the Euro and the apparent success of inflation targeting. Though monetary policy seems rather successful at present, certain weaknesses in currently prevailing monetary orders are noted.
    Keywords: monetary policy; policy regimes; crises; pegged exchange rates; flexible exchange rates; inflation; inflation targets; money supply; central banks, central bank independence.
    JEL: E42 E58 E65 F33
    Date: 2007
  6. By: Kristina Babich; Daniel Béland
    Abstract: Drawing on recent historical institutionalist scholarship, this paper explores the debates leading to the enactment of the Canada/Quebec Pension Plans (C/Q.P.P.) in 1965. More specifically, this analysis underlines the respective role of and the interaction between political institutions, business and labor power, and changing ideas about the role of public and private pensions in Canada. As argued, although the ideas that guided the enactment of C/Q.P.P. stressed the key role of private benefits, the enduring weight of Canadian-style federalism mitigated the impact of interest groups, especially business organizations, on the legislative process. Overall, the paper suggests that students of social policy should pay closer attention to the interaction between political institutions, interest group mobilization, and changing ideas about the relationship between public and private benefits.
    Keywords: pensions, ideas, institutions, federalism, politics, social policy, business, labor, private benefits, Canada
    JEL: I38 H77
    Date: 2007–08
  7. By: Ian Gazeley (University of Sussex); Andrew Newell (University of Sussex and IZA)
    Abstract: Until now there have been no national estimates of the extent of poverty in Britain at the turn of the 20th century. This paper introduces a newly-discovered household budget data set for the early 1900s. These data are more representative of urban working households in Britain in the period than any other existing record, although they are not without deficiencies. We use these data to estimate urban poverty in the British Isles in 1904. Applying Bowley’s poverty line we find that about fifteen percent of people in urban working class households had income insufficient to meet minimum needs. This is close to Rowntree’s estimate of primary poverty for York 1899 and in the range that Bowley found in Northern towns in 1912- 3. This average masks a heavy concentration of poverty among the unskilled and those with large families.
    Keywords: poverty, Britain, 1904
    JEL: N33 O15
    Date: 2007–09
  8. By: van den Hauwe, Ludwig
    Abstract: Professor Becker´s paper about free banking written in 1956 was originally intended as a reaction to the 100-percent reserve proposals that were then popular at the University of Chicago. Today the original paper clearly illustrates how considerably our views and theories about free banking have evolved in the past 50 years. This development is to a considerable extent the result of the work and the writings of economists of the Austrian School. Professor Pascal Salin is one of the most prominent members of the Austrian free banking school. In a new introduction to this 1956 paper written especially for the Festschrift in honor of Professor Pascal Salin, Professor Gary Becker partially repudiates and mitigates some of his previous conclusions. This event offers a fitting opportunity to review some developments in the theory of free banking and related issues and to add a few clarifications concerning the present “state of the art” as regards an acceptable and adequate notion of free banking.
    Keywords: Free Banking; Monetary Regimes; Monetary Standards; Business Cycles
    JEL: E32 E42 E58
    Date: 2007–10–04
  9. By: Douglas A. Irwin
    Abstract: This paper uses detailed tariff data to calculate the Anderson-Neary trade restrictiveness index (TRI) for the United States in 1859 and annually from 1867 to 1961. The TRI is defined as the uniform tariff that yields the same welfare loss as an existing tariff structure. The import-weighted average tariff understates the TRI by about 70 percent over this period. This approach also yields annual estimates of the static welfare loss from the tariff structure; the largest losses occur in the early 1870s (about one percent of GDP) but they fall almost continuously thereafter to less than one-tenth of one percent of GDP by the early 1960s. On average, import duties produced a welfare loss of 40 cents for every dollar of revenue generated, slightly higher than contemporary estimates of the marginal welfare cost of taxation.
    JEL: F13 N71 N72
    Date: 2007–09
  10. By: Severin Borenstein; Nancy L. Rose
    Abstract: Following a brief review of the U.S. domestic airline industry under regulation (1938-1978), we study the changes that have occurred in pricing, service, and competition in the 28 years since deregulation. We then examine some of the major public policy issues facing the industry: (a) the sustainability of competition and volatility of airline profits, (b) possible market power of dominant airlines, and (c) congestion and investment shortfall in the airport and air traffic infrastructure.
    JEL: L1 L13 L51 L93
    Date: 2007–09
  11. By: Heather Anderson; Mardi Dungey; Denise R. Osborn; Farshid Vahid
    Abstract: Time series analysis for the Euro Area requires the availability of sufficiently long historical data series, but the appropriate construction methodology has received little attention. The benchmark dataset, developed by the European Central Bank for use in its Area Wide Model (AWM), is based on fixed-weight aggregation across countries with historically distinct monetary policies and financial markets of varying international importance. This paper proposes a new methodology, based on the historical distance from monetary integration between core and periphery countries, for producing back-dated monetary and financial series for the Euro Area. The impact of using the new methodology versus the AWM data is illustrated through a structural VAR analysis and estimates of an international DSGE model. An important advantage of the new methodology is that it can be applied to develop appropriate series as new member countries join the Euro Area.
    JEL: C82 C43 E58
    Date: 2007–10
  12. By: Todd Sorensen (University of California, Riverside and IZA); Price Fishback (University of Arizona); Samuel Allen (Virginia Military Institute); Shawn Kantor (University of California, Merced)
    Abstract: During the 1930s the federal government embarked upon an ambitious series of grant programs designed to counteract the Great Depression. Public works and relief programs combated unemployment by hiring workers and building social overhead capital while the Agricultural Adjustment Administration (AAA) sought to raise farm incomes by paying farmers not to produce. The amounts distributed varied widely across the country and potentially contributed to population shifts. We examine the extent to which New Deal spending affected domestic migration patterns in the second half of the 1930s. We estimate an aggregate discrete choice model, in which household heads choose among 466 economic subregions. The structural model allows us to decompose the effects of program spending on migration into three categories: the effect of spending on keeping households in their origin (retention), the effect of pulling non-migrants out of their origin (creation), and the effect of causing migrants to substitute away from an alternative destination (diversion). An additional dollar of public works and relief spending increased net migration into an area primarily by retaining the existing population and creating new migration into the county. Only a small share of the increase in net migration rate was caused by diversion of people who had already chosen to migrate. AAA spending contributed to net out migration, primarily by creating new out migrants and repelling potential in migrants. A counterfactual analysis that examines what would have happened had there been no New Deal spending during the 1930s suggests that the uneven distribution of New Deal public works and relief spending explains about twelve percent of the internal migration flows in the United States between 1935 and 1940. The uneven distribution of AAA spending accounted for about one percent.
    Keywords: migration, New Deal, discrete choice
    JEL: J10 N32 O15 R23
    Date: 2007–09
  13. By: Heller, Claudia; Dessotti, Marina
    Abstract: The General Theory of Employment, Interest and Money by John Maynard Keynes led up to three cross-shaped graphical interpretations: the IS-LM model, the 45º model and the Z-D model. The first one was originated from Hicks (1937) well-known paper, despite the differences between his original version and the textbook versions. The second one has become familiar through Alvin Hansen´s 1953 book, to which Paul Samuelson also contributed. These two models are considered to be neoclassical – the meaning of which in this particular context will be discussed in our paper. The third model has became popular through Dudley Dillard´s 1948 book and is embraced – with few qualifications – by Post Keynesians, who consider it to be more faithful to Keynes´s original 1936 book. The three models are graphical (and algebraical) formalizations of Keynes´s theory, but the last two are more specific in that they are focused on the explanation of the Principle of Effective Demand (PED). This paper compares the two graphical representations of the PED in the light of the definitions of aggregate demand, aggregate supply and effective demand, as they were presented by Keynes in the General Theory. The purpose of the paper is to identify which original arguments by Keynes support each of both models
    Keywords: Keynesianism; 45º model; Z-D model
    JEL: B20 B22
    Date: 2007–09
  14. By: Joseph H. Davis; Douglas A. Irwin
    Abstract: This paper presents new annual estimates of U.S. production of pig iron and imports of pig iron products dating back to 1827. These estimates are used to assess the vulnerability of the antebellum iron industry to foreign competition and the role of the tariff in fostering the industry's early development. Domestic pig iron production is found to be highly sensitive to changes in import prices. Although import price fluctuations had a much greater impact on U.S. production than changes in import duties, our estimates suggest that the tariff permitted domestic output to be about thirty to forty percent larger than it would have been without protection.
    JEL: F13 F17 N11 N61
    Date: 2007–09

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