New Economics Papers
on Business, Economic and Financial History
Issue of 2007‒10‒13
twelve papers chosen by

  1. The Historical Roots Of India’s Service-Led Development : A Sectoral Analysis Of Anglo-Indian Productivity Differences, 1870-2000 By Broadberry, Stephen; Gupta, Bishnupriya
  2. Co-Authoring Advanced Art By David Galenson
  3. Mixing Kohonen Algorithm, Markov Switching Model and Detection of Multiple Change-Points: An Application to Monetary History By Marie-Thérèse Boyer-Xambeu; Ghislain Deleplace; Patrice Gaubert; Lucien Gillard; Madalina Olteanu
  4. The Equity Premium: 100 Years of Empirical Evidence from the UK By Andrew Vivian
  5. What Determines Top Income Shares? Evidence from the Twentieth Century By Roine, Jesper; Vlachos, Jonas; Waldenström, Daniel
  6. Recent Developments In The Theory Of Very Long Run Growth : A Historical Appraisal By Broadberry, Stephen
  7. Institutional Development of Capital Markets in Nine Asian Economies By Nakagawa, Rika
  8. Optimal Technology and Development By Hernan J. Moscoso Boedo
  9. A Brief History of Production Functions By Mishra, SK
  10. National Finance Commission Awards in Pakistan: A Historical Perspective By Iftikhar Ahmed; Usman Mustafa; Mahmood Khalid
  11. Economic policy and institutional change: a contex-specific model for explaining the economic reforms failure in 1970’s Colombia By Angela Milena Rojas
  12. Living standards and the distribution of heights: Italy, 1855-1910 By Brian A’Hearn; Franco Peracchi; Giovanni Vecchi

  1. By: Broadberry, Stephen (Department of Economics, University of Warwick); Gupta, Bishnupriya (Department of Economics, University of Warwick)
    Abstract: Overall labour productivity in India was already only around 15 per cent of the UK level between the early 1870s and the late 1920s. Between 1929 and 1950 India fell further behind and remained at around 10 per cent of the UK level until the 1970s. India has been catching-up since the 1970s, but by the end of the twentieth century was still further behind than in the late nineteenth century. Agriculture has played an important role in India’s relative decline to 1950 and subsequent delay in catching up, since comparative India/UK labour productivity in this sector has declined continuously and agriculture still accounts for around two-thirds of employment in India. Comparative India/UK labour productivity in industry has fluctuated around a level of around 15 per cent. The only sector to exhibit trend improvement in comparative India/UK labour productivity over the long run is services, rising from around 15 per cent to around 30%. India’s recent emergence as a dynamic service-led economy appears to have long historical roots.
    Keywords: Labour productivity ; sectoral disaggregation ; international comparison
    JEL: N10 N30 O47 O57
    Date: 2007
  2. By: David Galenson
    Abstract: The joint production of paintings by more than one artist was not uncommon in the past: a number of Old Masters had assistants do much of the work on their paintings, executing images that had been planned by the master. Yet prior to the twentieth century very few paintings were actually signed by more than one artist. Early in the twentieth century, many important conceptual artists occasionally co-authored paintings or drawings, but consistent co-authorship of paintings, sculptures, and photographs is a practice that is novel to the late twentieth century. These recent instances have generally involved pairs of conceptual artists. The English team, Gilbert and George, is the most important pair that has consistently produced co-authored works; they have executed all of their work jointly since 1969, when they made Singing Sculpture, their first and most famous piece. A number of pairs of young conceptual artists had worked closely together earlier in the century, but they did not formally co-author their work, perhaps because of the art world's commitment to the ideal of the autonomous artist. Since the critical and economic success of Gilbert and George has demonstrated that this resistance can be overcome, co-authorship has become more common among younger conceptual artists, and this trend is likely to continue in future.
    JEL: J01
    Date: 2007–10
  3. By: Marie-Thérèse Boyer-Xambeu (LED - EA3391 - Laboratoire d'Economie Dionysien - [Université de Paris VIII]); Ghislain Deleplace (LED - EA3391 - Laboratoire d'Economie Dionysien - [Université de Paris VIII]); Patrice Gaubert (SAMOS - Statistique Appliquée et MOdélisation Stochastique - [Université Panthéon-Sorbonne - Paris I], Erudite - Erudite - [Université de Paris 12]); Lucien Gillard (LED - EA3391 - Laboratoire d'Economie Dionysien - [Université de Paris VIII]); Madalina Olteanu (SAMOS - Statistique Appliquée et MOdélisation Stochastique - [Université Panthéon-Sorbonne - Paris I], CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I])
    Abstract: The present paper aims at locating the breakings of the integration process of an international system observed during about 50 years in the 19th century. A historical study could link them to special events, which operated as exogenous shocks on this process. The indicator of integration used is the spread between the highest and the lowest among the London, Hamburg and Paris gold-silver prices. Three algorithms are combined to study this integration: a periodization obtained with the SOM algorithm is confronted to the estimation of a two-regime Markov switching model, in order to give an interpretation of the changes of regime; in the same time change-points are identified over the whole period providing a more precise interpretation of the various types of regulation.
    Date: 2007
  4. By: Andrew Vivian
    Abstract: We examine the UK equity premium over more than a century using dividend growth to estimate expectations of capital gains employing the approach of Fama and French (2002). Over recent decades estimated equity premia implied by dividend growth have been much lower than that produced by average stock returns for the UK market as a whole; a finding corroborated by all economic sub-sectors. Our empirical analysis suggests this is primarily due to a declining discount rate, during the latter part of the 20th Century, which would rationally stimulate unanticipated equity price rises during this period. Thus, we conclude that historical stock returns over recent decades have been above investors’ expectations.
    Keywords: Equity Premium; Expected Returns; Dividend Growth Predictability
    JEL: G10 G12
    Date: 2007–09
  5. By: Roine, Jesper (Stockholm School of Economics); Vlachos, Jonas (Dept. of Economics, Stockholm University); Waldenström, Daniel (IFN)
    Abstract: This paper examines the long-run determinants of the evolution of top income shares. Using a newly assembled panel of 16 developed countries over the entire twentieth century, we find that financial development disproportionately boosts top incomes. This effect appears to be particularly strong during the early stages of a country’s development. Economic growth is strongly pro-rich which is inconsistent with globalized labor markets determining the incomes of elites. Furthermore, international trade is not associated with increases in top incomes on average, but is so in Anglo-Saxon countries. Finally, tax progressivity has a significant negative effect on top income shares whereas government spending has no such clear impact on inequality.
    Keywords: Top incomes; income inequality; financial development; trade openness; government spending; economic development
    JEL: D31 F10 G10 N30
    Date: 2007–09–29
  6. By: Broadberry, Stephen (Department of Economics, University of Warwick)
    Abstract: This paper offers a historical appraisal of recent developments in the theory of very long run growth, focusing on three main areas: (1) linkages between wages, population and human capital (2) interactions between institutions, markets and technology and (3) sustaining the process of economic growth once it has started. Historians as well as economists have recently begun to break away from the traditional practice of using different methods to analyse the world before and after the industrial revolution. However, tensions remain between the theoretical and historical literatures, particularly over the unit of analysis (the world or particular countries) and the role of historical contingency
    Date: 2007
  7. By: Nakagawa, Rika
    Abstract: This paper is conducting a comparative analysis of the development of securities markets in nine Asian economies: Korea, Taiwan, Hong Kong, Singapore, Malaysia, Thailand, Indonesia, the Philippines, and China. This study focuses on two aspects: the history and institutional development of securities market, such as legal systems, payment systems, etc. From the analyses, this paper reveals several common features of the development of securities markets in nine Asian economies. First, most economies had an informal capital market in the early period of their history. Second, the background of the foundation of their official markets was influenced by experiences of colonization. Third, most governments recognized the importance of the capital market for economic development and had a positive attitude in promoting the market. Fourth, statistics clearly showed that most economies experienced several booms in their capital market from the late 1980s.
    Keywords: Capital market, Securities market, East Asia, Southeast Asia
    JEL: G18 N20 N65
    Date: 2007–07
  8. By: Hernan J. Moscoso Boedo
    Abstract: Skill intensive technologies seem to be adopted by rich countries rather than poor ones. Related to that observation, the ratio of wages of skilled to unskilled workers - the skill premium - shows two important features over time and across countries. In the US the skill premium decreased during the first half of the 20th century and it increased after 1950, evolving according to a U shaped pattern. On the other hand, the same measure across countries around 1990 is hump shaped when countries are ordered by GDP per worker. By modeling the decisions for factor accumulation and technology adoption, this paper gives a systematic explanation as to why we see ever more skill intensive technologies being adopted both over time in the US and across countries. The model developed here endogenously generates predictions for the skill premium that are consistent with both the US and international observations under the same set of parameter values
    Keywords: skill biased technological change; skill premium,endogenous technology; inequality
    JEL: E25 J24 N32 O33 O57
    Date: 2007–04
  9. By: Mishra, SK
    Abstract: This paper gives an outline of evolution of the concept and econometrics of production function, which was one of the central apparatus of neo-classical economics. It shows how the famous Cobb-Douglas production function was indeed invented by von Thunen and Wicksell, how the CES production function was formulated, how the elasticity of substitution was made a variable and finally how Sato’s function incorporated biased technical changes. It covers almost all specifications proposed during 1950-1975, and further the LINEX production functions and incorporation of energy as an input. The paper in divided into (1) single product functions, (2) joint product functions, and (3) aggregate production functions. It also discusses the ‘capital controversy’ and its impacts.
    Keywords: Production function; Cobb-Douglas; CES; Transcendental; translog; Zellner-Revankar; VES; Bruno; Kadiyala; Diewert; Kummel; Mundlak; Engineering production function; Multi-output; joint product; Data Envelopment; Household production function; Humbug production function; capital controversy; Cambridge controversy.
    JEL: C30 C20 D24 B16 B13
    Date: 2007–10–09
  10. By: Iftikhar Ahmed (Pakistan Institute of Development Economics, Islamabad.); Usman Mustafa (Pakistan Institute of Development Economics, Islamabad.); Mahmood Khalid (Pakistan Institute of Development Economics, Islamabad.)
    Abstract: This study explores the evolution of fiscal resource distribution in Pakistan. Pakistan is a federation comprising four provinces, federally-administered areas, and the Islamabad Capital Territory. Being a central type of government, most of the revenues are collected by the centre and then redistributed vertically between the federal and the provincial governments, and horizontally among the provinces. Provinces then also redistribute revenues among lower tiers of the government, through a revenue-sharing formula. A thorough look at the history indicates that this process has been complex and has a far-reaching impact. A less systematic approach has been adopted to decentralise the financial matters. Over time, the divisible pool has expanded due to heavy reliance on indirect taxes as well as improvement in the collection. Population is the sole distribution criteria, adopted in all NFC awards from the divisible pool. This has raised friction among the provinces, necessitating inclusion of other potential variables evolved from international best practices. In addition to that, absence of technical experts and permanency of the NFC is another impediment. The NFC is supposed to provide the framework for amicable distribution of resources between the federal and the provincial governments for the joint goal of development and prosperity.
    Keywords: NFC, Pakistan, Fiscal Federalism, Rule and Discretion, Political Economy, Population, Subventions, Doing the Business of Government
    JEL: H71 H72 H73 H77
    Date: 2007
  11. By: Angela Milena Rojas
    Abstract: This paper develops a context-specific model (Greif, 1997) to analyze the case of failed market-oriented reform in Colombia during 1974-78. The methodology keeps the contextual specificity at a manageable level, which is no more than the institutional structure under consideration, while it tries to maintain a parsimonious model. The theoretical framework is inscribed in the rational choice approach and game theory. This paper raises a standard question in economic reforms literature: why did the reforms fail? More comprehensively, what impeded progressive institutional change in this case? The answer is based on modelling theoretically and historically the strategic dilemmas brought about by the reforms and internacional shocks. Government appears here as an inflexible agenda setter poorly endowed; Coffee as the dominant player whose short-run interests won through, and Industry as the weak player who openly opposed to policies that the G-Cs coalition set out with the 1976 coffee boom. Ultimately the reforms failed because of Government’s poor understanding of and limited autonomy for solving the dilemmas “economic reforms vs. coffee boom”, “Non-coffee sectors vs. Coffee sector”, and “Short-run vs. Long-run economic growth”.
    Date: 2006–11–05
  12. By: Brian A’Hearn (Franklin & Marshall College); Franco Peracchi (Tor Vergata University); Giovanni Vecchi (Tor Vergata University)
    Abstract: Mean heights are often used to measure living standards for times and places in which other economic indicators are not available. We propose a novel approach to modeling the distribution of heights, which does not rely on common but often-unwarranted assumptions such as normality. We construct a new database of height distributions for 69 Italian provinces for birth cohorts from 1855 to 1910 and apply our method to control for changes in age at measurement, selection effects due to emigration, and transitory data errors. Analysis of our corrected height distributions yields new insights into the evolution of living standards during Italy’s unification and transition to modern economic growth.
    Date: 2007–04

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