nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2007‒11‒10
nineteen papers chosen by
Bernardo Batiz-Lazo
University of Leicester

  1. Capital market and corporate governance: growth strategy of cotton spinning enterprise in the modern Japan By Takenobu Yuki
  2. The Collaborative Work Concept and the Information Systems Support: Perspectives for and from Manufacturing Industry By Moniz, António
  3. The Sustainable Debts of Philip II: A Reconstruction of Spain\'s Fiscal Position, 1560-1598 By Voth, Hans-Joachim; Drelichman, Mauricio
  4. Long-Run Changes in the U.S. Wage Structure: Narrowing, Widening, Polarizing By Claudia Goldin; Lawrence F. Katz
  5. Victory or Repudiation? The Probability of the Southern Confederacy Winning the Civil War By Marc D. Weidenmier; Kim Oosterlinck
  6. The impact of Milton Friedman on modern monetary economics: setting the record straight on Paul Krugman’s 'Who Was Milton Friedman? By Edward Nelson; Anna J. Schwartz
  8. Immigration and Crime in Early 20th Century America By Carolyn Moehling; Anne Morrison Piehl
  9. Foreign Capital and Economic Growth in the First Era of Globalization By Michael D. Bordo; Christopher M. Meissner
  10. Professor Becker on Free Banking: A Comment By van den Hauwe, Ludwig
  11. "He who sets the boundary”. Chieftaincy as a “necessary” institution in modern Ghana By Valsecchi Pierluigi
  12. How the World Achieved Consensus on Monetary Policy By Marvin Goodfriend
  13. A Quarterly Post-World War II Real GDP Series for New Zealand By Viv Hall; John McDermott
  14. Long term trends in resource exergy consumption and useful work supplies in the UK, 1900-2000 By Benjamin Warr; Heinz Schandl; Robert U. Ayres
  15. Finanzsystem und wirtschaftliche Entwicklung: Tendenzen in den USA und in Deutschland aus makroökonomischer Perspektive By Petra Dünhaupt; Eckhard Hein; Till van Treeck
  16. The Pill and the College Attainment of American Women and Men By Heinrich Hock
  17. L'Economie de l'Education fait-elle des Progrès? Une Perspective d'Histoire de la Pensée Economique By Jean-Luc De Meulemeester
  18. Non-mainstream Economics: Research Abroad and in Korea By MAN-SEOP PARK
  19. Pork Barrel Politics in Postwar Italy, 1953–1994 By Picci, Lucio; Golden, Miriam

  1. By: Takenobu Yuki (Graduate School of Economics, Osaka University)
    Abstract: This paper examines how the corporate governance of the Japanese cotton spinning enterprise was formed in 20th century beginning. The establishment of the corporate governance which makes long-term growth possible has been thought to be reached by the rise of the professional manager who pursued growth strategy in the modern Japanese business history. However, it was not professional manager's rise, but this paper showed that a capital market played a decisive part so that the cotton spinning enterprises might do growth in the period between 1903 and 1918. Then, the incentive which followed the evaluation of the capital market was being given to a professional manager because of a professional manager's reward system's working with the stock prices together. The professional manager chose strategy corresponding to the evaluation of the capital market. The labor productivity of the enterprises that growth became possible was high relatively, and gained a high profit. The factor of this high labor productivity relatively was a labor equipment ratio.
    Keywords: Cotton industry, Modern Japanese business history, Corporate governance, Direct financing, Growth strategy
    JEL: D92 G34 N25
    Date: 2007–10
  2. By: Moniz, António
    Abstract: Most of the discussion and controversy on organisation of work concepts has been referenced to the manufacturing industry along the 20th century: it started with the concept of “scientific management” from Taylor, and continued with the new ideas on the importance of human factors as Mayo pointed out in the 1930s. Immediately after the 2nd World War Friedmann studied the human problems related to new manufacturing technologies and automation. And the late 1950 and 1960s were decades of strong debate on the socio-technics with the research at Tavistock Institute of London and the emergence of national programmes on new forms of work organisation. At the end of the last century the concept of collaborative work was developed together with the definition(s) of information systems and organisational design. However, the interest came from other production activities, like the services. This article analyses the approaches developed on these debates on the collaborative work and information system and its application to the manufacturing industry.
    Keywords: Collaborative Work; Information Systems; Manufacturing;
    JEL: O32 J50 O33 L60 Z13
    Date: 2007–03
  3. By: Voth, Hans-Joachim; Drelichman, Mauricio
    Abstract: The defaults of Philip II have attained mythical status as the origin of sovereign debt crises. The king failed to honor his debts four times during his reign. In this paper, we reassess the fiscal position of Habsburg Spain. New archival evidence allows us to derive comprehensive estimates of debt and revenue. These show that primary surpluses were sufficient to make the king's debt sustainable for most of his reign. Spain's debt burden was manageable up to the 1580s, and its fiscal position only deteriorated for good after the defeat of the `Invincible Armada.' We also estimate fiscal policy reaction functions, and show that Spain under the Habsburgs was at least as `responsible` as the US in the 20th century or as Britain in the 18th century. Our results suggest that the outcome of uncertain events such as wars may have more influence on a history of default than strict adherence to fiscal rules.
    JEL: H62 H63 F34 N24 N44
    Date: 2007–11–06
  4. By: Claudia Goldin; Lawrence F. Katz
    Abstract: The U.S. wage structure evolved across the last century: narrowing from 1910 to 1950, fairly stable in the 1950s and 1960s, widening rapidly during the 1980s, and “polarizing†since the late 1980s. We document the spectacular rise of U.S. wage inequality after 1980 and place recent changes into a century-long historical perspective to understand the sources of change. The majority of the increase in wage inequality since 1980 can be accounted for by rising educational wage differentials, just as a substantial part of the decrease in wage inequality in the earlier era can be accounted for by decreasing educational wage differentials. <br><br>Although skill-biased technological change has generated rapid growth in the relative demand for more-educated workers for at least the past century, increases in the supply of skills, from rising educational attainment of the U.S. work force, more than kept pace for most of the twentieth century. Since 1980, however, a sharp decline in skill supply growth driven by a slowdown in the rise of educational attainment of successive U.S. born cohorts has been a major factor in the surge in educational wage differentials. Polarization set in during the late 1980s with employment shifts into high- and low-wage jobs at the expense of the middle leading to rapidly rising upper tail wage inequality but modestly falling lower tail wage inequality.
    JEL: J2 J24 J31 N32
    Date: 2007–11
  5. By: Marc D. Weidenmier; Kim Oosterlinck
    Abstract: Historians have long wondered whether the Southern Confederacy had a realistic chance at winning the American Civil War. We provide some quantitative evidence on this question by introducing a new methodology for estimating the probability of winning a civil war or revolution based on decisions in financial markets. Using a unique dataset of Confederate gold bonds in Amsterdam, we apply this methodology to estimate the probability of a Southern victory from the summer of 1863 until the end of the war. Our results suggest that European investors gave the Confederacy approximately a 42 percent chance of victory prior to the battle of Gettysburg/Vicksburg. News of the severity of the two rebel defeats led to a sell-off in Confederate bonds. By the end of 1863, the probability of a Southern victory fell to about 15 percent. Confederate victory prospects generally decreased for the remainder of the war. The analysis also suggests that McClellan's possible election as U.S. President on a peace party platform as well as Confederate military victories in 1864 did little to reverse the market's assessment that the South would probably lose the Civil War.
    JEL: N2 N21
    Date: 2007–11
  6. By: Edward Nelson; Anna J. Schwartz
    Abstract: Paul Krugman’s essay “Who Was Milton Friedman?” seriously mischaracterizes Friedman’s economics and his legacy. In this paper we provide a rejoinder to Krugman on these issues. In the course of setting the record straight, we provide a self-contained guide to Milton Friedman’s impact on modern monetary economics and on today’s central banks. We also refute the conclusions that Krugman draws about monetary policy from the experiences of the United States in the 1930s and of Japan in the 1990s.
    Date: 2007
  7. By: Michael Kvasnicka (Department of Economics, Humboldt University); Dirk Bethmann (Department of Economics, Korea University)
    Abstract: Based on county-level census data for the German state of Bavaria in 1939 and 1946, we use World War II as a natural experiment to study the effects of sex ratio changes on out-of-wedlock fertility. Our findings show that war-induced shortfalls of men to women significantly increased the nonmarital fertility ratio at mid century, a result that proves robust to the use of alternative sex ratio definitions, post-war measures of fertility, and estimation samples. The magnitude of this increase furthermore appears to depend on the future marriage market prospects that women at the time could expect to face in the not-too-distant future. We find the positive effect on the nonmarital fertility ratio of a decline in the sex ratio to be strongly attenuated by the magnitude of county-level shares of prisoners of war. Unlike military casualties and soldiers missing in action, prisoners of war had a sizeable positive probability of returning home from the war. Both current marriage market conditions, therefore, and foreseeable improvements in the future marriage market prospects of women appear to have influenced fertility behavior in the immediate aftermath of World War II.
    Keywords: World War II, Sex Ratios, Out-Of-Wedlock Births
    JEL: J12 J13 N34
    Date: 2007
  8. By: Carolyn Moehling; Anne Morrison Piehl
    Abstract: Research on crime in the late 20th century has consistently shown that immigrants have lower rates of involvement in criminal activity than natives. We find that a century ago immigrants may have been slightly more likely than natives to be involved in crime. In 1904 prison commitment rates for more serious crimes were quite similar by nativity for all ages except ages 18 and 19 when the commitment rate for immigrants was higher than for the native born. By 1930, immigrants were less likely than natives to be committed to prisons at all ages 20 and older. But this advantage disappears when one looks at commitments for violent offenses. <br><br>Aggregation bias and the absence of accurate population data meant that analysts at the time missed these important features of the immigrant-native incarceration comparison. The relative decline of the criminality of the foreign born reflected a growing gap between natives and immigrants at older ages, one that was driven by sharp increases in the commitment rates of the native born, while commitment rates for the foreign born were remarkably stable.
    JEL: J01 K4 N3
    Date: 2007–11
  9. By: Michael D. Bordo; Christopher M. Meissner
    Abstract: We explore the association between economic growth and participation in the international capital market. In standard growth regressions, we find mixed evidence of any association between economic growth and foreign capital inflows. If there is an impact, it comes with a long lag and it is transitory having no impact on either the steady state or the short run growth rate. This suggests a view that there were long gestation lags of large fixed investments and it is also consistent with a neoclassical growth model. We also argue for a negative indirect channel via financial crises. These followed on the heels of large inflows and sudden stops of capital inflows often erasing the equivalent of several years of growth. We then take a balance sheet perspective on crises and explore other determinants of debt crises and currency crises including the currency composition of debt, debt intolerance and the role of political institutions. We argue that the set of countries that gained the least from capital flows in terms of growth outcomes in this period were those that had currency crises, foreign currency exposure on their national balance sheets, poorly developed financial markets and presidential political systems. Countries with credible commitments and sound fiscal and financial policies avoided major financial crises and achieved higher per capita incomes by the end of the period despite the potential of facing sudden stops of capital inflows, major current account reversals and currency crises that accompanied international capital markets free of capital controls.
    JEL: E22 F21 F32 F43 N1 N20
    Date: 2007–11
  10. 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 the 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: E42 E32 E58
    Date: 2007–10–04
  11. By: Valsecchi Pierluigi
    Abstract: The title of this paper was inspired by an etymology formulated in 1929 by a famous Gold Coast maìtre-a-penser, J. de Graft Johnson. He explained the most common akan1 term for a chief ohene as a derivation from hye, boundary, with the meaning of “he who would decide the ohi (boundary) between the various groups farming on lands commonly reputed to be under his control” (de Graft Johnson, 1929). The ohene is therefore ‘the settler of the boundary’. Etymology is a tricky territory and I am not sure whether this interpretation is reliable. However it suits perfectly what I intend to say in my paper: 1) Controversial as Chieftaincy may be in Ghana, it is perhaps the clearest embodiment of shared concepts of what it means to belong to a place. 2) The link between Chieftaincy and place is not a static one. To a great extent chiefs have the power to redefine the very nature, size and scope of the place/locality they embody. 3) They are potentially in a better position to re-shape, manipulate, enlarge or shrink boundaries than most other player on the national stage. 4) From the early 1990s many of them were able to exercise that power to an extent they had not experienced since colonial days and in ways new to Ghanaian society and to themselves. I will try to substantiate my points through reference to a recent case of chieftaincy litigation in the Western Region of Ghana.
    Date: 2007–01
  12. By: Marvin Goodfriend
    Abstract: This article tells how the world achieved a working consensus on the core principles of monetary policy. The story begins with the muddled state of affairs in the late 1970s. It then asks: How did Federal Reserve policy produce an understanding of the practical principles of monetary policy? How did formal institutional support abroad for targeting low inflation follow from an international acceptance of these ideas? And how did a consensus theoretical model develop in academia? The article tells how the modern theoretical consensus known as the New Neoclassical Synthesis (aka, the New Keynesian model) reinforces key advances: the priority for price stability, the targeting of core rather than headline inflation, the importance of credibility for low inflation, and preemptive interest rate policy supported by transparent objectives and procedures. The conclusion identifies important practical issues that remain to be explored in theory.
    JEL: E3 E4 E5
    Date: 2007–11
  13. By: Viv Hall (Victoria University of Wellington); John McDermott (Reserve Bank of New Zealand)
    Abstract: There are no official quarterly real GDP estimates for New Zealand for the period prior to 1977. We develop a seasonally adjusted series for 1947q2 to 2006q2, by linking quarterly observations from two recent official series to temporally disaggregated observations for an earlier time period. Annual real GDP series are disaggregated, using the information from two quarterly diffusion indexes, developed by Haywood and Campbell (1976). Three econometric models are used: the Chow and Lin (1971) model that disaggregates the level of GDP, and the Fernández (1981) and Litterman (1983) models that disaggregate changes in GDP. Statistical properties of the series are evaluated, and movements in the new series are benchmarked against qualitative research findings from New Zealand's post-WWII economic history. Our preferred quarterly series is based on results generated from the Chow-Lin model.
    Keywords: Quarterly real GDP series; temporal disaggregation; business cycles; New Zealand
    JEL: C22 C82 E01 E32
    Date: 2007–10
  14. By: Benjamin Warr; Heinz Schandl; Robert U. Ayres (CSIRO Sustainable Ecosystems, Australia)
    Abstract: Our aim is to explain historical economic growth in the UK economy by introducing an empirical measure for useful work derived from natural resource energy inputs into an augmented production function. To do this, we estimate the long-term (1900-2000) trends in resource exergy supply and conversion to useful work in the United Kingdom. The exergy resources considered included domestic consumption of coal, crude oil and petroleum products, natural gas, nuclear and renewable resources (including biomass). All flows of exergy were allocated to an end use such as providing heat, light, transport, human and animal work and electrical power. For each end-use we estimated a time dependent efficiency of conversion from exergy to useful work. The 3-factor production function (of capital, labour and useful work) is able to reproduce the historic trajectory of economic growth without recourse to any exogenous assumptions of technological progress or total factor productivity. The results indicate that useful work derived from natural resource exergy is an important factor of production.
    Keywords: exergy, energy, efficiency, economic growth, United Kingdom
    JEL: Q43 O11
    Date: 2007–09
  15. By: Petra Dünhaupt (IMK at the Hans Boeckler Foundation); Eckhard Hein (IMK at the Hans Boeckler Foundation); Till van Treeck (IMK at the Hans Boeckler Foundation)
    Abstract: This study analyses the longer term implications of 'financialisation' in the US and in Germany from a macroeconomic perspective. In the process of 'financialisation' the importance of the financial sector of an economy increases relative to that of the non-financial sector. While discussing both opportunities and risks involved with 'financialisation', particular emphasis is on the potential causes and implications of a phenomenon repeatedly observed since the early 1980s: whereas physical investment activity was relatively weak over extended periods of time, profits in the business sector have developed very favourably throughout the period. In the US, economic growth is increasingly driven by (wealth-based and debt-financed) private consumption, while in Germany growth and profits depend increasingly on exports. We examine the implications of these different growth patterns in light of the current turbulences in national and international financial systems.
    Date: 2007
  16. By: Heinrich Hock (Department of Economics, Florida State University)
    Abstract: This paper considers the educational consequences of the increased ability of young women to delay childbearing as a result of the birth control pill. In order to identify the effects of the pill, I utilize quasi-experimental variation in U.S. state laws governing access to contraception among female adolescents during the 1960s and 1970s. Inference based on these laws indicates that unconstrained access to the pill increased female college enrollment rates by over 2 percentage points and reduced the dropout rate by over 5 percentage points. Further, early pill access led to a rise in college completion of approximately three quarters of a percentage point among women over the age of thirty. Finally, I analyze the outcomes of men in relation to the contraceptive laws, finding evidence that male educational opportunities also improved due to reductions in undesired early fertility among their female partners.
    Keywords: contraception, human capital, women, men
    JEL: I21 J13 N32 N42
    Date: 2007–10
  17. By: Jean-Luc De Meulemeester (DULBEA, Université libre de Bruxelles, Brussels, Skope, University of Oxford.)
    Abstract: Dans cet article, nous survolons les grandes tendances de l'évolution de la pensée économique en ce qui concerne le rôle de l'éducation et du capital humain, et nous cherchons par là à évaluer s'il y a eu (ou non) progrès dans le champ spécifique de l'économie de l'éducation Si les principales intuitions sur les liens entre éducation et économie étaient déjà là à la fin du 18ième siècle et au début du 19ièmesiècle, les principaux développements datent de l'après-guerre. Nous mettons en avant les grands thèmes débattus depuis la fin des années 50, et mettons en évidence une forme de cyclicité en ce qui concerne la vision des économistes quant au rôle bénéfique ou non de l'éducation pour l'économie. Nous soulignons également un progrès scientifique, menant l'économie de l'éducation à relativiser les premiers enseignements simplistes de la théorie du capital humain. On assiste en effet à une prise de conscience “historique” (rôle des institutions, dépendance à la trajectoire) ainsi qu'à un mouvement vers un travail empirique de plus en plus soigné (tant en termes des idées, des méthodes que des bases de données constituées), le tout menant à une vision nuancée des relations entre éducation et croissance comme celle entre éducation et performances sur le marché du travail. Cette évolution depuis les années 80 a permis à l'économie de l'éducation de servir de fondement plus solide à des prescriptions de politique économique et sociale.
    Keywords: éducation, croissance, marché du travail, histoire de la pensée économique.
    JEL: B1 B2 I2 J24 O4
    Date: 2007–10
  18. By: MAN-SEOP PARK (Department of Economics, Korea University)
    Abstract: This paper surveys the research trends and activities abroad and in Korea since 1980s in the area of '(Non-Marxian) non-mainstream economics', mainly classified into Sraffian Economics and Post-Keynesian Economics. Research in Sraffian Economics is examined under the topics of long-period effective demand, technical change, monetary distribution and other; and Post-Keynesian Economics under the topics of endogenous money, administered prices, Kaleckian growth and distribution models, stock-flow consistent models, Keyne's philosophy and others.
    Keywords: Non-mainstream economics, Sraffian economics, Post-Keynesian economics
    Date: 2007
  19. By: Picci, Lucio; Golden, Miriam
    Abstract: This paper analyzes the political determinants of the distribution of infrastructure expenditures by the Italian government to the country’s 92 provinces between 1953 and 1994. Extending implications of theories of legislative behavior to the context of open-list proportional representation, we examine whether individually powerful legislators and ruling parties direct spending to core or marginal electoral districts, and whether opposition parties share resources via a norm of universalism. We show that when districts elect politically more powerful deputies from the governing parties, they receive more investments. We interpret this as indicating that legislators with political resources reward their core voters by investing in public works in their districts. The governing parties, by contrast, are not able to discipline their own members of parliament sufficiently to target the parties’ areas of core electoral strength. Finally, we find no evidence that a norm of universalism operates to steer resources to areas when the main opposition party gains more votes.
    Keywords: pork barrel; distributive politics; electoral systems; Italy; public spending; infrastructure
    JEL: H40
    Date: 2007–11

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