New Economics Papers
on Business, Economic and Financial History
Issue of 2007‒12‒01
eighteen papers chosen by

  1. Wages, Prices, and Living Standards in China,1738-1925: in comparison with Europe, Japan, and India By Robert Allen; Jean-Pascal Bassino; Debin Ma; Christine Moll-Murata; Jan Luiten van Zanden
  2. Jacques Laffitte, an investment banker who did not create a model for investment banking (In French) By Hubert BONIN (GREThA)
  3. Engel's Pause: A Pessimist's GUide to the British Industrial Revolution By Robert Allen
  4. Resource Rents and their Impact on Institutional and Economic Development By Ian Keay
  5. Past is just a Fine Reality: Redefining the Indo-Pak History through its Economics By Mamoon, Dawood
  6. The other Europeans : inmigration into Latin America and the international labour market (1870-1930) By Blanca Sanchez Alonso
  7. Conflictos de tierras, derechos de propiedad y el surgimiento de la economía exportadora en el siglo XIX en Colombia By Fabio José Sánchez T.; Antonella Fazio Vargas; María del Pilar López Uribe
  8. Professor Becker on Free Banking: A Comment By van den Hauwe, Ludwig
  9. DO COUNTRIES DEFAULT IN "BAD TIMES"? By Michael Tomz; Mark L. J. Wright
  10. Modern energy consumption and economic modernisation in Latin America and the Caribbean between 1890 and 1925 By M. del Mar Rubio Varas; César Yáñez; Mauricio Folchi; Albert Carreras
  11. Canadian Wheat Board Performance Benchmarking By Richard Pedde
  12. Public Policies and Changing Boundaries of Firms in a "History Friendly" Model of the Co-evolution of the Computer and Semiconductor Industries. By Franco Malerba; Richard Nelson; Luigi Orsenigo; Sidney Winter
  13. Fifty Years of Malaysian Economic Development:Policies and Achievements By Hasan, Zubair
  14. Pessimism Preserved: Real Wages in the British Industrial Revolution By Robert Allen
  15. Un nuevo índice de tipo de cambio real para México By Carballo, Edgar A.; Urzúa, Carlos M.
  16. The inconsistency of French regulation mode faced with the financialization of accumulation pattern. By Mickaël Clévenot; Yann Guy
  17. International Differences in the Adoption and Impact of New Information Technologies and New HR Practices: The Valve-Making Industry in the U.S. and U.K. By Ann Bartel; Casey Ichniowski; Kathryn Shaw; Ricardo Correa
  18. Oil Crisis, Energy-Saving Technological Change and the Stock Market Crash of 1973-74 By Alpanda, Sami; Peralta-Alva, Adrian

  1. By: Robert Allen; Jean-Pascal Bassino; Debin Ma; Christine Moll-Murata; Jan Luiten van Zanden
    Abstract: The paper develops data on the history of wages and prices in China from thr eighteenth century to the twentieth. These data are used to coompare Beijing, Canton, Suzhou and Shanghai to leading cities in Europe, India, and Japan in terms of nominal wages, the cost of living, and the standard of living. In the eighteenth century, the real income of building workers in Asia was similar to that of workers in the backward parts of Europe and far behind that of workers in the leading economies of northwestern Europe. Industrialization led to rising real wages in Europe and Japan. Real wages declined in China in the eighteenth and early nineteenth centuries and rose slowly in the late nineteenth and early twentieth. There was little cumulative changae in the standard of living or workers in Beijing, Canton, and lower Yangzi cities for two hundred years. The income disparities of the early twentieth century were due to long run stagnation in China combined development in Japan and Europe.
    Keywords: Great Divergence, Preindustrial Real Wages, England, Europe, China, Japan, India
    JEL: N33 N35
    Date: 2007
  2. By: Hubert BONIN (GREThA)
    Abstract: The research program about the history of investment banking gauged in this text the legacy of Jacques Laffitte, one of the initiators of modern investment banking in the years 1800-1840. It assesses the reality of his contributions and argues about their role within the process of modernisation of the Paris banking market at the heart of the first stage of the first industrial revolution. It tried to precise the limits of the breakthroughs achieved by Laffitte within the banking economy of the merchant banks of this time and to explain the flaws of its competitiveness.
    Keywords: Bank, investment banking, banking history, first industrial revolution, Paris market place, merchant banking
    JEL: N23 N24 G21
    Date: 2007
  3. By: Robert Allen
    Abstract: The paper reviews the macroeconomic data describing the British economy from 1760 to 1913 and shows that it passed through a two stage evolution of inequality. In the first half of the nineteenth century, the real wage stagnated while output per worker expanded. The profit rate doubled and the share of profits in national income expanded at the expense of labour and land. After the middle of the nineteenth century, real wages began to grow in line with productivity, and the profit rate and factor shares stabilized. An integrated model of growth and distribution is developed to explain these trends. The model includes an aggregate production function that explains the distribution of income, while a savings function in which savings depended on property income governs accumulation. Simulations with the model show that technical progress was the prime mover behind the industrial revolution. Capital accumulation was a necessary complement. The surge in inequality was intrinsic to the growth process. Technical change increased the demand for capital and raised the profit rate and capital`s share. The rise in profits, in turn, sustained the industrial revolution by financing the necessary capital accumulation. After the middle of the nineteenth century, accumulation had caught up with the requirements of technology and wages rose in line with productivity.
    Keywords: British Industrial Revolution, Kuznets Curve, Inequality, Savings, Investment
    JEL: D63 N13 O41 O47 O52
    Date: 2007
  4. By: Ian Keay (Queen's University, Department of Economics)
    Abstract: Over the twentieth century, Canada's energy, forestry, and mining industries played a substantial and increasing role in the growth and development of the aggregate economy. Despite the improving fundamentals that were underlying their increased contributions to the size, capital intensity, and productivity of the aggregate economy, the relative profitability and equity market performance of the resource industries deteriorated over the twentieth century. Without having to invoke entrepreneurial failure among the resource industries or equity market inefficiency, I am able to illustrate that falling relative output prices played the key role in a reconciliation of what, at first glance, appears to be a surprising relationship between the resource industries' fundamentals, resource rents, and equity market performance.
    JEL: N22 N52 Q20 Q32
    Date: 2007–08
  5. By: Mamoon, Dawood
    Abstract: The paper revisits India Pakistan relationships in its historical context since 1947, and gives a fresh perspective to the political economy of the region by promoting the idea of how embracing free market economic management policies may have benefited both countries to achieve higher economic dividends recently and thus provided the base for ongoing peace negotiations. The paper also highlights the domestic and international political and economic factors which may have affected India and Pakistan relationships over the years though the study agrees with other research in the same area on the domestic dynamics of hostilities which were initiated since the very independence from the British in 1947 partly due to mistrust between the leadership of both countries. In later years the mistrust and encompassing hostilities were sustained more significantly due to Kashmir dispute which has yet to resolve.
    JEL: Z1 P5 Z12 N9
    Date: 2007–11–24
  6. By: Blanca Sanchez Alonso
    Abstract: Not all Europeans migrated to the United States. Between 1879 and 1930 13 million of Europeans went to Latin America; however, Latin America is not fully incorporated into current debates on the cost and benefits from Atlantic migration. This paper surveys Latin America immigration experience since the late nineteenth century to 1930. It assesses inferences about European migrants in Latin America derived from the experience of migrants in the United States and questions its validity. The topics covered here include migration trends and chronology, national origin of the flows and the evolution of real wages. New data on the cost of passages for transatlantic migration is also presented. This is followed by an examination of the immigrants’ contribution to economic growth in Latin America dealing basically with the issue of human capital brought in by European immigrants. The extent to which immigrants alter the composition of the labour force and the demographic structure, both in the short and the long run is also examined. A final section concludes with some new avenues for future research.
    Date: 2007–11
  7. By: Fabio José Sánchez T.; Antonella Fazio Vargas; María del Pilar López Uribe
    Abstract: Este estudio desarrolla la relación entre la expansión de la oferta de tierras y el desarrollo exportador a finales del siglo XIX e intenta explicar la lánguida inserción de la economía colombiana a la economía mundial durante la ola de globalización que se inició a mediados del siglo XIX. Con base en la información sobre producción de cultivos exportables a nivel municipal de 1892, adjudicación de baldíos y conflictos de tierra durante el siglo XIX se encuentra que el mayor obstáculo que enfrentó el desarrollo exportador fue la debilidad de los derechos de propiedad de los colonos en las tierras de frontera, resultante del riesgo de expropiación o usurpación por parte de terratenientes locales. A partir de los resultados cuantitativos se calcula que en ausencia de conflicto de tierras la probabilidad de que un municipio hubiese tenido producción de productos exportables habría sido 50% más alta mientras la producción de productos exportables habría sido por lo menos el doble de la observada. Para corregir por la posible endogeneidad entre el desarrollo exportador local (municipal) y los conflictos de tierra locales se utiliza como instrumento de estos últimos la cercanía geográfica a la presencia de instituciones coloniales (Encomienda en 1560 y Esclavitud –poblaciones con más de 20 esclavos en 1800).
    Date: 2007–09–11
  8. By: van den Hauwe, Ludwig
    Abstract: Professor Becker´s 1956 paper about free banking 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. 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 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
  9. By: Michael Tomz; Mark L. J. Wright
    Abstract: This paper uses a new dataset to study the relationship between economic output and sovereign default for the period 1820-2004. We fi?nd a negative but surprisingly weak relationship between output and default. Throughout history, countries have indeed defaulted during bad times (when output was relatively low), but they have also maintained debt service in the face of severe adverse shocks, and they have defaulted when domestic economic conditions were favorable. We show that this constitutes a puzzle for standard theories, which predict a much tighter negative relationship as default provides partial insurance against declines in output.
    Date: 2007–05
  10. By: M. del Mar Rubio Varas; César Yáñez; Mauricio Folchi; Albert Carreras
    Abstract: In the absence of comparable macroeconomic indicators for most of the Latin American economies before the 1930s, the apparent consumption of energy is used in this paper as a proxy of the degree of modernisation of Latin America and the Caribbean. This paper presents an estimate of the apparent consumption per head of modern energies (coal, petroleum and hydroelectricity) for 30 countries of Latin American and the Caribbean for 1890 to 1925, multiplying the number of countries for which energy consumption estimates were previously available. As a result, the paper provides the basis for a quantitative comparative analysis of modernisation performance beyond the few countries for which historical national accounts are available in Latin America.
    Keywords: Energy consumption, economic modernisation, Latin America
    JEL: N16 N76 Q43 O13
    Date: 2007–11
  11. By: Richard Pedde (School of Business, University of Alberta)
    Abstract: The paper is organized as follows. A brief historical overview of events leading up to the Gray Report is followed by a more detailed description of the performance measurement process. The third section describes the experience of US farmers in getting good prices. The fourth section places "outperformance" into an appropriate context by discussing the economic concept of "market efficiency". Then our benchmarking results are presented for the various types of grain. A short summary concludes the paper.
    Keywords: Canadian Wheat Board--Evaluation, Grain--Canada--Marketing, Grain--Prices--Canada, Grain trade--Canada.
    JEL: Q13
    Date: 2007–02
  12. By: Franco Malerba (Cespri - Bocconi University, Milano, Italy.); Richard Nelson (Columbia University, New York, USA.); Luigi Orsenigo (University of Brescia, Brescia and CESPRI - Bocconi University, Milan, Italy.); Sidney Winter (The Wharton School, University of Pennsylvania, Philadelphia, USA.)
    Abstract: In this paper, we explore the effects of alternative policies, ranging from antitrust to public procurement, open standards, information diffusion and basic research support on the dynamics of two vertically related industries in changing and uncertain technological and market environments. The two industries are a system industry and a component industry, and the evolution of these industries is characterized by periods of technological revolutions punctuating periods of relative technological stability and smooth technical progress. We have been inspired by the co-evolution of the computer and component industries from their inceptions to the 1980s. On the basis of that evolution, we have developed a history friendly-model this co-evolution. In sum, this paper has stressed that various types of policies may sometimes have contrasting effects on the industry, mainly on concentration and technical change and innovation. It has also shown that the consequences of policies may spillover from one industry to another, and from one type of firms to another. Policies that aim at a specific industry may provoke major changes in a related industry through the product market, the changing boundaries of firms or knowledge and technological interdependencies. The policy maker has to be aware of that. Finally, a major point of the paper regards the unintended consequences of policies.
    Keywords: Industrial dynamics, Public Policy, Technology, Innovation.
    JEL: O30 L10 L60
    Date: 2007–06
  13. By: Hasan, Zubair
    Abstract: Malaysia is a small country but has big achievement in economic development to its credit. This year (August 2007) the country celebrates the completion of the first 50 years of its independence. It is in the fitness of things that this paper takes a look at its economic achievements over the past decades and the policies that shaped its success story in the matter. This is all the more apt as not a few regard Malaysia as a role model for the developing countries, especially the OIC members. The paper does not follow the historical sequence of events. That is available in numerous publications spread over time. It highlights the major achievements of the country and the policies that made them possible. Here it talks about the long-run vision of the social order the economic effort had to establish, the form and speed of transformation the policies ushered in, the model of growth it chose, the measures it took to enforce equity, the way it managed crises, and the Islamic elements that it was always seizes with to incorporate in its plans.
    Keywords: Economic vision; Planning; Structural transformation; Capital controls; Islamic finance.
    JEL: O5
    Date: 2007
  14. By: Robert Allen
    Abstract: The paper compares Feinstein`s and Clark`s consumer price and real wage indices for the British industrial revolution. The sources for their weights and component price series are evaluated. While some of Clark`s innovations are improvements, many of his changes degrade the price index. A new price index is developed using the best components of Clark`s and Feinstein`s. This index is much closer to Feinstein`s than to Clark`s. The implied growth in real wages is also close to Feinstein`s and contradicts Clark`s `optimistic` view of rising working class living standards during the industrial revolution.
    Keywords: Real Wage, Consumer Price Index, Inequality, Industrial Revolution
    JEL: D33 E25 N13 N33 O11 O15 O41
    Date: 2007
  15. By: Carballo, Edgar A.; Urzúa, Carlos M. (Tecnológico de Monterrey, Campus Ciudad de México)
    Abstract: This paper proposes a new real exchange rate index for the Mexican economy. Unlike the methodology currently being employed by the Bank of Mexico, the new index reflects the changing patterns of trade between the country and the rest of the world. The index is calculated on a quarterly basis starting in 1962.
    Keywords: tipo de cambio real, México, real exchange rate
    JEL: F14 F31
    Date: 2007–11
  16. By: Mickaël Clévenot (CEPN - Centre d'économie de l'Université de Paris Nord - CNRS : UMR7115 - Université Paris-Nord - Paris XIII); Yann Guy (GERME - Groupe d’Études sur la Régulation et les Mutations - Equipe d'accueil)
    Abstract: The absence of specifically dedicated method to represent financialized capitalism constitutes a significant gap in contemporary macroeconomic modelling considering the impact of finance on the rules of wealth production and distribution. From both the lessons of Regulation theory in terms of accumulation pattern and regulation mode declined through the concepts of institutional hierarchy and complementarity, and the neo-Cambridgian modelling framework, one tries to establish the causes which prevail in the divergence of American and French economies in the adoption of finance-led capitalism.
    Keywords: modelling and macroeconomic simulation; institutional complementarity and hierarchy; accumulation regime; regulation pattern; financialization.
    Date: 2007–11–19
  17. By: Ann Bartel; Casey Ichniowski; Kathryn Shaw; Ricardo Correa
    Abstract: This paper compares the impact of new IT-enhanced technology on the efficiency of production in the U.S. and the U.K. for one manufacturing industry, valve manufacturing. There is a long-standing question of whether technological change and organizational changes have the same rates of adoption and impact internationally. We have assembled a unique dataset on plants in one narrowly defined industry -- valve manufacturing -- in both the U.S. and U.K to consider whether plants outside of the U.S. gain as much from IT as U.S. plants. We find that, despite differences in the current and historical patterns of institutions in the U.S. and U.K., both countries exhibit comparable patterns of gains to IT at the plant level. The impact of new IT-enhanced technology on the efficiency of production is virtually identical in the two countries. In addition, as a result of the adoption of the new technology, plants in both countries have shifted production to customized products. Finally, we find that, in both countries, the adoption of the new IT-enhanced technology coincides with increases in the skill requirements of machine operators, notably technical and problem-solving skills, and with the adoption of new human resource practices to support these skills.
    JEL: E23 J23 J24 L1
    Date: 2007–11
  18. By: Alpanda, Sami; Peralta-Alva, Adrian
    Abstract: The market value of U.S. corporations was nearly halved following the oil crisis of October 1973. Real energy prices more than doubled by the end of the decade, increasing energy costs and spurring innovation in energy-saving technologies by corporations. This paper uses a neo-classical growth model to quantify the impact of the increase in energy prices on the market value of U.S. corporations. In the model, corporations adopt energy-saving technologies as a response to the energy price shock and the price of installed capital falls due to investment irreversibility. The model calibrated to match the subsequent decline in energy consumption in the U.S. generates a 24% decline in market valuation - accounting for nearly half of what is observed in the data.
    Keywords: oil crisis; stock market crash; technological change
    JEL: C68 G12 O31 Q43
    Date: 2007–08

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