New Economics Papers
on Business, Economic and Financial History
Issue of 2007‒12‒08
fourteen papers chosen by

  1. Bankruptcy law and practice in 19th century France By Pierre-Cyrille Hautcoeur; Nadine Levratto
  2. Vertical integration or specialisation: producing and commercialising cotton goods (1815-1913) By Marc Prat Sabartes
  3. The institutional aspects of the Dojima rice exchange market in Tokugawa era: The role of governance mechanism By Yasuo Takatsuki
  4. The Paris financial market in the 19th century: an efficient multi-polar organization? By Pierre-Cyrille Hautcoeur; Angelo Riva
  5. The Laspeyres-Paradox: Tax Overshifting in Nineteenth Century Prussia By Spoerer, Mark
  6. Macchine, lavoro e accrescimento della ricchezza. Riflessioni sul progresso tecnico, occupazione e sviluppo economico nel pensiero economico del Settecento ed Ottocento By Coccia Mario
  7. Revisiting the Coyne Affair: A Singular Event That Changed the Course of Canadian Monetary History By Pierre Siklos
  8. Economic and Financial Integration between Hong Kong and Mainland China before the Open Door Policy 1965-75 By Catherine R Schenk
  9. New Zealand’s Exchange Rate Regime, the Collapse of Bretton Woods,and the Twilight of the Sterling Area By Catherine Schenk; John Singleton
  10. Petites et grandes entreprises face à la faillite au XIXème siècle en France : du droit à la pratique By Pierre-Cyrille Hautcoeur; Nadine Levratto
  11. Cote d ' Ivoire : from success to failure a story of growth, specialization, and the terms of trade By Espina, Carlos; Noer, John; Bogetic, Zeljko
  12. Firm Entry and Institutional Lock-in: An Organizational Ecology Analysis of the Global Fashion Design Industry. By R. Wenting; K. Frenken
  13. Le marché, une institution entre économie et histoire By Jérôme Maucourant
  14. Exploring and Sharing Asian Economic History: An Interim Report on the Asian Historical Statistics Database Project By Konosuke Odaka

  1. By: Pierre-Cyrille Hautcoeur; Nadine Levratto
    Abstract: In this paper, we try to measure the impact of the changes in French bankruptcy law in the 19th century focusing on the behaviour of economic agents as users of bankruptcy law for the sake of finding the best solution to their economic problems. Debtors used bankruptcy law in order to minimize their debt level when facing difficulties in servicing it, but they had to convince their creditors and/or the courts of their good faith, and faced the adverse effects of bankruptcy on their reputation and on the smooth functioning of their business. Creditors used bankruptcy law in order to force their debtors to pay, if they could. Judges - who in the French system of specialized commercial courts were elected entrepreneurs - applied the law within a specific economic context (both a specific local context and at a specific moment in the business cycle) which could affect them. The first part of the paper presents the evolution of French bankruptcy law during the 19th century in its historical context. The second part briefly describes the theoretical model we use in order to understand the choices facing debtors and creditors in the face of financial distress. The last part proposes some major stylized facts concerning bankruptcies during that period (based on contemporary official statistics) and tries to understand their relationship with the legal evolution described before.
    Date: 2007
  2. By: Marc Prat Sabartes (Universitat de Barcelona)
    Abstract: This article describes the ways in which cotton goods were commercialised during the nineteenth century and the first third of the twentieth. Several national cases are analysed: Britain, as the Workshop of the World; France, Germany, Switzerland and the US, as core economies; and Italy and Spain as countries on the European periphery. The main question that we address is why some cotton industries vertically integrated their production and commercialisation processes, but others did not. We present a model that combines industrial district size and product differentiation to explain why vertical integration was present in most cases and why there was vertical specialisation in Lancashire and Lowell.
    Keywords: vertical specialisation, industrial revolution, commercialisation, vertical integration, industrial organization, cotton industry, transaction costs
    JEL: N70 N80 L81 N60 M31 L22
    Date: 2007
  3. By: Yasuo Takatsuki (Graduate School of Economics, Tokyo University)
    Abstract: This paper examines the institutional aspects of the Dojima rice exchange market. Es- pecially, the role of governance mechanism was focused on. It is well known that the Dojima rice exchange market was established in 1730 in Osaka, and closed in 1869 due to the collapse of Tokugawa Shogunate. In addition, it had already been shown that there existed the institution of trades in Dojima. However, the most signfficant question: How did it evolve, and how did it assure the \safe" and \smooth" trades, remains to be unanswered. To answer the question, this paper focuses on three points; that is i) property right, ii) freedom of contracts, iii) liquidity of the market. Through the empirical analyses, it was shown that the futures trades in Dojima rice exchange maket had been evolved, exactly for the purpose of satisfying these three points.
    Keywords: Japanese Economic History, The Dojima Rice Exchange Market, The futures Trades
    JEL: G28 G13 N25
    Date: 2007–12
  4. By: Pierre-Cyrille Hautcoeur; Angelo Riva
    Abstract: The literature in financial history usually considers London as the only centre of the late 19th century's financial globalization, and explains it at least in part by the efficient microstructure (organization) of the London Stock Exchange (LSE). The LSE is characterized as having been a little regulated market, where entry was easy both for traders and issuers [Michie (1998), Neal (2004), White (2006)]. The LSE microstructure is also considered as the natural and optimal one by much of the theoretical literature on stock markets, which argues that free entry decreases transaction costs and increases both liquidity and diversification, resulting in economies of scale attracting traders, issuers and buyers. Our paper tries to explain why the Paris Bourse was able to be so successful in spite of the supposedly inefficient monopoly and regulations that the State imposed it. We focus on the fact that the Paris market actually included several different market places: the Parquet (the official Bourse, organized by the agents de change), the Coulisse, the Marché libre, and inter-bank direct operations. We argue that this multi-polar organization, was efficient, relying on the specialization it allowed, and the complementarities it helped develop among markets. We incorporate in the discussion the recent theoretical literature that shows that no single market can satisfy the heterogeneous preferences of all issuers and investors, so that a multi-polar organization can be a superior solution. We demonstrate our claim by looking not only at the rules but also at the actual functioning of the Parquet thanks to its archives which we recently classified. These archives also allow us to build new statistical series which permit evaluating the performances of the Parquet during the 19th century: volumes traded, seat prices, transaction costs, and operational risks. If one supposes that the Parquet was the least efficient segment of the Parisian market, this will provide us with a lower bound for the global efficiency of that market, which should be compared with other markets on similar concrete grounds.
    Date: 2007
  5. By: Spoerer, Mark
    Abstract: Following the seminal work of late nineteenth century economist Etienne Laspeyres we analyse the incidence of the Prussian milling and slaughter tax shortly before its repeal in 1875. A comparison of flour prices in cities which levied this tax with cities that did not reveals unusually strong tax overshifting. Modern theories explain overshifting of a specific tax with quality improvements or imperfect competition. In pursuing these ideas we find that it was rather large surplus costs induced by tax collection and monitoring that caused unusually large excess burdens. The reason why the tax remained nevertheless basically unchanged for more than half a century is that the urban bourgeoisie successfully prevented its repeal, as the alternative would have been the introduction of municipal direct taxes (rent-seeking behaviour).
    Keywords: Laspeyres tax incidence overshifting
    JEL: H22 B19 N43
    Date: 2007–12–03
  6. By: Coccia Mario (Ceris - Institute for Economic Research on Firms and Growth, Moncalieri (TO), Italy)
    Abstract: This paper presents the origins of the Economics of innovation describing the economic thought of the economists in the Eighteenth and Nineteenth centuries. In this period and in particular during the Industrial Revolution the economists argue the main effects of inventions and machines for consumers and entrepreneurs such as reduction of price, change of labour, improvement of international competition, rise of salaries, unemployment, economic growth and wealth of nations. Their discussions which are relevant, put forward the basis of the modern discipline of the Economics of innovation.
    Keywords: Invention, Innovation, Machines, Art (technology), Classical economists, Socialist
    JEL: B11 B12 B31 B50
    Date: 2007–06
  7. By: Pierre Siklos (Wilfrid Laurier University)
    Abstract: The Coyne affair is the greatest institutional crisis faced by the Bank of Canada in its history. The crisis took place in 1959-1961 and led to the resignation of the Governor, once he was cleared of any wrongdoing. The crisis eventually resulted in a major reform of the Bank of Canada. The paper highlights the critical role played by the directive in central banking legislation. Archival and empirical evidence is used to assess the performance of monetary policy throughout the 1950s. In doing so, a real-time dataset is constructed for both Canada and the US that permits estimation of reaction functions. I find that the case against James Coyne is \'not proven\'.
    Keywords: Coyne Affair; monetary policy stance; Taylor rules; real-time data
    JEL: N10 E52 E58 C52
    Date: 2007
  8. By: Catherine R Schenk (University of Glasgow)
    Abstract: The ‘one country, two systems’ structure established to govern the relationship between Hong Kong SAR and Mainland China was an innovative and comprehensive solution to particular economic and political challenges posed by the return of Hong Kong to the PRC in 1997. At the time of the drafting of the Basic Law, the integration of the colony into the regional economy of Southeast China through outward FDI had already begun, and from the mid-1980s this process facilitated the transformation of the Hong Kong economy from a manufacturing base to one dominated by financial and commercial services. It was recognised on both sides of the negotiations that the territory’s viability and future prosperity relied on retaining independence over a range of key fundamentals, including a separate and independent currency and monetary system that was at the foundation of Hong Kong’s attraction as an international financial centre for the PRC and also for the rest of the Asian region. An important credibility mechanism for the HK$ (as for the inconvertible RMB at this time) was the exchange rate link to the US$. Since this was also the anchor for the RMB after 1997, the linked rate system kept the relationship between the RMB and the HK$ stable.
    Date: 2007–04
  9. By: Catherine Schenk (University of Glasgow); John Singleton (Victoria University of Wellington)
    Abstract: How did developing countries adapt to the collapse of the Bretton Woods system? Using new archival evidence, we argue that New Zealand offers an interesting case study of decision-making in a small economy dependent on primary production with close economic and political links to two larger partners – Britain and Australia – with divergent domestic policies. After some experimentation, New Zealand adopted an innovative intermediate solution for the exchange rate that aimed to generate stability for primary producers during a period when the direction of trade was diversifying and most currencies were floating. This imaginative policy was not accompanied by comparable changes in reserves management, and until 1975 New Zealand continued to hold the bulk of its reserves in sterling. The article explores the different priorities and institutional constraints affecting the choice of anchor currency and reserve currency in this context.
    Date: 2007–10
  10. By: Pierre-Cyrille Hautcoeur; Nadine Levratto
    Abstract: Cet article étudie l'application de la législation sur les faillites en France au XIXème siècle. Il utilise deux sources : la statistique annuelle des faillites mise en place à partir de 1840 par le Ministère de la Justice et les dossiers individuels de faillite conservées par les archives du Tribunal de commerce de Paris. Il montre que l'évolution de la législation ne peut pas suffire à expliquer les comportements en matière de faillite, qui reflètent aussi des transformations économiques. Surtout, il démontre à partir de l'exemple parisien que les tribunaux ne traitent pas toujours à l'identique toutes les entreprises, accordant un traitement de faveur aux plus grandes d'entre elles. Ce travail donne ainsi de nouveaux arguments contre une vision légaliste et rétrospective de l'impact de la législation des faillites sur l'activité économique, et en faveur d'une étude empirique de son application concrète. ###[english abstract: This paper studies the implementation of bankruptcy law in 19th century France. It uses two sources: first, the annual exhaustive statistical appraisal of bankruptcies published from 1840 on; second, individual bankruptcy files conserved at the Paris Merchant Court archives. We show that the changes in bankruptcy law cannot explain the changes in the number and size of bankruptcies, suggesting changes in the practice of the courts as well as in the behaviour of firms. Most importantly, the Parisian example suggests that the courts didn't treat all firms on the same basis, privileging the important ones. This gives new arguments against a purely legalistic and retrospective vision of the impact of bankruptcy law on economic activity, and in favour of an empirical study of its concrete implementation.]###
    Date: 2007
  11. By: Espina, Carlos; Noer, John; Bogetic, Zeljko
    Abstract: Real GDP per capita and capital stock in Cote d ' Ivoire grew strongly from 1960 to 1979, but have declined ever since, for twenty-five years. As a result, the country has traveled a full circle from economic success to failure in little more than a generation. What are the long-term factors behind this dismal growth story? Are the Ivorian development problems mostly of recent origin? Or there are more fundamental, economic factors that explain its long term performance? Four principal conclusions are as follows: First, Cote d ' Ivoire ' s long-term growth performance is not fully explained by temporary factors (e.g., CFA overvaluation or recent conflict). Longer term factors such as capital accumulation, productivity, and terms of trade are key to understanding the country ' s performance as is the policy of specialization in a single commodity--cocoa. Second, the long-term decline in per capita output started well before the currency overvaluation, and at a time of political stability, and is related to a major, secular deterioration in terms of trade that started after 1976. Third, total factor productivity estimates indicate that TFP per capita also grew until it hit a plateau in 1976-78, and then shrank thereafter, despite gains in human capital accumulation. Fourth, Cote d ' Ivoire has pursued a policy of specialization in cocoa beans but this bet on a single commodity has ultimately failed. The strategy that brought prosperity during the 1970s resulted in a growth failu re when cocoa prices began declining since 1976.
    Keywords: Economic Theory & Research,Economic Growth,Emerging Markets,,Access to Finance
    Date: 2007–11–01
  12. By: R. Wenting; K. Frenken
    Abstract: Few industries are more concentrated than the global fashion industry. We analyse the geography and evolution of the ready-to-wear fashion design industry by looking at the yearly entry rates following an organizational ecology approach. In contrast to earlier studies on manufacturing industries, we find that legitimation effects are local and competition effects are global. This result points to the rapid turnover of ideas in fashion on the one hand and the global demand for fashion apparel on the other hand. We attribute the decline of Paris in the post-war period to 'institutional lock-in', which prevented a ready-to-wear cluster to emerge as vested interested of haute couture designers were threatened. An extended organizational ecology model provides empirical support for this claim.
    Keywords: Organizational ecology, fashion industry, creative industries, clusters, institutional lock-in Length 22 pages
    Date: 2007–11
  13. By: Jérôme Maucourant (Triangle : action, discours, pensée politique et économique - CNRS : UMR5206 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines - Institut d'Études Politiques de Lyon)
    Abstract: "L’hypothèse de l’article est la suivante : il n’est pas possible de parler rigoureusement d’un concept de « marché » en science économique, car ce concept est en réalité une notion floue, au mieux ambivalente. En revanche, le recours à d’autres sciences sociales, comme l’histoire et la sociologie, peuvent aider à la construction d’un concept de marché. Ainsi, le travail de Karl Polanyi et les travaux d’historiens contemporains, notamment ceux d’Alain Guéry, semblent utiles pour mieux distinguer le marché propre à la « société de marché » au sens de Polanyi des marchés caractéristiques des économies archaïques ou d’Ancien régime. L’histoire des idées et la réhabilitation du travail de Montchrestien, contre le jugement hâtif de Schumpeter, est mobilisée pour illustrer l’hypothèse de l’article. Il est enfin suggéré que ni l’approche en terme d’équilibre général, ni les travaux d’Israël Kirzner n’ont eu de valeur heuristique en ce qui concerne la présente problématique."
    Keywords: Karl Polanyi ; concept de marché; société de marché ; Alain Guéry
    Date: 2007
  14. By: Konosuke Odaka
    Abstract: This essay describes the aims and methods of an internationally linked, academic research project to create an economic database covering most of Asia. Named ASHSTAT, its purpose is to construct long-term, macro economic time series for the Russia, Central Asia, China, Korea, Taiwan, Indonesia, Philippines, Thailand, Vietnam, India, Pakistan, Egypt, and Turkey, using a standardised national accounting framework designed to maximise the compatibility and comparability of the data. The essay also discusses the value of the project, citing several illustrative examples, to show how cross-country comparison as well as time-based analysis may enhance the understanding of national economic development.
    Date: 2007–11

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