nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2008‒04‒15
twenty papers chosen by
Bernardo Batiz-Lazo
University of Leicester

  2. An uncertain dollar: The Wall Street Journal, the New York Times and the monetary crisis of 1971 to 1973 By Tiago Mata
  3. Top incomes and earnings in Portugal 1936-2004 By Facundo Alvaredo
  4. Peasant economy in the edebate on Japanese capitalismf: Tenancy contract facing the eTurning pointf By Masaki Nakabayashi
  5. A Different Song: Schneider’s ‘Singede Steine’ as evidence of work practices in the late 12th century By James L. Barbour
  6. Tariffs, Trains, and Trade: The Role of Institutions versus Technology in the Expansion of Markets By Wolfgang Keller; Carol H. Shiue
  7. Persistent Business Cycles and High Economic Growth: How to Explain Their Long Concurrence in Modern Capitalism? By Victor Zarnowitz
  8. Nissan's keiretsu 1956-1970 By Anderson, Evelyn
  9. Brand Names Before the Industrial Revolution By Gary Richardson
  10. Between Warfare and Welfare - scientific credence in the Swedish agricultural policies 1940-1970 By Jörgensen, Hans
  11. Speed of the price and efficiency of the concession the treaty port market in Japanfs industrialization By Masaki Nakabayashi
  12. Lost in Translation? - sience, technology and the state since the 1970s By Högselius, Per
  13. The "Thin Film Of Gold": Monetary Rules and Policy Credibility In Developing Countries By Niall Ferguson; Moritz Schularick
  14. Women's Liberation: What's in It for Men? By Matthias Doepke; Michèle Tertilt
  15. Good, Bad, and Ugly Colonial Activities: Studying Development Across the Americas By Miriam Bruhn; Francisco Gallego
  16. Bank Accounting Standards in Mexico. A layman’s guide to changes 10 years after the 1995 bank crisis By Gustavo A. Del Angel; Stephen Haber; Aldo Musacchio
  17. The Rise of the Nuclear System of Innovation in Sweden By Fjaestad, Maja; Jonter, Thomas
  18. Rockets and Reindeer - the history of the Swedish innovation system for space and its spatial dimensions By Sörlin, Sverker; Wormbs, Nina
  19. From Royal Academy of Science to Reserach Institute of Society - long term policy convergence of Swedish Knowledge intermediaries By Kaiserfeld, Thomas
  20. An Economic Assessment of EC Merger Control: 1957–2007 By Bruce Lyons

  1. By: Petersson, Tom (Uppsala University)
    Abstract: This paper describes the establishment and development of the Swedish computer industry from World War II to the early 1970s, and illuminates the mutually beneficial relationship between public (state) interests and private interests, the latter understood as private enterprises. In this lengthy process, two rather dissimilar interests eventually merged into one. The public, or state, interest was primarily motivated by security policy and military considerations, as the Post-War period gradually turned into the Cold War. Sweden was, from this perspective dependent on the transfer of American technology and know-how. More downright profit-interests were, obviously, the prime incentives for the private enterprises to get invested in the new business of computers and computer power. This study focuses primarily on Facit’s actions and role in this development, partly due to the fact that both the role of governmental initiatives and of the other private enterprise, Saab, has previously been the subject of extensive research. The sources for this study are mainly internal memos and business correspondence from the Facit enterprise.
    Keywords: computer industry; Sweden; innovation system; public interests; private interests
    JEL: N00 O25
    Date: 2008–04–02
  2. By: Tiago Mata (ISEG, Technical University of Lisbon, Portugal)
    Abstract: In August 15, 1971, President Nixon announced the unilateral suspension of the convertibility of the dollar into gold, a foundation of the world monetary system since the Second World War. The media and economic experts were caught by surprise, neither could foresee the immediate consequences of the decision or what would be the architecture of the emerging international monetary system. From 1971 to 1973, the money markets and the value of the dollar became a news, an opinion, an editorial item in both the New York Times and the Wall Street Journal. I examine this record to question how was anxiety about the dollar resolved in media communication? Media narratives were not uniform between and within the two newspapers. What distinguished the Times and Journal's coverage was their diverse framing of the dollar as political, financial or economic object. I conclude that media uncertainty about the dollar was less an outcome of failing expert knowledge as it was a consequence of the dollar's multiple cultural significations.
    Keywords: Economic Journalism, dollar, Smithsonian, Nixon shock, media narratives
    JEL: A11 B29 F33 N20
    Date: 2008–04
  3. By: Facundo Alvaredo
    Abstract: This paper analyzes income and earnings concentration in Portugal from a long-run perspective using personal income and wage tax statistics. Our results suggest that income concentration was much higher during the 1930s and early 1940s than it is today. Top income shares estimated from reported incomes deteriorated during the Second World War, even if Portugal did not take active participation in the conflict. However, the magnitude of the drop was less important than in other European countries. The level of concentration between 1950 and 1970 remained relatively high compared to countries such as Spain, France, UK or the United States. The decrease in income concentration, started very moderately at the end of the 1960s and which accelerated after the revolution of 1974, began to be reversed during the first half of the 1980s. During the last fifteen years top income shares have increased steadily. The rise in wage concentration contributed to this process in a significant way. The evidence since 1989 suggests that the level of marginal tax rate at the top has not been the primary determinant of the level of top reported incomes. Marginal rates have stayed constant in a context of growing top shares.
    Date: 2008
  4. By: Masaki Nakabayashi (Graduate School of Economics, Osaka University)
    Abstract: Japanese economy was losing its stability in the interwar period. Faced with the challenge, Moritaro Yamada gave an understanding that the stability of Japanese political economy before the First World War had been maintained by paternalistic institutions both of agricultural and industrial sectors, not based on thoroughly modern market mechanism. This then influential observation can still be supported by the classical dual economy model. However, as a scholar in the period of institutional change, Yamada failed to rightly predict the direction of change. While Yamada expected the change should lead to impersonal market mechanism, the real history showed people rather built a planned economy during the war and recovered stability. Yamadafs mistake was mainly in that he underestimated the significance of risk sharing in the paternalist organizations. At the gturning pointh where labor changed into scarce resource from surplus resource, two vectors with opposite directions could exist. Riskier opportunities for higher wages would encourage people to accept market mechanism based on impersonal exchange. Dissolution of risk sharing in paternalistic organizations would make people call for the sate taking on the role as a large welfare state. In Japan, especially in the middle of the Great Depression, the latter factor became dominant.
    Keywords: Peasant economy, tenancy contract, risk sharing, institutional change.
    JEL: N35 N55
    Date: 2008–03
  5. By: James L. Barbour (Department of Economics, Elon University)
    Abstract: In the mid 1940's, while walking in the cloister of the monastery at Ripoll in Catalonia,ethnomusicologist Marius Schneider noted that the carvings of the column capitals seemed familiar. On inspection of these and the ones at Sant Cugat del Valles he realized that they were the creatures comprising an Indian musical notation. On further study he realized that they "sang" the hymn of the patron saint of the region, St. Cucufate. He further extended his findings to include the Cathedral at Girona as well as the monasteries at Ripoll and Sant Cugat del Valles. While this is a fascinating notion, that a 12th century carver was "writing" music in the stones of cloisters in the region, it has a practical implication for economic history as well. Given that carvers must be familiar with the stone of a region, and that their skills were generally more locally than widely known, it is unlikely that more than one workshop was undertaking this particular style. By this signature skill, carving Indian musical notation, it is possible to trace the path of the work of this particular workshop, and its master carver.
    JEL: N64 N34
    Date: 2008–03
  6. By: Wolfgang Keller; Carol H. Shiue
    Abstract: We study the relative importance of technology and institutions as factors determining the size of markets. The setting of 19th century Europe presents a unique opportunity to address this issue, since it witnessed fundamental change in both dimensions. First, Germany went from around 1,800 customs borders to none through the Zollverein customs treaties. Second, it moved from a situation of monetary disorder to currency unification. And third, the 19th century saw the introduction of steam trains, the key technology that revolutionized transportation between markets. Changes in market integration are studied in terms of the spatial dispersion of grain prices in 68 markets with more than 10,000 observations, located in five different countries and fifteen different German states. We find that the emergence of integrated commodity markets in 19th century Europe is in major part due to the transportation revolution in form of the railways. There is evidence that also customs liberalizations and, more so, currency agreements improved trade possibilities. However, the impact of trains was larger than the effect of these institutions: about three times larger over the long horizon, and around 50% larger for the relatively short time horizon of twenty-five years. These results suggest that as significant as institutional factors were for the expansion of markets, technology factors may have been even more important.
    JEL: F1 F3 N10 O24 O3
    Date: 2008–04
  7. By: Victor Zarnowitz (The Conference Board)
    Abstract: Prior to the second half of the twentieth century, the economy of the United States was distinguished by cyclical instability and low growth; however, since the end of WWII, business cycles have moderated, coupled with relatively higher economic growth. Characteristically, in the second half of the twentieth century, periods of expansion were on average six times as long as periods of contraction, with growth cycles being more symmetric in nature. This paper addresses several internal dynamics behind business cycles (mainly endogenous constructs) and outside impulses or disturbances (theories with major exogenous and stochastic elements) that can be attributed to modern business cycle depth and duration. Reasons outlined for this observed business cycle moderation include more effective countercyclical policy by the Federal Reserve, the lack of financial crises and major depressions marked by big business and bank failures, a shift in the structure of global market economies and the employment of automatic stabilizers.
    Date: 2007–11
  8. By: Anderson, Evelyn
    Abstract: Because Toyota symbolizes the miraculous success of the Japanese automobile industry as a whole, scholars have thoroughly documented the nature of Toyota’s business strategy and its keiretsu.1 In contrast, literature exploring the nature of Nissan’s keiretsu and its business strategy was almost non-existent in the 1990s. The assumption was that the two keiretsu were identical, with similar characteristics, differences being a matter of degree.2 In this paper, I argue that the Provisional Act for the Promotion of the Machinery Industry (the Provisional Act or Kishinho), 1956-1970, enacted by the Ministry of International Trade and Industry (MITI), provided Nissan with incentives to vertically integrate some of its most important keiretsu firms; during these fifteen years, Nissan adopted hierarchy. I document how the Nissan keiretsu evolved in the period coinciding with the Provisional Act and how it differed from the Toyota keiretsu. Toyota’s inter-firm relationship with its core keiretsu members was built on trust and organizational capability, whereas Nissan’s initial postwar strategy was similar to Toyota’s only in name. Contrary to common belief, Nissan’s governance in this period was driven by transaction cost considerations in the absence of trust.
    Keywords: keiretsu; transaction cost; governance; industrial policy
    JEL: D23 N15 L22
    Date: 2007–12
  9. By: Gary Richardson
    Abstract: In medieval Europe, manufacturers sold durable goods to anonymous consumers in distant markets, this essay argues, by making products with conspicuous characteristics. Examples of these unique, observable traits included cloth of distinctive colors, fabric with unmistakable weaves, and pewter that resonated at a particular pitch. These attributes identified merchandise because consumers could observe them readily, but counterfeiters could copy them only at great cost, if at all. Conspicuous characteristics fulfilled many of the functions that patents, trademarks, and brand names do today. The words that referred to products with conspicuous characteristics served as brand names in the Middle Ages. Data drawn from an array of industries corroborates this conjecture. The abundance of evidence suggests that conspicuous characteristics played a key role in the expansion of manufacturing before the Industrial Revolution.
    JEL: L15 L2 N13 N4 N6 O14 O34 O5
    Date: 2008–04
  10. By: Jörgensen, Hans (Umeå University)
    Abstract: Previous studies of Post-War Sweden’s agricultural development have e.g. focused on the effects of structural change, agricultural price policies, or the peculiarities of the regulative environment. While these studies have been most valuable here, this study cannot provide any such in-dept account. This paper will instead explain how the Swedish agricultural policy — in the light of the Cold War’s specific environment up to the mid 1970s — can be related to the concepts of warfare and welfare. Even though Sweden was not a belligerent country, the adaptation and reconstruction policies necessitated profound state actions. Both the objectives of maintaining a high level of national preparedness in case of a war or crisis and the focus on scientific and technological renewal relate to warfare. With regards to the post-war welfare development in most parts of the Western world, welfare was also to a high degree linked with experiences from the depression and World War II. In Swedish agriculture the ambition was to achieve income parity between farmers and industry workers. Thus, in the context of the Post-War period’s scientific and expert technological development, the regulations and planning ambitions can be seen as means for applying rationality and efficiency in a time when state intervention was regarded as social engineering.
    Keywords: Agricultural policy; scientific credence
    JEL: N00
    Date: 2008–04–02
  11. By: Masaki Nakabayashi (Graduate School of Economics, Osaka University)
    Abstract: Even after modern economic growth began in the Western world, the international market, which consists of a number of national and regional markets, has been more or less inefficient with respect to information. To calm this inefficiency, economic institutions have taken important roles. In addition, players in a society whose institutions are superior have earned information rent in the international market. The treaty port in Japan that was imposed by Western powers worked as such an efficient institution, and a Japanese export industry took advantage of it at the beginning of Japanfs industrialization. This designed market provided useful information with the export industry in the inland, as, say, stock markets do with various industries in modern economic societies.
    Keywords: institutions, efficient market, exchange rate and prices, treaty port, development.
    JEL: O19 N75 L11
    Date: 2008–03
  12. By: Högselius, Per (Royal Institute of technology)
    Abstract: From the perspective of science and technology the period from the late 1960s marked the dawn of a number of revolutionary discoveries and inventions, such as the microprocessor and the technology of recombinant DNA. These and other developments, which as a rule originated outside Sweden, would with time open up a vast space of opportunities for industry and business as well as for other parts of society, and they would play key roles in the painful process of structural change in the Swedish economy during the decades that were to come.Against this background, Swedish state actors faced tremendous new challenges in their efforts to influence science- and technology-related activities in the country. The purpose of this paper is to explore how the Swedish state attempted to respond to these new challenges, and how state actors sought new ways to legitimate their actions – at a time when the myths of neutrality and welfare appeared more and more to be losing much of their attraction and broad acceptance.
    Keywords: science policy; technological opportunity; system evolution
    JEL: N00 O25 O30
    Date: 2008–04–02
  13. By: Niall Ferguson; Moritz Schularick
    Abstract: This paper asks whether developing countries can reap credibility gains from submitting policy to a strict monetary rule. Following earlier work, we look at the gold standard era (1880-1914) as a "natural experiment" to test whether adoption of a rule-based monetary framework such as the gold standard increased policy credibility. On the basis of the largest possible dataset covering almost sixty independent and colonial borrowers in the London market, we challenge the traditional view that gold standard adherence worked as a credible commitment mechanism that was rewarded by financial markets with lower borrowing costs. We demonstrate that in the poor periphery -- where policy credibility is a particularly acute problem -- the market looked behind "the thin film of gold". Our results point to a dichotomy: whereas country risk premia fell after gold adoption in developed countries, there were no credibility gains in the volatile economic and political environments of developing countries. History shows that monetary policy rules are no short-cut to credibility in situations where vulnerability to economic and political shocks, not time-inconsistency, are overarching concerns for investors.
    JEL: F2 F33 F36 N10 N20
    Date: 2008–04
  14. By: Matthias Doepke; Michèle Tertilt
    Abstract: The nineteenth century witnessed dramatic improvements in the legal rights of married women. Given that these changes took place long before women gained the right to vote, they amounted to a voluntary renouncement of power by men. In this paper, we investigate men's incentives for sharing power with women. In our model, women's legal rights set the marital bargaining power of husbands and wives. We show that men face a tradeoff between the rights they want for their own wives (namely none) and the rights of other women in the economy. Men prefer other men's wives to have rights because men care about their own daughters and because an expansion of women's rights increases educational investments in children. We show that men may agree to relinquish some of their power once technological change increases the importance of human capital. We corroborate our argument with historical evidence on the expansion of women's rights in England and the United States.
    JEL: D13 E13 J16 N30 O43
    Date: 2008–04
  15. By: Miriam Bruhn; Francisco Gallego (Instituto de Economía. Pontificia Universidad Católica de Chile.)
    Abstract: Levels of economic development vary widely within countries in the Americas. We argue that this variation can be explained by differences in institutions which in turn have their roots in the colonial era. Colonizers engaged in different economic activities in different regions of a country, depending on the local conditions and the supply of native labor. Some activities, such as mining and sugar cultivation, where "bad" in the sense that they depended heavily on the exploitation of labor and created extractive institutions, while "good" activities created inclusive institutions. We show that areas with bad colonial activities have 13 percent lower GDP per capita today than areas with good colonial activities. Moreover, areas that had high pre-colonial population density have lower output per capita today, independent of the type of colonial activity. We attribute this to the "ugly" fact that colonizers used the pre-colonial population as an exploitable resource, thereby also creating extractive institutions. We present some evidence that the intermediating factor between history and current development is related to institutional differences across regions and not to income inequality or the current ethnic composition of the population.
    Keywords: Colonialism, Institutions, Endowments, Americas, State-Level Development
    JEL: N26 O17 O40 P14 P28
    Date: 2008
  16. By: Gustavo A. Del Angel (Centro de Investigación y Docencia Económica, Carr. Mexico); Stephen Haber (Stanford University - Department of Political Science); Aldo Musacchio (Harvard Business School, Business, Government and the International Economy Unit)
    Abstract: After the 1995 crisis, the Mexican banking system experienced significant changes in bank accounting standards. Most of these changes took place between 1996 and 2001, and had a significant impact in the structure and interpretation of financial information of banks. This document explains the major changes on bank accounting, their purpose and structure, and discusses their impact on financial information reported by Mexican banks. It also provides the English equivalent of the major accounting terms used by Mexican banks. The main purpose of this document is to provide a standardized guide to better understand financial information produced before and after the crisis, within the current context of internationalization of Mexican banks' ownership.
    Date: 2008–04
  17. By: Fjaestad, Maja (Royal Institute of Technology and Stockholm University); Jonter, Thomas (Royal Institute of Technology and Stockholm University)
    Abstract: The purpose of this article is twofold. Firstly, the ambition is to analyze the role of the government in relation to private industry in the development of the nuclear power infrastructure in Sweden in the period of 1945-1970. Secondly, the purpose is to account for what was actually made in terms of education, research and financial funding in “the Swedish line” and to assess its importance for the swift take over by the light water reactor system.
    Keywords: Sweden; Innovation Systems; Nuclear Industry; System evolution
    JEL: N00 O31
    Date: 2008–04–02
  18. By: Sörlin, Sverker (Royal Institute of Technology); Wormbs, Nina (Royal Institute of Technology)
    Abstract: Given the strength of the Swedish air force and the role of state procurement in industrial expansion, so called development pairs, the size and direction of the non-military but relatively large Swedish space activity raises questions. The purpose of this article is to investigate the historic reasons for Swedish space activities, i.e. research and technology development, with focus on the early period. The relative weight of different policy areas has changed considerably over time. In our analysis the space sector in Sweden has adapted to a multilevel, multi-policy situation and has been instrumental in shaping a science and technology based social innovation system with focus on the Kiruna region.
    Keywords: innovation systems; Sweden; innovation policy; system evolution
    JEL: N00 O25 O30
    Date: 2008–04–02
  19. By: Kaiserfeld, Thomas (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: In this paper, the formation of intermediary organizations of knowledge transfer in Sweden during the Cold War will be described and analysed. Here, intermediary organizations of knowledge transfer are defined as organizations aiming to transfer knowledge between knowledge producers and potential knowledge users (knowledge intermediaries for short). In theory, such organizations supply a platform for interaction between economic and academic life with problem-solving potential as well as development capability for the former and research opportunities for the latter.
    Keywords: knowledge intermediaries; policy convergence; innovation systems; system evolution
    JEL: N00 O25 O30
    Date: 2008–04–02
  20. By: Bruce Lyons (School of Economics and Centre for Competition Policy, University of East Anglia)
    Abstract: This paper provides an assessment of EC merger policy from three perspectives. First, it places the evolution of merger policy alongside the evolution of economic ideas in relation to competition and industrial organisation. Second, it highlights recent developments in the practical economic appraisal of competition in four areas: unilateral (non-coordinated) effects, particularly the appropriate use of simulation techniques and the efficiency defence; coordinated effects (collective dominance), particularly the role of the Community Courts; non-horizontal effects, particularly the need for the new guidelines; and remedies, particularly weaknesses in current practice. Third, it develops a simple bargaining approach to merger policy evaluation to draw conclusions about the trend in overall effectiveness of EC merger policy since 1989.
    Keywords: merger control, unilateral effects, collective dominance, remedies, merger policy
    JEL: C78 K21 L41
    Date: 2008–03

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