New Economics Papers
on Business, Economic and Financial History
Issue of 2008‒05‒17
twenty-one papers chosen by

  1. The Globalization of Advanced Art in the Twentieth Century By David Galenson
  2. Was It Prices, Productivity or Policy? The Timing and Pace of Latin American Industrialization after 1870 By Aurora Gómez Galvarriato; Jeffrey G. Williamson
  3. Time Spent in Home Production in the 20th Century: New Estimates from Old Data By Valerie A. Ramey
  4. The Special Status of Mathematical Probability: A Historical Sketch By Xavier De Scheemaekere; Ariane Szafarz
  5. Creating Maryland's Paper Money Economy, 1720-1739: The Role of Power, Print, and Markets By Farley Grubb
  6. Inflation, monetary policy and stock market conditions By Michael D. Bordo; Michael J. Dueker; David C. Wheelock
  8. "Industrial Development, Firm Dynamics and Patterns of Productivity Growth: The Case of the Cotton Spinning Industry in Prewar Japan, 1894-1924" By Tetsuji Okazaki
  9. Cartels, managerial incentives, and productive efficiency in German coal mining, 1881-1913 By Carsten Burhop; Thorsten Luebbers
  10. "Industrial Policy Cuts Two Ways: Evidence from Cotton Spinning Firms in Japan, 1953-1979" By Kozo Kiyota; Tetsuji Okazaki
  11. The American Invasion of Europe: The Long Term Rise in Overseas Travel, 1820-2000 By Brandon Dupont; Alka Gandhi; Thomas J. Weiss
  12. Corporate Governance and Incentive Contracts: Historical Evidence from a Legal Reform By Christian Bayer; Carsten Burhop
  13. Long-run Estimates of Physical Capital in Spain, 1850-2000 By Leandro Prados de la Escosura; Joan R. Roses
  14. The need of Heterodox theories for a marriage between history and economics By Marongiu, Federico
  15. An Empirical Test of Taste-based Discrimination Changes in Ethnic Preferences and their Effect on Admissions to the NYSE during World War I By Petra Moser
  16. Kosovo 1998-2008: Human Rights from War to Independence By Radeljic, Branislav
  17. Political constraints on monetary policy during the Great Inflation By Weise, Charles L
  18. Controversies about the Rise of American Inequality: A Survey By Robert J. Gordon; Ian Dew-Becker
  19. Emergência do marketing nas instituições de ensino superior: Um estudo exploratório By Getulio Nunes; Edgar Lanzer; Fernando A. Ribeiro Serra; Manuel Portugal Ferreira
  20. ORIGINS and Strengthening of Institutional Change: the Chinese Case By EL KAROUNI, Ilyess
  21. Accès géographique au marché et effets du commerce sur la durée des cycles de production, la diversité des produits et la taille des établissements de fabrication au Canada, 1974 à 1999 By Baldwin, John R.; Brown, W. Mark; Gu, Wulong

  1. By: David Galenson
    Abstract: The twentieth century was a time of rapid globalization for advanced art. Artists from a larger number of countries made important contributions than in earlier periods, and they did so in a larger number of places. Many important innovations also diffused more rapidly, and more widely, than in earlier times. The dominance for much of the century of conceptual forms of art, from Cubism and Dada to Pop and Conceptual Art, was largely responsible for the greater speed with which innovations spread: conceptual techniques are communicated more readily, and are generally more versatile in their uses, than experimental methods. There is no longer a single dominant place in the art world, comparable to Paris for the first century of modern art, but it is unlikely that a large number of places will join New York and London as centers of artistic innovation in the future.
    JEL: J00
    Date: 2008–05
  2. By: Aurora Gómez Galvarriato; Jeffrey G. Williamson
    Abstract: Brazil, Mexico and a few other Latin American republics enjoyed faster industrialization after 1870 than did the rest of Latin America and even faster than the rest of the poor periphery (except East Asia). How much of this economic performance was due to more accommodating institutions and greater political stability, changes that would have facilitated greater technology transfer and accumulation? That is, how much to changing fundamentals? How much instead to a cessation in the secular rise in the net barter terms of trade which reversed de-industrialization forces, thus favoring manufacturing? How much instead to cheaper foodstuffs coming from more open commercial policies ('grain invasions'), and from railroad-induced integration of domestic grain markets, serving to keep urban grain prices and thus nominal wages in industry low, helping to maintain competitiveness? How much instead to more pro-industrial real exchange rate and tariff policy? Which of these forces contributed most to industrialization among the Latin American leaders, long before their mid 20th century adoption of ISI policies? Changing fundamentals, changing market conditions, or changing policies?
    JEL: F1 N7 O2
    Date: 2008–05
  3. By: Valerie A. Ramey
    Abstract: This paper presents new estimates of time spent in home production in the U.S. during the 20th Century. Regressions based on detailed tabulations from early time diary studies are used to construct estimates for housewives that are closer to being nationally representative for the first half of the 20th Century. These estimates are then linked to estimates from individual-level data from 1965 to the present. Time diary studies of other groups such as employed women, men, and children are also compiled and analyzed. The new estimates suggest that time spent in home production by prime-age women fell by around six hours from 1900 to 1965 and by another 12 hours from 1965 to 2005. Time spent by prime-age men rose by 13 hours from 1900 to 2005. Considering the entire population, including children and older individuals, per capita time spent in home production increased slightly over the century. The new estimates are used to assess leading theories about long-run trends in home production.
    JEL: J22 N32
    Date: 2008–05
  4. By: Xavier De Scheemaekere (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels.); Ariane Szafarz (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels and DULBEA, Université Libre de Bruxelles)
    Abstract: The history of the mathematical probability includes two phases: 1) From Pascal and Fermat to Laplace, the theory gained in application fields; 2) In the first half of the 20th Century, two competing axiomatic systems were respectively proposed by von Mises in 1919 and Kolmogorov in 1933. This paper places this historical sketch in the context of the philosophical complexity of the probability concept and explains the resounding success of Kolmogorov’s theory through its ability to avoid direct interpretation. Indeed, unlike experimental sciences, and despite its numerous applications, probability theory cannot be tested per se. Rather it relates to practical matters by means of transition hypotheses or bridging principles that match the structure of practical problems with abstract theory. In this respect probability theory has a very special status among scientific disciplines.
    Keywords: probability, Kolmogorov, von Mises, axioms, epistemology
    JEL: B41 B16 B23 C00
    Date: 2008–05
  5. By: Farley Grubb
    Abstract: The British North American colonies were the first western economies to rely on legislature-issued fiat paper money as their principal internal medium of exchange. This system arose piecemeal across the colonies making the paper money creation story for each colony unique. It was true monetary experimentation on a grand scale. The creation story for Maryland, perhaps the most unique among the colonies, is analyzed to evaluate how market forces, media influences, and the power of various constituents combined to shape its particular paper money system.
    JEL: E42 E51 H20 N11 N21 N41
    Date: 2008–05
  6. By: Michael D. Bordo; Michael J. Dueker; David C. Wheelock
    Abstract: This paper examines the association between inflation, monetary policy and U.S. stock market conditions during the second half of the 20th century. We estimate a latent variable VAR to examine how macroeconomic and policy shocks affect the condition of the stock market. Further, we examine the contribution of various shocks to market conditions during particular episodes and find evidence that inflation and interest rate shocks had particularly strong impacts on market conditions in the postwar era. Disinflation shocks promoted market booms and inflation shocks contributed to busts. We conclude that central banks can contribute to financial market stability by minimizing unanticipated changes in inflation.
    Keywords: Inflation (Finance) ; Monetary policy ; Stock market
    Date: 2008
  7. By: Drakopoulos, Stavros A.
    Abstract: Theories of social comparison have a long presence in the social sciences and have provided many useful insights. In economics, the idea of comparison, aspiration or relative income belongs to this theoretical framework. The first systematic usages of this idea can be found in the works of Keynes and Duesenberry. After these works the concept was relatively ignored by orthodox theorists until its recent re-appearance mainly in the fields of labour and macroeconomics. To the contrary, however, income comparisons continued to play a role in much of Keynesian inspired and Behavioural economics literature. In the last few years it has made a strong comeback in the literature of job satisfaction and of the economics of happiness. This paper attempts to trace the development of the concept in the modern history of economic thought. It also discusses the main theoretical implications of adopting income comparisons and possible reasons for its relative disregard by orthodox economics.
    Keywords: Relative Income; History of Economic Thought; Wages
    JEL: D31 B20 J30
    Date: 2008–05–12
  8. By: Tetsuji Okazaki (Faculty of Economics, University of Tokyo)
    Abstract: This paper explores the relationship between patterns of productivity growth and the development stage of an industry, using firm-level data on the cotton spinning industry in Japan in the late nineteenth century. It is found that patterns of productivity growth depend on the development stage of the industry. In the earlier stage of industrial development, productivity growth of each firm, namely the within effect, was the sole major source of aggregate productivity growth. On the other hand, once the industry had matured, resource reallocation across firms became a major source of aggregate productivity growth, along with the within effect. This relationship between patterns of productivity growth and the development stage of an industry is considered to reflect the stage-dependent patterns of innovation and competition.
    Date: 2008–05
  9. By: Carsten Burhop (Max Planck Institute for Research on Collective Goods); Thorsten Luebbers (Max Planck Institute for Research on Collective Goods)
    Abstract: In this paper, we evaluate the impact of cartelisation and managerial incentives on the productive efficiency of German coal mining corporations. We focus on coal mining in the Ruhr district, Germany’s main mining area. We use stochastic frontier analysis and an unbalanced dynamic panel data set for up to 28 firms for the years 1881-1913 to measure productive efficiency. We show that coal was mined with decreasing returns to scale. Moreover, it turns out that cartelisation did not affect productive efficiency. Controlling for corporate governance variables shows that stronger managerial incentives were significantly correlated with productive efficiency, whereas the debt-equity ratio did not influence it.
    Keywords: Economic history; Germany pre-1913; Cartel; Productive efficiency; Corporate Governance
    JEL: N53 L41 L71
    Date: 2008–04
  10. By: Kozo Kiyota (Faculty of Business Administration, Yokohama National University and Gerald R. Ford School of Public Policy, University of Michigan); Tetsuji Okazaki (Faculty of Economics, University of Tokyo)
    Abstract: A number of studies have revealed that the effect of industrial policy on productivity growth is negative. Is this because industrial policy fails to control the activities of firms, or because it can effectively control them? This paper attempts to answer this question, using firm-level data from the cotton spinning industry in Japan for the period 1953-79. We find that industrial policy cut two ways during this period. Industrial policy effectively controlled the output of cotton spinning firms, which contributed to the establishment of a stable market structure both during and after the regulation of the industry. On the flip side, such policy constrained the reallocation of resources from less productive large firms to more productive small firms. Combined with the negative growth of large firms during this period, industrial policy resulted in negative sectoral productivity growth.
    Date: 2008–05
  11. By: Brandon Dupont; Alka Gandhi; Thomas J. Weiss
    Abstract: Tourism today is an activity of substantial economic importance worldwide, and has been for some time. Tourism is also of substantial economic importance in the United States, sufficient to warrant the Bureau of Economic Analysis's establishing special accounts on travel and tourism. In this paper we investigate the long term rise in overseas travel by Americans. Over the course of the nineteenth and twentieth centuries the number of Americans going abroad rose from less than 2,000 travelers to over 26 million. The industry went from one confined to the elite of American society to what some have described as mass tourism. We document this rise by compiling a long term series on overseas travel, and describe the changes in the composition of the travelers, their destinations, and their mode of travel. We use an Error Correction Model to explain how the increase came about.
    JEL: N7 N71 N72
    Date: 2008–05
  12. By: Christian Bayer (IGIER – Università Commerciale Luigi Bocconi, Italy); Carsten Burhop (Max Planck Institute for Research on Collective Goods)
    Abstract: This paper proposes to exploit a reform in legal rules of corporate governance to identify contractual incentives from the correlation of executive pay and firm performance. In particular, we refer to a major shift in the legal and institutional environment, the reform of the German joint-stock companies act in 1884. We analyze a sample of executive pay for 46 firms for the years 1870 to 1911. In 1884, a law reform substantially enhanced corporate control, strengthened the monitoring incentives of shareholders, and reduced the discretionary power of executives in Germany. Pay-performance sensitivity decreased significantly after this reform. While executives received a bonus of about three to five per cent in profits before 1884, after the reform this parameter decreased to a profit share of about two per cent. At least the profit share that is eliminated by the reform must have been incentive pay before. This incentive mechanism was replaced by other elements of corporate governance.
    Keywords: pay-performance sensitivity, natural experiment, legal reform, corporate governance
    JEL: G30 J33 N23
    Date: 2008–03
  13. By: Leandro Prados de la Escosura; Joan R. Roses
    Abstract: In this paper, new series of Spain’s capital stock and input are constructed for the last one-and-a-half centuries. Capital stock and input grew at average rates of 3.5 and 3.7 percent per year but not at a steady pace since rates accelerated dramatically during the ‘Golden Age’. Two major structural changes accompanied this process. Composition of capital stock and remuneration changed gradually as the contribution of productive capital rose while that of structures declined. Spanish economy experienced capital deepening in the long-run. Although the capital-output ratio increased over time, in phases of accelerated growth the productivity of capital rose.
    Keywords: capital stock and input, Spain, capital deepening, capital productivity
    JEL: E22 O16 N13 N14 E22
    Date: 2008–04
  14. By: Marongiu, Federico
    Abstract: This paper shows how economic theory and history can be matched with the use of heterodox theories. This matching between history and economics is needed for a better comprehension of reality. Cliometrics, regulationism, institutional economics are some of the tentative approaches that have been used. The use of only orthodox theories is not enough for an understanding of multiple economic phenomena arising in the real world.
    Keywords: heterodox;theory;regulationism;institutional economics;cliometrics
    JEL: B10 B52 A20 N00 B25
    Date: 2008–02
  15. By: Petra Moser
    Abstract: A significant challenge to empirically testing theories of discrimination has been the difficulty of identifying taste-based discrimination and of distinguishing it clearly from statistical discrimination. This paper addresses this problem through a two-part empirical test of taste-based discrimination. First, it constructs measures of revealed preferences, which establish that World War I created a strong and persistent shock to ethnic preferences that effectively switched the status of German Americans to an ethnic minority. Second, the paper uses this shock to ethnic preferences to identify the effects of taste-based discrimination at the example of traders at the New York Stock Exchange (NYSE). A new data set of more than 4,000 applications for seats on the NYSE reveals that the War more than doubled the probability that German applicants would be rejected (relative to Anglo-Saxons). The mechanism of taste-based discrimination is surprising: Prices are unaffected by ethnic preferences, and discrimination operates instead entirely through admissions.
    JEL: J7 N22 N42
    Date: 2008–05
  16. By: Radeljic, Branislav
    Abstract: Serbs and Albanians have inhabited Kosovo for centuries. For Serbs, Kosovo is the core of the medieval Serbian kingdom. For Albanians, Kosovo is the cradle of their struggle for independence. With both parties feeling entitled to the territory of the province, the threat of conflict was never far away. At several points, human rights abuses were perpetrated by one group on the other. Deeper ethnic antagonisms led to the outbreak of conflict in Kosovo in 1998, culminating in January 1999. Having already dealt with conflicts in Croatia and Bosnia, the international community claimed to be well-prepared to approach the Kosovo issue and stop the atrocities. While bearing in mind the past and the present, this paper addresses the failures of both the international community and the local parties in regard to human rights protection.
    JEL: Z0 Z00 Z19 Z13
    Date: 2008–04
  17. By: Weise, Charles L
    Abstract: The U.S. Great Inflation of the 1970s was characterized by repeated, failed attempts at disinflation by the Federal Reserve as well as periods of inaction despite rising inflation. Previous research has attributed these failures to policymakers’ “misperceptions” about monetary policy and the macroeconomy. This paper argues instead that the Fed’s behavior during this period can be explained as a response to political constraints. Members of the Fed understood that a serious attempt to tackle inflation would be unpopular with the public and would generate opposition from Congress and the Executive branch. The result was a commitment to the policy of gradualism, under which the Fed would attempt to reduce inflation with mild policies that would not trigger an outright recession, and premature abandonment of anti-inflation policies at the first sign of recession. The Fed managed to disinflate successfully under Chairman Volcker only when the political constraints on Fed policy were lifted after 1979, allowing the Fed to abandon the policy of gradualism and knowingly take actions that risked recession. Evidence for this explanation of Fed behavior is found in Minutes and Transcripts of FOMC meetings and speeches of Fed chairmen.
    Keywords: Great Inflation; monetary policy; Federal Reserve
    JEL: E58 E50
    Date: 2008–05
  18. By: Robert J. Gordon; Ian Dew-Becker
    Abstract: This paper provides a comprehensive survey of seven aspects of rising inequality that are usually discussed separately: changes in labor's share of income; inequality at the bottom of the income distribution, including labor mobility; skill-biased technical change; inequality among high incomes; consumption inequality; geographical inequality; and international differences in the income distribution, particularly at the top. We conclude that changes in labor's share play no role in rising inequality of labor income; by one measure labor's income share was almost the same in 2007 as in 1950. Within the bottom 90 percent as documented by CPS data, movements in the 50-10 ratio are consistent with a role of decreased union density for men and of a decrease in the real minimum wage for women, particularly in 1980-86. There is little evidence on the effects of imports, and an ambiguous literature on immigration which implies a small overall impact on the wages of the average native American, a significant downward effect on high-school dropouts, and potentially a large impact on previous immigrants working in occupations in which immigrants specialize. The literature on skill-biased technical change (SBTC) has been valuably enriched by a finer grid of skills, switching from a two-dimension to a three- or five-dimensional breakdown of skills. We endorse the three-way "polarization" hypothesis that seems a plausible way of explaining differentials in wage changes and also in outsourcing. To explain increased skewness at the top, we introduce a three-way distinction between market-driven superstars where audience magnification allows a performance to reach one or ten million people, a second market-driven segment consisting of occupations like lawyers and investment bankers, and a third segment consisting of top corporate officers. Our review of the CEO debate places equal emphasis on the market in showering capital gains through stock options and an arbitrary management power hypothesis based on numerous non-market aspects of executive pay. Data on consumption inequality are too fragile to reach firm conclusions. We introduce two new issues, disparities in the growth of price indexes and also of life expectancy between the rich and the poor. We conclude with a perspective on international differences that blends institutional and market-driven explanations.
    JEL: D12 D3 D31 D63 I3 J24 J31 J62 R10
    Date: 2008–05
  19. By: Getulio Nunes (Universidade do Sul de Santa Catarina); Edgar Lanzer (Universidade do Sul de Santa Catarina); Fernando A. Ribeiro Serra (UNISUL Business School); Manuel Portugal Ferreira (Instituto Politécnico de Leiria)
    Abstract: Este trabalho apresenta um estudo exploratório sobre o marketing nas universidades privadas e comunitárias brasileiras. Analisa o cenário competitivo do ensino superior brasileiro, para demonstrar que a utilização de estratégias de marketing é um fator crítico de sucesso para essas organizações. As barreiras contra o marketing nas universidades necessitam cair para fazer face a rápida mudança no ambiente competitivo, como a queda da demanda associada à multiplicação de novos concorrentes. Neste trabalho discutimos o cenário atual enolvendo as IES e estipulando como as estratégias de marketing poderão ser utilizadas. É feita uma revisão teórica sobre o marketing sempre em paralelo com a análise e contextualização para organizações universitárias.
    Keywords: Marketing de relacionamento, Marketing em instituições de ensino superior, Estratégia.
    JEL: M0 M1
    Date: 2008–05–12
  20. By: EL KAROUNI, Ilyess
    Abstract: Without necessarily reduce it to a single cause, this article lays stress on the cultural foundations of the Chinese postsocialist transformation. The process began with what we call a «cultural shock» brought about the opening of the country and took the form of an ideological aggiornamento. Henceforth Chinese authorities attach more importance to the economy than the ideology. Deep changes occurred at all levels of Chinese economic system. Besides it is this process which allows the institutional consolidation.
    Keywords: Chine; Changement institutionnel; Culture
    JEL: P30 B52 P51
    Date: 2008–05–12
  21. By: Baldwin, John R.; Brown, W. Mark; Gu, Wulong
    Abstract: Au cours des trois dernières décennies, les obstacles tarifaires ont diminué de façon significative, ce qui a mené à une intégration plus grande des établissements de fabrication canadiens aux marchés mondiaux, et plus particulièrement le marché des États-Unis. On a accordé beaucoup d'attention aux effets de cette transition à l'échelle nationale, mais peu à la variation de ces effets d'une région à l'autre. Dans un pays de la taille d'un continent, il existe de bonnes raisons de croire que les effets du commerce varieront d'une région à l'autre. De façon plus particulière, l'emplacement a un effet significatif sur la taille des marchés auxquels les entreprises ont accès, et cela peut avoir des répercussions sur la mesure dans laquelle elles réorganisent leur production par suite de la diminution des obstacles tarifaires. À partir d'un fichier de microdonnées longitudinales sur les établissements de fabrication (1974 à 1999), la présente étude a pour but d'évaluer l'effet de l'accroissement du commerce entre les régions sur l'organisation de la production à l'intérieur des établissements. L'étude a permis de déterminer que des niveaux plus élevés d'intensité des exportations (exportations en proportion de la production) entre les régions comportent un lien positif avec des cycles de production plus longs, des établissements plus importants et une plus grande spécialisation des produits à l'intérieur de ces établissements. Ces effets sont les plus marqués en Ontario et au Québec, les deux provinces les mieux situées par rapport au marché des États-Unis.
    Keywords: Commerce international, Fabrication, Rendement des entreprises et appartenance, Adaptation et ajustement des entreprises
    Date: 2008–05–09

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