New Economics Papers
on Business, Economic and Financial History
Issue of 2009‒01‒03
twenty-one papers chosen by

  1. Borders, Market Size and Urban Growth, The Case of Saxon Towns and the Zollverein in the 19th Century By Florian Ploeckl
  2. Changes in the Concepts of Political Economy and Economics and their Translations By Hun-Chang Lee
  3. Shipbuilding in Italy, 1861-1913:The Burden of The Evidence By Carlo Ciccarelli; Stefano Fenoaltea
  4. "Interbank Networks in Pre-war Japan: Structure and Implications" By Tetsuji Okazaki; Michiru Sawada
  5. The Democratization of Invention in the American South: Antebellum and Post Bellum Technology Markets in the United States By William H. Phillips
  6. The First Six Waves of SOEP : The Panel Project in the Years 1983 to 1989 By Ute Hanefeld; Jürgen Schupp
  7. Reconstruction and development of rural Cambodia : from Krom Samakki to globalization By Amakawa, Naoko
  8. The Erosion of Colonial Trade Linkages after Independence By Thierry Mayer; Keith Head; John Ries
  9. Infrastructure Finance and Industrial Takeoff in the United Kingdom By Alex Trew
  10. Charitable Giving for Overseas Development: UK Trends over a Quarter Century By Atkinson, Anthony B.; Backus, Peter G.; Micklewright, John; Pharoah, Cathy; Schnepf, Sylke V.
  11. Opting Out of the Great Inflation: German Monetary Policy After the Break Down of Bretton Woods By Andreas Beyer; Vitor Gaspar; Christina Gerberding; Otmar Issing
  12. Why Did Democracy Become the Preferred Political Regime Only in the Twentieth Century? By Luiz Carlos Bresser-Pereira
  13. Sobre os porquês do pluralismo em economia: aproximações de uma alternativa historicista By Marco Antonio Ribas Cavalieri
  14. The organizational properties of money: Gustavo Del Vecchio's theory By Gianfranco Tusset
  15. Banking Crises: An Equal Opportunity Menace By Carmen M. Reinhart; Kenneth S. Rogoff
  16. THE RISE AND FALL OF SPATIAL INEQUALITIES IN FRANCE: A LONG-RUN PERSPECTIVE By Pierre-Philippe Combes; Miren Lafourcade; Jacques-François Thisse; Jean-Claude Toutain
  17. Institutions vs. Policies: A Tale of Two Islands By Peter Blair Henry; Conrad Miller
  18. Holding India together: The role of institutions of federalism By Singh, Nirvikar
  19. A resource need and availability view of the make or ally choice: evidence from the worldwide aircraft industry 1945-2000 By Garrette, Bernard; Dussauge, Pierre; Castaner, Xavier
  20. The Incidence of Civil War: Theory and Evidence By Timothy J. Besley; Torsten Persson
  21. Desenvolvimento Econômico e Revolução Capitalista By Luiz Carlos Bresser-Pereira

  1. By: Florian Ploeckl (Department of Economics, Yale University)
    Abstract: Changes in trade institutions, such as the abolishment of tariff barriers, have a potentially strong impact on economic development. The Zollverein, the 1834 customs union between German states, erased borders in much of central Europe. This paper investigates the Zollverein's economic impact through a study of urban population and its growth in the German state of Saxony. A model of the effect of market access on urban growth is combined with an extensive data set on town populations in Saxony and its neighbors as well as an improved distance measure based on GIS techniques, which take into account elevation patterns, roads, and rivers. The results show that Zollverein membership led to significantly higher growth for towns close to the border with fellow Zollverein member Thuringia. They also illustrate that natural resources affect town size but not the growth pattern after the Zollverein. The effects of changes in market access were reinforced through the impact on market access in other towns and they were stronger for larger towns as well. Migration was the predominant source of the differential growth pattern.
    Keywords: Zollverein, Saxony, Customs Union, Market Access, Economic Geography, GIS, Distance measurement
    JEL: F15 N93 R12
    Date: 2008–12
  2. By: Hun-Chang Lee (Korea University)
    Abstract: Nowadays, the terms economics and political economy are translated in Korea, Japan, and China as Kyeongjaehak(which originally meant statecraft for the people's welfare) and Jeongchikyeongjaehak, respectively. However, the translation of Kyeongjaehak, in fact, originated in the very concept of political economy. The etymology of the translated terms for political economy in India and China actually accords with the original concept of political economy prior to the establishment of modern economics, while that in the Arabic region is congenial to the definition of economy. These terms were born in the heyday of ancient thoughts, and have been reborn in today's definitions with the establishment of modern economics. Originating in the Greek oikonomia, literally "management of household," the adjective political was added to describe the management of polis or state. With the advent of Classical economics, the term political economy became a social science to study of the laws of production and distribution and of the nature of wealth. Later, Neoclassical economists, who sought to establish the study of the economy upon mathematical methodology, and who aimed to analyze behaviors of households and firms regardless of politics, replaced the term 'political economy' with 'economics' without the adjective political. The etymology of Kyeongjaehak, which first appeared as a translated term in an English-Japanese dictionary published in 1862, shares some aspects with the Classical concept of political economy, but is irrelevant to the Neoclassical definition of economics. This term ultimately triumphed over other translations, such as Ejaehak(which originally meant the study of governing wealth), which captured the Classical and Neoclassical concepts more appropriately. In China, where there were more competing translated terms than there were in Japan, the term Kyeongjaehak was generally considered as an inappropriate translation, but was, nonetheless, adopted in the end. As for Korea, strongly influenced by modern sciences from Japan since the 1880s, there was little resistance against the adoption of the Japanese translation. The etymology of political economy, as a subject of translation, along with the innate nature of the early Classical economics' moral philosophy, helped the term Kyeongjaehak to prevail. As people better understood economics, both the Japanese and the Chinese thought that the meaning of Kyeongjaehak was too broad to capture the concept of political economy or economics, while the alternative term, Ejaehak, by contrast, was too confining. At that time, the three, backward East-Asian countries viewed the utility of economic science as serving the development of national economy and this goal was best represented by the Chinese characters Kyeongjaehak, which was the key determinant for its final victory. In sum, the selection of Kyeongjaehak as the translated term for economic science was affected by the evolution of the modern science at the beginning, while, at the finishing point, it reflected the demands of the times. Since the late twentieth century, mainstream economics has extended its fields of study to embrace history, institutions, politics, culture, etc. In that sense, the broad term Kyeongjaehak seems more appropriate for the translation of economics rather than Ejaehak, which is better suited as a term for the confined research-area of Neoclassical economics before the middle twentieth century.
    Keywords: Economics, Political economy, Oikonomikos, Translation
    Date: 2008
  3. By: Carlo Ciccarelli (Faculty of Economics, University of Rome "Tor Vergata"); Stefano Fenoaltea (Faculty of Economics, University of Rome "Tor Vergata")
    Abstract: Shipbuilding in post-Unification Italy is here documented by new national and regional time series. Where the extant national series point to secular decline, the new estimates reveal a major increase in output tied primarily to the growth of repair work on the one hand and of naval construction on the other. The regional estimates, which have no precedent in the literature, point to considerable concentration: Liguria accounted for more than half the product, and Campania for almost another quarter. Again, while in most regions shipbuilding was barely significant, in Liguria it represented up to a quarter of total industrial production. The further disaggregation of naval construction points to significant exports, from the 1890s, by the private yards in Tuscany and Liguria; the consensus view that Italy's engineering industry was then too backward to export at all is clearly unfounded.
    Date: 2008–12–15
  4. By: Tetsuji Okazaki (Faculty of Economics, University of Tokyo); Michiru Sawada (Department of Economics , Nagoya Gakuin University)
    Abstract: In this paper, we explored the structure and implications of interbank networks in pre-war Japan, focusing on director interlocking. It was found that approximately 60% of the banks had at least one connection with another bank through director interlocking. These connections resulted in the construction of complex networks of banks, not to be reduced to core-periphery structures. Based on this finding, the impact of the interbank networks on the financial performance and the survivability of banks was examined. It was revealed that while a bank with a network was not always more profitable compared to a bank without it, a bank which had a network with profitable banks was more profitable. Concerning the probability of failure, it was found that a bank with a network was less likely to fail than a bank without one. In this case as well, the failure probability of a bank was negatively associated with the profitability of the connected banks. In addition, interbank networks affected on bank mergers. Namely, a bank tended to choose a bank in the same network as a counterpart of the merger, which suggests that interbank networks played a role in coordinating bank mergers.
    Date: 2008–12
  5. By: William H. Phillips (Department of Economics, Tulane University)
    Abstract: Patenting expanded rapidly across the post bellum South as its transportation network filled in and city growth extended markets. This was consistent with Sokoloff and Khan (1990), who demonstrated the elastic supply of patentable ideas in early America. Successful innovation required that inventors could or did sell their property rights through "assignment" to those who commercialized new technology. The assignment characteristics of 1912 southern patents were examined. Southern "border" state patents had a higher rate of marketable assignments than those issued to residents in the Deep South. Greater commercialization of patents in border state cities accounted for most of this difference.
    Keywords: post bellum South, invention, patents
    JEL: N71 O34
    Date: 2008–12
  6. By: Ute Hanefeld; Jürgen Schupp
    Abstract: This article describes how the German Socio-Economic Panel longitudinal study project developed over the years 1983 to 1989, a period when practical experience was being gathered with the first six waves and when the further funding for this large-scale project was a constant issue. During this time, a series of basic features were established that have made this panel study an example to others¿for example, its governance structure, teamworking capacity, service provision, data quality, and data provision. The article shows that during the early years of building this project in cooperation with the Collaborative Research Center Sfb 3 ¿Microanalytical Foundations of Social Policy¿ at the Universities of Frankfurt and Mannheim, the panel study at DIW Berlin developed increasingly close cooperation with non-university social science research institutions as well as with the two universities in West Berlin.
    Keywords: SOEP, Panel, Survey
    Date: 2008
  7. By: Amakawa, Naoko
    Abstract: This paper reveals how rural Cambodian people reconstructed their social relationships after the collapse of the Pol Pot regime by examining farmland, which was the most important means of production in rural areas at that time. Section 1 and 2 illustrate the process of returning from collective farming under the Pol Pot regime to the family farming system. Section 3 analyzes the structure of land ownership created through land distribution by Krom Samakki. Section 4 studies the actualities of tenant farming. Section 5 examines the changes of the land ownership structure during a decade years after the distribution of Krom Samakki. This paper concludes that the legacy of Krom Samakki started to fade as early as the 1990s.
    Keywords: Cambodia, Reconstruction, Development, Land
    JEL: R11 R52
    Date: 2008–11
  8. By: Thierry Mayer; Keith Head; John Ries
    Abstract: The majority of independent nations today were part of empires in 1945. Using bilateral trade data from 1948 to 2006, we examine the effect of independence on post-colonial trade. On average, there is little short run effect of trade with the colonizer (metropole). However, after three decades trade declines more than 60%. We also find that trade between former colonies of the same empire erodes as much as trade with the metropole, whereas trade with third countries exhibits small and unsystematic changes after independence. Hostile separations lead to larger and more immediate reductions. Trade deterioration over extended time periods suggests the depreciation of some form of trading capital such as business networks or institutions.
    Keywords: Colonies; gravity; trade
    JEL: F15
    Date: 2008–12
  9. By: Alex Trew
    Abstract: That financial matters did not constrain industrial takeoff in the UK is generally accepted in the historical literature; in contrast, contemporary empirical analyses have found evidence that financial development can be a causal determinant of economic growth. We look to reconcile these findings by concentrating on a particular aspect of industrialising UK where inefficiencies in finance could have had bite: The finance of physical infrastructures. We document the historical record and develop the importance of spatial disaggregation and spillovers in both technological and financial development. We develop a simple model that captures the nature of infrastructure finance within a theory of endogenous growth where financial costs are endogenous. We argue that the conception of the finance-growth nexus as a largely static, aggregative phenomenon misses out a good deal of complexity and we relate that complexity to a number of implications for regulation of both financial systems and the emergence of infrastructures.
    Keywords: Finance and growth, economic history, infrastructure, economic integration.
    JEL: O11 O16 O40 N23
    Date: 2008–11
  10. By: Atkinson, Anthony B. (Nuffield College, Oxford); Backus, Peter G. (University of Warwick); Micklewright, John (University of Southampton); Pharoah, Cathy (City University London); Schnepf, Sylke V. (University of Southampton)
    Abstract: Charitable giving for overseas development and emergency relief is important in the UK, being about a quarter of the size of government development aid. There has been a strong growth over time, reflecting the activities of development charities and the public response to a series of humanitarian emergencies. This paper examines how individual overseas giving has changed over the quarter century since 1978, using a newly constructed panel data set on donations to individual UK charities. When did the increase take place? Did the public respond to events such as Live Aid? Or has there been a steady upward trend as our society became more globalised? What form did the increase in giving take? Which charities have grown fastest? Have new charities displaced old? How do changes in giving for overseas compare with changes in giving for other causes such as cancer relief or animal welfare? What, if any, is the relation with Official Development Assistance?
    Keywords: charitable giving, overseas development, philanthropy, UK
    JEL: D12 D64 F35 L31
    Date: 2008–12
  11. By: Andreas Beyer; Vitor Gaspar; Christina Gerberding; Otmar Issing
    Abstract: During the turbulent 1970s and 1980s the Bundesbank established an outstanding reputation in the world of central banking. Germany achieved a high degree of domestic stability and provided safe haven for investors in times of turmoil in the international financial system. Eventually the Bundesbank provided the role model for the European Central Bank. Hence, we examine an episode of lasting importance in European monetary history. The purpose of this paper is to highlight how the Bundesbank monetary policy strategy contributed to this success. We analyze the strategy as it was conceived, communicated and refined by the Bundesbank itself. We propose a theoretical framework (following Söderström, 2005) where monetary targeting is interpreted, first and foremost, as a commitment device. In our setting, a monetary target helps anchoring inflation and inflation expectations. We derive an interest rate rule and show empirically that it approximates the way the Bundesbank conducted monetary policy over the period 1975-1998. We compare the Bundesbank's monetary policy rule with those of the FED and of the Bank of England. We find that the Bundesbank's policy reaction function was characterized by strong persistence of policy rates as well as a strong response to deviations of inflation from target and to the activity growth gap. In contrast, the response to the level of the output gap was not significant. In our empirical analysis we use real-time data, as available to policy-makers at the time.
    JEL: E31 E32 E41 E52 E58
    Date: 2008–12
  12. By: Luiz Carlos Bresser-Pereira
    Abstract: A Democracia Tornou-Se a Forma Preferida de Governo Apenas no Século Vinte. a Busca por Motivos Racionais para Entendermos a Razão não é Suficiente. o Autor Procura por um Fato Histórico Novo que Tenha Levado a Essa Mudança de Preferência, Baseado Sucessivamente na Revolução Capitalista e na Perda Gradual do Medo da Expropriação Pela Burguesia. a Revolução Capitalista que Mudou o Modo de Apropriação do Excedente, da Violência para o Mercado, é a Primeira Condição Necessária. Representa Também a Transição do Estado Absoluto para o Estado Liberal. a Segunda Condição é o Desaparecimento do Medo da Expropriação, Permitindo a Transição do Regime Liberal para o Regime Liberal-Democrático. Depois de Estabelecer Estas Duas Condições, ou Estes Dois Fatos Históricos Novos, o Regime Democrático Tornou-Se Rational Choice para Todas as Classes. para os Capitalistas, Democracia é Agora a Forma de Governo que Melhor Assegura o Direito À Propriedade e Aos Contratos. para os Trabalhadores, é a Forma de Governo que Melhor Assegura o Aumento de Salários com Lucros
    Date: 2007–02–26
  13. By: Marco Antonio Ribas Cavalieri (Cedeplar-UFMG)
    Abstract: Amidst the economists that are concerned about the method, it is common to make reference on the subject of a new economic methodology. It was from the deception and the abandon of the search toward a unique criterion to give scientific status to research programmes that this new movement came into being. Therefore, among the studies within this innovative trend there’re many patterns of pluralism. All of them reveal different perspectives that can justify the diversity of more or less substitute research programmes within economics. This paper suggests that the ideas of a hermeneutics philosophy’s founding father Wilhelm Dilthey offers an epistemological option to legitimate this state of affairs inside economic science. His thought is chiefly presented as an alternative for Bruce Caldwell’s and Sheila Dow’s pluralisms.
    Keywords: history of economic thought, pluralism, hermeneutics, Dilthey
    JEL: B00 B40 B41
    Date: 2008–11
  14. By: Gianfranco Tusset (University of Padua)
    Abstract: Between 1909 and 1917, Gustavo Del Vecchio built a theory of money as a medium of exchange where organizational and social aspects were investigated in depth, first by means of a conventional static investigation and then by adopting a dynamic perspective. Del Vecchio believed that money, credit, accumulation, and crisis could no longer be theorised with time omitted, and this induced him to formulate dynamic statements which put forward claims about money as a store of value. The organizational and social dimensions of money, time and uncertainty were all important and interconnected aspects in his scientific research, for they all sprang from his conceptualization of money as a medium of exchange.
    Keywords: economic organization, monetary services
    JEL: B13 B31
    Date: 2008–12
  15. By: Carmen M. Reinhart; Kenneth S. Rogoff
    Abstract: The historical frequency of banking crises is quite similar in high- and middle-to-low-income countries, with quantitative and qualitative parallels in both the run-ups and the aftermath. We establish these regularities using a unique dataset spanning from Denmark's financial panic during the Napoleonic War to the ongoing global financial crisis sparked by subprime mortgage defaults in the United States. Banking crises dramatically weaken fiscal positions in both groups, with government revenues invariably contracting, and fiscal expenditures often expanding sharply. Three years after a financial crisis central government debt increases, on average, by about 86 percent. Thus the fiscal burden of banking crisis extends far beyond the commonly cited cost of the bailouts. Our new dataset includes housing price data for emerging markets; these allow us to show that the real estate price cycles around banking crises are similar in duration and amplitude to those in advanced economies, with the busts averaging four to six years. Corroborating earlier work, we find that systemic banking crises are typically preceded by asset price bubbles, large capital inflows and credit booms, in rich and poor countries alike.
    JEL: E6 F3 N0
    Date: 2008–12
  16. By: Pierre-Philippe Combes (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579); Miren Lafourcade (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales - Ecole Nationale des Ponts et Chaussées - Ecole Normale Supérieure de Paris); Jacques-François Thisse (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales - Ecole Nationale des Ponts et Chaussées - Ecole Normale Supérieure de Paris); Jean-Claude Toutain (ERMES - Equipe de recherche sur les marches, l'emploi et la simulation - CNRS : FRE2887 - Université Panthéon-Assas - Paris II)
    Abstract: This paper uses a unique database that provides value-added, employment, and population levels for the entire set of French departments for the years 1860, 1930, and 2000. These data cover three sectors: agriculture, manufacturing, and services. This allows us to study the evolution of spatial inequalities within France and to test the empirical relevance of economic geography predictions over the long run. The evidence confirms the existence of a bell-shaped evolution of the spatial concentration of manufacturing and services. In contrast, labor productivity has been converging across departments. Last, our study also confirms the presence of strong agglomeration economies during the full time-period. Market potential during the first sub-period (1860-1930), and higher education during the second (1930-2000), together with sectoral diversity, account for the spatial distribution of these gains.
    Keywords: Economic geography, agglomeration economies, human capital, economic history
    Date: 2008–12–28
  17. By: Peter Blair Henry; Conrad Miller
    Abstract: Recent work emphasizes the primacy of differences in countries' colonially-bequeathed property rights and legal systems for explaining differences in their subsequent economic development. Barbados and Jamaica provide a striking counter example to this long-run view of income determination. Both countries inherited property rights and legal institutions from their English colonial masters yet experienced starkly different growth trajectories in the aftermath of independence. From 1960 to 2002, Barbados' GDP per capita grew roughly three times as fast as Jamaica's. Consequently, the income gap between Barbados and Jamaica is now almost five times larger than at the time of independence. Since their property rights and legal systems are virtually identical, recent theories of development cannot explain the divergence between Barbados and Jamaica. Differences in macroeconomic policy choices, not differences in institutions, account for the heterogeneous growth experiences of these two Caribbean nations.
    JEL: E0 F0 N0 O0
    Date: 2008–12
  18. By: Singh, Nirvikar
    Abstract: India is a large, heterogeneous and complex nation, with multiple languages, religions and ethnicities, and over one billion people. It stands out in having held together while sustaining a working democracy for over five decades, at relatively low levels of income. One of the main institutional aspects of managing heterogeneity to preserve national unity is the structures of Indian federalism. This paper traces some of the features of Indian federal institutions, focusing on their contribution to this ‘holding together.’ It reviews the conceptual and analytical underpinnings of the role of federal structures in sustaining unity, and summarizes historical developments and current institutional structures of the Indian case. It assesses the role of federal dimensions of political, administrative and judicial structures in the holding together function. It also examines fiscal federal institutions and their impacts, including distributional and growth issues. It also separately focuses specifically on the special treatment of what may be characterized as India’s periphery.
    Keywords: federalism; decentralization; intergovernmental relations
    JEL: H1 H7 P35 P26
    Date: 2008–10
  19. By: Garrette, Bernard; Dussauge, Pierre; Castaner, Xavier
    Abstract: This paper investigates why firms choose to undertake product expansion through alliances with competitors rather than on their own.
    Keywords: alliance; governance; resource; competence; expansion; growth
    JEL: D21 D92
    Date: 2008–12–01
  20. By: Timothy J. Besley; Torsten Persson
    Abstract: This paper studies the incidence of civil war over time. We put forward a canonical model of civil war, which relates the incidence of conflict to circumstances, institutions and features of the underlying economy and polity. We use this model to derive testable predictions and to interpret the cross-sectional and times-series variations in civil conflict. Our most novel emprical finding is that higher world market prices of exported, as well as imported, commodities are strong and significant predictors of higher within-country incidence of civil war.
    JEL: D74 F52 O11 Q54
    Date: 2008–12
  21. By: Luiz Carlos Bresser-Pereira
    Abstract: Desenvolvimento Econômico ou Crescimento Econômico Só Pode ser Compreendido a Partir de uma Perspectiva Histórica como o Processo de Acumulação de Capital Personificando o Progresso Tecnológico que Melhora os Padrões de Vida. Definido Nestes Termos o Desenvolvimento Econômico é um Processo Histórico e Econômico que é Parte da Revolução Capitalista. o Desenvolvimento Econômico, Assim como as Nações, o Estado Moderno e os Estados-Nação são Resultado Desta Mudança Estrutural Tectônica, que foi Formada por Três Sub-Revoluções a Revolução Comercial, a Nacional e a Industrial. de Acordo com Essa Perspectiva, Poderemos Distinguir Quatro Modelos ou Padrões Históricos de Desenvolvimento, Dois Referentes Aos Países Hoje Ricos (Desenvolvimento Original e Desenvolvimento Atrasado), e Dois Aos Países em Desenvolvimento (Desenvolvimento Autônomo e Desenvolvimento Nacional-Dependente), Tendo como Exemplos, Respectivamente, a Inglaterra, a Alemanha, a China e o Brasil.
    Date: 2008–10–16

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