New Economics Papers
on Business, Economic and Financial History
Issue of 2009‒03‒22
fourteen papers chosen by

  1. Guns and Books: Legitimacy, Revolt and Technological Change in the Ottoman Empire By Metin M. Cosgel; Thomas J. Miceli; Jared Rubin
  2. Medias Bias in Financial Newspapers: Evidence from Early 20th Century France By Vincent Bignon; Antonio Miscio
  3. The USDA Graduate School: Government Training in Statistics and Economics, 1921-1945 By Malcolm Rutherford
  4. The current financial crisis: what should we learn from the great depressions of the Twentieth Century? By Gonzalo Fernández de Córdoba; Timothy J. Kehoe
  5. A New Economic Analysis of the American Revolution By Paul Hallwood; Ambyre Ponivas
  6. Comparing Population Distributions from bin-Aggregated Sample Data: an Application to Historical Height Data from France By Jean-Yves Duclos; Josée Leblanc; David Sahn
  8. Criticisms of capitalism, budgeting and the double enrolment: Budgetary control rhetoric and social reform in France in the 1930s and 1950s By Nicolas Berland; Eve Chiapello
  9. From equilibrium models to mechanism design: On the place and the role of government in the public goods provision analysis in the second part of the twentieth century By Monique Florenzano
  10. Labor Force Participation of Older Males in Korea: 1955-2005 By Chulhee Lee
  11. Utrinque Paratus: A Case Study of Discourse and Identity in The British Parachute Regiment By Thomas Thornborrow; Andrew D. Brown
  12. Labor Markets in South Africa During Apartheid By Mariotti, Martine
  13. Men,Women, and the Ballot – Woman Suffrage in the United States By Sebastian Braun; Michael Kvasnicka
  14. Civil War By Christopher Blattman; Edward Miguel

  1. By: Metin M. Cosgel (University of Connecticut); Thomas J. Miceli (University of Connecticut); Jared Rubin (California State University, Fullerton)
    Abstract: New technologies have not always been greeted with great enthusiasm. Although the Ottomans were quick to adopt advancements in military technology, they waited for almost three hundred years to allow the first book to be printed in Arabic script. We explain differential reaction to technology through a political economy approach centered on the legitimizing relationship between the rulers and their agents (e.g., military or religious authorities). The Ottomans readily accepted new military technologies such as gunpowder and firearms because they increased the net revenue available to the ruler and reduced the expected value of revolting against him. But they objected to the printing press because it would have decreased the ruler's net revenue by undermining the legitimacy provided by religious authorities, and it would have raised the probability and expected value of a revolution. The printing press was allowed in the eighteenth century after alternative sources of legitimacy emerged.
    Keywords: technology, state, military, printing, religion, legitimacy, revolt, Ottoman Empire
    JEL: H2 N45 N75 O3 O53 P48 Z12
    Date: 2009–03
  2. By: Vincent Bignon; Antonio Miscio
    Abstract: The financial market was very developed in France in the years before World War I and subsequently many newspapers provided information to investors. Yet, contemporaries blamed the inaccuracy and biases of the financial press. This study implements a quantitative test to assess this judgment. The results show that although the firms’ media coverage were impacted by the fact that firms paid to appear in newspapers, the performance of the firms selected by the media was pretty good. A better explanation of the bias is then that newspapers choose firms according to their editorial policy and that they were able to make firms paid for that.
    Keywords: Media coverage, financial newspapers, media bias, information on the financial market
    JEL: G11 G12 L15 O16 N13
    Date: 2009
  3. By: Malcolm Rutherford (Department of Economics, University of Victoria)
    Abstract: The USDA Graduate School was founded in 1921 to provide statistical and economic training to the employees of the Department of Agriculture. The School did not grant degrees, but its graduate courses were accepted for credit by a significant number of universities.After its founding, the activities of the School grew rapidly to provide training in many different subject areas for employees from almost all Government Departments. The training in statistics provided by the School was often highly advanced (instructors included Howard Tolly and, later, Edwards Deming), while the economics taught displayed an eclectic mix of standard and institutional economics. Mordecai Ezekiel taught both economics and statistics at the school, and had himself received his statistical training there. Statistics instruction in 1936 and 1937 included seminars from R. A. Fisher and J. Neyman, and courses on sampling theory involving Lester Frankel and William Hurwitz became important after 1939. The instruction in economics was noticeably institutionalist in the period of the New Deal. Towards the end of the period considered here the instruction in economics became narrower and more focused on agricultural economics. The instruction given provides a basis for understanding the sources of the relative statistical sophistication of agricultural economists in the interwar period. It also provides a light on the place of institutional economics in the training of government economists through the same time span. It is noteworthy than within the USDA Graduate School, and in contrast to the Cowles Commission, statistical sophistication co-existed with an approach to economics that was not predominantly neoclassical.
    Keywords: Department of Agriculture, Agricultural Economics, Statistic, Institutional Economics, Training
    JEL: B2 C1 Q1
    Date: 2009–03–13
  4. By: Gonzalo Fernández de Córdoba; Timothy J. Kehoe
    Abstract: Studying the experience of countries that have experienced great depressions during the twentieth century teaches us that massive public interventions in the economy to maintain employment and investment during a financial crisis can, if they distort incentives enough, lead to a great depression.
    Date: 2009
  5. By: Paul Hallwood (University of Connecticut); Ambyre Ponivas (University of Connecticut)
    Abstract: We offer an analysis of the American Revolution in which actors are modeled as choosing the sovereign organization that maximizes their net expected benefits. Benefits of secession derive from satisfaction of greed and settlement of grievance. Costs derive from the cost of civil war and lost benefit of Empire membership. When expected net benefits are positive for both secessionists and the Empire civil war ensues, otherwise it is settled or never begins in the first place. The novelty of our discussion is to show how diverse economic and non-economic factors (such as pamphleteering by Thomas Paine and the morale of the Revolutionary forces) can be integrated into a single economic model.
    Keywords: American Revolution, autonomous regions, causes of war, civil war, collapse of empire, empire, international borders, secession, self determination, theory of history, transaction costs, war of secession
    JEL: F5 K33 N40 P48
    Date: 2009–02
  6. By: Jean-Yves Duclos; Josée Leblanc; David Sahn
    Abstract: This paper develops a methodology to estimate the entire population distributions from bin-aggregated sample data. We do this through the estimation of the parameters of mixtures of distributions that allow for maximal parametric flexibility. The statistical approach we develop enables comparisons of the full distributions of height data from potential army conscripts across France's 88 departments for most of the nineteenth century. These comparisons are made by testing for differences-of-means stochastic dominance. Corrections for possible measurement errors are also devised by taking advantage of the richness of the data sets. Our methodology is of interest to researchers working on historical as well as contemporary bin-aggregated or histogram-type data, something that still widely done since much of the information that is publicly available is in that form, often due to restrictions due to political sensitivity and/or confidentiality concerns.
    Keywords: Health, health inequality, aggregate data, 19th century France, welfare
    JEL: C14 C81 D3 D63 I1 I1 N3
    Date: 2009
  7. By: Jonathan Pincus (School of Economics, University of Adelaide); Richard Pomfret
    Abstract: Financial sector innovation and development has been an integral part of the rise of capitalism over the last half millennium. The innovations of the last three decades of the twentieth century were a continuation of the trend; they contributed to an era of global prosperity, but also increased the probability of bank failures as bankers and policymakers inexperienced in the new instruments made mistaken decisions. The likelihood of crises was increased by public policies which increased moral hazard. Governments regulate the financial sector due to asymmetric information between depositors and deposit-taking institutions; restricting entry or the lending activity of financial institutions is inefficient, so the weight is now placed on deposit insurance with moral hazard consequences. The policy challenge is to reduce moral hazard without repressing the financial sector and creating adverse selection in lending practices. Since the mid-1980s cheap money policies have exacerbated moral hazard associated with inadequate financial sector regulation by encouraging highly leveraged investments. The post-2007 financial crisis was one of many crises with idiosyncratic catalysts but with common underlying causes: cheap money available to participants in the integrated but imperfectly regulated global financial market eventually led to loan defaults and bank failures. This is not the end of capitalism, but a reminder of the difficult balancing acts involved in policing the financial sector which is at the heart of capitalist economies.
    Keywords: financial development – moral hazard
    JEL: O16 G28 F43
    Date: 2009–05
  8. By: Nicolas Berland (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris Dauphine - Paris IX); Eve Chiapello (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - GROUPE HEC - CNRS : UMR2959)
    Abstract: This article is a contribution to the study of the spread of management innovations, methods and rhetorics. It particularly concerns the influence of ideological and political factors, which have so far mostly escaped in-depth study. In particular, we seek to understand to what extent a critique of society developed by social reformers can be a source of inspiration for managers, leading them to change their practices and experiment with new devices. Relying on the framework of historical change in management practices developed by Boltanski and Chiapello [Boltanski, L., & Chiapello, E. (2005). The new spirit of capitalism. London: Verso (Translation of Le nouvel esprit du capitalisme, Paris: Gallimard, 1999)], we study the specific development of budgetary control in France, examined in the light of the general political and economic history of the 20th century. This framework simultaneously encompasses the dissemination of a new accounting practice, the transformation of capitalist institutions and mo des of regulation in a given period and country, and the programmatic discourses [Miller, P., & Rose, N. (1990). Governing economic life. Economy and Society, 19(1), 1-31] associated with the historical move. More exactly, what interests us is a double enrolment process. The business world promoters of budgetary control use the rhetorics of social reformers to present budgetary control as a solution to the economic and social problems of their time; conversely, social reformers promote budgetary control as a realistic, efficient tool that can change the world. Ultimately, a degree of alliance is possible around this management tool, although the extent to which the meanings each group attributes to its action are shared may remain unclear. Based on an analysis of the writings of budgetary control promoters of the 1930s and the 1950s, we show the close links between their discourse and the reforming ideas of their time, and how we can trace through this corpus the evolution of this kind of political rationalities [Miller, P., & Rose, N. (1990). Governing economic life. Economy and Society, 19(1), 1-31] associated with governing and managing corporations we call the spirit of capitalism [Boltanski, L., & Chiapello, E. (2005). The new spirit of capitalism. London: Verso (Translation of Le nouvel esprit du capitalisme, Paris: Gallimard, 1999)].
    Keywords: accounting; organizations; society
    Date: 2009–01–05
  9. By: Monique Florenzano (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: Focussing on their analysis of the optimal public goods provision problem, this paper follows the parallel development of equilibrium models and mechanism design after the accommodation of Samuelson's definition of collective goods to the general equilibrium framework. Both paradigms lead to the negative conclusion of the impossibility of a fully decentralized optimal public goods provision through market or market-like institutions.
    Keywords: General equilibrium, Lindahl-Foley equilibrium, Wicksell public competitive equilibrium, private provision equilibrium, mechanism design, free-rider problem, incentive compatibility.
    Date: 2009–02
  10. By: Chulhee Lee
    Abstract: This study estimates the labor force participation rate (LFPR) of older males in Korea from 1955 to 2005, and analyzes the effects of several determining factors on labor force participation decisions at older ages. The LFPR of older men increased substantially from the mid-1960s to the late-1990s. This pattern is in sharp contrast to the historical experiences of most OECD countries, where the LFPR of older males declined rapidly over the last century. The rise in the LFPR of older males in Korea between 1965 and 1995 is largely explained by the dramatic increase in the labor-market activity of the rural elderly population. The results of regression analyses suggest that the acceleration of population aging in rural areas due to the selective out-migration of younger persons was the major cause of the sharp increase in the LFPR of older males. It is likely that the relative decline of the rural economy in the course of industrialization made it increasingly difficult for the rural elderly population to save for retirement.
    JEL: J26
    Date: 2009–03
  11. By: Thomas Thornborrow (Nottingham University Business School - Malaysia Campus); Andrew D. Brown (University of Bath, School of Management)
    Abstract: This paper analyzes how participants' preferred conceptions of their selves are disciplined by the organizationally-based discursive and material resources on which they draw. Our paper is principally an in-depth case study of the subjectivities of men who were serving, or who had served, in an elite military unit - the Britis Parachute Regiment. In examining issues of agency and control in identity matters we employ literature on subjectivity, the discursive construction of identity, the self as a project, and identity regulation. There is a dearth of research in management studies on military institutions, and one important element of the research contribution of this paper is to explore issues of subjectivity and identity regulation in these underexplored work organizations. Two aspects of our case are particularly highlighted. First, we argue that soldiers' evolving self-conceptions were disciplined not (just) by anxieties but by understandings of themselves as professionally tough, and their continuous aspiration to be more authentic paratroopers. Second, rather than focus on how those who were hierarchically privileged sought to manipulate discursive resources for their own ends, we examine a range of paratroopers, to illustrate how all (officers and enlisted men) were subject to, and constituted by, the material and discursive practices of the Regiment.
    Date: 2008–07
  12. By: Mariotti, Martine
    Abstract: Conventional wisdom holds that international political pressure and domestic civil unrest in the mid-1970s and 1980s brought an end to apartheid in South Africa. I show that, prior to these events, labor market pressure in the late 1960s/early 1970s caused a dramatic unraveling of apartheid in the workplace. Increased educational attainment among whites reduced resistance to opening semi-skilled jobs to Africans. This institutional change reflected white economic preferences rather than a relaxation of attitudes toward apartheid. I show that whites benefited from the relaxation of job reservation rules and that this is the primary cause of black occupational advancement.
    Keywords: Discrimination; Job Reservation; Education; Labor markets
    JEL: N0 N37
    Date: 2009
  13. By: Sebastian Braun; Michael Kvasnicka
    Abstract: Woman suffrage led to the greatest enfranchisement in the history of the United States. BeforeWorldWar I, however, suffrage states remained almost exclusively confined to the American West. The reasons for this pioneering role of theWest are still unclear. Studying the timing of woman suffrage adoption at state level, we find that states in which women were scarce (the West) enfranchised their women much earlier than states in which the sex ratio was more balanced (the rest of the country). High sex ratios in the West, that is high ratios of grantors to grantees, reduced the political costs and risks to male electorates and legislators of extending the franchise. They are also likely to have enhanced female bargaining power and may have made woman suffrage more attractive in the eyes of western legislators that sought to attract more women to their states. Our finding of a reduced-form inverse relationship between the relative size of a group and its success in securing the ballot may be of use also for the study of other franchise extensions and for inquieries into the dynamics of political power sharing more generally.
    Keywords: Woman suffrage, democratization, political economy, sex ratio
    JEL: D72 J16 K10 N41 N42
    Date: 2009–03
  14. By: Christopher Blattman; Edward Miguel
    Abstract: Most nations have experienced an internal armed conflict since 1960. The past decade has witnessed an explosion of research into the causes and consequences of civil wars, belatedly bringing the topic into the economics mainstream. This article critically reviews this interdisciplinary literature and charts productive paths forward. Formal theory has focused on a central puzzle: why do civil wars occur at all when, given the high costs of war, groups have every incentive to reach an agreement that avoids fighting? Explanations have focused on information asymmetries and the inability to sign binding contracts in the absence of the rule of law. Economic theory has made less progress, however, on the thornier (but equally important) problems of why armed groups form and cohere, and why individuals decide to fight. Likewise, the actual behavior of armed organizations and their leaders is poorly understood. On the empirical side, a vast cross-country econometric literature has aimed to identify the causes of civil war. While most work is plagued by econometric identification problems, low per capita incomes, slow economic growth and geographic conditions favoring insurgency are the factors most robustly linked to civil war. We argue that microlevel analysis and data are needed to truly decipher war’s causes, and understand the recruitment, organization, and conduct of armed groups. Recent advances in this area are highlighted. Finally, turning to the economic legacies of war, we frame the literature in terms of neoclassical economic growth theory. Emerging stylized facts include the ability of some economies to experience rapid macroeconomic recoveries, while certain human capital impacts appear more persistent. Yet econometric identification has not been adequately addressed, and there is little consensus on the most effective policies to avert conflicts or promote postwar recovery. The evidence is weakest where it is arguably most important: in understanding civil wars’ effects on institutions, technology, and social norms.
    JEL: H56 O10 O40 C80
    Date: 2009–03

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