nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2009‒03‒28
four papers chosen by
Bernardo Batiz-Lazo
University of Leicester

  1. Was Weber Wrong? A Human Capital Theory of Protestant Economic History: A Comment on Becker and Woessmann By Christoph A. Schaltegger; Benno Torgler
  2. 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
  3. Did Pressler Understand how to Use the Indicator Per Cent By Gong, Peichen; Löfgren, Karl-Gustaf
  4. "Background Considerations to a Regulation of the U.S. Financial System-- Third Time a Charm? Or Strike Three? " By Jan Kregel

  1. By: Christoph A. Schaltegger; Benno Torgler
    Abstract: This comment makes a contribution to Becker and Woessmann’s paper on a human capital theory of Protestant economic history eventually challenging the famous thesis by Max Weber who attributed economic success to a specific Protestant work ethic (Quarterly Journal of Economics 124 (2) (2009) forthcoming). The authors argue for a human capital approach: higher literacy among Protestants of the 19th century (and not a Protestant work ethic) contributed to higher economic prosperity at that point in history. However, the paper leaves the question open as to whether a Protestant specific work ethic existed or exists at all. Are there observable denomination-based differences in work ethic or is Protestantism only a veil hiding the underlying role of education? We use recent data to explore the role of Protestantism on work ethic. The results indicate that today’s work ethic in fact is influenced by denomination-based religiosity and also education.
    Keywords: Religion; Work Ethic; Protestantism; Education
    JEL: Z12 I20 J24
    Date: 2009–03
  2. By: Andreas Beyer (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Vitor Gaspar (Banco de Portugal, Special Adviser, Av. Almirante Reis, 71 – 8°, 1150-012 Lisboa, Portugal.); Christina Gerberding (Deutsche Bundesbank, Monetary Policy and Analysis Division, Wilhelm-Epstein-Strasse 14, D-60431 Frankfurt am Main, Germany.); Otmar Issing (Centre for Financial Studies, Goethe University Frankfurt, Mertonstrasse 17-25, D-60325 Frankfurt am Main, Germany.)
    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 Classification: E31, E32, E41, E52, E58.
    Keywords: Inflation, Price Stability, Monetary Policy, Monetary Targeting, Policy Rules.
    Date: 2009–03
  3. By: Gong, Peichen (Faculty of Forest Sciences); Löfgren, Karl-Gustaf (Department of Economics, Umeå University)
    Abstract: A classical problem in forestry is the determination of the optimal rotation. This problem was solved during the 19th century, by German forest mathematicians. Martin Faustmann deserves some of the fame. However, he did not explicitly derive the conditions for an optimal solution. His contender is Max Robert Pressler. He invented the concept of Indicator Per Cent, which can be used to determine whether a stand is mature for harvesting or not. Did Pressler fully realize this? Having analyzed some of the relevant literature our answer is no.
    Keywords: Optimal rotation; Die Weiserprocent (The Indicator Per Cent)
    JEL: B16 Q23
    Date: 2009–03–18
  4. By: Jan Kregel
    Abstract: United States financial regulation has traditionally made functional and institutional regulation roughly equivalent. However, the gradual shift away from Glass-Steagall and the introduction of the Financial Modernization Act (FMA) generated a disorderly mix of functions and products across institutions, creating regulatory gaps that contributed to the recent crisis. An analysis of this history suggests that a return to regulation by function or product would strengthen regulation. The FMA also made a choice in favor of financial holding companies over universal banks, but without recognizing that both types of structure require specific regulatory regimes. The paper reviews the specific regime that has been used by Germany in regulating its universal banks and suggests that a similar regime adapted to holding companies should be developed.
    Date: 2009–03

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