nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2009‒07‒17
thirteen papers chosen by
Bernardo Batiz-Lazo
University of Leicester

  1. The Potato's Contribution to Population and Urbanization: Evidence from an Historical Experiment By Nunn, Nathan; Qian, Nancy
  2. From the national-bourgeois to the associated dependency interpretation of latin America By Bresser-Pereira, Luiz Carlos
  3. Technological Change and the Roaring Twenties: A Neoclassical Perspective By Sharon Harrison; Mark Weder
  4. Institutional Development and Colonial Heritage within Brazil By Naritomi, Joana; Soares, Rodrigo R.; Assunção, Juliano J.
  6. A Hurricane’s Long-Term Economic Impact: the Case of Hawaii’s Iniki By Makena Coffman; Ilan Noy
  8. South Africa's post-apartheid two-step: social demands versus macro stability By Brahima Coulibaly; Trevon D. Logan
  9. The Evolution of Paper Money By Levintal, Oren; Zeira, Joseph
  10. How could the Bank of the South promote sustainable development and regional monetary integration in Latin America ? By Jean-François Ponsot
  12. Guilbaud's Theorem : an early contribution to judgment aggregation. By Daniel Eckert; Bernard Monjardet
  13. Financial crises and bank failures: a review of prediction methods By Yuliya Demyanyk; Iftekhar Hasan

  1. By: Nunn, Nathan; Qian, Nancy
    Abstract: We exploit regional variation in suitability for cultivating potatoes, together with time variation arising from their introduction to the Old World from the Americas, to estimate the impact of potatoes on Old World population and urbanization. Our results show that the introduction of the potato was responsible for a significant portion of the increase in population and urbanization observed during the 18th and 19th centuries.
    Keywords: agriculture; Columbian Exchange; Demography; Economic Development; Industrialization; potato
    JEL: J1 N1 N5 O14
    Date: 2009–07
  2. By: Bresser-Pereira, Luiz Carlos
    Abstract: In the 1960s and 1970s Latin America was the setting of modernizing military coups and of the transition of their intellectuals from nationalism to associated dependency. In the 1950s two groups of public intellectuals, organized around ECLAC, in Santiago, Chile, and ISEB, in Rio de Janeiro, Brazil, pioneer the thinking on Latin American societies and economies (including Brazil’s) from a nationalist standpoint. ECLAC mainly criticized the law of comparative advantage and its underlying imperialist implications; ISEB focused on the political definition of a national-developmentalist strategy. The idea of a national bourgeoisie was key to this interpretation of Latin America. The Cuban revolution, the economic crisis of the 1960s, and the military coups in the South Cone, however, made room for criticism of these ideas from a new interpretation – the dependency one. By fully rejecting possibility of a national bourgeoisie, two versions of the dependency interpretation (the “associated†and the “over-exploitation†interpretations) also rejected the possibility of a national-development strategy. Only a third one, the “national-dependent†interpretation, continued to affirm the need for and possibility of a national bourgeoisie and a national strategy. Yet, it was the associated-dependency interpretation that was dominant in Latin America in the 1970s and 1980s.
    Date: 2009–04–13
  3. By: Sharon Harrison (Barnard College, Columbia University); Mark Weder (University of Adelaide)
    Abstract: Annualized output growth in the United States was highest during the 1920s, as compared to any other of Fields (2003, 2009) growth cycles. This motivates us to address the causes of the Roaring Twenties in the United States. In particular, we use a version of the real business cycle model to test the hypothesis that an extraordinary pace of productivity growth was the driving factor. Our motivation comes from the abundance of evidence of signi…cant technological progress during this period, fed by innovations in manufacturing and the widespread introduction of electricity. Our estimated total factor productivity series generate arti…cial model output that shows high conformity with the data: the model economy successfully replicates the boom years from 1922-1929.
    Keywords: Real Business Cycles, Roaring Twenties.
    JEL: E32 N12
    Date: 2009–04
  4. By: Naritomi, Joana (Harvard University); Soares, Rodrigo R. (Pontifical Catholic University of Rio de Janeiro (PUC-Rio)); Assunção, Juliano J. (Pontifical Catholic University of Rio de Janeiro (PUC-Rio))
    Abstract: This paper analyzes the determinants of local institutions and distribution of political power within a constant 'macro-institutional' setting. We show that characteristics of Brazilian municipalities related to institutional quality and distribution of political power are partly inherited from the colonial histories experienced by different areas of the country. Municipalities with origins tracing back to the sugar-cane colonial cycle – characterized by a polarized and oligarchic socioeconomic structure – display today more inequality in the distribution of endowments (land). Municipalities with origins tracing back to the gold colonial cycle – characterized by a heavily inefficient presence of the Portuguese state – display today worse governance practices and less access to justice. The colonial rent-seeking episodes are also correlated with lower provision of public goods and lower income per capita.
    Keywords: institutions, colonial heritage, rent-seeking, geography, Brazil
    JEL: N26 O17 O40
    Date: 2009–07
  5. By: Edwyna Harris
    Abstract: This paper analyses the transition of water rights institutions in Victoria, Australia, between 1840 and 1886. It will focus on the shift from the common law doctrine of riparian rights to government control of water supplies via quasi-government organisations known as irrigation trusts examining factors leading to this transition and whether it increased institutional efficiency. Evidence suggests transition to government control resulted from two factors. First, the decreasing costs of using government relative to costs of private redefinition because settlement numbers increased thereby increasing scarcity while adding to costs of private investment in redefinition due to higher negotiation and enforcement costs, legal uncertainty, and the inability for private actors to capture the full benefit of a transition. In this way, transition was efficient as it lowered transaction costs associated with creating irrigation schemes to provide water supply security. Second, crisis of drought that increased in magnitude over the period due to changes in dominant farming methods from land extensive grazing to land intensive crop farming. Drought escalated demands, via lobbying, for government action. Combined, these two factors explain why an efficiency enhancing transition from riparian rights to government control took place at this juncture in Victoria’s history.
    Keywords: .
    Date: 2009–06
  6. By: Makena Coffman (Department of Urban and Regional Planning, University of Hawaii at Manoa; University of Hawaii Economic Research Organization); Ilan Noy (Department of Economics, University of Hawaii at Manoa)
    Abstract: The importance of understanding the macro-economic impact of natural disasters cannot be overstated. Hurricane Iniki, that hit the Hawaiian island of Kauai on September 11th, 1992, offers an ideal case study to better understand the long-term economic impacts of a major disaster. Iniki is uniquely suited to provide insights into the long-term economic impacts of disaster because (1) there is now seventeen years of detailed post-disaster economic data and (2) a nearby island, Maui, provides an ideal control group. Hurricane Iniki was the strongest hurricane to hit the Hawaiian Islands in recorded history, and wrought an estimated 7.4 billion (2008 US$) in initial damage. Here we show that Kauai’s economy only returned to pre-Iniki levels 7-8 years after the storm; though 17 years later, it has yet to recover in terms of its population and labor force. As we document, these long-term adverse impacts of disasters are ‘hidden.’ They are not usually treated as ‘costs’ of disasters, and are ignored when cost-benefit analysis of mitigation programs is used, or when countries, states, and islands attempt to prepare, financially and otherwise, to the possibility of future events.
    Keywords: natural disasters, hurricane, Iniki, Kauai, Hawaii
    JEL: Q54 R50
    Date: 2009–06–01
  7. By: Edwyna Harris
    Abstract: This paper analyses whether the evolution of water law in the Australian colony of New South Wales (NSW) contradicts theoretical models that suggest in arid countries correlative, land based water rights will be replaced with individual ownership. Evidence from NSW shows a series of Supreme Court decisions between 1850-1870 adopted correlative riparian rights thereby implying that common law was inefficient. However, further consideration of factors that gave rise to these decisions suggests the value of water was higher when used in unity because of the arid climate and non-consumptive nature of water use in the pastoral industry. The findings suggest that where intensity of water use is low, economic development is dominated by industries requiring low levels of capital investment, and acute water scarcity prevails, correlative water rights are efficient.
    Keywords: water rights, common law
    JEL: N57 Q25 K11
    Date: 2009–06
  8. By: Brahima Coulibaly; Trevon D. Logan
    Abstract: During Apartheid, there was little need for redistributional policies or to borrow for public works since the vast majority of the population was underserved. With the arrival of a representative democracy in 1994, however, South Africa faced a unique problem--providing new and improved public services for the majority of its citizens while at the same time ensuring that filling this void would not undermine macroeconomic stability. Over the past fifteen years, policy makers have achieved macrostability, but progress on social needs has been below expectations and South Africa continues to lag behind its peers. This paper reviews the progress made so far and examines the challenges ahead for the upcoming administration. Our analysis suggest an increase in skill formation as a possible solution to the policy dilemma of fulfilling the outsized social demands while maintaining macrostability.
    Date: 2009
  9. By: Levintal, Oren; Zeira, Joseph
    Abstract: This paper tells the story of how paper money evolved as a result of lending by banks. While lending commodity money requires holding large reserves of commodity money to ensure liquidity, issuing convertible paper money reduces these costs significantly. The paper also examines the possibility of issuing inconvertible notes and shows that while they further reduce the cost of borrowing they also have adverse effects on the stability of the banking system. As a result, governments often intervened, either outlawing the issuance of such notes, or monopolizing them for themselves by issuing fiat money. The paper examines the process of creation of paper money, but also sheds light on more general issues, like the relation between money and financial intermediation.
    Keywords: Banks; Convertibility; Fiat Money; Financial Intermediation; Liquidity; Paper Money
    JEL: E4 E5 N1 N2
    Date: 2009–07
  10. By: Jean-François Ponsot (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : UMR5252 - Université Pierre Mendès-France - Grenoble II)
    Abstract: Section 1 will present, as a starting point, the regional payments and unit of accounts agreements in Latin America: the Reciprocal Payments and Credits Agreement of the Latin American Integration Association or ALADI, the ‘Peso Andino” set up by the Latin American Reserve Fund (FLAR) and the Payment System on Local Currency agreement (SML) recently launched by Brazil and Argentina. Section 2 will examine the objections arisen against Keynes's plan. It will also emphasise their relevance to the Sucre plan or to any similar plan. Section 3 will focus on the exchange scheme drafted by Keynes and on how to supplement it in order to get over the objections under examination.
    Keywords: sustainable development ; regional monetary integration ; Latin America
    Date: 2009–06–10
  11. By: Guang-Zhen Sun
    Abstract: First of all, one point seems in order regarding the title: this article is not intended to be comprehensive in its coverage. Rather, it focuses on a deliberately and highly selected body of studies on the division of labor ranging from ancient Greeks to WWII as represented by those reproduced in Sun (2005a), with particular attention paid to what I believe has been relatively unknown even among economists of specialization. A more systematic examination, covering hundreds of studies on the division of labor by ancient Greeks, ancient Chinese, medieval Islamic scholars, medieval Latin scholasticists and Anglo-Europeans of recent centuries is found in Sun (2005b). But what is the (commonly accepted definition of) division of labor? The one that Peter Groenewegen uses for the entry “division of labor†in New Palgrave’s Dictionary of Economics (1987, p.901) may be accepted by overwhelmingly most, if not all, economists: “The division of labor may be defined as the division of a process or employment into parts, each of which is carried out by a separate person.†That is, individuals cooperate, consciously or not, to undertake a divisible process or employment. As such, there naturally emerge two fundamental questions: Why, and how does the separation of employment among persons bear upon important economic and social consequences? In fact, the studies to be surveyed below that emerged over twenty-five centuries or so up to WWII basically centre round the above questions. We will first of all map out the evolution of ideas about division of labor up to the classical political economy in Sections I and II. For the body of economic analysis was considerably enriched since then, with different schools/perspectives simultaneously developing and sometimes competing with one another, we will focus on three themes, explored respectively by three most influential schools that have made contributions of lasting value to the economics of the division of labor. Section III examines the idea of mutual interdependence between increasing returns to the division of labor and the extent of the market originating from Smith, substantiated by Wakefield, Mill, Marshall and culminating in Young (1928). Section IV focuses on the division of labor in society and the division of labor in manufacture, on which Marx offers important insights, foreshadowing some modern theories of the firm well into 1990s. Analyses of unfavorable sociological consequences of the division of labor are also briefly surveyed in this section. Section V examines literature on the overarching theme of the spontaneous order, which can be traced back to Mandeville and was later on elaborated by the Scottish Enlightenment men, and the Austrians especially Hayek. Indeed, the Austrians not only developed a general theory of the spontaneous order but also applied it to analyses of many issues that are concomitant with the division of labor, in particularly the origin of money and the socio-economics of dispersed knowledge. Finally, Section VI concludes.
    JEL: L85
    Date: 2009–05
  12. By: Daniel Eckert (Institute of Public Economics - University of Graz); Bernard Monjardet (Centre d'Economie de la Sorbonne)
    Abstract: In a paper published in 1952, the French matematician Georges-Théodule Guilbaud has generalized Arrow's impossibility result to the "logical problem of aggregation", thus anticipating the literature on abstract aggregation theory and judgment aggregation. We reconstruct the proof of Guilbaud's theorem, which is also of technical interest, because it can be seen as the first use of ultrafilters in social choice theory.
    Keywords: Arrow's theorem, aggregation rule, judgment aggregation, logical connexions, simple game, ultrafilter.
    JEL: D71
    Date: 2009–06
  13. By: Yuliya Demyanyk; Iftekhar Hasan
    Abstract: In this article we analyze financial and economic circumstances associated with the U.S. subprime mortgage crisis and the global financial turmoil that has led to severe crises in many countries. We suggest that the level of cross-border holdings of long-term securities between the United States and the rest of the world may indicate a direct link between the turmoil in the securitized market originated in the United States and that in other countries. We provide a summary of empirical results obtained in several Economics and Operations Research papers that attempt to explain, predict, or suggest remedies for financial crises or banking defaults; we also extensively outline the methodologies used in them. The intent of this article is to promote future empirical research for preventing financial crises.
    Keywords: Subprime mortgage ; Financial crises
    Date: 2009

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