New Economics Papers
on Business, Economic and Financial History
Issue of 2009‒08‒02
twenty papers chosen by

  1. Electoral Fraud, the Rise of Peron and Demise of Checks and Balances in Argentina By Lee J. Alston; Andrés A. Gallo
  2. The dynamics of inequality in a newly settled, pre-industrial society: The case of the Cape Colony By Johan Fourie; Dieter von Fintel
  3. Sweet Diversity: Colonial Goods and the Rise of European Living Standards after 1492 By Jonathan Hersh; Joachim Voth
  4. Switzerland.s Rise to a Wealthy Nation: Competition and Contestability as Key Success Factors By Weder, Beatrice; Weder, Rolf
  5. Japan's Model of Economic Development: Relevant and nonrelevant Elements for Developing Economies By Kimura, Fukunari
  6. Institutional Development and Colonial Heritage within Brazil* By Joana Narotomi; Rodrig Soares; Juliano J. Assunção
  7. The ‘Transaction Cost Approach’ and the Performance of the Belgian Dairy Co-operatives Before 1940 By Peter Van Der Hallen
  8. Why did Countries Adopt the Gold Standard? Lessons from Japan By Kris James Mitchener; Masato Shizume; Marc D. Weidenmier
  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. "Industrial Organization in Japan between the Two World Wars" (in Japanese) By Tetsuji Okazaki
  11. FORTY YEARS OF LATIN AMERICA’S ECONOMIC DEVELOPMENT: From the Alliance for Progress to the Washington Consensus By Sebastian Edwards
  12. Milton Friedman and U.K. economic policy: 1938-1979 By Edward Nelson
  13. World Bank policy research : a historical overview By Dethier, Jean-Jacques
  14. Fertility Decline and the Heights of Children in Britain, 1886-1938 By Hatton, Timothy J.; Martin, Richard M.
  15. International Comovements, Business Cycle and Inflation: a Historical Perspective By Haroon Mumtaz; Saverio Simonelli; Paolo Surico
  16. The "Transitional Labour Markets" Approach : Theory, history and Future Research Agenda By Bernard Gazier; Jérôme Gautié
  17. Ranking Economic History Journals: A Citation-Based Impact-Adjusted Analysis By Gianfranco Di Vaio; Jacob Weisdorf
  18. The Internal Politics of Journal Editing By William Barnett; ;
  19. Journal rankings in economics: handle with care By Howard J. Wall
  20. Herencia colonial y desarrollo económico en Iberoamérica By Rafael Dobado González

  1. By: Lee J. Alston; Andrés A. Gallo
    Abstract: The future looked bright for Argentina in the early twentieth century. It had already achieved high levels of income per capita and was moving away from authoritarian government towards a more open democracy. Unfortunately, Argentina never finished the transition. The turning point occurred in the 1930s when to stay in power, the Conservatives in the Pampas resorted to electoral fraud, which neither the legislative, executive, or judicial branches checked. The decade of unchecked electoral fraud led to the support for Juan Peron and subsequently to political and economic instability.
    JEL: H11 K0 K11 N16 N26 N46 O11 O54 P48
    Date: 2009–07
  2. By: Johan Fourie (Department of Economics, University of Stellenbosch); Dieter von Fintel (Department of Economics, University of Stellenbosch)
    Abstract: One reason for the relatively poor development performance of many countries around the world today may be the high levels of inequality during and after colonisation. Evidence from colonies in the Americas suggests that skewed initial factor endowments could create small elites that owned a disproportionate share of wealth, human capital and political power. The Cape Colony, founded in 1652 at the southern tip of Africa, presents a case where a mercantilist company (the Dutch East India Company) settles the land and establishes a unique set of institutions within which inequality and development evolve. This paper provides a long-run quantitative analysis of trends in asset-based inequality (using Principle Components' Analysis on tax inventories) during the seventeenth and eighteenth century, allowing, for the first time, a dynamic rather than static analysis of inequality trends in a newly settled and pre-industrial society over this period. While theory testing in other societies has been severely limited because of a scarcity of quantitative evidence, this study presents a history with evidence, enabling an evaluation of the Engerman-Sokoloff and other hypotheses.
    Keywords: South Africa, settler societies, Kuznets, income distribution, asset index, institutions, mercantilism, Dutch East India Company
    JEL: N37 D31 D63
    Date: 2009
  3. By: Jonathan Hersh; Joachim Voth
    Abstract: Did living standards stagnate before the Industrial Revolution? Traditional real-wage indices typically show broadly constant living standards before 1800. In this paper, we show that living standards rose substantially, but surreptitiously because of the growing availability of new goods. Colonial luxuries such as tea, coffee, and sugar transformed European diets after the discovery of America and the rounding of the Cape of Good Hope. These goods became household items in many countries by the end of the 18th century. We use the Greenwood-Kopecky (2009) method to calculate welfare gains based on data about price changes and the rate of adoption of new colonial goods. Our results suggest that by 1850, the average Englishman would have been willing to forego 15% or more of his income in order to maintain access to sugar and tea alone. These findings are robust to a wide range of alternative assumptions, data series, and valuation methods.
    Keywords: Economics of New Goods, Age of Discovery, Consumption, Early Modern Europe, Living Standards
    JEL: D12 D60 F10 N33
    Date: 2009–07
  4. By: Weder, Beatrice; Weder, Rolf
    Abstract: This paper argues that economic competition and political contestability are two key determinants of the successful development of the Swiss economy in the nineteenth and twentieth century. We describe how Switzerland evolved from a relatively poor country with no natural resources and net emigration in 1800 to one of the richest countries of the world two hundred years later. Based on quantitative and qualitative evidence, we argue that early internationalization, open and flexible markets as well as a high degree of competition were crucial for the development of the Swiss economy. In addition, the Swiss political system with its direct democratic elements and the implemented principle of subsidiarity created political contestability that maintained government efficiency and led to political stability throughout history. The combination of these elements seems to explain the Swiss success, but also to make it difficult for other
    Keywords: Switzerland, development, growth, competition, contestability
    Date: 2009
  5. By: Kimura, Fukunari
    Abstract: Japan was the first non-western country to accomplish successful industrialization, and the dominant perception of its .industrial policy. had over-emphasized specific characteristics of Japan. However, from the perspective of today.s development thinking, Japan.s economic history shared a wide range of common factors in usual economic development: macroeconomic stability, human resource development, and economic infrastructure. Industrial policy in Japan sometimes worked well and sometimes did not, depending on how effectively it counteracted market failure and took advantage of market dynamism. We must note, however, that the external conditions faced by Japan were widely different from what today.s
    Keywords: industrial policy, industrialization, trade liberalization, macroeconomic stability, economic infrastructure
    Date: 2009
  6. By: Joana Narotomi (Harvard University); Rodrig Soares (Department of Economics PUC-Rio); Juliano J. Assunção (Department of Economics 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 Codes: N26, O17, O40
    Date: 2009–07
  7. By: Peter Van Der Hallen (Catholic University of Leuven)
    Abstract: We see that Belgian industrial dairy production before World War II lagged the developments of other countries in the same region and of the same size such as Denmark and The Netherlands. The share of home production remained remarkably high, while within the industrial segment the number of private to co-operative creameries was high compared to the more successful countries. We argue that this is no coincidence. Co-operative creameries were better suited to deal with the problems posed by the organisation and technology of dairy production at the time. The lacklustre performance of the Belgian dairy industry was therefore connected to the underdevelopment of the co-operative sector. The co-operative spirit of Belgian farmers suffered due to some historical events such as the large scale introduction of farm cream separators and especially the outbreak of World War I. This erosion of co-operative spirit diminished the attractiveness and binding power of the co-operative creameries.
    Keywords: Dairy Industry, Co-operatives, Creameries
    JEL: L14 N53 N54 Q13
    Date: 2009–02
  8. By: Kris James Mitchener; Masato Shizume; Marc D. Weidenmier
    Abstract: Why did policymakers adopt the gold standard? Although previous research has identified ex post effects of gold standard adoption on trade and bond yields, few studies have sought to understand whether these were the actual outcomes of interest to policymakers at the time of adoption. We examine the political economy of Japan’s adoption of the gold standard in 1897 by exploring the ex ante motives of policymakers as well as how the legislative decision to adopt gold won approval. We then link the beliefs of contemporaneous policymakers to data so that we can test the economic effects of adoption. In contrast to previous studies examining bond yields, we find little evidence that joining the gold standard reduced Japan’s country risk or investors anticipated a dramatic decline in borrowing rates for the government. Moreover, we find no evidence of a domestic investment boom or that investors anticipated one and bid it into stock prices. However, as some policymakers suggested, we find that membership in the gold standard increased Japan’s exports by lowering transactions costs and because the price of gold fell relative to silver, making exports to silver standard countries more competitive. While Japan also received a boost in exports to its regional trading partners when it switched from paper to silver, going onto gold allowed Japan to tap into the growing share of global trade that was centered on the gold standard: by the late 1890s nearly 60 percent of Japanese exports and total trade were with members of the gold club.
    JEL: E58 F33 N15 N25 N75
    Date: 2009–07
  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: Tetsuji Okazaki (Faculty of Economics, University of Tokyo)
    Abstract: This paper overviews the industrial organization in Japan between the two World Wars. In this period, the change in the industrial structure gave a substantial impact on the industrial organization. On one hand, development of the heavy industries, which had been highly concentrated, raised the average level of market concentration (between effect). On the other hand, market concentration of each industry declined, in particular for the heavy industries (within and covariance effects). Decline of market concentration in each industry reflected the change in firm dynamics. While "natural selection" shaking out inefficient firms weakened, new entries continued in many industries. This new pattern of firm dynamics was associated with the activities of cartels, which proliferated in this period. Cartels indeed restricted competition and enhanced profitability of industries in the short run, which in turn undermined natural selection and induced new entries in the long run.
    Date: 2009–07
  11. By: Sebastian Edwards
    Abstract: In this paper I analyze the evolution of economic and social conditions in Latin America from the 1950s through the 1980s, when deep external crises erupted in country after country. The point of departure of our story is the political awakening of the region in the late 1950s and early 1960s and the emergence of guerilla movements in many countries, including in Cuba. I then analyze the Alliance for Progress, a major and ambitious aid program sponsored by the United States whose main objective was to improve social conditions in the region. I show that in spite of the Alliance, social circumstances did not improve significantly; I also show that throughout this period protectionism and government intervention became more ingrained, discouraging productivity improvements. I then deal with inflation, fiscal largesse, and the Mexican debt crisis of 1982, a crisis that led to the so-called “lost decade.†The paper ends with a discussion of the launching of the reforms of the Washington Consensus in 1989-1990. I provide a detailed analysis of the most important elements of this consensus, and I touch on some of the implementation challenges.
    JEL: F30 F32 N26 O40 O54
    Date: 2009–07
  12. By: Edward Nelson
    Abstract: This paper analyzes the interaction of Milton Friedman and U.K. economic policy from 1938 to 1979. The period under study is separated into 1938-1946, 1946-1959, 1959-1970, and 1970-1979. For each of these subperiods, I consider Friedman's observations on and dealings with key events, issues, and personalities in U.K. monetary policy and in general U.K. economic policy.
    Keywords: Friedman, Milton ; Economic policy - Great Britain
    Date: 2009
  13. By: Dethier, Jean-Jacques
    Abstract: The World Bank is a leading intellectual institution on development. It is a world leader in analytical studies in areas including poverty measurement, delivery of social services, impact evaluation, measurement of development outcomes, international trade and migration. It is also a leader in development data, including the Living Standard Measurement Surveys; the enterprise surveys, and the International Price Comparison Project. World Bank research is resolutely empirical and policy oriented. By both learning from past policies and operations and thinking critically about future policies, research plays a critical role in the formulation of policy advice to developing countries. This paper reviews the intellectual and institutional forces that have shaped research at the World Bank since the latter started lending to developing countries in the early 1950s. It provides an overview of the shifts in development economics that have influenced Bank research and briefly surveys the changes in research organization, structure and approach. The first section, after a short introduction, examines the shifts in positive and normative views about development during the past half century that have influenced Bank thinking. The Bank itself has been an active participant in the rise and fall of long-lived development dogmas about the nature of development; the most appropriate policies and actions for achieving it; and the respective roles of government and markets. The second section examines how the World Bank has adapted its organization to keep abreast of emerging issues and produce relevant policy research of good quality. On the one hand, the Bank has experienced several reorganizations that have affected the research unit(s) as well as its relationship with operational units. On the other hand, the Bank’s research units themselves have been reorganized at several junctures, leading to new priorities and new means of achieving them.
    Keywords: Banks&Banking Reform,ICT Policy and Strategies,Science Education,Scientific Research&Science Parks,Poverty Monitoring&Analysis
    Date: 2009–07–01
  14. By: Hatton, Timothy J. (Australian National University); Martin, Richard M. (University of Bristol)
    Abstract: In this paper we argue that the fertility decline that began around 1880 had substantial positive effects on the health of children, as the quality-quantity trade-off would suggest. We use microdata from a unique survey from 1930s Britain to analyze the relationship between the standardized heights of children and the number of children in the family. Our results suggest that heights are influenced positively by family income per capita and negatively by the number of children or the degree of crowding in the household. The evidence suggests that family size affected the health of children through its influence on both nutrition and disease. Applying our results to long-term trends, we find that rising household income and falling family size contributed significantly to improving child health between 1886 and 1938. Between 1906 and 1938 these variables account for nearly half of the increase in heights, and much of this effect is due to falling family size. We conclude that the fertility decline is a neglected source of the rapid improvement in health in the first half of the twentieth century.
    Keywords: fertility decline, heights of children, health in Britain
    JEL: I32 J13 N33 N34
    Date: 2009–07
  15. By: Haroon Mumtaz (Center for Central Banking Studies, Bank of England); Saverio Simonelli (Università di Napoli Federico II, EUI and CSEF); Paolo Surico (External MPC unit, Bank of England)
    Abstract: Using a dynamic factor model, we uncover four main empirical regularities on international comovements in a long-run panel of real and nominal variables. First, the contribution of world comovements to domestic output growth has decreased over the post-WWII period. The contribution of regional comovements, however, has increased significantly. Second, the share of inflation variation due to a global factor has become larger since 1985. Third, over most of the post-WWII period, international comovements within regions have accounted for the bulk of fluctuations in business cycle and inflation. Fourth, prices have become significantly less countercyclical during the post-1984 sample, with the largest contribution due to external developments.
    Keywords: output growth, in.ation, geographic identi.cation, dynamic factor model
    JEL: E30 F40 N10
    Date: 2009–07–10
  16. By: Bernard Gazier (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, Institut Universitaire de France - IUF); Jérôme Gautié (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: This contribution aims at presenting a critical and synthetic overview of the researches done, since 1995, under the aegis of the "Transitional Labour Markets" current. In its first part, the survey focuses on the positive theoretical bases of this current. They come from diverse theories of the labour market and of organisations, and are integrated into a systemic perspective. The second part deals with the normative consequences stemming from this approach. The third part presents and discusses recent developments, identifying unsolved problems.
    Keywords: Transitional Labour Markets, employment, labour market policies.
    Date: 2009–02
  17. By: Gianfranco Di Vaio (Faculty of Economics, Libera Università Internazionale delle Scienze Sociali); Jacob Weisdorf (Department of Economics, University of Copenhagen)
    Abstract: This study ranks - for the first time - 12 international academic journals that have economic history as their main topic. The ranking is based on data collected for the year 2007. Journals are ranked using standard citation analysis where we adjust for age, size and self-citation of journals. We also compare the leading economic history journals with the leading journals in economics in order to measure the influence on economics of economic history, and vice versa. With a few exceptions, our results confirm the general idea about what economic history journals are the most influential for economic history, and that, although economic history is quite independent from economics as a whole, knowledge exchange between the two fields is indeed going on.
    Keywords: economic history; journal ranking; citation analysis; scientometrics; impact factor
    JEL: A10 A11 A14 N10
    Date: 2009–06
  18. By: William Barnett (Department of Economics, The University of Kansas); ;
    Abstract: I have been invited to write an essay for The American Economist on my experiences as founder and editor of the Cambridge University Press journal, Macroeconomic Dynamics. I have decided to focus the essay on my experiences in starting up the journal. Few economists, who have not themselves started up a new journal, are aware of the nature of the process and its sometimes very complicated academic politics.
    Date: 2009–07
  19. By: Howard J. Wall
    Abstract: Nearly all journal rankings in economics use some weighted average of citations to calculate a journal's impact. These rankings are often used, formally or informally, to help assess the publication success of individual economists or institutions. Although ranking methods and opinions are legion, scant attention has been paid to the usefulness of any ranking as representative of the many articles published in a journal. First, because the distributions of citations across articles within a journal are seriously skewed, and the skewness differs across journals, the appropriate measure of central tendency is the median rather than the mean. Second, large shares of articles in the highest-ranked journals are cited less frequently than typical articles in much-lower-ranked journals. Finally, a ranking that uses the h-index is very similar to one that uses total citations, making it less than ideal for assessing the typical impact of articles within a journal.
    Keywords: Economics
    Date: 2009
  20. By: Rafael Dobado González
    Abstract: En este trabajo se hace una crítica empírica de lo que puede denominarse “nueva ortodoxia” interpretativa de los problemas económicos contemporáneos de Iberoamérica (crecimiento lento y gran desigualdad). Más concretamente, son Acemoglu, Johnson y Robinson (2001a y 2002) y Engerman y Sokoloff (1994, 2002 y 2005), que encuentran en la herencia institucional del colonialismo español en América las claves de los problemas de desarrollo iberoamericanos, quienes reciben una atención especial en este trabajo. Su principal conclusión es que la fundamentación empírica de la “nueva ortodoxia” dista de ser satisfactoria.
    Date: 2009

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