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

  1. History without Evidence: Latin American Inequality since 1491 By Jeffrey G. Williamson
  2. In Memory of Dr. Ali Al-Gritly (1913-1982): His Views on Egypt’s Experience with Socialism By Yamada, Toshikazu
  3. The Wife’s Administration of the Earnings’? Working-Class Women and Savings in the Mid-Nineteenth Century By Maltby, Josephine
  4. 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
  7. Perfecting the Catching-up: The Case of Taiwan’s Motorcycle Industry By Sato, Yukihito
  8. Global inequality and global inequality extraction ratio: The story of the last two centuries By Milanovic, Branko
  10. KALDOR’S WAR By J.E King
  12. Revisión de la literatura económica reciente sobre las causas de la violencia homicida en Colombia By Leonardo Bonilla Mejía

  1. By: Jeffrey G. Williamson (Harvard University and University of Wisconsin)
    Abstract: Most analysts of the modern Latin American economy hold to a pessimistic belief in historical persistence -- they believe that Latin America has always had very high levels of inequality, suggesting it will be hard for modern social policy to create a more egalitarian society. This paper argues that this conclusion is not supported by what little evidence we have. The persistence view is based on an historical literature which has made little or no effort to be comparative. Modern analysts see a more unequal Latin America compared with Asia and the rich post-industrial nations and then assume that this must always have been true. Indeed, some have argued that high inequality appeared very early in the post-conquest Americas, and that this fact supported rent-seeking and anti-growth institutions which help explain the disappointing growth performance we observe there even today. This paper argues to the contrary. Compared with the rest of the world, inequality was not high in pre-conquest 1491, nor was it high in the post-conquest decades following 1492. Indeed, it was not even high in the mid-19th century just prior Latin America’s belle époque. It only became high thereafter. Historical persistence in Latin American inequality is a myth.
    Keywords: Inequality; Development; Latin America
    JEL: N16 N36 O15 D3
    Date: 2009–07–15
  2. By: Yamada, Toshikazu
    Abstract: This essay reexamines the great contributions made by Dr. Ali Al-Gritly to Egypt. He was the finance minister for a short period at the beginning of the 1950s and later was appointed as chairman of the Bank of Alexandria. In 1966, he completed a book (Al-Gritly [1966 (1974)]) on the economic history of Egypt. However, the book was banned from publication due to irresistible circumstances. At that time, with Arab Socialism on the ascendance, his views on certain policies were not welcomed by the top political hierarchy. In 1974, the book was finally allowed to be published, and he wrote and published another book in 1977 (Al-Gritly [1977]) on the development of the Open Door Policy and the new economic policies accompanying it.
    Keywords: Egypt, Economic history, Economic policy, Socialism, Al-Grity, Ali, Socialist transformation, Family planning, Democratic socialism
    JEL: P27 B31 E5 H1 O2 O3 P21
    Date: 2009–03
  3. By: Maltby, Josephine
    Abstract: King and Tomkins (2002) in their study of the ‘economy of makeshifts’1 of the poor in Britain in the late eighteenth and early nineteenth centuries identify a network of different ‘sources and benefits’ from which ‘poor households cobbled together incomes’.2 Poor people, they argue, used complementary resources which included wages, self-help and family support, as well as charity and parish benefits and research has not yet adequately explored the strategies by which these resources were combined. More needs to be known, they argue, about the effects on these strategies of a variety of factors, which include different gender roles, and more use needs to be made of a wide variety of sources whose ‘full potential has yet to be explored’,3 such as parish minutes, begging letters, wage accounts, and the records of pawnbrokers. The paper examines the role played in the makeshift economy by workingclass women’s use of the savings banks that were founded in Britain as resources for the poor at the beginning of the nineteenth century. It begins with a brief survey of the history of savings banks and of their relationship with working-class and women savers, and an overview of previous studies of UK savings banks, before outlining the results of surveys of two Yorkshire banks: the Sheffield and Hallamshire Savings bank and the Huddersfield Penny Savings Bank.
    Date: 2009–02
  4. 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
  5. By: Edwyna Harris
    Abstract: This paper will analyse the operation of the British common law of riparian rights in the Riverina District of New South Wales (NSW), Australia between 1850 and 1870.* Theorists argue that the predisposition of people to fight over or cooperate to exploit valuable resources depends on how well property rights are defined and enforced.† The operation of the riparian doctrine in the Riverina provides an empirical, historical example of why inefficient property rights promote violence. Violence in this instance was based on collective action directed at the destruction of water supply infrastructure, specifically dams, constructed on various rivers within the Riverina. This paper considers why collective action in violence did not spill over into infrastructure construction. It is argued that the failure of collective action was due to its high costs stemming from several factors: failure to meet optimal group size; problems of free riders; hold-up concerns; and the introduction of a much disputed land policy in 1861 referred to as selection.
    JEL: D92 O10
    Date: 2009–08
  6. By: Lionel Frost
    Abstract: In current debates about regional Australia, many observers point to a gap in incomes and access to services between Australia’s capital cities and the rest of the nation. Supporters of this view tend to see government intervention as necessary to reverse the declining fortunes of regions and encourage industries to relocate away from congested capital cities. An alternative view is that regional Australia has become differentiated, which suggests that more flexible government intervention, targeting regions that are capable of driving growth in local economies, is warranted. This paper considers the ways in which a historical perspective might shed light on this debate. An overview of the economic history of the Inland Corridor in the 19th and 20th centuries reveals complex patterns of conditions that varied across space and over time. A dense network of small towns, established when transport and manufacturing technologies were simple, provided a connection between primary producers and external markets. After World War I, technological and global forces weakened the traditional link between farm output and economic activity and left country towns vulnerable to decline. None of these trends is explained adequately by the ‘divide’ that contemporary observers perceived between politically powerful, parasitic capital cities and their resource-starved hinterlands. This suggests that it is more appropriate to see the regional Australia of today as an evolving system of conditions, with some regions diversifying and responding to new economic opportunities more effectively than others, rather than a sector that is in general decline.
    Date: 2009–08
  7. By: Sato, Yukihito
    Abstract: The final stage of the catching-up process has formidable hurdles. This paper examines the case of Taiwan’s motorcycle industry and shows how latecomers overcame the hurdles. In the early 1990s, the two largest motorcycle makers in Taiwan, Sanyang and Kwang Yang, had completed the catching-up process and became independent from Honda, on which they had technologically depended since the early 1960s. The requisite for independence was acquiring the capacity for product innovation. The two assemblers could cultivate technological capacity by investing abundant resources, which they accumulated in the protected market. It should be noted that although the market was protected and highly concentrated, it was also very competitive. Another condition was the solid local suppliers of parts and components. The local suppliers had also grown under the government’s industrial policies. However, their development beyond imitators can be attributed to their own initiatives.
    Keywords: Taiwan, Motorcycle industry, Catching-up, Motorcycles
    JEL: L13 L52 L62 N85 O14
    Date: 2009–03
  8. By: Milanovic, Branko
    Abstract: Using social tables, we make an estimate of global inequality (inequality among world citizens) in early 19th century. We then show that the level and composition of global inequality have changed over the last two centuries. The level has increased reaching a high plateau around 1950s, and the main determinants of global inequality have become differences in mean country incomes rather than inequalities within nations. The inequality extraction ratio (the percentage of total inequality that was extracted by global elites) has remained surprisingly stable, at around 70 percent of the maximum global Gini, during the last 100 years.
    Keywords: global inequality; economic history; inequality extraction ratio
    JEL: D31 N3
    Date: 2009–07–30
  9. By: Lionel Frost; Abdel K. Halabi
    Abstract: Until the last quarter of the twentieth century, non-metropolitan Australian Rules football clubs prospered as volunteer organisations, operating in regions that were protected by distance from clubs in larger, competing leagues. They acted as places that people valued and were important components of social capital in their communities, and in turn, received subsidies from other community groups that reduced operating costs. Clubs appear to have measured success in terms of their ability to attract the talent needed to build a winning team that would boost the prestige of both the club and its local community. The Victorian Football League’s regulations about player payment and mobility gave country football clubs the opportunity to offer attractive terms to League players, and this prevented the game’s most powerful league, from crowding out its rivals. The circumstances that were favourable to country football clubs have changed with the formation of a major league, the Australian Football League. The televising of matches nationwide allowed people in even remote regions to watch AFL games. Economic and demographic decline in country areas, greater mobility and the lure of metropolitan jobs has made it difficult for clubs to retain players. In this challenging economic environment, many country football clubs have been unable to survive in their own right. This paper reports on a survey of administrators of Victorian country football clubs as to their perceptions of what constitutes ‘success’ in this new environment. It provides information about how individual clubs are responding to broad changes that are beyond their control, and offers evidence about the ability of local football clubs to continue to play their traditional role as places of importance and generators of social capital in regional communities.
    Date: 2009–08
  10. By: J.E King
    Date: 2009–08
  11. By: Jakob B. Madsen
    Abstract: This paper examines the effect of international patent stock on total factor productivity for 16 OECD countries over the past 120 years. The results show that the international patent stock is highly influential for economic growth and, together with knowledge spillovers through the channel of imports, has contributed significantly to TFP growth and σ-convergence among the OECD countries over the past 120 years.
    Keywords: TFP growth, international diffusion of ideas, international patents, convergence.
    JEL: E13 E22 E23 O11 O3 O47
    Date: 2009–08
  12. By: Leonardo Bonilla Mejía
    Abstract: La siguiente es una revisión de la literatura económica reciente relacionada con las causas de la violencia homicida en Colombia. La motivación principal de este trabajo es que en el Centro de Estudios Económicos Regionales del Banco de la República (CEER), se van a realizar varias investigaciones relacionadas, entre otras, con la dimensión regional de la violencia en Colombia, y se considera que un balance de este tipo siempre es un buen punto de inicio. Una vez expuestas, a partir de estudios previos, dos clasificaciones de las causas de la violencia homicida identificadas en la literatura internacional, se pasa a describir lo que se ha dicho sobre el caso colombiano. La tercera sección corresponde al Informe de la Comisión de Estudios sobre la Violencia. En la cuarta sección se revisa la respuesta que surge durante los años noventa desde la teoría económica. En la quinta se retoman brevemente perspectivas multidimensionales y multicausales de la violencia en Latinoamérica y Colombia.
    Date: 2009–07–30

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