New Economics Papers
on Business, Economic and Financial History
Issue of 2009‒12‒05
seventeen papers chosen by

  1. Spain´s International Position, 1850-1913 By Leandro Prados de la Escosura
  2. Endowments, Fiscal Federalism, and the Cost of Capital for States: Evidence from Brazil, 1891-1930 By André Martínez; Aldo Musacchio
  3. Merchants and councilors: intellectual divergences in early 17th century British economic thought By Carlos Eduardo Suprinyak
  4. Interpreting a crisis: trade and money debates in England during the parliament of 1621 By Carlos Eduardo Suprinyak
  5. The Long-Lived Effects of Historic Climate on the Wealth of Nations By Bluedorn, John; Valentinyi, Akos; Vlassopoulos, Michael
  6. Career Concerns in a Political Hierarchy: A Case of Regional Leaders in Soviet Russia By Andrei Markevich; Ekaterina Zhuravskaya
  7. Bagehot for beginners: The making of lending of last resort operations in the mid-19th century By Vincent Bignon; Marc Flandreau; Stefano Ugolini
  8. Credit Booms Gone Bust: Monetary Policy, Leverage Cycles and Financial Crises, 1870-2008 By Schularick, Moritz; Taylor, Alan M.
  9. Increasing Inequality, Status Insecurity, Ideology, and the Financial Crisis of 2008 By Jon D. Wisman; James F. Smith
  10. Price stability and inflation persistence during the international gold standard: The Scandinavian case By ola Grytten; Arngrim Hunnes
  11. Money supply and Greek history monetary statistics: definition, construction, sources and data By Sophia Lazaretou
  12. From Great Depression to Great Credit Crisis: Similarities, Differences and Lessons By Almunia, Miguel; Bénétrix, Agustín; Eichengreen, Barry; O Rourke, Kevin H.; Rua, Gisela
  13. Limitaciones a la integración de los mercados peninsulares en la monarquía hispánica. El sureste peninsular en los siglos XV y XVI By Jorge Ortuño Molina
  14. La influencia de la especialización productiva y regional en el comportamiento de las exportaciones colombianas del siglo XIX: Metodología Shift Share By Fernando Barrios Aguirre
  15. Montoneros, FAP Y Peronismo de Base ante las políticas económicas de los gobiernos justicialistas de 1973-1976 By Marongiu, Federico
  17. LA INSERCIÓN DE LA REPÚBLICA POPULAR CHINA EN EL NORESTE ASIÁTICO DESDE LOS AÑOS 1970: ¿ HACIA UN NUEVO REGIONALISMO? By Adriana Roldán Pérez; Melissa Eusse Giraldo; Luz Elena Hoyos Ramírez; Carolina Duque Tobón

  1. By: Leandro Prados de la Escosura
    Abstract: Spain’s financial position during the late 19th and early 20th century has usually been presented as one of persistent deficit on current account, which resulted from her integration into international commodity and factor markets and this, in turn, slowed down growth. In this essay a preliminary reconstruction of the balance of payments on current account allows us to reject this view. In fact, a net capital inflow made possible to meet the demand for investment boosting economic performance. Current account reversals in a context of macroeconomic domestic imperfections help to explain the economic slowdown at the turn of the century.
    Keywords: Balance of payments, Current acount reversals, Saving, Investment, Growth, Spain
    JEL: F21 F32 F43 N13 N73
    Date: 2009–10
  2. By: André Martínez; Aldo Musacchio
    Abstract: In this paper, we contribute to the discussion of what determines country risk by arguing that an important explanatory factor is the impact that commodities have on the capacity to pay. We use a newly created data base with state-level fiscal and risk premium data for Brazil states between 1891 and 1930 to show that Brazilian states with natural endowments that allowed them to export commodities that were in high demand ended up having higher revenues per capita and, thus, lower cost of capital. We also explain that the variation in revenues per capita across states was both a product of the variation in natural endowments and a commodity boom that had asymmetric effects among states. We end by running instrumental variable estimates using indices of export prices for each state to instrument for revenues per capita. Our IV estimates confirm our results that states with commodities that had higher price increases had lower risk premia.
    Keywords: State public debt, fiscal decentralization, endowments, public revenue.
    JEL: H71 H74 N26 N46 N96
    Date: 2009–11
  3. By: Carlos Eduardo Suprinyak (Cedeplar-UFMG)
    Abstract: During the early 1620’s, England went through a period of intense economic disorders which sparked the interest of many in economic reasoning. The decade witnessed the emergence of the most relevant pieces of economic literature of the early Stuart era, but the debate was not restricted to the abstract confrontation of economic writers. The fundamental issue at stake in the controversies between Malynes, Misselden, and Mun – the integration of money and international trade in a coherent explanation of economic phenomena – was also the subject of much care in the political arena at large. The 1621 parliamentary session, in particular, put in evidence not only the fundamental relevance of the matter for understanding England’s economic maladies, but also the great difficulties involved in its investigation. By bringing all these elements together, the paper seeks to articulate a more dense and meaningful portrait of the prevailing state of economic ideas in early 17th century England.
    Keywords: pre-classical economics; mercantilism; 17th century; Stuart England; Thomas Mun
    JEL: B11
    Date: 2009–11
  4. By: Carlos Eduardo Suprinyak (Cedeplar-UFMG)
    Abstract: The parliament of 1621 witnessed extensive debating of economic issues by those engaged in finding solutions for the exacting crisis which then affected England. These proceedings offer the background against which some of the most relevant economic literature of the period was produced. As debates progressed, two contrasting perspectives gradually emerged. One of them argued that monetary imbalances were responsible for bullion outflows and sluggish economic activity, while the other believed that monetary flows were ultimately caused by an unfavorable balance of trade. These were exactly the same issues at stake in the controversy between Malynes and Misselden in the early 1620’s, to which Mun would provide a solution with his strict adherence to the balance of trade. Thus, through an analysis of economic debates in the 1621 parliament, this paper seeks to offer an essential element for understanding early XVII century British economic reasoning.
    Keywords: pre-classical economics; mercantilism; XVII century; Stuart England; Thomas Mun
    JEL: B11
    Date: 2009–11
  5. By: Bluedorn, John; Valentinyi, Akos; Vlassopoulos, Michael
    Abstract: We investigate the long-run consequences of historic, climatic temperatures (1730-2000) for the modern cross-country income distribution. Using a newly constructed dataset of climatic temperatures stretching over three centuries (18th, 19th, and 20th), we estimate a robust and significant time-varying, non-monotonic effect of climatic temperature upon current incomes for a cross-section of 167 countries. We find a large, positive effect of 18th century climatic temperature and an even larger, negative effect of 19th century climatic temperature upon current incomes. When historic, climatic temperature is introduced, the effect of 20th century climatic temperature on current income is either weakly positive or insignificant. Our findings are robust to various sub-samples, additional geographic controls, and alternative income measures. The negative relationship between current, climatic temperature and current income that is commonly estimated appears to reflect the long-run effect of climatic variations in the 18th and 19th centuries.
    Keywords: climate; economic performance; geography; history; temperature
    JEL: N50 O11 O40 O50 O57
    Date: 2009–11
  6. By: Andrei Markevich (New Economic School and the University of Warwick); Ekaterina Zhuravskaya (New Economic School, CEFIR and CEPR)
    Abstract: We study the nature of career concerns of regional leaders in Soviet Russia under Khrushchev and Brezhnev. We document a substantial over-time variation in career concerns associated with reforms of Soviet governing hierarchy. We demonstrate that Khrushchev’s “Sovnarkhoz” system—a unique episode in Soviet history, when a traditional Soviet unitary-form (U-form) hierarchy was replaced by a multidivisional-form (M-form) organization—created yardstick competition in industrial performance of regional leaders. High-powered career incentives, however, did not result in faster industrial growth on average. We find that only two groups of regional leaders performed better in response to increased incentives. 1) Leaders appointed during “Sovnarkhoz” were able to learn new rules better. 2) Leaders with good connections to their neighbors were able to overcome negative inter-regional externalities, a common byproduct of M-form. The lack of success of the “Sovnarkhoz” system triggered the separation of regional units along production branch lines, which, as we show, led to a substantial decrease of industrial growth rates. The failure of Khrushchev's management reforms together with the U-form lobby contributed to his dismissal and reinstatement of the U-form hierarchy under Brezhnev.
    Keywords: Career Concerns, Political Hierarchy, Yardstick Competition, Soviet Economy
    JEL: D73 H7 J63 N44 P3
    Date: 2009–11
  7. By: Vincent Bignon (Graduate Institute, Geneva); Marc Flandreau (Graduate Institute, Geneva and CEPR, London); Stefano Ugolini (Graduate Institute, Geneva)
    Abstract: According to a Keynesian view, short term output fluctuations are normally demand side led. Since prices reflect demand, they should mirror output fluctuations. Thus, prices and output are expected to move in the same direction in the short run. The present paper investigates the historical co-movements of output and prices for a small open raw material based economy, in this case Norway 1830-2006. We find little evidence of a positive relationship. On the contrary, we rather find negative correlations between the two variables, indicating that supply side shocks through the foreign sector were more important for historical business cycles in Norway than assumed hitherto.
    Keywords: Lending of last resort, Bagehot, Bank of England, financial crises, history of monetary policy
    JEL: E58 N13
    Date: 2009–10–05
  8. By: Schularick, Moritz; Taylor, Alan M.
    Abstract: The crisis of 2008-09 has focused attention on money and credit fluctuations, financial crises, and policy responses. In this paper we study the behavior of money, credit, and macroeconomic indicators over the long run based on a newly constructed historical dataset for 12 developed countries over the years 1870-2008, utilizing the data to study rare events associated with financial crisis episodes. We present new evidence that leverage in the financial sector has increased strongly in the second half of the twentieth century as shown by a decoupling of money and credit aggregates, and we also find a decline in safe assets on banks' balance sheets. We also show for the first time how monetary policy responses to financial crises have been more aggressive post-1945, but how despite these policies the output costs of crises have remained large. Importantly, we can also show that credit growth is a powerful predictor of financial crises, suggesting that such crises are
    Keywords: banking; central banking; financial stability; liquidity; monetary policy
    JEL: E44 E51 E58 G20 N10 N20
    Date: 2009–11
  9. By: Jon D. Wisman; James F. Smith
    Abstract: Over the three decades leading up to the crisis of 2008, inequality dramatically increased in the United States and Great Britain. What stands out, but is seldom noted, is that this occurred within democracies where the relative losers -- the overwhelming majority -- could in principle have used the political system to block or reverse rising inequality. Why did they not do so? A glance at history reveals that peoples have only very infrequently contested inequality because they were led to believe that their inferior status in terms of income, wealth, and privilege was just, that it was not really so bad, or that it was necessary for their future wellbeing. Ideological systems legitimated a status quo of inequality, or in more modern times even increasing inequality. This article surveys the manner in which inequality has been historically legitimated, first predominantly by religion, then predominately by economic thought. Attention is then focused on the manner in which contemporary economic science and its popular interpretations in the media have served to legitimate inequality in the U.S. since the mid-1970s. The paper concludes with a reflection on the unique conditions that enable the legitimation of inequality to be delegitimated.
    Keywords: Ideology, class power, utility of poverty, trickle down, vertical social mobility
    Date: 2009–11
  10. By: ola Grytten (Norwegian School of Economics and Business Administration (NHH)); Arngrim Hunnes (University of Agder (UiA))
    Abstract: In the 1870s the three Scandinavian countries Denmark, Norway and Sweden formed the Scandinavian Currency Union. Both the adoption of gold and the monetary union were supposed to lead to price stability in and between these countries. By drawing on new indices of consumer prices the present paper offers an examination of inflation dynamics, defined as price stability and inflation persistence, in the periphery of Scandinavia during the heyday of the international gold standard.
    Keywords: Currency union, Gold Standard, Inflation persistence, Price stability, Scandinavia
    JEL: E31 E42 N13
    Date: 2009–11–11
  11. By: Sophia Lazaretou (Bank of Greece)
    Abstract: This paper attempts to provide, for the first time, a survey of the construction of estimates of the quantity of money in Greece since the inception of the National Bank of Greece in 1842 until the eve of WWII. Specifically, we describe in detail the methods of construction and the sources of data used in building these aggregates. We discuss the data collection procedure and publication practices. The end product is presented in a data appendix.
    Keywords: money; monetary aggregates; data; sources
    JEL: E51 N24
    Date: 2009–10
  12. By: Almunia, Miguel; Bénétrix, Agustín; Eichengreen, Barry; O Rourke, Kevin H.; Rua, Gisela
    Abstract: The Great Depression of the 1930s and the Great Credit Crisis of the 2000s had similar causes but elicited strikingly different policy responses. It may still be too early to assess the effectiveness of current policy responses, but it is possible to analyze monetary and fiscal policies in the 1930s as a 'natural experiment' or 'counterfactual' capable of shedding light on the impact of recent policies. We employ vector autoregressions, instrumental variables, and qualitative evidence for a panel of 27 countries in the period 1925-1939. The results suggest that monetary and fiscal stimulus was effective - that where it did not make a difference it was not tried. The results also shed light on the debate over fiscal multipliers in episodes of financial crisis. They are consistent with multipliers at the higher end of those estimated in the recent literature, consistent with the idea that the impact of fiscal stimulus will be greater when banking system are dysfunctional and monetary policy is constrained by the zero bound.
    Keywords: credit crisis; Great Depression; multipliers
    JEL: E63 N10
    Date: 2009–11
  13. By: Jorge Ortuño Molina (Universidad de Zaragoza)
    Abstract: Authoritarian Monarchies in the Early Modern period have been considered as a keystone of the outset of the market economy in Europe. However, as a result of their own need of coexistence with other power institutions, it has to be taken into account that those monarchies implied the survival of inefficient economic arrangements that did not precisely contribute to market integration across the Continent. Among the inefficient economic policies we can lists fixed prices as well as communal granaries, charts to assure cites supply or handicaps to free movement of goods by the customs policy into the realms. It would be mistaken to argue that those policies against free internal trade were a burden for the economic growth without analyzing the special conditions under which market run in the 17th century. The effects of the demand over the supply were not identical everywhere and, hence, its use as an explanatory concept for economic growth takes the risk of being used without an empirical base. This paper focuses on the effects that the demand caused over the householders, the appearance of rent-seeking and the consequences of high cereals prices that forced the Monarchy to limit the free internal trade in order maintaining the social status quo.
    Keywords: Monarchy, markets convergence, demand, supply, economic growth
    JEL: N23 N33 N43 N53
    Date: 2009–11
  14. By: Fernando Barrios Aguirre
    Abstract: Una de las aproximaciones que nos permite entender la dinámica económica del Siglo XIX en Colombia es por medio de las Exportaciones de este período. Mediante las cifras podemos observar la dinámica de los principales rubros de producción diferentes al oro, así como su dinamismo y contribución al crecimiento de las exportaciones en el siglo XIX: el oro, el tabaco y la quina, y algunos artesanales (intensivos, también, en recursos naturales y trabajo no calificado), como los sombreros de paja, especialmente durante el período de expansión diversificada de exportaciones, 1850-1882. Los movimientos coyunturales así como la inserción de los países de Latinoamérica al proceso capitalista y a los primeros pasos de la globalización nos permiten incidir en la explicación del dinamismo, estancamiento y auge de algunos productos que fueron potencialmente exportables en el siglo XIX. Mediante el escenario de Cambio y Composición se puede observar resultados como la falta de dinamismo de la Quina y el Tabaco en el primer período o las expectativas del periodo dos con la bonanza cafetera y la Quina y la crisis tabacalera de los años 1870 y 1873 que terminó afectando al sector y generando la cifra de dinamismo más baja del periodo de análisis y preparo al café en su expansión del tercer período. De acuerdo con estos resultados, el periodo nos evidencia el camino de una crisis, que realmente se dio entre 1876 y 1877. Algunos aspectos históricos que nos permiten complementar los resultados por países. En efecto se nota el poco dinamismo con Gran Bretaña y Estados Unidos que sucedió en la primera mitad de los años sesenta, el dinamismo de las exportaciones hacia Alemania debido al impulso del mercado de tabaco y el dinamismo en Francia debido al incremento notable que se obtuvo en este periodo. El período dos muestra la recuperación que obtuvo Gran Bretaña en la bonanza quinera, el decaimiento de Alemania debido a la crisis tabacalera y la importancia que va tomando el mercado estadounidense. Muy seguido, el tercer periodo resalta la pérdida del poder comercial de Alemania, pero también un aspecto excepcional el camino de la crisis
    Date: 2009–11–26
  15. By: Marongiu, Federico
    Abstract: This work wants to describe the different positions that adopted revolutionary organizations linked to Peronism when faced with the implementation of the economic policies by the peronist governements from 1973-1976. the analysis is focused mainly on the visions by Montoneros/ FAR, by Fuerzas Armadas Peronistas (FAP) and related organizations such as Peronismo de Base (PB) and Juventud de Trabajadores Peronistas (JTP). The work shows that there was not an homogeneous reaction to the economic policies through all the period and that there were huge transformations on opinions and reactions mainly due to the political evolution through the period.
    Keywords: Peronism; oil crisis; economic planning; Montoneros; economic history; Argentina; inflation; balance of payment crisis
    JEL: N16 N46 N00 N36
    Date: 2009–10
  16. By: Camilo Alexander Ramirez Arias
    Abstract: Este artículo presenta un análisis crítico de la estructura y el problema agrario en Colombia. A través de una aproximación integra a éste, obtenemos que el conflicto social y armado actual que se presenta en el territorio nacional, tiene algunas de sus raíces en causas sociales derivadas de la pésima situación del agro. Este trabajo intenta retomar el análisis y debate en torno al sector rural en Colombia; también, busca aportar en la construcción de una propuesta de completa solución a dicha problemática, la cual necesariamente se deriva de la indispensable reforma agraria integral para el caso colombiano
    Date: 2009–10–01
  17. By: Adriana Roldán Pérez; Melissa Eusse Giraldo; Luz Elena Hoyos Ramírez; Carolina Duque Tobón
    Abstract: El presente trabajo tiene como objetivo central realizar un estudio detallado y profundo sobre China y las relaciones de ésta con los países vecinos del Noreste Asiático –Japón, Corea del Norte, Corea del Sur y Taiwán- a nivel histórico, partiendo del siglo XV, pero profundizando en la evolución de estos lazos desde 1970 hasta la actualidad, con el fin de comprender la dinámica y estrategias de Beijing como nueva potencia emergente, en su proceso de inserción en la región después de las reformas económicas de 1978, y las nuevas tendencias hacia un nuevo regionalismo en Asia, el cual pretende liderar. La investigación analiza algunos autores en Colombia que han desarrollado temas relacionados y pueden ser relevantes para este trabajo; además incorpora los paradigmas de las relaciones internacionales en el contexto del Noreste Asiático, construyendo de esta manera un sustento teórico. Adicionalmente, estudia los principales acontecimientos históricos en los países involucrados para comprender de mejor manera los hechos que han conducido a la coyuntura actual. Posteriormente, estudia los factores que han motivado los rompimientos y acercamientos de China con cada uno de los países del Noreste Asiático desde 1970 hasta la actualidad, los cuales de alguna manera, han dado forma a la política exterior de cada uno de estos Estados. Finalmente, analiza el proceso de integración que se ha dado en el Este de Asia y las principales tendencias e iniciativas de regionalismo.
    Date: 2009–11–30

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