New Economics Papers
on Business, Economic and Financial History
Issue of 2010‒04‒04
seventeen papers chosen by

  1. The Second Great Contraction By Reinhart, Carmen
  2. The financial crisis and the future of innovation: A view of technical change with the aid of history By Carlota Perez
  3. Producción agrícola e inflación en Buenos Aires tardo-colonial By Amado, Raúl Oscar
  4. Moral Hazard in a Mutual Health-Insurance System: German Knappschaften, 1867–1914 By Timothy W. Guinnane; Jochen Streb
  5. Entrepreneurs, formalisation of social ties and trustbuilding in Europe (14th-20th centuries) By Guido Alfani; Vincent Gourdan
  6. Financial stability, monetary autonomy and fiscal interference: Bulgaria in search of its way, 1879-1913 By Kalina Dimitrova; Luca Fantacci
  7. Violent Urbanization and Homogenization of Space and Place By Yassin, Nasser
  8. Business Activities of Yamanaka Hyouemon Family: The Case of the Gotenba-sake Branch in the Edo period By Atsuko Suzuki
  9. Lotta Lemmata: A Sour Harvest By Philip R. P. Coelho; James E. McClure
  10. Dar es Salaam as a 'Harbour of Peace' in East Africa: Tracing the Role of Creolized Urban Ethnicity in Nation-State Formation By Fahy Bryceson, Deborah
  11. "Studies on the Western Welfare State: A Historiographic Overview" By Klaus Weber
  12. Networks information in the civil wars By Fernando, Estrada
  13. How do financial crises affect commercial bank liquidity? Evidence from Latin America and the Caribbean By Moore, Winston
  14. Windows of technological opportunity: do technological booms influence the relationship between firm size and innovativeness? By Degner, Harald
  15. Growth, History, or Institutions? What Explains State Fragility in Sub-Saharan Africa By Bertocchi, Graziella; Guerzoni, Andrea
  16. From proximity to distant banking: Spanish banks in the EMU By Alfredo Martín-Oliver

  1. By: Reinhart, Carmen
    Abstract: The global scope and depth of the 2007-2009 crisis is unprecedented in the post World War II period. As such, the most relevant comparison benchmark is the Great Depression, or the Great Contraction as dubbed by Friedman and Schwartz (1963). We highlight some of the similarities between these two episodes and extend our analysis of the aftermath of severe financial crises to include the most severe post-WWII crises as well. As to the causes of these great crises, we focus on those factors that are common across time and geography; we discriminate between root causes of the crisis, its symptoms, and features such as financial regulation which serve as amplifiers of the boom-bust cycle.
    Keywords: financial crisis; public debt; recession; unemployment; global
    JEL: N10 F30 H6
    Date: 2009–11
  2. By: Carlota Perez
    Abstract: This essay locates the current financial crisis and its consequences in a historical context. It briefly outlines the difference in patterns of innovation between the first two or three decades of each technological revolution .regularly ending in a major financial collapse. and the next two or three decades of diffusion, until maturity is reached. With this historical experience in mind, the essay discusses the opportunity space for innovation across the production spectrum taking into account the specificity of the Information and Communications Technology (ICT) paradigm and the increasing social and environmental pressures in the context of a global economy. Finally, there is a brief look at the sorts of institutional innovations that would be required to provide adequate finance to take full advantage of those opportunities.
    Date: 2010–02
  3. By: Amado, Raúl Oscar
    Abstract: In the past 30 years, the historiography of colonial Pampean agriculture showed a radical change. The “Bonaerense Campaign”, which was thought extensively devoted to cattle, was recently named one of the most important grain-producing regions of the Spanish Empire. This new hermeneutics of colonial agriculture differs radically from the descriptions and analysis that made the eighteenth-century writers for whom the agricultural production was in crisis. One of the main sources for forming this "new vision" of colonial agriculture was the “Diezmos” (Tithe). In this research, we propose first to review the source from another perspective. In considering which were the diezmos as they were intended, we understand much better if they serve or not as a tool for know the reality of the Bonaerense Campaing in the eighteenth-century. Second, we review the collection of diezmos between 1767 and 1801, only the years that "Administración General de Diezmos" was responsible for their collection. These data are deflated by Consumer Price Index and and compared with wheat prices for the same period. Finally we discuss the technology and labor productivity in the pampas. Our goal is to determine if there really was a great agricultural production or on the contrary this is an inflationary period that influenced the collection of agricultural taxes.
    Keywords: agriculture; inflation; prices; Viceroyalty of the Rio de la Plata; Buenos Aires; Bonaerense Campaign; labor productivity; colonial agricultural technology;
    JEL: E31 C20 C02 E23 B41 N56
    Date: 2010–03–15
  4. By: Timothy W. Guinnane; Jochen Streb
    Abstract: The Knappschaft underlies Bismarck’s sickness and accident insurance legislation (1883 and 1884), which in turn forms the basis of the German social-insurance system today and, indirectly, many social-insurance systems around the world. The Knappschaften were formed in the medieval period to provide sickness, accident, and death benefi ts for miners. By the mid-nineteenth century, participation in the Knappschaft was compulsory for workers in mines and related occupations, and the range and generosity of benefi ts had expanded considerably. Each Knappschaft was locally controlled and self-funded, and their admirers saw in them the ability to use local knowledge and good incentives to deliver benefi ts at low cost. This paper focuses on a problem central to any insurance system, and one that plagued the Knappschaften as they grew larger in the later nineteenth century: the problem of moral hazard. Replacement pay for sick miners made it attractive, on the margin, for miners to invent or exaggerate conditions that made it impossible for them to work. Here we outline the moral hazard problem the Knappschaften faced as well as the internal mechanisms they devised to control it. We then use econometric models to demonstrate that those mechanisms were at best imperfect.
    Keywords: Sickness insurance; moral hazard; malingering; Knappschaft; social insurance
    JEL: N33 N43 H55 H53 I18
    Date: 2010–01
  5. By: Guido Alfani; Vincent Gourdan
    Abstract: Recent developments in applications of network analysis to history are leading to a new way of thinking about how social and economic actors interacted in the past. Focus on the social tie has resulted in increased interest in relational instruments that have not previously been taken into great consideration. This article analyses some of these instruments, and particularly godparenthood and marriage witnessing, as ways to establish formal and public ties. It shows that formalisation, ritualisation and publicity of ties were used by entrepreneurs to establish trust with their business associates, in situations when information was asymmetric or when institutions were perceived as inefficient in guaranteeing mutual good behaviour. The paper underlines both factors of continuity and factors of change over time, from the Middle Ages to today, paying particular attention to the consequences of Reformation and Counter-Reformation on one hand, and of Industrial Revolution and Modernization on the other. It shows, in the light of the most recent literature, that much of what we think to know about the declining importance, for social and economic activity, of family ties and of weaker ties such as godparenthood, is actually a kind of prejudice originating from a twentieth-century ideology of the market in which ancient practices struggle to find a place but are not abandoned.
    Keywords: godparenthood, spiritual kinship, marriage witnesses, trust, entrepreneurship, Industrial Revolution, Reformation, formalisation of social ties
    Date: 2010–03
  6. By: Kalina Dimitrova; Luca Fantacci
    Abstract: The Bulgarian monetary system was established, immediately after independence. Having experienced it already under Ottoman rule, newly independent Bulgaria adopted the bimetallic standard. Without being a member of the Latin Monetary Union, it tried broadly to follow the principles of the convention, yet with some exceptions, the most important of which concerned the limit on silver coinage. The absence of such a clause in Bulgaria turned out to be crucial since the financial needs of the recently established state triggered excessive silver coinage which resulted in a persistent agio - a positive and variable difference between the legal and the commercial value of silver coins. The interference of fiscal authorities obstructed the Bulgarian National Bank's ability to manage money in circulation and to secure the monetary stability required by economic development). The attempts of the Bulgarian monetary authorities to eliminate the agio were unsuccessful until they acquired the right to issue silver-backed banknotes. Soon after that, in 1906, Bulgaria introduced a short-lived typical Gold standard.
    Keywords: financial stability, monetary autonomy, fiscal interference, Bulgaria
    JEL: E42 E51 E63
    Date: 2010–02–01
  7. By: Yassin, Nasser
    Abstract: This paper aims at understanding the dynamics of sectarian violence in the city of Beirut, by looking at the early phase of violence in the Lebanese civil war (1975–90), and the process of dividing Beirut into various sectarian enclaves controlled by the warring militias. The paper aims to show the way in which political actors used sectarian violence as a mechanism of social, political, and territorial control. As a point of departure, the paper views the city not only as a backdrop for conflict and violence, but also as an actual target. The objectives of the paper are threefold. First, it shows how sectarian violence was not random but was, rather, a product of a lengthy process that involved calculation and some levels of planning. It includes defining one’s …/
    Keywords: urbanization, cities, urban conflict, Lebanon
    Date: 2010
  8. By: Atsuko Suzuki (Graduate School of Economics, Osaka University)
    Abstract: Yamanaka Hyouemon family who was one of Omi-Hino Merchants established the first and second branches in the Gotenba area located at the foot of Mt. Fuji in the Edo period. Focusing on the licenses to brew and the bookkeeping, this paper examines the business activities of the second Gotenba branch (the Gotenba-sake branch). As the conclusions, we could point out the following topics. 1) Yamanaka Family purchased a license to brew sake from the Gotenba village headman in 1801. Purchasing afterward more licenses and building breweries, Yamanaka Family laid the foundation of the sake brewing industry for a short period. 2) The Gotenba-sake branch brewed three types of sake: shiraume, morohaku, namishu. These sake prices were mainly affected by the rice prices. 3) The Gotenba-sake branch brewed sake on average 756 koku (136,374 litre) a year in 1835-1872. 4) The main business of the Gotenba-sake branch was to brew and sell sake, but the branch also sold soy sauce, salt, vinegar and rice bran. 5) The net assets of the Gotenba-sake branch showed the second largest volume of all five branches of Yamanaka family.
    Keywords: Japanese Economic History. Omi-Hino Merchant, Sake Brewing
    JEL: N65 N85
    Date: 2010–03
  9. By: Philip R. P. Coelho (Department of Economics, Ball State University); James E. McClure (Department of Economics, Ball State University)
    Abstract: We quantify the increasing use of complex mathematics and show that the increase is unique to economics in the social sciences. Over half a century ago Donald F. Gordon hypothesized that mathematics was most likely to be useful in manipulating long chains of relationships, but these were the cases where the theory was least likely to valid. Time particularly bedevils the long chains because the ceteris paribus assumption requires the stability of all links. We find that the rate of hypothesis testing in articles citing mathematically complex articles is less than two percent, and summarize a variety of tests and other evidence supporting the Gordon hypothesis. We suggest that a major factor in the rise in mathematical complexity may be the decline in comments, replies, and rejoinders debating earlier publications; the decline has been rapid as editors have become increasingly “hostile” toward perspectives other than the ones they had previously published. We conclude by emphasizing that: 1) prominent journals in economics are devoting more space to mathematically complex articles despite their inconsequential operational harvest; 2) both the “appropriate” balance between mathematical complexity and operationalism, and the relative merits of “stylized facts” versus observational reality should be considered as a factor in editorial decision-making; finally 3) the vital importance of academic debate that addresses empirical verification, the appropriateness of model formulation, and the crucial matters of history and circumstance which are the measures of all research in the social sciences.
    Date: 2010–03
  10. By: Fahy Bryceson, Deborah
    Abstract: Dar es Salaam is exceptional in East Africa for having a record of relatively little ethnic tension, and remaining tranquil and true to its name, the ‘harbour of peace’. This paper explores the interface between ethnic and national identities in Tanzania’s capital city, focusing on its ethnic foundations and their malleability with regard to nationalism, asking how nationalist identities were negotiated vis-à-vis existing local ethnic identities. How willing were ethnic groups that were indigenous to the locality to ‘share’ the city, its land, and amenities with newcomer compatriots, given that the city was almost as new as the nation-state? How did their modus operandi affect nation-building?
    Keywords: nation-state, Tanzania, nationalism, urbanization
    Date: 2010
  11. By: Klaus Weber (The Rothschild Archive and Institut fur Geschichte der deutschen Juden)
    Abstract: Research on the history of the modern welfare state has for many decades been dominated by a focus on the 'power resources' of the working class, in their struggle against the commodification of labour. This is mostly associated with the concept of a more or less uniform path for all societies in the course of industrialisation. Only with the increasingly comparative studies of the 1970s and 1980s, more complex models have been developed. Prominent among them is Gosta Esping-Andersen's 1990 book, which offers a typology of welfare state regimes. While his description of basically three regime types and their underlying class coalitions is quite convincing, there remain theoretical and empirical flaws in explaining their evolution. Alternative approaches, such as Peter Lindert's consideration of the democratisation process, do not fill this gap. Only recently, Philip Manow has offered a heuristic approach which combines Esping- Andersen's typology with Stein Rokkan's 'social cleavages' model. In further integrating a consideration of the social doctrines of Europe's three major Christian denominations and of the electoral systems (majoritarian vs. proportional), Manow provides answers to some of the puzzles unresolved by Esping-Andersen.
    Date: 2010–03
  12. By: Fernando, Estrada
    Abstract: The aim of this paper is to interpret the relationships between information networks and the civil wars (Colombia). Over a period of paramilitary violence networks of informants were used with a strategic purpose. In fact, the paramilitaries were preparing each slaughter counting information previously learned between the inhabitants of the town. For these reasons, it is shown that information is a key phenomenon to understand civil wars. Moreover, as demonstrated in this work is the evolution of the slaughter in the civil wars as a result of rumor and information.
    Keywords: Civil wars; massacres; paramilitary; information; rumors; Colombia; communication.
    JEL: D7 D74 H7 Z0 D89 D82 D8 D85
    Date: 2010–03–25
  13. By: Moore, Winston
    Abstract: The 1990s were a turbulent time for Latin American and Caribbean countries. During this period, the region suffered from no less than sixteen banking crises. One of the most important determinants of the severity of banking crises is commercial bank liquidity. Banking systems, which are relatively liquid, are better able to deal with the large deposit withdrawals that tend to accompany bank runs. This study provides an assessment of the main determinants of bank liquidity as well as an evaluation of the impact of banking crises on liquidity. The results show that on average, bank liquidity is about 8% less than what is consistent with economic fundamentals during financial crises.
    Keywords: Liquidity; Financial Crisis; Banks
    JEL: E44 G21
    Date: 2009–03–27
  14. By: Degner, Harald
    Abstract: Many papers have been written about the effect of firm size on innovativeness, revealing a positive, a negative or a mixed impact. To this day, the so-called Schumpeterian hypothesis of the above-average innovativeness of large firms has been neither confirmed nor rejected, often because of insufficient data or a too-short observation period. Many studies concentrate only on a specific region or a specific sector, or they analyze a very short time period. Windows of technological opportunities, providing technological booms for both firms and sectors, have not yet been investigated. An analysis of Germany’s chemical, metal and electronic-engineering sectors between 1877 and 1932 reveals that the sector-specific long-term relationship between firm size and innovativeness is negative, except during times of specific technological booms. In combination with firm-specific characteristics, this new aspect can contribute to a better understanding of the long-term relationship between firm size and innovativeness. --
    Keywords: Effect of firm size on innovativeness,technological boom,Schumpeterian hypothesis
    Date: 2010
  15. By: Bertocchi, Graziella (University of Modena and Reggio Emilia); Guerzoni, Andrea (University of Modena and Reggio Emilia)
    Abstract: We explore the determinants of state fragility in sub-Saharan Africa. Controlling for a wide range of economic, demographic, geographic and istitutional regressors, we find that institutions, and in particular the civil liberties index and the number of revolutions, are the main determinants of fragility, even taking into account their potential endogeneity. Economic factors such as income growth and investment display a non robust impact after controlling for omitted variables and reverse causality. Colonial variables reflecting the history of the region display a marginal impact on fragility once institutions are accounted for.
    Keywords: state fragility, Africa, institutions, colonial history
    JEL: O43 H11 N17
    Date: 2010–03
  16. By: Alfredo Martín-Oliver (Banco de España)
    Abstract: This paper examines the nature of competition in the Spanish banking industry during the years before and after Spain joined the European Monetary Union (EMU). The paper models competition in a product-differentiated market where banks choose from a list of price (interest rates of loans and deposits) and non-price variables (branches, advertising, IT capital). The empirically estimated demand and cost functions are used to simulate the values of the endogenous variables of the representative bank in response to the historically low official interest rates of the post Euro period. The results show that there has been a convergence in the levels of price competition in the loans and deposits markets during the post Euro period. Additionally, the paper finds that branches have lost weight in the mix of competition variables in benefit of advertising and IT capital. This is interpreted as evidence that traditional proximity banking is evolving towards distant banking. Finally, the simulation results highlight the high imbalances between loans and deposits for the representative bank in the regime of low official interest rates of the Euro zone.
    Keywords: banking competition, product differentiation, intangibles, simulation
    JEL: G21 D24
    Date: 2010–03
  17. By: Christine Dattin (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272)
    Abstract: Cet article se propose d'étudier les caractéristiques et attributions des ancêtres de nos actuels commissaires aux comptes. Il dresse un aperçu des pratiques de contrôle existant dans les SA autorisées par le Conseil d'Etat entre 1807 et 1867 en étudiant leurs statuts publiés au Bulletin des Lois. Ce papier rend compte de pratiques fort diverses pour le contrôleur des comptes, allant d'une simple lecture des comptes quinze jours avant la tenue de l'assemblée générale jusqu'à une mission permanente avec des pouvoirs d'investigation étendus. Cet article mesure également l'influence de ces pratiques sur les lois de 1863 et 1867, qui abolissent le régime d'autorisation préalable à la constitution des SA et qui rendent obligatoire, pour la première fois en France, la présence d'un commissaire aux comptes dans toutes les SA.
    Keywords: contrôle des comptes, audit, commissaire aux comptes, histoire de la comptabilité. SA autorisées
    Date: 2010

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