nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2010‒09‒11
23 papers chosen by
Bernardo Batiz-Lazo
University of Leicester

  1. What was Meant by a Republic in 1910 By Herr, Richard
  2. History Institutions and Economic Performance: The Legacy of Colonial Land Tenure Systems in India By Abhijit Banerjee; Lakshmi Iyer
  3. Do countries “graduate” from crises? Some historical perspective By Reinhart, Carmen; Qian, Rong; Rogoff, Kenneth
  4. Revisiting Import-Substituting Industrialisation in Post-War Brazil By Colistete, Renato P.
  5. Neoliberalism’s relationship with economic growth in the developing world: Was it the power of the market or the resolution of financial crisis? By Cohen, Joseph N
  6. The Swedish Model By Ari Kokko
  7. The MPs of the First Portuguese Republic: A Prosopographic Study By Tavares de Almeida, Pedro; Fernandes, Paulo Jorge; Santos, Marta Carvalho dos
  8. Transaction costs, liquidity and expected returns at the Berlin Stock Exchange, 1892-1913 By Carsten Burhop; Sergey Gelman
  9. A Multilateral Moment: A New US Foreign Policy? By Clark, Wesley; Schroeder, Paul W.
  10. The Falling Time Cost of College: Evidence from Half a Century of Time Use Data By Babcock, Phillip; Marks, Mindy
  11. Broken Promises, Postponed Commitments By Feijó, Rui Graça
  12. The Potato’s Contribution to Population and Urbanization: Evidence from an Historical Experiment By Nathan Nunn; Nancy Qian
  13. Portage: path dependence and increasing returns in U.S. history By Hoyt Bleakley; Jeffrey Lin.
  14. Cliometrics and Time Series Econometrics: Some Theory and Applications By David Grreasley
  15. Demographic Change, Macroecnomic Conditions, and the Murder Rate: The Case of the United States, 1934 to 2006 By John M. Nunley; Richard Alan Seals; Joachim Zietz
  16. Poverty and crime in 19th century Germany: A reassessment By Christian Traxler; Carsten Burhop
  17. “’Lost in Translation’? Towards a Theory of Economic Transplants” By Ioannis Lianos
  18. Aspectos Económicos del Gobierno de Carlos Lleras Restrepo. (Colombia, 1966-1970) By Pascual Amézquita Zárate
  19. Transaction Cost Economics: The Natural Progression By Williamson, Oliver E.
  20. Press and Pulpit: Competition, Co-operation and the Growth of Religious Magazines in Antebellum America By Goldstein, Adam; Haveman, Heather A.
  21. Lucas on the Lucasian transformation of macroeconomics: an assessment By Michel DE VROEY
  23. Strategic Mass Killings By Joan Esteban; Massimo Morelli; Dominic Rohner

  1. By: Herr, Richard
    Abstract: To develop the concept of a republic in 1910 when the Portuguese revolution of 1910 replaced the constitutional monarchy with its republic, the paper traces the central experiences of a republic in the modern Western world before that date. The images of the Ancient republics were in the minds of the founders of the American and French Revolutions. These set a pattern for the future, a key point being patriotic dedication to their country and to civil rights, especially the right of property and religious freedom. During much of the nineteenth century the memory of the French Terror and radical support for a republic during the French revolutions of 1830 and 1848 and the Paris Commune of 1871 made a republic appear to be threat to social stability and private property. Two developments changed the image of a republic. One was the sight of the Third French Republic favorable to the conservative peasantry and bourgeoisie. The other was the growing tension in Catholic countries between the defenders of Catholic doctrine and the partisans of secular scientific knowledge, especially over the control of education. Because monarchies would not break with the Catholic Church, partisans of the separation of church and state became supporters of a republic. Both developments molded the republican revolution of 1910 in Portugal.
    Keywords: Portugal, republic, history, 1910, exhibition, monarchy, Europe, Institute of European Studies, Portuguese Studies Program
    Date: 2010–03–12
  2. By: Abhijit Banerjee; Lakshmi Iyer
    Abstract: This paper analyze the colonial institutions set up by the British to collect land revenue in India, and show that differences in historical property rights institutions lead to sustained differences in economic outcomes. Areas in which proprietary rights in land were historically given to landlords have significantly lower agricultural investments, agricultural productivity and investments in public goods in the post-Independence period than areas in which these rights were given to the cultivators. It has been verified that these differences are not driven by omitted variables or endogeneity of the historical institutions, and argue that they probably arise because differences in institutions lead to very different policy choices. [Working Paper No. 003]
    Keywords: British, India, historical, landlords, agricultural, investments, independence, policy choices, history, land tenure, development
    Date: 2010
  3. By: Reinhart, Carmen; Qian, Rong; Rogoff, Kenneth
    Abstract: The widespread banking crises since 2007 among advanced economies and the “near” default of Greece in 2010 dashed the popular notion that rich countries have outgrown severe financial crises. Record or near-record declines in output accompanying these events signaled the end of the short-lived “great moderation era.” In fact, graduation from recurring sovereign external debt crises is a very tortuous process that sometimes takes a century or more. For banking crises, we simply do not know what it takes to graduate; it is unclear whether any country has managed it.
    Keywords: financial crisis; debt; default; banking; reversals; duration
    JEL: E0 F3 N0
    Date: 2010–08
  4. By: Colistete, Renato P.
    Abstract: This article reassesses the classic period of Import-Substituting Industrialisation (ISI) in Brazil between 1945 and 1979. New data presented here show that Brazilian industry achieved significant labour productivity growth during the post-war years and became more technologically sophisticated, when measured by manufacturing exports and evidence of specific industries and firms. We also found that Brazil’s labour productivity growth lagged behind what was achieved in other industrialising and developed countries from the mid-1970s. Technological advances were slow and uneven, and most firms relatively backward. Overall these results suggest that a highly heterogeneous structure became a major feature of Brazilian industrialisation, rather than widespread inefficiency and technological stagnation as argued by the dominant interpretation of ISI in Latin America.
    Keywords: Import-Substituting Industrialisation; Productivity; Technology; Brazil; Latin America
    JEL: O1 N1 N6 O54 O4 O3
    Date: 2010–08
  5. By: Cohen, Joseph N
    Abstract: This article examines the relationship between "economic freedom" and economic growth. Previous studies have found a positive relationship between economic growth rates and "economic freedom", and used this relationship as a basis for arguing that more liberal economic policies promote development. "Economic freedom" conflates laissez-faire policy with other important concepts, like good governance and macroeconomic stability. When laissez-faire is parsed from these other concepts, it shows no positive relationship with growth outside of the early-1990s, a period in which financially-strained developing governments and financial systems enjoyed debt bailouts in exchange for liberalization reforms. Further analysis shows that laissez-faire exerts no discernible effect on economic growth net of the debt relief, inflation containment and improved inward investment that occurred after the Cold War. I argue that free market capitalism itself may not have promoted economic development in the post-Cold War era. Instead, free market reforms occurred alongside domestic and international political developments that helped developing countries resolve a serious financial crises, and that the resolution of these crises were most important in explaining the comparative prosperity of the 1990s and 2000s.
    Keywords: economic freedom; neoliberalism; laissez faire; periodicity; economic growth; economic development; capitalism
    JEL: P11 P17 O21 E61 O4
    Date: 2010–07–15
  6. By: Ari Kokko
    Abstract: The main characteristics of ‘the Swedish model’ are arguably related to the country’s knowledge-intensive industry and its advanced welfare state. The purpose of this paper is to discuss the historical development of these two features of the Swedish economy. The first part looks at industrial development, highlighting both the reasons for the rapid industrialization in the late 19th century and the subsequent shift from raw materials to human capital and knowledge as the main competitive advantages. The second part turns to the development of welfare state, stressing the gradual increase in benefits and coverage as well as the emphasis on universal rather than means-tested benefits. The final part suggests some policy conclusions for today’s developing countries and emerging economies.
    Keywords: Sweden, industrialization, welfare state
    Date: 2010
  7. By: Tavares de Almeida, Pedro; Fernandes, Paulo Jorge; Santos, Marta Carvalho dos
    Abstract: This paper summarises the results of the first systematic, detailed prosopographic study of the MPs – the deputados of the Lower Chamber - of the First Portuguese Republic (1910-1926). Data are presented both by legislature and for the overall period. Two kinds of background variables are explored: sociodemographic (birthplace, age, education and profession) and political (previous experience in other elite positions). Regime change in 1910 resulted in the replacement of the former political elite by homines novi. Most MPs of the Republican regime were born in small towns and communities, had carried out higher educational studies (with prevalence for law training), were mainly drawn from the professions (practising lawyers and doctors) and the Army, and were elected for the first-time at relatively young ages. Parliamentary turnover was high (two-thirds of the representatives held just one mandate) and a large proportion of MPs had a consistent connection (birth, family ties, occupation) to the constituencies to which they had been elected.
    Keywords: Portugal, First Republic, 1910, history, prosopography, political elite, MPs, Portuguese Studies Program, Institute of European Studies
    Date: 2010–03–12
  8. By: Carsten Burhop (Max Planck Institute for Research on Collective Goods, Bonn and University of Cologne); Sergey Gelman (International College of Economics and Finance, State University – Higher School of Economics, Moscow, Russia)
    Abstract: We estimate effective spreads and round-trip transaction costs at the Berlin Stock Exchange for the period 1892-1913 using daily stock market returns for a sample of 27 stocks. Our results show that transaction costs at the main stock exchange in a bank-based financial system at the turn of the 20th century were quite low and about comparable to transaction costs in modern markets. Nonetheless, transaction costs varied substantially over time and across securities, whereby the cross-sectional variation could be substantially explained by firm size and time variation by crises. Furthermore, we find surprising evidence that transaction costs decrease the expected excess returns. Thereby size and momentum premia are of expected signs while market beta has no significant influence on the cross-sectional return variation.
    Keywords: Economic history, Germany, Transaction Costs, Effective spreads
    JEL: N23 G12 G14
    Date: 2010–05
  9. By: Clark, Wesley; Schroeder, Paul W.
    Abstract: Paul Schroeder presents a historical argument for the declining possibility of wars between the world’s great powers. In large part this new era of peace is generally a success story rooted in practical experience, historical knowledge and institution building since the Concert of Europe. He also contends that the history of US foreign policy has largely been successful though not as commonly asserted. The US was largely a “rent-receiving stateâ€, in the international system, before taking on a role as a “rent-paying state†following World War II. Schroeder concludes that the US must continue to play a vital role in global affairs and not turn inward especially based on a false and myth-based history. General Wesley Clark maintains that the Obama administration has effectively deployed itself in the realm of domestic politics to begin to rebuild US social capital in the international arena. Obama’s appointment of Republican-leaning men to critical foreign policy and defense positions within his administration has squelched potential criticism from opponents. His adept policy decisions have also followed a pattern of moderate reorientation to blunt hostilities that might have emerged by taking more bold positions noting that all policy-making is a matter of politics. Clark turns to analyzing these policy changes as well as the challenges the US faces including Afghanistan, Iraq, Eastern Europe, Israel and Palestine, as well as climate change and nuclear proliferation. He finds that the 16-month-old administration has shifted from a largely unilateral to a multilateral approach of pursuing its national interest. He endorses Schroeder’s call for a continued rent paying US in the international system but also fears domestic forces that could push for a diminished US presence in global politics.
    Date: 2010–04–19
  10. By: Babcock, Phillip; Marks, Mindy
    Abstract: Using multiple datasets from different time periods, we document declines in academic time investment by full-time college students in the United States between 1961 and 2003. Full-time students allocated 40 hours per week toward class and studying in 1961, whereas by 2003 they were investing about 27 hours per week. Declines were extremely broad-based, and are not easily accounted for by framing effects, work or major choices, or compositional changes in students or schools. We conclude that there have been substantial changes over time in the quantity or manner of human capital production on college campuses.
    Keywords: time use, human capital, education
    Date: 2010–03–24
  11. By: Feijó, Rui Graça
    Abstract: The First Republic was a short period in Portuguese History which, nevertheless, left deep marks on the social and political tissue of the country. It was marred by instability. The political elite of the time recanted on their defense of "universal suffrage" and thus deprived the regime of a much needed popular base of support. The Second Republic that emerged from the Carnation Revolution instituted a democratic regime based on universal suffrage, and enshrined in its Constitution provisions for popular participation in a much wider scale than it has effectively offered up to the present. This manifests itself in the absence of an effective Regional level of power as well as in poorly endowed municipalities, and is reflected in the lowering of popular confidence in Portuguese Democracy shown in consecutive surveys. The capacity of the Second Republic to develop the principles of democratic participation granted in the Constitution is a test to the present decade, failing what a Third Republic may be looming in the horizon.
    Keywords: Portugal, Republic, Democratic Institutions, Voting Rights, Political Elites, 1910, 1974, Carnation Revolution, Institute European Studies, Portuguese Studies Program
    Date: 2010–05–22
  12. By: Nathan Nunn; Nancy Qian
    Abstract: In this paper regional variation in suitability for cultivating potatoes, together with time variation arising from their introduction to the Old World from the Americas is being exploited, to estimate the impact of potatoes on Old World population and urbanization. Their 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 and19th centuries. [Working Paper No. 234]
    Keywords: Potato;ColumbianExchange;Demography;Agriculture;EconomicDevelopment; Industrialization
    Date: 2010
  13. By: Hoyt Bleakley; Jeffrey Lin.
    Abstract: The authors examine portage sites in the U.S. South, Mid-Atlantic, and Midwest, including those on the fall line, a geomorphologic feature in the southeastern U.S. marking the final rapids on rivers before the ocean. Historically, waterborne transport of goods required portage around the falls at these points, while some falls provided water power during early industrialization. These factors attracted commerce and manufacturing. Although these original advantages have long since been made obsolete, the authors document the continuing-and even increasing-importance of these portage sites over time. They interpret this finding in a model with path dependence arising from local increasing returns to scale.
    Keywords: Geography ; Urban economics
    Date: 2010
  14. By: David Grreasley (University of Canterbury)
    Abstract: The paper discusses a range of modern time series methods that have become popular in the past 20 years and considers their usefulness for cliometrics research both in theory and via a range of applications. Issues such as, spurious regression, unit roots, cointegration, persistence, causality, structural time series methods, including time varying parameter models, are introduced as are the estimation and testing implications that they involve. Applications include a discussion of the timing and potential causes of the British Industrial Revolution, income „convergence? and the long run behaviour of English Real Wages 1264 – 1913. Finally some new and potentially useful developments are discussed including the mildly explosive processes; graphical modelling and long memory.
    Keywords: Time series; cointegration; unit roots; persistence; causality; cliometrics; convergence; long memory; graphical modelling; British Industrial Revolution
    JEL: N33 O47 O56 C22 C32
    Date: 2010–09–04
  15. By: John M. Nunley; Richard Alan Seals; Joachim Zietz
    Abstract: Fluctuations in aggregate crime rates contrary to recent shifts in the age distribution of the U.S. population have cast doubt on the predictive power of the age-crime hypothesis. By examining a longer time horizon, back to the early 1930s,, we show that the percentage of the young population is a robust predictor of the observed large swings in the U.S. murder rate over time. However, changes in the misery index—the sum of the inflation and unemployment rates—significantly contribute to explaining changes in the murder rate. This applies, in particular, to those changes that are at odds with the long-run trend of the U.S. age distribution, such as the decline in the murder rate in the latter part of the 1970s or its increase starting around the middle of the 1980s.
    Keywords: Murder Rate, Demographic Change, Age Composition, Crime, Misery Index
    JEL: J10 J11
    Date: 2010–09
  16. By: Christian Traxler (Max Planck Institute for Research on Collective Goods, Bonn); Carsten Burhop (Max Planck Institute for Research on Collective Goods, Bonn and University of Cologne)
    Abstract: Using panel data for Prussia during 1882 to 1910, we replicate Mehlum, Miguel, and Torvik’s (2006) study on the causal effect of poverty on crime in 19th century Germany. In addition, our data set allows us to make several original contributions to the literature. We confirm the robust positive effect of poverty on property crime. Employing the rye price as a proxy for poverty, we show that the effect is less pronounced for provinces with a large agricultural sector. As Mehlum et al., we also find a strong negative impact of poverty on violent crime. However, once we account for beer consumption, this effect vanishes.
    Keywords: Crime, Poverty, rye price, beer, weather, Prussia
    JEL: K42 N93
    Date: 2010–08
  17. By: Ioannis Lianos
    Abstract: Abstract: The rise of economics as one of the main (some will advance the most important) “source” of competition law discourse is well documented. This study focuses on a facet of the integration of economic analysis in competition law: "economic transplants". The term “economic transplants” refers to specific economic concepts that were incorporated into the legal discourse by an act of “translation”. They represent the ultimate degree of interaction between the legal and the economic systems. Using a paradigmatic approach the study examines their specific characteristics and what distinguishes them from other forms of integration of economic analysis in competition law. It critically assesses their role and their impact on the legal and the economic discourses. The study concludes that the “paradigm” of translation constitutes the most appropriate explanatory framework for taking into account the dual nature of economic transplants and, more broadly, for conceptualizing the interaction of law with other social sciences. It should be distinguished from the existing methodologies of interaction between the disciplines of law and economics, such as the concept of “economic law” and the law and economics approach.
    Keywords: economic law; European law; competition policy; economics; history; law
    Date: 2009–10–08
  18. By: Pascual Amézquita Zárate
    Abstract: El gobierno de Carlos Lleras Restrepo se destaca en la historia de Colombia por haber introducido una reforma institucional de amplias proporciones que fortaleció las bases del Estado intervencionista. Este hecho, sumado a una concepción estructuralista sobre el manejo monetario y cambiario, permitió un evidente despegue del sector exportador no tradicional y un crecimiento del PIB sin antecedentes en la economía nacional, particularmente el PIB industrial. Otros indicadores macroeconómicos como la baja inflación y el empleo también mostraron resultados favorables que se extendieron a los años siguientes. En general, las medidas lograron una estabilidad económica que permitió un crecimiento sostenido en los años siguientes en momentos en los cuales la “edad de oro” del capitalismo llegaba a su abrupto final.
    Date: 2010–08–31
  19. By: Williamson, Oliver E. (University of California, Berkeley)
    Abstract: Oliver E. Williamson delivered his Prize Lecture on 8 December 2009 at Aula Magna, Stockholm University. He was introduced by Professor Bertil Holmlund, Chairman of the Economic Sciences Prize Committee.
    Keywords: Transaction; costs
    JEL: D70 H10
    Date: 2009–12–08
  20. By: Goldstein, Adam; Haveman, Heather A.
    Abstract: Sociologists have long been interested in how interactions among the diverse groups that constitute modern societies shape group mobilization efforts, including the use of group media. We advance research on this topic by analyzing the growth of magazines affiliated with religious groups in antebellum America, when the nation was becoming a modern society. We draw on the sociology of religion, organizations, and media to develop hypotheses linking the growth of denominational magazines to inter-denominational competition, intra-denominational fragmentation, denominations’ geographic dispersion, and denominational resource sharing across locations. We test these hypotheses using dynamic techniques on a unique dataset that includes all religious denominations and denominational magazines in the United States between 1790 and 1860. Because our analysis focuses on tools for mobilization – magazines – it avoids the definitional dependency between explanation and outcome that has plagued much research on religious groups. Our results show that denominations published magazines in response to both inter-denominational competition and geographic expansion. However, they used magazines in a manner more consistent with a theory of resource sharing than with ethnic-competition and religious-economies theories. And contrary to expectations, we find that intra-denominational fragmentation did not contribute to the growth of antebellum religious magazines. Our analysis not only links interactions between religious groups to broader group processes, it also offers fruitful ways to extend the analysis of other kinds of groups.
    Date: 2010–04–09
  21. By: Michel DE VROEY (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: Robert Lucas is rightfully credited with having changed the course of macroeconomic theory. The aim of this paper is to document his transformation from a potential contributor to Keynesian macroeconomics to the master builder of an alternative paradigm, equilibrium macroeconomics. I reconstruct Lucas’s theoretical journey as involving seven steps: (1) his pre-macroeconomic years, (2) his early work as a macroeconomist, jointly with Rapping, (3) the ‘Expectations and the Neutrality of Money’ 1972 article, (4) his inaugural equilibrium model of the business cycle, (5) his all-out attack on Keynesian macroeconomics, (6) the passing of the baton to Kydland and Prescott, and (7) his standpoint after the victory of the approach he so much contributed to launch
    Keywords: Lucas, new classical macroeconomics
    JEL: B B E30
    Date: 2010–07–31
  22. By: Thibault Daudigeos (IFGE - Institut Français de Gouvernement des Entreprises - EM-LYON, MC - Management et Comportement - Grenoble Ecole de Management); Bertrand Valiorgue (Pôle Stratégie et Gouvernance des Organisations - Groupe ESC Clermont, IFGE - Institut Français de Gouvernement des Entreprises - EM LYON)
    Abstract: This paper highlights overlap and differences between Convention Theory and New Organizational Institutionalism and thus states the strong case for profitable dialog. It shows how the former can facilitate new institutional approaches. First, convention theory rounds off the model of institutionalized action by turning the spotlight to the role of evaluation in the coordination effort. In parallel, the attention focused on the two components of the qualification process also sheds new light on the institutional dynamics issue at the heart of organizational institutionalism research since the mid-90s.
    Keywords: Convention; new institutionalism; institutional logic; qualification; compromise; higher-order principles of justice; order of worth
    Date: 2010–08–30
  23. By: Joan Esteban (Institut d’Analisis Economica, CSIC); Massimo Morelli (Columbia University); Dominic Rohner (University of Zurich)
    Abstract: Since World War II there have been about fifty episodes of large-scale mass killings of civilians and massive forced displacements. They were usually meticulously planned and independent of military goals. We provide a model where conflict onset, conflict intensity and the decision to commit mass killings are all endogenous, with two main goals: (1) to identify the key variables and situations that make mass killings more likely to occur; and (2) to distinguish conditions under which mass killings and military conflict intensity reinforce each other from situations where they are substitute modes of strategic violence. We predict that mass killings are most likely in societies with large natural resources, significant proportionality constraints for rent sharing, low productivity and low state capacity. Further, massacres are more likely in a civil than in an interstate war, as in the latter group sizes matter less for future rents. In non polarized societies there are asymmetric equilibria with only the larger group wanting to engage in massacres. In such settings the smaller group compensates for this by fighting harder in the first place. In this case we can talk of mass killings and fighting efforts to be substitutes. In contrast, in polarized societies either both or none of the groups can be ready to do mass killings in case of victory. Under the "shadow of mass killings" groups fight harder. Hence, in this case massacres and fighting are complements. We also present novel empirical results on the role of natural resources in mass killings and on what kinds of ethnic groups are most likely to be victimized in massacres and forced resettlements, using group level panel data.
    Keywords: Mass Killings, Civil War, Natural Resources, Intensity of Conflict, Group Size
    JEL: C72 D74
    Date: 2010–05

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