New Economics Papers
on Business, Economic and Financial History
Issue of 2010‒11‒20
eighteen papers chosen by

  1. Using history to help refine international business theory: ownership advantages and the eclectic paradigm By da Silva Lopes, Teresa
  2. Interest rate risk and other determinants of post WWII U.S. government debt/GDP dynamics By George J. Hall; Thomas J. Sargent
  3. On the Latin American Growth Paradox: A Hindsight into the Golden Age By Giorgia Barboni; Tania Treibich
  4. Accounting and Labour Control at Boulton and Watt, c. 1775-1810 By Toms, Steven
  5. Southern Engines of Global Growth: Very Long Cycles or Short Spurts? By Meghnad Desai
  6. Reversing the Null: Regulation, Deregulation, and the Power of Ideas By David A. Moss
  7. The historical place of the 'Friedman-Phelps' expectations critique.. By Forder, James
  8. Wagner's law and Italian disaggregated public spending: some empirical evidences By Magazzino, Cosimo
  9. Competition and equilibrium: Attilio da Empoli’s innovative approach By Massimo Di Matteo
  10. Uncovering uncovered interest parity during the classical gold standard era, 1888-1905. By Andrew Coleman;
  11. Self-Reinforcing Shocks: Evidence from a Resettlement Policy By Aki Kangasharju; Matti Sarvimäki
  12. Assessing Corruption: Expert Surveys versus Household Surveys, Filling the Gap By Thomas Roca
  13. Genesis and foundations of the multiplier: Marx, Kalecki and Keynes By Serena Sordi; Alessandro Vercelli
  14. El factor multiplicador en el crecimiento del dinero. España 1874-1998 (The multiplier factor in money growth. Spain 1874-1998) By Regina Escario
  15. "International Trade Theory and Policy: A Review of the Literature" By Sunanda Sen
  16. Dubai financial crisis: causes, bailout and after - a case study By Hasan, Zubair
  17. Balance of Trade, Remittance and Net Capital Flows: An Analysis of Economic Development in Kerala since independence By T.M. Thomas Issac; Nata Duvuury; Ram Manohar Reddy

  1. By: da Silva Lopes, Teresa
    Abstract: In John Dunning’s eclectic paradigm firms need to have ownership, location, and internalisation advantages in order to cross borders and engage in foreign direct investment. By drawing on historical evidence on the evolution of a group of leading marketing-based multinationals in consumer goods, this paper claims that, despite its richness, the eclectic paradigm, and in particular the concept of ‘ownership advantages’, needs to be revised and extended, to take into account different levels of institutional analysis. For the eclectic paradigm to give a rounded view of the internationalising firm it needs to acknowledge the critical importance of firm-specific ownership advantages such as the role of the entrepreneur.
    Date: 2010–03
  2. By: George J. Hall (Department of Economics, Brandeis University); Thomas J. Sargent (Department of Economics, New York University)
    Abstract: This paper uses a sequence of government budget constraints to motivate estimates of returns on the U.S. Federal government debt. Our estimates differ conceptually and quantitatively from the interest payments reported by the U.S. government. We use our estimates to account for contributions to the evolution of the debt-GDP ratio made by inflation, growth, and nominal returns paid on debts of different maturities.
    Keywords: Holding period returns, capital gains, inflation, growth, debt- GDP ratio, government budget constraint
    Date: 2010–11
  3. By: Giorgia Barboni; Tania Treibich
    Abstract: In 1950, Latin American countries capabilities were promising, and the subcontinent was thought to have a big potential for convergence. In order to understand why this prediction was not fullled, we apply in this paper the framework set by Fagerberg and Srholec (2008). Our study of the economic evolution of Latin America during the Golden Age (1950-1975) is based on historical data on economic, political and social variables from 18 countries. We use a factor analysis to classify our 20 indicators into ve dimensions: the level of "industrialization", "human capital", the "macroeconomic fundamentals", "politics" and "religion". We nd that only the quality of human capital and the presence of Roman Catholics signicantly and positively aected Latin American economic growth in this period, while the determinants traditionally put forward in the empirical growth literature, such as technical change and openness, did not. Finally, the positive correlation between the religion and education variables reveals that this result is partly related to the role of the Catholic Church as an educational institution.
    Keywords: Growth; Development; Convergence; Factor Analysis; Latin America;Economic History; Golden Age.
    JEL: N26 O54
    Date: 2010–11–12
  4. By: Toms, Steven
    Abstract: The paper offers a new perspective on the management and accounting practices at this pioneering firm of the British industrial revolution. Using a historical materialist approach, it offers an alternative to the economic rationalist, Foucauldian and Marxist explanations in the prior literature. Based on preliminary archival research, it shows how the business practices of Boulton and Watt reflected the norms of the eighteenth century and before rather than overtly capitalist methods and used accounting to solve the problems of pricing their product and the supervision and control of labour.
    Date: 2010–03
  5. By: Meghnad Desai
    Abstract: This article views the four economies of the South in a long run historical perspective of 1500-2000. It contrasts the history and the initial endowments of the two Northern hemisphere economies China and India which are land scarce and labour abundant with the two Southern hemisphere economies Brazil and South Africa which are land abundant and labour scarce. It argues for different strategies for future growth and discusses impediments which may come in the paths of these four economies in the near future. [Discussion Paper No. 2008/02]
    Keywords: China, India, Brazil, South Africa, development, history
    Date: 2010
  6. By: David A. Moss (Harvard Business School, Business, Government and the International Economy Unit)
    Abstract: It has been said that deregulation was an important source of the recent financial crisis. It may be more accurate, however, to say that a deregulatory mindset was an important source of the crisis - a mindset that, to a very significant extent, grew out of profound changes in academic thinking about the role of government. As scholars of political economy quietly shifted their focus from market failure to government failure over the second half of the twentieth century, they set the stage for a revolution in both government and markets, the full ramifications of which are still only beginning to be understood. This intellectual sea-change generated some positive effects, but also some negative ones, including (it seems) an excessively negative impression of the capacity of government to address problems in the marketplace. Today, as we consider the need for new regulation, particularly in the wake of the financial crisis, another fundamental shift in academic thinking about the role of government may be required - involving nothing less than a reversal of the prevailing null hypothesis in the study of political economy.
    Date: 2010–10
  7. By: Forder, James
    Abstract: The ‘expectations critique’, usually attributed to Friedman or Phelps and dated towards the end of the 1960s, in fact originates much earlier. And rather than being an insight properly attributable to a particular individual, it was, by that time, a commonplace of economic discussion. This much is easy to establish. It is argued that the common attribution arises at least in part because the Keynesians unwisely chose to express their disagreement with Friedman in terms of expectations rather than in terms of the existence of the natural rate of unemployment. As a result, forty years later, it has become hard to see that two separate points ever existed.
    JEL: E31 B22
    Date: 2010
  8. By: Magazzino, Cosimo
    Abstract: Wagner’s Law is the first model of public spending in the history of public finance. The aim of this article is to assess its empirical evidence in Italy for the period 1960-2008 at a disaggregated level, using a time-series approach. After a brief introduction, a survey of the economic literature on this issue is shown, before estimating the specifications of Wagner’s Law for some specific items of public spending (for interests, for final consumption, for labour dependent income, for grants on production, and for public investments). We found a cointegration relationship for three out of five items. Moreover, Granger causality tests results show evidence in favour of Wagner’s law only for spending for passive interests in the long-run, and for spending for dependent labour income in the short-run. Some notes on the policy implications of our empirical results conclude the paper.
    Keywords: public spending; economic growth; Wagner’s Law; time-series; unit root; cointegration; causality; fiscal policy
    JEL: C32 H50 H60 N44 D60
    Date: 2010–11–10
  9. By: Massimo Di Matteo
    Abstract: Attilio da Empoli (1904-48) is a relatively unknown Italian economist who for various reasons, included a premature death, is not recognized as an innovative scholar. One of the main preoccupation of da Empoli’s scientific research was to analize and refine the concept of equilibrium. In the paper I review two main attempts in this direction elaborated in books and papers mostly in Italian (or in a not easily accessible book). The first concerns the introduction of the concept of ultramarginal cost to complement Marshall’s analysis. I show that da Empoli is a forerunner of several concepts to be introduced later, such as kinked demand curve, entry preventing price, limit price, etc. In particular I compare da Empoli’s analysis with Sylos Labini-Modigliani’s theory. After this work da Empoli continued his research and, in the context of a discussion about the theory of international trade, came across a difficulty with the Marshallian analysis of short and long periods. In the second part of the paper I review the discussion that took place in the Rivista Italiana di Scienze Economiche stressing three aspects. First, the analysis was not confined to the comparison of two equilibrium positions (as traditionally made in the pure theory of trade) but it was investigated how the costs that the economy incurs in moving from free trade to autarky may modify some traditional results. Secondly, a link can be established between the concept of ultramarginal cost and the analysis of “costi intermedi” put forward by Borgatta and Mazzei. Thirdly, the analysis of those costs calls into question the problem of time and the different definitions of equilibrium according to the temporal dimension involved. Da Empoli spotted a contradiction in the definitions of short run equilibrium that Marshall gave in his Principles and, on the basis also of the most recent literature on the subject, an interpretation of his position that leads to a rejection of the concept of long run stationary equilibrium will be proposed.
    Keywords: competition, equilibrium, ultramarginal cost, limit price
    JEL: B3 B2 B4
    Date: 2010–10
  10. By: Andrew Coleman (Motu Economic and Public Policy Research);
    Abstract: This paper examines the uncovered interest parity hypothesis using the dollar-sterling exchange rate during the gold standard era. This period is interesting because the exchange rate was seasonal, because transactions costs were high, and because occasions when uncovered interest rate speculation did not occur can be identified. The paper shows UIP speculation frequently did not occur, that speculation occurred more in response to expected exchange rate changes than interest rate differentials, and that profitability varied systematically with interest rate differentials. The estimated UIP equations are substantially improved by distinguishing occasions when sterling was borrowed not lent.
    Keywords: Uncovered interest parity, gold standard
    JEL: N21 F31
    Date: 2010–02
  11. By: Aki Kangasharju; Matti Sarvimäki
    Abstract: We examine the long-term effects of resettling 11 percent of the Finnish population fromareas ceded to the Soviet Union during World War II. Our empirical strategy exploits featuresof the resettlement policy as a source of plausibly exogenous variation in population growth.The results suggest that a 10 percent increase in the population of a rural location during thewar caused an additional 15 percent growth during the next five decades. The growth wasdriven by migration and led to the expansion of the non-primary sector. The effect is largerfor locations connected to the railway network.
    Keywords: Economic geography, agglomeration, migration
    JEL: F12 J10 R12 N94
    Date: 2010–04
  12. By: Thomas Roca (GED, Université Montesquieu Bordeaux IV)
    Abstract: La mesure de la gouvernance est une source d’occupation relativement nouvelle pour les économistes. Le World Bank Institute a ouvert la voie à la fin des années 90 avec la désormais célèbre suite “Governance Matters”, I, II, III, IV… Le peu d’imagination de KKZ1 dans le choix du titre de leurs publications cache, en réalité, les plus populaires des indicateurs de gouvernance. L’accent mis sur la corruption pourrait, lui aussi, revendiquer la paternité de la Banque mondiale dans la mesure où l’on doit la création de Transparency International à Peter Eigen ancien cadre de la Banque, mais également, à James Wolfensohn, premier directeur de la Banque à s’intéresser au fléau de la corruption, dans un contexte de « de-géopolitisation » de l’aide au développement. Avec les prémices de la systématisation des enquêtes ménages, une nouvelle manière de mesurer la gouvernance voit le jour. Si les enquêtes menées auprès de la population peuvent constituer un outil intéressant pour évaluer la qualité des institutions, cette prise en compte de l’opinion des populations introduit de nouveaux écueils. Cette étude vise à analyser l’écart de perception entre experts et populations, en matière de corruption. En effet, les enquêtes d’experts et les enquêtes ménages s’accordent difficilement dans leurs estimations de l’étendue de la corruption. Nous suggérons que la liberté de la presse, la culture, la tolérance et la confiance envers les dirigeants puissent venir fausser les pistes. Governance measurement is a relatively new source of entertainment for economists. The World Bank Institute paved the way in the late 90`s with the now famous suite “Governance Matters”, I, II, III, IV… The little imagination of KKZ, regarding the choice of their publications title, hides the most popular aggregated governance indicators. Corruption focus could also claim World Bank parenthood since Transparency International birth was the fruit of a former “affair” between James Wolfensohn and Peter Eigen. With the prelude to household surveys systematization, a new way to measure governance and corruption saw the day. If household surveys may stand for an interesting tool for institutional assessment, populations’ opinions also introduce new pitfalls. This study aims to investigate the gap between expert and household surveys regarding corruption measurement. Indeed, experts and populations barely agree on their estimations of corruption extent. We suggest that press freedom, culture, permissiveness and leadership approval may cover one’s track.(Full text in french)
    JEL: O11 O17 O19
    Date: 2010–11
  13. By: Serena Sordi; Alessandro Vercelli
    Abstract: This paper explores the Marxian genetic root of the multiplier in order to clarify its foundations and validity conditions. Though the analysis is restricted to the first two volumes of Capital and the early contributions by Kalecki in the 1930s, we argue that we can draw from these works valuable insights into the theoretical and empirical scope of the Kahn-Keynes multiplier.
    Keywords: multiplier, reproduction schema, capitalist process of circulation
    JEL: B23 B41 E11 E12
    Date: 2010–10
  14. By: Regina Escario (Universidad de Zaragoza)
    Abstract: En este trabajo se detalla y cuantifica la relación formal existente entre los agregados base monetaria y disponibilidades líquidas (o M3). La evolución de estas últimas se debe no sólo a la propia expansión de la base, sino también al efecto que el multiplicador monetario ejerce a través de los coeficientes de efectivo y de reservas. Así, tras revisar la trayectoria de la M3 se profundiza en el papel que el multiplicador ha jugado en su crecimiento, calculando las contribuciones de cada determinante e integrándolas en el contexto histórico que ofrece España entre 1874 y 1998. El peso del multiplicador en la expansión de las disponibilidades, mayor que el estimado para Italia o EE UU, resulta cercano al 20%, del que dos terceras partes corresponden al impacto del coeficiente de efectivo y un tercio al de reservas.
    Keywords: multiplicador monetario, coeficiente de efectivo, coeficiente de reservas, dinero
    JEL: E51 N14
    Date: 2010–11
  15. By: Sunanda Sen
    Abstract: This paper provides a survey of the literature on trade theory, from the classical example of comparative advantage to the New Trade theories currently used by many advanced countries to direct industrial policy and trade. An account is provided of the neo-classical brand of reciprocal demand and resource endowment theories, along with their usual empirical verifications and logical critiques. A useful supplement is provided in terms of Staffan Linder’s theory of "overlapping demand," which provides an explanation of trade structure in terms of aggregate demand. Attention is drawn to new developments in trade theory, with strategic trade providing inputs to industrial policy. Issues relating to trade, growth, and development are dealt with separately, supplemented by an account of the neo-Marxist versions of trade and underdevelopment.
    Keywords: Comparative Costs; Resource Endowment Pattern and Trade; Overlapping Demand; Strategic Trade; New Theories of Trade; Trade and Development
    JEL: F11 F12 F14
    Date: 2010–11
  16. By: Hasan, Zubair
    Abstract: This paper explains the circumstances that led Dubai to the current financial crisis that still lingers. It analyses the steps taken at various stages by the city state to ameliorate the situation including the bailout help the UAE Government eventually granted. It spotlights the role international rating agencies played in aggravating the situation and demands that their activities be brought under regulatory nets now being strengthened across the world in the context of ongoing global meltdown. Finally, it warns of challenges Dubai may be facing in years ahead and what could be done to pre-empt them. The argument is cast with a backdrop of the economic position of UAE in the Middle-East and happenings at the global level in the arena of finance – mainstream and Islamic.
    Keywords: Islamic finance; Global meltdown; Dubai crisis; Rating agencies; financial architecture.
    JEL: J38 G10 G21
    Date: 2010–07
  17. By: T.M. Thomas Issac; Nata Duvuury; Ram Manohar Reddy
    Abstract: A major drawback of the plethora of regional studies in India is that most of them tend to treat regional development as an autonomous process of regional productive forces and relations of productions. The multifarious inter regional relations that impinge on regional development are not given sufficient consideration. [Working Paper No. 250]
    Keywords: plethora, regional, studies, development, productive, relations, sufficient
    Date: 2010
  18. By: Mario García Molina
    Abstract: Se estudia el comportamiento de la diversificación mediante el índice de entropía para 4 grandes grupos empresariales diversificados colombiano 5 años antes y después de la apertura económica de 1991. Se encuentra que la apertura no hizo que disminuyeran su diversificación. Los grupos aumentaron o mantuvieron su diversificación al salir de algunos sectores y entrar a otros que ofrecían nuevas posibilidades con las privatizaciones.
    Date: 2010–11–08

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