New Economics Papers
on Business, Economic and Financial History
Issue of 2011‒02‒12
fourteen papers chosen by

  1. Serial defaults, serial profits: Returns to sovereign lending in Habsburg Spain, 1566-1600 By Mauricio Drelichman; Joachim Voth
  2. Plague in Seventeenth Century Europe and the Decline of Italy: An Epidemiological Hypothesis By Guido Alfani
  3. The original sin that started only later: How Austria-Hungary’s paper debt turned golden, 1870s – 1913 By M Morys
  4. Government economic policy and the formation of the investment climate: The experience of Russia in the late nineteenth — early twentieth centuries By Drozdova, Natalia P.; Kormilitsyna, Irina G.
  5. Trade and Colonial Status By José De Sousa; Julie Lochard
  6. Age-Price Profiles for Canadian Painters at Auction By Douglas James Hodgson
  7. Sovereign Wealth Funds: Form and Function in the 21st Century By Gordon L. Clark; Ashby H. B. Monk
  8. The origin of scientific management systems in Russia By Semenov, Andrey A.
  9. Improving the system of internal control through regulation: cases of small-sized building societies, circa 1960 By Batiz-Lazo, Bernardo; Noguchi, Masayoshi
  10. India's financial globalisation. By Shah, Ajay; Patnaik, Ila
  11. The Dynamics of Competition: Phasing of Domestic and External Liberalisation in India By Arvind Virmani
  12. Engel’s Law Around the World 150 Years Later By Richard Anker
  13. Regional value added in Italy over the long run (1891-2001): linking indirect estimates with official figures, and implications By Emanuele Felice
  14. Schools of thought in organization theory: Factors affecting emergence and development By Klemina, Tatiana N.

  1. By: Mauricio Drelichman; Joachim Voth
    Abstract: Philip II of Spain accumulated debts equivalent to 60% of GDP. He also defaulted four times on his short-term loans, thus becoming the first serial defaulter in history. Contrary to a common view in the literature, we show that lending to the king was profitable even under worst-case scenario assumptions. Lenders maintained long-term relationships with the crown. Losses sustained during defaults were more than compensated by profits in normal times. Defaults were not catastrophic events. In effect, short-term lending acted as an insurance mechanism, allowing the king to reduce his payments in harsh times in exchange for paying a premium in tranquil periods. © 2010 Elsevier Inc. All rights reserved.
    Keywords: Sovereign debt, Serial default, Rate of return, Profitability, Spain
    JEL: N23 F34 G12
    Date: 2011–01
  2. By: Guido Alfani
    Abstract: This article compares the impact of plague across Europe during the seventeenth century. It shows that, contrary to received wisdom, seventeenth century plague cannot be considered a “great equalizer”: the disease affected southern Europe much more severely than the north. In particular, Italy was by far the area worst struck. Using both archival sources and previously published data, the article introduces a novel epidemiological variable that has not been considered in the literature: territorial pervasiveness of the contagion. This variable is much more relevant than local mortality rates in accounting for the different regional impact of plague. The article shows that pandemics, and not economic hardship, generated a severe demographic crisis in Italy during the seventeenth century --- at a time when northern European populations were growing quickly. Plague caused a “system shock” to the economy of the Italian peninsula that might be key in understanding the start of its relative decline compared to the emerging northern European countries.
    Date: 2011
  3. By: M Morys
    Abstract: Conventional wisdom has that most countries were not able to issue debt denominated in domestic currency before World War I. We show that Austria-Hungary had a vast external paper debt until the 1870s; only then became foreign residents reluctant to hold unsecured debt. Austria-Hungary attempted to counteract the repatriation of paper debt by issuing gold debt. As a result, the external debt became increasingly “golden” but the dual monarchy was a net exporter of capital in the period 1880-1913. This suggests that Austria-Hungary had been free from original sin initially but began to be affected by it in the 1870s. Based on a reconstruction of the balance-of payments, we then demonstrate that a strong export performance and large remittances from emigrants counteracted capital exports and interest payments abroad and made gold standard adherence feasible.
    Date: 2010–10
  4. By: Drozdova, Natalia P.; Kormilitsyna, Irina G.
    Abstract: Full text in Russian. Executive summary is available at pp.53-56 in English.
    Keywords: government economic policy, investment climate, investment climate assessment, economic history of Russia,
    Date: 2010
  5. By: José De Sousa; Julie Lochard
    Abstract: Does colonisation explain differences in trade performance across developing countries? In this paper, we analyse the differential impact of British versus French colonial legacies on the current trade of African ex-colonies. We initially find that former British colonies trade more, on average, than do their French counterparts. This difference might be the result of the relative superiority of British institutions. However, a core concern is the non-random selection of colonies by the British. Historians argue that with Britain, trade preceded colonisation. Using an instrument based on colonisation history to control for this endogeneity, we find no evidence of a systematic difference between the British and French colonial legacies with respect to trade. This finding suggests that the apparent better performance of British ex-colonies might be instead explained by pre-colonial conditions.
    Keywords: Trade, colonisation, Africa
    JEL: F10 F54 O55
    Date: 2010
  6. By: Douglas James Hodgson
    Abstract: We conduct an empirical analysis of the effect on the auction price of a Canadian painting of the age of the painter at the time of creation of the painting. We consider several hundred artists, active over the entire history of Canadian art, who are pooled in the estimation of a hedonic regression in which a polynomial function in age enters as a regressor along with several other control variables. We then consider the possibility that the age-price relationship has changed over time by : (a) estimating separate age-price functions for three generational groups of artists - those born before 1880, between 1880 and 1920, and after 1920 and thus coming of age in the world of post-war “contemporary art” ; and (b) estimating a parameterization where the shape of the age-price profile is permitted to change continuously depending on the year of birth of the artist. Our principal result is that artists born more recently tend to “peak” earlier in their careers than those of previous generations. As pertaining to artists born after 1920, this result is consistent with the findings of Galenson (2000) for modern American painters, but we find that the phenemenon applies over longer periods of art history. <P>
    Keywords: Auction, Age-price profiles, Canadian painting, hedonic regression,
    Date: 2011–01–01
  7. By: Gordon L. Clark (Centre for Employment, Work and Finance, Oxford University Centre for the Environment and Faculty of Business and Economics, Monash University); Ashby H. B. Monk (Centre for Employment, Work and Finance, Oxford University Centre for the Environment)
    Abstract: As representatives of nation-states in global financial markets, sovereign wealth funds (SWFs) share a common form and many functions. Arguably their form and functions owe as much to a shared (global) moment of institutional formation as they owe their form and functions to the hegemony of Anglo-American finance over the late 20th and early 21st centuries. We distinguish between the immediate future for SWFs in the aftermath of the global financial crisis, and two possible long-term scenarios; one of which sees SWFs becoming financial goliaths dominating global markets, while the other sees SWFs morphing into nation-state development institutions that intermediate between financial markets and the long-term commitments of the nation-state sponsors. If the former scenario dominates, global financial integration will accelerate with attendant costs and benefits. If the latter scenario dominates, SWFs are likely to differentiate and evolve, returning, perhaps, to their national traditions and their respective places in a world of contested power and influence. Here, we clarify the assumptions underpinning the conception and formation of sovereign wealth funds over the past twenty years or so in the face of the ‘new’ realities of global finance.
    Keywords: Sovereign Wealth Funds, Crisis, Market Performance, Long-term Investment
    JEL: D02 F36 G15
    Date: 2010–10
  8. By: Semenov, Andrey A.
    Keywords: history of management in Russia, scientific systems of labour organization, social consequences of the use of the taylorism, ways of increasing productivity,
    Date: 2010
  9. By: Batiz-Lazo, Bernardo; Noguchi, Masayoshi
    Abstract: Following the previous research conducted in Noguchi and Bátiz-Lazo (2010), this study aims to analyzes how the system of internal control entailing the effectiveness of the management and governance of building societies were improved within individual societies following the Building Societies Act, 1960 (BSA60). By specifically focusing on and comparing the process to reform the systems of internal control executed at two small-sized building societies, i.e. Lloyds Permanent and Eagle Building Societies, this study also purports to analyze how the improvement of the system of internal control affected the management and governance of both societies. The two cases examined in this study prove that an order, forbidding some activities by a building society, recognized to the CRFS under the regulation of BSA60 provided an important opportunity for the building societies to reform their systems of internal control and that the improvement of the system of internal control could have an important impact upon the management of the small-sized building societies in the UK, as a necessary condition for the withdrawal at an early stage of the order once made.
    Keywords: the system of internal control; BSA60; the Chief Registrar of Friendly Societies (CRFS); the Treasury; building societies; supervision of retail financial intermediaries; delegated monitoring; UK
    JEL: N8 M41 N24
    Date: 2011–02
  10. By: Shah, Ajay (National Institute of Public Finance and Policy); Patnaik, Ila (National Institute of Public Finance and Policy)
    Abstract: India embarked on reintegration with the world econ- omy in the early 1990s. At first, a certain limited open- ing took place emphasising equity flows by certain kinds of foreign investors. This opening has had myriad in- teresting implications in terms of both microeconomics and macroeconomics. A dynamic process of change in the economy and in economic policy then came about, with a co-evolution between the system of capital con- trols, macroeconomic policy, and the internationalisa- tion of firms including the emergence of Indian multi- nationals. Through this process, de facto openness has risen sharply. De facto openness has implied a loss of monetary policy autonomy when exchange rate pegging was attempted. The exchange rate regime has evolved towards greater flexibility.
    Keywords: India ; Financial globalisation ; Capital controls, Capital flows
    JEL: F15 F23 F32 F36 G15
    Date: 2011–01
  11. By: Arvind Virmani
    Abstract: The focus of the analysis is on the post-colonial period after India attained independence in 1947. This paper covers the period from 1950-51 onwards for which consistent data series are available. This means that growth rates are available from 1951-52 onwards. The primary purpose of the paper is to examine the link between policy regimes, reforms and economic growth in India. The data and analysis of earlier papers are drawn to provide the growth side of the link. Consistent series of data on consumption distribution are available only from the seventies, so the more detailed analysis of these issues has to be limited to the second half of the post-independence period. [Working Paper No. 4/2006-PC]. URL: [ s/wrkpapers/wp_dc_pdel.pdf].
    Keywords: policy regimes, economic growth, India, consumption, post-independence,
    Date: 2011
  12. By: Richard Anker
    Abstract: <p>One of the most enduring relationships in economics is that proposed by Ernst Engel in 1857: “The poorer is a family, the greater is the proportion of the total outgo [family expenditures] which must be used for food. … The proportion of the outgo used for food, other things being equal is the best measure of the material standard of living of a population.” The 150th anniversary of Engel’s law passed in 2007. With this in mind, the present paper looks at the extent to which Engel’s law is relevant in today’s world by looking across countries at the relationship between the share of household expenditure spent on food and national income per capita. This working paper provides an empirical analysis of Engel’s law based on data for almost every country and territory in the world. This facilitates analysis of the relationship between the food share of household expenditure and national income per capita, especially how this differs by development level.</p>
    Keywords: History of economic thought, Economic history, Consumer economics, Consumption, Measurement and analysis of poverty, Household behavior
    JEL: B31 B41 D12 E21 I32 N01 N30 P46
    Date: 2011
  13. By: Emanuele Felice (Departament d’Economia i d’Història Econòmica, Universitat Autònoma de Barcelona, Spain)
    Abstract: This paper presents value added estimates for the Italian regions, in benchmark years from 1891 until 1951, which are linked to those from official figures available from 1971 in order to offer a long-term picture. Sources and methodology are documented and discussed, whilst regional activity rates and productivity are also presented and compared. Thus some questions are briefly reconsidered: the origins and extent of the north-south divide, the role of migration and regional policy in shaping the pattern of regional inequality, the importance of social capital, and the positioning of Italy in the international debate on regional convergence, where it stands out for the long run persistence of its disparities.
    Keywords: Italy, regional growth, convergence, productivity
    JEL: N93 N94 O47 R11 Y10
    Date: 2011–01
  14. By: Klemina, Tatiana N.
    Keywords: theory of organization, school of thought,
    Date: 2010

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