nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2011‒02‒19
fourteen papers chosen by
Bernardo Batiz-Lazo
Bangor University

  1. On the long-run evolution of inheritance: France 1820-2050 By Thomas Piketty
  2. Looking on English and German banking in the French mirror: Banking and development in France (1880-1913) By Guillaume Bazot
  3. Incentives in Merchant Empires: Portuguese and Dutch Labor Compensation By Rei, Claudia
  4. Land-use profiles of agrarian income and land ownership inequality in the province of Barcelona in mid-nineteenth century By Enric Tello; Marc Badia-Miró
  5. Global Imbalances: Non-conventional View By Vladimir Popov
  6. Economic ideas and redistributive policy in the Spanish parliament: the 1900 debate on fiscal progressivity By Javier San-Julián-Arrupe
  7. The Pure Logic of Accounting: A Critique of the Fair Value Revolution By Yuri Biondi
  8. L’économie de la médecine libérale. By Ducos, Jean
  9. Credit constraints and distance, what room for Central banking? The French experience (1880-1913) By Guillaume Bazot
  10. Le rôle du taux de change réel dans la transmission de l'instabilité des prix agricoles internationaux By Julie Subervie
  11. The Big U-Turn: Japan Threatens to Reverse Postal Reforms By Gary Clyde Hufbauer; Julia Muir
  12. Market Failures and Regulatory Failures: Lessons from Past and Present Financial Crises By Acharya, Viral V.; Cooley, Thomas; Richardson, Matthew; Walter, Ingo
  13. Persistent anti-market culture: A legacy of the Pale of Settlement and of the Holocaust By Irina Grosfeld; Alexander Rodnyansky; Ekaterina Zhuravskaya
  14. The implications of European retail banking integration on small and medium-sized enterprises financing. An overview By Anton, Sorin Gabriel; Avadanei, Andreea

  1. By: Thomas Piketty (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: This paper attempts to document and account for the long run evolution of inheritance. We find that in a country like France the annual flow of inheritance was about 20%-25% of national income between 1820 and 1910, down to less than 5% in 1950, and back up to about 15% by 2010. A simple theoretical model of wealth accumulation, growth and inheritance can fully account for the observed U-shaped pattern and levels. Using this model, we find that under plausible assumptions the annual bequest flow might reach about 20%-25% of national income by 2050. This corresponds to a capitalized bequest share in total wealth accumulation well above 100%. Our findings illustrate the fact that when the growth rate g is small, and when the rate of return to private wealth r is permanently and substantially larger than the growth rate (say, r=4%-5% vs. g=1%-2%), which was the case in the 19th century and early 20th century and is likely to happen again in the 21st century, then past wealth and inheritance are bound to play a key role for aggregate wealth accumulation and the structure of lifetime inequality. Contrarily to a widely spread view, modern economic growth did not kill inheritance.
    Keywords: inheritance ; bequest ; wealth ; capital
    Date: 2010–05
  2. By: Guillaume Bazot (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: This paper aim to prove positive correlations between local banking, industry, innovation, and growth in the French classical period (1880-1913). Empirical works on GDP per capita growth gives positive correlation with local banking indicator. The relation is all the more strong since local banking tied on non agricultural economies. Thus, we open the black box and give evidence of local banking connection with innovation. We set the proof through panel data analysis on a spacial basis. Regard to so called German and English banks performances, local knowledge looks like a key point of industrialization, at least in the French experience.
    Keywords: local banking ; information management ; industrial development ; innovation
    Date: 2011–02–10
  3. By: Rei, Claudia
    Abstract: The different organizational structure of the Portuguese and Dutch merchant empires affected their ability to monitor workers. I test the theoretical implications of these differences using micro data of overseas workers' compensation from the sixteenth to the eighteenth century. The two merchant empires used significantly different compensation structures: working for the king of Portugal corresponded to a higher bonus share of compensation on average than that of the Dutch East India Company. These results are consistent with theoretical implications and provide additional support to the historical evidence we have on the organizational structure of merchant empires.
    Keywords: Merchant Empires; Labor Compensation; Incentives; Monitoring
    JEL: N34 J33
    Date: 2011–01
  4. By: Enric Tello (Department of Economic History and Institutions,Faculty of Economics and Business, University of Barcelona (Spain)); Marc Badia-Miró (Department of Economic History and Institutions,Faculty of Economics and Business, University of Barcelona (Spain))
    Abstract: According to the existing literature, when land remained the most abundant factor an increase in market integration is expected to lead to a greater inequality in wealth or income distribution. However, several case studies on the vineyard specialization experienced in Catalonia during the 18th and 19th centuries suggested another outcome: land ownership and agrarian income became less uneven, not the opposite. The outstanding interpretation posed by Catalan rural historians deserves to be confirmed or rejected by applying different inequality and polarization indices (Gini, Theil and top incomes), and innovative methods (inequality possible frontier and extraction ratios), to the big dataset we have been able to assemble with the information provided for every cadastral taxpayer of each municipality in the Distribution of Personal Wealth in Real Estate Ownership in the Province of Barcelona published in 1852 by the Official Gazette, combined with other population and land-use data listed in a Land-Use Statistics of the Province of Barcelona compiled in 1858. The results confirm that landownership and income inequality were lower in winegrowing municipalities than in cereal-cropping or forest ones, in spite of the fact that commercial specialization and higher population densities could have meant an extended frontier of possible inequality.
    Keywords: agrarian income distribution, land ownership, personal inequality, regional inequality, land-use patterns, tax burden
    JEL: N53 D31 H24 Q15
    Date: 2011–01
  5. By: Vladimir Popov (New Economic School, Moscow)
    Abstract: Maintaining today’s global imbalances would help to overcome the major disproportion of our times – income gap between developed and developing countries. This gap was widening for 500 years and only now, in the recent 50 years, there are some signs that this gap is starting to decrease. The chances to close this gap sooner rather than later would be better, if the West would go into debt, allowing developing countries to have trade surpluses that would help them develop faster. Previously, in 16-20th century, it was the West that was developing faster, accumulating surpluses in trade with “the rest” and using these surpluses to buy assets in developing countries, while “the rest” were going into debt. Now it is time for “the rest” to accumulate assets and for the West to go into debt.
    Date: 2010–05
  6. By: Javier San-Julián-Arrupe (Universitat de Barcelona)
    Abstract: This paper analyses the debate on the introduction of progressive rates in the inheritance tax, which took place in the Spanish Parliament in 1900. The article highlights the interest of this debate concerning two aspects: First, the parliamentary discussion itself, very controversial, showed an atypical alliance between conservatives and republicans supporting a very limited progressivity. In their view, this was just a tool to achieve real tax proportionality, and by no means should be a redistributive measure. Liberals' opposition feared the ultimate consequences of progressive taxes and refused its introduction in Spain, as it entailed serious hazard for property. Second, the wide use of economic ideas to support arguments in the debate make evident that the Members of Parliament taking part in the debate had a noteworthy degree of economic expertise. Therefore, parliamentary discussions were effectively contributing to the progress, expansion and institutionalization of political economy in contemporary Spain.
    Keywords: economy, parliament, public finance, progressivity.
    JEL: A11 B12 K34 N43
    Date: 2011–02
  7. By: Yuri Biondi (PREG - Pole de recherche en économie et gestion - CNRS : UMR7176 - Polytechnique - X)
    Abstract: When international accounting standards were renamed to become international financial reporting standards, this seemed to imply that accounting no longer needed to exist, but rather had to be reconsidered as a part of financial communication and advertising. Does traditional accountability no longer matter? Betrayed investors and globalized stakeholders would dissent. A difference of nature continues to exist between fair values disclosed by managers and certified by auditors, and the actual performance generated by the enterprise entity through time, space, and interaction. In a world shaped by complex organizations facing unfolding changes, hazard and limited knowledge, the quest for fundamental principles of accounting is not academic. Accounting principles constitute a primary way that the creation and allocation of business incomes is governed; that is, fairly managed and regulated in the public interest, having respect to “other people interests.” This article adopts a dualistic posture that opposes the accounting conceptual frameworks based on fair value (market basis) and historical cost and revenue (process basis). The fundamental premises about the underlying economics of the enterprise entity are discussed, including the representation of the business and the concepts of asset and liability. References are made to the case of accounting for intangibles, and to the distinction between equities and liabilities. The cost and revenue accounting perspective is then defended in terms of accountability, but also from the informational viewpoint: historical accounting information plays a special role as a lighthouse in the dynamic and strategic setting of the Share Exchange. In particular, two refinements of the historical cost (and revenue) accounting model are suggested. The first one regards the treatment of earned revenues from continuing operations, and the second, the recognition of shareholders' equity interest computed on the actual funds provided in the past, coupled with the distinction between shareholders' equity and entity equity.
    Keywords: accounting theory; international financial reporting standards (IFRS); intangibles; conceptual framework; accounting principles and rules; accounting standards; marked-to-market; fair value; marked-to-models; accounting regulation
    Date: 2011
  8. By: Ducos, Jean
    Abstract: Cette thèse a pour objet de réaliser une analyse économique de la médecine libérale en insistant sur ce qui, à nos yeux, est tu ou non reconnu. Il s’agit d’une analyse institutionnaliste basée sur l’encastrement historique et social de la santé. Après une présentation des spécificités de l’économie de la santé et un historique, nous abordons les institutions de la médecine libérale. Les caractéristiques essentielles de l’offre sont présentées en mettant l’accent sur ce qui fait problème tels que les comportements opportunistes des médecins libéraux, les carences de la régulation et les défaillances de la médecine libérale, sans oublier qu’il s’agit d’une profession en souffrance et en manque de reconnaissance. Concernant la demande, nous nous efforçons d’introduire l’état de maladie dans l’analyse économique. Enfin, après une mise en exergue des problèmes de la médecine libérale, nous faisons des propositions dans une perspective de développement des soins de santé primaires. Nous concluons sur l’utilité de la médecine libérale et sur son avenir fondé sur sa capacité à se réforme.
    Abstract: This thesis aims to undertake an economic analysis of private medical practice while stressing on elements, which in our view, remain unsaid or unrecognised. It is about an institutional analysis, based on the historic and social embedding of the health. After presenting the specificities of health economics and a history, we will deal with the institutions of private medical practice. The essential features of « supply » are introduced by stressing upon the drawbacks of private medical practice concerning the opportunistic behaviour of private practitioners and the deficiencies in regulation, without ignoring the fact that it is a profession that is suffering and needs recognition. As far as « demand » is concerned, we will stress upon the state of sickness in the economic analysis. Finally, after underlining the problems linked with private medical practice, we will outline proposals with a perspective of developing primary health care. The conclusion will treat the utility factory of private medical practice and its future, based upon its capability to reform itself.
    Keywords: régulation médicale; primary health care; private medical practice; ethics; embedding; demand of care; soins de santé primaires; médecine libérale; institutions; éthique; encastrement; demande de soins;
    JEL: I18 I11
    Date: 2010–11
  9. By: Guillaume Bazot (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: Although a relative consensus is emerging about the economic effects of credit development, many controversies remain as to the role of the central bank in that development. This paper addresses the process of credit allocation by the central bank as observed on a spatial basis. It examines how and why improved geographical access to the central bank contributes to credit development by looking at the Fench experience in the ‘classical period' (1880-1913). In an environment of emerging, but highly prudent, deposit banks and the absence of a centralised money market, Banque de Fance branches had enough supply and demand to generate a network. Access to “central loans” hence reduced liquidity constraints and encouraged local banks and firms to lend. We shape the proof in two stages. First, a simple banking model presents our intuition and the mechanisms at work. Second, we take a new data set on the development of credit by French geographic area (département) to test our hypothesis using panel econometric tools. The results show the Banque de France branches having a strong and robust impact on credit development.
    Keywords: credit constraint ; distance ; soft information ; succursales of the Banque de France ; credit development
    Date: 2010–11
  10. By: Julie Subervie (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: This paper aims at analyzing the role of the real exchange rate in the transmission of world price instability to producers of agricultural commodity-exporting developing countries. The analysis relates to a sample of 51 developing countries over the 1968-2002 period. In those countries whose real exchange rate is supposed to be determined by world price movements, the instability of real prices measured in local currency is supposed to be lower than the instability of world real prices. However, in the great majority of countries, the instability of real prices in local currency is on the contrary stronger. This observation leads to analyse the nature of the relationship between the real exchange rate of these countries and the international real price of exported commodities. More precisely, we investigate whether this relationship can be asymmetric, which would explain a weak correlation between real exchange rate and world real prices. To test this hypothesis, we use an asymmetric cointegration approach. As it was expected, for many countries the results highlight a cointegration relationship between real effective exchange rate and world real prices when there is a rise in world prices, while the hypothesis of cointegration is rejected for almost all countries when there is a drop in world prices, which tends to corroborate the hypothesis of asymmetry.
    Keywords: taux de change réel;instabilite des prix;cointégration asymétrique
    Date: 2011–02–09
  11. By: Gary Clyde Hufbauer (Peterson Institute for International Economics); Julia Muir (Peterson Institute for International Economics)
    Abstract: On May 31, 2010, a majority of the Lower House of the National Diet of Japan approved legislation that would reverse a decade's worth of effort to fully privatize key subsidiaries of Japan Post Holdings Co. Ltd. Besides postal services, the state-run postal system offers banking and insurance services, through Japan Post Bank (JPB) and Japan Post Insurance (JPI), respectively. These are the financial engines of Japan Post and were the units slated for privatization. Both subsidiaries have long received favorable government treatment, tilting the playing field against private banks and insurance firms, whether foreign or domestic. The government of Japan is in clear violation of its commitments under the World Trade Organization (WTO), and if the Upper House approves the legislation, Japan will reverse the efforts made by the United States and the European Union, as well as domestic private banks and insurance firms, to establish a level playing field. What's more, Japan risks having a formal WTO dispute brought against it.
    Date: 2010–06
  12. By: Acharya, Viral V. (Asian Development Bank Institute); Cooley, Thomas (Asian Development Bank Institute); Richardson, Matthew (Asian Development Bank Institute); Walter, Ingo (Asian Development Bank Institute)
    Abstract: The paper analyzes the financial crisis of 2007–2009 through the lens of market failures and regulatory failures and presents a case that there were four primary failures contributing to the crisis: excessive risk-taking in the financial sector due to mispriced government guarantees; regulatory focus on individual institution risk rather than systemic risk; opacity of positions in financial derivatives that produced externalities from individual firm failures; and runs on the unregulated banking sector that eventually threatened to bring down the entire financial sector. In emphasizing the role of regulatory failures, the paper provides a description of regulatory evolution in response to the panic of 1907 and the Great Depression, why the regulation put in place then was successful in addressing market failures, but how, over time, especially around the resolutions of Continental Illinois, Savings and Loans crisis and the Long-Term Capital Management, expectations of too-big-to-fail status got anchored. The paper proposes specific reforms to address the four market and regulatory failures we identify, and we conclude with some lessons for emerging markets.
    Keywords: global financial crisis; LTCM; market failures; regulation; emerging markets
    JEL: E44 G15 G18 G21 G24
    Date: 2011–02–08
  13. By: Irina Grosfeld (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Alexander Rodnyansky (CEFIR - Center for Economic and Financial Research - CEFIR); Ekaterina Zhuravskaya (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, NES - New Economic School - NES)
    Abstract: We investigate the long-term effects of the important presence of Jews in Eastern Europe before the Second World War and their disappearance during the Holocaust. The Pale of Settlement, the area which Jewish residents were confined to in the Russian empire is used as a source of exogenous variation in the size of Jewish population before the Second World War. Based on election and survey data, we find that current residents of the Pale (if compared to their counterparts outside the Pale) vote more for socialist anti-market parties, have lower support for market and democracy, are less engaged in entrepreneurship, but exhibit higher levels of trust. At the same time, the Pale has no lasting effects on average consumption, income, and education levels. We show that the effect of the Pale is related to the former presence of Jews rather than the inflow of new migrant population into the formerly-Jewish areas. We suggest two mechanisms behind the effect: the development of persistent anti-market culture and bonding trust among non-Jewish population rooted in ethnic hatred, and the disappearance of the middle class. Regression discontinuity at the Pale border helps identification.
    Keywords: Holocaust ; pale of settlement ; political development ; ethnic animosity ; persistence ; culture
    Date: 2010–10
  14. By: Anton, Sorin Gabriel; Avadanei, Andreea
    Abstract: Considering the last few years, the European Union (EU) has became one of the most competitive and integrated economic regions of the world, following a rapid pace of change as a result of an inspired series of initiatives. The harmonization of the banking and other financial services legislation as component of the EU’ Single Market, the creation of the European Economic and Monetary Union (EMU), alongside the ongoing implementation of the Financial Services Action Plan (FSAP) represent the central drivers of financial integration and the set of elements that have helped reducing the barriers to cross-border trade in banking services. The process of deregulation is another element that facilitated the environment in which technology and other bank strategic determinants have become increasingly important. The scope of the present paper is to analyze the implications of a higher degree of banking integration on firms financing options and choices. This paper is composed of two main parts. The first part focuses to the determinants of European banking integration, analyzing this process since the banking system represents the main financial channel for both the small and medium-sized enterprises and households. The second part concentrates on the effects of banking integration on considered entities’ financial constraints. The concluding remarks outline that retail bank integration has an ambiguous implication on SMEs’ access to credit.
    Keywords: retail banking integration; SMEs; firms’ financing; financial constraints; deregulation
    JEL: G32 G21
    Date: 2010–04–09

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