nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2011‒04‒09
eleven papers chosen by
Bernardo Batiz-Lazo
Bangor University

  1. Cosmopolitanism and Democratic Freedom By Hauke Brunkhorst
  2. Where it all began: lending of last resort and the Bank of England during the Overend-Gurney panic of 1866 By Marc Flandreau; Stefano Ugolini
  3. Institutions, property rights, and economic development in historical perspective By Luis Angeles
  4. "Minsky's Money Manager Capitalism and the Global Financial Crisis" By L. Randall Wray
  5. Measuring Human Capital in Japan By MIYAZAWA Kensuke
  6. The Great Inflation: Did the Shadow Know Better? By William Poole; Robert H. Rasche; David C. Wheelock
  7. El turismo, motor fundamental de la economía de Cataluña (1951-2010) By Jordi Maluquer de Motes
  8. Breve ou Longo? Um estudo comparativo entre as contribuições de Hobsbawm e Arrighi para a interpretação da História Econômica do século XX By Souza, Luiz Eduardo Simões de
  9. Keeping Up With Fashion: Recent Trends in the Subfields of Study of Doctoral Students in Economics By Sheng Guo; Jungmin Lee
  10. UK Fiscal Policy Sustainability, 1955-2006 By Fan, Jingwen; Arghyrou, Michael G
  11. Alternative indices of political freedoms, property rights, and political instability for Zambia By J.W. Fedderke; I. Lourenco; F. Gwenhamo

  1. By: Hauke Brunkhorst
    Abstract: Cosmopolitanism has a long history. Yet there is a great difference between classical and modern cosmopolitanism. Whereas the latter is an ideology of the classical empire that is grounded in a hierarchical society, modern cosmopolitanism is based on egalitarian and individualistic premises, and is related closely to the constitutional law and the ideological justification of the nation state and its imperial cravings. Whereas the modern nation state in a way has solved the fundamental religious, political and socio-economic crises of modernity within its boarders (at least in the western hemisphere), its greatest advance, the exclusion of inequalities, was at the price of the exclusion of the internal other: of blacks, workers, women, etc., and the other that stemmed from the non-European world that furthermore was under European colonial rule or other forms of European, North-American, or Japanese imperial control. Yet, the wars and revolutions of the 20th century led to a complete reconstruction, new foundation and globalization of all national and international law. The evolutionary advances of the 20th century consisted in the emergence of world law, and this finally enabled the normative (not necessarily factual) construction of international and national welfarism. Nevertheless the dialectic of enlightenment came back again and led to new forms of postnational domination, hegemony, oppression and exclusion, and the emergence of a new formation of transnational class rule. In the final section the possibilities of a democratic ‘Reform nach Prinzipien’ (Kant) are considered.
    Keywords: differentiation; globalization; internationalism; law; European law; legal culture; supranationalism
    Date: 2011–03–15
  2. By: Marc Flandreau (Graduate Institute of International and Development Studies, Geneva); Stefano Ugolini (Scuola Normale Superiore, Pisa)
    Abstract: The National Monetary Commission was deeply concerned with importing best practice. One important focus was the connection between the money market and international trade. It was said that Britain’s lead in the market for “acceptances” originating in international trade was the basis of its sterling predominance. In this article, we use a so-far unexplored source to document the portfolio of bills that was brought up to the Bank of England for discount and study the behavior of the Bank of England during the crisis of 1866 (the so-called Overend-Gurney panic) when the Bank began adopting lending of last resort policies (Bignon, Flandreau and Ugolini 2011). We compare 1865 (a “normal” year) to 1866. Important findings include: (a) the statistical predominance of foreign bills in the material brought to the Bank of England; (b) the correlation between the geography of bills and British trade patterns; (c) a marked contrast between normal times lending and crisis lending in that main financial intermediaries and the “shadow banking system” only showed up at the Bank’s window during crises; (d) the importance of money market investors (bills brokers) as chief conduit of liquidity provision in crisis; (e) the importance of Bank of England’s supervisory policies in ensuring lending-of-last-resort operations without enhancing moral hazard. An implication of our findings is that Bank of England’s ability to control moral hazard for financial intermediaries involved in acceptances was another reason for the rise of sterling as an international currency.
    Keywords: Financial crises, lending of last resort, history of monetary policy, shadow banking system, banking supervision.
    JEL: E42 E58 N13
    Date: 2011–03–29
  3. By: Luis Angeles
    Abstract: Institutions, and more specifically private property rights, have come to be seen as a major determinant of long-run economic develop- ment. We evaluate the case for property rights as an explanatory factor of the Industrial Revolution and derive some lessons for the analysis of developing countries today. We pay particular attention to the role of property rights in the accumulation of physical capital and the pro- duction of new ideas. The evidence that we review from the economic history literature does not support the institutional thesis.
    Keywords: Institutions and Economic Development; Property Rights; Industrial Revolution; long-run growth.
    JEL: O43 O34 N33
    Date: 2011–02
  4. By: L. Randall Wray
    Abstract: The world's worst economic crisis since the 1930s is now well into its third year. All sorts of explanations have been proffered for the causes of the crisis, from lax regulation and oversight to excessive global liquidity. Unfortunately, these narratives do not take into account the systemic nature of the global crisis. This is why so many observers are misled into pronouncing that recovery is on the way-or even under way already. I believe they are incorrect. We are, perhaps, in round three of a nine-round bout. It is still conceivable that Minsky's "it"-a full-fledged debt deflation with failure of most of the largest financial institutions-could happen again. Indeed, Minsky's work has enjoyed unprecedented interest, with many calling this a "Minsky moment" or "Minsky crisis." However, most of those who channel Minsky locate the beginnings of the crisis in the 2000s. I argue that we should not view this as a "moment" that can be traced to recent developments. Rather, as Minsky argued for nearly 50 years, we have seen a slow realignment of the global financial system toward "money manager capitalism." Minsky's analysis correctly links postwar developments with the prewar "finance capitalism" analyzed by Rudolf Hilferding, Thorstein Veblen, and John Maynard Keynes-and later by John Kenneth Galbraith. In an important sense, over the past quarter century we created conditions similar to those that existed in the run-up to the Great Depression, with a similar outcome. Getting out of this mess will require radical policy changes no less significant than those adopted in the New Deal.
    Keywords: Hyman Minsky; Hilferding; Veblen; Keynes; John Kenneth Galbraith; Financial Crisis; Minsky Crisis; Minsky Moment; Finance Capitalism; Money Manager Capitalism; Debt Deflation; Can It Happen Again?
    JEL: B22 B25 B52 E11 E12 E44 G18 G20 G21
    Date: 2011–03
  5. By: MIYAZAWA Kensuke
    Abstract: This paper measures human capital development in the Japanese workforce after WWII. An increase in workers' years of schooling is believed to have aided Japan's economic growth after WWII. The development of human capital has acquired increasing importance for Japan's future economic growth given its aging population. To quantify these historical and forward-looking contributions of human capital, we construct a dataset that incorporates the distribution of workers' years of schooling by employing data covering workers and students. We transform years of schooling into a measure of human capital by using a nonlinear Mincer-type wage function. We find that workers' average years of schooling increased dramatically during the 1950s and 1960s. While this increase in human capital could explain much of Japan's economic growth during these decades, education policies have limited prospects for contributing to Japan's future economic growth.
    Date: 2011–03
  6. By: William Poole; Robert H. Rasche; David C. Wheelock
    Abstract: The Shadow Open Market Committee was formed in 1973 in response to rising inflation and the apparent unwillingness of U.S. policymakers to implement policies necessary to maintain price stability. This paper describes how the Committee’s policy views differed from those of most Federal Reserve officials and many academic economists at the time. The Shadow argued that price stability should be the primary goal of monetary policy and favored gradual adjustment of monetary growth to a rate consistent with price stability. This paper evaluates the Shadow’s policy rule in the context of the New Keynesian macroeconomic model of Clarida, Gali, and Gertler (1999). Simulations of the model suggest that the gradual stabilization of monetary growth favored by the Shadow would have lowered inflation with less impact on output growth and less variability in inflation or output than a one-time reduction in monetary growth. We conclude that the Shadow articulated a policy that would have outperformed the policies actually implemented by the Federal Reserve during the Great Inflation era.
    JEL: E31 E32 E37 E41 E52 E58
    Date: 2011–03
  7. By: Jordi Maluquer de Motes (Departament d'Economia i d'Història Econòmica, Universitat Autònoma de Barcelona)
    Abstract: This work outlines the basic dimensions of Catalonia’s economic activities associated to incoming tourism from 1951 until 2010. It analyzes its characteristics from a macroeconomics perspective and with a comparative approach. It shows the transformation from the sun and beach model that defined the initiation stage of mass tourism into a much more diversified tourism destination, with an increasing relevance of the Barcelona conurbation. This transformation has provided for a positive adaptation to the segmentation experimented by international tourism demand. Foreign tourism has given Catalonia its Spanish and European leadership and it has become its main engine of economic growth.
    Keywords: Catalan Economy, Economic Growth, Mass Tourism, Role of Tourism in Regional Economies, Tourism Impact, Economía Catalana, Crecimiento Económico, Turismo de Masas, Función del Turismo en las Economías Regionales, Impacto del Turismo
    Date: 2011–03
  8. By: Souza, Luiz Eduardo Simões de
    Abstract: This study aims to conduct a comparative study between the visions of Eric Hobsbawm and Giovanni Arrighi on the economic transformations of the twentieth century. In our view, there are differences in methodology and approach which makes the comparison a matter of methodological discussion in Economic History. Hobsbawm, for example, maintains an understanding of the twentieth century as a brief period, limited primarily by the dispute between the U.S. and the USSR for world supremacy. The historical milestones for Hobsbawm would be the First World War (1914 - 1918) and the end of the USSR (1991). According to Arrighi, the focus would be on the assertion of American supremacy and consolidation of systems designated from the mid-nineteenth century. Besides the obvious difference of approaches and frameworks, there is more to discuss methodically - especially in the field of understanding of economic history – from both authors. This thread runs through processes such as military-political expansion and technological revolutions of the period.
    Keywords: Economic History; Contemporary History; World-Systems; Eric Hobsbawm; Giovanni Arrighi
    JEL: N01 N0
    Date: 2010–04–10
  9. By: Sheng Guo (Department of Economics, Florida International University); Jungmin Lee (School of Economics, Sogang University)
    Abstract: We conduct an analysis of recent trends on the subfields of study that doctoral students in economics choose for their dissertations. By investigating data on the JEL classification codes of dissertations reported by the Journal of Economic Literature from 1991 to 2007, we find that the trends in the subfields of study of doctoral dissertations follow those of articles published at five major general-interest journals (American Economic Review, Quarterly Journal of Economics, Journal of Political Economy, Review of Economic Studies, and Review of Economics and Statistics). In particular, the co-movement pattern is salient in subfields such as Microeconomics (D), Health, Education, and Welfare (I), and Economic Development and Growth (O). Our findings suggest that the fashion exhibited in the top-notch research journals is one of the most influential factors when doctoral students choose a subfield.
    Keywords: Economics Research, Doctoral Dissertation, Journal Publication, Ph.D. Economist, Economics Job Market
    JEL: A11 A14 A20 J44
    Date: 2011–03
  10. By: Fan, Jingwen (Cardiff Business School); Arghyrou, Michael G (Cardiff Business School)
    Abstract: We test for fiscal policy sustainability in the UK for the period 1955-2006. We find evidence of sustainability with three structural breaks, respectively occurring in the early 1970s, early 1980s and late 1990s. UK fiscal policy has been sustainable throughout the sample period except from 1973-1981 when a non-Ricardian regime applied. For the remaining periods correction of fiscal disequilibrium occurs through adjustments in public revenue rather than expenditure. Finally, we find evidence of non-linear fiscal adjustment, with UK authorities not reacting to relatively small deficits; but correcting exceedingly large deficits and any temporary surpluses relatively fast.
    Keywords: Fiscal policy; Sustainability; UK; Structural breaks; Non-linear adjustment
    JEL: E62 H60
    Date: 2011–03
  11. By: J.W. Fedderke; I. Lourenco; F. Gwenhamo
    Abstract: This paper presents new institutional measures for Zambia. Coverage is of political rights and freedoms, of property rights, and of political instability. The sample period is from 1947 to 2007. Comparison of the indices with directly comparable Zimbabwean and Malawian series, shows strong sources of divergence in institutional conditions. The paper also considers interaction amongst the institutional measures, and between the institutional measures and measures of economic development. We find that there is an association among the institutional variables, with the various rights dimensions moving together, and being negatively associated with political instability. The evidence further suggests that the institutional measures are associated benevolently with economic development. In this sense the indicators of the present paper therefore conform to the precepts of the new institutional economics
    Keywords: Institutions, Political freedom, Property rights, Political Instability and Zambia
    JEL: K00 N4 O1
    Date: 2011

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