New Economics Papers
on Business, Economic and Financial History
Issue of 2011‒06‒25
twenty-two papers chosen by

  1. Democratic Dividends: Stockholding, Wealth and Politics in New York, 1791-1826 By Eric Hilt; Jacqueline Valentine
  2. Evolution or revolution? a study of price and wage volatility in England, 1200-1900 By Casson, Catherine; Fry, J. M.; Casson, Mark
  3. The creation of new entities: stakeholders and shareholders in 19th century Italian co-operatives By P. Battilani
  4. Knocking on Heaven's Door? Protestantism and Suicide By Becker, Sascha O.; Woessmann, Ludger
  5. Trade, money, and the grievances of the commonwealth : economic debates in the English public sphere during the commercial crisis of the early 1620’s By Carlos Eduardo Suprinyak
  6. The history of interbank settlement arrangements: exploring central banks’ role in the payment system By Norman, Ben; Shaw, Rachel; Speight, George
  7. Economic Modernization in Late British India: Hindu-Muslim Differences By Timur Kuran; Anantdeep Singh
  8. The Cost of Railroad Regulation: The Disintegration of American Agricultural Markets in the Interwar Period By Giovanni Federico; Paul Sharp
  9. Tariffs dispersion in France between 1850 and 1913, contribution to tariff growth paradox (In French) By Stéphane BECUWE (GREThA, CNRS, UMR 5113); Bertrand BLANCHETON (GREThA, CNRS, UMR 5113)
  10. The Labour Market Impact of the Run on Northern Rock: Continuity and Evolution in an old Industrial Region By Stuart Dawley; Neill Marshall; Andy Pike; Jane Pollard; John Tomaney
  11. Irving Fisher and Price-Level Targeting in Austria: Was Silver the Answer? By Richard C.K. Burdekin; Kris James Mitchener; Marc D. Weidenmier
  12. The long term impact of Vietnam war's veteran on economic governance By Dang, Duc Anh
  13. Rural Tourism Driving Regional Development in Tuscany. The Renaissance of the Countryside By Filippo Randelli; Patrizia Romei; Marco Tortora; Maria Tinacci Mossello
  14. إستعراض للموقف في الصومال ، الجشع ، الاستعمار والآثار الاقتصادية والاجتماعية By Mohamed, Issam A.W.
  15. Demutualization and its Problems By P. Battilani; H. G. Schroter
  16. Portrait of the Economist as a Young Man: Raúl Prebisch’s evolving views on the business cycle and money, 1919-1949 By Matías Vernengo
  17. Educational expansion, earnings compression and changes in intergenerational economic mobility : Evidence from French cohorts, 1931-1976 By Arnaud Lefranc
  18. Japanese management abroad: A literature review and a research agenda By Enrique Yacuzzi
  19. Path dependence in technologies and organizations: a concise guide By Carolina Castaldi; Giovanni Dosi
  20. Corruption and Multinational Companies’ Entry Modes.Do Linguistic and Historical Ties Matter? By Marlene Grande; Aurora A.C. Teixeira
  21. Household's portfolio structure in Germany - analysis of financial accounts data 1959-2009 By Fred Ramb; Michael Scharnagl
  22. An Estimated Fiscal Taylor Rule for the Postwar United States By Christopher Reicher

  1. By: Eric Hilt; Jacqueline Valentine
    Abstract: This paper analyzes the early history of corporate shareholding, and its relationship with political change. In the late eighteenth century, corporations were extremely rare and were dominated by elites, but in the early nineteenth century, after American politics became significantly more democratic, corporations proliferated rapidly. Using newly collected data, this paper compares the wealth and status of New York City households who owned corporate stock to the general population there both in 1791, when there were only two corporations in the state, and in 1826, when there were hundreds. The results indicate that although corporate stock was held principally by the city’s elite merchants in both periods, share ownership became more widespread over time among less affluent households. In particular, the corporations created in the 1820s were owned and managed by investors who were less wealthy than the stockholders of corporations created in earlier, less democratic periods in the state’s history.
    JEL: K22 N21 N41
    Date: 2011–06
  2. By: Casson, Catherine; Fry, J. M.; Casson, Mark
    Abstract: Using annual data 1209-1914, this paper examines whether there are structural breaks in the movements of prices and wages that correspond to the major ‘revolutions’ identified in historical narratives. Econometric modelling of trend and volatility in prices and wages confirms the importance of the Commercial Revolution and the Glorious Revolution, but suggests that the Industrial Revolution may be better described in evolutionary terms. The evidence also points to a late medieval revolution at the time of the Good Parliament, shortly after the Black Death and just before the Peasant’s Revolt. This supports Britnell and Campbell’s commercialisation hypothesis - that the institutional pre-conditions for the Industrial Revolution began to develop at a very early date.
    Keywords: Economic evolution; Economic revolution; Historical economics;
    JEL: N23 E30 N00
    Date: 2011–06–13
  3. By: P. Battilani
    Abstract: The numerous studies made of the persistence of the co-operative movement during the course of the 20th century, have often distinguished between economic efficiency and the ethical values (or ideologies) in questioni, as if the two were separate phenomena moving in parallel directions. However, over the past fifteen years at least two approaches have led to an interweaving of the cultural aspects of co-operation with the question of economic efficiency: the Putnam’s concept of social capital and the property rights model based on the work of Henry Hansmann. In associating myself with an approach, where efficiency is linked with “culture”, I wish to examine the cultural components of the Italian co-operative movement which emerged from three different socio-cultural traditions: liberalism, catholicism and socialism. Despite their differences, all three seem to share what we refer to here as the “ideal of community happiness”, that is the ideal of a collaboration among citizens for the improvement of the standard of living of the whole community. In this paper we will measure the popularity of this culture in the various Italian regions by per capita welfare expenditure in 1880 and 1900. At that time everything spent for helping people in need was given by friendly societies, catholic charities and local councils and nothing came from the central state. Therefore only the spreading of non-profit societies and a proactive attitude by local councils could generate high per capita welfare expenditure. Indeed, such indicator would seem to be closely linked to co-operative expansion during the second half of the 19th century, and would thus appear to provide an explanation for the non-homogeneous geographical distribution of Italian co-operatives. The main conclusion of this essay is that in the early stages the link with the political and cultural movements was crucial not only for the emergence but above all for the viability of cooperative enterprises by reducing the costs associated with collective decision making.
    JEL: N83
    Date: 2011–06
  4. By: Becker, Sascha O. (University of Warwick); Woessmann, Ludger (Ifo Institute for Economic Research)
    Abstract: We model the effect of Protestant vs. Catholic denomination in an economic theory of suicide, accounting for differences in religious-community integration, views about man's impact on God's grace, and the possibility of confessing sins. We test the theory using a unique micro-regional dataset of 452 counties in 19th-century Prussia, when religiousness was still pervasive. Our instrumental-variable model exploits the concentric dispersion of Protestantism around Wittenberg to circumvent selectivity bias. Protestantism had a substantial positive effect on suicide in 1816-21 and 1869-71. We address issues of bias from mental illness, misreporting, weather conditions, within-county heterogeneity, religious concentration, and gender composition.
    Keywords: religion, suicide, Prussian economic history
    JEL: Z12 N33
    Date: 2011–06
  5. By: Carlos Eduardo Suprinyak (Cedeplar-UFMG)
    Abstract: The turbulent, crisis-ridden first half of the 1620’s was a rich period for economic pamphleteering in England, as has been long recognized in the specialist literature. What is less commonly appreciated is that economic reasoning was not, at that time, exclusively confined to the musings of merchants who sought to influence the course of public policy according to their own practical wisdom or corporate interests. In fact, economic distress was then a central topic for public debate throughout English society at large; it figured prominently both in parliament and at court, thus mobilizing most of the kingdom’s economic and political groups. Using a wide array of primary sources – parliamentary debates, Privy Council records, papers and correspondence by public officials – this paper aims to uncover the place occupied by economic reasoning and discourse within the English public sphere during the early 17th century. When seen against this background, it becomes apparent that the pamphlet literature actually came about as a response to a debate which was already well under way – a rather late chapter of which was the famous controversy among Malynes, Misselden and Mun, played out simultaneously in the political arena and in London’s printing houses.
    Keywords: pre-classical economics; mercantilism; 17th century; Stuart England; Thomas Mun.
    JEL: B11 N24
    Date: 2011–06
  6. By: Norman, Ben (Bank of England); Shaw, Rachel (Bank of England); Speight, George (Bank of England)
    Abstract: Modern central banks have come to view payment systems as a key area of strategic interest, both as part of their responsibilities for financial stability and for the implementation of monetary policy. By considering the evolution of interbank settlement arrangements and central banking functions in the context of a number of diverse historical country case studies, this paper seeks to improve understanding of the development of, and reasons for, central banks’ current roles. Starting from a situation where the earliest banks gradually began to accept claims on each other, banks introduced a variety of innovations to clear and settle between themselves more efficiently. Focusing particularly on the lender of last resort function – a key characteristic of a central bank – this paper explores whether institutions at the centre of clearing and settlement arrangements developed central bank-like characteristics.
    Keywords: Monetary history; central banking; payments clearing and settlement
    JEL: N21 N23
    Date: 2011–06–13
  7. By: Timur Kuran; Anantdeep Singh
    Abstract: The Muslims of South Asia made the transition to modern economic life more slowly than the region’s Hindus. In the first half of the twentieth century, they were relatively less likely to use large-scale and long-living economic organizations, and less likely to serve on corporate boards. Providing evidence, this paper also explores the institutional roots of the difference in communal trajectories. Whereas Hindu inheritance practices favored capital accumulation within families and the preservation of family fortunes across generations, the Islamic inheritance system, which the British helped to enforce, tended to fragment family wealth. The family trusts (waqfs) that Muslims used to preserve assets across generations hindered capital pooling among families; they were also ill-suited to profit-seeking business. Whereas Hindus generally pooled capital within durable joint family enterprises, Muslims tended to use ephemeral Islamic partnerships. Hindu family businesses facilitated the transition to modern corporate life by imparting skills useful in large and durable organizations.
    Keywords: India, Islam, Hinduism, capital accumulation, inheritance, partnership, corporation, waqf, economic development
    JEL: N25 N85 K22 O53 P48
    Date: 2010
  8. By: Giovanni Federico (European University Institute, Firenze); Paul Sharp (Department of Economics, University of Copenhagen)
    Abstract: We investigate the costs of transportation regulation using the example of agricultural markets in the United States. Using a large database of prices by state of agricultural commodities, we find that the coefficient of variation (as a measure of market integration between states) falls for many commodities until the First World War. We demonstrate that this reflected changes in transportation costs which in turn in the long run depended on productivity growth in railroads. 1920 marked a change in this relationship, however, and between the First and Second World Wars we find considerable disintegration of agricultural markets, ultimately as a consequence of the 1920 Transportation Act. We argue that this benefited railroad companies in the 1920s and workers in the 1930s, and we put forward an estimate of the welfare losses for the consumers of railroad services (i.e. agricultural producers and final consumers).
    Keywords: market integration; price convergence; United States; agriculture; transportation regulation
    JEL: K23 L51 N5 N7
    Date: 2011–06
  9. By: Stéphane BECUWE (GREThA, CNRS, UMR 5113); Bertrand BLANCHETON (GREThA, CNRS, UMR 5113)
    Abstract: This contribution reveals for the first time to our knowledge, the existence of a dispersion of tariffs of France by origin of goods between 1850 and 1913. If any part of this dispersion results from bias in the constitution of the classifications of General-Table of Trade of France, it nevertheless reveals the existence of discriminatory practices against certain countries for certain products. The principle of this tariff dispersion (which is not specific to France) introduces doubts about the robustness of the empirical work conducted on the theme of the correlation between growth and customs tariff (tariff-growth paradox) and how which was treated the theme of effective protection. We believe it should pave the way for work to reintroduce the country dimension in the study of trade policy late nineteenth century.
    Keywords: trade policy, tariff growth paradox, tariff rates
    JEL: N7
    Date: 2011
  10. By: Stuart Dawley; Neill Marshall; Andy Pike; Jane Pollard; John Tomaney
    Abstract: The Northern Rock mortgage bank was a high profile casualty of the credit crunch in 2007. A longitudinal investigation focused on the redundancy and resettlement of employees at the bank provides a case study of the labour market impact of the banking crisis on the North East of England. An evolutionary geographical political economy approach indicates that Northern RockÕs growth and decline was shaped by its location in an old industrial region, and echoes the historical position of the peripheral region in the spatial division of labour. The Northern Rock case highlights the enduring occupational structure of the regionÕs labour market, and suggests older industrial regions may suffer from a process of Ôoccupational disadvantageÕ that restricts their ability to adapt to economic change.
    Keywords: Financial crisis, Northern Rock, Labour market impact, Evolutionary geographical political economy
    Date: 2011–06
  11. By: Richard C.K. Burdekin; Kris James Mitchener; Marc D. Weidenmier
    Abstract: The question of price level versus inflation targeting remains controversial. Disagreement concerns, not so much the desirability of price stability, but rather the means of achieving it. Irving Fisher argued for a commodity dollar standard where the purchasing power of money was fixed by indexing it to a basket of commodities. We show that movements in the price of silver closely track the movements in overall prices during the classical gold standard era. The one-to-one relationship between paper and silver bonds suggests that a simple “silver rule" could have sufficed to fix the purchasing power of money.
    JEL: E31 E4 E58 N1 N33
    Date: 2011–06
  12. By: Dang, Duc Anh
    Abstract: I investigate the effects of Vietnam War’s veteran on long run economic development in Vietnam. Using a unique dataset containing the number of war invalids at province levels, I find the number of war invalids from each province to be an important determinant of its current economic performance. To correct for potential biases arising from reverse causality, measurement error and unobservable province characteristics, I use an instrumental variable approach exploiting distance to the 17th parallel demilitarized zone. I also find that the importance of the war invalids for contemporary development is a result of its impacts on overall provincial economic governance and other disaggregated economic institutions, such as the pro-activity of provincial leadership, the quality of the legal institutions and services supporting business development.
    Keywords: War invalids, economic governance, economic development, Vietnam
    JEL: O10 O43
    Date: 2010–01–01
  13. By: Filippo Randelli (Università degli Studi di Firenze, Dipartimento di Scienze Economiche); Patrizia Romei (Università degli Studi di Firenze, Dipartimento di Scienze Economiche); Marco Tortora (Università degli Studi di Firenze, Dipartimento di Scienze Economiche); Maria Tinacci Mossello (Università degli Studi di Firenze, Dipartimento di Scienze Economiche)
    Abstract: After the crisis of the traditional agricultural system in the 50’s, starting from the 80’s rural tourism is driving the renaissance of Tuscan countryside. The empty spaces of rural areas, which characterise the agricultural landscape, show a new set of functions developed by and for the tourist field. The Tuscany Region was the first Italian region to recognize the new trend of the integrated rural development so that in 1985 it stated the first regional law on agritourism. In this context Tuscany is the one of the first Italian and European regions committed to the development of rural areas. This paper recognizes the leading role of Tuscany in the development of rural areas and tourism and shows the relationships between tourism and local sustainable development in rural areas through a case study. In the first part there is a historical analysis of the evolution of the tourism in rural areas, of the strengths of the Tuscan model in this field, and of the relationship between identity and local resources for the sustainable development of tourism (the topic of rural tourism may be analyzed from a local development point of view). In the second part there is the introduction of a case study developed in a rural area characterized by the “typical” Tuscan landscape, the presence of art cities, and a high-quality supply of services and products such as food and wine. The analysis is based on quantitative and qualitative methodologies that helped us outline the network of tourist centres and study tourism in rural Tuscany. Then there is an analysis of competition capacities and potentialities of the local area to understand if and how these depend more or less on the network structure or on local resources. At the end the paper underlines the strengths and weaknesses of rural tourism in Tuscany, one of the leading region of the European project NECSTOUR, and outlines possible future regional policies in support of the sector.
    Keywords: rural tourism, regional development, sustainable tourism, Tuscany
    JEL: O18 Q26 Q56 R11
    Date: 2011
  14. By: Mohamed, Issam A.W.
    Abstract: In a country that lost all feasible authorities for over twenty years economic future seems gloomy. No feasible economic solutions are seen. The paper review auspices of the Somalian tragedy and retort history of its last dictatorship, Siad Barri, the following civil conflict and the process of the present total war, everyone against everyone. Socioeconomic impacts are discussed along with the education situation and state human capital there.
    Keywords: Somalia; Internal Disputes; Civil War; Socioeconomic Impacts
    JEL: H5 A2 A29 A10 I2 A13 A12 H75 H7 H56 H52 N4
    Date: 2011
  15. By: P. Battilani; H. G. Schroter
    Abstract: Over the last three decades cooperatives experienced acceleration of institutional innovation with the introduction of many variations to the reference model. It is certainly not surprising that coops changed their organizational structure over time to face the challenges of world. In the United States and in Canada they are commonly referred to as New generation cooperatives, in Italy and Spain as cooperative groups or network of cooperatives. One of the main feature of these new organizational structures is their attempt to take some advantages of the investor oriented firms (above all in capital raising activities) while retaining the mutual/cooperative status. Many of these changes have been undertaken to facilitate the growth of the enterprises both in domestic market and abroad. Due to the wideness of the phenomenon we could name the last three decades the age of hybridization. However in some cases the search for new structures went further and assumed the aspect of conversion of mutuals into stock firms. Our paper will deal with this latter part of the story, focusing on cooperatives that preferred conversion or demutualization to hybridization. The paper describes the chronology and the geography of demutualization and analyses the forces that drove it over the last decades. The main conclusion is that demutualization provided solutions for real problems, as hybridization did, however the choice between these two options seems to have been more a matter of ideology than of efficiency.
    JEL: N80
    Date: 2011–06
  16. By: Matías Vernengo
    Abstract: This paper provides a rejoinder to Colander, Holt and Rosser (2010) strategy to win friends and influence mainstream economics. It is suggested that their strategy is counter-productive, and while it might gain them friends, it will not lead to increased influence of heterodox ideas within what they term the cutting edge of the profession. It is argued that their failure to understand the nature of heterodoxy, and the reason for the eclecticism of the mainstream, associated to the rise of vulgar economics, undermines their arguments.
    Keywords: Methodology, Heterodox Economics JEL Codes: B49, B59
    Date: 2011
  17. By: Arnaud Lefranc (THEMA, Universite de Cergy-Pontoise)
    Abstract: This paper analyzes long-term trends in intergenerational earnings mobility in France. I estimate intergenerational earnings elasticities for male cohorts born between 1931 and 1975. This time period has witnessed important changes in the French labor market and educational system, in particular a large expansion in access to secondary and higher education as well as an important compression of earnings differentials. Intergenerational mobility is estimated using a two-sample instrumental variables approach. Over the period, intergenerational earnings mobility exhibits a V-shaped pattern. Mobility falls between cohorts born in the mid 1930s and those born in the mid 1950s, but subsequently rises. For cohorts born in the first half of the 1970s, age-adjusted intergenerational earnings elasticity amount to around .55. This value is significantly higher than the elasticity estimated for the baby-boom cohorts. It is also slightly lower than the elasticity estimated for cohorts born in the 1930s but the difference is not statistically significant. Changes in the extent of mobility mostly reflects the evolution of cross-section earnings inequality, rather than variations in positional mobility.
    Keywords: Intergenerational mobility, earnings, inequality, trends, elasticity, correlation, education, France.
    JEL: D1 D3 J3
    Date: 2011
  18. By: Enrique Yacuzzi
    Abstract: The purpose of this review is to evaluate the status of scholarly research on Japanese management as it is applied outside Japan. The first part of the review deals with the concept of Japanese management. The second part aims at understanding how Japanese management is applied in foreign countries, both at subsidiaries of Japanese corporations and in non-Japanese firms; in particular, the issue of transferability of concepts and techniques is considered in detail. Primarily EBSCO databases were used, but other sources were consulted as well. A set of seven steps was used to organize the literature search, analysis, and report. These steps, presented in a section on methodology, are: 1. Rationale; 2. Sampling results; 6. Interpretations, limitations, and implications; and 7. Reporting the review. There is general agreement among different authors on the main tenets of Japanese management (especially those referred to Human Resources Management) and on the ability of firms--Japanese and non-Japanese alike--to use some practices of Japanese management in foreign lands; in particular, the Japanese production management "paradigm" seems to travel everywhere with the Japanese. An attempt is made to detect changes in the nature of themes studied by scholars through the years. To this end a number of variables is explicitly considered for a subset of the literature. While most variables seem to be receiving the same amount of attention from scholars through time, the issue of corporate governance seems to be getting more attention in recent years. On the basis of the literature search, the final part of the paper provides a sketch of a general research agenda. Methodological appendices are provided, as well as a reference list.
    Keywords: Japanese management, Japanese management abroad, transferability of Japanese management, international corporations, multinational corporations, Japanese multinational corporations.
    JEL: F23 M10 M11 M12 M14 P51
    Date: 2011–04
  19. By: Carolina Castaldi; Giovanni Dosi
    Abstract: The note on which an entry for the Palgrave Encyclopedia of Strategic Management will draw offers a beginner’s guide to path dependency in technologies and organizations. We address the very meaning of the concept and its centrality in various aspects of economic analysis. We outline the various levels of the economic system where it is observable, its sources, consequences and different formal representations of path dependent processes.
    Keywords: path dependence, lock-in, organizations, technologies
    Date: 2011–06
  20. By: Marlene Grande (Faculdade de Economia do Porto, Universidade do Porto); Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia do Porto, Universidade do Porto; INESC Porto; OBEGEF)
    Abstract: Extant literature on FDI entry modes and corruption tend to convey the idea that corruption leads to the choice of low equity, i.e. joint-ventures with local partners, or non-equity modes, namely export and contracting, in order to avoid the contact with corrupt state officials. Recently, some studies argument that despite corruption, linguistic and historical ties between home and host countries guide MNCs to prefer high equity modes. Focusing on a rather unexplored setting, the African countries, most specifically the PALOP (Países Africanos de Língua Oficial Portuguesa), which includes countries with both very high (e.g., Guinea-Bissau, and Angola), high (e.g., Mozambique, Sao Tome and Principe) and middle (e.g., Cape Verde) levels of corruption, and that maintain quite close linguistic and historical ties with Portugal, we found that FDI entry mode is associated to the less corrupt markets. Thus, our results do not support the content that cultural and historical links are likely to perform an intermediating role in helping, through fostering foreign direct investment, African countries to overpass the dismissal growth that some have been facing in the last decades. On the contrary, our findings highlight the pressing need for these countries to combat corruption if higher economic growth via FDI attraction is envisioned.
    Keywords: Corruption, Emerging Economies, Entry mode
    JEL: F21 F23 K42
    Date: 2011–06
  21. By: Fred Ramb (Sadly recently deceased researcher at Deutsche Bundesbank.); Michael Scharnagl (Deutsche Bundesbank, Wilhelm-Epstein-Str. 14, D-60431 Frankfurt am Main, Germany.)
    Abstract: Based on a Financial Almost Ideal Demand System (FAIDS), this paper investigates the wealth structure of German households. The long-run wealth elasticities and interestrate elasticities were calculated using a unique new quarterly financial accounts macrodata set which covers the period from 1959 to 2009 and contains a portfolio of eight different financial assets. Descriptive analysis shows that all financial assets were characterized by substantial volatility of their weight in the portfolio of households. We found that portfolio shifts in the long run are determined significantly by changes in interest rates. The estimated model provides evidence that currency (and transferable deposits) is mainly a substitute for other assets and time deposits are typically a complement. Wealth elasticity is for most assets around unity. JEL Classification: E21, G11, C32.
    Keywords: Financial wealth, portfolio structure, household.
    Date: 2011–06
  22. By: Christopher Reicher
    Abstract: This paper documents the systematic response of postwar U.S. fiscal policy to fiscal imbalances and the business cycle using a multivariate Fiscal Taylor Rule. Adjustments to taxes and purchases both account for a large portion of the fiscal response to debt, while authorities seem reluctant to adjust transfers. As expected, taxes are highly procyclical; purchases are acyclical; and transfers are countercyclical. Neither pattern has changed much over time, except that adjustment happens more slowly after 1981 than before 1980. The role of adjustments to purchases in stabilizing the debt indicates that the recent discussion about spending reversals is highly relevant
    Keywords: Spending reversals, Fiscal Taylor Rule, deficits, fiscal policy, taxes, spending, transfer payments
    JEL: E62 E63 H20 H62
    Date: 2011–05

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