nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2011‒10‒22
twenty papers chosen by
Bernardo Batiz-Lazo
Bangor University

  1. Anthropometric history of the Iberian world. lessons we have learned By José Miguel Martínez-Carrión
  3. “Economic freedom” and economic growth: questioning the claim that freer markets make societies more prosperous By Cohen, Joseph N
  4. Taxes, lawyers, and the decline of witch trials in France By Johnson, Noel D; Koyama, Mark
  5. Past dominations, current institutions and Italian regional economic performance By Adriana Di Liberto; M. Sideri
  6. In quest of the stages of renewal of French entrepreneurship in the years 1950s-2000s (In French) By Hubert BONIN (GREThA, CNRS, UMR5113 - IEP BORDEAUX)
  7. Islamic republic of Iran and Its Opposition By Mehrdad Vahabi; Mohajer Nasser
  8. The Democratic Transition By Murtin, Fabrice; Wacziarg, Romain
  9. Appropriating the Environment. How the European Institutions Received the Novel Idea of the Environment and Made it Their Own. By Jan-Henrik Meyer
  10. (Re)financing the Slave Trade with the Royal African Company in the Boom Markets of 1720 By Gary S. Shea
  11. Grossman-Hart (1986) Goes Global: Incomplete Contracts, Property Rights, and the International Organization of Production By Antràs, Pol
  12. Labour market dynamics in Canada, 1891-1911: A first look from new census samples By Kris Inwood; Chris Minns; Mary MacKinnon
  13. Historical Patterns Based on Automatically Extracted Data: the Case of Classical Composers By Karol Jan BOROWIECKI; John W. O'HAGAN
  14. El rol del mercado de capitales y las fuentes de financiamiento de infraestructura en México By Javier Villa Zárate
  15. Law and finance in Africa By Simplice A., Asongu
  16. LOCATION DETERMINANTS OF FDI: A LITERATURE REVIEW By Susana Assunção; Rosa Forte; Aurora A. C. Teixeira
  17. Beyond Banks and Stocks: A Study of Industrial Mortgages for the City of São Paulo, Brazil (1866-1914) By Gustavo S. Cortes; Renato L. Marcondes; Maria Dolores M. Diaz
  18. The Tax Reform Act of 1986: Comment on the 25th Anniversary By Martin S. Feldstein
  19. 130 years of fiscal vulnerabilities and currency crashes in advanced economies By Fratzscher, Marcel; Mehl, Arnaud; Vansteenkiste, Isabel
  20. Inequalities' Impacts: State of the Art Review By Brian Burgoon; Bea Cantillon; Giacomo Corneo; Marloes Graaf-zijl; Tony Fahey; Horn, D.; Bram Lancee; Valkana Lesseva; Virginia Maestri; Ive Marx; Abigail Mcknight; Márton Medgyesi; Elena Meschi; Michelle Norris; Brian Nolan; Veruska Oppedisano; Olivier Pintelon; Wiemer Salverda; Francesco Scervini; Herman Werfhorst; Mechelen, N. Van; Tim Rie; Verbist, G.; Christopher Whelan; Nessa Winston

  1. By: José Miguel Martínez-Carrión (Departamento de Economía Aplicada. Facultad de Economía y Empresa, Universidad de Murcia)
    Abstract: Recent research of anthropometric history within the Iberian world shed new light on trends in nutritional status, health, living standards, and biological welfare since ancient times. It has been shown that nutrition was not worse during the middle Ages than at the beginning of modern times, and that the height of the Portuguese and Spaniards did not differ much from that enjoyed by other Europeans in the Age of Enlightenment. At the beginning of industrialization height deteriorated in both countries, earlier in Spain than in Portugal, between 1840 and 1900 recruitments. Since then, human growth has been spectacular. Spaniards height grew 13 cm between 1880 and 1980 cohorts while Portuguese height increased 9 cm during the same period, the latter being somewhat higher in 1880. The advance of biological welfare in Spain is more meaningful, knowing the height decline occurred in the generations born by 1920s -recruits who lived the Civil War and its aftermath. The explosion of human growth in the twentieth century, especially after World War II, is explained by the importance of environmental changes such as improved income and diet, the unstoppable advance of life expectancy, the mortality decline during childhood, the family care for children, as well as the almost complete reduction of child labor. In addition, the relationship between the human height and the main indicators of welfare suggest the importance of public health policies and education in well-being improvements.
    Keywords: Height, human growth, biological wellbeing, Spain, Portugal, Iberian
    JEL: I31 N33 N34 O15
    Date: 2011–10
  2. By: Carlos Eduardo Suprinyak
    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
    Date: 2011
  3. By: Cohen, Joseph N
    Abstract: A conventional reading of economic history implies that free market reforms rescued the world’s economies from stagnancy during the 1970s and 1980s. I reexamine a well-established econometric literature linking economic freedom to growth, and argue that their positive findings hinge on two problems: conceptual conflation and ahistoricity. When these criticisms are taken seriously, a very different view of the historical record emerges. There does not appear to be enduring relationship between economic liberalism and growth. Much of the observed relationship between these two variables involves a one-shot transition to freer markets around the Cold War’s end. Several concurrent changes took place in this historical context, and it is hasty to conclude that it was market liberalization alone that produced the economic turnaround of the 1990s and early-2000s. I also question market fundamentalists’ view that all forms of liberalization are helpful, arguing that the data show little to no benefit from reforms that did not attract foreign investment.
    Keywords: Economic Growth; Economic Freedom; Economic Liberalization; Economic Development; Foreign Investment; Market Fundamentalism; Inflation; Governance
    JEL: P11 P17 O21 E61 O4
    Date: 2011–09–27
  4. By: Johnson, Noel D; Koyama, Mark
    Abstract: This paper explores the rise of the fiscal state in the early modern period and its impact on legal capacity. To measure legal capacity, we establish that witchcraft trials were more likely to take place where the central state had weak legal insti- tutions. Combining data on the geographic distribution of witchcraft trials with unique panel data on tax receipts across 21 French regions, we find that the rise of the tax state can account for much of the decline in witch trials during this period. Further historical evidence supports our hypothesis that higher taxes led to better legal institutions.
    Keywords: Rule of Law; Witchcraft; France; Institutions; Fiscal Capacity; Legal Capacity
    JEL: K0 H2 P48 K14 N43
    Date: 2011–10–21
  5. By: Adriana Di Liberto; M. Sideri
    Abstract: In this paper we study the connection between economic performance and the quality of government institutions for the sample of 103 Italian NUTS3 regions. We include new measures of institutional quality calculated using data on the provision of four areas of public services - health, education, environment and energy. We depart from the vast literature that examines the role of different formal institutions on economic development and investigate if the quality of the same governing institutions matters for productivity. To get through likely endogeneity problems we focus on history to find good instruments. We firstly concentrate on the Spanish period that has been often portrayed by historians as having negatively affected the dominated areas through its legacy of inefficient bureaucracy. Secondly, unlike previous studies that are usually based on specific historical events, we collect data for all different dominations that governed each Italian province over seven centuries before the creation of the unified Italian State. Our results suggest a significant role of past historical institutions on the current public administration efficiency and, most of all, confirm that the latter matters for explaining region’s economic performance, with institutional quality differences explaining more than 20% of the observed differences in productivity levels. Our results are robust to the inclusion of different sets of controls, instruments and the use of different measures of regional economic performance.
    Keywords: economic development; quality of institutions; history
    JEL: O43 O11
    Date: 2011
  6. By: Hubert BONIN (GREThA, CNRS, UMR5113 - IEP BORDEAUX)
    Abstract: Having already fixed the arguments about French entrepreneurship in a previous on a long term scope, we focus our paper on the French syndrome about low entrepreneurship throughout the challenges of the rebuilding of economic power and growth after WWII within the framework of planification, at times when the very substance of economic elites was at stake among the business associations, the regional communities of business and the state economic apparel. The 1960s-1970s seemed to foster a balance between from a “from the top approach” and a “from the basis” renewal of entrepreneurship, thanks to new layers of entrepreneurial bourgeoisies, either family business or transfers from the state system – France being supposed to become the “South Korea of Europe”. But the crisis of the 1970s-1990s shook this regarnished confidence: doubtful elites reconsidered the “French model” along issues of differenciation and competitiveness, within the mindsets of “eurosclerosis” and a specific type of “declinism”. We’ll thus ponder the evolution of entrepreneurial reactivity throughout the dismantle of traditional family business and industries and the upsurge of new productive models; and once more tackle the argument about the role of the state in fuelling entrepreneurship and about the ever-dreamed rebirth of “productive districts” and creative communities of entrepreneurship.
    Keywords: Enterprise, businessmen, economic regions, corporate strategy, productive system, industrial and services specialisation
    JEL: L26 L20 N84
    Date: 2011
  7. By: Mehrdad Vahabi (EA - ERASME-Economie Politique Internationale - Université Paris VIII Vincennes-Saint Denis : EA); Mohajer Nasser (EA - ERASME - Université Paris VIII Vincennes-Saint Denis : EA)
    Abstract: This paper takes a stylized paradoxical fact of Iranian politics under the Islamic Republic of Iran as its starting point: the stark confusion between the position and a good portion of the opposition. Such a blurred frontier between 'position' and 'opposition' did not exist during the Shah's regime. Without the decisive support of non-Islamic organizations, secular intellectuals, and political forces on the ground, the creation of a theocratic regime in Iran and its consolidation could not be realized. Now in the thirtieth anniversary of the Islamic Republic, the open opposition of many influential clergies towards the way in which government is run under the present Supreme Leader and President Ahmadinejad, provides a new episode of 'opposition' within the theocrats' circles. To put this paradoxical fact differently, it should be emphasized that no regime in Iran's modern history has produced so much 'opposition' within its own ranks and enjoyed the loyalty of its 'oppositions' at the same time. How could this paradox be explained? Our paper tackles this issue by describing the peculiar type of social order under the Republic Islamic of Iran as ordered anarchy or "destructive coordination". Analysing the sources of this type of coordination, we proceed in two steps. The first is to question whether there has ever been a laic or secular movement in the recent Iranian history. The second consists in defining the institutional setup and recent dynamics of the Islamic Republic of Iran as a strange, if not unique, mutant of Huntington's Praetorian state, led by 'priests' and armed religious militants.
    Keywords: secularism, destructive coordination, contradictory orders, parallel institutions, Islamic Republic of Iran
    Date: 2011
  8. By: Murtin, Fabrice; Wacziarg, Romain
    Abstract: Over the last two centuries, many countries experienced regime transitions toward democracy. We document this democratic transition over a long time horizon. We use historical time series of income, education and democracy levels from 1870 to 2000 to explore the economic factors associated with rising levels of democracy. We find that primary schooling, and to a weaker extent per capita income levels, are strong determinants of the quality of political institutions. We find little evidence of causality running the other way, from democracy to income or education.
    Keywords: democracy; GMM; human capital; modernization
    JEL: N30 N40 O43
    Date: 2011–10
  9. By: Jan-Henrik Meyer
    Abstract: Environmental policy has become an important area of European Union (EU) policy making, even though it had not originally been foreseen in the Treaty of Rome. Its emergence in the early 1970s can be understood as a result of a transfer of the novel policy idea of the environment to the European level. This paper thus inquires into the emergence of a European environmental policy from a diffusion of ideas perspective. Rather than focusing on multi-level policy making it seeks to trace the diffusion of environmental ideas from the level of international organizations to the European Communities (EC) in the early 1970s. It analyzes how and why these new concepts were taken up by the European Communities and adapted to the specific institutional framework of the EC. Starting with a brief introduction into the historical context, the paper first explores the origins of the notion of the environment as a political concept emerging in the context of international organizations at the time. Secondly, an analysis of the first Environmental Action Programme of 1973 will be used to show how the EC conceptualized the environment, including the definition of problems and potential remedies. Thirdly, the origins of these ideas will be traced back to international models, from the UNESCO conference Man and the Biosphere in 1968 onwards. In a final step, the paper tries to explain the diffusion and reception of ideas. It examines how these ideas were received by the EC, which actors were involved in this process, and which mechanisms of diffusion played a role. The goal is thus to make a contribution to the debate about the transnational diffusion of ideas.
    Keywords: environmental policy; Europeanization; Europeanization
    Date: 2011–09–21
  10. By: Gary S. Shea
    Abstract: In 1720, subscription finance and its attendant financial policies were highly successful for the Royal African Company. The values of subscription shares are easily understandable using standard elements of derivative security pricing theory. Sophisticated provision for protection of shareholder wealth made subscription finance successful; its parallels with modern innovated securities are demonstrated. A majority of Company shareholders participated in the re-financing, but could provide only a small portion of the new equity required. The re-financing attracted to the subscription an investment class that was strongly composed of parliamentary and aristocratic elements, but appeared to be only weakly attractive to persons who had already invested in the East India Company and was not attractive at all to Bank of England investors or to those persons who were investing in newly created marine insurance companies. Subsequent trade in subscription shares was more intense than was other share trading during the South Sea Bubble, but the trade was only lightly served by financial intermediaries. Professional financial intermediaries did not form densely connected networks of trade that were the hallmarks of Bank of England and East India Company share trading. The re-financing launched an only briefly successful revival of the Company¡¯s slave trade.
    Keywords: South Sea Company; South Sea Bubble; goldsmith bankers; subscription shares; call options; derivatives; installment receipts; innovated securities; networks.
    JEL: N23 G13
    Date: 2011–10
  11. By: Antràs, Pol
    Abstract: I survey the influence of Grossman and Hart's (1986) seminal paper in the field of International Trade. I discuss the implementation of the theory in open-economy environments and its implications for the international organization of production and the structure of international trade flows. I also review empirical work suggestive of the empirical relevance of the property-rights theory. Along the way, I develop novel theoretical results and also outline some of the key limitations of existing contributions.
    Keywords: intrafirm trade; multinational firms; outsourcing; property rights
    JEL: D23 F10 F12 F14 F21 F23 L22 L23
    Date: 2011–10
  12. By: Kris Inwood (Department of Economics University of Guelph); Chris Minns (Department of Economic History London School of Economics); Mary MacKinnon (Department of Economics McGill University)
    Abstract: This paper uses newly available census evidence to portray changes in labour market outcomes in Canada between 1891 and 1911. Multiple census cross-sections allow for the documentation of how the location, occupation, and earnings of Canadian and foreign-born cohorts changed over time. The westward movement of young anglophones after 1901 contributed to the formation of a national labour market. Anglophone, francophone, and foreign-born cohorts all experienced significant occupational mobility between 1891 and 1911, but francophones and immigrants remained over-represented at the bottom of the occupational ladder. Greater occupational and geographical mobility supported higher rates of earnings growth among Anglophones.
    Keywords: labour market, census, Canada, ethnicity, anglophone, francophone, occupations, earnings regression, 1891, 1901, 1911
    JEL: J31 J61 J62 N31
    Date: 2010–10
  13. By: Karol Jan BOROWIECKI (Department of Economics, Trinity College Dublin); John W. O'HAGAN (Department of Economics, Trinity College Dublin)
    Abstract: The purpose of this paper is to demonstrate the potential for generating interesting aggregate data on certain aspect of the lives of thousands of composers, and indeed other creative groups, from large on-line dictionaries and to be able to do so relatively quickly. A purpose-built java application that automatically extracts and processes information was developed to generate data on the birth location, occupations and importance (using word count methods) of over 12,000 composers over six centuries. Quantitative measures of the relative importance of different types of music and of the different music instruments over the centuries were also generated. Finally quantitative indicators of the importance of different cities over the different centuries in the lives of these composers are constructed. A range of interesting findings emerge in relation to all of these aspects of the lives of composers, which might provide insight and productive lines of enquiry for further work as to why certain composers were so successful in different historical periods.
    Keywords: cliometrics, data collection, geographic concentration, creative individual
    JEL: O15 N01 N90 Z11
    Date: 2011–10
  14. By: Javier Villa Zárate
    Abstract: Presentación expuesta durante el Tercer Encuentro Técnico sobre la Estructuración de Proyectos de Asociación Público-Privada, llevado a cabo en Mérida, Yucatán, México, el 20, 21 y 22 de enero de 2010. En 1967, en el estudio de Evolución Financiero de México, Brothers y Solís identificaron 3 tendencias negativas de largo plazo para el desarrollo económico: a) Insuficiencia de ahorro interno; b) Ineficiencia del sistema financiero y c) Excesivo endeudamiento externo. A principios de los 1990s se intensificó el proceso de cambio estructural con las modificaciones de diversas leyes y el marco regulatorio relativo a distintos temas de inversión. El objetivo de esta presentación es exponer cómo ha evolucionado la estructuración financiera en México y cómo este proceso ha influido en las inversiones del país.
    Date: 2010–01
  15. By: Simplice A., Asongu
    Abstract: This paper assesses how legal-origin influences financial development through regulation quality and the rule of law. It uses data collected after pioneering works on the law-finance nexus to assess hypotheses resulting there-from in the context of Africa. Distinctions are made between English, French, French sub-Saharan, Portuguese and North African countries in how their legal origins affect financial intermediary dynamics of depth, efficiency, size and activity. In terms of policy implications results support the benefits of law channels to financial development in the continent.
    Keywords: Law; finance; banks; Africa
    JEL: O1 K2 G2 P5 K4
    Date: 2011–09–28
  16. By: Susana Assunção (Faculdade de Economia, Universidade do Porto); Rosa Forte (CEF.UP, Faculdade de Economia, Universidade do Porto); Aurora A. C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto; OBEGEF)
    Abstract: The development of economic activity and the rise in foreign direct investment (FDI) in recent decades has prompted a great deal of research into the phenomenon of multinational companies. A vast amount of empirical literature on FDI catalogues a long list of determinants that try to explain direct investment by multinational companies in a particular location, but it is noticeable that the results are not always consensual. This article provides a review of the theoretical approaches to and empirical studies on FDI in an attempt to single out the most robust factors for explaining the geographic distribution of FDI flows worldwide. It also suggests paths for future research in this area.
    Keywords: FDI, determinants of FDI, literature review
    JEL: F21 F23
    Date: 2011–10
  17. By: Gustavo S. Cortes; Renato L. Marcondes; Maria Dolores M. Diaz
    Abstract: O objetivo deste artigo é mostrar a relação entre o mercado de crédito hipotecário e as atividades industriais da Cidade de São Paulo, considerando as hipotecas uma forma não-usual de nanciamento industrial. Hipotecas registram diferentes formas de nanciamento. Por meio delas, podemos descobrir se as indústrias foram nanciadas por bancos nacionais ou estrangeiros, indivíduos privados ou emissão de debêntures. O período analisado está inserido em um contexto de intensa transformação da economia brasileira, que inclui: expansão das exportações cafeeiras, urbanização e investimentos em infra-estrutura. Analisando os dados, armamos que o capital nativo é preponderante em hipotecas industriais e que os tamanhos das indústrias importam para determinar as condições de nanciamento. Não obstante, embora bancos e títulos sejam importantes para se explicar o nanciamento industrial, as hipotecas mostraram que a maior parte das operações de crédito foram realizadas por agentes não-bancários.
    Keywords: crédito hipotecário, indústria, mercados nanceiros
    JEL: N26 N66 N86
    Date: 2011–07–18
  18. By: Martin S. Feldstein
    Abstract: The Tax Reform Act of 1986 was a powerful pro-growth force for the American economy. Equally important, as we look back on it after 25 years, we also see that it taught us two important lessons. First, it showed that politicians with very different political philosophies on the right and on the left could agree on a major program of tax rate reduction and tax reform. Second, it showed that the amount of taxable income is very sensitive to marginal tax rates. More specifically, the evidence based on the 1986 tax rate reductions shows that the response of taxpayers to reductions in marginal tax rates offsets a substantial portion of the revenue that would otherwise be lost. This implies that combining a broadening of the tax base that raises revenue equal to 10 percent of existing personal income tax revenue with a 10 percent across the board cut in all marginal tax rates would raise revenue equal to about four percent of existing tax revenue. With personal income tax revenue in 2011 of about $1 trillion, that four percent increase in net revenue would be $40 billion at the current level of taxable income or more than $500 billion over the next ten years.
    JEL: H0 H2 H21 H3 H31
    Date: 2011–10
  19. By: Fratzscher, Marcel; Mehl, Arnaud; Vansteenkiste, Isabel
    Abstract: This paper investigates the empirical link between fiscal vulnerabilities and currency crashes in advanced economies over the last 130 years, building on a new dataset of real effective exchange rates and fiscal balances for 21 countries since 1880. We find evidence that crashes depend more on prospective fiscal deficits than on actual ones, and more on the composition of public debt (i.e. rollover/sudden stop risk) than on its level per se. We also uncover significant nonlinear effects at high levels of public debt as well as significantly negative risk premia for major reserve currencies, which enjoy a lower probability of currency crash than other currencies ceteris paribus. Yet, our estimates indicate that such premia remain small in size relative to the conditional probability of a currency crash if prospective fiscal deficits or rollover/sudden stop risk are high. This suggests that a currency’s international status is not necessarily sufficient to shelter it from collapse.
    Keywords: advanced economies; banking crises; currency crashes; exchange rates; fiscal vulnerability; foreign debt; reserve currencies; total debt level
    JEL: F30 F31 N20
    Date: 2011–10
  20. By: Brian Burgoon; Bea Cantillon (Departement Sociale Wetenschappen, Universiteit van Antwerpen, Centrum voor Sociaal Beleid Herman Deleeck); Giacomo Corneo (Department of Economics, Freie Universität Berlin); Marloes Graaf-zijl (AIAS, Universiteit van Amsterdam); Tony Fahey; Horn, D.; Bram Lancee (AIAS, Universiteit van Amsterdam); Valkana Lesseva; Virginia Maestri (AIAS, Universiteit van Amsterdam); Ive Marx (Centre for Social Policy, University of Antwerp); Abigail Mcknight (London School of Economics, Centre for Analysis of Social Exclusion); Márton Medgyesi; Elena Meschi (Institute of Education ,Room 405, University of London); Michelle Norris (Extension at the Champaign Center, University of Illinois); Brian Nolan (School of Applied Social Science, University College Dublin); Veruska Oppedisano (Department of Economics, University College London); Olivier Pintelon; Wiemer Salverda (AIAS, Universiteit van Amsterdam); Francesco Scervini (Collegio Carlo Alberto, Università degli Studi, Torino); Herman Werfhorst (FMG / AIAS, Universiteit van Amsterdam); Mechelen, N. Van; Tim Rie (Centrum voor Sociaal Beleid Herman Deleeck, Universiteit Antwerpen); Verbist, G.; Christopher Whelan (Newman Building, School of Sociology); Nessa Winston

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