New Economics Papers
on Business, Economic and Financial History
Issue of 2011‒11‒01
twenty papers chosen by

  1. From Monasteries to Multinationals (and Back): A Historical Review of the Beer Economy By Eline Poelmans; Johan F.M.Swinnen;
  2. The Propertisation of Science By Gabriel Galvez-Behar
  3. Transparency without Accountability By Mwangi wa Githinji; Frank Holmquist
  4. Race v. Suffrage The Determinants of Development in Mississippi By Graziella Bertocchi; Arcangelo Dimico
  5. Can Tight and Centralized Financial Regulation Prevent Financial Crises? Czech Government Bond Seignorage in the Historical Perspective By Tomáš Otáhal; Václav Rybáček
  6. Race v. Suffrage: The Determinants of Development in Mississippi By Bertocchi, Graziella; Dimico, Arcangelo
  7. Ursula Hicks: My Early Life (Up to The Age of 12) By John Creedy
  8. Origins and Early Development of the Nonlinear Endogenous Mathematical Theory of the Business Cycle: Part I - The Setting By V. Ragupathy; K. Vela Velupillai
  9. El sueño de los radicales y las desigualdades regionales en Colombia: La educación de calidad para todos como política de desarrollo territorial By Adolfo Meisel Roca
  10. An Early Modern Economy in China: A Study of the GDP of the Huating-Lou Area, 1823–29 By Bohzong Li
  11. From the Pulps to the Stars: The Making of the American Science Fiction Magazine, 1923-1973 By David Reinecke
  12. Behavioural Economics: Classical and Modern By Selda (Ying Fang) Kao; K. Vela Velupillai
  13. The History of Macroeconomics from Keynes’s General Theory to the Present By Michel DE VROEY; Pierre MALGRANGE
  14. Credit availability and the collapse of the banking sector in the 1930s By Mark A. Carlson; Jonathan D. Rose
  15. A new monthly chronology of the US industrial cycles in the prewar economy By Amélie Charles; Olivier Darné; Claude Diebolt; Laurent Ferrara
  16. The elusive quest for supply response to cash-crop market reforms in Sub-Saharan Africa : the case of cotton By Delpeuch, Claire; Leblois, Antoine
  17. The Japanese Financial Sector's Transition from High Growth to the‘Lost Decades':A Market Economy Perspective By Wataru Takahashi
  18. The Captain of the Men of Death and His Shadow: Long-Run Impacts of Early Life Pneumonia Exposure By Bhalotra, Sonia R.; Venkataramani, Atheendar
  19. Ayuda externa en Bolivia (1985-2003): auge y caída del neoliberalismo By Fernando De La Cruz Prego
  20. Freedom, Anarchy and Conformism in Academic Research By K. Vela Velupillai

  1. By: Eline Poelmans; Johan F.M.Swinnen;
    Abstract: This article reviews beer production, consumption and the industrial organization of breweries throughout history. Monasteries were the centers of the beer economy in the early Middle Ages. Innovation and increased demand later induced the growth of commercial breweries. Globalization and scientific discoveries transformed the beer industry and increased competition from the 16th through the 19th century. The 20th century was characterized by dramatic (domestic and international) consolidation, major shifts in consumption patterns, and the re-emergence of small breweries.
    Keywords: economic history, history of beer, monasteries, innovation and taxation in brewing, modern brewing, consolidation and globalization
    JEL: N30 N40 L23 L66
    Date: 2011
  2. By: Gabriel Galvez-Behar (IRHiS - Institut de Recherches Historiques du Septentrion - CNRS : UMR8529 - Université Charles de Gaulle - Lille III)
    Abstract: For thirty years scientific institutions have been engaged in a process of propertisation through the strengthening of intellectual property in science. In fact, the relationship between science, intellectual property rights and the economic spheres have ever been neither stable nor continuous. Therefore a historical inquiry is necessary to understand the meaning and the practice of scientific property from the middle of 19th century to WW II. In this paper, the relationship between scientific authorship and property appears as a mean to promote the scientific work and its professionalization. Moreover, through the study of the French case, the place of science in the patent system is taken into account in order to understand, at last, the international controversy about scientific property during the interwar period.
    Keywords: Propertisation ; Science ; Intellectual Property ; History ; Scientific Authorship
    Date: 2011
  3. By: Mwangi wa Githinji (University of Massachusetts Amherst); Frank Holmquist (Hampshire College)
    Abstract: Kenya has been going through a period of political reform from 1991 when section 2A of the constitution that had made Kenya a de jure one party state was repealed. The reform followed a prolonged struggle by citizens both within and without the country. Their call for democracy was one that, post the fall of the Berlin wall, was embraced by western countries. Via diplomatic pressure and conditionality on aid, western donors played an important role in the repeal of section 2a, the return of multi-party elections and in the creation and reform of a number of political institutions and offices. In the main these changes were pushed by the donors and though supported by the opposition in Kenya they did not rise organically from the struggle over political power in Kenya. In this paper, we argue that although these reforms led to a heightened awareness of the ills of the political class, they failed to actually hold members of this class accountable for their transgressions. We argue that these institutions presupposed the existence of an electorate with an effective set of identities that belonged to the larger Kenyan nation. This broader construct of society did not exist. A history of economic and political inequality from the inception of modern Kenya had resulted in a divided population that was unable to exercise this mandate, and could ultimately discipline politicians when they failed. In actuality, since the politics was not based on broader Kenyan national interests but rather narrower personal interests construed as ethno-nationalist, the political class was not accountable to the larger Kenyan constituency. JEL Categories: O, P16, Z13
    Keywords: Political Economy, Ethnicity, Development, Corruption, Kenya
    Date: 2011–10
  4. By: Graziella Bertocchi; Arcangelo Dimico
    Abstract: We investigate the long term determinants of political and economic outcomes over a new data set composed of Mississippi counties. We analyze the effect of disfranchisement on voting registration at the end of the nineteenth century (1896-9), as well as the impact of voting registration on education outcomes at different points in time, namely in 1917 and in the 1950s. Finally, we turn to the determinants of a broad array of development indicators for the year 1960 and for the 1960-2000 period. Our main conclusion is that race, rather than political institutions and education policies, is the main force driving the above outcomes
    Keywords: Race, institutions, development, inequality, education
    JEL: E25 H52 J15 N31 O11 P16
    Date: 2011–09
  5. By: Tomáš Otáhal (Department of Economics, FBE MENDELU in Brno); Václav Rybáček (University of Economics Prague)
    Abstract: Can tight and centralized financial regulation prevent financial crises? Governments usually respond to financial crises with tightening and centralizing financial regulation. In this paper, we explore the historical parallels between the governmental responses to the financial crises at the end of the 19th and the beginning of the 20th century in the USA and the recent response of the European Union. Our rent- seeking model with endogenous rent derived from the historical narrative predicts that tight and centralized financial regulation might increase the risk of inflationary monetary policy. To illustrate our findings on an empirical example, we calculated the Czech government bond seignorage that represents the rent extracted through inflationary monetary policy.
    Keywords: Bureaucracy, corruption, economic efficiency, Chicago Public Choice, Virginia Public Choice, rent-seeking, rule of law
    JEL: G18 G28 N11 N21 N41
    Date: 2011–10
  6. By: Bertocchi, Graziella (University of Modena and Reggio Emilia); Dimico, Arcangelo (Queen's University Belfast)
    Abstract: We investigate the long term determinants of political and economic outcomes over a new data set composed of Mississippi counties. We analyze the effect of disfranchisement on voting registration at the end of the nineteenth century (1896-9), as well as the impact of voting registration on education outcomes at different points in time, namely in 1917 and in the 1950s. Finally, we turn to the determinants of a broad array of development indicators for the year 1960 and for the 1960-2000 period. Our main conclusion is that race, rather than political institutions and education policies, is the main force driving the above outcomes.
    Keywords: race, institutions, development, inequality, education
    JEL: E25 H52 J15 N31 O11 P16
    Date: 2011–10
  7. By: John Creedy
    Abstract: Ursula Hicks (nee Webb) is well known for her contributions to public finance and development economics, and in her role as founding editor of Review of Economic Studies. After a brief introduction to Ursula Hicks’s complex family background, this paper reproduces, with editorial material, the autobiographical sketch of her early life in Dublin. This sketch, written late in her life, is of considerable interest,not only for the light it shows on her own background, but for the glimpse it gives of life in Dublin in the early years of the 20th century. In particular, there is much discussion of the wide circle of the Religious Society of Friends, more generally known as Quakers,which played such a large part in the life of her family.
    Date: 2011
  8. By: V. Ragupathy; K. Vela Velupillai
    Abstract: We study the emergence of the nonlinear, endogenous, theory of the business cycle, in mathematical modes, within the framework of a macroeconomic theory, which was itself going through its own formal 'birth pangs' at the same time, in the same years. The first part of the story begins in 1928 and ends, with the publication of Yasui's classic on Kaldor, Hicks and Goodwin, in 1953, and Hudson's classic of 1957. But there were other classics in the 1930s, even within some theories of the business cycles of the time - particularly the Austrian and that which may now be called the 'time-to-build' tradition, which originates in Marx and Aftalion, independently, and reaches its nonlinear formalization origins in Tinbergenís work of 1931, followed by Kalecki's theories of the business cycle, substantially influenced also by Tinbergen's classic for mathematical method. There is also what may, for want of a better name, be called the 'cobweb' tradition, on the one hand, and the tradition of Swedish Sequence Analysis, on the other (especially in the 1937 classic work of Lundberg, summarising the Swedish discussion on business cycle theory). The former having its origins, partly, in Austrian inspired search for an integration of dynamic method with equilibrium economic theory (especially represented by a series of classics by Rosenstein-Rodan, from about 1929); and partly in the well known phenomenon of lagged responses in the supply-demand interactions in agricultural and commodity markets, particularly elegantly formalised by Leontief in 1934. From the point of view of economic theory, they were all part of the emerging consensus on the need to incorporate money and áuctuations in nontrivial ways as intrinsic components of orthodox equilibrium economic theory which was characterised as static theory. The implication was that the search was for a synthesis of dynamic method with traditional static equilibrium economic theory. The origins of macroeconomic theory, generally attributed to the post-depression development of monetary theory, business cycle theory and the theory of policy, could be traced to this particular search for a synthesis and was brilliantly summarised by Kuznets in a series of pioneering contributions in 1929/30. The story we try to tell is of mathematical business cycle theory in its non-linear modes, and how it emerged from one strand of macroeconomic theory, which, as just mentioned, was itself being forged, ab initio, dynamically
    Date: 2011
  9. By: Adolfo Meisel Roca
    Abstract: In this paper we argue that the most effective policy for the reduction in regional income disparities observed in Colombia is to invest in the human capital of the inhabitants of the periphery. Initially, we review the failed efforts to transform Colombian education in the late nineteenth century promoted by the so called radicales, wing of the Liberal Party. When they lost political influence, the Conservative Party returned to the Catholic Church the control of education. In a certain way the dream of the Radicals is still unfulfilled. In the last section, four examples of policies to raise human capital in the periphery are presented. The costs of these policies are estimated for the case of the Colombian Caribbean, the most populated lagged backward region of the country. RESUMEN: En este trabajo se argumenta que la política más efectiva para reducir las enormes desigualdades regionales que se observan en Colombia es la inversión en el capital humano de la gente de la periferia del país. En la primera sección se hace un repaso de lo que fue el sueño de los liberales radicales de fines del siglo XIX, quienes trataron de modernizar muchos aspectos de la vida económica y social del país. Un tema al cual le otorgaron la mayor importancia, la creación de un sistema de educación primaria, universal, laica y gratuita, termino en el fracaso debido a que los sectores conservadores le devolvieron el control de la educación a la Iglesia Católica. De cierta manera, los anhelos de los radicales siguen sin haberse logrado del todo. En la última sección, a manera de ilustración, se proponen cuatro estrategias de inversión en capital que permitirían que la periferia mejore su situación con respecto a las regiones más desarrolladas. Se realiza una cuantificación del valor de esas propuestas para el caso de la Costa Caribe, la región rezagada con el mayor número de habitantes.
    Date: 2011–10–11
  10. By: Bohzong Li
    Abstract: This study attempts to reconstruct the GDP of the Lower Yangzi Delta in the beginning of the nineteenth century. It is part of a cooperative research project carried out by myself and Jan Luiten van Zanden. We have applied the same methods, standards, and measures to reconstruct the economies of the Netherlands and the Lower Yangzi Delta in the said period and then compared them. The result of my five years of work came out in my recent Chinese book (see Li 2010). This paper summarily presents my findings in English.
    Date: 2011–10
  11. By: David Reinecke (Princeton University)
    Abstract: Making a theoretical case linking genre trajectory with artistic legitimation struggles, this paper seeks to explain the development of the American science fiction magazine. Across the fifty-plus years analyzed, science fiction emerged from its lowbrow pulp fiction origins into a highly successful, critically acclaimed genre across multiple mediums. This empirical trend is then modeled using predictors adopted from theories of cultural legitmation, which conceptualize the process as both movement induced and historically shaped. Employing standard time-series regression techniques, the results suggest a sequential story underlying the trajectory of American science fiction magazines: popular science initially created a legitimate discursive space for the nascent genre, while growing cohesive networks among science fiction authors sustained the cultural form in the post-war period. The paper, then, contributes significantly to the growing study of the dynamics of classificatory schemes.
    Keywords: genre trajectory, cultural legitimation, science fiction, popular science, historical sociology, social movements
    JEL: Z11
    Date: 2011–10
  12. By: Selda (Ying Fang) Kao; K. Vela Velupillai
    Abstract: In this paper, the origins and development of behavioural economics, beginning with the pioneering works of Herbert Simon (1953) and Ward Edwards (1954), is traced, described and (critically) discussed, in some detail. Two kinds of behavioural economics – classical and modern – are attributed, respectively, to the two pioneers. The mathematical foundations of classical behavioural economics is identified, largely, to be in the theory of computation and computational complexity; the corresponding mathematical basis for modern behavioural economics is, on the other hand, claimed to be a notion of subjective probability (at least at its origins in the works of Ward Edwards). The economic theories of behavior, challenging various aspects of 'orthodox' theory, were decisively influenced by these two mathematical underpinnings of the two theories
    Keywords: Classical Behavioural Economics, Modern Behavioural Economics, Subjective Probability, Model of Computation, Computational Complexity. Subjective Expected Utility
    JEL: C61 C63 D81 D83
    Date: 2011
  13. By: Michel DE VROEY (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Pierre MALGRANGE (CEPREMAP, Paris)
    Abstract: This paper is a contribution to the forthcoming Edward Elgar Handbook of the History of Economic Analysis volume edited by Gilbert Faccarello and Heinz Kurz. Its aim is to introduce the reader to the main episodes that have marked the course of modern macroeconomics: its emergence after the publication of Keynes’s General Theory, the heydays of Keynesian macroeconomics based on the IS-LM model, disequilibrium and non-Walrasian equilibrium modelling, the invention of the natural rate of unemployment notion, the new classical attack against Keynesian macroeconomics, the first wave of new Keynesian models, real business cycle modelling and, finally, the second wage of new Keynesian models, i.e. DSGE models. A main thrust of the paper is the contrast we draw between Keynesian macroeconomics and stochastic dynamic general equilibrium macroeconomics. We hope that our paper will be useful for teachers of macroeconomics wishing to complement their technical material with a historical addendum.
    Keywords: Keynes, Lucas, IS-LM model, DSGE models
    JEL: B E E E
    Date: 2011–06–30
  14. By: Mark A. Carlson; Jonathan D. Rose
    Abstract: This paper examines the mechanism through which banking sector distress affects the availability of credit. We use the experience of the United States during the Great Depression, a period of intense bank distress, to conduct our analysis. We utilize previously neglected data from a 1934 survey conducted by the Federal Reserve System of both banks and Chambers of Commerce regarding the availability of credit, and examine which aspects of the banking system collapse affected credit availability as indicated by the survey. A number of scholars have posited different ways that bank distress constrained credit availability and impacted economic activity during the 1930s; however, the empirical evidence regarding these channels is modest. In this study, we find that bank failures had the most dominant impact, but there is also some evidence for the importance of funding constraints from deposit outflows and of protracted deposit liquidation.
    Date: 2011
  15. By: Amélie Charles; Olivier Darné; Claude Diebolt; Laurent Ferrara
    Abstract: This article extends earlier efforts at redating the US industrial cycles for the prewar period (1890–1938) using the methodologies proposed by Bry and Boschan (1971) and Hamilton (1989) and based on the monthly industrial production index constructed by Miron and Romer (1990). The alternative chronology detects 90% of the peaks and troughs identified by the NBER and Romer (1994), but the new dates are consistently dated earlier for more than 50% of them, especially as regards the NBER troughs. The new dates affect the comparison of the average duration of recessions and expansions in both pre-WWI and interwar eras. Whereas the NBER reference dates show an increase in average duration of the expansions between the pre-WWI and interwar periods, the new dates show evidence of shortened length of expansions. However, the new dates confirm the traditional finding that the length of contractions increases between the both eras.
    Keywords: Industrial business cycle, Dating chronology
    JEL: C22 E32
    Date: 2011
  16. By: Delpeuch, Claire; Leblois, Antoine
    Abstract: Little cross-cutting conclusions emerge from comparative studies on the impact of structural adjustment on Sub-Saharan African agricultural performance. This paper aims to illuminate this long-standing debate by adopting a novel quantitative, sectoral and long-term approach controlling for country-specific determinants. It incorporates detailed information on the pace of reforms and the nature of post-reform market structure, pre-reform policies and weather conditions at the cultivation zone level. The cotton sector is the focus of this paper because of its particularly interesting institutional history. The authors find that the changes in market structure brought about by reforms have had very different impacts in Francophone West and Central Africa and in the rest of Sub-Saharan Africa. In the former region, production has been higher but productivity lower, on average, in regulated markets than in monopolistic markets. Conversely, in the liberalized markets of the rest of Sub-Saharan Africa, productivity has been higher in than in monopolistic markets but highly competitive markets seem to have produced less than monopolistic sectors.
    Keywords: Markets and Market Access,Economic Theory&Research,Labor Policies,Debt Markets,Political Economy
    Date: 2011–10–01
  17. By: Wataru Takahashi (Research Institute for Economics and Business Administration, Kobe University)
    Abstract: This paper looks at Japan's experience in transforming its financial system. While the country is considered a model of successful Asian economic development, it has encountered many difficulties as introducing market economy. During the 1960s and 1970s, Japan experienced high economic growth, contributed by its regulated financial sector. Cooperation among the government, banks and corporations created a strong system, in which main banks played an important role. They supported companies and, sometimes, in addition to their role in the corporate governance of client enterprises, they also rescued troubled companies. In addition, banks extended loans to businesses in promising sectors, thereby assuming risks similar to those taken by venture capitalists. However, during the 1970s and 1980s, Japan's financial system, under pressure from the changing economic environment, was compelled to adjust. Economic growth led to changes in the money flow, as Japanese big business began to lose its appetite for borrowing. Instead, there developed circumvented financing outside the domestic market that, with the growing bond market and accumulation of other financial assets, led to financial liberalization.In the late 1980s, this liberalization resulted in a combination of loose monetary conditions after the Plaza Agreement, an economic boom, and the bursting of the asset bubble. Then, between 1991 and 2000, Japan experienced a “lost decade.†Now, in order to pull itself out of its economic malaise, Japan continues to focus on market orientation in a bid to achieve economic reform but, so far, this has been little benefit. One of the main challenges Japan still faces is developing a new set of institutional complementarities.
    Keywords: Institutional Complementarities, Network Capitalism, Personalized System
    JEL: E44 N15 O16
    Date: 2011–10
  18. By: Bhalotra, Sonia R. (University of Bristol); Venkataramani, Atheendar (Massachusetts General Hospital)
    Abstract: We exploit the introduction of sulfa drugs in 1937 to identify the causal impact of exposure to pneumonia in infancy on later life well-being and productivity in the United States. Using census data from 1980-2000, we find that cohorts born after the introduction of sulfa experienced increases in schooling, income, and the probability of employment, and reductions in disability rates. These improvements were larger for those born in states with higher pre-intervention levels of pneumonia as these were the areas that benefited most from the availability of sulfa drugs. These estimates are, in general, larger and more robust to specification for men than for women. With the exception of cognitive disability and poverty for men, the estimates for African Americans are smaller and less precisely estimated than those for whites. This is despite our finding that African Americans experienced larger absolute reductions in pneumonia mortality after the arrival of sulfa. We suggest that pre-Civil Rights barriers may have inhibited their translating improved endowments into gains in education and employment.
    Keywords: early childhood, infectious diseases, pneumonia, medical innovation, antibiotics, schooling, income, disability, mortality trends
    JEL: I18 H41
    Date: 2011–10
  19. By: Fernando De La Cruz Prego
    Abstract: Desde 1985 la ayuda externa fue una variable central para el proceso de desarrollo de Bolivia. Las necesidades financieras derivadas de la doble crisis de deuda externa e hiperinflación obligaron a sus gobernantes a recurrir de manera masiva a la ayuda internacional para estabilizar y reestructurar la economía. Esta dependencia financiera de la ayuda, junto con la coincidencia ideológica entre los sucesivos gobiernos bolivianos y los principales proveedores de ayuda, allanó el camino para la implantación del modelo neoliberal como nuevo eje del desarrollo boliviano. Sin embargo, dos décadas más tarde —y tras más de 12.000 millones de dólares de ayuda—, este modelo se mostró incapaz de ofrecer tasas de crecimiento sostenibles, el país presentaba uno de los niveles de pobreza y desigualdad más elevados del continente, y las finanzas públicas seguían dependiendo sustancialmente de la ayuda externa. Este artículo analiza el papel desempeñado por la ayuda externa durante las dos décadas de neoliberalismo boliviano.
    Keywords: Bolivia, ayuda externa, impacto de la ayuda, neoliberalismo
    Date: 2011–02
  20. By: K. Vela Velupillai
    Abstract: In this paper I attempt to make a case for promoting the courage of rebels within the citadels of orthodoxy in academic research environments. Wicksell in Macroeconomics, Brouwer in the Foundations of Mathematics, Turing in Computability Theory, Sraffa in the Theories of Value and Distribution are, in my own fields of research, paradigmatic examples of rebels, adventurers and non-conformists of the highest caliber in scientific research within University environments. In what sense, and how, can such rebels, adventurers and non-conformists be fostered in the current University research environment dominated by the cult of 'picking winners'? This is the motivational question lying behind the historical outlines of the work of Brouwer, Hilbert, Bishop, Veronese, Gödel, Turing and Sraffa that I describe in this paper. The debate between freedom in research and teaching, and the naked imposition of 'correct' thinking, on potential dissenters of the mind, is of serious concern in this age of austerity of material facilities. It is a debate that has occupied some of the finest minds working at the deepest levels of foundational issues in mathematics, metamathematics and economic theory. By making some of the issues explicit, I hope it is possible to encourage dissenters to remain courageous in the face of current dogmas
    Keywords: Non-conformist research, economic theory, mathematical economics, 'Hilbert's Dogma', Hilbert's Program, computability theory
    Date: 2011

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