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on Business, Economic and Financial History |
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Issue of 2012‒07‒14
seventeen papers chosen by |
| By: | Bignon, Vincent; Flandreau, Marc |
| Abstract: | This paper develops a new insight enabling the empirical study of media capture: minority shareholders of newspapers and readers face similar risks. Both are adversely affected when corrupt insiders use the newspaper for personal profit and receive invisible revenues. This means that relevant data on influence and exploitation of newspaper has been hiding in plain sight in stock exchange or over-the-counter prices, since stock transactions reflect the value of this capture. Empirical data is consistent with increasing levels of looting in France during the 1930s. We provide a comparison with Britain and argue that Britain managed to protect its newspapers better. |
| Keywords: | control premium; corruption; France; governance; Interwar; Media; minority shareholders |
| JEL: | D72 G34 L82 N24 N74 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9014&r=his |
| By: | Francisco Comín |
| Abstract: | This article provides a historical overview of the factors leading up to debt crises and the default methods used by the governments to solve them, ranging from repudiation and restructuring to inflation tax and financial repression. The paper also analyses the Spanish governments’ graduation to responsible public debt management under the democracy and the last debt crisis starting in 2010. After analysing the evolution of the outstanding public debt, the budget deficits, the Spanish economy’s ability to borrow, the central government’s debt affordability and the profile of the sovereign debt the article concludes that the Spanish case confirms the main hypothesis of Reinhart and Rogoff (2009) about international debt crisis, regarding to: short term borrowing enhanced the risk of a debt crisis; insolvency problems arose when the governments were unwilling or unable to repay the debt; debt crisis took place after large capital inflows; most outright defaults ended up being partial defaults; sovereign debt level became unsustainable when it rose above 60-90 % of GDP; default trough inflation became commonplace when fiat money displaced coinage; financial repression was used as a subtle type of debt restructuring; defaults endangered the creditworthiness of Spanish Finance Ministry and forced disciplined fiscal policies |
| Keywords: | Public debt, Default, Restructuring, Inflation tax, Financial repression, Fiscal policy |
| JEL: | E31 E4 E6 F3 F4 H6 N10 N23 N43 H63 F34 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:cte:whrepe:wp12-06&r=his |
| By: | Andersen, Thomas Barnebeck (Department of Business and Economics); Bentzen, Jeanet (Department of Economics); Dalgaard, Carl-Johan (Department of Economics); Sharp, Paul (Department of Business and Economics) |
| Abstract: | We hypothesize that cultural appreciation of hard work and thrift, the "Protestant ethic" according to Max Weber, had a pre-Reformation origin. The proximate source of these values was, according to the proposed theory, the Catholic Order of Cistercians. In support, we document that the Cistercians influenced comparative regional development across English counties, even after the monasteries were dissolved in the 1530s. Moreover, we find that the values emphasized by Weber are comparatively more pervasive in regions where Cistercian monasteries were found historically. Pre-industrial development in England may thus have been propelled by a process of growth through cultural change. |
| Keywords: | Cultural values; protestant ethic; economic development |
| JEL: | N13 O11 Z12 |
| Date: | 2012–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sdueko:2012_012&r=his |
| By: | Stephen Quinn; William Roberds |
| Abstract: | In August 1763, northern Europe experienced a financial crisis with numerous parallels to the 2008 Lehman Brothers episode. The 1763 crisis was sparked by the failure of a major provider of acceptance loans, a form of securitized credit resembling modern asset-backed commercial paper. The central bank at the hub of the crisis, the Bank of Amsterdam, responded by broadening the range of acceptable collateral for its repo transactions. Analysis of archival data shows that this emergency source of liquidity helped to contain the effects of the crisis, by preventing the collapse of at least two other major securitizers. While the underlying themes seem to have changed little in 250 years, the modest scope of the 1763 liquidity intervention, together with the lightly regulated nature of the eighteenth century financial landscape, provide some informative contrasts with events of late 2008. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2012-08&r=his |
| By: | Michael D. Bordo; Joseph G. Haubrich |
| Abstract: | Do steep recoveries follow deep recessions? Does it matter if a credit crunch or banking panic accompanies the recession? Moreover, does it matter if the recession is associated with a housing bust? We look at the American historical experience in an attempt to answer these questions. The answers depend on the definition of a financial crisis and on how much of the recovery is considered. But in general recessions associated with financial crises are generally followed by rapid recoveries. We find three exceptions to this pattern: the recovery from the Great Contraction in the 1930s; the recovery after the recession of the early 1990s and the present recovery. The present recovery is strikingly more tepid than the 1990s. One factor we consider that may explain some of the slowness of this recovery is the moribund nature of residential investment, a variable that is usually a key predictor of recessions and recoveries. |
| Keywords: | Monetary policy ; Macroeconomics |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:1214&r=his |
| By: | Germà Bel (Faculty of Economics, University of Barcelona) |
| Abstract: | This paper analyzes Spanish infrastructure policy since the early 1700s: Road building in the eighteenth century, railway creation and expansion in the nineteenth, motorway expansion in the twentieth, and high speed rail development in the twenty-first. The analysis reveals a long-term pattern, in which infrastructure policy in Spain has been driven not by the requirements of commerce and economic activity, but rather by the desire to centralize transportation around the country’s political capital. As commerce has been unable to sustain the development of this policy, regulation and subsidies from the national budget have regularly been used to decide the priorities regarding infrastructure creation and to fund the development, maintenance, and operation of the networks. |
| Keywords: | Infrastructure, Transportation, Railroads and Other Surface Transportation, Government Policy. JEL classification:L91, L92, L98 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:201016&r=his |
| By: | Moriguchi, Chiaki |
| Abstract: | Annually over 60,000 children in need of care are finding a permanent home through adoption in the U.S. In this study, I use a framework of family economics to examine the evolution of child adoption in the U.S. from 1950 to the present. Noting substantial heterogeneity within child adoption, I first compile detailed statistics and document historical trends in child adoption by the type of adoption in the U.S. I then investigate demand-side, supply-side, and institutional factors underlying the observed historical patterns. I find that, in the U.S., child adoption rate (per 1,000 births) was at its highest around 1970, and that, despite a resurgence in the 1990s, the adoption rate today is substantially below the historic peak. I also show that the composition of child adoption in the U.S. has changed markedly from domestic infant adoption to the adoption of foreign infants and foster care children since the 1970s, resulting in much greater diversity of adopted children and adoptive parents. I argue that these changes were initially brought about by large and exogenous supply shocks in domestic adoption, but were propelled further by endogenous changes in adoption laws, agency practices, and child welfare policies. |
| JEL: | D10 J13 N32 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hituec:572&r=his |
| By: | Kym Anderson |
| Abstract: | By how much did the cost of governmental barriers to trade change over the 20th century, and how might they change by the middle of the 21st century? This paper addresses that question by first reviewing evidence on the changing extent of global trade restrictions since 1900, particularly for agricultural and manufactured goods. It then assesses prospects for trade policy changes over the coming four decades by drawing on current political economy theory and evidence. The paper then provides crude estimates of the annual cost, in terms of economic welfare foregone in high-income and developing countries, of those trade-restricting policies. |
| Keywords: | welfare effects of trade restrictions, protectionist history, policy reform |
| JEL: | F13 F15 F17 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2012-08&r=his |
| By: | Braun, Sebastian (Kiel Institute for the World Economy); Kvasnicka, Michael (RWI) |
| Abstract: | Does immigration accelerate sectoral change towards high-productivity sectors? This paper uses the mass displacement of ethnic Germans from Eastern Europe to West Germany after World War II as a natural experiment to study this question. A simple two-sector model of the economy, in which moving costs prevent the marginal product of labor to be equalized across sectors, predicts that immigration boosts output per worker by expanding the high-productivity sector, but decreases output per worker within a sector. Using German district-level data from before and after the war, we find strong empirical support for these predictions. |
| Keywords: | immigration, sectoral change, output growth, post-war Germany |
| JEL: | J61 J21 C36 N34 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6690&r=his |
| By: | Fabio Landini |
| Abstract: | The organization of information production is undergoing a deep transformation. Alongside media corporations, which have been for long time the predominant institutions of information production, new organizational forms have emerged, e.g. free software communities, open-content on-line wikis, collective blogs, distributed platforms for resource sharing. The paper investigates the factors that favoured the emergence of these alternative systems, called peer production. Differently from most of the previous literature, the paper does so by considering technology (i.e. digital code) as an endogenous variable in the process of organizational design. On this basis the paper argues that the diffusion of digital technology is a necessary but not sufficient condition to explain the emergence of peer production. A similarly important role has been played by the specific set of ethics that motivated the early adherents to the free software movement. Such an ethics indeed operated as a sort of “cultural subsidy” that helped to overcome the complementarities existing among distinct institutional domains, and let a new organizational species to emerge. |
| Keywords: | peer production, organizational equilibria, institutional complementarities, transaction costs |
| JEL: | B52 D23 K20 L17 O34 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:645&r=his |
| By: | Antonakakis, Nikolaos |
| Abstract: | In this paper we examine the extent of international trade synchronization during periods of international trade collapses and US recessions. Based on monthly data for the G7 economies over the period 1961-2011, our results suggest rather idiosyncratic patterns of international trade synchronization during international trade collapses and US recessions. During the great recession of 2007-2009, however, international trade experienced the most sudden, severe and globally synchronized collapse. |
| Keywords: | International trade collapse; Synchronization; Recession; Dynamic conditional correlation |
| JEL: | C32 F15 F41 F43 |
| Date: | 2012–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:39859&r=his |
| By: | Dessein, Wouter |
| Abstract: | The seminal work by Grossman and Hart (1986) made the study of firm boundaries susceptible to formal economic analysis, and illuminated an important role for markets in providing incentives. In this essay, I discuss some new directions that the literature has taken since. As a central challenge, I identify the need to provide a formal theory of the firm in which managerial direction and bureaucratic decision-making play a key role. Merging a number of existing incomplete contracting models, I propose two approaches with very different contracting assumptions. As in transaction cost economics, a central element in those theories is the presence of a central office who directs and coordinates the actions of subordinates. More novel, I highlight the superior ability of non-integrated firms to adapt to a changing environment. |
| Keywords: | Adaptation; Coordination; Firm Boundaries; Incomplete contracts; Managerial direction |
| JEL: | D23 D83 L23 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9019&r=his |
| By: | Philip Hans Franses; Michael McAleer (University of Canterbury); Rianne Legerstee |
| Abstract: | Macroeconomic forecasts are frequently produced, widely published, inten¬sively discussed and comprehensively used. The formal evaluation of such forecasts has a long research history. Recently, a new angle to the evaluation of forecasts has been addressed, and in this review we analyse some recent developments from that perspective. The literature on forecast evaluation predominantly assumes that macro¬economic forecasts are generated from econometric models. In practice, however, most macroeconomic forecasts, such as those from the IMF, World Bank, OECD, Federal Reserve Board, Federal Open Market Committee (FOMC) and the ECB, are typically based on econometric model forecasts jointly with human intuition. This seemingly inevitable combination renders most of these forecasts biased and, as such, their evaluation becomes non-standard. In this review, we consider the evaluation of two forecasts in which: (i) the two forecasts are generated from two distinct econo¬metric models; (ii) one forecast is generated from an econometric model and the other is obtained as a combination of a model and intuition; and (iii) the two forecasts are generated from two distinct (but unknown) combinations of different models and intu¬ition. It is shown that alternative tools are needed to compare and evaluate the fore-casts in each of these three situations. These alternative techniques are illustrated by comparing the forecasts from the (econometric) Staff of the Federal Reserve Board and the FOMC on inflation, unemployment and real GDP growth. It is shown that the FOMC does not forecast significantly better than the Staff, and that the intuition of the FOMC does not add significantly in forecasting the actual values of the economic fundamentals. This would seem to belie the purported expertise of the FOMC. |
| Keywords: | Macroeconomic forecasts; econometric models; human intuition; biased forecasts; forecast performance; forecast evaluation; forecast comparison |
| JEL: | C22 C51 C52 C53 E27 E37 |
| Date: | 2012–06–08 |
| URL: | http://d.repec.org/n?u=RePEc:cbt:econwp:12/12&r=his |
| By: | Alfredo Di Tillio (Bocconi University - Bocconi University); Itzhak Gilboa (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - GROUPE HEC - CNRS : UMR2959, Tel-Aviv University - Tel-Aviv University); Larry Samuelson (Department of Economics - Yale University) |
| Abstract: | We suggest a model that describes how counterfactuals are constructed and justified. The model can describe how counterfactual beliefs are updated given the unfolding of actual history. It also allows us to examine the use of counterfactuals in prediction, and to show that a logically omniscient reasoner gains nothing from using counterfactuals for prediction. |
| Keywords: | induction, counterfactuals, prediction |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00712888&r=his |
| By: | Jose Romero (El Colegio de México) |
| Abstract: | En este trabajo se analiza el impacto de la inversión extranjera directa sobre la productividad del trabajo para el período 1940-2010. Se plantea una función producción que relaciona el producto agregado con el trabajo, y capital de tres tipos: privado nacional, extranjero y público. De la función de producción en niveles se obtuvo una relación en términos de tasas de crecimiento y dado que las variables en niveles están cointegradas se agregó un término de corrección de errores. Se realizó una prueba de cambio estructural, la cual nos indica la necesidad de estimar dos modelos, uno para el período 1940-1980 y otro para el período 1984-2010. En ambas estimaciones se encuentra un efecto positivo del capital extranjero (acumulación de IED), privado nacional y público, sobre la productividad del trabajo, pero con muy diferentes valores, lo que refleja la importancia de la estructura para determinar el impacto de la IED. En el primer período el crecimiento está liderado por la inversión pública, pero también se encuentra que el impacto de la inversión extranjera sobre la productividad del trabajo es mayor que el de la privada nacional. En el segundo período el crecimiento es liderado por la inversión privada nacional y sorprendentemente se registra un efecto muy reducido de la inversión extranjera, lo que podría deberse precisamente al cambio estructural. |
| Keywords: | Mexican economy, economic growth, foreign direct investment |
| JEL: | O54 O11 E22 F43 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:emx:ceedoc:2012-12&r=his |
| By: | Carlo Zappia |
| Abstract: | The recent financial crisis has renewed the interest in Keynes's thought and his analysis of the role played by individual agents in financial markets. George Akerlof and Robert Shiller, in particular, have drawn on the growing interest in behavioural interpretations of financial markets to hold that Keynes’s insistence on “the spontaneous urge to action” of individuals is the most relevant message conveyed by the General Theory. This paper starts off from a brief summary of Akerlof and Shiller’s influential stance and aims to provide an historically motivated assessment of their claim. The paper mostly concentrates on Keynes’s Treatise on Probability and discusses how Keynes applied his philosophy of probability to decision-making. It is argued that a fresh reading of this part of Keynes’s work can contribute to an understanding of how individual agents behave under uncertainty, and that the violations of the Bayesian creed scrutinized in behavioural finance, and in some current proposals to amend mainstream decision theory, were already implicitly discussed by Keynes in his critique of frequency probability |
| Keywords: | uncertainty, probability, decision theory |
| JEL: | B21 D81 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:646&r=his |
| By: | Michael Fritsch (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Michael Wyrwich (School of Economics and Business Administration, Friedrich-Schiller-University Jena) |
| Abstract: | We investigate the persistence of levels of self-employment and new business formation in different time periods and under different framework conditions. The analysis shows that high levels of regional self-employment and new business formation tend to be persistent for periods as long as 80 years and that such an entrepreneurial culture can even survive abrupt and drastic changes in the politic-economic environment. We thus conclude that regional entrepreneurship cultures do exist and that they have long-lasting effects. |
| Keywords: | Entrepreneurship, self-employment, new business formation, persistence, culture |
| JEL: | L26 R11 O11 |
| Date: | 2012–07–04 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2012-036&r=his |