nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2012‒10‒27
sixteen papers chosen by
Bernardo Batiz-Lazo
Bangor University

  1. Public borrowing in harsh times: The Leagues of Nations loans revisited By Yann Decorzant; Juan Flores
  2. The decline of French trade power during the first globalization (1850-1913) By Stéphane BECUWE (GREThA, CNRS, UMR 5113); Bertrand BLANCHETON (GREThA, CNRS, UMR 5113); Léo CHARLES (GREThA, CNRS, UMR 5113)
  3. Finance and economic development in Islam, historical perspective By Cizakca, Murat
  4. Ethics and Finance: the role of mathematics By Timothy C. Johnson
  5. Il sistema delle piccole e medie imprese e il «modello Emilia» By Alberto Rinaldi
  6. Do Schooling Laws Matter? Evidence from the Introduction of Compulsory Attendance Laws in the United States By Karen Clay; Jeff Lingwall; Melvin Stephens, Jr.
  7. Clash of Civilizations, Culture and Conflict By Gokmen, Gunes
  8. Emissions Trading - A Transatlantic Journey for an Idea? By Katja Biedenkopf
  9. Alternative Paths of Learning: Standardisation and Growth in Britain, 1901-2009 By Christopher Spencer; Paul Temple
  10. Competition Between Sports Leagues: Theory and Evidence on Rival League Formation in North America By Che, XiaoGang; Humphreys, Brad
  11. Revisiting the 1992-93 EMS crisis in the context of international political economy By Sotiropoulos, Dimitris P.
  12. The Role of Money in New-Keynesian Models By McCallum, Bennett T.
  13. Introduction to the Handbook on the Economics and Theory of the Firm By Michael Dietrich; Jackie Krafft
  14. The Centennial Resilience Index: Expanding Its Coverage and Testing Its Predictive Power By Jack Boorman; José Fajgenbaum; Herve Ferhani; Manu Bhaskaran; Drew Arnold; Harpaul Alberto Kohli
  15. Baumol, Panzar, and Willig’s Theory of Contestable Markets and Industry Structure: A Summary of Reactions By Amavilah, Voxi Heinrich
  16. Government use of the payment card system: issuance, acceptance, and regulation By Susan Herbst-Murphy

  1. By: Yann Decorzant; Juan Flores
    Abstract: This paper reassesses the importance of the League of Nations loans of the 1920s. These long-term loans were an essential part of the League’s strategy to restore the productive basis of countries in Central and Eastern Europe. Whereas the literature is not conclusive as to the final result of this experience, we argue that the League Loans were successful because they accomplished the task for which they were conceived – namely, to allow countries in financial distress to access capital markets. This success rested on the sustained efforts of the League of Nations to gather support from creditor countries’ governments and financial intermediaries, as well as its efforts to develop plans for economic reform for borrowing countries. We provide quantitative and qualitative evidence to show that the League provided market access in a difficult and hostile environment, and did so by building its own reputation as an actor that provided a credible commitment to economic and institutional reforms. Through the success of the placement of the initial issues, the League became capable of influencing borrowing costs, even if they continued to be predominately determined by the secondary market and remained high as a result of the risk involved. Much of the confusion in the literature is explained by the fact that the League lacked its own capital, which impeded its ability to act as a lender of last resort once the great depression hit Europe.
    Keywords: League Loans, Great Depression, capital markets, underwriting
    Date: 2012–09
  2. By: Stéphane BECUWE (GREThA, CNRS, UMR 5113); Bertrand BLANCHETON (GREThA, CNRS, UMR 5113); Léo CHARLES (GREThA, CNRS, UMR 5113)
    Abstract: This article offers an exhaustive quantitative analysis of the French foreign trade during the second part of the 19th century (1850-1913). It uses both geographical and sectoral dimension. Products are analyzed at a highly disaggregated level (corresponding to the SITC rev.3). We have studied imports from 41 countries and exports to 63 destinations.\r\nThe article shows that France has faced problems to benefit from the global economic growth induced by the first globalization from the end of the 1870’s because of a weakness in geographical and sectoral diversification. Indeed, France withdraws on close markets and is not able to take advantage of emerging countries’ economic development.
    Keywords: International trade, Intra-Industry trade, 1st globalization, France
    JEL: N7
    Date: 2012
  3. By: Cizakca, Murat
    Abstract: ABSTRACT This article first identifies the basic theoretical characteristics of an Islamic economy as discussed by contemporary Muslim economists. Then inquires whether these characteristics were ever implemented in history. The next question tackled concerns the consequences. The author asks whether an Islamic economy has ever led to sustained economic growth. In view of the powerful evidence, the answer to the question is a resounding and definitive, `yes`. An attempt has also been made to explain the institutional mechanisms by which this success has been achieved. Finally, the question of decline is also tackled followed by policy proposals to remedy the situation.
    Keywords: Islamic capitalism; economic development and Islam;Economic decline and Islam
    JEL: Z12 N00 N40
    Date: 2012–10–18
  4. By: Timothy C. Johnson
    Abstract: This paper presents the contemporary Fundamental Theorem of Asset Pricing as being equivalent to approaches to pricing that emerged before 1700 in the context of Virtue Ethics. This is done by considering the history of science and mathematics in the thirteenth and seventeenth century. An explanation as to why these approaches to pricing were forgotten between 1700 and 2000 is given, along with some of the implications on economics of viewing the Fundamental Theorem as a product of Virtue Ethics. The Fundamental Theorem was developed in mathematics to establish a `theory' that underpinned the Black-Scholes-Merton approach to pricing derivatives. In doing this, the Fundamental Theorem unified a number of different approaches in financial economics, this strengthened the status of neo-classical economics based on Consequentialist Ethics. We present an alternative to this narrative.
    Date: 2012–10
  5. By: Alberto Rinaldi
    Abstract: The Emilia-Romagna region is an exemplary case of industrial development based on systems of small and medium-sized enterprises. Since the 1980s it has become a common reference in the international debate on Post-Fordism. This paper analyzes the role of small and medium-sized enterprises in the development of region’s economy. After presenting a short profile of the dynamics and structural features of the region’s industrialization, the paper reconstructs the debate among economists and politicians about the role of small and medium-sized enterprises in the Emilian economy: from the dominant positions in the mid-20th century economic theory that saw them as unavoidably backward and inefficient, to Togliatti’s innovative proposal for a strategic alliance between the working class and the small entrepreneurs, the debate on productive decentralization, the discovery of industrial districts up to the more recent analysis on the rise of district lead firms and medium-sized firms of the «forth capitalism»
    Keywords: Economia; Pci; Piccole imprese; Emilia-Romagna;
    JEL: B2 L6 N9
    Date: 2012–05
  6. By: Karen Clay; Jeff Lingwall; Melvin Stephens, Jr.
    Abstract: This paper examines the effects of introducing compulsory attendance laws on the schooling of U.S. children for three overlapping time periods: 1880-1927, 1890-1927, and 1898-1927. The previous literature finds little effect of the laws, which is somewhat surprising given that the passage of these laws coincided with rising attendance. Using administrative panel data, this paper finds that laws passed after 1880 had significant effects on enrollment and attendance. Laws passed after 1890, for which both administrative and retrospective census data are available, had significant effects on enrollment, attendance, and educational outcomes. In both cases, the timing of increases in enrollment and attendance is consistent with a causal effect of the laws. For men in the 1898-1927 period who reported positive wage income in the 1940 census, compulsory attendance laws increased schooling and wage income. The OLS estimates of the return to a year of schooling are 8 percent and the IV estimates are 11 to 14 percent.
    JEL: J24 N21 N22
    Date: 2012–10
  7. By: Gokmen, Gunes (Bocconi University)
    Abstract: In a series of influential studies, Huntington (1993a, 1993b, 1998) argued that the fundamental source of conflict in the post-Cold War world will not be primarily ideological or economic, but rather the great divisions among humankind. Given the fault lines between civilizations, the primary axis of conflict in the future will be civilization clashes. This paper tests Huntington’s hypothesis evaluating the impact of civilizations on militarized interstate disputes. In particular, we investigate whether countries that belong to different civilizations tend to be more involved in con.ict than countries that belong to the same civilization. We show that over the period of 1816-2001, dissimilarity in civilization in a dyad has no effect on conflict involvement. However, even after controlling for temporal dependence, and for geographic, political, military and economic factors, being part of different civilizations in the post-Cold War period brings about 63.6% higher probability of conflict than belonging to the same civilization, whereas this effect is insignificant during the Cold War. Moreover, we show that the element of civilizations that triggers belligerent relations the most is the language channel, despite Huntington’s unyielding emphasis on religion.
    Keywords: civilization; clash; conflict; culture; militarized dispute
    JEL: F51 N40 Z10
    Date: 2012–10–19
  8. By: Katja Biedenkopf
    Abstract: This paper examines the ways in which the EU greenhouse gas (GHG) emissions trading system (ETS) affected the design of similar programs in North America. It investigates the conditions under which EU pioneering policy can play a role in extra-EU jurisdictions’ policy-making. The empirical investigation finds that the EU’s promotion of emissions trading was successful to some extent. The EU did not influence or trigger the inception of GHG emissions trading programs in North America. The EU ETS, however, played a role in the design process of the North American programs. Actors learned from elements of the EU system. Domestic North American factors were the triggers and drivers of the agenda-setting stage and dominated the policy adoption stage while the EU ETS significantly contributed to the policy formulation processes. The EU ETS played a role at the technical level rather than at the level of political deliberations and decision-making. The EU’s policy promotion efforts depended on the demand in North America. The resonance and receptiveness in North America were decisive factors. The EU was not an importunate persuader. Learning from the ETS was to a significant part demand-driven.
    Keywords: new technologies; regulations; environmental policy
    Date: 2012–09–17
  9. By: Christopher Spencer (School of Business and Economics, Loughborough University, UK); Paul Temple (School of Economics, University of Surrey, Guildford, UK)
    Abstract: This paper considers the contribution of voluntary consensus based standards, as developed through the British Standards Institution (BSI), to collective learning and productivity growth in Britain. It discusses the pivotal contribution of professional engineers to the establishment of a committee based national standards setting body that developed an important model of consensus standardisation. This model was imitated into new areas at home and overseas. We argue that by 1931 the catalogue of BSI standards represented a considerable stock of codifed knowledge whose growth reflected that of underlying aggregate technological advance. This claim is validated by its successful incorporation into an econometric model that suggests that this mode of standardisation has made a significant contribution to productivity growth in Britain.
    Keywords: standards, technological change, productivity
    JEL: O11 O33 O47 L52 C22
    Date: 2012–10
  10. By: Che, XiaoGang (University of Alberta, Department of Economics); Humphreys, Brad (University of Alberta, Department of Economics)
    Abstract: We analyze the formation of rival leagues in professional team sports, one of the least studied forms of competition in sport. We survey the economic history of professional sports leagues in North America and develop stylized facts about rival league formation and develop a game-theoretic model of entry of a rival league to an existing market to explain these stylized facts. This model accounts for the strategic interaction between the incumbent and rival league and costs associated with acquiring new players from the incumbent league. The model predicts that either expanding to deter rival league formation, or allowing a rival league to form and then merging with that league is a subgame perfect equilibrium, and that incumbent leagues will pay players relatively high salaries to deter entry by a rival league.
    Keywords: professional team sports; rival league; monopsony
    JEL: D42 L12 L83
    Date: 2012–10–01
  11. By: Sotiropoulos, Dimitris P. (Kingston University London)
    Abstract: The paper revisits the sequence of events leading to the 1992-93 crisis of the European Monetary System’s Exchange Rate Mechanism in the context of International Political Economy. The paper reconsiders the crisis, emphasising the workings of monetary unions and contemporary financial markets. The lessons to be drawn could help in understanding the contemporary crisis of the Euro area.
    Keywords: European Monetary System; monetary unions; currency crises
    JEL: F31 F36 F59 G11
    Date: 2012–10
  12. By: McCallum, Bennett T. (Carnegie Mellon University; National Bureau of Economic Research)
    Abstract: In this paper Professor McCalllum reviews the different forms researchers have attempted to introduce a meaningful role of Money in New-keynesian models typically used in the monetary policy analysis at central banks. The paper concludes that, there is still no convincing argument toward the need of including monetary aggregates into the structure of New Keynesian models.
    Date: 2012–10
  13. By: Michael Dietrich (University of Sheffield - University of Sheffield); Jackie Krafft (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS))
    Abstract: The Handbook on the Economics and Theory of the Firm explores both the economics of the firm and the theory of the firm, two areas which were traditionally treated separately in the literature. On the one hand, the former refers to the structure, organization and boundaries of the firm, while the latter is devoted to the analysis of behaviours and strategies in particular market contexts. The novel concept underpinning this authoritative volume is that these two areas closely interact, and that a framework must be articulated in order to illustrate how linkages can be created. This introduction is dedicated to comprehensively develop this interpretative framework.
    Keywords: Economis and theory of the firm, Handbook
    Date: 2012–08–24
  14. By: Jack Boorman (Emerging Markets Forum); José Fajgenbaum (Centennial Group International and the Emerging Markets Forum); Herve Ferhani (Centennial Group International and the Emerging Markets Forum); Manu Bhaskaran (Centennial Asia Advisors); Drew Arnold (Centennial Group International and the Emerging Markets Forum); Harpaul Alberto Kohli (Centennial Group International and the Emerging Markets Forum)
    Date: 2012–10
  15. By: Amavilah, Voxi Heinrich
    Abstract: This paper summarizes reactions to the theory of contestable markets and industry structure. The reactions came immediately after the theory was published. The summary finds that the proposed theory stands on sound grounds. However, empirically the theory leaves much to be desired especially for practical policy in developing countries.
    Keywords: Baumol-Panzar-Willig; perfectly contestable; perfectly sustainable; Ramsey welfare criteria; constestable markets; industry structure
    JEL: D21 L16 L11 D63 L22 D43 L29
    Date: 2012–09–16
  16. By: Susan Herbst-Murphy
    Abstract: The U.S. General Services Administration’s SmartPay program is the world’s largest commercial card portfolio. Nearly every state uses payment cards to electronically distribute unemployment insurance, child support, Temporary Assistance to Needy Families, or other funds. Federal, state, and local governments, as well as universities and other public-sector organizations, accept payments made with debit, credit, and prepaid cards. Recognizing the significant use of the payment card system by state and federal agencies, the Payment Cards Center hosted a conference on July 11 and 12, 2011 to explore the reasons why the public sector has adopted payment card options, the benefits that have resulted, and the challenges that must be managed.
    Keywords: Payment systems ; Electronic funds transfers
    Date: 2012

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