New Economics Papers
on Business, Economic and Financial History
Issue of 2013‒01‒26
33 papers chosen by

  1. These Are the Good Old Days: Foreign Entry and the Mexican Banking System By Stephen H. Haber; Aldo Musacchio
  2. Heights and Development in a Cash-Crop Colony: Living Standards in Ghana, 1870-1980 By Alexander Moradi, Gareth Austin and Jorg Baten
  3. An agency-oriented model to explain vine-growing specialization in the province of Barcelona (Catalonia, Spain) in the mid-nineteenth century By MARC BADIA-MIRO; ENRIC TELLO
  4. World human development : 1870-2007 By Leandro Prados de la Escosura
  5. Why Did the Netherlands Develop so Early? The Legacy of the Brethren of the Common Life By Bas ter Weel; Semih Akcomak; Dinand Webbink
  6. Financing Japan’s World War II occupation of Southeast Asia By Gregg Huff; Shinobu Majima
  7. History and Urban Primacy: The Effect of the Spanish Reconquista on Muslim Cities By David Cuberes; Rafael González-Val
  8. Geography, Writing System and History of Ancient Civilizations By Mo, Pak-Hung
  9. Demand for Cuban Tobacco as seen through Cuban Exports By Fernández-de-Pinedo, Nadia
  10. Birthing a Nation: The Effect of Fertility Control Access on the 19th Century Demographic Transition By Joanna Lahey
  11. A Bibliometric Based Review on Social Entrepreneurship and its Establishment as a Field of Research By Sean Patrick Sassmannshausen; Christine Volkmann
  12. Urban Mortality Transitions: The Role of Slums By Günther Fink; Isabel Günther; Kenneth Hill
  13. Protectionism and Protectionists Theories in the Balkans in the Interwar Period By Bertrand BLANCHETON; Nikolay NENOVSKY
  14. Patterns and causes of growth of European agricultural production, 1950-2005 By Miguel Martín-Retortillo; Vicente Pinilla
  15. Modernization of Agriculture and Long-Term Growth By Dennis Tao Yang; Xiaodong Zhu
  16. Theocracy is just another Form of Dictatorship: Theory and Evidence from the Papal Regimes By Fabio Padovano; Ronald Wintrobe
  17. Esclavagisme et colonisation : Quelles conséquences contemporaines en Afrique ? - Résumé critique des travaux de l'économiste Nathan Nunn By Kodila-Tedika, Oasis
  18. Competition Among the Exchanges before the SEC: Was the NYSE a Natural Hegemon? By Eugene N. White
  19. Asia and The G20 By Peter Drysdale; Sébastien Willis
  20. The Trade-off between Fertility and Education: Evidence from the Korean Development Path By Jun, Bogang
  21. The Golden Dilemma By Claude B. Erb; Campbell R. Harvey
  22. The Transmission of Democracy: From the Village to the Nation-State By Paola Giuliano; Nathan Nunn
  23. Jacob Bielfeld's ''On the ''Decline of States''(1760) and its Relevance for Today By Erik S. Reinert
  24. Still more on why we should bury the Marginal Productivity Theory of the Price of Capital: A Supplementary Note By Roy Grieve
  25. Primitivization of the EU Periphery: The Loss of Relevant Knowledge By Erik S. Reinert
  26. Portugal Before and After the European Union: Facts on Nontradables By Fernando Alexandre; Pedro Bação
  27. Acuicultura y globalización: el caso de la industria del mejillón By Ángel Fernández González; Jesús Giráldez Rivero
  28. Predestination and the Protestant ethic By Larbi Alaoui; Alvaro Sandroni
  29. Trade liberalization and the balance of payments constraint with intermediate imports: the case of Mexico revisited By Robert A. Blecker; Carlos A. Ibarra
  30. Monthly industrial output in China since 1983 By Holz, Carsten A
  31. Equilibrio regional y patrones de migración para el continente americano 1960 – 2005: Análisis espacial por panel de datos By Hernán Enriquez Sierra; Jacobo Campo Robledo
  33. Do entrepreneurs matter? By Becker, Sascha O.; Hvide, Hans K.

  1. By: Stephen H. Haber; Aldo Musacchio
    Abstract: In 1997, the Mexican government reversed long-standing policies and allowed foreign banks to purchase Mexico’s largest commercial banks and relaxed restrictions on the founding of new, foreign-owned banks. The result has been a dramatic shift in the ownership structure of Mexico’s banks. For instance, while in 1991 only one percent of bank assets in Mexico were foreign owned, today they control 74 percent of assets. In no other country in the world has the penetration of foreign banks been as rapid or as far-reaching as in Mexico. In this work we examine some of the important implications of foreign bank entry for social welfare in Mexico. Did liberalization lead to an increase (or decrease) in the supply of credit? Did liberalization lead to an increase (or decrease) in the cost of credit? Did liberalization lead to an increase (or decrease) in the stability of the banking system? In order to answer these questions, we must first ask, "increase (or decrease), measured on what basis?" There are, in fact, two distinct conceptual frameworks through which one can assess the impact of foreign bank entry. One is concerned with measuring the short-run impacts of foreign entry on credit abundance, pricing, and observable stability using reduced form regressions. The other is an institutional economics conception of how to measure performance. It is focused on understanding whether foreign entry gave rise to difficult-to-reverse changes in the political economy of bank regulation, which will affect competition and stability in the long term, outside the period that may be observed empirically. We employ both conceptions in this paper.
    JEL: G18 G21 N26 N46
    Date: 2013–01
  2. By: Alexander Moradi, Gareth Austin and Jorg Baten
    Abstract: While Ghana is a classic case of economic growth in an agriculturalâ€export colony, scholars have queried whether it was sustained, and how far its benefits were widely distributed, socially and regionally. Using height as a measure of human wellâ€being we explore the evolution of living standards and regional inequality in Ghana from 1870 to 1980. Our findings suggest that, overall, living standards improved during colonial times and that a trend reversal occurred during the economic crisis in the 1973â€83. In a regression analysis we test several covariates reflecting the major economic and social changes that took place in early twentiethâ€century Ghana including railway construction, cocoa production, missionary activities, and urbanization. We find significant height gains in cocoa producing areas, whereas heights decreased with urbanization.
    Keywords: Nutrition, health, anthropometrics, colonial, living standards
    JEL: I30 I32 N37 O10
    Date: 2013
  3. By: MARC BADIA-MIRO; ENRIC TELLO (Universitat de Barcelona)
    Abstract: We present a model of vine-growing specialization in the municipalities of the province of Barcelona in the mid-19th century that explains how a comparative advantage arose through a process deemed to be one of the starting points for Catalan industrialization. The results confirm the roles played by the Boserupian population-push on land-use intensification and the Smithian market-pull in a growing demand from the Atlantic economy. They also stress the conditioning function of agro-ecological endowments and socio-institutional settings related to income inequality. Vineyard planting gave rise to less unequal rural communities until 1820, but inequality grew again afterwards.
    Keywords: rental-wage ratios, population push, rural inequality, vine-growing, grapevines suitability, agricultural specialization, market integration, catalonia
    JEL: I39 N33 N53 Q56
    Date: 2013
  4. By: Leandro Prados de la Escosura
    Abstract: How has wellbeing evolved over time and across regions? How does the West compare to the Rest? What explains their differences? These questions are addressed using an historical index of human development. A sustained improvement in wellbeing has taken place since 1870. The absolute gap between OECD and the Rest widened over time, but an incomplete catching up –largely explained by education- has occurred since 1913 but fading away after 1970, when the Rest fell behind the OECD in terms of longevity. As the health transition was achieved in the Rest, the contribution of life expectancy to human development improvement declined. Meanwhile, in the OECD, as longevity increased, healthy years expanded. A large variance in human development is noticeable in the Rest since 1970, with East Asia, Latin America and North Africa catching up to the OECD, while Central and Eastern Europe and Sub-Saharan Africa falling behind
    Keywords: Wellbeing, Human Development, HDI, Life Expectancy, Education
    JEL: O15 O50 I00 N30
    Date: 2013–01
  5. By: Bas ter Weel; Semih Akcomak; Dinand Webbink
    Abstract: In many Dutch cities there are Geert Groote schools. This is no coincidence, because Geert Groote's (1340-1384) ideas form the foundation of modern education in the Netherlands and many other countries. Much less known is that his investments, and those of his followers, have put the Netherlands on the pathway towards the Golden Age. In this study, we describe the mechanism by which the influence of Groote so impressive. Furthermore, we present econometric estimates that indicate a long-lasting legacy. This research provides an explanation for high literacy, economic growth and societal developments in the Netherlands in the period before the Dutch Republic. We establish a link between the Brethren of the Common Life (BCL), a religious community founded by Geert Groote in the city of Deventer in the late fourteenth century, and the early development of the Netherlands. The BCL stimulated human capital accumulation by educating Dutch citizens without inducing animosity from the dominant Roman Catholic Church or other political rulers. Human capital had an impact on the structure of economic development in the period immediately after 1400. The educated workforce put pressure on the Habsburg monarchy leading to economic and religious resentment and eventually to the Revolt in 1572. The analyses show that the BCL contributed to the high rates of literacy in the Netherlands. In addition, there are positive effects of the BCL on book production and on city growth in the fifteenth and sixteenth century. Finally, we find that cities with BCL-roots were more likely to join the Dutch Revolt. These findings are supported by regressions that use distance to Deventer as an instrument for the presence of BCL. The results are robust to a number of alternative explanations. <em>The statistical programme used for the regression analysis and the data used for this research can also be downloaded below (attachment, if necessary rename the file as a .zip).</em>
    JEL: N33 N93 O15 J20
    Date: 2013–01
  6. By: Gregg Huff (Pembroke College, University of Oxford); Shinobu Majima (Faculty of Economics, Gakushuin University)
    Abstract: This paper analyzes how Japan financed its World War II occupation of Southeast Asia, the transfer of resources to Japan, and the monetary and inflation consequences of Japanese policies. In Malaya, Burma, Indonesia and the Philippines, the issue of military scrip to pay for resources and occupying armies greatly increased money supply. Despite high inflation, hyperinflation hardly occurred because of a sustained transactions demand for money, because of Japan's strong enforcement of monetary monopoly, and because of declining Japanese military capability to ship resources home. In Thailand and Indochina, occupation costs and bilateral clearing arrangements created near open-ended Japanese purchasing power and allowed the transfer to Japan of as much as a third of Indochina's annual GDP. Although the Thai and Indochinese governments financed Japanese demands mainly by printing large quantities of money, inflation rose only in line with monetary expansion due to money's continued use as a store of value in rice-surplus areas.
    Keywords: War, Financial and macroeconomic crises, Resource transfer, Occupation costs, Bilateral clearing arrangements, Seigniorage, Hyperinflation, Greater East Asian Co-Prosperity Sphere, Japan, Southeast Asia
    JEL: G01 N15 N45 P44
    Date: 2013–01–16
  7. By: David Cuberes (Department of Economics, The University of Sheffield); Rafael González-Val (Department of Economics, The University of Sheffield)
    Abstract: This paper aims to study the effect of a major historical event on the Spanish city size distribution, the Spanish Reconquista. This was a long military campaign that aimed to expel Muslims from the Iberian Peninsula. The process started in the early 1300s and ended around 1500, when the entire peninsula was brought back under Christian rule. The Reconquista had a major effect on the evolution of the Muslim and Christian populations during this period and offers a unique “quasi-natural” experiment. The Reconquista dramatically decreased the population of the three main cities of the Moorish Caliphate - Granada, Cordoba, and Seville. This represents a very particular shock in the sense that these were cities with a vast majority of Muslim population, which was then replaced by Christian residents. Using a methodology closely related to Nitsch (2003) we show that the effect of the Reconquista on both the relative size of these three cities was indeed dramatic and that it cannot be simply explained by similar trends in other important national or international cities. Granada lost 53% of its population during the 1300-1800 period, whereas the figures for Cordoba and Seville were 33% and 7%, respectively. These impressive population drops are still present even after controlling for a large set of country and city-specific socioeconomic indicators. We interpret these results as suggestive that the Spanish Reconquista shock had permanent effects, and therefore, in the context studied here, history does not matter for city growth. Our results suggest that the locational fundamentals that made these three cities the most populated ones in the Peninsula for about 500 years ceased to be crucial growth determinants once Christians took control of them.
    Keywords: urban primacy; locational fundamentals; city growth; lock-in effects
    JEL: R12 N9
    Date: 2013
  8. By: Mo, Pak-Hung
    Abstract: We find an undiscovered effect of geography on the choices of writing system in ancient civilizations that in turn drive their courses of historical evolution. The fates of the ancient civilizations were predetermined by the causation spirals generated by the writing system chosen by their ancient ancestors. Understanding the mechanism can enlighten our present political choices that in turn determine the future course of humankind evolution. It can also inspire us about the clue to build an inclusive global society that can integrate the cumulative knowledge, ideas and technology of the diverse speech-communities in the world for a better quality of living for all.
    Keywords: Geography; Writing System; Historical Evolution
    JEL: O11 O43 O29 O57 N4
    Date: 2013
  9. By: Fernández-de-Pinedo, Nadia (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid)
    Abstract: During the nineteenth century Spain did not import the majority of Cuban tobacco, nor was most of it consumed in Spain. Spain neither consumed nor re-exported Cuban tobacco. Cuban tobacco, due to its high quality, was too expensive to be able to compete with tobacco of lesser quality which was, therefore, cheaper. The Spanish tax office preferred to take in huge amounts of money by taxing consumption in general rather than promoting Cuban tobacco. For this reason, Spain imported tobacco of mediocre and poor quality and taxed it through the government-licensed tobacconists. However, Cuban tobacco was successful as it could be exported freely in exchange for lower customs duties, thus allowing an increase in production as well as the possibility of reaching, on the international market, prices matching its quality. This paper attempts to discern how Spain grew in its colonies the world's best tobacco but did not consume it nor re-exported it. The analysis of Cuban tobacco exports reveals the most relevant aspects that influenced the consolidation of these circumstances.
    Keywords: Tobacco, Commerce, Fiscal System, Cuban Economic History, Consumption, Spain
    JEL: H20 L66 L81 N46 N56
    Date: 2013–01
  10. By: Joanna Lahey
    Abstract: During the 19th century, the US birthrate fell by half. While previous economic literature has emphasized demand-side explanations for this decline—that rising land prices and literacy caused a decrease in demand for children—historians and others have emphasized changes in the supply of technologies to control fertility, including abortion and birth control. In this paper I exploit the introduction during the 19th century of state laws governing American women’s access to abortion to measure the effect of changes in the supply of fertility technologies on the number of children born. I estimate an increase in the birthrate of 4 to 12% when abortion is restricted, which lies within the ranges of estimates found for the effect of fertility control supply restrictions on birthrates today. The importance of legal abortion in reducing 19th-century birthrates helps to account for a previously unexplained portion of the demographic transition. This paper posits that there has long been a demand, often unmet, for fertility control that should be considered in future demographic research as well as in policy formulation.
    JEL: J11 J13 K3 N31
    Date: 2013–01
  11. By: Sean Patrick Sassmannshausen (Schumpeter School of Business and Economics, University of Wuppertal); Christine Volkmann (Schumpeter School of Business and Economics, University of Wuppertal)
    Abstract: This paper provides an overview on the state of art of research on social entrepreneurship and the establishment of this topic in the academic world. It uses scientometric methods, especially bibliometrics, in measuring the maturity of social entrepreneurship research. The empirical part reveals the increasing number of literature, the institutionalization of social entrepreneurship in seven dimensions, the emergence of thematic clusters, and methodological issue. The paper makes concrete suggestions on how to overcome methodological challenges at the boarder of advanced qualitative and early quantitative research designs. Using Harzing’s “Publish or Perish” software this article furthermore provides a ranking of the 20 most cited academic contributions in social entrepreneurship. Surprisingly, almost half of the most cited papers have not been published in journals but in books, rising doubts on the (over-)rating of journal publications.
    Keywords: Social entrepreneurship, bibliometric study, citations, review, organizational establishment, academic institutionalization, development of empirical measurement scales
    Date: 2013–01
  12. By: Günther Fink (Harvard School of Public Health); Isabel Günther (ETH Zurich); Kenneth Hill (Harvard School of Public Health)
    Abstract: High urban mortality delayed transitions to low mortality in 19th century Europe, but an urban mortality advantage emerged as European transitions progressed into the 20th century. Recent analysis has suggested that high mortality in the rapidly growing urban slums of developing countries might once again delay transitions to low mortality in the 21st century. In this paper we use data from Demographic and Health Surveys across 37 countries to investigate this hypothesis. We document the changes in child mortality over the last twenty years, with a special focus on urban slums and on differences between small and large cities. We show that slum areas fare worse than other urban areas across all child mortality categories and all city categories, but that generally children growing up in urban slums fare at least as well as children in rural areas. Moreover, the improvements in child mortality appear to have affected slum residents at least as much as other urban and rural residents, indicating a neutral role of slum settlements in the mortality transition of developing countries.
    Keywords: child mortality, urban slums, mortality transition
    Date: 2013–01
  13. By: Bertrand BLANCHETON; Nikolay NENOVSKY
    Abstract: This paper makes a comparative analysis between two unique theories of international trade and protectionism which emerged in Bulgaria and Romania during the period between the two World Wars as a response to the specific economic environment and the spread of economic ideas coming from economically developed countries. These are the general theory of protectionism based on Mihail Manoilescu’s (1891-1950) ideas of national productivity and the theory of international trade and productive forces forwarded by Konstantin Bobchev (1894-1976). Probing into the two theories allows the formulation of interesting academic and purely practical assertions and ideas that could help understand the trajectories and limits of the independent development of peripheral European economies. As in the past, so today, Bulgaria and Romania share more or less similar problems – those of the catching-up economies, lack of own capitals, severe strain on their balance of payments, dependence on the leading countries in the European Union, etc. Following this logic, a look back at the “protectionist past” of the Balkan countries opens new possibilities of highlighting the so-called Bairoch paradox, which claims the positive impact of protectionism on economic growth, and which in a sense comes into conflict with the main postulates of free international trade (Bairoch, 1999 [1993]; Becuwe, Blancheton, 2011).
    Keywords: economic thought, theories of protectionism, protectionism, Balkan economies, Bulgaria, Romania
    JEL: B30 N7
    Date: 2013
  14. By: Miguel Martín-Retortillo (Universidad de Zaragoza, Spain); Vicente Pinilla (Universidad de Zaragoza, Spain)
    Abstract: The aim of this work is to analyze the evolution of agricultural production in Europe after World War Two. To study the evolution of production, we want to find the causes of its growth. We will start with the role played by the factors of production. We will also want to estimate the contribution to output growth from improvements in efficiency, for which we will calculate the total factor productivity growth. Preliminary results show three possible patterns to explain the evolution of agricultural production. The first one which included Western countries and Germany based their growth in the raised efficiency and a higher use of capital. The opposing model is that of the countries with centrally planned economies. In this group of countries the use of capital was crucial. The efficiency of the system improved, but by considerably less than in the rest of Europe. The intermediate situation is that of the lesser developed countries in the southern European periphery and the Nordic countries, but in distinction to those of the Soviet bloc, they tended to converge much earlier with the model of the Western countries.
    Keywords: Agricultural productivity, European agriculture, European economic history
    JEL: N50 N54 Q10 Q11
    Date: 2013–01
  15. By: Dennis Tao Yang; Xiaodong Zhu
    Abstract: This paper develops a two-sector model that illuminates the role played by agricultural modernization in the transition from stagnation to growth. When agriculture relies on traditional technology, industrial development reduces the relative price of industrial products, but has a limited effect on per capita income because most labor has to remain in farming. Growth is not sustainable until this relative price drops below a certain threshold, thus inducing farmers to adopt modern technology that employs industry-supplied inputs. Once agricultural modernization begins, per capita income emerges from stasis and accelerates toward modern growth. Our calibrated model is largely consistent with the set of historical data we have compiled on the English economy, accounting well for the growth experience of England encompassing the Industrial Revolution.
    Keywords: long-term growth, transition mechanisms, relative price, agricultural modernization, structural transformation, the Industrial Revolution, England
    JEL: O41 O33 N13
    Date: 2013–01–18
  16. By: Fabio Padovano (Condorcet Center for Political Economy, University of Rennes 1 and CREM-CNRS UMR 6211, France - DIPES, Università Roma Tre, Italy); Ronald Wintrobe (University of Western Ontario, USA)
    Abstract: This paper tests the explanatory and predictive power of a theory of dictatorship (e.g., Wintrobe 1998, 2007) when applied to the case of theocracy and in particular to the history of the temporal power of the Popes. We consider the behaviour of the Catholic theocracy in the Papal States, as this was a very long lasting theocracy, exposed to many historical shocks that reveal information about the incentives and constraints that characterize it. We use this information to test the explanatory power of the theory of dictatorship, showing that never in the history of the temporal power of the Church have the four categories of dictatorship that the theory foresees (tinpot, tyrant, totalitarian and conceivably timocrat) proven inadequate. Theocracy is just like any other form of dictatorship. Furthermore, we test some of the predictions of the theory of dictatorship about the durability of, and the source of opposition to the various regimes on data about the Papacy. The results appear to support the theory.
    Keywords: Matching, Dictatorship, Theocracy, Papacy
    JEL: Z12 N83 D79
    Date: 2012–12
  17. By: Kodila-Tedika, Oasis
    Abstract: This article aims to highlight the first work of economist Nathan Nunn on slavery and colonization. Indeed, for the latter, these two historical facts, quantifiable consequences, have defined the path of economic development of African countries. Secondly, this paper discusses the findings of Nunn with the prism of literature ad hoc and do not miss to criticize. Cet article a pour objectif de mettre en évidence en premier lieu les travaux de l’économiste Nathan Nunn sur l’esclavagisme et la colonisation. En effet, pour celui-ci, ces deux faits historiques, aux conséquences quantifiables, ont défini la trajectoire du développement économique des pays africains. En second lieu, cet article discute les conclusions de Nunn avec le prisme de la littérature ad hoc et ne manque pas de les critiquer.
    Keywords: institutions; esclavagisme; colonisation; Afrique; Nathan Nunn
    JEL: O11 O55 O43 P51 P14 N17
    Date: 2013–01–12
  18. By: Eugene N. White
    Abstract: Improved information technology and higher volume should drive orders to be concentrated in one market, lowering the costs of transactions. However, the opposite occurred during the bull market of the 1920s when rapid technological change spawned a flood of new issues. This paper employs newly recovered data for 1900-1933 on the volume and seat prices of regional exchanges to examine how these rivals successfully competed with the NYSE, leading to its relative decline at the zenith of the market. The history of U.S. exchanges reveals that the tendency towards concentration of trading is periodically reversed when new industries, whose technologies are risky and unfamiliar, are more easily accommodated by existing or new rivals to the dominant exchange
    JEL: G18 N21 N22
    Date: 2013–01
  19. By: Peter Drysdale (East Asia Bureau of Economic Research); Sébastien Willis (Crawford School of Public Policy)
    Abstract: The industrial transformation of Asia is a development on a scale unprecedented in human history. Following the industrial revolution towards the end of the eighteenth century, Europe and North America each in turn came to dominate the world economy and global power. Now economic weight is shifting towards population weight due to convergence in productivity. Asia is re-emerging as the world’s biggest element in the world economy. In 1980, Asia produced just under 20 per cent of global output measured at purchasing power parity. In 2010 that share was 35 per cent.2 This has happened in the space of a few decades whereas it took more than three quarters of a century for the industrial revolution to transform the European economy and political power. In the last twenty five years the economy of China, a nation of 1.3 billion, has grown by a factor of twenty. Twenty years from now, even ten years from now, Asia’s influence will be even greater. By 2025, one in two of the world’s population and four of the 10 largest economies will be in Asia. Asia is likely then to account for almost half of the world output and more than half world trade, with China accounting for half of that. In 2010, China’s per capita income was 30 per cent of the United States’; by 2050 it will be 55 per cent and India’s likely 42 per cent. The Chinese economy will likely be bigger than America’s within the coming half decade. Asia has never been of greater global significance, as global economic and strategic weight shifts from west to east. Global institutional frameworks are coming to reflect this, with six Asian members of the G20, including Australia. These developments set the context in which the G20 has emerged as a new fulcrum for global economic governance.
    Keywords: G20, China, India, G7, International policy coordination, the G20 summit, financial crisis
    Date: 2013–01
  20. By: Jun, Bogang
    Abstract: Unified Growth Theory suggests the demographic transition and the associated rise in human capital formation were critical forces in the transition from Malthusian stagnation to modern economic growth. This paper provides empirical evidence in support of this hypothesis based on the development process in Korea. Exploiting variations in fertility in human capital formation across regions in Korea over the period 1970 to 2010, the study establishes that the process of development in Korea was associated with a reduction in child quantity and increase child quality.
    Keywords: Demographic transition; Quantity-quality trade-off; Unified Growth Theory
    JEL: J13 N15 I25
    Date: 2013–01–23
  21. By: Claude B. Erb; Campbell R. Harvey
    Abstract: While gold objects have existed for thousands of years, gold’s role in diversified portfolios is not well understood. We critically examine popular stories such as ‘gold is an inflation hedge’. We show that gold may be an effective hedge if the investment horizon is measured in centuries. Over practical investment horizons, gold is an unreliable inflation hedge. We also explore valuation. The real price of gold is currently high compared to history. In the past, when the real price of gold was above average, subsequent real gold returns have been below average consistent with mean reversion. On the demand side, we focus on the official gold holdings of many countries. If prominent emerging markets increase their gold holdings to average per capita or per GDP holdings of developed countries, the real price of gold may rise even further from today’s elevated levels. In the end, investors face a golden dilemma: 1) embrace a view that ‘those who cannot remember the past are condemned to repeat it’ and the purchasing power of gold is likely to revert to its mean or 2) embrace a view that the emergence of new markets represent a structural change and ‘this time is different’.
    JEL: E58 G10 G11 G15 G28 N20
    Date: 2013–01
  22. By: Paola Giuliano; Nathan Nunn
    Abstract: We provide evidence that a history of democracy at the local level is associated with contemporary democracy at the national level. Auxiliary estimates show that a tradition of local democracy is also associated with attitudes that favor democracy, with better quality institutions, and higher level of economic development.
    JEL: N30 P0 Z1
    Date: 2013–01
  23. By: Erik S. Reinert
    Abstract: The idea of economic decline has been with us for a very long time. The notion that human societies are bound to follow the cyclical patterns of nature . birth, life, decline and death . is found from the Greek philosophy of Plato to the Arab philosophy of Ibn-Khaldun. Only late Renaissance and Enlightenment Entzauberung. demystification . of the world picture view freed mankind from the cyclical vicissitudes of the blindfolded god-dess Fortuna and opened up for rational economic policy to prevent booms and bust.
    Date: 2013–01
  24. By: Roy Grieve (Department of Economics, University of Strathclyde)
    Abstract: The purpose of this note is to supplement the author’s earlier remarks on the unsatisfactory nature of the neoclassical account of how the return on capital is determined. (See Strathclyde Discussion Paper 12-03: “The Marginal Productivity Theory of the Price of Capital: An Historical Perspective on the Origins of the Codswallopâ€). The point is made via a simple illustration that certain matters which are problematical in neoclassical terms are perfectly straightforward when viewed from a classical perspective. Basically, the marginalist model of the nature of an economic system is not fit for purpose in that it fails to comprehend the essential features of a surplus-producing economic system as distinct from one merely of exchange.
    Keywords: marginal productivity theory of distribution; reswitching
    JEL: B13 B51 D33
    Date: 2012–10
  25. By: Erik S. Reinert
    Abstract: The European periphery . from Greece to Spain and the Baltic States . is hard hit by economic crises in the form of unemployment and falling real wages. The immediate reasons for these crises, .the straw that broke the nationsÿ backÿ so to say, are not the same. The countries in crisis may have had irresponsible budget deficits or irresponsible housing and prop-erty booms, but . as this article argues . the present underlying problems in the European Union can partly be attributed to ignoring previously well-understood economic insights and wisdom based on the interplay between geography, technology, and economic structure. This ignored knowledge abounds in the German-speaking literature, in this chapter represented by three economists: Heinrich von Thünen, Friedrich List, and Joseph Schumpeter, whose collective lives span from 1783 to 1950. Although all three worked in the periphery of what is normally referred to as The German Historical School of Economics, they all centered their analysis on a qualitative understanding of economic phenomena which disappeared from ruling economic theory, and consequently also from the understanding of politicians.
    Date: 2013–01
  26. By: Fernando Alexandre (University of Minho and NIPE, Portugal); Pedro Bação (Faculty of Economics University of Coimbra and GEMF, Portugal)
    Abstract: The rise of nontradable sectors has been mentioned as one of the causes of low economic growth and external imbalances in the Portuguese economy. In this paper we describe the main trends and jumps in the evolution of nontradable sectors, since the mid-1950s, using four different databases to shed light on different dimensions of this issue. We show that, despite the pattern of the growth of the share of services being similar to that observed in other developed countries, since the early 1990s it has been significantly larger than in most countries. We find that the shift to nontradables in Portugal has been fast and that it occurred essentially at the expense of agriculture in the period 1953-95, and essentially at the expense of industry in the period 1995-2009. In 2009, the share of nontradables (defined as the sum of services plus construction) in total GVA reached 68%, if we exclude open service sectors, and 81.1%, if we treat all service sectors as nontradable. We also find that more than half of the change towards nontradables since joining the European Union took place in the period 1988-1993. Finally, we show that construction and services facing a strong Government demand were the main drivers of the increasing weight of nontradables in the Portuguese economy since 1986.
    Keywords: nontradable sectors; Portugal; Services; Structural Change.
    JEL: N60 N70 O14
    Date: 2012–12
  27. By: Ángel Fernández González (Universidad de Santiago de Compostela, Spain); Jesús Giráldez Rivero (Universidad de Santiago de Compostela, Spain)
    Abstract: El presente trabajo analiza el proceso de globalización que en la última década experimentaron los productos acuícolas, más concretamente el mejillón. Desde los años setenta España se ha configurado tradicionalmente como uno de los principales países productores y exportadores de este bivalvo a nivel mundial. Una posición asentada en la importante actividad mitilicultora que se concentra abrumadoramente en Galicia, en las rías bajas. Sin embargo, esta ventajosa posición de liderazgo se está viendo amenazada por el surgimiento de nuevos países como Chile, cuyas producciones acuícolas experimentaron en la última década un fuerte despegue de la mano de empresas gallegas y del mediterráneo español. El trabajo se divide en dos partes bien diferenciadas; en la primera, se atiende al proceso de internacionalización de la pesca gallega y la industria transformadora en las últimas décadas, mientras la segunda, se centra en los efectos que la apertura del comercio internacional ha provocado sobre los productores gallegos de mejillón, el peculiar desarrollo de la mitilicultura chilena y el papel jugado por las empresas españolas, así como la incidencia de la crisis económica tanto en las producciones como los mercados
    Keywords: Aquaculture, Mussel, Spanish Business, Globalization
    JEL: L11 L66 N56 Q22
    Date: 2013–01
  28. By: Larbi Alaoui; Alvaro Sandroni
    Abstract: This paper shows an equivalence result between the utility functions of secular agents who abide by a moral obligation to accumulate wealth and those of religious agents who believe that salvation is immutable and preordained by God. This result formalizes Weber's renowned thesis on the connection between the worldly asceticism of Protestants and the religious premises of Calvinism. Furthermore, ongoing economies are often modeled with preference relations such as "Keeping up with the Joneses" which are not associated with religion. Our results relate these secular economies of today and economies of the past shaped by religious ideas.
    JEL: D0 D8
    Date: 2013–01
  29. By: Robert A. Blecker; Carlos A. Ibarra
    Abstract: Previous studies have found that a tightening of the balance of payments (BP) constraint can explain the slowdown in Mexico’s growth after its trade liberalization in the late 1980s. This paper develops a disaggregated model of the BP constraint with two types of exports (manufactured and primary commodities) and two types of imports (intermediate and final goods). Econometric estimates (including tests for structural breaks) show that the BPequilibrium growth rate did not fall, but instead rose in the post-liberalization period, so this model cannot account for the country’s growth slowdown. Instead, the analysis points to the need to consider the real exchange rate as well as internal obstacles and policies.
    Date: 2013
  30. By: Holz, Carsten A
    Abstract: Monthly economic indicators are used for a variety of purposes, from studying business cycles to determining economic policy and making informed business decisions. China’s published monthly industrial output statistics could hardly be more confusing, with changes in variables, in coverage, in measurement, and in presentation. This paper reviews the available official data and proceeds to construct a monthly industrial output series in nominal terms and in real terms for the period since May 1983, economy-wide and for the state sector.
    Keywords: China industrial output; industrial growth; monthly industry data; public sector industrial output; Chinese statistics
    JEL: C43 E01 C80
    Date: 2013–01–10
  31. By: Hernán Enriquez Sierra; Jacobo Campo Robledo
    Abstract: El artículo analiza la dinámica de la migración en el continente americano desde 1960 a 2005 empleando un enfoque de desequilibrio como el propuesto por Sjaastad (1969) y Todaro (1969). Mediante técnicas recientes de econometría espacial se evalúan los flujos migratorios, controlando por el efecto de movilidad del trabajo y el ajuste salarial a escala regional determinados por los salarios reales y por la población de cada país. Adicionalmente, el modelo estimado busca variaciones en la migración teniendo en cuenta características de la población en cada uno de los países, específicamente la proporción de personas en edad de trabajar, desempleo y salario relativo. Estimando la migración neta se tiene que el equilibrio espacial migratorio se ve afectado negativamente por los salarios y positivamente por la oferta de trabajo existente.
    Date: 2012–12–30
  32. By: Vincenzo Scoppa (Dipartimento di Scienze Economiche, Statistiche e Finanziarie, Università della Calabria)
    Abstract: We investigate the role of fatigue in soccer (football). Although this issue is important for the “productivity” of players and the optimal organization of national and international championships, there is a lack of empirical evidence. We use data on all the matches played by national teams in all the tournaments of the FIFA Soccer World Cup (from 1930 to 2010) and the UEFA European Football Championship (from 1960 to 2012). We relate team performance (in terms of goal difference and points gained) to the respective days of rests that teams have had after their previous match, controlling for several measures of teams’ abilities. Using different estimators we show that, under the current structure of major international tournaments, there are no relevant effects of enjoying different days of rest on team performance.
    Keywords: Sports Economics, Soccer, Fatigue, Team Performance, World Cup, European Football Championship
    JEL: L83 J4 J22 L25 C29
    Date: 2013–01
  33. By: Becker, Sascha O. (CAGE @ Warwick University ; CEPR ; CESifo ; Ifo and IZA); Hvide, Hans K. (University of Bergen ; CEPR and University of Aberdeen)
    Abstract: In the large literature on firm performance, economists have given little attention to entrepreneurs. We use deaths of more than 500 entrepreneurs as a source of exogenous variation, and ask whether this variation can explain shifts in firm performance. Using longitudinal data, we find large and sustained effects of en- trepreneurs at all levels of the performance distribution. Entrepreneurs strongly affect firm growth patterns of both very young firms and for firms that have begun to mature. We do not find signficant differences between small and larger firms, family and non-family firms, nor between firms located in urban and rural areas, but we do find stronger effects for founders with high human capital. Overall, the results suggest that an often overlooked factor – individual entrepreneurs – plays a large role in affecting firm performance. Key words: entrepreneurship ; firm performance ; human capital. JEL classification: D21 ; D24 ; J23 ; L11 ; L25 ; G39
    Date: 2013

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.