New Economics Papers
on Business, Economic and Financial History
Issue of 2013‒02‒16
nineteen papers chosen by

  1. A temporal analysis of wealth in eighteenth-century Ottoman Kastamonu By Metin M. Cosgel; Bogac A. Ergene; Atabey Kaygun
  2. Persistence of fortune: Accounting for Population Movements, There was no Post-Columbian Reversal By Areendam Chanda; C. Justin Cook; Louis Putterman
  3. Why Did the Netherlands Develop So Early? The Legacy of the Brethren of the Common Life By Akçomak, I. Semih; Webbink, Dinand; ter Weel, Bas
  4. From Divergence to Convergence: Re-evaluating the History Behind China’s Economic Boom By Brandt, Loren; Ma, Debin; Rawski, Thomas
  5. Are government spending multipliers greater during periods of slack? evidence from 20th century historical data By Michael T. Owyang; Valerie A. Ramey; Sarah Zubairy
  6. The Interwar Housing Cycle in the Light of 2001-2011: A Comparative Historical Approach By Alexander J. Field
  7. On the Evolution of Specie: Circulation and Weight Loss in 18th and 19th Century Coinage. By Velde, F R.
  8. “Law and Economics” Literature and Ottoman Legal Studies By Metin M. Cosgel; Bogac A. Ergene
  9. National Banking's Role in U.S. Industrialization, 1850-1900 By Matthew S. Jaremski
  10. From the Persecuting to the Protective State? Jewish Expulsions and Weather Shocks from 1100 to 1800 By Anderson, R. Warren; Johnson, Noel D; Koyama, Mark
  11. Discrimination or Social Networks? Industrial Investment in Colonial India By Gupta, Bishnupriya
  12. "Inequality and Household Finance during the Consumer Age" By Barry Z. Cynamon; Steven M. Fazzari
  13. Knowledge Systematisation and the Development of a By Beatrice D'Ippoloto; Marcela Miozzo; Davide Consoli
  14. "A 'Trojan Horse' in Daoguang China?: Explaining the flows of silver (and opium) in and out of China" By Irigoin, Alejandra
  15. Ecological debt and historical responsibility revisited - The case of climate change By Olivier Godard
  16. Structural and technological change in the European periphery: The case of Portugal By Argentino Pessoa
  17. Does The John Bates Clark Medal Boost Subsequent Productivity And Citation Success? By Ho Fai Chan; Bruno S. Frey; Jana Gallus; Benno Torgler
  18. Not the Opium of the People: Income and Secularization in a Panel of Prussian Counties By Becker, Sascha; Woessmann, Ludger
  19. Agricultural Price Distortions: Trends and Volatility, Past and Prospective By Kym Anderson

  1. By: Metin M. Cosgel (University of Connecticut); Bogac A. Ergene (University of Vermont); Atabey Kaygun (Bahcesehir University)
    Abstract: This article studies temporal variations in wealth levels and distribution in an Ottoman context during the eighteenth century. By analysing the probate estate inventories of the Muslim deceased in Kastamonu, located in north-central Anatolia, we demonstrate that real wealth levels generally declined over the course of the century. Our analysis also suggests that the economic conditions of poor men, if not women, deteriorated more so than those of the rich, fuelling growing inequality. The article explores the factors that contributed to these trends and discusses the relevance of our findings for long-term economic development patterns in the region from a comparative perspective.
    Keywords: wealth, inequality, war, weather, Ottoman Empire
    JEL: D3 D6 E3 E6 I3 J1 N3 N9 O53
    Date: 2013–02
  2. By: Areendam Chanda; C. Justin Cook; Louis Putterman
    Abstract: We revisit the idea that colonized countries that were more (less) economically advanced in 1500 became poorer (richer, respectively) by the late 20th century. Using data on place of origin of today's country populations and the urbanization and population density measures used by Acemoglu et al. (2002) as indicators of level of development in 1500, we confirm a reversal of fortune for territories but find persistence of fortune and their descendants. The results are equally strong or stronger for three alternative measures of early development, namely years since transition to agriculture, state history, and the Comin et al (2010) year 1500 technology index. They are also robust to changing end years, to inclusion of non-colonized countries or exclusion of "neo-Europes" and city states, and to the addition of various controls.
    Keywords: Long-Run Economic Growth, Comparative Development, Colonized Countries, Early Development
    Date: 2013
  3. By: Akçomak, I. Semih (Middle East Technical University); Webbink, Dinand (Erasmus University Rotterdam); ter Weel, Bas (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: 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.
    Keywords: economic development, literacy, religion, societal change
    JEL: N33 N93 O15 J20
    Date: 2013–01
  4. By: Brandt, Loren (University of Toronto); Ma, Debin (London School of Economics); Rawski, Thomas (University of Pittsburg)
    Abstract: China’s long-term economic dynamics pose a formidable challenge to economic historians. The Qing Empire (1644-1911), the world’s largest national economy before 1800, experienced a tripling of population during the 17th and 18th centuries with no signs of diminishing per capita income. While the timing remains in dispute, a vast gap emerged between newly rich industrial nations and China’s lagging economy in the wake of the Industrial Revolution. Only with an unprecedented growth spurt beginning in the late 1970s did this great divergence separating China from the global leaders substantially diminish, allowing China to regain its former standing among the world’s largest economies. This essay develops an integrated framework for understanding that entire history, including both the divergence and the recent convergent trend. We explain how deeply embedded political and economic institutions that contributed to a long process of extensive growth before 1800 subsequently prevented China from capturing the benefits associated with the Industrial Revolution. During the 20th century, the gradual erosion of these historic constraints and of new obstacles erected by socialist planning eventually opened the door to China’s current boom. Our analysis links China’s recent development to important elements of its past, while using recent success to provide fresh perspectives on the critical obstacles undermining earlier modernization efforts, and their eventual removal.
    Date: 2013
  5. By: Michael T. Owyang; Valerie A. Ramey; Sarah Zubairy
    Abstract: A key question that has arisen during recent debates is whether government spending multipliers are larger during times when resources are idle. This paper seeks to shed light on this question by analyzing new quarterly historical data covering multiple large wars and depressions in the U.S. and Canada. Using an extension of Ramey’s (2011) military news series and Jordà’s (2005) method for estimating impulse responses, we find no evidence that multipliers are greater during periods of high unemployment in the U.S. In every case, the estimated multipliers are below unity. We do find some evidence of higher multipliers during periods of slack in Canada, with some multipliers above unity.
    Keywords: Fiscal policy ; Business cycles ; Multiplier (Economics)
    Date: 2013
  6. By: Alexander J. Field
    Abstract: This paper examines the interwar housing cycle in comparison to what transpired in the United States between 2001 and 2011. The 1920s experienced a boom in construction and prolonged retardation in building in the 1930s, resulting in a swing in residential construction’s share of GDP, and its absolute volume, that was larger than what has taken place in the 2000s. In contrast, there was relatively little sustained movement in the real price of housing between 1919 and 1941, and the up and down price movements were remarkably modest, certainly in comparison with more recent experience. The paper documents the higher degree of housing leverage in 2001-2011. And it documents a rate of foreclosure on residential housing post 2006 that is likely higher than during the 1930s. It concludes that balance sheet problems resulting from a prior residential housing boom pose greater obstacles to recovery today than they did in the interwar period.
    JEL: E2 E22 E44 N22 N62
    Date: 2013–02
  7. By: Velde, F R.
    Abstract: I measure the parameters of coin wear using data collected in the 19th century. A comparison across denominations and countries shows that coin wear (in relative terms) is linear in the logarithm of coin value. Data from coin hoards of the 18th and early 19th centuries yield similar estimates of mean coin wear, showing that hoards provide useful information. Finally, under assumptions of normality for initial coin weights and coin loss I use maximum likelihood estimation to recover the parameters of the wear process from a sample of coins whose age is unknown. The method performs well on the hoard data (for which the age is known and can serve as a check).
    Keywords: coin circulation, coin wear, abrasion, velocity, denomination, gold, silver.
    JEL: N10
    Date: 2013
  8. By: Metin M. Cosgel (University of Connecticut); Bogac A. Ergene (University of Vermont)
    Abstract: This article considers the relevance of hypotheses developed in the "law and economics" literature regarding settlement/trial decisions in the Ottoman Empire. In particular, it explores the applicability of the "selection principle" and "50 percent plaintiff win-rate" formulated by George Priest and Benjamin Klein. The article also demonstrates how existing research based on Ottoman court records can contribute to the "law and economics" scholarship, which is dominated by research based on modern, Western contexts. The article utilizes the court records from eighteenth-century Kastamonu to make observations about settlement/litigation decisions in an Ottoman context.
    Keywords: Islamic law, legal system, selection principle, Ottoman Empire, Kastamonu, litigation, settlement, trial
    JEL: D3 D6 E3 E6 I3 J1 N3 N9 O53
    Date: 2013–02
  9. By: Matthew S. Jaremski
    Abstract: The passage of the National Banking Acts stabilized the existing financial system and encouraged the entry of 729 banks between 1863 and 1866. The national banks not only attracted more deposits than previous state banks, but also concentrated in the area that would eventually become the Manufacturing Belt. Using a new bank census, the paper shows that these changes to the financial system were a major determinant of the geographic distribution of manufacturing. The sudden entry not only resulted in more manufacturing capital and output at the county-level, but also more steam engines and value added at the establishment-level.
    JEL: G21 N21 O43
    Date: 2013–02
  10. By: Anderson, R. Warren; Johnson, Noel D; Koyama, Mark
    Abstract: What factors caused the persecution of minorities in medieval and early modern Europe? We build a model that predicts that minority communities were more likely to be expropriated in the wake of negative income shocks. We then use panel data consisting of 785 city-level expulsions of Jews from 933 European cities between 1100 and 1800 to test the implications of the model. We use the variation in city-level temperature to test whether expulsions were associated with colder growing seasons. We find that a one standard deviation decrease in average growing season temperature in the fifteenth and sixteenth centuries was associated with a one to two percentage point increase in the likelihood that a Jewish community would be expelled. Drawing on our model and on additional historical evidence we argue that the rise of state capacity was one reason why this relationship between negative income shocks and expulsions weakened after 1600.
    Keywords: Political Economy; State Capacity; Expulsions; Jewish History; Climate
    JEL: N33 Z12 J15 N53 N43
    Date: 2013–02–05
  11. By: Gupta, Bishnupriya (University of Warwick)
    Abstract: Industrial investment in Colonial India was segregated by the export oriented industries, such as tea and jute that relied on British firms and the import substituting cotton textile industry that was dominated by Indian firms. The literature emphasizes discrimination against Indian capital. Instead informational factors played an important role. British entrepreneurs knew the export markets and the Indian entrepreneurs were familiar with the local markets. The divergent flows of entrepreneurship can be explained by the comparative advantage enjoyed by social groups in information and the role of social networks in determining entry and creating separate spheres of industrial investment.
    Date: 2013
  12. By: Barry Z. Cynamon; Steven M. Fazzari
    Abstract: One might expect that rising US income inequality would reduce demand growth and create a drag on the economy because higher-income groups spend a smaller share of income. But during a quarter century of rising inequality, US growth and employment were reasonably strong, by historical standards, until the Great Recession. This paper analyzes this paradox by disaggregating household spending, income, saving, and debt between the bottom 95 percent and top 5 percent of the income distribution. We find that the top 5 percent did indeed spend a smaller share of income, but demand drag did not occur because the spending share of the bottom 95 percent rose, accompanied by a historic increase in borrowing. The unsustainable rise in household leverage concentrated in the bottom 95 percent ultimately spawned the Great Recession. The demand drag of rising inequality could be one explanation for the stagnant recovery in the recession’s aftermath.
    Keywords: Consumption; Saving; Inequality; Aggregate Demand
    JEL: D12 D31 E21
    Date: 2013–02
  13. By: Beatrice D'Ippoloto; Marcela Miozzo; Davide Consoli
    Abstract: Drawing on evidence on the home furnishing sectors in Italy during the XX century, the aim is to understand the instituted processes that facilitated the translation of design know-how from being project-specific to becoming relevant to broader remits. The paper contributes to the debate on industry evolution by incorporating the institutional dimension to the organisational and technological changes taking place at both firm and industry level.
    Keywords: Design; Knowledge Systematisation; Industry Evolution; Routines; Capabilities; Home Furnishing
    Date: 2013
  14. By: Irigoin, Alejandra
    Abstract: Economic historians have offered several explanations for China’s cycles of silverisation and de-silverisation in the 18th and 19th centuries focusing either on exogenous supply shortages in world silver markets or an outflow of silver as a consequence of opium imports. This paper challenges both existing “supply-side” and “demand-side” explanations. Section two shows that the supply side change was not a decline in the quantity of silver but in the quality of imported silver coins after the 1820s. Section three shows that this led to a decline in demand because China did not perform as a classic bi-metallic system as usually assumed. Because China lacked monetary sovereignty, the Chinese adopted a foreign coin, the Spanish American peso as the preferred means of payment in some areas of southern China, and increasingly further into the interior. Section four presents evidence for the exchange rate premium of the Spanish American silver coin over other coins and, more importantly, over silver sycee in China after the 1790s. This allowed for large-scale arbitrage by means of acquiring silver sycee in China for export, while bringing coined silver to China. Underlying this sort of 'dollarization' in China was opium. Hence section five shows that opium imports did not trigger the outflow of silver. Instead the flight of silver in fact seems to be the cause for large opium imports.
    Keywords: Monetary history of China; bimetallic system; 'dollarization'; silver trade; Opium imports; Daoguang depression
    JEL: E42 N25 N00 N15
    Date: 2013–01–20
  15. By: Olivier Godard
    Abstract: In spite of its strong appeal to NGOs, to certain governments and to some scholars, the concept of an ecological debt accumulated by developed countries due to their historical responsibility deserve a serious critical assessment. The paper provides this assessment in the context of climate change. It first shows how the rhetoric of ecological debt exploits confusion between a pre-modern concept of social debt and the modern one based on the contract figure. Two components of the climate debt are examined: a presumed duty of compensation of the damage imposed by climate change and rules of sharing out of atmospheric services when developed countries are presumed to have emitted GHGs in the past in excess of their fair share. The discussion considers successively the legal and the moral viewpoint. A review of arguments shows that both concepts of ecological debt and historical responsibility disintegrate under scrutiny in the case of climate change, as ill-founded backward-looking reparative concepts as well as additional obstacles to a forward-looking agreement in which responsibilities could legitimately be differentiated according to various variables referring to current states (emissions levels, needs, capacities, etc.). The GHGs emissions that cause problems are those that have taken place since 1990.
    Date: 2012–09–05
  16. By: Argentino Pessoa (CEF.UP and NIFIP, Faculdade de Economia, Universidade do Porto)
    Abstract: In the past Portugal managed to grow at a significant rate, but the pace has getting slower and slower from decade to decade, until becoming practically stagnant in the first decade of the 21st century. This stumpy growth together with the current debt crisis has fed the rhetoric of structural reforms in a so obsessive way as if they are a panacea. Our paper shows how structural change was occurred in the Portuguese economy and how it began to be transformed in technological change in the beginning of the 21st. century and argues that structural change and structural reform are two very different concepts and using the latter as a magic potion is more detrimental than beneficial of economic growth and structural change.
    Keywords: Catching-up; crisis; EMU; peripheral countries; Portuguese economy; structural change; structural reforms; technological change.
    JEL: O30 O32 O33 O38 O43 O47 O52
    Date: 2013–02
  17. By: Ho Fai Chan; Bruno S. Frey; Jana Gallus; Benno Torgler
    Abstract: Despite the social importance of awards, they have been largely disregarded by academic research in economics. This paper investigates whether a specific, yet important, award in economics, the John Bates Clark Medal, raises recipients? subsequent research activity and status compared to a synthetic control group of non-recipient scholars with similar previous research performance. We find evidence of positive incentive and status effects that raise both productivity and citation levels.
    Keywords: Awards; Incentives; Research; John Bates Clark Medal; Synthetic control method
    JEL: A13 C23 M52
    Date: 2013–02
  18. By: Becker, Sascha (University of Warwick); Woessmann, Ludger (University of Munich)
    Abstract: The interplay between religion and the economy has occupied social scientists for long. We construct a unique panel of income and Protestant church attendance for six waves of up to 175 Prussian counties spanning 1886-1911. The data reveal a marked decline in church attendance coinciding with increasing income. The cross-section also shows a negative association between income and church attendance. But the association disappears in panel analyses, including firstdifferenced models of the 1886-1911 change, panel models with county and time fixed effects, and panel Granger-causality tests. The results cast doubt on causal interpretations of the religioneconomy nexus in Prussian secularization
    Keywords: Religion, secularization, Prussian economic history
    Date: 2013
  19. By: Kym Anderson
    Abstract: Historically, earnings from farming in many developing countries have been depressed by a pro-urban bias in own-country policies, as well as by governments of richer countries favouring their farmers with import barriers and subsidies. Both sets of policies reduced global economic welfare and agricultural trade, and added to global inequality and poverty. Over the past three decades, much progress has been made in reducing agricultural protection in high-income countries and agricultural disincentives in developing countries. However, plenty of price distortions remain. As well, the propensity of governments to insulate their domestic food market from fluctuations in international prices has not waned. Such insulation contributes to the amplification of international food price fluctuations, yet it does little to advance national food security when food-importing and food-exporting countries equally engage in insulating behaviour. Thus there is still much scope to improve global economic welfare via multilateral agreement not only to remove remaining trade distortions but also to desist from varying trade barriers when international food prices gyrate. This paper summarizes indicators of trends and fluctuations in farm trade barriers before examining unilateral or multilateral trade arrangements, together with complementary domestic measures, that could lead to better global food security outcomes.
    Keywords: Farmer protection, export taxation, food price spikes, trade policy history
    JEL: F13 F14 Q17 Q18
    Date: 2013

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