nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2013‒03‒23
27 papers chosen by
Bernardo Batiz-Lazo
Bangor University

  1. The South Manchuria Railway Company: an accounting and financial history, 1907-1943 By Masayoshi Noguchi; Trevor Boyns
  2. Shifting Mandates: The Federal Reserve’s First Centennial By Carmen M. Reinhart; Kenneth S. Rogoff
  3. Output potenziale, gap e inflazione in Italia nel lungo periodo (1861-2010): un’analisi econometrica By Alberto Baffigi; Maria Elena Bontempi; Roberto Golinelli
  4. British and European Industrialization By C Knick Harley
  5. The Transformation of Hunger Revisited By Gazeley, Ian; Newell, Andrew T.; Bezabih, Mintewab
  6. Interdisciplinary research collaboration as the future of ancient history? Insights from spying on demographers By Saskia C. Hin
  7. Don't Make War, Make Elections. Franchise Extension and Violence in XIXth-Century Colombia By Leopoldo Fergusson; Juan F. Vargas
  8. ‘The Curse of the Caribbean’? Agency’s impact on the efficiency of sugar estates in St.Vincent and the Grenadines, 1814-1829 By Simon D. Smith; Martin Forster
  9. The Labor/Land Ratio and India’s Caste System By Harriet Orcutt Duleep
  10. The Glue of Democracy: Economics, Warfare and Values in Classical Greece By Kyriazis, Nicholas; Paparrigopoulos, Xenophon; Economou, Emmanouel/Marios/Lazaros
  11. Lessons from the historical use of reserve requirements in the United States to promote bank liquidity By Mark A. Carlson
  12. Fifty Years of Compositional Changes in U.S. Out-Migration, 1908-1957 By Biavaschi, Costanza
  13. The Economic Status of Asian Americans Before and After the Civil Rights Act By Harriet Orcutt Duleep; Seth Sanders
  14. The decentralised central bank: regional bank rate autonomy in Norway, 1850-1892. By Klovland, Jan Tore; Øksendal, Lars Fredrik
  15. Between Modernization and Stagnation. Russian Economic Policy and Global Crisis By Vladimir Mau
  16. Risk Management : History, Definition and Critique By Georges Dionne
  17. Liquidity provision during the crisis of 1914: private and public sources By Margaret Jacobson; Ellis W. Tallman
  18. The Role of Household Saving in the Economic Rise of China By Steven Lugauer; Nelson C. Mark
  19. Méthodologie de construction de séries de taux de défaut pour l’industrie canadienne By Ramdane Djoudad; Étienne Bordeleau
  20. Mode of socio-economic development and occupational structure: the case of contemporary Russia By Anikin, Vasiliy
  21. ¿Sin ley y dentro de la legalidad? Inicios de la Sociedad de Responsabilidad Limitada en España (1869-1953) By Susana Martínez-Rodríguez
  22. The Emergence of Three Human Development Clubs By Sebastian Vollmer; Hajo Holzmann; Florian Ketterer; Stephan Klasen; David Canning
  23. La esclavitud y la trata de negros en el pensamiento económico español, siglos XVI al XVIII By Luis Perdices de Blas; José Luis Ramos Gorostiza
  24. Does “Skin in the Game” Reduce Risk Taking? Leverage, Liability and the Long-Run Consequences of New Deal Banking Reforms By Kris James Mitchener; Gary Richardson
  25. Monetary regimes and statistical regularity: the Classical Gold Standard (1880-1913) through the lenses of Markov models By Daniela Bragoli; Camilla Ferretti; Piero Ganugi; Giancarlo Ianulardo
  26. The Civil Rights Act and the Earnings of Lower Income Hispanic Men By Harriet Orcutt Duleep; Mark C. Regets
  27. On the causality and determinants of energy and electricity demand in South Africa: A review By Anastassios Pouris

  1. By: Masayoshi Noguchi (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Trevor Boyns (Cardiff Business School Cardiff University, UK)
    Abstract: This study examines aspects of the accounting and financial history of the South Manchuria Railway Company (SMR) from its formation in 1907. In particular we focus on the 1930s, a period in which the activities of the SMR became increasingly dominated by the demands of the Kwantung Army which effectively controlled Manchuria. As a special company, the SMR had always faced the dilemma of pursuing the private interest of shareholders as a business enterprise against the backdrop of the requirement to serve the national interest. Following the formation of the State of Manchuria in 1932, the Kwantung Army placed significant and growing financial demands on the SMR while at the same time wishing to alter the juridical personality of the company. Such demands were repelled by the SMR’s management for fear that the change in its legal status would cause problems in obtaining the finance necessary to carry out the army’s requirements for new lines and improvements to the existing railway network in Manchuria. This problem, and its eventual resolution through the State of Manchuria taking an equity stake in the company in 1940, provides important insights into the impact of military power and wartime conditions on the operation of special companies. In this way, this study contributes to filling a gap in Japanese accounting and financial history research by examining the motives, commitments and (inter)actions of the various parties concerned – the company’s management, the Japanese government, the Kwantung Army and the State of Manchuria – and the interaction of such factors with the social, political and economic conditions surrounding the SMR’s operations in Manchuria.
    Keywords: The South Manchuria Railway, Special company, The Kwantung Army, The State of Manchuria, Juridical personality
    Date: 2013–03
  2. By: Carmen M. Reinhart; Kenneth S. Rogoff
    Abstract: The mandate of the Federal Reserve has evolved considerably over its hundred-year history. From an initial focus in 1913 on financial stability, to fiscal financing in World War II and its aftermath, to a strong anti-inflation focus from the late 1970s, and then back to greater emphasis on financial stability since the Great Contraction. Yet, as the Fed’s mandate has expanded in recent years, its range of instruments has narrowed, partly based on a misguided belief in the inherent stability of financial markets. We briefly discuss the active use in an earlier era of multiple instruments, including reserve requirements, credit controls and interest rate ceilings.
    JEL: E02 E5 N1 N12 N2
    Date: 2013–03
  3. By: Alberto Baffigi (Bank of Italy); Maria Elena Bontempi (University of Bologna); Roberto Golinelli (University of Bologna)
    Abstract: We exploit the new historical national accounts data for Italy over the period 1861-2010, built by Banca d'Italia and Istat, with the collaboration of the University of Rome "Tor Vergata". In the first part of the paper, a thorough study of the new data's statistical properties is presented mainly aimed to analyse the variability of the cyclical component of constant price GDP. The GDP cyclical component, interpreted as output gap, is used, in the second part of the paper, to assess the Phillips curve's ability to explain inflation dynamics over a wide variety of circumstances, over the 150 years of the country's history. In Italy, the relation linking inflation with the cyclical situation in the economy emerged only after World War I, while in US and UK it was operating already in the mid 19th century.
    Keywords: macroeconomic history, output gap, structural break, principal components, volatility, triangle model, New Keynesian Phillips curve, industrialization
    JEL: C26 E32 E31 N13 N14
    Date: 2013–02
  4. By: C Knick Harley (University of Oxford)
    Abstract: Modern economic growth – the simultaneous increase in population and average incomes – has been capitalism’s greatest achievement. This growth first became apparent in Britain in the nineteenth century and then spread to continental Europe (and the United States). The process is usually associated with the Industrial Revolution in Britain and the spread of British-type industrialization to follower economies. This chapter reviews the emergence of modern economic growth and suggests that the usual view is misleading in that it focuses is too limited both in time and in the technological change it usually emphasizes. On one hand, the of famous industries – textiles, iron and engineering – contributed only modestly to growth because they constituted only a small proportion of the economy. Furthermore, the emergence of growth was much more gradual than traditionally understood. In new views, Britain was already a substantially industrialized economy with relatively high wages before the early eighteenth century. The origin of growth appear to lie in the ability of an economy in which both product and factor markets were well developed in both the rural and urban areas to partially overcome Malthusian constraints. The spread of growth to continental Europe is often seen as the spread of new technology of the British Industrial Revolution. This too seems somewhat misleading. The industries were small relative to the entire economies and their success depended on particular conditions. Furthermore, just as Britain’s early success rested importantly on productive capitalist agriculture, the emerge nce of increased incomes on the continent depended on agricultural reforms that increases in its productivity.
    Date: 2013–03–06
  5. By: Gazeley, Ian (University of Sussex); Newell, Andrew T. (University of Sussex); Bezabih, Mintewab (London School of Economics)
    Abstract: We examine Trevon Logan's 2009 claim to have found low levels of nutrition among British worker's households in the late 19th century. Using the same data, we conclude that Logan's estimates are thirty percent too low. Logan buttressed his estimates by claiming that the income elasticity of calories demand was unusually high among these households, relative to other estimates, reflecting great hunger. We find that the elasticity is high, but not outside the range observed in other data sets. We also warn against the simple assertion that a high elasticity implies hunger.
    Keywords: nutrition, living standards, worker's households, late 19th century, Britain
    JEL: I15 I32 N33
    Date: 2013–03
  6. By: Saskia C. Hin (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: This papers investigates patterns of research collaboration in the fields of ancient history and demography and explores studies on the benefits of interdisciplinary collaboration in academia
    Keywords: research policy
    JEL: J1 Z0
    Date: 2013–12
  7. By: Leopoldo Fergusson; Juan F. Vargas
    Abstract: This paper studies the effect of strengthening democracy, as captured by an increase in voting rights, on the incidence of violent civil conflict in nineteenth-century Colombia. Empirically studying the relationship between democracy and conflict is challenging, not only because of conceptual problems in defining and measuring democracy, but also because political institutions and violence are jointly determined. We take advantage of an experiment of history to examine the impact of one simple, measurable dimension of democracy (the size of the franchise) on conflict, while at the same time attempting to overcome the identification problem. In 1853, Colombia established universal male suffrage. Using a simple difference-indifferences specification at the municipal level, we find that municipalities where more voters were enfranchised relative to their population experienced fewer violent political battles while the reform was in effect. The results are robust to including a number of additional controls. Moreover, we investigate the potential mechanisms driving the results. In particular, we look at which components of the proportion of new voters in 1853 explain the results, and we examine if results are stronger in places with more political competition and state capacity. We interpret our findings as suggesting that violence in nineteenth-century Colombia was a technology for political elites to compete for the rents from power, and that democracy constituted an alternative way to compete which substituted violence.
    Date: 2013–02–28
  8. By: Simon D. Smith (University of Oxford, University of York); Martin Forster (University of Oxford, University of York)
    Abstract: This study estimates agency’s impact on the efficiency of sugar plantations on St.Vincent and the Grenadines during the early 19th century. Using a panel data set covering the years 1814-1829, a series of stochastic frontier models are estimated to investigate whether estates employing agents were more technically efficient than those managed by the owners themselves. Multiple imputation methods are used to deal with missing data problems. There is no evidence in any of the models estimated to suggest that estates under agency were less efficient than those that were directed by their owners. Estimates from a number of models suggest that agent-operated estates were more efficient.
    Date: 2013–03–20
  9. By: Harriet Orcutt Duleep (Thomas Jefferson Program in Public Policy, The College of William and Mary)
    Abstract: This paper proposes that India’s caste system and involuntary labor were joint responses by a nonworking landowning class to a low labor/land ratio in which the rules of the caste system supported the institution of involuntary labor. The hypothesis is tested in two ways: longitudinally, with data from ancient religious texts, and cross-sectionally, with twentieth-century statistics on regional population/land ratios linked to anthropological measures of caste-system rigidity. Both the longitudinal and cross-sectional evidence suggest that the labor/land ratio affected the caste system’s development, persistence, and rigidity over time and across regions of India.
    Keywords: labor-to-land ratio, population, involuntary labor, immobility, value of life, marginal product of labor, market wage
    JEL: J47 J1 J30 N3 Z13
    Date: 2013–03–17
  10. By: Kyriazis, Nicholas; Paparrigopoulos, Xenophon; Economou, Emmanouel/Marios/Lazaros
    Abstract: In the present essay we analyse the links between the emergence of new arms and forms of war-emergence, the phalanx and its hoplites, and the trieres at sea, its economic base, and the emergence of democracy in classical Greece. We propose that the unique till then in the world phalanx formation, led to the development of particular values and ethics, which again were the necessary conditions for the emergence of democracy, then again, a unique phenomenon. We then turn to seapower, which according to our analysis was a sufficient condition for the establishment and endurance of democracy, because seapower led to a community of economic interests, on which direct democracies like Ancient Athens, were based.
    Keywords: Democracy, seapower, values, warfare, economic development.
    JEL: B11 N30 N43 O10
    Date: 2013–03–15
  11. By: Mark A. Carlson
    Abstract: Efforts in the United States to promote bank liquidity through reserve requirements, a minimum ratio of liquid assets relative to liabilities, extend at least as far back as the aftermath of the Panic of 1837. These requirements were quite important during the National Banking Era. Nevertheless, suspensions of deposit convertibility and liquidity shortfalls continued to occur during banking panics. Eventually, efforts to ensure that banks remained liquid resulted in a shift away from reserve requirements in favor of a central bank able to add liquidity to the financial system. This paper reviews the issues raised in the historical debates about reserve requirements along with some empirical evidence on banks' holdings of reserves, to provide some insights and lessons that are relevant today. A key lesson is that individual bank liquidity during stress periods is inherently and intricately tied to the liquidity policies of the central bank.
    Date: 2013
  12. By: Biavaschi, Costanza (IZA)
    Abstract: Immigration authorities have seldom collected data on the out-migration of the foreign-born. As a consequence, several indirect approaches have been proposed to measure and study out-migration. This paper adds to the literature by using official statistics that directly identify the out-migration by demographic and socio-economic characteristics. Using time series and panel methods on the composition of U.S. out-migration between 1908 and 1957, the paper asks two questions. First, how did the out-migrants compare with in-migrants and permanent settlers? Second, did the economic and political events of the 1900s have any impact on the composition of this outflow? Results show that the out-migrants were primarily unskilled workers, but selection has become more positive over time. The economic and political shocks of the first half of the 20th century impacted the composition of the outflow, however, the more restrictive immigration policies have been associated primarily with longer stays. These findings complements the results based on indirect measures of out-migration, and are interestingly in line with analyses of out-migrant selectivity and impact of border controls on out-migrant behavior in later periods.
    Keywords: return migration, out-migration, self-selection, quotas
    JEL: F22 J61 N12
    Date: 2013–02
  13. By: Harriet Orcutt Duleep (Thomas Jefferson Program in Public Policy, The College of William and Mary); Seth Sanders (Duke Sanford School of Public Policy)
    Abstract: In contrast to their relative standing in today’s labor market, in 1960 U.S.-born men in all Asian groups earned substantially less than comparable whites. We explore explanations for the wage gap and find that all of the variables that might plausibly account for it, such as Asian/white differences in schooling, labor force participation, entrepreneurial and agricultural employment, English proficiency, enclave activity, and foreign-born parentage, have either no effect or only modest effects on the 1960 wage gap and its subsequent reduction. Our findings suggest that anti-Asian labor market discrimination was the predominate cause of the 1960 wage gap and that most of the 1960 to 1980 improvement in the relative wages of U.S.-born Asian men stemmed from a decline in anti-Asian discrimination. Although much of the policy focus of the civil rights era was directed at reducing discrimination against blacks, our findings suggest a prominent post-Civil Rights Act labor market effect for Asians. If these results hold up to further scrutiny, one interpretation is that the Civil Rights Act and accompanying activities, and/or concomitant changes in societal attitudes, benefited all minorities.
    Keywords: anti-discrimination legislation, minority economic progress, Asian Americans,Civil Rights Act
    JEL: J48 J71 J78 J15 J18
    Date: 2013–03–17
  14. By: Klovland, Jan Tore (Dept. of Economics, Norwegian School of Economics and Business Administration); Øksendal, Lars Fredrik (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: Before 1893 the regional branches of Norges Bank set their own bank rates. We discuss how bank rate autonomy could be reconciled with the fixed exchange rate commitments of the silver and gold standard. Although the headquarters of the bank was in Trondhjem, we find that the Christiania branch played the key role in providing leadership in bank rate policy. Foreign interest rate impulses were important for bank rate decisions, but there was also some leeway for responding to idiosyncratic shocks facing the Norwegian economy.
    Keywords: Bank rate; gold standard; monetary policy.
    JEL: E58 N23
    Date: 2013–03–11
  15. By: Vladimir Mau (Russian Presidential Academy of National Economy and Public Administration; Gaidar Institute for Economic Policy)
    Abstract: The paper deals with the trends in the world and Russian economies towards development of a new post-crisis system, including technological and structural transformation. Three main scenarios of Russian economic development (conservative, innovation and acceleration) are discussed basing on historical analysis of Russian economic performance since 1970-s when oil boom started. On this basis key challenges of economic policy in 2013 are discussed
    Keywords: economic growth, global crisis, modernization, structuãal adaptation, regulation, welfare state
    JEL: O52 P27
    Date: 2013
  16. By: Georges Dionne
    Abstract: The study of risk management began after World War II. Risk management has long been associated with the use of market insurance to protect individuals and companies from various losses associated with accidents. Other forms of risk management, alternatives to market insurance, surfaced during the 1950s when market insurance was perceived as very costly and incomplete for protection against pure risk. The use of derivatives as risk management instruments arose during the 1970s, and expanded rapidly during the 1980s, as companies intensified their financial risk management. International risk regulation began in the 1990s, and financial firms developed internal risk management models and capital calculation formulas to hedge against unanticipated risks and reduce regulatory capital. Concomitantly, governance of risk management became essential, integrated risk management was introduced and the first corporate risk officer positions were created. Nonetheless, these regulations, governance rules and risk management methods failed to prevent the financial crisis that began in 2007.
    Keywords: Risk management, derivatives, regulation, financial crisis, insurance market, self-protection, self-insurance, governance
    JEL: D81 G21 G22
    Date: 2013
  17. By: Margaret Jacobson; Ellis W. Tallman
    Abstract: Caught between the end of the National Banking Era and the beginning of the Federal Reserve System, the crisis of 1914 provides an example of a banking panic avoided. We investigate how this outcome was achieved by examining data on the issues of Aldrich-Vreeland emergency currency and clearing house loan certificates to New York City institutions that identify borrower and quantity requested for each type of temporary liquidity measure. Combined with balance sheet data, we illustrate how temporary liquidity borrowing was essential for maintaining transactions volumes among New York City financial intermediaries. We highlight a significant role for clearing house loan certificates that is distinct from the influence of Aldrich-Vreeland emergency currency issues.
    Keywords: Financial markets ; Payment systems ; Money supply
    Date: 2013
  18. By: Steven Lugauer (University of Notre Dame); Nelson C. Mark (University of Notre Dame and National Bureau of Economic Research and Hong Kong Institute for Monetary Research)
    Abstract: The saving rate in China is high by historical and international norms. The high saving rate has funded capital accumulation which in turn has been the primary driver of China's economic growth. We review the evidence on Chinese household saving and conduct a small study to assess the importance of the precautionary motive for saving.
    Keywords: Household Saving, Precautionary Motive, China
    JEL: E21 F42
    Date: 2013–04
  19. By: Ramdane Djoudad; Étienne Bordeleau
    Abstract: Default rates are series commonly used in stress testing. In Canada, as in many other countries, there are no historical series available for sectoral default rates on bank loans to firms. Knowledge of such data is required to assess the impact of shocks on the balance sheets of financial institutions and to conduct stress-testing exercises of the banking system. The authors discuss the methodology used to construct historical series of firm default rates for selected sectors of the Canadian economy, as well as the models applied to predict default rates. Their findings confirm the existence of a non-linear relationship between the gross domestic product, the unemployment rate and default rates.
    Keywords: Econometric and statistical methods, Financial Institutions, Financial stability
    JEL: C13 C18 G21 G33
    Date: 2013
  20. By: Anikin, Vasiliy
    Abstract: The given paper assumes the existence of a correlation between the occupational structure and the mode of social and economic development of a country. It is shown that the modern stage of development in advanced economies could be described by the post-industrial phase with (a) the specific proportions in the occupational structure (predominance of professional managers and technical experts); (b) particular nature of work and the corresponding extent of labor division according to specialization and qualification (highly skilled labor with broad specialization and a new criterion of creativity included within qualifications). Within the certain historical framework these indicators, combined onto the entire scheme, produce the criteria to distinct different types of socio-economic development and arrange them in consistent order. The analysis of occupational structure of Russian population shows that the reforms of 1990s have facilitated the process of deindustrialization alongside with the growth of semi- and low-skilled jobs. According to the scheme, Russia seems to have reached the stage of the development that is similar to one of the 1950–1960s in the USA and the Europe.
    Keywords: Occupational structure; Socio-economic development; Knowledge based economy; Industrialization;Labour potential; Modernization; Russia
    JEL: J21 O14 P20
    Date: 2013–02–24
  21. By: Susana Martínez-Rodríguez (Universidad de Murcia, Spain)
    Abstract: La Sociedad de Responsabilidad Limitada es la modificación más rotunda en materia de sociedades en España en todo el siglo XX. Su primera ley es de 1953. Y no obstante funcionó con total normalidad y éxito desde 1919, cuando el Reglamento del Registro Mercantil regularizó su inscripción. De hecho, fue una figura muy popular que desplazó a las sociedades personalistas, sin contar con una ley propia, carente de una regulación específica, de forma similar a lo que sucede en los países con un régimen legal común, pero dentro de un país con una tradición civil arraigada. La explicación a esta hecho excepcional se encuentra en que el Código de Comercio de 1885 – todavía hoy vigente – permitía el uso de sociedades mercantiles no especificadas en el texto. Esta atipicidad, es decir, la ruptura de numerus clausus en el menú societario, permitió adoptar novedades jurídico-mercantiles a través de la práctica, del uso y la experiencia al estilo de los países de ley común.
    Keywords: responsabilidad limitada, numerus clausus, España, legislación mercantil de sociedades
    JEL: K20 N43 N44
    Date: 2013–03
  22. By: Sebastian Vollmer (University of Göttingen and Harvard School of Public Health); Hajo Holzmann (University of Marburg); Florian Ketterer (University of Marburg); Stephan Klasen (University of Göttingen); David Canning (Harvard School of Public Health)
    Abstract: We examine the joint distribution of levels of income per capita, life expectancy, and years of schooling across countries in 1960 and in 2000. In 1960 countries were clustered in two groups; a rich, highly educated, high longevity “developed” group and a poor, less educated, high mortality, “underdeveloped” group. By 2000 however we see the emergence of three groups; one underdeveloped group remaining near 1960 levels, a developed group with higher levels of education, income, and health than in 1960, and an intermediate group lying between these two. This finding is consistent with both the ideas of a new “middle income trap” that countries face even if they escape the “low income trap”, as well as the notion that countries which escaped the poverty trap form a temporary “transition regime” along their path to the “developed” group.
    Keywords: income per capita, life expectancy, schooling, income trap
    Date: 2013–03
  23. By: Luis Perdices de Blas (Universidad Complutense, Madrid, Spain); José Luis Ramos Gorostiza (Universidad Complutense, Madrid, Spain)
    Abstract: Entre el siglo XVI y el XVIII la esclavitud fue adquiriendo en el Imperio español una indudable importancia económica, tanto por el creciente peso de la mano de obra esclava en el Nuevo Mundo, como por la relevancia política, económica y administrativa de los sucesivos asientos. Sin embargo, la atención prestada a las cuestiones de la esclavitud y la trata en la literatura económica española fue decreciendo: éstas pasaron de tener un lugar en los textos escolásticos de los siglos XVI y principios del XVII, a convertirse en algo completamente marginal para los economistas ilustrados del Dieciocho. El propósito de este artículo es poner de manifiesto esta paradoja a través del análisis de los escasos textos de los teólogos escolásticos, arbitristas y economistas de la Ilustración que abordaron la esclavitud y la trata. La cuestión reviste interés, pues fueron tres centurias en las que los debates económicos en el ámbito del pensamiento español tuvieron un buen nivel, que se reflejó en la traducción a otras lenguas europeas de numerosas obras económicas españolas.
    Keywords: Esclavitud, trata de negros, asiento, Escuela de Salamanca, arbitristas, economistas de la Ilustración
    JEL: B11 B30
    Date: 2013–03
  24. By: Kris James Mitchener; Gary Richardson
    Abstract: This essay examines how the Banking Acts of the 1933 and 1935 and related New Deal legislation influenced risk taking in the financial sector of the U.S. economy. The analysis focuses on contingent liability of bank owners for losses incurred by their firms and how the elimination of this liability influenced leverage and lending by commercial banks. Using a new panel data set, we find contingent liability reduced risk taking. In states with contingent liability, banks used less leverage and converted each dollar of capital into fewer loans, and thus could survive larger loan losses (as a fraction of their portfolio) than banks in limited liability states. In states with limited liability, banks took on more leverage and risk, particularly in states that required banks with limited liability to join the Federal Deposit Insurance Corporation. In the long run, the New Deal replaced a regime of contingent liability with deposit insurance, stricter balance sheet regulation, and increased capital requirements, shifting the onus of risk management from bankers to state and federal regulators.
    JEL: E44 G28 G33 N22
    Date: 2013–03
  25. By: Daniela Bragoli (Department of Economics and Social Sciences, Universita Cattolica del Sacro Cuore); Camilla Ferretti (Department of Economics and Social Sciences, Universita Cattolica del Sacro Cuore); Piero Ganugi (Department of Industrial Engineering, Universita degli Studi di Parma); Giancarlo Ianulardo (Department of Economics, University of Exeter)
    Abstract: We aim at characterizing the Classical Gold Standard period (CGS) in order to verify if it is endowed with statistical regularity. We study the statistical properties of two-state annual transition matrices of countries switching from a sound state to a crisis state focusing on Reinhart and Rogoff 2009 dataset on external debt crises. The CGS period is governed by homogeneity both in time and across statistical units: the Homogeneous Markov Chain Model holds whereas the Mover Stayer Model does not. Our work is linked to the literature on the CGS and credibility (Bordo and Rockoff 1996). We follow a pure statistical approach to highlight two decisive channels of the credibility mechanism. The first is the stabilization of the probability of default of sound countries. The second is the fact that the CGS makes periphery/deficit countries homogeneous to the core with respect to the probability of default. Both channels are decisive because poor developing countries can borrow at favorable conditions and finance a level of investment greater than their capacity of saving.
    Keywords: Classical Gold Standard; Credibility; Time Homogeneous Markov Chain; Mover Stayer.
    JEL: E42 N10 C13
    Date: 2013
  26. By: Harriet Orcutt Duleep (Thomas Jefferson Program in Public Policy, The College of William and Mary); Mark C. Regets (National Science Foundation)
    Abstract: This paper uses Social Security longitudinal earnings records matched to Current Population Survey data to examine changes in the relative earnings of Hispanic men during a period of dramatic change in public and private policies toward race and ethnicity characterized by, but not limited to, the Civil Rights Act of 1964. Our principle focus is to compare and contrast how lower income Hispanic and African-American men fared during the civil rights era relative to lower-income non- Hispanic whites. Although previous studies have analyzed black economic progress using annual data before and after the Civil Rights Act, this is the first study to do so for Hispanics. We follow a longitudinal sample of individuals who were in the labor market before and after the passage of the Civil Rights Act. Following the same individuals holds constant an array of unmeasured variables such as labor force selectivity and schooling quality that may correlate with the post-1964 period; our approach addresses concerns that the results are the product of changes in these variables. Of particular note—we uncover a significant acceleration following the Civil Rights Act in the relative earnings of low-income Hispanic men.
    Keywords: anti-discrimination legislation, minority economic progress, Mexican Americans, Hispanic, low income, Civil Rights Act, longitudinal administrative records
    JEL: J48 J71 J78 J15 J18
    Date: 2013–03–17
  27. By: Anastassios Pouris (Institute for Technological Innovation, University of Pretoria)
    Abstract: The purpose of this paper is to review, summarise and critically assess the academic studies that have dealt with either the causal relationship between energy consumption and growth or the determinants of energy demand in South Africa from 2007 and outline recent forecasts for electricity demand. The results of this review aim to identify gaps in the existing research. From a policy point of view, the findings of this effort have the potential to inform the relevant stakeholders to make appropriate interventions to improve the status quo of the energy sector. The results have indicated that studies examining the causality direction between energy (electricity) consumption and economic growth have failed to reach a consensus. The main differences identified were the time periods examined, the econometric approaches and the variables included in the estimations. Another potential reason for the results is the availability –or lack thereof– of data specific for the country. On the other side, the studies looking at the factor affecting energy (electricity) demand have agreed that economic growth or income or output are considered significant factors. The role of prices was debatable among different studies. This has become more apparent when reviewing the few forecasting efforts in the country that resulted in conflicting results.
    Keywords: Review, South Africa, energy sector, causality, determinants
    Date: 2013–03

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