nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2013‒04‒27
eighteen papers chosen by
Bernardo Batiz-Lazo
Bangor University

  1. The Persistence of de Facto Power: Elites and Economic Development in the US South, 1840-1960 By Philipp Ager
  2. North and South: Social Mobility and Welfare Spending in Preindustrial England By Nina Boberg-Fazlic; Paul Sharp
  3. Nominal Shocks and Real Exchange Rates: Evidence from Two Centuries By William D. Craighead; Pao-Lin Tien
  4. Stockholm – from ugly duckling to Europe’s first green capital By Hårsman, Björn; Wijkmark, Bo
  5. The truth, the whole truth, and nothing but the truth: the English Corn Returns as a data source in economic history, 1770-1914. By Brunt, Liam; Cannon, Edmund
  6. The Role of Public Employment Services in a Developing Country: The Case of Japan in the Twentieth Century By Kambayashi, Ryo
  7. Housing and the Great Depression By Mehmet Balcilar; Rangan Gupta; Stephen M. Miller
  8. European migration, national origin and long-term economic development in the US By Andrés Rodríguez-Pose; Viola von Berlepsch
  9. Cost and Benefit of Globalization:Lesson Learned from Indonesian History By Maddaremmeng A. Panennungi
  10. Inequality and growth in the very long run: Inferring inequality from data on social groups By Jørgen Modalsli
  11. Related Variety, Unrelated Variety and Technological Breakthroughs: an analysis of U.S. state-level patenting By Carolina Castaldi; Koen Frenken; Bart Los
  12. Cross Sections Are History By Easterlin, Richard A.
  13. Average Marginal Income Tax Rates for New Zealand, 1907-2009 By Fiona McAlister; Debasis Bandyopadhyay; Robert Barro; Jeremy Couchman; Norman Gemmell; Gordon Liao
  14. Share Portfolios and Risk Management in the Early Years of Financial Capitalism: London 1690-1730 By Carlos, Ann M.; Fletcher, Erin; Neal, Larry
  15. The butterfly and the elephant: local social innovation, the welfare state and new poverty dynamics By Stijn Oosterlynck; Yuri Kazepov; Andreas Novy; Pieter Cools; Eduardo Barberis; Florian Wukovitsch; Tatiana Saruis; Bernhard Leubolt
  16. Financial accounting and reporting in Germany: A case study on German accounting tradition and experiences with the IFRS adoption By Fülbier, Rolf Uwe; Klein, Malte
  17. Interrogating Protective Space: Shielding, Nurturing and Empowering Dutch Solar PV By Bram Verhees; Rob Raven; Frank Veraart; Adrian Smith; Florian Kern
  18. Exploring mobile pricing strategies and innovations in the Thai mobile communications market By Srinuan, Chalita; Srinuan, Pratompong; Bohlin, Erik

  1. By: Philipp Ager (Universitat Pompeu Fabra)
    Abstract: Wealthy elites may end up retarding economic development for their own interests. This paper examines how the historical planter elite of the Southern US affected economic development at the county level between 1840 and 1960. To capture the planter elite’s potential to exercise de facto power, I construct a new dataset on the personal wealth of the richest Southern planters before the American Civil War. I find that counties with a relatively wealthier planter elite before the Civil War performed significantly worse in the post-war decades and even after World War II. I argue that this is the likely consequence of the planter elite’s lack of support for mass schooling. My results suggest that when during Reconstruction the US government abolished slavery and enfranchised the freedmen, the planter elite used their de facto power to maintain their influence over the political system and preserve a plantation economy based on low-skilled labor. In fact, I find that the planter elite was better able to sustain land prices and the production of plantation crops during Reconstruction in counties where they had more de facto power.
    Keywords: Long-Run Economic Development, Wealth Inequality, Elites and Development, de Facto and de Jure Power, US South
    Date: 2013–04
  2. By: Nina Boberg-Fazlic (University of Copenhagen); Paul Sharp (University of Southern Denmark)
    Abstract: In a recent paper Ferrie and Long (2012) argue that historically high levels of social mobility can lead to a culture of non-acceptance of redistribution and welfare provision. We apply this hypothesis to England, where it has been noted that, at least historically speaking, the North and the South of England were culturally very different. King (2000) argues that the North exhibited a ‘harsh culture of making do’ whereas the South exhibited a ‘culture of dependency’. We put these two propositions together and study occupational mobility in North- and South-England using the Cambridge Group data from the years 1550-1850. We find that, in the North, lower poor relief expenditures go hand-in-hand with higher levels of social mobility. In the South, on the other hand, occupational status is heavily determined by the father’s occupation. We also study intergenerational inheritance of pauperism, showing that the probability of becoming a pauper was heavily determined by a family history of pauperism in the South. We add to the literature by providing further evidence for a link between historical social mobility and the development of a welfare state.
    Keywords: England, Poor Laws, social mobility, welfare
    JEL: J62 N33
    Date: 2013–04
  3. By: William D. Craighead (Department of Economics, Wesleyan University); Pao-Lin Tien (Department of Economics, Wesleyan University)
    Abstract: This paper employs structural vector autoregression methods to examine the contribution of real and nominal shocks to real exchange rate movements using two hundred and seventeen years of data from Britain and the United States. Shocks are identified with long-run restrictions. The long time series makes possible an investigation of how the role of nominal shocks has evolved over time due to changes in the shock processes or to structural changes in the economy which might alter how a shock is transmitted to the real exchange rate. The sample is split at 1913, which is the end of the classical gold standard period, the last of the monetary regimes of the 19th century. The earlier subsample (1795-1913) shows a much stronger role for nominal shocks in explaining real exchange rate movements than the later subsample (1914-2010). Counterfactual analysis shows that the difference between the two periods is mainly due to the size of the nominal shocks rather than structural changes in the economy.
    Keywords: ector autoregression; monetary shocks, exchange rate movements, longrun identifying restrictions
    JEL: F31 F41 N10
    Date: 2013–04
  4. By: Hårsman, Björn (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Wijkmark, Bo (Office of Regional Planning and Metropolitan Transport)
    Abstract: The European Commission named Stockholm Europe’s first Green Capital City in 2010. Important reasons for the award were: a reduction of CO2 emissions by 25 percent per capita since 1990 and the establishment of an administrative system integrating environmental aspects in the planning, budgeting and management of all the various activities governed by the city. This paper describes the main features of the economic, environmental and political development in Stockholm since 1850. The main idea is simply to provide a historical perspective on the city´s environmental policy but we also want to shed light on the extent to which historical decisions and processes exert an influence on current ambitions and measures to strengthen Stockholm´s sustainability. In addition to pointing at the long-lasting influence of earlier infrastructure investments we also indicate the importance of the political pragmatism and social-engineering attitude developed since the 1930´s. However, Stockholm´s recently adopted action plan for reducing the emission of greenhouse gases indicates that this institutional capital might have eroded somewhat. If this is true, Stockholm might face more difficulties in becoming greener than usually expected considering its current ranking as a leading European capital in terms of intellectual capital and rate of innovation.
    Keywords: Urban sustainability; Stockholm; history; environment; urban planning
    JEL: Q01 Q58 R50
    Date: 2013–04–16
  5. By: Brunt, Liam (Dept. of Economics, Norwegian School of Economics and Business Administration); Cannon, Edmund (University of Bristol)
    Abstract: From 1770 to 1914, the British Government collected weekly price and quantity data for all types of grain traded in many market towns; these ‘Corn Returns’ were published in the London Gazette. We computerised the data published 1770-1864, totalling around 6 million data points. Here we describe the nature of these data; discuss why, when and how they were collected; consider their accuracy and biases; describe how we computerised them; and offer caveats in using these – and similar – data. We highlight the problem of drawing valid inferences in the face of price impact from fluctuating grain quality and rising imports.
    Keywords: Grain prices; market institutions; data collection
    JEL: N53 Q13
    Date: 2013–04–18
  6. By: Kambayashi, Ryo
    Abstract: Like all developed and developing economies, Japan struggled with labor market issues in the process of industrialization. The Public Employment Service (PES) was probably the only countermeasure of the Japanese government before 1938, since other labor market policies such as minimum labor standard, unemployment insurance, and unionization were highly restricted by the political climate. In this article, we discuss the importance of the institutional arrangements of the PES by examining the developing stage of the Japanese labor market. In Japan, the PES was first institutionalized officially by the Employment Exchange Act in 1921. In the wake of the Kanto earthquake disaster in 1923, the PES played a substantial role in the recovery process, which implies the capacity of the PES to reduce unemployment even in a developing economy. However, under normal economic circumstances during the 1910s and 1920s, the institutional arrangement of the PES?namely, the financial backbone of the government and the nationwide network?was not effective as shown by anecdotes and ad hoc surveys. The statistical analysis of the matching function clearly shows that the PES, at least during the 1920s, had a fundamental problem?lacking long-term relations with other economic agents. Finally, improvements were made in the PES during the 1930s to cope with the economic crisis from the Great Depression. Such improvements were realized by incorporating already-existing networks of organizations that spontaneously emerged at the grassroots level. By 1938, when the Employment Exchange Act was revised to abolish private agencies, some PES centers had already absorbed nearby private networks and the matching technique of the PES was almost the same as that of private agencies. An ad hoc physical and financial investment by the government may not lead to the provision of efficient public services, and it is important to recognize that labor market policies are based on a long-term relationship among the PES, job seekers, and employers.
    Keywords: public employment agency, private employment agencies, labor market intermediaries, matching function, Kanto earthquake
    JEL: J68 N35 O15
    Date: 2013–03
  7. By: Mehmet Balcilar (Department of Economics, Eastern Mediterranean University); Rangan Gupta (Department of Economics, University of Pretoria); Stephen M. Miller (Department of Economics, University of Nevada, Las Vegas)
    Abstract: This paper considers the role of the real housing price in the Great Depression. More specifically, we examine structural stability of the relationship between the real housing price and real GDP per capita. We test for structural change in parameter values, using a sample of annual US data from 1890 to 1952. The paper examines the long-run and short-run dynamic relationships between the real housing price and real GDP per capita to determine if these relationships experienced structural change over the sample period. We find that temporal Granger causality exists between these two variables only for sub-samples that include the Great Depression. For the other sub-sample periods as well as for the entire sample period no relationship exists between these variables.
    Keywords: Great Depression, Real House Price, Real GDP per Capita, Structural change
    JEL: C32 E32 R31
    Date: 2013–04
  8. By: Andrés Rodríguez-Pose; Viola von Berlepsch
    Abstract: Have Irish, German or Italian settlers arriving in the US at the turn of the 20th century left an institutional trace which determines economic development differences to this day? Does the national origin of migrants matter for long-term development? This paper explores whether the distinct geographical settlement patterns of European migrants according to national origin affected economic development across US counties. It uses micro-data from the 1880 and 1910 censuses in order to identify where migrants from different nationalities settled and then regresses these patterns on current levels of economic development, using both OLS and instrumental variable approaches. The analysis controls for a number of factors which would have determined both the attractiveness of different US counties at the time of migration, as well as current levels of development. The results indicate that while there is a strong and positive impact associated with overall migration, the national origin of migrants does not make a difference for the current levels of economic development of US counties.
    Keywords: Migration, National/Ethnic Origin, Institutions, Culture, Economic Development, Counties, USA
    JEL: F22 O15 R23 N91
    Date: 2013–04
  9. By: Maddaremmeng A. Panennungi (Department of Economics, Faculty of Economics, University of Indonesia)
    Abstract: This paper is aimed at investigating the impact of globalization in Indonesia from long term recorded history. The methodology in this paper is focused on the literature survey with the qualitative analysis. The result shows that the presence of globalization in Indonesia tends to put the relationship between Indonesia (Nusantara or Netherland Indies) and the great power/globalizer as the Periphery-Centre (Core) relationship. It is shown that the globalizer influences Indonesia and not the other way around. The positive effect on Indonesia is globalization could increase people’s wealth and enrich Indonesia’s civilization without losing the real Indonesian culture. However, the presence of negative effect, could be very devastating, such as war and internal conflicts, in the time of clash among great powers/globalizers or in the time of changing time of influence from old great power to the new one.
    Keywords: Globalization, Indonesia
    JEL: F0 N95
    Date: 2013–04
  10. By: Jørgen Modalsli (Statistics Norway)
    Abstract: This paper presents a new method for calculating Gini coefficients from tabulations of the mean income of social classes. Income distribution data from before the Industrial Revolution usually come in the form of such tabulations, called social tables. Inequality indices generated from social tables are frequently calculated without adjusting for within-group income dispersion, leading to a systematic downward bias in the reporting of pre-industrial inequality. The correction method presented in this paper is applied to an existing collection of twenty-five social tables, from Rome in AD 1 to India in 1947. The corrections, using a variety of assumptions on within-group dispersion, lead to substantial increases in the Gini coefficients. Combining the inequality levels with data on GDP suggests a positive relationship between income inequality and economic growth. This supports earlier proposals, based on fewer data points, of a “super Kuznets curve” of increasing inequality over the entire pre-industrial period.
    Keywords: Pre-industrial inequality; social tables; Kuznets curve; history
    JEL: D31 N30 O11 C65
    Date: 2013–02
  11. By: Carolina Castaldi; Koen Frenken; Bart Los
    Abstract: We investigate how variety affects the innovation output of a region. Borrowing arguments from theories of recombinant innovation, we expect that related variety will enhance innovation as related technologies are more easily recombined into a new technology. However, we also expect that unrelated variety enhances technological breakthroughs, since radical innovation often stems from connecting previously unrelated technologies opening up whole new functionalities and applications. Using patent data for US states in the period 1977-1999 and associated citation data, we find evidence for both hypotheses. Our study thus sheds a new and critical light on the related-variety hypothesis in economic geography.
    Keywords: recombinant innovation, regional innovation, superstar patents, technological variety, evolutionary economic geography
    JEL: O31 R11
    Date: 2013–02
  12. By: Easterlin, Richard A. (University of Southern California)
    Abstract: Although cross section relationships are often taken to indicate causation, and especially the important impact of economic growth on many social phenomena, they may, in fact, merely reflect historical experience, that is, similar leader-follower country patterns for variables that are causally unrelated. Consider a number of major advances ("revolutions") in the human condition over the past four centuries – material living levels, life expectancy, universal schooling, political democracy, empowerment of women, and the like. Suppose that each has its own unique set of causes, and, as a result, a unique starting date and a unique rate of diffusion throughout the world. Suppose too that initially all countries are fairly closely bunched together on each variable in fairly similar circumstances. Suppose, finally, that the geographic pattern of diffusion is the same for each aspect of improvement in the human condition, that is, the same group of countries have a head start, and the follower countries in the various parts of the world fall in line in a similar geographic order. The result will be statistically significant international cross section relationships among the various phenomena, despite their being causally independent. The oft-reported significant cross-country relationships of many variables to economic growth may merely demonstrate that one set of countries got an early start in virtually every “revolution”, and another set, a late start.
    Keywords: cross section, time series, economic growth, life expectancy, diffusion
    JEL: C2 O10 O57 J11 N0 I0
    Date: 2013–04
  13. By: Fiona McAlister; Debasis Bandyopadhyay; Robert Barro; Jeremy Couchman; Norman Gemmell; Gordon Liao (The Treasury)
    Abstract: Estimates of marginal tax rates (MTRs) faced by individual economic agents, and for various ggregates of taxpayers, are important for economists testing behavioural responses to changes in those tax rates. This paper reports estimates of a number of personal marginal income tax rate measures for New Zealand since 1907, focusing mainly on the aggregate income-weighted average MTRs proposed by Barro and Sahasakul (1983, 1986) and Barro and Redlick (2011). The paper describes the methodology used to derive the various MTRs from original data on incomes and taxes from Statistics New Zealand Official Yearbooks (NZOYB), and discusses the resulting estimates.
    Keywords: Average marginal tax rates; New Zealand
    JEL: H20 H24
    Date: 2012–09
  14. By: Carlos, Ann M.; Fletcher, Erin; Neal, Larry
    Abstract: The dramatic expansion of public and private financial markets in the aftermath of the Glorious Revolution has received extensive attention. Despite interest in the operation of the capital market, much less is known about how ordinary individual investors managed risk within this framework. Using a newly constructed data set of share ownership for each company listed in the financial press of the day, we reconstruct individual portfolio holdings for every investor in these companies. We examine individual portfolio holdings first for the decade after the Glorious Revolution and then for the years around the South Sea Bubble of 1720. We also examine holdings over time. Despite a fivefold increase in the number of unique individuals in the market between the 1690s and the 1720s, we find that in each period roughly eighty per cent of those active in the equity market owned shares in only one company, even though most shareholders had the capacity or wealth to diversity their share portfolios. We also find some continuity in the market with forty per cent of those who owned stock in 1690 holding stock two decades later. This level of stock market activity suggests that individuals were diversifying against idiosyncratic liquidity risk. Overall, however, there is limited evidence that individuals were using their financial portfolios to increase return or reduce risk or to protect themselves against diversifiable shocks. Clearly some part of this behaviour can be explained by low levels of financial literacy, for many, however, company specific voting rules with their attendant effects on firm governance drove market activity.
    Date: 2012–09
  15. By: Stijn Oosterlynck; Yuri Kazepov; Andreas Novy; Pieter Cools; Eduardo Barberis; Florian Wukovitsch; Tatiana Saruis; Bernhard Leubolt
    Abstract: This paper surveys the literature on localized socially innovative policies and actions aimed at overcoming poverty and social exclusion. The authors show how these local forms of social innovation emerged in the late 1970s against the backdrop of the crisis and transformation of the Western welfare state, the emergence of new social risks and the transition from the Fordist to the knowledge based economy. The paper aims to learn about new or older but as yet too often overlooked poverty and social exclusion dynamics from the locally embedded and collective responses to it by civil society associations, local state institutions and/or social entrepreneurs. The paper first develops a definition of social innovation as it applies to the fight against poverty and social exclusion. In a second part the authors put social innovation in its historical context by discussing three different strands of social innovation research and practice, namely: (1) social innovation as a critique of the territorial innovation model underlying the knowledge-based economy; (2) social innovation as a critique on the bureaucratic nature of the welfare state; and (3) socially innovative forms of neighbourhood development as a response to the urban crisis. The third section of the paper then zooms in on the process dimensions of social innovation for each of the three strands discussed in the second part. The authors propose the metaphor of ‘the elephant and the butterfly’ to think through the relationship between localized forms of socially innovative actions and initiatives on the one hand and the macro-level institutions of the welfare state and dialectical interplay between state institutions and civil society associations on the other. The paper concludes with a preliminary list of social needs, trends in poverty and the reconfiguration of welfare institutions and policies that are revealed by place-based socially innovative practices.
    Keywords: Europe, Social innovation, welfare state, urban crisis, knowledge-based economy, poverty, social exclusion
    JEL: D31 O52
    Date: 2013–04
  16. By: Fülbier, Rolf Uwe; Klein, Malte
    Abstract: Financial accounting is rooted in national thoughts, traditions and institutional settings. As a consequence, accounting has developed heterogeneously over time and fulfilled contracting purposes in divergent national environments. Against this background, we argue that the ongoing process of accounting internationalization and imposed harmonization carries with it the danger of deforming country-specific balancing factors in the accounting systems, especially when the national environment for economic and contractual activities is not harmonized at all. In contrast to more evolutionary integration and adjustment processes of the past where spillover effects have always existed, the rapidity of the current process and coercive nature increases country-specific frictions. To support our argument and to substantiate the interplay of accounting as a contractual device and country-specific characteristics, we provide an in-depth case study of one country, Germany. We illustrate how the traditional German commercial law accounting system has evolved over time to meet specific contractual needs. We demonstrate how the current process of globalization and accounting internationalization has been attended by increasing frictions and challenges, especially on the contractual and regulatory level. We finally investigate the consequences on the German standard setting system, which also includes the changing role of German accounting research. -- Als standardisierte Kommunikation zwischen Unternehmensbeteiligten wurzelt Rechnungslegung stets auch in nationalen Traditionen, Konzepten und institutionellen Rahmenbedingungen. Insofern verwundert es nicht, dass sich Rechnungslegung weltweit heterogen entwickelt hat und unter unterschiedlichen nationalen Bedingungen unterschiedlichen Zwecken folgt. Dabei birgt die seit Jahren zu beobachtende Internationalisierung und oktroyierte Harmonisierung der Rechnungslegung die Gefahr, landesspezifische (Ausgleichs-)Faktoren in der Rechnungslegung zu nivellieren, obwohl sonstige Rahmenbedingungen unternehmerischer Aktivität keineswegs harmonisiert sind. Im Gegensatz zu den eher evolutorischen Integrations- und Anpassungsprozessen der Vergangenheit, in denen Einflüsse anderer Systeme durchaus erkennbar waren, dürften die Schnelligkeit und der regulatorische Zwangscharakter des gegenwärtigen Prozesses landesspezifische Friktionen erzeugen. Um diese Argumentation zu untermauern und um das komplexe Zusammenspiel von Rechnungslegung als Vertragskoordinationsinstrument mit landesspezifischen Rahmenbedingungen zu verdeutlichen, wird eine detaillierte Fallstudie präsentiert, die auf ein einziges Land, Deutschland, zielt. Darin wird aufgezeigt wie sich handelsrechtliche, deutsche Bilanzierungstradition vor dem Hintergrund spezifischer Koordinationsbedürfnisse historisch entwickelt hat. Untersucht werden zudem die Friktionen und Herausforderungen auf unternehmensvertraglicher wie auch regulatorischer Ebene, die durch den gegenwärtigen Internationalisierungsprozess in der Rechnungslegung ausgelöst werden. Die Untersuchung schließt die dahingehenden Konsequenzen für das System der deutschen Rechnungslegungsregulierung und für die Rechnungslegungsforschung mit ein.
    Keywords: German Accounting,Accounting Research,HGB,Code Law,Legal System,Socioeconomic-Environment,Institutional Settings,SME,Book-Tax-Conformity,Debt Financing,Accounting History
    JEL: K22 M41 N00 N24 N44
    Date: 2013
  17. By: Bram Verhees; Rob Raven; Frank Veraart; Adrian Smith; Florian Kern
    Abstract: This paper reviews the developments of solar photovoltaic technology in the Netherlands. Despite the recent boom in PV industries and deployment around the globe, the Dutch have until now not experienced major growth in the diffusion of PV electricity generation. But this is only part of the story. This paper focuses on the question why PV is still around in the Netherlands despite, at times, harsh policy and socio-economic contexts. It builds upon a recently developed framework from the field of transition studies that distinguishes between shielding, nurturing and empowerment of sustainable innovations. A historical description is combined with an analysis of niche space to show how PV advocates have been able to strategically secure and shape protective measures over four decades in the context of harsh regime selection environments. The paper suggests how further analysis with the shielding-nurturing-empowerment framework can learn from this exploratory study on PV innovation in the Netherlands.
    Keywords: Strategic Niche Management, protective space, shielding, nurturing, empowering, solar PV.
    Date: 2012–09
  18. By: Srinuan, Chalita; Srinuan, Pratompong; Bohlin, Erik
    Abstract: This paper aims to explore the price plans offered by Thai mobile operators and analyse the role of demand characteristics in the development of new price plans. The paper also shows how demand affects a firm's degree of innovativeness in terms of the number of new price plans. The empirical qualitative analysis is based on an original data set from several secondary data sources and includes all the price plans offered in the history of the Thai mobile communications market between 2002 and 2010. The results show that mobile operators have introduced several innovative price plans to attract and retain their consumers. Although a greater number of price plans can increase competition among operators, some have complex combinations that may lead to confusion for consumers. A price comparison programme should therefore be implemented by the telecom regulator to ensure that consumers receive correct and complete information about the price plans. Most studies, by far, have not extensively discussed this mobile communications market in detail and the effect of innovation on competition between firms in the mobile communications industry, in particular the development of innovation in developing countries. --
    Keywords: pricing strategies,mobile communications market,innovation,Thailand
    Date: 2012

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