New Economics Papers
on Business, Economic and Financial History
Issue of 2013‒06‒04
seventeen papers chosen by

  1. Government debt in economic thought of the long 19th century By Holtfrerich, Carl-Ludwig
  2. The Institutional Revolution: A Review Essay By Richard N. Langlois
  3. University-industry relations and the evolution of knowledge governance. the italian evidence in the first part of the xx century By Antonelli, Cristiano; Fassio, Claudio
  4. Trade Synchronisation During Major Economic Crises By Susanne Bärenthaler-Sieber; Sandra Bilek-Steindl; Christian Glocker
  5. More Hands, More Power? Estimating the Impact of Immigration on Output and Technology Choices Using Early 20th Century US Agriculture By Jeanne Lafortune; José Tessada; Carolina González-Velosa
  6. The mechanisms of knowledge governance: State owned enterprises and Italian economic growth, 1950-1994 By Antonelli, Cristiano; Barbierini Amidei, Federico; Fassio, Claudio
  7. Von Thünen South of the Alps : Access to Markets and Interwar Italian Agriculture By Pablo Martinelli
  8. The emergence of democracy: a behavioural perspective By Kyriazis, Nicholas; Metaxas, Theodore
  9. Ethical Investment and Consumers in Cultural History By Alam, Niaz
  10. What Do Experts Know About Forecasting Journal Quality? A Comparison with ISI Research Impact in Finance? By Chang, C.L.; McAleer, M.J.
  11. Immigrant Assimilation into U.S. Prisons, 1900-1930 By Carolyn M. Moehling; Anne Morrison Piehl
  12. The Top 1 Percent in International and Historical Perspective By Facundo Alvaredo; Anthony B. Atkinson; Thomas Piketty; Emmanuel Saez
  13. Music consumption at the dawn of the music industry: the rise of a cultural fad By Guerzoni, Marco; Nuccio, Massimiliano
  14. Labor Busted, Rising Inequality and the Financial Crisis of 1929: An Unlearned Lesson By Jon D. Wisman
  15. Money, Credit, Capital and the State: On the evolution of money and institutions By Hanappi, Hardy
  16. The cliometrics of academic chairs. Scientific knowledge and economic growth, the evidence across the Italian regions 1900-1959 By Antonelli Cristiano; Crepax Nicola; Fassio Claudio
  17. Monetary theory and monetary policy: Reflections on the development over the last 150 years By Issing, Otmar; Wieland, Volker

  1. By: Holtfrerich, Carl-Ludwig
    Abstract: [Introduction] The first half of the long 19th century covers the publication of Adam Smiths 'Wealth of Nations' in 1776 through the work of subsequent representatives of classical political economy in Great Britain. The second half of that long century is marked by the contributions of German economists to public finance theory spanning the sixty years preceding the First World War. In this paper I will contrast the views of four classical British economists regarding the issue of public debt, namely those of Adam Smith, David Ricardo, Thomas Robert Malthus and John Stuart Mill, with those of three German economists, Carl Dietzel, Lorenz von Stein, and, with the internationally prominent (at least up to the First World War), Adolph Wagner. The position of British economists of the classical school that government debt was an impediment to economic progress is relatively familiar. Maybe due to their harsh judgment they treated the issue only in passing. In contrast, considerably less well-known today are the contributions of these three German economists who published entire books devoted to the issue of public debt with a subtly differentiated analysis and who were led to significantly more favorable assessments of the use of debt finance by governments. Before outlining the views of the classical economists in Great Britain, I begin with a brief discussion of the origins and magnitude of the British debt problem, the times when the main representatives of the British classical school shaped their views. Having the times and doctrines of English political economy before us, we move to consider each of the three German economists to see what led them to discover a more positive role for the use of debt in a system of public finance. The paper concludes by highlighting the main differences between the two traditions. --
    Date: 2013
  2. By: Richard N. Langlois (University of Connecticut)
    Abstract: This review essay discusses and appraises Douglas Allen’s The Institutional Revolution (2011) as a way of reflecting on the uses of the New Institutional Economics (NIE) in economic history. It praises and defends Allen’s method of asking “what economic problem were these institutions solving?” But it insists that such comparative-institutional analysis be imbedded within a deeper account of institutional change, one driven principally by changes – often endogenous changes – in the extent of the market and in relative scarcities. The essay supports its argument with a variety of examples of the NIE applied to economic history.
    Keywords: institutions, transaction costs, aristocracy, military history, factory system.
    JEL: C61 L25 D24
    Date: 2013–02
  3. By: Antonelli, Cristiano; Fassio, Claudio (University of Turin)
    Abstract: This paper contributes the large literature on the university industry relations providing unique historic evidence on the positive effects of academic spillovers as proxied by chairs, distinguished by disciplinary field, on total factor productivity growth. The analysis impinges upon an original data-base on the evolution of the size and the disciplinary composition of the stock of academic chairs in Italy in the years 1900-1959. The results confirm the contribution of academic knowledge to economic growth and the positive effects of the public support to the academic system. At the same time they shed new light on the differentiated impact of the different disciplines on economic growth. The increase in the number of chairs in engineering and chemistry contributed to total factor productivity growth more than any other discipline. This is consistent with the historic context characterized by the radical transformation of a backward agricultural economy into a highly industrialized and rich one. The results of this cliometric analysis of a case where the corporate mode of knowledge governance had not yet been introduced confirm the viability of the academic mode of knowledge governance.
    Date: 2012–05
  4. By: Susanne Bärenthaler-Sieber (WIFO); Sandra Bilek-Steindl (WIFO); Christian Glocker (WIFO)
    Abstract: In this paper we present a new long-term database on monthly export and import series for 23 economies during 1921-2010 and its first empirical application. Using these data, we analyse the synchronised decline in foreign trade during the recession 2008-09 in a historical perspective. We investigate the following two research questions: First, we compare the degree of synchronisation of trade flows among the past major economic crises. Second, we investigate the synchronisation of the speed of the recovery after these recessions. In order to answer these questions we use both, descriptive statistics (like rolling correlations) and turning-point oriented measures (Bry-Boschan routine, Markov switching model).
    Keywords: Synchronisation, Trade collapse, Turning Points, Economic History
    Date: 2013–05–13
  5. By: Jeanne Lafortune; José Tessada; Carolina González-Velosa
    Abstract: Can shifts in output mix or technologies attenuate the impact of immigration on wages? We explore this using immigration-induced changes in relative labor supply at the county level in US Censuses of Agriculture in early 20th century. An increase in labor supply induced a shift away from capital-intensive crops and a reduction in farm size. Crop mix adjustments were more likely in counties less specialized in a given crop while adjustments in technological and organization changes were more marked in the rest. Suggestive evidence indicates that crop mix adjustments, but not organizational changes, were sufficient to limit wage impacts.
    Keywords: Immigration, Agriculture, Output mix, Technological change
    JEL: J43 J61 N51
    Date: 2013
  6. By: Antonelli, Cristiano; Barbierini Amidei, Federico; Fassio, Claudio (University of Turin)
    Abstract: The grafting of the tools of communication studies on the economics of knowledge helps to investigate the mechanisms of knowledge governance. The actual economic benefits stemming from knowledge externalities depend on the characteristics of a) their sources, b) the context in which spillovers take place, c) the possible recipients. In the Italian experience between 1950-1992, state owned enterprises (SOE) have been one of the most effective mechanisms of knowledge governance. Italian SOE were very effective emissaries of knowledge externalities as they imitated the US corporate model of intramuros R&D laboratories and yet were characterized by an objective function based upon output maximization under the constraint of average profitability. Their support to the growth of the system was crucial not only with respect to the creation of basic infrastructure but also as active players in implementing effective mechanisms of knowledge governance. Research activities carried out by SOE were mainly based in upstream industries, with multiple user-producer interactions with firms active in downstream industries, and aimed at implementing a knowledge base characterized by high levels of generic content and a wide scope of application. Moreover the specific objective function of SOE favoured higher levels of knowledge generation than exploitation. These characteristics helped disseminate relevant knowledge externalities that played a strong and positive role on total factor productivity in the second part of the XX century in Italy. Their role was stronger than the knowledge externalities stemming from research activities carried out by private firms.
    Date: 2012–05
  7. By: Pablo Martinelli
    Abstract: This paper sheds new light on the agricultural side of the Italian regional divide from an economic geography perspective, following a Von Thünen approach. The central hypothesis is that the development of the non-agricultural economy in Northern cities drove the location of agricultural output and inputs during the interwar years. A new database on Italian agriculture around 1930 fully confirms the key role of access to domestic markets in shaping agricultural activity. Thus, the causes of the falling behind of Southern agriculture are uncovered: it is not very surprising that an agricultural divergence joined an already ongoing industrial divergence during a period in which international markets collapsed.
    Keywords: Agriculture, Access to markets, Economic Geography, Italy
    JEL: Q10 N54 O13 R12
    Date: 2012–11
  8. By: Kyriazis, Nicholas; Metaxas, Theodore
    Abstract: In the present essay we introduce in a model the concept of macroculture and the formation of new values within the particular macroculture that arose during the 8th to 4th century BC in Ancient Greece. We analyse the conditions and the context for the emergence of the heavy infantryman, the hoplite, and the new tactical formation, the phalanx, and the trireme warship. We apply the coordination and cooperation as behavioural mechanisms to the phalanx and the triremes to show how a specific set of new values emerged. Then, taking into account bounded rationality, as a second behavioural mechanism we analyse how these values were taken over from the military into the political field and thus were crucial for the emergence and development of democracy.
    Keywords: Macroculture, Coordination and Cooperation mechanisms, bounded rationality, phalanx and triremes, military and democratic values.
    JEL: B15 N4 N43
    Date: 2013
  9. By: Alam, Niaz
    Abstract: A short cultural history of the impact of Ethical Investment and Consumers over the years. Primarily from a UK based perspective looking at the evoluton of ethical business issues and their contemporary impact. Topics covered include impacts in books, films and foreign policy. History of Influencing the market via international conventions and discussion of debates on the value of mainstreaming, political disputes (The human rights and wrongs of boycotts) and the 1990s take off for codes of conduct
    Keywords: Responsible Investment, SRI, Ethical consumers, Ethical Investment
    JEL: B00 B2 B29 B30 Z1 Z13
    Date: 2013–04–28
  10. By: Chang, C.L.; McAleer, M.J.
    Abstract: Experts possess knowledge and information that are not publicly available. The paper is concerned with forecasting academic journal quality and research impact using a survey of international experts from a national project on ranking academic finance journals in Taiwan. A comparison is made with publicly available bibliometric data, namely the Thomson Reuters ISI Web of Science citations database (hereafter ISI) for the Business - Finance (hereafter Finance) category. The paper analyses the leading international journals in Finance using expert scores and quantifiable Research Assessment Measures (RAMs), and highlights the similarities and differences in the expert scores and alternative RAMs, where the RAMs are based on alternative transformations of citations taken from the ISI database. Alternative RAMs may be calculated annually or updated daily to answer the perennial questions as to When, Where and How (frequently) published papers are cited (see Chang et al. (2011a, b, c)). The RAMs include the most widely used RAM, namely the classic 2-year impact factor including journal self citations (2YIF), 2-year impact factor excluding journal self citations (2YIF*), 5-year impact factor including journal self citations (5YIF), Immediacy (or zero-year impact factor (0YIF)), Eigenfactor, Article Influence, C3PO (Citation Performance Per Paper Online), h-index, PI-BETA (Papers Ignored - By Even The Authors), 2-year Self-citation Threshold Approval Ratings (2Y-STAR), Historical Self-citation Threshold Approval Ratings (H-STAR), Impact Factor Inflation (IFI), and Cited Article Influence (CAI). As data are not available for 5YIF, Article Influence and CAI for 13 of the leading 34 journals considered, 10 RAMs are analysed for 21 highly-cited journals in Finance. The harmonic mean of the ranks of the 10 RAMs for the 34 highly-cited journals are also presented. It is shown that emphasizing the 2-year impact factor of a journal, which partly answers the question as to When published papers are cited, to the exclusion of other informative RAMs, which answer Where and How (frequently) published papers are cited, can lead to a distorted evaluation of journal impact and influence relative to the Harmonic Mean rankings. A linear regression model is used to forecast expert scores on the basis of RAMs that capture journal impact, journal policy, the number of high quality papers, and quantitative information about a journal. The robustness of the rankings is also analysed.
    Keywords: robustness;IFI;PI-BETA;STAR;article influence;eigenfactor;h-index;C3PO;impact factor;expert scores;journal quality;RAMs;harmonic mean
    Date: 2013–02–01
  11. By: Carolyn M. Moehling; Anne Morrison Piehl
    Abstract: The analysis of a new dataset on state prisoners in the 1900 to 1930 censuses reveals that immigrants rapidly assimilated to native incarceration patterns. One feature of these data is that the second generation can be identified, allowing direct analysis of this group and allowing their exclusion from calculations of comparison rates for the “native” population. Although adult new arrivals were less likely than natives to be incarcerated, this likelihood was increasing with their years in the U.S. The foreign born who arrived as children and second generation immigrants had slightly higher rates of incarceration than natives of native parentage, but these differences disappear after controlling for nativity differences in urbanicity and occupational status. Finally, while the incarceration rates of new arrivals differ significantly by source country, patterns of assimilation are very similar.
    JEL: J15 K42 N32
    Date: 2013–05
  12. By: Facundo Alvaredo; Anthony B. Atkinson; Thomas Piketty; Emmanuel Saez
    Abstract: The top 1 percent income share has more than doubled in the United States over the last thirty years, drawing much public attention in recent years. While other English speaking countries have also experienced sharp increases in the top 1 percent income share, many high-income countries such as Japan, France, or Germany have seen much less increase in top income shares. Hence, the explanation cannot rely solely on forces common to advanced countries, such as the impact of new technologies and globalization on the supply and demand for skills. Moreover, the explanations have to accommodate the falls in top income shares earlier in the twentieth century experienced in virtually all high-income countries. We highlight four main factors. The first is the impact of tax policy, which has varied over time and differs across countries. Top tax rates have moved in the opposite direction from top income shares. The effects of top rate cuts can operate in conjunction with other mechanisms. The second factor is indeed a richer view of the labor market, where we contrast the standard supply-side model with one where pay is determined by bargaining and the reactions to top rate cuts may lead simply to a redistribution of surplus. Indeed, top rate cuts may lead managerial energies to be diverted to increasing their remuneration at the expense of enterprise growth and employment. The third factor is capital income. Overall, private wealth (relative to income) has followed a U-shaped path over time, particularly in Europe, where inherited wealth is, in Europe if not in the United States, making a return. The fourth, little investigated, element is the correlation between earned income and capital income, which has substantially increased in recent decades in the United States.
    JEL: H2
    Date: 2013–05
  13. By: Guerzoni, Marco; Nuccio, Massimiliano (University of Turin)
    Abstract: This paper discusses the extent to which socio-demographic characteristics of consumers and their past consumption are less effective in explaining the decision of purchasing a cultural good than the characteristics of the product itself, which allow imitative behaviors and are at the basis of distinction. While the former approaches are well discussed in the literature, the latter refers to the Bourdieu’s idea of objectified cultural capital, which has been rarely explored in empirical works. Because the various explanatory effects interact with each others, the paper tests a theoretical model which matches individual characteristics of the consumer with the properties of the cultural product. Specifically, we discussed the emergence of a new version of a cultural good, which is able to broaden the dimension of the market by gaining quick success in the the audience. This diffusion pattern is a quite rare event, but disruptive for the market and extremely profitable for the producer. The authors label this occurrence disruptive cultural fad and try to understand the determinants of its adoption. The hypotheses of the model are tested on a unique dataset of micro-data of purchasing transactions in Milan in the early 19th century,when the music by Gioachino Rossini emerged as disruptive cultural fad at the dawn of the music industry
    Date: 2012–09
  14. By: Jon D. Wisman
    Abstract: Although the Great Depression and the financial crisis of 1929 that triggered it have been endlessly studied, there is little consensus and even much puzzlement as to why they occurred. This article claims that beneath the many causal factors that have been advanced lie deeper underlying determining forces that have received less notice: wage stagnation and the dramatic increase in inequality following World War I. Wage stagnation and rising inequality fueled three dynamics that set the stage for a financial crisis – the focus of this study -- and contributed to the duration of the depression that followed. The first is that consumption was constrained by the smaller share of total income accruing to workers, thereby restricting investment opportunities in the real economy. Flush with greater income and wealth, the elite flooded financial markets with credit, helping keep interest rates low and encouraging the creation of new credit instruments, some of which recycled the rich's surplus assets as debt to those less well off. The second dynamic is that greater inequality pressured households to find ways to consume more to maintain their relative social status. As a result, household saving rates declined, households took on greater debt, and may have worked longer hours. The third dynamic is that, as the rich took larger shares of income and wealth, they gained relatively more command over everything, including ideology. Reducing taxes on the rich, favoring business over labor, and failing to regulate newly evolving credit instruments flowed out of this ideology.
    Keywords: inadequate demand, consumer externalities, social respectability, speculation, financial innovation, ideology
    JEL: E21 E44 G01
    Date: 2013
  15. By: Hanappi, Hardy
    Abstract: This paper combines several important arguments, which have puzzled economic theory for decades, to arrive at a more adequate description of the current global crisis. The main theoretical innovation is to view the long-run economic evolution as a stepwise evolution of money forms. Moreover, as already indicated in the title, this development of money forms is closely linked to the development of social institutions, in particular of state institutions. Capital, the most recent form of money, today has to be understood as an omnipresent algorithm, as a growth imperative implicit in social institutions and internalized models. The task of evolutionary political economy thus will be to provide an adequate theoretical counterpart to mirror these processes. This paper explores how far a careful reconsideration of received economic theory can contribute to this task.
    Keywords: Money, Credit, Capital, State
    JEL: B50 E02 P16
    Date: 2013–02–11
  16. By: Antonelli Cristiano; Crepax Nicola; Fassio Claudio (University of Turin)
    Abstract: The analysis of the evolution of the academic chairs of an academic system is a promising area of investigation. The exploration of the evolution of the size and the disciplinary composition of the stock of academic chairs in Italy in the years 1900- 1959 provides an opportunity to understand the contribution of scientific knowledge to economic growth. The basic assumption is that knowledge is not a homogeneous activity, but rather a bundle of highly differentiated disciplines that have a differentiated impact on economic growth. Advances in scientific knowledge are likely to have a direct, positive effect on economic growth according to their fungibility, appropriability and complementarity with other sources of technological knowledge and hence exploitation conditions. Advances in scientific knowledge that can be converted into technological knowledge with high levels of fungibility, appropriability and complementarity have a higher chance to affect economic growth. The econometric analysis confirms that advances in engineering and chemistry, as proxied by the number of chairs, had much a stronger output elasticity than in other scientific fields. These results have important implications for research policy as they highlight the differences in the economic effects of academic disciplines.
    Date: 2012–02
  17. By: Issing, Otmar; Wieland, Volker
    Abstract: In this paper, we provide some reflections on the development of monetary theory and monetary policy over the last 150 years. Rather than presenting an encompassing overview, which would be overambitious, we simply concentrate on a few selected aspects that we view as milestones in the development of this subject. We also try to illustrate some of the interactions with the political and financial system, academic discussion and the views and actions of central banks. --
    Date: 2012

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