New Economics Papers
on Business, Economic and Financial History
Issue of 2013‒08‒16
twelve papers chosen by

  1. Pre-Reformation Roots of the Protestant Ethic By Andersen, Thomas Barnebeck; Bentzen, Jeanet; Dalgaad, Carl-Johan; Sharp, Paul
  2. A Western Reversal Since the Neolithic? The Long-Run Impact of Early Agriculture By Olsson, Ola; Paik, Christopher
  3. Gibrat’s Law and the British Industrial Revolution By Klein, Alexander; Leunig, Tim
  4. Searching for Irving Fisher By Mitchener, Kris James; Weidenmier, Marc D
  5. Living Standards and Plague in London, 1560–1665 By Cummins, Neil; Kelly, Morgan; O Grada, Cormac
  6. Markov Switching and the Taylor Principle By Christian Murray; Nikolsko-Rzhevskyy Alex; Papell David
  7. Capital Controls and Recovery from the Financial Crisis of the 1930s By Mitchener, Kris James; Wandschneider, Kirsten
  8. The Money of the Mind and the God of Commodities – The real abstraction according to Sohn-Rethel By Cardoso Machado, Nuno Miguel
  9. Efficiency, Distortions and Factor Utilization during the Interwar Period By Klein, Alexander School of Economics, University of Kent; Otsuy, Keisuke
  10. The Value of Democracy: Evidence from Road Building in Kenya By Robin Burgess; Remi Jedwab; Edward Miguel; Ameet Morjaria; Gerard Padro i Miquel
  11. Econophysics Research in India in the last two Decades By Asim Ghosh
  12. Surviving the Genocide: The Impact of the Rwandan Genocide on Child Mortality By Ciani, Federico; Giannelli, Gianna Claudia

  1. By: Andersen, Thomas Barnebeck (University of Southern Denmark); Bentzen, Jeanet (University of Copenhagen); Dalgaad, Carl-Johan (University of Copenhagen); Sharp, Paul (University of Southern Denmark)
    Abstract: We hypothesize that cultural appreciation of hard work and thrift,the Protestant ethic according to Max Weber,had a pre-Reformation origin.The proximate source of these values was,according to the proposed theory,the Catholic Order of Cistercians.In support,we first document an impact from the Order on growth within the epicenter of the industrial revolution;English counties that were more exposed to Cistercian monasteries experienced faster productivity growth from the 13th century onwards. Consistent with a cultural influence,this impact is also found after the monasteries were dissolved in the 1530s.Second,we find that the values emphasized by Weber are relatively more pervasive in European regions where Cistercian monasteries were located historically,and that the legacy of the Cistercianscan be detected inpresent-day employment rates across European sub-regions.
    Keywords: Cultural values;Protestant ethic;Economic development
    Date: 2013
  2. By: Olsson, Ola (University of Gothenburg); Paik, Christopher (NYU Abu Dhabi)
    Abstract: While it is widely believed that regions which experienced a transition to Neolithic agriculture early also become institutionally and economically more advanced, many indicators suggest that within the Western agricultural core (including Europe, North Africa, the Middle East, and Southwest Asia), communities that adopted agriculture early in fact have weaker institutions and poorly functioning economies today. In the current paper, we attempt to integrate both of these trends in a coherent historical framework. Our main argument is that countries that made the transition early also tended to develop autocratic societies with social inequality and pervasive rent seeking, whereas later adopters were more likely to have egalitarian societies with stronger private property rights. These different institutional trajectories implied a gradual shift of dominance from the early civilizations towards regions in the periphery. We document this relative reversal within the Western core by showing a robust negative correlation between years since transition to agriculture and contemporary levels of income and institutional development, on both the national and the regional level. Our results further indicate that the reversal had become manifest already before the era of European colonization.
    Keywords: Neolithic agriculture, comparative development
    Date: 2013
  3. By: Klein, Alexander (University of Kent); Leunig, Tim (London School of Economics)
    Abstract: This paper examines Gibrat’s law in England and Wales between 1801 and 1911using a unique data set covering the entire settlement size distribution.We find that Gibrat’s law broadly holds even in the face of population doubling every fifty years,an industrial and transportrevolution, and the absence of zoning laws to constrain growth. The result is strongest for the later period, and in counties most affected by the industrial revolution. The exception were villages in areas bypassed by the industrial revolution.We argue that agglomeration externalities balanced urban disamenities such as commuting costs and poor living conditions to ensure steady growth of many places, rather than exceptional growth of few.
    Keywords: Gibrat’s law, city-size distribution, industrial revolution
    Date: 2013
  4. By: Mitchener, Kris James (University of Warwick); Weidenmier, Marc D (Claremont McKenna College)
    Abstract: There is a long-standing debate as to whether the Fisher effect operated during the classical gold standard period. We break new ground on this question by developing a market-based measure of inflation expectations during the gold standard. We derive a measure of silver-gold inflation expectations using the interest-rate differential between Austrian silver and gold perpetuity bonds. Our use of the silver-gold interest rate differential is motivated by the fact that both gold and silver served as numeraires in the pre-WWI period, so that a change in the price of either precious metal would impact the prices of all goods and services. The empirical evidence suggests that silver-gold inflation expectations exhibited significant persistence at the weekly, monthly, and annual frequencies. Further, we find that there is a one-to-one relationship between silver-gold inflation expectations and the interest rate on Austrian perpetuity bonds that were denominated in paper currency. The analysis suggests the operation of a Fisher effect during the classical gold standard period.
    Keywords: Fisher effect, inflation expectations, gold standard
    Date: 2013
  5. By: Cummins, Neil (London School of Economics); Kelly, Morgan (University College Dublin); O Grada, Cormac (University College Dublin)
    Abstract: We use individual records of 920,000 burials and 630,000 baptisms to reconstruct the spatial and temporal patterns of birth and death in London from 1560 to 1665, a period dominated by recurrent plague. The plagues of 1563, 1603, 1625, and 1665 appear of roughly equal magnitude, with deaths running at five to six times their usual rate, but the impact on wealthier central parishes falls markedly through time. Tracking the weekly spread of plague before 1665 we find a consistent pattern of elevated mortality spreading from the same northern suburbs. Looking at the seasonal pattern of mortality, we find that the characteristic autumn spike associated with plague continued into the early 1700s. Given that individual cases of plague and typhus are frequently indistinguishable, claims that plague suddenly vanished after 1665 should be treated with caution. Natural increase improved as smaller plagues disappeared after 1590, but fewer than half of those born survived childhood.
    Keywords: Plague in London
    Date: 2013
  6. By: Christian Murray (University of Houston); Nikolsko-Rzhevskyy Alex (Lehigh University); Papell David (University of Houston)
    Abstract: Early research on the Taylor rule typically divided the data exogenously into pre-Volcker and Volcker-Greenspan subsamples.  We contribute to the recent trend of endogenizing changes in monetary policy by estimating a real-time forward-looking Taylor rule with endogenous Markov switching coefficients and variance. The response of the interest rate to inflation is regime dependent, with the pre and post-Volcker samples containing monetary regimes where the Fed did and did not follow the Taylor principle. While the Fed consistently adhered to the Taylor principle before 1973 and after 1984, it followed the Taylor principle from 1975-1979 and did not follow the Taylor principle from 1980-1984.  We also find that the Fed only responded to real economic activity during the states in which the Taylor principle held.  Our results are consistent with the idea that exogenously dividing postwar monetary policy into pre-Volcker and post-Volcker samples misleading. The greatest qualitative difference between our results and recent research employing time varying parameters is that we find that the Fed did not adhere to the Taylor Principle during most of Paul Volcker’s tenure, a finding which accords with the historical record of monetary policy.
    Keywords: Markov Switching, Taylor Principle, Taylor Rule
    JEL: E52 C24
    Date: 2013–08–05
  7. By: Mitchener, Kris James (University of Warwick); Wandschneider, Kirsten (Occidental College)
    Abstract: We examine the first widespread use of capital controls in response to a global or regional financial crisis. In particular, we analyze whether capital controls mitigated capital flight in the 1930s and assess their causal effects on macroeconomic recovery from the Great Depression. We find evidence that they stemmed gold outflows in the year following their imposition; however, time-shifted, difference-indifferences (DD) estimates of industrial production, prices, and exports suggest that exchange controls did not accelerate macroeconomic recovery relative to countries that went off gold and floated. Countries imposing capital controls also appear to perform similar to the gold bloc countries once the latter group of countries finally abandoned gold. Time series regressions further demonstrate that countries imposing capital controls refrained from fully utilizing their newly acquired monetary policy autonomy. Even so, capital controls remained in place as instruments for manipulating trade flows and for preserving foreign exchange for the repayment of external debt.
    Keywords: capital controls, financial crises, Great Depression, interwar gold standard
    Date: 2013
  8. By: Cardoso Machado, Nuno Miguel
    Abstract: According to Sohn-Rethel there is a “secret identity” between commodity form and thought form. Commodity exchange is a real abstraction – embodied in money – and constitutes a social a priori which reflects itself in the conceptual abstraction, i.e., in the abstract thought typical of commodity-producing societies: philosophy (in ancient Greece) and modern science (in capitalism). However, the theory of Sohn-Rethel has a fundamental flaw: its exclusive identification of the real abstraction with the sphere of circulation results in the ontologization of labor which, on the contrary, is a capitalist specificity and the original source of the abstraction in this society.
    Keywords: Sohn-Rethel, real abstraction, commodity form, thought form
    JEL: A11 A12 A13 B24 B31 B41 P1 P10 P51
    Date: 2013
  9. By: Klein, Alexander School of Economics, University of Kent (University of Kent); Otsuy, Keisuke (University of Kent)
    Abstract: In this paper, we analyze the International Great Depression in the US and Western Europe using the business cycle accounting method a la Chari, Kehoe and McGrattan (CKM 2007). We extend the business cycle accounting model by incorporating endogenous factor utilization which turns out to be an important transmission mechanism of the disturbances in the economy. Our main …ndings are that in the U.S. labor wedges account for roughly half of the drop in output while efficiency and investment wedges each account for a quarter of it during the 1929-1933 period while in Western Europe labor wedges account for more than one-third of the output drop and efficiency, government and investment wedges are responsible for the remaining during the 1929-1932 period. Our …ndings are consistent with several strands of existing descriptive and empirical literature on the International Great Depression.
    Keywords: International Great Depression; Business Cycle Accounting; Efficiency, Market Distortions
    Date: 2013
  10. By: Robin Burgess; Remi Jedwab; Edward Miguel; Ameet Morjaria; Gerard Padro i Miquel
    Abstract: Ethnic favoritism is seen as antithetical to development. This paper provides credible quantifi…cation of the extent of ethnic favoritism using data on road building in Kenyan districts across the 1963-2011 period. Guided by a model it then examines whether the transition in and out of democracy under the same president constrains or exacerbates ethnic favoritism. Across the 1963 to 2011 period, we fi…nd strong evidence of ethnic favoritism: districts that share the ethnicity of the president receive twice as much expenditure on roads and have four times the length of paved roads built. This favoritism disappears during periods of democracy.
    Date: 2013–08
  11. By: Asim Ghosh
    Abstract: We discuss here researches on econophysics done from India in the last two decades. The term `econophysics' was formally coined in India (Kolkata) in 1995. Since then many research papers, books, reviews, etc. have been written by scientists. Many institutions are now involved in this research field and many conferences are being organized there. In this article we give an account (of papers, books, reviews, papers in proceedings volumes etc.) of this research from India.
    Date: 2013–07
  12. By: Ciani, Federico (University of Florence); Giannelli, Gianna Claudia (University of Florence)
    Abstract: Between April and July 1994 Rwanda experienced a tremendous wave of inter-ethnic violence that caused at least 500,000 deaths. Combining birth history data drawn from the 2000 Rwanda Demographic and Health Survey with prefecture-level information on the intensity of the conflict, we examine the impact of the civil war on infant and child mortality. War exposure is measured exploiting the differential effects of timing of birth and genocide intensity at the household and geographic level. Considering both in utero and postnatal war exposure, we estimate discrete time proportional hazard models of child mortality for the exposed and the unexposed birth cohorts. We find large positive effects of exposure to the conflict on infant and child mortality. Moreover, restricting our sample to the survivors, we find that child mortality is significantly impacted by war exposure, increasing the hazard rate by nearly 6 percentage points on average. This result holds true also for children who were only exposed while in utero. This evidence points to the existence of long-term disruptive effects on the cohorts of children exposed to the violence.
    Keywords: genocide, child mortality, child health, survival analysis, Rwanda
    JEL: I20 J13 O12 Z13
    Date: 2013–07

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