nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2013‒08‒23
thirteen papers chosen by
Bernardo Batiz-Lazo
Bangor University

  1. Burying Money. The Monetary Origins of Lutherÿs Reformation By Philippe Robinson Rössner
  2. MIT Graduate Networks: the early years By Pedro Garcia Duarte
  3. Inequality (un)perceived: The emergence of a discourse on economic inequality from the Middle Ages to the Age of Revolutions By Guido Alfani; Elena Roberta Frigeni
  4. Instability: Monetary and Real By Michael T. Belongia; Peter N. Ireland
  5. The Production and Circulation of Manuscripts and Printed Books in China Compared to Europe, ca. 581-1840 By Ting Xu
  6. Antecedentes y desarrollos recientes del sistema de salud chileno By Calvo, Esteban
  7. Estimating the Global Impacts of Climate Variability and Change During the 20th Century By Richard S.J. Tol; Francisco Estrada
  8. Written evidence given by Professor Alexander Pepper of the London School of Economics and Political Science to the UK Parliamentary Commission on banking standards. By Pepper, Alexander
  9. Large global volatility shocks, equity markets and globalisation: 1885-2011 By Mehl, Arnaud
  10. Mining Gold for the Currency during the Pax Romana By John Hartwick
  11. A twin crisis with multiple banks of issue: Spain in the 1860s By Moro, Alessio; Nuño, Galo; Tedde, Pedro
  12. The Knowledge Economy, Economic Transformations and ICT: Regional Dynamics in the Deployment Phase. Case study: Southern and Eastern Ireland By Franck Barry
  13. Impact of Financial Deregulation on Monetary and Economic Policy in the Czech Republic, Hungary and Poland: 1990-2003 By Patricia McGrath

  1. By: Philippe Robinson Rössner
    Abstract: Idiosyncrasy . the notion of a specific location of people and their ideas in their peculiar contexts of time and space as a guide towards the interpretation of their actions and interactions . has become an increasingly popular heuristic concept, not only in the historical disciplines, but in other social sciences, as well. With regard to Martin Lutherÿs Reformation (1517) an authority in the field has recently suggested: ´Here are two of the most tantalising questions in Western history: How could the Protestant Reformation take off from a tiny town in the middle of Saxony, which contemporaries regarded as a mudhole? How could a man of humble origins who was deeply scared by the devil become a charismatic leader and convince others that the Pope was the living Antichrist?¡ The present paper is intended to contribute to this by arguing that a contextualization of Lutherÿs Reformation of 1517 in its idiosyncratic location of time and space can be further advanced by studying a factor that has been overlooked so far: money. I will argue that the 95 Theses and the early works of Martin Luther should be interpreted against a background of monetary shortage and depression. The argument will be presented in three sections. A first section will challenge the usual notion that Lutherÿs comments on business ethics and economics, mainly on greed (avarice) and high interest rates (usury) were made in the light of an increase in the price level (I). I will argue instead that the first three decades of the sixteenth century were a period of depression, economic and social crisis in the central German lands where Luther grew up and spent the major part of his life (Eisleben, County of Mansfeld and Wittenberg in the Electoral Lands of Saxony). This economic crisis, marked by a deflationary trend in the general price level, as well as a downward trend in many other economic variables of the time was triggered in a sense by a decline in per capita supplies of silver available in this region (II). I then purport to re-read parts of Lutherÿs early oeuvre against the background of this deflationary crisis, to see whether we may perhaps gain some additional insights into the man and how his world view developed around 1500, culminating in his 95 Theses(1517) and his early works of the 1520s (III). The conclusion points the way to further research and interpretation (IV).
    Date: 2013–08
  2. By: Pedro Garcia Duarte
    Abstract: After World War II economists acquired increasing importance in the American society in general. Moreover, the production of economics PhDs in the United States increased substantially and became a less concentrated industry. This period witnessed also the reformulation of the graduate education in economics in the US, informed by the several changes that were occurring in economics: its mathematization, the neoclassicism, the advancement of econometrics, the “Keynesian revolution”, and the ultimate Americanization of economics. The centrality that the MIT graduate program acquired in the postwar period makes it an important case study of the transformation of American economics more generally. Therefore, my aim here is to scrutinize the formative years of the PhD program, mostly the 1940s and 1950s.
    Keywords: MIT Economics Department, MIT PhD Program, Paul Samuelson, Robert Solow
    JEL: B20 B29 A23
    Date: 2013–07–12
  3. By: Guido Alfani; Elena Roberta Frigeni
    Abstract: Long-term developments in economic inequality are attracting growing attention. Earlier works focused on producing reliable measures of inequality, which overall suggest that in Europe, inequality levels were already high in preindustrial times and tended to grow almost continuously from the Middle Ages until the eve of the Industrial Revolution. Proposing a significantly different perspective, this article explores whether the change in inequality is connected to a change in how a condition of unequal distribution of property/income was perceived. By referring to large databases of manuscripts and printed editions covering ca. 1100-1830, we measure the occurrences of keywords connected to the notions of equality/inequality to determine when inequality became a topic considered worthy of specific reflection. Key texts are analyzed in depth to discover how and when such keywords acquired an economic meaning. Lastly, changes in meaning are connected to changes in levels of economic inequality. We demonstrate that the notions of equality/inequality appeared first in scholarly fields far from economic concerns and only slowly acquired economic meanings. This process intensified in the decades preceding the French Revolution of 1789, suggesting that changes in inequality levels contributed to brewing political upheaval in the Age of Revolutions.
    Keywords: equality, inequality, economic inequality, social inequality, middle ages, early modern period, French revolution, economic thought
    Date: 2013–07
  4. By: Michael T. Belongia (University of Mississippi); Peter N. Ireland (Boston College)
    Abstract: Fifty years ago, Friedman and Schwartz presented evidence of pro-cyclical movements in the money stock, exhibiting a lead over corresponding movements in output, found in historical monetary statistics for the United States. Very similar relationships appear in more recent data. To see them clearly, however, one must use Divisia monetary aggregates in place of the Federal Reserve’s official, simple-sum measures. One must also split the data sample to focus, separately, on episodes before and after 1984 and on a new episode of instability beginning in 2000. A structural VAR draws tight links between Divisia money and output during each of these three periods.
    Keywords: money, output, Divisia aggregates, structural VAR
    JEL: E31 E32 E51 E52
    Date: 2013–08–01
  5. By: Ting Xu
    Abstract: Literature dealing with the history of Chinese printed books and printing is voluminous. Yet studies of how knowledge in general and utilitarian forms of knowledge in particular were generated, accumulated and circulated by printed books and their relationship with the long-term socio-economic transformation of China are rare. This paper aims to open up the subject by examining long-term trends in the production of manuscripts and books and focussing on connections between the generation and dissemination of useful knowledge in China and the production and circulation of printed books over the centuries and dynasties from circa 581 to 1840 compared to Europe. It connects trends in this indicator for knowledge formation and diffusion to economic growth, urbanisation, changes in higher forms of education, the rise of literacy, the development of printing technologies, and changes in perceptions of the natural world. It concludes that human capital formation in China probably proceeded at a slower rate, which is relevant for narratives of the .divergenceÿ between China and Europe.
    Date: 2013–07
  6. By: Calvo, Esteban
    Abstract: En el presente capítulo se revisan algunos antecedentes y desarrollos recientes del sistema de salud chileno. En primer término, se lleva a cabo un repaso de los principales períodos e hitos históricos de las políticas de salud en Chile. Posteriormente, se revisa el contexto epidemiológico y demográfico en Chile y se compara con el caso de Colombia, en relación a indicadores relevantes como la esperanza de vida, el envejecimiento de la población y los gastos en salud. En tercer lugar, se profundizará en la realidad actual de las políticas de salud chilenas. Por último, se analizará cómo es posible priorizar el sistema de salud de una forma justa, legítima y sustentable. In this chapter we examine the history and recent developments in the Chilean health system. First, we outline the main historical periods and milestones of health policies in Chile. Next, we review the current epidemiological and demographic context in Chile and compare it with the case of Colombia. Then we analyze the current health policy debates and reform that are taking place in Chile. Finally, we discuss how to prioritize the health system in a fair, legitimate and sustainable way.
    Keywords: health system; health policies; epidemiology; demography
    JEL: I00 I18
    Date: 2013
  7. By: Richard S.J. Tol (Department of Economics, University of Sussex; Institute for Environmental Studies, Vrije Universiteit, Amsterdam, The Netherlands; Department of Spatial Economics, Vrije Universiteit, Amsterdam, The Netherlands; Tinbergen Institute, Amsterdam, The Netherlands); Francisco Estrada (Institute for Environmental Studies, Vrije Universiteit, Amsterdam, The Netherlands; Centro de Ciencias de la Atmósfera, Universidad Nacional Autónoma de México, Mexico)
    Abstract: Estimates of the impacts of observed climate change during the 20th century obtained by different integrated assessment models (IAMs) are separated into their main natural and anthropogenic components. The estimates of the costs that can be attributed to natural variability factors and to the anthropogenic intervention with the climate system in general tend to show that: 1) during the first half of the century, the amplitude of the impacts associated to natural variability is considerably larger than that produced by anthropogenic factors and according to most models the effects of natural variability were mainly negative. These non-monotonic impacts are mostly determined by the low-frequency variability and the persistence of the climate system; 2) IAMs do not agree on the sign (nor on the magnitude) of the impacts of anthropogenic forcing but indicate that they steadily grew over the first part of the century, rapidly accelerated since the mid 1970's, and decelerated during the first decade of the 21st century. The economic impacts of anthropogenic forcing range in the tenths of percentage of the world GDP by the end of the 20th century; 3) the impacts of natural forcing are about one order of magnitude lower than those associated to anthropogenic forcing and are dominated by the solar forcing. Human activities became dominant drivers of the infrapolated economic impacts at the end of the 20th century, rivaling in magnitude with those of natural variability. FUNDn3.6 allows to further decompose the natural and anthropogenic contributions into different sectors. The benefits of anthropogenic contribution in agriculture and energy are shown to outweigh the losses in health and water resources.
    Keywords: climate change; impacts; 20th century
    JEL: Q54
    Date: 2013–08
  8. By: Pepper, Alexander
    Abstract: My contention is that many of the current problems with 'Bankers’ Pay' have their origins in the dismantling of the formal and informal institutions which regulated the labour markets in the financial centres in London and New York prior to 1986-1987.
    Date: 2013
  9. By: Mehl, Arnaud
    Abstract: I estimate the transmission of large global volatility shocks in international equity markets from the earlier (pre-1914) to the modern era of globalisation. To that end, I identify 43 such shocks over the period 1885-2011, defined as significant increases in unanticipated volatility in US equity markets, which I relate to well-known historical events. My estimates suggest that the response of global equity markets to these shocks in a panel of 16 countries is both statistically significant and large economically. On average, global equity market valuations correct by about 20% in the month when a shock occurs. There is substantial heterogeneity in responses both across countries and time, however, which can be partly explained by differences in global trade integration. I find no evidence that other potential theoretical determinants, such as output composition, country fundamentals or global policy responses matter, by contrast. These results shed light on a neglected aspect of globalisation, which creates opportunities but also heightens the exposure of economies to acute surges in global uncertainty and risk aversion. JEL Classification: F30, F31, N20
    Keywords: equity markets, Globalisation, international linkages, large global volatility shocks
    Date: 2013–05
  10. By: John Hartwick (Queen's University)
    Abstract: We set out a simple four sector macro model of the economy of the Roman Empire during a period of considerable economic prosperity. Our focus is on gold coins as currency and the seignorage which the government used to fund its activities. We solve numerically for a balanced growth representation of the economy of the empire, a solution that captures the intricacies of money creation, currency expansion and seignorage. We subscribe to the view that the exhaustion of low-cost gold and silver deposits contributed significantly to the ending of the economic prosperity enjoyed by Roman Italy and its provinces during the so-called Pax Romana (31 BC to 165 CE) and we attempt to capture significant shifts in variables during the decline.
    Keywords: Roman money supply, gold coinage, money during Pax Romana
    JEL: E40 E10 N10
    Date: 2013–08
  11. By: Moro, Alessio; Nuño, Galo; Tedde, Pedro
    Abstract: We document the twin crisis that affected Spain in the mid-1860s. First, we trace back its origins to the international crisis of 1864-66. Next, we describe the particular banking sector of Spain, characterized by the coexistence of the Bank of Spain with multiple local banks of issue. We analyze the microeconomic behavior of each bank in response to the crisis and find that, overall, the banks of issue performed well during the crisis. The Bank of Spain resulted as the most destabilizing institute due to its involvement with a Government on the brink of default. JEL Classification: N13, N23, E31, E5
    Keywords: financial crisis, Gurney and Co, Lender of Last Resort, Overend, sudden stop
    Date: 2013–07
  12. By: Franck Barry (Trinity College Dublin)
    Abstract: Ireland has been one of the global economic success stories of the last 20 years. National income rose from less than 65% of the EU15 average in the mid 1980s to well above parity today. Ireland is also the most FDI-intensive economy in Europe. Section A of the present report provides an analysis of the rapid economic development of the “Celtic Tiger” era and how Ireland’s status as a successful export platform for foreign Multinational Corporations was achieved. Though the production structure of the economy is heavily weighted towards (largely foreign-owned) high-technology and ICT-using industries, the country lags behind in terms of personal ICT use. The remainder of Section A presents regional and national data on ICT production and diffusion across the economy. The main focus of the report in on the more advanced Southern and Eastern region of the two NUTS II regions into which the country is divided. The indigenous software sector, the emergence and growth of which is the subject of Section B, is very heavily clustered in this region. Section B charts the role played by the foreign-owned high-tech ICT-using sectors in seeding this ICT-producing cluster and provides details of the types of state interventions that emerged through a process of trial and error to support the cluster. The conclusions presented in Section C reflect on the implications of the case study for the roles that FDI and different types of knowledge spillovers can play in the emergence of a knowledge-intensive cluster and on the types of policies that can play a role in assisting its evolution.
    Keywords: ICT, Information and Communication Technologies, software, Ireland, Dublin
    JEL: D22 L52 L86 R12
    Date: 2013–08
  13. By: Patricia McGrath
    Abstract: The three countries took different stances in regards to economic policy; the Czech Republic pursued a shock therapy regime which aimed to stabilise the economy, Hungary’s policy was more relaxed whilst Poland had an aggressive reform programme. Regarding monetary policy the Czech Republic used the discount rate as a tool for monetary policy, Hungary used indirect monetary policy and Poland had strict monetary policies which raised interest rates and devalued the zloty. After financial deregulation the impact of economic and monetary policy led to positive economic growth in the Czech Republic year on year. Hungary had a similar experience whilst Poland had an initial high increase in economic growth. This reduced over time but they still recorded positive economic growth over the period studied.
    Keywords: Transition Economies, Financial Deregulation, Economic Growth, Eastern Europe.
    JEL: E E2 E4 E5 G G15 G21
    Date: 2013–05–15

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