nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2013‒11‒02
23 papers chosen by
Bernardo Batiz-Lazo
Bangor University

  1. Military Conflict and the Economic Rise of Urban Europe By Mark Dincecco; Massimiliano Gaetano Onorato
  2. England's Eighteenth Century Demand for High-Quality Workmanship: Evidence from Apprenticeship, 1710-1770 By Karine van der Beek
  3. Market Forces Shaping Human Capital in Eighteenth Century London By Karine van der Beek; Moshe Justman
  4. In the Kingdom of Solovia: The Rise of Growth Economics at MIT, 1956-1970 By Mauro Boianovsky; Kevin D. Hoover
  5. Deceptive data? The New Survey of London Life and Labour 1928 – 31 By Simon T Abernethy
  6. MIT's Openness to Jewish Economists By E. Roy Weintraub
  7. Work histories of Older People - Evidence from Mixed Method Occupational History Calendars By Fiona Carmichael; Claire Hulme; Lorna Porcellato
  8. Globalization, Democracy and Development By Jorge Braga de Macedo; Luis Brites Pereira; Joaquim Oliveira Martins; João Tovar Jalles
  9. The Phillips Curve and the Tyranny of an Assumed Unique Macro Equilibrium By Richard G. Lipsey
  10. Did Keynes in the General Theory significantly misrepresent J S Mill? By Roy H Grieve
  11. Redefining Industrial Revolution: Song China and England By Ronald A. Edwards
  12. US Employment Deindustrialization: Insights from History and the International Experience By Robert Z. Lawrence; Lawrence Edwards
  13. Foreign electricity companies in Argentina & Brazil: The case of American & Foreign Power (1926-1965) By Norma Lanciotti; Alexandre Macchione Saes
  14. Does Expansionary Monetary Policy Cause Asset Price Booms; Some Historical and Empirical Evidence By Michael D. Bordo; John Landon-Lane
  15. What Explains House Price Booms?: History and Empirical Evidence. By Michael D. Bordo; John Landon-Lane
  16. The Continental Dollar: How the American Revolution was Financed with Paper Money—Initial Design and Ideal Performance By Farley Grubb
  17. Is body mass human capital in sumo? Outcome of globalization and formation of human capital in Japan By Yamamura, Eiji
  18. Equilibrium versus Process: A Confrontation between Mainstream and Austrian Ontology By Sandye Gloria-Palermo
  19. On the stability of money demand By Juan Nicolini
  20. Conflict and Social and Political Preferences: Evidence from World War II and Civil Conflict in 35 European countries By Pauline Grosjean
  21. The Mother of All Sudden Stops: Capital Flows and Reversals in Europe, 1919-32 By Olivier Accominotti; Barry Eichengreen
  22. Credit Rating Agencies: An Overview By Lawrence J. White
  23. Monopoly and Dominant Firms: Antitrust Economics and Policy Approaches By Lawrence J. White

  1. By: Mark Dincecco (University of Michigan); Massimiliano Gaetano Onorato (IMT Lucca Institute for Advanced Studies)
    Abstract: We present new city-level evidence about the military origins of Europe's economic "backbone", the prosperous urban belt that runs from the Low Countries to northern Italy. Military conflict was a defining feature of pre-industrial Europe. The destructive effects of conflict were worse in the countryside, leading rural inhabitants to relocate behind urban fortifications. Conflict-related city population growth in turn had longrun economic consequences. Using GIS software, we construct a novel conflict exposure measure that computes city distances from nearly 300 major conflicts from 1000 to 1799. We find a significant, positive, and robust relationship between conflict exposure and historical city population growth. Next, we use luminosity data to construct a novel measure of current city-level economic activity. We show evidence that the economic legacy of historical conflict exposure endures to the present day.
    Keywords: conflict, city populations, historical legacy, economic development, GIS
    JEL: O10 N40 N90 P48 R11
    Date: 2013–10
  2. By: Karine van der Beek (Ben-Gurion University of the Negev)
    Abstract: cCreation-Date: 2013-09
    Keywords: Industrial Revolution, skills, high quality workmen, wrights, mechanization, apprenticeship
    JEL: N13 N33 O30
  3. By: Karine van der Beek (Ben-Gurion University of the Negev); Moshe Justman (Ben-Gurion University of the Negev)
    Abstract: We draw on quantitative and descriptive data from Robert Campbell's widely cited manual for prospective apprentices, The London Tradesman (1747), to demonstrate the responsiveness of apprenticeship in mid-eighteenth century London to market forces of supply and demand. We regress apprenticeship premiums on journeymen's wages, set up costs and a selection of employment conditions and requirements across 178 trades, and find a significant elasticity of 0.4 with respect to wages and 0.25 with respect to set-up costs. We interpret this as supporting an economic model that views premiums as bounded from above by the expected benefits of acquiring the skills of the trade (Lane, 1996); bounded from below by the expected net training costs to the master, taking into account the possibility of the apprentice terminating his service prematurely (Wallis, 2008); and reflecting the relative bargaining power of master and parent. This supports the thesis that apprenticeship played an important role in adapting the English workforce to the skill requirements of the Industrial Revolution. Moreover, by demonstrating the internal and external consistency of Campbell's observations, our findings support their further use as a unique, invaluable source of detailed, trade-specific wage data from the early years of the Industrial Revolution.
    Keywords: premium, wages, setting-up costs, human capital, industrial revolution, apprenticeship, Campbell, Eighteenth century England
    JEL: K31 N33 O15
    Date: 2013–09
  4. By: Mauro Boianovsky; Kevin D. Hoover
    Abstract: From its flow tide, fueled by the Cold War, to its ebbing with the anti-growth movement and the economic crises of the early 1970s, the “growthmen” of MIT stood at the center of the dominant field in macroeconomics. The history of MIT growth economics is traced from Solow’s seminal neoclassical growth model of 1956 through the stabilization of growth theory in the first graduate textbooks.
    Keywords: growth theory, development economics, MIT, Robert Solow, endogenous growth models, technical progress
    JEL: B2 B22 O4 O11 E12 E13
  5. By: Simon T Abernethy (Faculty of History, University of Cambridge)
    Abstract: This paper examines the New Survey of London Life and Labour, a social survey conducted within Greater London in the late 1920s and early 1930s. Relatively unknown compared to Charles Booth’s more famous survey of London some forty years before, the New Survey is perhaps the most detailed study of the lives of everyday Londoners in the inter-war period. This paper explains the background of the New Survey and examines the processes that were used to collect household information. It then examines how reliable the data is, especially given that doubts have been raised over the conduct of one interviewer in particular, who was responsible for collecting almost a fifth of the total information.
    Keywords: New Survey of London Life and Labour, Life and Labour of the people in London, Greater London, Social Survey, inter-war, Arthur Lyon Bowley, Hubert Llewellyn Smith.
    JEL: N34
    Date: 2013–09–10
  6. By: E. Roy Weintraub
    Abstract: MIT emerged from “nowhere” in the 1930s to its place as one of the three or four most important sites for economic research by the mid-1950s. A conference held at Duke University in April 2013 examined how this occurred. In this paper the author argues that the immediate postwar period saw a collapse – in some places slower, in some places faster – of the barriers to the hiring of Jewish faculty in American colleges and universities. And more than any other elite private or public university, particularly Ivy League universities, MIT welcomed Jewish economists.
    Keywords: MIT, Jewish faculty, anti-Semitism, Samuelson
    JEL: B2 B22 O4 O11 E12 E13
  7. By: Fiona Carmichael (Department of Management, Birmingham Business School, University of Birmingham); Claire Hulme (Academic Unit of Health Economics, Leeds Institute of Health Sciences, University of Leeds); Lorna Porcellato (Faculty of Health and Applied Social Sciences, Liverpool John Moores University)
    Date: 2013
  8. By: Jorge Braga de Macedo; Luis Brites Pereira; Joaquim Oliveira Martins; João Tovar Jalles
    Abstract: This paper addresses the interactions between globalization, the quality of democracy, and economic convergence using simultaneous estimation techniques. To reflect process, we use multi-dimensional, de facto, and continuous measures of democracy and globalization. To reflect context, as defined by space (geography) and time (history), we control for the distance to the income frontier. Using this measure of development, we extend the test for the two-way relationship between democracy and globalization put forward by Eichengreen and Leblang (2008) for the period 1870-2000. Focusing on the more recent wave of globalization (1970-2005), we find a two-way relationship between democracy and globalization and also significant two-way relationships with development. In the restricted sample of non-OECD countries, however, democracy hurts development.
    JEL: F02 F5
    Date: 2013–10
  9. By: Richard G. Lipsey (Simon Fraser University)
    Abstract: To make the argument that the behaviour of modern industrial economies since the 1990s is inconsistent with theories in which there is a unique ergodic macro equilibrium, the paper starts by reviewing both the early Keynesian theory in which there was no unique level of income to which the economy was inevitably drawn and the debate about the amount of demand pressure at which it was best of maintain the economy: high aggregate demand and some inflationary pressure or lower aggregate demand and a stable price level. It then covers the rise of the simple Phillips curve and its expectations-augmented version, which introduced into current macro theory a natural rate of unemployment (and its associated equilibrium level of national income). This rate was also a NAIRU, the only rate consistent with stable inflation. It is then argued that the current behaviour of many modern economies in which there is a credible policy to maintain a low and steady inflation rate is inconsistent with the existence of either a unique natural rate or a NAIRU but is consistent with evolutionary theory in which there is perpetual change driven by endogenous technological advance. Instead of a NAIRU evolutionary economies have a noninflationary band of unemployment (a NAIBU) indicating a range of unemployment and income over with the inflation rate is stable. The paper concludes with the observation that the great pre- Phillips curve debates of the 1950s that assumed that there was a range within which the economy could be run with varying pressures of demand, and varying amounts of unemployment and inflationary pressure, were not as silly as they were made to seem when both Keynesian and New Classical economists accepted the assumption of a perfectly
    Keywords: Natural rate of unemployment, NAIRU, NAIBU, inflation targeting, Phillips curve, evolutionary theory, equilibrium theory
    JEL: B22 E12 E31 E58 E61
    Date: 2013–10
  10. By: Roy H Grieve (Department of Econimics, University of Strathclyde)
    Abstract: It has been alleged that J M Keynes, quoting in the General Theory a passage from J S Mill’s Principles, misunderstood the passage in question and was therefore wrong to cite Mill as an upholder of the ‘classical’ proposition that ‘supply creates its own demand’. We believe that, although Keynes was admittedly in error with respect to, so-to-say, the ‘letter’ of Mill’s exposition, he did not mislead readers as to the ‘substance’ of Mill’s conception. The purpose of this paper is to demonstrate that J S Mill did indeed stand for a ‘classical’ position, vulnerable to Keynes’s critique as developed in the General Theory. [This is a revised version of an earlier working paper: ‘Keynes, Mill and Say’s Law’, Strathclyde Papers in Economics, 2000/11]
    Keywords: Keynes and the 'classics'; John Stuart Mill; Say's Law
    JEL: B12 B22 B31 E32
    Date: 2013–10
  11. By: Ronald A. Edwards (Tamkang University)
    Abstract: I argue that China during the Song Dynasty (960 – 1279 AD) (Song China hereafter) experienced the onset of an Industrial Revolution, preceding England’s by several centuries. The concept of Industrial Revolution is extended to include two types – one non-science based and one science-based. It is argued that the Song China vs. England comparison is more relevant than other comparisons with England. Using both the Song China and England episodes, I introduce a new definition of the onset of an Industrial Revolution, which more clearly identifies and dates the social process. This has important implications for theories of its cause.
    Date: 2013
  12. By: Robert Z. Lawrence (Harvard University and Peterson Institute for International Economics); Lawrence Edwards (University of Cape Town)
    Abstract: International factors, such as the dramatic increase in imports from emerging-market economies, especially China, have been widely blamed for the decline in manufacturing employment in the United States over the past decade. The authors argue, however, that far more important in causing that decline has been the slow overall growth in US employment and powerful historical forces that have affected all advanced economies: a combination of rapid productivity growth and demand that is relatively unresponsive to income growth and lower prices. To be sure, US manufacturing employment can grow in the short run. The labor content of the US manufacturing trade deficit remains significant and a vigorous US and global economic recovery could boost US manufacturing employment. Over the long run, however, absent new product innovations, or a shift in consumer preferences, the basic forces leading to declining manufacturing employment are unlikely to abate.
    Date: 2013–10
  13. By: Norma Lanciotti; Alexandre Macchione Saes
    Abstract: The article analyzes the evolution, strategies and position of American & Foreign Power subsidiaries in Argentina and Brazil from their entry in the mid-1920s to their nationalisation. We compare the economic performance and entry strategies followed by the American holding in different host economies. We also examine the relations between the American electricity firms and the Governments of both countries, focusing on the debates and policies that explain American & Foreign Power's withdrawal from Argentina and Brazil in 1959-1965. Finally, the article reviews the role of foreign direct investment in the development of electric power sector in both countries. The study is based upon the Annual Reports and Proceedings of American & Foreign Power (1923-1963) and other corporate reports, Government statistics and official Reports from Argentina, Brazil and the United States.
    Keywords: Electricity companies; Holding companies; US foreign direct investment; Argentina; Brazil; Regulatory strategies; State-owned enterprises
    JEL: N86 N76
    Date: 2013–10–21
  14. By: Michael D. Bordo; John Landon-Lane
    Abstract: In this paper we investigate the relationship between loose monetary policy, low inflation, and easy bank credit with asset price booms. Using a panel of up to 18 OECD countries from 1920 to 2011 we estimate the impact that loose monetary policy, low inflation, and bank credit has on house, stock and commodity prices. We review the historical narratives on asset price booms and use a deterministic procedure to identify asset price booms for the countries in our sample. We show that “loose” monetary policy – that is having an interest rate below the target rate or having a growth rate of money above the target growth rate – does positively impact asset prices and this correspondence is heightened during periods when asset prices grew quickly and then subsequently suffered a significant correction. This result was robust across multiple asset prices and different specifications and was present even when we controlled for other alternative explanations such as low inflation or “easy” credit.
    JEL: N1
    Date: 2013–10
  15. By: Michael D. Bordo; John Landon-Lane
    Abstract: In this paper we investigate the relationship between loose monetary policy, low inflation, and easy bank credit with house price booms. Using a panel of 11 OECD countries from 1920 to 2011 we estimate a panel VAR in order to identify shocks that can be interpreted as loose monetary policy shocks, low inflation shocks, bank credit shocks and house price shocks. We show that loose monetary policy played an important role in housing booms along with the other shocks. We show that during boom periods there is a heightened impact of all three “policy” shocks with the bank credit shock playing an important role. However, when we look at individual house price boom episodes the cause of the price boom is not so clear. The evidence suggests that the house price boom that occurred in the US during the 1990s and 2000s was not due to easy bank credit. Loose monetary policy (as well as low inflation) played some role but the residual which may be picking up other factors such as financial innovation and the shadow banking system is the most important shock. This result is robust to many alternative specifications.
    JEL: N1
    Date: 2013–10
  16. By: Farley Grubb
    Abstract: The purpose of this paper is to convince the reader that the Continental dollar was a zero-interest bearer bond and not a fiat currency—thereby overturning 230 years of scholarly interpretation; to show that the public and leading Americans knew and acted on this fact, and to illustrate the ideal performance of the Continental dollar as a zero-interest bearer bond. The purpose of establishing the ideal performance is to create a benchmark against which empirical measures of depreciation can be evaluated in future papers.
    JEL: E51 E52 E61 E63 H56 H63 N11 N21 N41
    Date: 2013–10
  17. By: Yamamura, Eiji
    Abstract: Sumo wrestling is a traditional fighting sport in Japan and has been popular since the 18th century (the Edo period). Using a data set for all sumo wrestlers in the post-World War II period, this paper investigates how wrestlers’ body mass index (BMI) is associated with their win rate and absence rate. Further, the effect of BMI is compared between an early period (before the emergence of foreign wrestlers) and later period (after the emergence of foreign wrestlers). After accounting for endogenous bias using instrumental variables, the key findings are that (1) there is no positive relationship between the BMI and win rate in either the early or later period and (2) there is a positive relationship between the BMI and absence rate in the later period but not in the early period. From the findings in this paper, I make the argument that an increase in the number of immigrants with human capital different from that of domestic labor leads the domestic labor to obtain human capital that does not match its characteristics, thereby reducing the performance of domestic labor.
    Keywords: Sumo wrestling, Body mass index, Human capital, International labor mobility; Immigrant
    JEL: I15 J24 L83 N35
    Date: 2013–10–05
  18. By: Sandye Gloria-Palermo (GREDEG CNRS; University of Nice-Sophia Antipolis, France)
    Abstract: We confront mainstream and Austrian economics from a history of economic analysis point of view in order to identify the main reasons of their divergent interests on the concepts of, respectively, equilibrium and processes. The result of this confrontation attributes a decisive role to ontological considerations: mainstream central focus on equilibrium is the consequence of the adoption of specific mathematical tools. But the claim for a mathematical approach to economics is a doctrine that is independent from any study on the nature of the underlying economic system and real phenomena that are non-tractable are either reinterpreted in an amenable to reason form or are simply ignored. The choice of the tools determine the orthodox vision of the economic world as a closed system of interacting autonomous atoms. Austrians proceed exactly the other way round: ontological investigations are the starting point and as a consequence, they choose the relevant tools so to be coherent with their ontology where social reality is apprehended along an open processual view.
    Keywords: Mainstream, mathematical formalism, Austrian school, social ontology, mathematical constructivism
    JEL: B13 B53 C18
    Date: 2013–10
  19. By: Juan Nicolini (Federal Reserve Bank of Minneapolis)
    Abstract: In this paper we consider a simple model of transactional assets management to evaluate the changes in banking regulation that passed between 1980 and 1982. The model implies that the newly created deposits in the US after the deregulation should be taken into account in the proper definition of money, in a way the model itself makes explicit. We show that once this is taken into account, the money demand equation characterized by Meltzer (1960) and Lucas (2000) remained remarkably stable.
    Date: 2013
  20. By: Pauline Grosjean (School of Economics, Australian School of Business, the University of New South Wales)
    Abstract: This paper uses new micro-level evidence from a nationally representative survey of 39,500 individuals in 35 countries to shed light on how individual experiences of conflict shape political and social preferences. The investigation covers World War II and recent civil conflict. Overwhelmingly, the results point to the negative and enduring legacy of war-related violence on political trust and perceived effectiveness of national institutions, although the effects are heterogeneous across different types (external vs. internal) and outcomes (victory vs. defeat) of conflict. Conflict spurs collective action, but of a dark nature, one associated with further erosion of social and political trust.
    Keywords: Conflict, social capital, state capacity, Europe, Caucasus, Central Asia
    JEL: N24 O57 Z13
    Date: 2013–10
  21. By: Olivier Accominotti; Barry Eichengreen
    Abstract: We present new data documenting European capital issues in major financial centers from 1919 to 1932. Push factors (conditions in international capital markets) perform better than pull factors (conditions in the borrowing countries) in explaining the surge and reversal in capital flows. In particular, the sharp increase in stock market volatility in the major financial centers at the end of the 1920s figured importantly in the decline in foreign lending. We draw parallels with Europe today.
    JEL: F0 F4 N0 N14
    Date: 2013–10
  22. By: Lawrence J. White
    Date: 2013
  23. By: Lawrence J. White
    Date: 2013

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