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on Business, Economic and Financial History |
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Issue of 2013‒11‒22
24 papers chosen by |
| By: | Toms, Steven; Shepherd, Alice |
| Abstract: | The paper examines an early case of creative accounting, and how, during British industrialization, accounting was enlisted by the manufacturers’ interest to resist demands, led by the ‘Ten hours’ movement, for limiting the working day. In contrast to much of the prior literature, which argues that entrepreneurs made poor use of accounting techniques in the British industrial revolution, the paper shows that there was considerable sophistication in their application to specific purposes, including political lobbying and accounting for the accumulation of capital. To illustrate lobbying behaviour, the paper examines entrepreneurs’ use of accounting to resist the threat of regulation of working time in textile mills. It explains why accounting information became so important in the debate over factory legislation. In doing so, it shows that a significant element was the accounting evidence of one manufacturer in particular, Robert Hyde Greg, which had a strong impact on the outcome of the parliamentary process. The paper uses archival evidence to illustrate how accounting was used in Greg’s enterprise and the reality of its economic performance. The archival evidence of actual performance is then contrasted with the figures presented by Greg to the Factories Inquiry Commission, convened by the House of Commons in 1833-1834 to hear witnesses from the manufacturing interest. These sets of figures are compared and contrasted and discrepancies noted. Conclusions show that the discrepancies were substantial, motivated by Greg’s incentives to present a particular view of low profits, high fixed costs, and the threat of cheaper overseas competition. The figures appeared to lend some credibility to the apparent plight of manufacturers and to Nassau Senior’s flawed argument about all profit being earned in the ‘last hour’ of the working day. The consequence was a setback for the Ten Hours movement, leading to a further intensification of political struggles over working conditions in the 1840s. |
| Keywords: | Key words: British Industrial Revolution, Accounting, Child labour, Factory Reform, Lancashire cotton textiles, Greg, Quarry Bank Mill |
| JEL: | J21 J31 K31 L50 L67 M4 N13 O14 O15 O38 |
| Date: | 2013–11–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:51478&r=his |
| By: | Ferdinand Rauch; Guy Michaels |
| Abstract: | Do locational fundamentals such as coastlines and rivers determine town locations, or can historical events trap towns in unfavorable locations for centuries?� We examine the effects on town locations of the collapse of the Western Roman Empire, which temporarily ended urbanization in Britain, but not in France.� As urbanization recovered, medieval towns were more often found in Roman-era town locations in France than�in Britain, and this difference still persists today.� The resetting of Britain's urban network gave it better access to naturally navigable waterways when this was important, while many French towns remained without such access. |
| Keywords: | Economic Geography, Economic History, Path Dependence, Transportation |
| JEL: | R11 N93 O18 |
| Date: | 2013–11–19 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:684&r=his |
| By: | Meloni, Giulia; Swinnen, Jo |
| Abstract: | It is hard to imagine in the 21st global wine economy, but until 50 years ago Algeria was the largest exporter of wine in the world – and by a wide margin. Between 1880 and 1930 Algerian wine production grew dramatically. Equally spectacular is the decline of Algerian wine production: today, Algeria produces and exports little wine. This paper analyzes the causes of the rise and the fall of the Algerian wine industry. There was an important bi-directional impact between developments of the Algerian wine sector and French regulations. French regulations had a major impact on the Algerian wine industry. Vice versa, the growth of the Algerian wine industry triggered the introduction of important wine regulations in France at the beginning of the 20th century and during the 1930s. Important elements of these regulations are still present in the European Wine Policy today. |
| Keywords: | European agriculture; wine history; regulation; appelations; institutions; |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ner:leuven:urn:hdl:123456789/401907&r=his |
| By: | Michaël Assous (GREDEG CNRS; University of Paris 1) |
| Abstract: | Solow has repeatedly called for the development of models that combine equilibrium and out-of equilibrium outcomes or what he called a macroeconomics of the medium-run. This paper recounts the history of Solow’s different attempts to address this issue. It starts in early 1950s when Solow developed his long-run growth model and it ends in the mid-1990s with the publication of A Critical Essay on Modern Macroeconomic Theory co-written with Frank Hahn. This narrative involves different economists associated with various research traditions, going from the neo-classical synthesis in the 1960s, the New Classical Economics in the 1970s and the New Keynesianism in the 1980s. |
| Keywords: | economic growth, Robert Solow, Medium-Run macroeconomics, dynamics, multiple equilibria |
| JEL: | B22 O4 E12 E13 N1 B31 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2013-41&r=his |
| By: | Neil M Kay (Department of Economics, University of Strathclyde) |
| Abstract: | This paper shows how one of the developers of QWERTY continued to use the trade secret that underlay its development to seek further efficiency improvements after its introduction. It provides further evidence that this was the principle used to design QWERTY in the first place and adds further weight to arguments that QWERTY itself was a consequence of creative design and an integral part of a highly efficient system rather than an accident of history. This further serves to raise questions over QWERTY’s forced servitude as “paradigm case†of inferior standard in the path dependence literature. The paper also shows how complementarities in forms of intellectual property rights protection played integral roles in the development of QWERTY and the search for improvements on it, and also helped effectively conceal the source of the efficiency advantages that QWERTY helped deliver. |
| Keywords: | QWERTY, invention, path dependence, path creation, patents, trade secrets |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:str:wpaper:1324&r=his |
| By: | Pedro Garcia Duarte |
| Abstract: | Although economists have recognized long ago that “time enters into all economic questions”, the ways they treated and modeled time has varied substantially in the last century. While in the 1930s there was a distinctive Cambridge tradition against discounting utilities of future generations, to which Frank Ramsey subscribed, postwar neoclassical growth economists (of the “Ramsey-Cass-Koopmans model”) applied the discount factor either to individual’s or to social planner’s decision-making as a technical requirement of dynamic general equilibrium models. My goal in this article is to shed some historical light on how a practice that was condemned as ethically indefensible when applied to intergenerational comparisons became a technical requirement in dynamic models of either a consumer or a planner deciding the intertemporal allocation of resources. |
| Keywords: | time discount; growth models; Ramsey-Cass-Koopmans model; economic dynamics |
| JEL: | B22 B23 E32 |
| Date: | 2013–11–12 |
| URL: | http://d.repec.org/n?u=RePEc:spa:wpaper:2013wpecon18&r=his |
| By: | Nina Boberg-Fazlic (University of Copenhagen); Paul Sharp (University of Copenhagen) |
| Abstract: | This paper examines the relationship between government spending and charitable activity. We present a novel way of testing the ‘crowding out hypothesis’, making use of the fact that welfare provision under the Old Poor Laws was decided on the parish level, thus giving the heterogeneity we need to test for the impact of different levels of welfare support within a single country. Using data on poor relief spending combined with data on charitable incomes by county for two years before and after 1800, we find a positive relationship: areas with more public provision also enjoyed higher levels of charitable income. These results are confirmed when instrumenting for Poor Law spending using the distance to London and historical migration to London, as well as when looking at first differences. |
| Keywords: | Charity, crowding out hypothesis, England, Poor Laws |
| JEL: | H5 I3 N3 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:hes:wpaper:0049&r=his |
| By: | Nicholas Dimsdale |
| Abstract: | The paper examines the behavior of the British economy 1890-1913 by using a newly assembled quarterly data set.� This provides a basis for estimating a small macroeconomic model, which can be used to explore the relationship between the policy responses of the Bank of England and the course of the economy.� It is one of the few papers to make use of UK quarterly data and seeks to extend the earlier work of Goodhart (1972).� The paper goes on to look into the determinants of external and internal gold flows and relates these to an extensive historical literature.� The outcome is compared with the traditional representation of the working of the gold standard, as set out in the well-known Interim Report of the Cunliffe Committee (1918).� It is found that operation of the model accords in general with the views of the Committee.� The views of the Committee were applicable to the pre 1914 gold standard, but less so to the restored interwar gold standard. The next question to be considered is how far the Bank observed 'The Rules of the Game' in the sense of relating the reserves of the commercial banks to the gold reserves held at the Bank.� It is shown that the relationship between the Bank's reserves and the reserves of the commercial banks was severely distorted by the massive gold movements of 1895-6.� These flows were associated with US political conflicts over the monetization of silver.� With the exception of this episode, the Bank is shown to have had a limited measure of discretion in operating the gold standard.� The final question to be considered is whether a similar model can be estimated from US data and related to the views of Friedman and Schwartz. |
| Date: | 2013–10–24 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:number-123&r=his |
| By: | Kai P. Willführ (Max Planck Institute for Demographic Research, Rostock, Germany); Mikko Myrskylä (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | Background: Epigenetic inheritance is a potentially important determinant of health in several mammals. For humans, the existing evidence is weak. We investigate whether disease exposure triggers functional epigenetic inheritance among humans by analyzing siblings who were conceived under different disease loads, and comparing their mortality in later epidemics. Under functional epigenetic inheritance, we expect that those who were conceived under high pathogenic stress load will have relatively low mortality during a later epidemic. Methods: We use data from the Registre de la Population du Québec Ancien, which covers the historical population living in St. Lawrence Valley, Québec, Canada. Children born in 1705-1724 were grouped according to their exposure during conception to the measles 1714-15 epidemic. The 1714-15 epidemic was followed by two mortality crises in 1729-1734 which were caused by measles and smallpox. Using proportional hazard Cox regression models with multivariate adjustment and with fixed-effects approach that compare siblings, we analyze whether mortality in 1729-1734 is affected by exposure to the 1714-15 epidemic. Results: hildren who were conceived during the peak of the measles epidemic of 1714-15 exhibited significantly lower mortality during the 1729-1734 crisis than those who were born before the 1714-15 epidemic (mortality hazard ratio 0.106, p |
| JEL: | J1 Z0 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2013-015&r=his |
| By: | Biavaschi, Costanza (IZA); Giulietti, Corrado (IZA); Siddique, Zahra (University of Reading) |
| Abstract: | We examine the impact of the Americanization of names on the labor market outcomes of migrants. We construct a novel longitudinal data set of naturalization records in which we track a complete sample of migrants who naturalize by 1930. We find that migrants who Americanized their names experienced larger occupational upgrading. Some, such as those who changed to very popular American names like John or William, obtained gains in occupation-based earnings of at least 14%. We show that these estimates are causal effects by using an index of linguistic complexity based on Scrabble points as an instrumental variable that predicts name Americanization. We conclude that the tradeoff between individual identity and labor market success was present since the early making of modern America. |
| Keywords: | Americanization, names, assimilation, migration |
| JEL: | J61 J62 Z1 N32 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7725&r=his |
| By: | Nonso Obikili |
| Abstract: | I examine the relationship between social and human capital in colonial Western Nigeria. Using data on expenditure of cocoa farmers in 1952, I show that farmers in townships with higher social spending individually spend more on education. The relationship holds after controlling for various characteristics of the farmers and the townships. Thus I show that there is a relationship between social and human capital and that this relationship was already present during the colonial era. |
| Keywords: | Human Capital, social capital, Africa |
| JEL: | J24 D71 N37 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:382&r=his |
| By: | Arts, Sam; Veugelers, Reinhilde |
| Abstract: | We explore the relationship between the technological origins and novelty of inventions on the one hand and their technological impact on the other hand. In particular, we are interested into the technological origins and novelty of breakthrough inventions. By jointly looking at the effects of the origins and novelty on an invention’s average impact, on the likelihood of a very poor invention, and on the likelihood of a breakthrough, we identify some trade-offs researchers face when exploring breakthroughs. For evidence, we consider the US patent record in biotechnology from 1976 to 2001. Our analysis shows that breakthroughs in biotechnology rely more on non-technical and technical prior art, particularly more recent technical prior art, prior art from many different technology fields, and prior art from unfamiliar technology fields. Yet, breakthroughs are less likely to have a dissimilar set of technical prior art citations, as they are more likely to use prior art previously cited by many other inventions. Besides differences in the origins, we find significant differences in the technological novelty. Breakthroughs are more novel in the sense that they are more likely to recombine technological components for the first time in history, particularly more familiar technological components. |
| Keywords: | origins; novelty; breakthrough; invention; biotechnology; patents; |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:ner:leuven:urn:hdl:123456789/377027&r=his |
| By: | Carmen M. Reinhart |
| Abstract: | This Chartbook, which is a companion piece to Carmen M. Reinhart and Takeshi Tashiro (2013) “Crowding Out Redefined: The Role of Reserve Accumulation,” focuses on nine Asian economies: China, India, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore and Thailand. Like its predecessor (Reinhart, 2010), it provides a pictorial history, on a country-by-country basis. In addition to public debt, we trace out the evolution of its composition between domestic and external borrowing. Total external debt (public and private) and domestic credit are also included through 2013. This combination gives a broad (but not complete) picture of a country’s indebtedness. It should be ideally supplemented (where relevant) by indicators and trends in the shadow banking sector, as discussed in Shin (2013). It is also timeline of a country’s creditworthiness and financial turmoil (including its history, if any, with IMF programs). |
| JEL: | E51 F3 G01 H63 N25 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19655&r=his |
| By: | Louw Pienaar (Western Cape Department of Agriculture, Elsenburg); Dieter von Fintel (Department of Economics, University of Stellenbosch) |
| Abstract: | One hundred years after the implementation of the 1913 Land Act, the subject of land reform and rural development are still at the forefront of public discourse within South Africa. Much of the literature suggests that post-apartheid interventions have not been successful at improving small-scale agriculture, which is seen as an important vehicle for improving rural food security. Nevertheless, data from the General Household Survey indicate that household food security has improved in the post-2000 decade. In particular, this paper demonstrates that hunger levels have declined substantially since 2002 (as other estimates of poverty have also indicated), but more importantly that they have done so faster in former homelands regions. Using linear probability models, this paper seeks to isolate which factors have led to the convergence of homeland regions’ hunger levels to the rest of the country. The historical context that is sketched here highlights the severe challenges faced by farmers in these areas; this raises the question how convergence in food security occurred, given that many agricultural interventions have not attained the success that was hoped for. In particular, the large reliance on social grants in homelands regions accounts for a part of the reduction in hunger levels. Communal gardens and connections to the agricultural market have reduced hunger within former homelands regions. The long-term sustainability of grants in bolstering food security is of concern, highlighting the need for greater market integration of small scale farmers in homeland regions. |
| Keywords: | Food Security, Subsistence Farming, Apartheid Homelands, Social Pensions |
| JEL: | Q18 Q12 C31 H55 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers202&r=his |
| By: | Armand Hatchuel (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris) |
| Abstract: | In this paper we present new theoretical perspectives about industrial design. First, we establish that antinomies about function, form and meaning cannot offer a theory of industrial design. Then we bear on advances in Design theory in the literature of engineering design to find out universal features of design which are common to industrial design, Architecture and Engineering. Taking into account social and cognitive contexts, we identify the dilemma that is specific of industrial design. This dilemma can be solved in two ways that we define as "adornement" and "wit" which differ by how the identity of objects is maintained or challenged by design. Each way corresponds to different types of rhetoric -classic and conceptist- that we identify. The combination of adornment and wit explains the generative power of industrial design and its paradoxical situation: neither Art, neither engineering. Moreover, the academic identity of industrial design research can be clarified within the traditions of Design theory, anthropology and rhetoric. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00903421&r=his |
| By: | William R. Kerr (Harvard Business School, Entrepreneurial Management Unit) |
| Abstract: | This study tests the importance of Ricardian technology differences for international trade. The empirical analysis has three comparative advantages: including emerging and advanced economies, isolating panel variation regarding the link between productivity and exports, and exploiting heterogeneous technology diffusion from immigrant communities in the United States for identification. The latter instruments are developed by combining panel variation on the development of new technologies across U.S. cities with historical settlement patterns for migrants from countries. The instrumented elasticity of export growth on the intensive margin with respect to the exporter's productivity growth is between 1.6 and 2.4 depending upon weighting. |
| Keywords: | Trade; Exports; Comparative Advantage; Technological Transfer; Patents; Innovation; Research and Development; Immigration; Networks; |
| JEL: | F11 F14 F15 F22 J44 J61 L14 O31 O33 O57 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:14-039&r=his |
| By: | Evenett, Simon (Asian Development Bank Institute) |
| Abstract: | This paper provides an account of how governments in the Asia and Pacific region have resorted in recent years to discrimination against foreign commercial interests. As in previous systemic economic crises, policymakers altered the mix of discriminatory policies employed. This time around governments of higher income economies in the region frequently softened the budget constraints of firms, offering a range of financial incentives that went beyond high-profile bank sector bailouts. Meanwhile, many developing countries in the Asia and Pacific region relied more on traditional forms of protectionism. The result is a more fragmented set of markets in the region than before the crisis. |
| Keywords: | protectionism; asia-pacific region; wto; non-tariff measures |
| JEL: | F13 F53 |
| Date: | 2013–11–14 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0445&r=his |
| By: | Sreenilayam, Dr Jomon Mathew |
| Abstract: | Balance of Payments (BoP), being a record of the monetary transactions over a period with the rest of the world, reflects all payments and liabilities to foreigners and all payments and obligations received from foreigners. In this sense, the balance of payments is one of the major indicators of a country's status in international trade. BoP accounting serves to highlight a country's competitive strengths and weaknesses and helps in achieving balanced economic-growth. It can significantly affect the economic policies of a government and the economy itself. Therefore, every country strives to a have a favorable balance of payments and maintains its long run sustainability. India’s balance of payment position was quite unfavorable during the time of country’s entry into liberalized trade regime. Two decades of economic reforms and free trade opened several opportunities that, of course, reflected in the balance of payments performance of the country. This paper, therefore, attempts to evaluate the trends and emerging challenges of India’s Balance of Payments. The discussion is broadly classified into four parts viz. i) India’s balance of payments picture since 1991, ii) emerging role of invisibles and software services in balance of payments iii) unhealthy trends in FDI and iv) the vulnerability and challenges ahead. |
| Keywords: | Balance of payments, invisibles, FDI, globalisation, liberalisation |
| JEL: | F1 F3 F32 |
| Date: | 2013–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:51387&r=his |
| By: | Yiannos Katsourides |
| Abstract: | The political parties in Cyprus are extremely powerful. They play a dominant role in the public as well as the private sphere, resulting in a civil society that is extremely weak. The article will address two issues. First, it will map the evolution of civil society organisations (CSOs), especially the trade unions, and their relationship with political parties. Trade unions are probably the most important and influential of the CSOs in Cyprus. Second, it will examine the relationship between political parties and trade unions in contemporary Cyprus, focusing on the changing context within which their interaction takes place, the strategies adopted by the two actors and the direction of influence between them. Research and analysis are based on interviews, surveys, party documents and other secondary literature. |
| Keywords: | Cyprus, political parties, civil society, trade unions, AKEL, DISY, PEO, SEK |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:hel:greese:74&r=his |
| By: | William R. Cline (Peterson Institute for International Economics); Joseph E. Gagnon (Peterson Institute for International Economics) |
| Abstract: | Five years after the Federal Reserve and Treasury allowed the investment bank Lehman Brothers to fail, while rescuing Bear Stearns, Fannie Mae, Freddie Mac, and AIG, their actions (or inaction) remain a focus of debate. Cline and Gagnon present evidence that federal officials, at least in hindsight, appear to have followed the dictum of Walter Bagehot that lending should be granted only to solvent entities. Lehman was insolvent—probably deeply so—whereas the other institutions arguably were solvent. The other institutions had abundant collateral to pledge, whereas what little collateral Lehman had to pledge was of questionable quality and scattered across many affiliated entities. While the Fed and Treasury had a sound reason to let Lehman fail, the shock to financial markets that ensued from its collapse sent the financial crisis into a new, more acute phase and may have contributed to the severity of the Great Recession. Therefore the lesson from Lehman is not only that Bagehot-type lender-of-last-resort action is as important as ever but also that it is critical to ensure an orderly resolution for a systemically important financial institution going bankrupt. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:iie:pbrief:pb13-21&r=his |
| By: | Giuseppe De Feo (: Department of Economics and Management, University of Pavia); Giacomo De Luca (University of York) |
| Abstract: | We study the impact of organized crime on electoral competition. Assuming that the mafia is able to bring votes to the supported party in exchange of money, we show that (i) the strongest party is willing to pay the highest price to secure mafia services; (ii) the volume of electoral trade with the mafia increases with political competition and with the efficiency of the mafia. Studying in detail parliamentary elections in Sicily for the period 1946- 1992, we document the significant support given by the Sicilian Mafia to the Christian Democratic party, starting at least from the 1970s. This is consistent with our theoretical predictions, as political competition became much tighter during the 1970s and the Sicilian mafia experienced an extensive centralization process towards the end of the 1960s, which increased substantially its control of the territory. We also provide evidence that in exchange for its electoral support the mafia got economic advantages for its activities in the construction industry. |
| Keywords: | electoral competition, mafia, Cosa Nostra, electoral fraud |
| JEL: | D72 K42 H42 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:pav:demwpp:demwp0057&r=his |
| By: | Mirjana Pejić Bach (Faculty of Economics and Business, University of Zagreb) |
| Abstract: | Scientific research publishing carries huge importance for the development of the society. Apart from the dissemination of knowledge, there are also motives for publication of scientific research results at the level of individual reserachers: it might be a requirement for graduation or promotion, and there is also an individuals’s wish to be recognized as a respectable researcher. Depending on how difficult it is for a paper to get accepted for publishing, publications can be ranged from the least difficult to the most difficult to get published in, in the following order: a book chapter, a conference, a non-indexed journal and an indexed journal. Journals are currently indexed in two databases: Scopus and Web of Science. Of the two, Web of Science has a long tradition and is formally accepted in a number of countries and institutions as an indicator of the quality of an indexed journal. Hence, publication in a journal that is indexed in Web of Science is an important venue for scientific researchers, although previously published papers indicate that there are substantial obstacles for researchers from developing countries. When considering writing for publication, four critical questions emerge: (1) How to pick a topic that is relevant for publication?, (2) How to select a journal for possible publication of research results?, (3) How to structure the paper in accordance with the IMRAD format?, and (4) How to efficiently write the paper?. The goal of the paper is to propose simple, yet highly applicable advice when answering these questions and thus pursuing the publication of a paper in a scientific journal providing a closer look to economics, business and management journals indexed in Web of Science that focus on Eastern European countries. |
| Keywords: | publication, scientific research, knowledge, economics, business, management, academic writting |
| JEL: | A10 Y20 |
| Date: | 2013–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:zag:wpaper:1305&r=his |
| By: | Rabah Arezki; Kaddour Hadri; Yao Rao |
| Abstract: | In this paper, we re-examine two important aspects of the dynamics of rel- ative primary commodity prices, namely the secular trend and the short run volatility. To do so, we employ 25 series, some of them starting as far back as 1650 and powerful panel data stationarity tests that allow for endogenous multiple structural breaks. Results show that all the series are stationary after allowing for endogeneous multiple breaks. Test results on the Prebisch-Singer hypothesis, which states that relative commodity prices follow a downward sec- ular trend, are mixed but with a majority of series showing negative trends. We also make a .rst attempt at identifying the potential drivers of the structural breaks. We end by investigating the dynamics of the volatility of the 25 relative primary commodity prices also allowing for endogenous multiple breaks. We describe the often time-varying volatility in commodity prices and show that it has increased in recent years. � � |
| Date: | 2013–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:oxcarre-research-paper-124&r=his |
| By: | Rebecca Henderson (Harvard Business School, Strategy Unit); Karthik Ramanna (Harvard Business School, Accounting and Management Unit) |
| Abstract: | In a capitalist system based on free markets, do managers have responsibilities to the system itself? If they do, should these responsibilities shape their behavior when they are engaging in the political process in an attempt to structure the institutions of capitalism? The prevailing view-perhaps most eloquently argued by Milton Friedman-is that the first duty of managers is to maximize shareholder value, and thus that they should take every opportunity (within the bounds of the law) to structure market institutions so as to increase profitability. We maintain here that this shareholder-return view of political engagement applies in cases where the political process is sufficiently 'thick,' in that diverse views are well-represented and sufficiently detailed information about the issues is widely available. However, we draw on a series of detailed examples in the context of the determination of corporate accounting standards to argue that when the political process of determining institutions of capitalism is 'thin,' in that managers find themselves with specialized technical knowledge unavailable to outsiders and with little political resistance from the general interest, then managers have a responsibility to market institutions themselves, even if this entails acting at the expense of corporate profits. We make this argument on grounds that this behavior is both in managers' long-run self-interest and, expanding on Friedman's core contention, that it is managers' moral duty. We provide a framework for future research to explore and develop these arguments. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:13-075&r=his |