New Economics Papers
on Business, Economic and Financial History
Issue of 2013‒12‒29
twenty-six papers chosen by

  1. Flip the Switch: The Spatial Impact of the Rural Electrification Administration 1935-1940 By Carl Kitchens; Price Fishback
  2. O.M.W. Sprague (the Man who “Wrote the Book” on Financial Crises) and the Founding of the Federal Reserve By Hugh Rockoff
  3. All but one: How pioneers of linear economics overlooked Perron-Frobenius mathematics By PARYS, Wilfried
  4. ‘Because She Never Let Them In’: Irish Immigration a Century Ago and Today By Cormac Ó Gráda
  5. Development, progress and economic growth By Bresser-Pereira, Luiz Carlos
  6. Fuentes y métodos para la reconstrucción de PIBs regionales en Colombia. Siglos XIX y XX By Mejía Cubillos, Javier
  7. Fiscal Sustainability and the Value of Money: Lessons from the British Paper Pound, 1797-1821. By Antipa, P.
  8. QWERTY and the search for optimality By Kay, Neil M
  9. American Exceptionalism as a Problem in Global History By Robert Allen
  10. Regional income inequality in Italy in the long run (1871–2001). Patterns and determinants By Emanuele Felice
  11. Rainfall Risk and Religious Membership in the Late Nineteenth-Century US By Philipp Ager; Antonio Ciccone
  12. Urban laboring poor against Infant Mortality at Osaka city of the early 20th century : Who saved babies? By Emiko Higami; Kenichi Tomobe; Makoto Hanashima
  13. Persistent effects of empires: Evidence from the partitions of Poland By Grosfeld, Irena; Zhuravskaya, Ekaterina
  14. Political Ideology and Economic Growth: Evidence from the French Democracy By François Facchini; Mickaël Melki
  15. The Effect of U.S. Health Insurance Expansions on Medical Innovation By Jeffrey Clemens
  16. Did Keynes in the General Theory significantly misrepresent J S Mill? By Grieve, Roy H
  17. The return of “patrimonial capitalism”: review of Thomas Piketty’s Capital in the 21st century By Milanovic, Branko
  18. Bank Deregulation, Competition and Economic Growth: The US Free Banking Experience By Philipp Ager; Fabrizio Spargoli
  19. Institutions and prosperity By Colin, Jennings
  20. Le Paradoxe d'Allais: Comment lui rendre sa signification perdue? (Allais's Paradox: How to Give It Back Its Lost Meaning?) By Mongin, Philippe
  21. Las instituciones horizontales de gestión colectiva del riego. El fracaso del Sindicato General de Riegos del Turia (1850-1883) By Carles Sanchis Ibor
  22. Mafia in the ballot box By De Feo, Giuseppe; De Luca, Giacomo
  23. Lock-in, path dependence, and the Internationalization of QWERTY By Neil M., Kay
  24. Review of Diffusion Research By Sriwannawit , Pranpreya; Sandström, Ulf
  25. Working Paper 184 - Does Oil Wealth Affect Democracy in Africa? By Anyanwu John; Andrew E. O. Erhijakpor
  26. Crisis agraria y desigualdad nutricional en Extremadura: una primera aproximación antropométrica a los efectos de la guerra y la posguerra By Antonio M. Linares Luján; Francisco M. Parejo

  1. By: Carl Kitchens; Price Fishback
    Abstract: To isolate the impact of access to electricity on local economies, we examine the impact of the Rural Electrification Administration low-interest loans in the 1930s. The REA provided loans to cooperatives to lay distribution lines to farms and aid in wiring homes. Consequently, the number of rural farm homes electrified doubled in the United States within 5 years. We develop a panel data set for the 1930s and use changes within counties over time to identify the effect of the REA loans on a wide range of socio-economic measures. The REA loans contributed significantly to increases in crop output and crop productivity and helped stave off declines in overall farm output, productivity, and land values, but had much smaller effects on nonagricultural parts of the economy. The ex-ante subsidy from the low interest loans was large, but after the program was completed, nearly all of the loans were fully repaid, and the ultimate cost to the taxpayer was relatively low.
    JEL: N12 O13 O38
    Date: 2013–12
  2. By: Hugh Rockoff
    Abstract: O.M.W. Sprague was America’s leading expert on financial crises when America was debating establishing the Federal Reserve. His History of Crises under the National Banking Act is one of the most enduring legacies of the National Monetary Commission; a still frequently cited classic. Since the Commission recommended a central bank, and its recommendation after some modifications became the Federal Reserve System, it might be assumed that Sprague was a strong supporter of establishing a central bank. But he was not. Initially, Sprague favored more limited reforms, a position that he did not abandon until the Federal Reserve became a fait accompli. Here I discuss the sources of Sprague’s opposition to a central bank and the relationship of that opposition to his understanding of the history and structure of the American banking system at the turn of the nineteenth century.
    JEL: B26 N1
    Date: 2013–12
  3. By: PARYS, Wilfried
    Abstract: In the period 1907-1912 the German ‘pure mathematicians’ Oskar Perron and Georg Frobenius developed the fundamental results of the theory of nonnegative matrices. Today Perron-Frobenius mathematics enjoys wide applications in many fields, for example in economics, probability theory, demography and even in Google’s ranking algorithm. In linear economic models of the Leontief-Sraffa type it is often the crucial tool to solve many mathematical economic problems. My paper concentrates on the history of Perron-Frobenius in linear economics, and some related stories. In the 1910s and 1920s, several pioneering publications in linear economics could have benefited from applying Perron-Frobenius results, but failed to do so, even the economic publications authored by the mathematicians Georg Charasoff, Hubert Bray and Robert Remak. Either they didn’t know Perron-Frobenius, or they didn’t realize its usefulness. The only exception was the French Jesuit mathematician Maurice Potron, who used Perron-Frobenius mathematics in the core of his economic model, in many of his writings, as early as 1911. He constructed a sort of disaggregated open input-output system, formulated duality theorems between his quantity system and his price system, and anticipated the Hawkins-Simon conditions. Potron’s economic or mathematical contemporaries didn’t recognize his originality. A general treatment of Charasoff’s economic system needs Perron-Frobenius mathematics, especially Perron’s Limit Lemma. Although some of Charasoff’s mathematical interests (irreducibility, continued fractions) were close to those of Perron or Frobenius, the theory of nonnegative matrices is never explicitly used in Charasoff’s work. It is doubtful whether Charasoff knew the relevant matrix theorems. Probably he just assumed that the properties of his numerical examples with three commodities also hold in the general case with n commodities. Frobenius had been Remak’s doctoral supervisor in 1911. After a forgotten non-mathematical paper in 1918, on the repayment of the national debt, Remak presented his mathematical system of ‘superposed prices’ in 1929, twelve years after Frobenius’ death. With suitable units of measurement, Remak’s system can be handled by Perron-Frobenius tools. However, Remak failed to normalize his units, and provided lengthy proofs of his own. Moreover, he spent most of his mathematical efforts on freak systems in which the most important commodities have zero prices. A few years earlier, in 1922, Bray also had overlooked Perron-Frobenius in a mathematically similar model that studied Cournot’s equations of currency exchange. Contrary to Dorfman’s well-known article on Leontief’s Nobel Prize in 1973, I provide archival evidence that Leontief knew Remak’s results already in the early 1930s, before he submitted a paper containing ideas of input-output theory to Keynes for the Economic Journal in 1933. Keynes quickly rejected Leontief’s paper; a few months later Leontief submitted it to Frisch for Econometrica. Frisch formulated a lot of critical remarks on Leontief’s first and revised version in 1933-34. In the light of this criticism, it is highly probable that Leontief simplified and linearized his mathematics, and a few years later he finally started publishing his Nobel Prize winning empirical and theoretical results in American journals. Just like Leontief, Sraffa started related research in the late 1920s. He didn’t discuss his mathematical problems with competent economic colleagues in Cambridge, nor with the specialists of the Econometric Society, but preferred mathematical help from three non-economists: Ramsey, Watson and especially Besicovitch. I suggest that Besicovitch in his early mathematical research in Russia ‘came close’ to Perron-Frobenius results, but it is well-known that he didn’t know Perron-Frobenius, and tried to invent his own proofs for Sraffa in the 1940s. In the first half of the twentieth century, abstract algebra started to flourish and became a more prestigious and widely researched subject than the ‘old-fashioned’ Perron-Frobenius matrices. In this context, it is less surprising that for many decades even the mathematicians (except Potron) overlooked the usefulness of Perron-Frobenius in linear economics. Results, connections or applications that seem evident after the fact, were not obvious to the original pioneers.
    Keywords: Perron-Frobenius, Charasoff, Potron, Bray, Remak, Leontief, Sraffa, Nonnegative matrices, Input-output analysis
    Date: 2013–12
  4. By: Cormac Ó Gráda (University College Dublin)
    Abstract: A century ago, and for most of the twentieth century, Ireland was a land of emigration, not immigration. However, in the space of less than a decade in the 2000s, Ireland was transformed from a homogeneous community, where nonnative residents were in a very small minority, to one in which one-sixth of its inhabitants are foreign-born. The paper will compare immigration and attitudes towards immigrants in the very different Irelands of a century ago and of the present.
    Date: 2013–12–19
  5. By: Bresser-Pereira, Luiz Carlos
    Abstract: Progress was an idea of the 18th century; development, a project of the 20th century that continues into the 21st century. Progress was associated with the advance of reason, development with the fulfillment of the five political objectives that modern societies set for themselves: security, freedom, economic well-being, social justice and protection of the environment. Today we can view progress and development as equivalent. Both were products of the capitalist revolution, and of the economic development that began with it. Economic development or growth, in its turn, is the process of capital accumulation with the incorporation of technical progress that, mainly through productive sophistication and the increase of the value of labor, increases wages and improves standards of living. The five objectives that define development, as well as the three social instances existing in society change in an interdependent way.
    Date: 2013–12–09
  6. By: Mejía Cubillos, Javier
    Abstract: This paper summarizes and analyzes the main sources and methods used in the reconstruction of regional GDPs in Colombia for the 19th and 20th centuries. In addition, it is offered a general perspective of the field's evolution in the coming years.
    Keywords: Colombia; 19th century; 20th century; regional GDP
    JEL: C82 N16 N96 R11 R12
    Date: 2013–12
  7. By: Antipa, P.
    Abstract: This article explores the determinants of price level fluctuations in Britain during the first suspension of the gold standard over the 1797-1821 period. I find that the contemporary price level was determined by world gold prices and expectations regarding the resumption of the gold standard at the pre-war parity. As the latter hinged on market participants’ expectations concerning the financial burden of the Napoleonic Wars, my contribution establishes the importance of fiscal factors for the determination of the price level.
    Keywords: Fiscal Theory of the Price Level, debt monetization, structural breaks.
    JEL: N13 N23 N43 C22
    Date: 2013
  8. By: Kay, Neil M
    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.
    Date: 2013
  9. By: Robert Allen
    Abstract: The causes of the USA's exceptional economic performance are investigated by comparing American wages and prices with wages and prices in Great Britain, Egypt, and India.� Habakkuk's views on the causes of American industrial pre-eminence are reassessed.� While the USA had abundant natural resources, they did not promote manufacturing since international trade equalized prices in Britain and the USA or American tariffs made resources dearer in the USA.� Wages were higher in the USA than in Britain since labor markets were tightly integrated and labor was drawn to the USA as the continent was settled.� Capital services were also more expensive in USA.� American industrialization required tariffs since virtually all input prices were higher than in Britain and industrial productivity was comparable.� America's comparative advantage shifted from agriculture to manufacturing after 1895 was industrial productivity soured.� This was due to a fall in energy prices in the USA, the American policy of mass schooling which increased the supply of skilled adults and induced firms to invent technology to raise their productivity since the supply of child labor was restricted in comparison to Britain, and the great growth of manufacturing investment induced by the tariff which provide a large market for inventions and generated technical knowledge through learning by doing.� Egypt and India could not have industrialized by following American policies since their wages were so low and their energy costs so high that the modern technology that was cost effective in Britain and the USA would not have paid in their circumstances.� The development of Egypt and India required more draconian state intervention than a protective tariff, mass education, and infrastructure investment - the American model.
    Keywords: economic growth, technical change, natural resources, international migration, American exceptionalism
    JEL: F13 F14 N1 N3 N4 N5 N6 N7 O31
    Date: 2013–12–20
  10. By: Emanuele Felice (Departament d'Economia i d'Història Econòmica, Universitat Autònoma de Barcelona)
    Abstract: The chapter presents up-to-date estimates of Italy’s regional GDP, with the present borders, in ten-year benchmarks from 1871 to 2001, and proposes a new interpretative hypothesis based on long-lasting socio-institutional differences. The inverted U-shape of income inequality is confirmed: rising divergence until the midtwentieth century, then convergence. However, the latter was limited to the centrenorth: Italy was divided into three parts by the time regional inequality peaked, in 1951, and appears to have been split into two halves by 2001. As a consequence of the falling back of the south, from 1871 to 2001 we record s-divergence across Italy’s regions, i.e. an increase in dispersion, and sluggish ß-convergence. Geographical factors and the market size played a minor role: against them are both the evidence that most of the differences in GDP are due to employment rather than to productivity and the observed GDP patterns of many regions. The gradual converging of regional GDPs towards two equilibria instead follows social and institutional differences - in the political and economic institutions and in the levels of human and social capital - which originated in pre-unification states and did not die (but in part even increased) in postunification Italy.
    Keywords: Italy, regional convergence, long-run economic growth, geography, institutions
    JEL: O11 O18 O52 N13 N14
    Date: 2013–12
  11. By: Philipp Ager; Antonio Ciccone
    Abstract: Insurance among the members of religious organizations should be more valuable in communities facing greater risk, making membership in religious organizations more attractive in high-risk environments. We examine the link between rainfall risk and church membership as well as seating capacity across US counties in the second half of the nineteenth century. Our results indicate that church membership and seating capacity were significantly larger in counties likely to have been subject to greater rainfall risk. This link is present among the most agricultural counties and among counties with low population densities, but not among less agricultural or more densely populated counties. Among the most agricultural counties, a one-standard-deviation increase in rainfall risk is associated with an increase in church seating capacity of around 32 percent in 1890 and 65 percent in 1860.
    Date: 2013–12
  12. By: Emiko Higami (Graduate School of Economics, Osaka University); Kenichi Tomobe (Graduate School of Economics, Osaka University); Makoto Hanashima (Institute of areal Studies, Foundation)
    Abstract: The average infant mortality rate (IMR) was 155.4 in rural areas in Japan, and IMR in Osaka city was 231.6 during 1906 to 1910. The outstanding level of IMR in Osaka city might have been influenced by somewhat negative urban factors, which we can call the gurban penalty.h Dr. Hiroshi Maruyama discovered the ƒ¿-index in 1938. The ƒ¿-index represents infant mortality number divided by neonatal mortality number. After all, Maruyama set one month after birth as a boundary to divide endogenous and exogenous. The ƒ¿-index shows a qualitative measure of infant mortality. Post neonatal mortality was increased due to acquired diseases such as diarrhea, pneumonia and beriberi. This shows that the effect of the urban penalty was raising the ƒ¿-index. The ƒ¿-index of the industrial zones shows that bad maternal conditions affected endogenous factors. Most mothers suffered from a deficiency of breast-feeding capability. The first reason was anemia. The second reason was mothersf ignorance about breast-feeding. The third reason was motherfs illnesses. They had to rely on bottle-feeding without any knowledge to handle artificial milk. Those babies often died from diarrhea or pneumonia.
    Keywords: Infant Mortality Rate (IMR), Breast-feeding, ƒ¿-index, diarrhea, visiting nurses
    JEL: J13 N35 R23
    Date: 2013–11
  13. By: Grosfeld, Irena; Zhuravskaya, Ekaterina
    Abstract: Using spatial RD, we test the persistence of historical partition of Poland among three empires—Russia, Austria-Hungary, and Prussia. The formerly Prussian lands compared with the Russian lands have better infrastructure built during industrialization, resulting in higher support for anticommunist parties. The population of the Austrian compared with Russian lands believes in democracy more because of Austrian decentralized governance. People in the Russian territories are less religious than in the other two empires due to Russian imperial policies undermining trust in the Catholic Church. Both liberals and religious conservatives find higher support in the Austrian compared to the Russian lands.
    Date: 2013–12
  14. By: François Facchini (Université Paris-Sud - Faculté Jean Monnet, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne); Mickaël Melki (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)
    Abstract: We provide a test of the impact of voters' political ideology on economic growth and of the role of preferences for government size as a transmission channel. We focus on France from the beginning of its stable democratic experience in 1871. A move of voters' ideology to the right increases economic growth over total observation period. However, the growth effect of ideology is mediated by voters' preferences for government size only during the post-World War II period. For reverse causality concerns, we use the political ideology of other historical democracies as an instrument variable for France's ideology.
    Keywords: Political ideology; economic growth; public spending
    Date: 2013–11
  15. By: Jeffrey Clemens
    Abstract: I study the channels through which health insurance influences medical innovation. Following Medicare and Medicaid's passage, I find that U.S.-based medical-equipment patenting rose by 40 to 50 percent relative to both other U.S. patenting and foreign medical-equipment patenting. Within the United States, increases in medical-equipment patenting were most dramatic in states where the Great Society insurance expansions were largest and in which there were large baseline numbers of physicians per resident. Consistent with historical case studies, Medical innovation's determinants extend beyond the potential revenues associated with global market size; a physician driven process of innovation-while-doing appears to play a central role. An extrapolation of the evidence suggests that the last half century's U.S. insurance expansions have driven 25 percent of recent global medical-equipment innovation. In a standard decomposition of health spending growth, this insurance-induced innovation accounts for 15 percent of the long run rise in U.S. health spending in hospitals, physicians' offices, and other clinical settings.
    JEL: H51 H57 I1 I13 O3 O31
    Date: 2013–12
  16. By: Grieve, Roy H
    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,
    Date: 2013
  17. By: Milanovic, Branko
    Abstract: Thomas Piketty's "Capital in the 21st century" may be one of the most important recent economics books. It jointly treats theory of growth, functional distribution of income, and interpersonal income inequality. It envisages a future of relatively slow growth with the rising share of capital incomes, and widening income inequality. This tendency could be checked only by worldwide taxation of capital.
    Keywords: Income distribution, economic growth, taxation
    JEL: D31 D33 E2 E25
    Date: 2013–10
  18. By: Philipp Ager (University of Southern Denmark); Fabrizio Spargoli (Erasmus University Rotterdam)
    Abstract: We exploit the introduction of free banking laws in US states during the 1837-1863 period to examine the impact of removing barriers to bank entry on bank competition and economic growth. As governments were not concerned about systemic stability in this period, we are able to isolate the effects of bank competition from those of state implicit guarantees. We find that the introduction of free banking laws stimulated the creation of new banks and led to more bank failures. Our empirical evidence indicates that states adopting free banking laws experienced an increase in output per capita compared to the states that retained state bank chartering policies. We argue that the fiercer bank competition following the introduction of free banking laws might have spurred economic growth by (1) increasing the money stock and the availability of credit; (2) leading to efficiency gains in the banking market. Our findings suggest that the more frequent bank failures occurring in a competitive banking market do not harm long-run economic growth in a system without public safety nets.
    Keywords: Bank Deregulation, Bank Competition, Economic Growth, Financial Development, Dynamic Efficiency, Free Banking
    JEL: G18 G21 G28 N21
    Date: 2013–12
  19. By: Colin, Jennings
    Abstract: This article reviews ‘Pillars of Prosperity’ by Timothy Besley and Torsten Persson and ‘Why Nations Fail’ by Daron Acemoglu and James Robinson. Both books are focussed on the role of institutions in determining the wealth of nations and the review compares and contrasts the different approaches contained in the two texts. The review also attempts to locate the texts within the broader literature in development and political economics and to link them to other recent work in these areas.
    Keywords: Institutions, Prosperity,
    Date: 2013
  20. By: Mongin, Philippe
    Abstract: De tous les problèmes conçus par la théorie de la décision, le paradoxe d'Allais est peut-être celui qui aura suscité l'intérêt le plus persistant. La théorie y a consacré assez de travaux techniques remarquables pour qu'il soit désormais possible à l'histoire et à la philosophie des sciences de l'examiner réflexivement. Dans sa partie historique, l'article restitue le contexte d'apparition du paradoxe - le colloque de Paris, en 1952, auquel assistaient les principaux théoriciens de la décision du moment. L'axiomatique de von Neumann et Morgenstern en 1947 leur avait donné des raisons nouvelles d'approuver l'hypothèse de l'utilité attendue, et le contre-exemple d'Allais visait précisément à ébranler leur conviction. Les questions de la controverse étaient de type normatif, mais elles se perdirent quand le "paradoxe d'Allais" gagna tardivement la célébrité dans des travaux des années 1980 qui le traitaient comme une simple réfutation empirique. Ils en firent l'enjeu de "théories de l'utilité non-espérée" qu'ils développaient de même sous le seul angle empirique. Dans sa partie philosophique, l'article cherche à évaluer ce déplacement d'interprétation. D'un certain côté, les théoriciens de la décision firent bien de libérer leur travail expérimental des complications du normatif, car ils parvinrent ainsi à des résultats éclairants : l'hypothèse de l'utilité espérée était empiriquement réfutée, la responsabilité principale en revenait à l'axiome d'indépendance de von Neumann-Morgenstern, et l'étape suivante était de transformer adéquatement cet axiome. D'un autre côté, ils eurent tort de négliger un trait fondamental de leur domaine : les comportements observés ne sont informatifs que si les agents sont prêts à les assumer de manière réfléchie, c'est-à-dire à leur prêter une certaine valeur normative. D'après la reconstruction proposée ici, Allais ne voulait faire porter les expériences de choix que sur des sujets rationnels, ou bien sélectionnés au départ, ou bien révélés comme tels par l'expérience. L'article développe ces intuitions en revenant aux travaux des années 1970, aujourd'hui très peu connus, qui, sous l'influence d'Allais, proposèrent des traductions expérimentales de la rationalité, et il invite finalement la théorie de la décision à diversifier ses méthodes en s'inspirant de ces tentatives originales. Few problems in decision theory have raised more persisting interest than the Allais paradox. It appears that sufficiently many brilliant works have addressed it from within decision theory proper for history and philosophy of science now to enter stage. In its historical side, the paper recounts the paradox as it arose, i.e., in 1952, at a Paris conference attended by the main decision theorists of the time. They had drawn renewed confidence in expected utility theory (EUT) from the way von Neumann and Morgenstern had axiomatized it in 1947, and Allais devised his puzzle precisely to shaken their confidence. The issues between the two camps were normative, but they became lost in the developments of the 1980s that belatedly brought fame to the "Allais paradox". These works restricted the paradox to be a straightforward empirical refutation, turning it into a stake of also exclusively empirically oriented non-EU theories. In its philosophical vein, the paper tries to evaluate this shift of interpretation. To an extent, decision theorists were right because their experimental work was thus freed from a major complication and amenable to illuminating results: EUT was empirically refuted, the independence axiom of von Neumann and Morgentern was the main culprit, and the next theoretical stage was to modify this axiom appropriately. However, they were also wrong in not addressing an essential feature of their field, i.e., that observed behaviour is informative only if agents are prepared to endorse it reflectingly, i.e., to endow it with some normative value. As reconstructed here, Allais meant to reserve choice experiments to rational subjects, who were either selected at the outset, or identified as such by the experimental results. The paper tries to flesh out Allais's intuitions by turning to by now little known works of the 1970s, which under his influence provided experimental renderings of rationality, and it eventually suggests that decision theory might diversify its methods by taking inspiration from these original attempts.
    Keywords: Allais Paradox; expected utility theory; von Neumann-Morgenstern; positive vs normative; experimental economics of decision; rationality
    JEL: B21 B31 B41 C91 D81
    Date: 2013–06–30
  21. By: Carles Sanchis Ibor
    Abstract: The Spanish collective institutions for irrigation management have become a reiterated reference in the study of common pool resources. However, the success of Spanish irrigators in the local management of water contrasts with an important failure in the management of this common pool resource at the basin scale. During the second half of the ninetieth century, the water users’ associations of the large huertas (market gardens) of eastern Spain seek for the constitution of higher institutions to coordinate water management at the basin or sub-basin level. The aim of this institutional ambition, unsuccessful in this period, was to reduce the number and intensity of conflicts and to achieve a major level of water rights enforcement. This paper describes the case of the Sindicato General de Riegos del Turia, whose short experience (1850-1883) was conditioned by the firm opposition of water users’ from the upper and middle Turia, reluctant to join the institutional project. The design of the institution, previous to the model defined by the Water Law of 1866, was based in the transposition, to the basin level, of the successful principles used at the local management of irrigation. The paper focuses on the analysis of the principles of institutional design followed in the creation of the Sindicato, and explores the importance of the up-scaling processes in the development of nested institutions.
    Keywords: irrigation, institutions, commons, water conflicts, nesting principle
    JEL: D02 N53 Q15
    Date: 2013–12
  22. By: De Feo, Giuseppe; De Luca, Giacomo
    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,
    Date: 2013
  23. By: Neil M., Kay
    Abstract: This paper looks at the emergence of what is described here as the QWERTY family of standards (QWERTY and its international adaptations QZERTY, AZERTY, and QWERTZ). QWERTY has been described as an inferior solution and an accident of history. However, the analysis here finds that each member of the family represented highly efficient adaptations to specific user needs and technical challenges encountered in their own environments. These findings may be seen to have wider implications given QWERTY’s role as paradigm case in the literature on increasing returns and path dependence, and these are pursued in the paper
    Date: 2013
  24. By: Sriwannawit , Pranpreya (Department of Industrial Economics and Management, Royal Institute of Technology, Stockholm); Sandström, Ulf (Department of Industrial Economics and Management, Royal Institute of Technology, Stockholm)
    Abstract: Despite the fact that diffusion research has existed for more than one century, there is no quantitative review study that covers this subject in a broad and general context. This article reviews diffusion research by providing an extensive bibliometric and clustering analysis. We identify research trails and explain the characteristics of diffusion research using new methods. We contribute a methodology for the use of advanced mapping and clustering techniques in order to describe the research areas. This method produces a fairly good overview of diffusion research and can be applied to any knowledge field to replace or complement the traditional literature review.
    Keywords: adoption; bibliometric; cluster; labeling; publication analysis; quantitative; research front; technology transfer
    JEL: O30 O33
    Date: 2013–12–13
  25. By: Anyanwu John (African Development Bank); Andrew E. O. Erhijakpor
    Abstract: Understanding the effect of oil wealth on democracy is important. National democratic institutions provide a check on governmental power and thereby limit the potential of public officials to amass personal wealth and to carry out unpopular policies. Democracy promotion has thus been at the top of the US and West European foreign policy agenda since the end of the Cold War. Recently rising coups d’états attempts and oil discoveries in some African countries, high energy prices and the North African and Middle East situation characterized by revolutions have made the question of the link between oil wealth and democracy timelier than ever. This paper uses recent data on historical oil wealth to provide new evidence on the effect of oil wealth on democracy in Africa from 1955 to 2008. We find that oil wealth is statistically associated with a lower likelihood of democratization when we estimate the relationship in a pooled cross-sectional and time-series setting. In addition, when estimated using fixed effects, the strong negative statistical association continues to hold. Indeed, this result is robust to the source of oil wealth data, the choice and treatment of the variables set, and the sample selection. Our results also show other interesting and important results. The cross-country evidence examined in the study confirms that the “Lipset/Aristotle/modernization hypothesis” (that prosperity stimulates democracy) is a strong empirical regularity. Also, the propensity for democracy rises with population size, population density, ethnic fractionalization, having British legal origin or colonial heritage, and having a supportive institutional environment in the form of maintenance of the rule of law. However, apart from oil wealth, democracy tends to fall with linguistic fractionalization and rough (mountainous) terrain. Moreover, consistent with the data, North Africa consistently fails to favor democratic development.
    Date: 2013–12–19
  26. By: Antonio M. Linares Luján (Universidad de Extremadura, Spain); Francisco M. Parejo (Universidad de Extremadura, Spain)
    Abstract: Este trabajo pretende conocer las secuelas que, sobre el estado nutricional neto de los mozos reclutados en Extremadura entre 1926 y 1975, dejaron las crisis alimentarias generadas por la Guerra Civil y por la férrea política de control de precios mantenida por el primer franquismo. Mediante el análisis de los datos extraídos de las Actas de Clasificación y Declaración de Soldados de diez núcleos de población repartidos por la geografía extremeña, nuestra investigación profundiza en la intensidad de dichas crisis, comparando la experiencia del mundo urbano y del mundo rural y estudiando la evolución y el grado de desigualdad nutricional que pudo generar en Extremadura la distinta formación educativa de la población, el recrudecimiento de los movimientos migratorios a partir de mediados de la década de 1950 y la pertenencia a un determinado grupo profesional. Los resultados muestran que, pese a “gozar” de la condición de región ocupada durante la contienda y de protagonizar una exitosa recuperación tras la posguerra, la Guerra Civil y la autarquía resultaron especialmente negativas para Extremadura, sobre todo para el mundo rural. Sugieren, asimismo, que la euforia antropométrica de los años cincuenta y sesenta del pasado siglo oculta una distorsión a la baja entre la población de las áreas más agrarias y despobladas de la región: la ocasionada por la crisis de la agricultura tradicional y la consecuente sangría migratoria. Revelan, además, que la guerra y la posguerra incrementaron las diferencias biológicas entre los mozos extremeños, siendo los más pobres, los menos corpulentos y los no alfabetizados los que más sufrieron el impacto del hambre y la escasez. Insinúan, finalmente, que, dentro de los distintos grupos de actividad, fueron los mozos dedicados a la agricultura y a la ganadería los que mostraron un peor desempeño nutricional a lo largo de todo el periodo objeto de estudio.
    Keywords: Extremadura, Guerra Civil, posguerra, desigualdad, nivel de vida biológico, estado nutricional neto, estatura, perímetro, peso, índice de masa corporal.
    JEL: J1 N3 I1 I2 I3
    Date: 2013–12

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.