New Economics Papers
on Business, Economic and Financial History
Issue of 2014‒03‒01
sixteen papers chosen by

  1. The Growing Dependence of Britain on Trade during the Industrial Revolution By Gregory Clark; Kevin Hjortshøj O'Rourke; Alan M. Taylor
  2. Should we call for a doctor? Households, consumption and the development of medical care in the Netherlands, 1650-1900 By Heidi Deneweth; Patrick Wallis
  3. The Savings Banks crises in Spain: When and How? By Pablo Martín-Aceña
  4. The Argentina Paradox: Microexplanations and Macropuzzles By Alan M. Taylor
  5. Early Public Banks By Roberds, William; Velde, Francois R.
  6. A 150-year Perspective on Swedish Capital Income Taxation By Du Rietz, Gunnar; Johansson, Dan; Stenkula, Mikael
  7. Yes, it’s the economy, stupid, but is it demand or supply? By De Grauwe, Paul
  8. Grain Market Integration in the Baltic Sea Region in the 19th Century By Andersson , Fredrik N. G.; Ljungberg, Jonas
  9. Richard Titmuss: Forty years on By Howard Glennerster
  10. A Tale of Minorities: Evidence on Religious Ethics and Entrepreneurship from Swiss Census Data By Nunziata, Luca; Rocco, Lorenzo
  11. El Estado y el desarrollo de la energía nuclear en España, c. 1950-1985 By Joseba De la Torre; Mar Rubio
  12. The agricultural invasion and the political economy of agricultural trade policy in Belgium, 1875-1900 By Maarten VAN DIJCK; Tom TRUYTS
  13. Finance and the Preservation of Wealth By Nicola Gennaioli; Andrei Shleifer; Robert Vishny
  14. Ricardo’s Discovery of Comparative Advantage Revisited By Christian Gehrke
  15. La dinámica empresarial en el sector exportador del aceite de oliva andaluz, 1886-1939 By Salvador Hernández Armenteros; Juan Antonio Rubio Mondéjar; Josean Garrués Irurzun
  16. The Divorce Revolution and Generalized Trust: Evidence from the United States 1973-2010 By Viitanen, Tarja

  1. By: Gregory Clark; Kevin Hjortshøj O'Rourke; Alan M. Taylor
    Abstract: Many previous studies of the role of trade during the British Industrial Revolution have found little or no role for trade in explaining British living standards or growth rates. We construct a three-region model of the world in which Britain trades with North America and the rest of the world, and calibrate the model to data from the 1760s and 1850s. We find that while trade had only a small impact on British welfare in the 1760s, it had a very large impact in the 1850s. This contrast is robust to a large range of parameter perturbations. Biased technological change and population growth were key in explaining Britain’s growing dependence on trade during the Industrial Revolution.
    JEL: F11 F14 F43 N10 N70 O40
    Date: 2014–02
  2. By: Heidi Deneweth; Patrick Wallis
    Abstract: This article examines the Dutch medical marketplace between 1650 and 1900 from a household’s perspective, based on the probate inventories database of the Meertens Institute. It offers the first quantitative analysis of demand for medical care in small towns and villages across the Netherlands. Our findings offer a substantial contrast to the well-known medical market in the Netherland’s major cities and might be more representative for general European patterns. We observe that different usage of medical care bears similarity to the households’ income, level of monetisation and engagement in commercial activities and other forms of non-essential consumption. While the pre-industrial era showed very outspoken differences in medical consumption between the commercialised maritime part of the Netherlands and the more autarchic inland region, patterns of medical consumption converged during the nineteenth century. These findings suggest that demand set a basic boundary for the further development of medical supply.
    Keywords: Medical market, Household economics, The Netherlands, 17th-19th centuries
    Date: 2014–02
  3. By: Pablo Martín-Aceña (Universidad de Alcalá, Madrid, Spain)
    Abstract: The present financial crisis has severely hit the Spanish savings banks sector. Of 45 savings banks in 2007 by the end of 2012 the number had dropped to only thirteen. Most of the institutions that have disappeared, have been consolidated into major groups, either by outright purchase by banks or as a result of merging operations among individual savings banks. The Bank of Spain and the Fund for Ordely Restructuring of the Banking Sector (FROB) have bailout seven savings banks or group of savings banks, and four of them have been nationalized. Moreover, nearly all merging operations have required the consumption of public resources, which in turn have increased the already large government budget deficit. First, the paper presents a short history of the savings banks crises, and shows that until very recently the sector has surmounted major crisis affecting the financial system. Their limited scope and scale, the principle of territoriality, and a prudent and conservative management avoided saving banks the financial turbulences suffered by the commercial and investment banks. Second, the paper reviews the causes of the current savings banks crisis and which have been the procedure and the cost of its resolution, which has required the astonishing figure of 60,000 million euros provided by the European Stability Mechanism.
    Keywords: savings banks, banking crises, financial regulation, Spain
    JEL: N23 N24 G21 G38
    Date: 2014–02
  4. By: Alan M. Taylor
    Abstract: The economic history of Argentina presents one of the most dramatic examples of divergence in the modern era. What happened and why? This paper reviews the wide range of competing explanations in the literature and argues that, setting aside deeper social and political determinants, the various economic mechanisms in play defy the idea of a monocausal explanation.
    JEL: F43 N16 O11 O54 O57 P52
    Date: 2014–02
  5. By: Roberds, William (Federal Reserve Bank of Atlanta); Velde, Francois R. (Federal Reserve Bank of Chicago)
    Abstract: Publicly owned or commissioned banks were common in Europe from the fifteenth century. This survey argues that while the early public banks were characterized by great experimentation in their design, a common goal was to create a liquid and reliable monetary asset in environments where such assets were rare or unavailable. The success of these banks was however never guaranteed, and even well-run banks could become unstable over time as their success made them susceptible to fiscal exploitation. The popularization of bearer notes in the eighteenth century broadened the user base for the public banks’ money but was also accompanied by increased fiscal abuse. Wartime demands of the Napoleonic Era resulted in the reorganization or dissolution of many early public banks. A prominent exception was the Bank of England, whose adept management of a fiscally backed money provided a foundation for the development of central banks as they exist today.
    Keywords: Central banks; exchanges bank; public banks
    JEL: E58 N13
    Date: 2014–02–11
  6. By: Du Rietz, Gunnar (Research Institute of Industrial Economics (IFN)); Johansson, Dan (Örebro University School of Business); Stenkula, Mikael (Research Institute of Industrial Economics (IFN))
    Abstract: This paper describes the evolution of capital income taxation, including corporate, dividend, interest, capital gains and wealth taxation, in Sweden between 1862 and 2010. To illustrate the evolution, we present annual time-series data on the marginal effective tax rates on capital income (METR) for a marginal investment financed with new share issues, retained earnings or debt. Tax tables covering the period are presented. These data are unique in their consistency, thoroughness and time span covered. The METR is low, is stable and does not exceed five percent until World War I, when it starts to drift somewhat upward and vary depending on the source of finance. The outbreak of World War II starts a period when the magnitude and variation of the METR sharply increases. The METR peaks during the 1970s and 1980s and often exceeds 100 percent. The 1990–1991 tax reform and lower inflation reduce the magnitude and variation of the METR. The METR varies between 15 and 40 percent at the end of the examined period.
    Keywords: cost of capital; marginal effective tax rates; marginal tax wedges; tax reforms
    JEL: H21 H31 N44
    Date: 2014–02–21
  7. By: De Grauwe, Paul
    Abstract: Paul De Grauwe writes in this new CEPS Commentary that the recent and surprising conversion of François Hollande to supply-side economics completes the victory of the northern European policy-makers who believe that insufficient aggregate demand should be fought exclusively by supply-side measures. In his view, however, it is not the first time in post-war history that economists and policy-makers apply the wrong medicine; or to put it differently, it's akin to some generals who fight a new war by applying the strategies developed for the previous war.
    Date: 2014–01
  8. By: Andersson , Fredrik N. G. (Department of Economics, Lund University); Ljungberg, Jonas (Department of Economic History, Lund University)
    Abstract: This paper explores the development of market integration within the Baltic Sea region as well as between the region and England, from the early 1840s to around 1890. It exploits two new datasets on grain prices. The paper applies a new method for measuring market integration by combining a dynamic factor model with wavelet analysis. A gradual yardstick is suggested and the role of distance analyzed. Wheat and rye markets became highly integrated whereas the cheaper grains lagged. Integration progressed geographically and conclusions emphasize traded volumes and transport cost.
    Keywords: Baltic Sea Region; grain prices; market integration; wavelet analysis; dynamic factor model
    JEL: C21 N23 N53
    Date: 2014–02–11
  9. By: Howard Glennerster
    Abstract: Richard Titmuss was one of the world's leading public analysts and philosophers. He was highly influential in shaping the post-war welfare state and created the subject we now call social policy. What would he make of the present state of welfare? This lecture reflects on the man and the times which shaped his ideas. What is his legacy forty years on from his death? Which of his ideas have lasted and which have proved less durable? What gaps were there in his world view?
    Keywords: social policy, Titmuss, well-being
    JEL: I38
    Date: 2014–02
  10. By: Nunziata, Luca (University of Padova); Rocco, Lorenzo (University of Padova)
    Abstract: Does Protestantism favour the market economy more than Catholicism does? We provide a novel quasi-experimental way to answer this question by comparing Protestant and Catholic minorities using Swiss census data from 1970 to 2000. Exploiting the strong adhesion of religious minorities to their confession's ethical principles and the historical determination of the geographical distribution of confessions across Swiss cantons, we find that Protestantism is associated with a significantly higher propensity for entrepreneurship. The estimated difference ranges between 2.3 and 4.4 percentage points. Our findings are robust to a number of robustness checks, including a placebo test.
    Keywords: entrepreneurship, self-employment, religion, culture, Protestantism, Catholicism, Switzerland
    JEL: Z12 J24 J21 Z13
    Date: 2014–02
  11. By: Joseba De la Torre (New York University, United States / Universidad Publica de Navarra, Navarra, Spain); Mar Rubio (Universidad Publica de Navarra, Navarra, Spain)
    Abstract: Tres décadas después de la decisión gubernamental de paralizar y replantear el programa atómico español que se había diseñado en los años del desarrollismo, la controversia permanece abierta. Pese a su relevancia, la historiografía económica de la energía nuclear está tan sólo en sus inicios. Este trabajo analiza el papel que el Estado jugó para conseguir que uno de los países más pobres de Europa occidental entrara en el exclusivo club de países productores de esa energía. Proponemos una nueva periodización del avance de la energía nuclear en España basada en la evolución político-económica del sector que va más allá de los estadios tecnológicos que se describen en la literatura.
    Keywords: energía nuclear, historia económica, política energética, sector eléctrico
    JEL: N2 N4 N5 N7 Q43 Q48
    Date: 2014–02
  12. By: Maarten VAN DIJCK; Tom TRUYTS
    Abstract: After 1875, cheap grain from the United States and Russia flooded the European markets. Many countries like Germany, France, and Sweden turned to agricultural trade protection, while others, like the UK and Denmark, held on to a free trade position. Belgium adopted a middle position, leaving its grain markets open but protecting animal husbandry, dairy production, and the processing of foodstuffs. The econometric analysis of the votes of Belgian Members of Parliament on four proposals to install protectionist measures on agricultural trade seeks to identify which economic or political interests explain the Belgian policy option.
    Date: 2014–01
  13. By: Nicola Gennaioli; Andrei Shleifer; Robert Vishny
  14. By: Christian Gehrke (University of Graz)
    Abstract: In an influential paper entitled “David Ricardo’s Discovery of Comparative Advantage”, which was published in HOPE (Vol. 34, 2002), Roy J. Ruffin attempted to reconstruct the circumstances of Ricardo’s discovery of the law of comparative advantage. Ruffin’s article has inspired a number of further contributions (see, e.g., Aldrich 2004, Maneschi 2004, 2008, Ruffin 2005, Morales-Meoqui 2011) on the precise nature, logical structure, and analytical significance of Ricardo’s formulation of the law of comparative advantage in international trade theory. The present paper shows that Ruffin’s reconstruction of Ricardo’s discovery of the law of comparative advantage, and in particular his interpretation of Ricardo’s letters to Malthus and James Mill of October 1816, encounters a number of serious problems. When the context of Ricardo’s statements is properly taken into account, and the premises and implications of Ruffin’s hypothesis, according to which those statements refer to international prices, are carefully scrutinized, his novel interpretation is seen to lack plausibility. Moreover, it is shown that Ruffin’s contention that modeling assumptions and analytical results of neoclassical trade theory such as “factor price equalization”, the “Lerner symmetry theorem”, or the “Stolper-Samuelson theorem” can be discerned in Ricardo’s chapter “On Foreign Trade” cannot be sustained.
    Date: 2014–02
  15. By: Salvador Hernández Armenteros (Universidad de Granada, Granada, Spain); Juan Antonio Rubio Mondéjar (Universidad de Granada, Granada, Spain); Josean Garrués Irurzun (Universidad de Granada, Granada, Spain)
    Abstract: La crisis abierta en el sector aceitero en el último tercio del siglo XIX obligó a un profundo cambio en los distintos ámbitos del mismo. El presente trabajo busca analizar la actividad empresarial en el sector exportador, poniendo el acento en su destacable incremento, así como en los protagonistas, en las estrategias empresariales planteadas y en las redes que se establecieron tanto entre las empresas exportadoras, como entre estas y el resto de la actividad económica andaluza.
    Keywords: Historia empresarial, Industria Agroalimentaria, Aceite, Exportación, Redes
    JEL: L14 N74 N84 Q17
    Date: 2014–02
  16. By: Viitanen, Tarja (University of Otago)
    Abstract: This paper examines the effect of exposure to a culture of easier divorce as a minor on generalized trust using the General Social Survey from 1973-2010. The easier divorce culture is defined as the introduction of no-fault including unilateral divorce reforms across the US. According to the results, the divorce revolution seems to have had some effect on trust levels across the US. While there are no discernible effects for the whole sample of men, there are statistically significant effects for women with an additional year of exposure being associated with a 4 percentage point lower generalized trust in the states with easy divorce culture compared to states with fault based divorce culture. An analysis by sub-group of women indicates that married and divorced/separated women have significantly lower levels of trust associated with exposure to easy divorce culture as a child. The findings are in agreement with the predictions of previous literature regarding no-fault divorce reforms reducing the security offered by marriage, in particular for women.
    Keywords: divorce laws, trust, GSS, panel data analysis
    JEL: J12 K36 Z13
    Date: 2014–02

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