nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2014‒08‒20
nineteen papers chosen by

  1. Politics, political settlements and social change in post-colonial Rwanda By Frederick Golooba-Mutebi
  2. Preconditions for an Informal Economy: 'Trucking and Bartering' in New Guinea By John D. Conroy
  3. The wind of change: Maritime technology, trade and economic development By Luigi Pascali
  4. Economic inequality in northwestern Italy: A long-term view (fourteenth to eighteenth centuries) By Guido Alfani
  5. When Economics met Antitrust: The Second Chicago School and the Economization of Antitrust Law By Patrice Bougette; Marc Deschamps; Frédéric Marty
  6. "The Agricultural Origins of Time Preference" By Oded Galor; Omer Ozak
  7. Rainfall Risk and Religious Membership in the Late Nineteenth-Century United States By Ager, Philipp; Ciccone, Antonio
  8. Employment Policies in Brazil: History, Scope and Limitations By Sakiko Fukuda-Parr
  9. Changing Times, Changing Values: A Historical Analysis of Sectors within the US Stock Market 1872-2013 By Oliver D. Bunn; Robert J. Shiller
  10. Habemus Papam? Polarization and Conflict in the Papal States By Pino, Francisco J.; Vidal-Robert, Jordi
  11. Changes in the agrarian structure in Poland in the years 1921-2002 based on the example of selected provinces from three annexed territories. By Michal Bernard Pietrzak; Damian Walczak
  12. Competition and Credit Control By C.A.E. Goodhart
  13. Coal Mining and the Resource Curse in the Eastern United States By Stratford Douglas; Anne Walker
  14. Ley de Zipf y de Gibrat para Colombia y sus regiones: 1835-2005 By Gerson Javier Pérez; Adolfo Meisel Roca
  15. Family Structure and the Education Gender Gap: Evidence from Italian Provinces By Bertocchi, Graziella; Bozzano, Monica
  16. Interpreting the Pari Passu Clause in Sovereign Bond Contracts: It's All Hebrew (and Aramaic) to Me By Wright, Mark L. J.
  17. La décentralisation dans les pays en développement : une revue de la littérature - Decentralization in developing countries: A literature review By Emilie CALDEIRA; Grégoire ROTA-GRAZIOSI
  18. Medicaid: A Review of the Literature By Marianne P. Bitler; Madeline Zavodny
  19. Shifting Responsibilities - 20 Years of Education Devolution in Sweden: A Governing Complex Education Systems Case Study By Patrick Blanchenay; Tracey Burns; Florian Köster

  1. By: Frederick Golooba-Mutebi
    Abstract: Until 1994 Rwanda's post-colonial history was marked by episodes of political violence, attempted wars, and wars of different durations. Feeding the violence was the absence of an elite consensus about how best to take Rwanda forward after colonial rule ended, the rules for doing so, and the roles to be played by the holders and losers of power. This paper explores key aspects of Rwanda's political evolution from independence to-date. The critical stages are the events popularly known as the 1959 social revolution that preceded independence in 1962; the period from 1962 to the overthrow of Kayibanda's First Republic in 1973; from the Habyarimana-led military coup to 1994; and the Rwanda Patriotic Front -led post-genocide period. The paper examines the different political coalitions that have ruled the country since independence, their impact on political stability and their role in catalysing or influencing the cycles of turmoil with which it is associated. In the case of the current coalition, this paper also provides a glimpse into the efforts they have made to promote the wellbeing of ordinary Rwandans. It first charts the historical origins and the current state of drivers of instability and elite fragmentation. It then identifies the nature of interactions between drivers of instability and political settlements over time, and their impact on governance and the pursuit of development.
    Date: 2013
  2. By: John D. Conroy (Crawford School of Public Policy, The Australian National University)
    Abstract: This fourth paper, in a series on the theme of the informal economy, considers the extent to which premodern trade in Melanesia constituted any preparation for engagement with the market. It reviews explanations of trade and exchange in 'aboriginal' societies, from Adam Smith in the eighteenth century and the German historical school in the nineteenth, to their modern heirs and critics. The view of trade as due to a natural human tendency to 'truck and barter' is counter-posed against a conception of exchange as the product of socially regulated customs, in the manner of The Gift. Malinowski's account of the kula, and its (mis)interpretation by Van Leur, the historian of Asian trade, raises the question whether Melanesia possessed any counterpart of the travelling Asian peddler. To consider this question, the paper examines the traditional trading systems of regions which would later become the hinterlands of three modern towns (Rabaul, Port Moresby and Goroka). In preparation for later discussion of these towns' colonial experience, the paper surveys the traditional trade of the New Guinea interior, the long-distance seaborne trade of the coasts and islands, and the particular case of the Gazelle Peninsula. It draws conclusions which throw some light on the question of Asian-style 'peddling' in Melanesia. Finally, the paper considers how Keith Hart's concept of 'informality', derived from Weber's notion of rational/legal bureaucracy, could be seen as applicable to the early colonial setting of New Guinea. It finds a piquant correspondence between a highly bureaucratized German New Guinea and the Weberian original, located back in Bismarck's Berlin.
    Date: 2013–04
  3. By: Luigi Pascali
    Abstract: The 1870-1913 period marked the birth of the first era of trade globalization. How did this tremendous increase in trade affect economic development? This work isolates a causality channel by exploiting the fact that the steamship produced an asymmetric change in trade distances among countries. Before the invention of the steamship, trade routes depended on wind patterns. The introduction of the steamship in the shipping industry reduced shipping costs and time in a disproportionate manner across countries and trade routes. Using this source of variation and a completely novel set of data on shipping times, trade, and development that spans the great majority of the world between 1850 and 1900, I find that 1) the adoption of the steamship was the major reason for the first wave of trade globalization, 2) only a small number of countries that were characterized by more inclusive institutions benefited from globalization, and 3) globalization exerted a negative effect on both urbanization rates and economic development in most other countries.
    Keywords: Steamship, Gravity, Globalization.
    JEL: F1 F15 F43 O43
    Date: 2014–06
  4. By: Guido Alfani
    Abstract: This article provides a comprehensive picture of economic inequality in northwestern Italy (Piedmont), focusing on the long-term developments occurring from 1300 to 1800 ca. Regional studies of this kind are rare, and none of them has as long a timescale. The new data proposed illuminate many little-known aspects of wealth distribution and general economic inequality in preindustrial times, and support the idea that during the Early Modern period, inequality grew everywhere: both in cities and in rural areas, and independently from whether the economy was growing or stagnating. This finding challenges earlier views that explained inequality growth as the consequence of economic development. The importance of demographic processes affecting inequality is underlined, and the impact of severe mortality crises, like the Black Death, is analyzed.
    Keywords: Economic inequality, social inequality, wealth concentration, middle ages, early modern period, Piedmont, Sabaudian States, Italy, plague, Black Death
    Date: 2014–03
  5. By: Patrice Bougette (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - Université Nice Sophia Antipolis (UNS) - CNRS : UMR6227); Marc Deschamps (BETA - Bureau d'économie théorique et appliquée - CNRS : UMR7522 - Université de Strasbourg - Université Nancy II); Frédéric Marty (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS))
    Abstract: In this article,we use a history of economic thought perspective to analyze the process by which the Chicago School of Antitrust emerged in the 1950s and became dominant in the US. We show the extent to which economic objectives and theoretical views shaped antitrust laws in their inception. After establishing the minor influence of economics in the promulgation of US competition laws, we then highlight US economists' very cautious views about antitrust until the Second New Deal. We analyze the process by which the Chicago School developed a general and coherent framework for competition policy. We rely mainly on the seminal and programmatic work of Director and Levi (1956) and trace how this theoretical paradigm was made collective, i.e. the "economization" process took place in US antitrust. Finally, we discuss the implications, if not the possible pitfalls, of such a conversion to economics - led competition law enforcement.
    Keywords: Antitrust, Chicago School, Consumer Welfare, Monopolization, Efficiency
    Date: 2014–07–21
  6. By: Oded Galor; Omer Ozak
    Abstract: This research explores the origins of the distribution of time preference across regions. It advances the hypothesis, and establishes empirically, that geographical variations in the incentives to delay consumption in favor of lucrative investment opportunities have had a persistent effect on the distribution of long-term orientation across societies. In particular, exploiting a natural experiment associated with the Columbian Exchange, the research establishes that agro-climatic characteristics in the pre-industrial era that were conducive to higher return to agricultural investment, triggered selection and learning processes that had a persistent positive effect on the prevalence of long-term orientation in the contemporary era.
    Keywords: Time preference, Delayed Gratiffcation, Culture, Agriculture, Economic Development, Evolution
    Date: 2014
  7. By: Ager, Philipp; Ciccone, Antonio
    Abstract: Building on the idea that religious communities provide mutual insurance against some idiosyncratic risks, we argue that religious membership is more valuable in societies exposed to greater common risk. In our empirical analysis we exploit rainfall risk as a source of common economic risk in the nineteenth-century United States and show that religious communities were larger in counties where they faced greater rainfall risk. The link between rainfall risk and the size of religious communities is stronger in counties that were more agricultural, that had lower population densities, or that were exposed to greater rainfall risk during the growing season.
    Keywords: Religious community size , agricultural risk , informal insurance
    Date: 2014
  8. By: Sakiko Fukuda-Parr (The New School University, New York)
    Abstract: Employment Policies in Brazil: History, Scope and Limitations
    Keywords: Employment Policies in Brazil: History, Scope and Limitations
    Date: 2014–03
  9. By: Oliver D. Bunn; Robert J. Shiller
    Abstract: We construct a price, dividend, and earnings series for the Industrials sector, the Utilities sector, and the Railroads sector from the beginning of the 1870s until the beginning of the year 2013 from primary sources. To infer about mispricings in the sector markets over more than a century, we investigate the forecasting power of the Cyclically Adjusted Price-Earnings (CAPE) ratio for these sectors. With regard to the CAPE ratio, which has originally been devised and employed by Campbell and Shiller (1988, 1998, 2001) as well as Shiller (2005), we define a methodological improvement to this ratio to not only be robust to inflationary changes, but also to changes in corporate payout policy. We then update the original evidence from Campbell and Shiller (1998, 2001) of the return predictability of the CAPE ratio for the overall stock market and furthermore extend this evidence to the three forementioned sectors individually. Whereas this part of our analysis focuses on each sector of the US economy in isolation, we subsequently construct an indicator from the CAPE ratio that enables us to perform valuation comparisons across sectors. In addition to establishing the prediction of subsequent return differences based on differences in the CAPE-based valuation indicator, we also suggest a hypothetical, historical, and simple value investment strategy that rotates between the three sectors based on the valuation signals derived from the CAPE-based indicator, generating slightly more than 1:09% annualized, inflation-adjusted excess total return over the market benchmark during a period of nearly 110 years.
    JEL: E37 G11 G14 G17 N20
    Date: 2014–08
  10. By: Pino, Francisco J. (Université Libre de Bruxelles); Vidal-Robert, Jordi (University of Warwick and CAGE)
    Abstract: We study the effect of divisions within the elite on the probability of internal conflict in the Papal States between 1295 and 1846. We assemble a new database using information on cardinals that participated in conclaves during this period, and construct measures of polarization and fractionalization based on the cardinals’ places of birth. The deaths of popes and cardinals provide plausible exogenous variation in the timing of the conclave and the composition of the College of Cardinals, which we exploit to analyze the causal effect of a divided conclave on conflict. We find that an increase of one standard deviation in our measure of polarization raised the likelihood of internal conflict by between 2 and 3 percent in a given year and by up to 15 percent in a given papacy. The effect is largest in the initial years after the conclave, to gradually vanish over time. Cardinals’ influence on the politics of the Papal States decreased after reforms introduced between 1586 and 1588. Our measure of religious productivity, however, is negatively and significantly linked to polarization in the post-reform period. These reforms were successful in shifting the effect of divisions among the elite of one of the largest and oldest organizations from violent conflict to religious matters.
    Keywords: Papal States, polarization, cardinals
    Date: 2014
  11. By: Michal Bernard Pietrzak (Nicolaus Copernicus University, Poland); Damian Walczak (Nicolaus Copernicus University, Poland)
    Abstract: The objective of the paper is to analyse the agrarian structure in Poland in the years 1921-2002 based on the example of the following selected provinces from the former three annexed territories: the wielkopolskie province from the Prussian partition, the ma³opolskie province from the Austrian partition, and the œwiêtokrzyskie province from the Russian partition. The subject of the evaluation of the changes in the agrarian structure is based on the comparisons made for the years 1921 and 2002. The Gini coefficient and the arable coefficient were applied in the analysis of the agrarian structure. As shown in the paper, despite the flow of many years, the transformations determining it, the changes in the agrarian structure within the three annexed areas were much alike. That means that in the provinces examined the agrarian structure is strongly conditioned by history. The differences in the agrarian structure between the three annexed territories have been maintained to date, despite the common agricultural and economic policies conducted within the area of Poland for almost 100 years.
    Keywords: agrarian structure, Gini coefficient, arable coefficient
    JEL: Q15 Q18
    Date: 2013–02
  12. By: C.A.E. Goodhart
    Abstract: The Bank of England’s ‘consultative document’ on Competition and Credit Control was published on May 14th, 1971. It was a landmark occasion, representing a decisive break with the prior system of maintaining direct controls over the, main components of the, UK banking system; the intention was now to achieve the monetary authorities’ objectives of policy via the operation of market mechanisms, notably adjustments in interest rates and open market operations. Although the ‘credit control’ aspect was, over the next few years, notably less successful than the encouragement of competition amongst the banks, (where the London Clearing Banks previously had maintained a restrictive cartel with the support of the authorities), nevertheless the direction of travel towards a more liberal, market based system, remained, despite a partial reversion towards a partial direct control system in the guise of the ‘corset’, introduced at the end of 1973, and finally laid to rest in June 1980.
    Date: 2014
  13. By: Stratford Douglas (West Virginia University, College of Business and Economics); Anne Walker (University of Colorado at Denver, Department of Economics)
    Abstract: We measure the effect of resource sector dependence on long run income growth using the natural experiment of variation in coal endowments in a set of 409 relatively U.S. counties selected for homogeneity. Using a panel data set that extends over two separate boom and bust cycles (1970-2010), we find that coal dependence significantly reduces growth of per capita county income over the long run. These estimates indicate that a one standard deviation increase in the measure of resource intensity results in an estimated 0.7 percentage point drop in average annual growth rates. We also measure the extent to which the Appalachian coal resource curse operates by providing disincentives to education, and find that the education channel explains only about 15% to 40% of the curse.
    Keywords: Resource Curse, Natural Resources, Economic Growth
    JEL: Q32 Q33 O40 R11
    Date: 2014
  14. By: Gerson Javier Pérez; Adolfo Meisel Roca
    Abstract: En este documento se estudia la dinámica de la jerarquía urbana a nivel nacional y regional en Colombia utilizando evidencia empírica basada en la información censal entre 1835 y 2005. Este trabajo se enfoca en tres asuntos: 1. el análisis de la distribución del tamaño poblacional a través de las regularidades empíricas de Zipf y de Gibrat; 2. el cambio temporal en el modelo de crecimiento poblacional a nivel nacional y regional; y 3. la validación empírica del planteamiento teórico de Gabaix (1999b) sobre la coincidencia de la dinámica poblacional en un país y sus regiones. Haciendo uso de la relación rango-tamaño ajustadas (Gabaix-Ibragimov, 2011) y de técnicas no-paramétricas, se encuentra coincidencia a partir de 1964, a nivel nacional y por regiones, en el cumplimiento de la Ley de Zipf y parcialmente de la Ley de Gibrat. Estos resultados muestran un cambio en el modelo de crecimiento poblacional a partir de la segunda mitad del siglo XX. A través del uso de matrices de transición se encontró que, mientras que las ciudades grandes y pequeñas tienen una alta probabilidad de seguir con el mismo tamaño en el futuro, las ciudades medias tienen una mayor probabilidad de reducir su tamaño relativo.******ABSTRACT: By using empirical evidence based on census data for the period 1835–2005, this paper studies the dynamic pattern of urban hierarchies at both national and regional level in Colombia. In particular, this document focuses on three issues: 1. the analysis of city size distribution by means of Zipf’s law and Gibrat’s law; 2. the shifts in the population growth models at national and regional level; 3. the empirical validation of the point made by Gabaix (1999b) on the coincidence between national and regional population patterns. Using the adjusted rank-size relationship (Gabaix-Ibragimov, 2011) and non-parametric techniques, we find that city size distributions follow a Zipfian power low and that Gibrat’s law holds at national level and partially at the regional level from 1964. These results are consistent with shifts in the population growth patterns from the second half of the twentieth century at national and regional level. By using transition probability matrices it was found that, whereas small and big cities are more likely to remain so in the future, medium-sized cities have a higher probability of facing downward mobility.
    Keywords: Distribución del tamaño poblacional, Ley de Zipf, Ley de Gibrat
    JEL: J11 R10
    Date: 2013–10–08
  15. By: Bertocchi, Graziella (University of Modena and Reggio Emilia); Bozzano, Monica (University of Modena and Reggio Emilia)
    Abstract: We investigate the determinants of the education gender gap in Italy in historical perspective with a focus on the influence of family structure. We capture the latter with two indicators: residential habits (nuclear vs. complex families) and inheritance rules (partition vs. primogeniture). After controlling for economic, institutional, religious, and cultural factors, we find that over the 1861-1901 period family structure is a driver of the education gender gap, with a higher female to male enrollment rate ratio in upper primary schools being associated with nuclear residential habits and equal partition of inheritance. We also find that only the effect of inheritance rules persists over the 1971-2001 period.
    Keywords: education gender gap, Italian Unification, family types, inheritance, institutions, religion, convergence
    JEL: E02 H75 I25 J16 N33 O15
    Date: 2014–07
  16. By: Wright, Mark L. J. (Federal Reserve Bank of Chicago)
    Abstract: In this comment, we take a helicopter tour of the history of notions of “equality” and “justice” in sovereign debt restructuring in particular, and in the division of property more generally, and show that these concerns have existed for centuries, if not millennia. We argue that the issue at stake in the interpretation of the pari passu clause is not so much the treatment of holders of identical claims—it is now customary to treat them identically—but whether the holders of different claims should be treated differently. We show that exists a customary “principle of differentiation” that allows creditors with claims that differ in specific ways to be treated preferentially. One of these specific differences concerns debts that have been reduced in value during a previous debt restructuring or default, and based on this principle we conclude that the New York court has, if not completely misinterpreted the meaning of the pari passu clause, then at least misapplied it.
    Keywords: Sovereign debt restructuring; pari passu; Argentina; inter-creditor equity
    JEL: D63 F34 K12
    Date: 2014–05
  17. By: Emilie CALDEIRA (Université d'Auvergne); Grégoire ROTA-GRAZIOSI (Centre d'Etudes et de Recherches sur le Développement International)
    Abstract: Cet article propose une revue de la littérature consacrée à la décentralisation dans les pays en voie de développement. Reprenant la distinction des fonctions de l’État établie par Musgrave (allocation redistribution et stabilisation) ainsi que deux principes généraux - le principe de proximité politique et celui de compétition – nous établissons une grille de lecture de la littérature étudiée. Un bilan des études empiriques est également établi. La conclusion souligne certaines questions relatives aux travaux empiriques, qui appellent de plus amples investigations. This article offers a literature review on decentralization in developing countries. Considering the three economic functions of the State pointed out by Musgrave (stabilization, distribution and allocation) and two general principles - the proximity and the competition principles- we establish a reading grid of the literature studied. A review of empirical studies is also established. The conclusion underlines certain issues relating to empirical studies that call for further investigations.
    Keywords: Public Economics; State and Local Government; Economic Development; Institutional Arrangement.
    JEL: O17 O1 H7 H
  18. By: Marianne P. Bitler; Madeline Zavodny
    Abstract: We review the existing literature about the effects of the Medicaid program. We first describe the program’s structure and how it has changed over time. We then discuss findings on coverage, crowd out, take-up and health. Finally, we look at effects of the program on non-health outcomes such as welfare use and labor supply, marriage and fertility, and savings.
    JEL: I1 I13
    Date: 2014–05
  19. By: Patrick Blanchenay; Tracey Burns; Florian Köster
    Abstract: This case study examines the consequences of important education decentralisation reforms that took place in Sweden in the early 1990s. The sudden shift away from a traditionally centralised education system towards a decentralised one meant that municipalities had to quickly accommodate new responsibilities. Difficulties related to this shift were noticed early on and then confirmed by international surveys, in particular PISA, which revealed that student performance was deteriorating while the gap increased between and top- and bottom-performers. Key elements to this include the fact that decentralisation took place without enough support from the central authorities, municipalities (particularly smaller ones) lacked local capacity to manage their new responsibilities, and as a result the reform has resulted in a mismatch between official responsibilities and the actual powers of the various stakeholders. The central government, steering education at arm’s length, has few tools to incentivise compliance with national goals. At the municipal level, financial resources are often allocated based on tradition and local politics rather than actual needs. This is in part due to misuse of available data and of expert knowledge by decision-makers. The case study also provides a series of recommendations for improvement. L’étude de cas présentée ici examine les conséquences d’importantes réformes de décentralisation du système éducatif suédois qui ont eu lieu au début des années 1990. La transition soudaine d’un système éducatif traditionnellement centralisé vers un système décentralisé a forcé les municipalités à assumer rapidement des responsabilités nouvelles pour elles. Des difficultés ont été remarquées tôt dans la transition, et ont plus tard été confirmées par des études internationales, en particulier PISA, qui ont révélé des performances scolaires en baisse, et un élargissement du fossé entre les meilleurs et les moins bons élèves. Parmi les facteurs clé de cette évolution : la décentralisation a eu lieu sans un support adéquat de la part des autorités centrales, les municipalités (en particulier celles de petite taille) ne disposaient pas localement des capacités nécessaires pour assumer leurs nouvelles responsabilités, ce qui a abouti à un manque d’alignement entre les responsabilités officielles et les capacités effectives des différents acteurs. Le gouvernement central, dirigeant le système éducatif avec distance, a peu d’outils à sa disposition pour inciter les municipalités à atteindre les objectifs nationaux. Au niveau municipal, les ressources financières sont souvent allouées en fonction des traditions, et des débats politiques locaux, plutôt qu’en accord avec les besoins réels. Cela est en partie dû au mauvais usage par les décideurs locaux des données disponibles ainsi que des connaissances des experts. L’étude de cas suggère un ensemble de pistes d’amélioration.
    Date: 2014–07–23

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