nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2014‒08‒28
seventeen papers chosen by

  1. Inherited wealth over the path of development: Sweden, 1810–2010 By Ohlsson, Henry; Roine, Jesper; Waldenström, Daniel
  2. The Role of Historical Resource Constraints in Modern Gender Inequality: A Cross-Country Analysis By Hazarika, Gautam; Jha, Chandan Kumar; Sarangi, Sudipta
  3. Resolving the Halperín Paradox: The Terms of Trade and Argentina’s Expansion in the Long Nineteenth Century By Francis, Joseph A.
  4. The Periphery’s Terms of Trade in the Nineteenth Century: A Methodological Problem Revisited By Francis, Joseph A.
  5. Who is the Narrator of the Fable of the Individuality in Political Economy: Mandeville or Smith? By Eren, Ahmet Arif; Bozkurt, Ahmet Deniz
  6. Employment Industry and Occupational Continuity in Germany: From the Nazi Regime to the Post-War Economic Miracle By Puhani, Patrick
  7. Regiões e Especialização na Economia Cafeeira: São Paulo no Início do Século XX By Renato Colistete
  8. Too Late but Profitable: Railroads in Colombia during 1920-1950 By Adolfo Meisel R.; María Teresa Ramírez G.; Juliana Jaramillo E.
  9. "Phantom of the Opera" or "Sex and the City"? Historical Amenities as Sources of Exogenous Variation By Bauer, Thomas K.; Breidenbach, Philipp; Schmidt, Christoph M.
  10. Cultural heritage protection system in Japan: current issues and prospects for the future By Emiko Kakiuchi
  11. The Genesis of Samuelson and Solow's Price-Inflation Phillips Curve By Kevin D. Hoover
  12. Lessons learned for monetary policy from the recent crisis By Michael D. Bordo
  13. Fertility Responses to Expectations of Child Mortality in a Tuscan Village 1700-1913: A Micro-Data Approach By Mette Ejrnes; Karl Gunnar Persson
  14. How Much Does Political Uncertainty Matter? The Case of Louisiana Under Huey Long By Gabriel P. Mathy; Nicholas L. Ziebarth
  15. A Brief History of Envelope Theorems in Economics: Static and Dynamic By Löfgren, Karl-Gustaf
  16. Abstract of History of Japan's Trade and Industry Policy : Abstract of Minoru Sawai, History of Japan's Trade and Industry Policy (9) Industrial Technology Policy (Japanese) By KAWAMURA Satoshi; TAKEDA Haruhito
  17. Re-Reading the New Institutional Economics in Market-State Dilemma By Akansel, İlkben

  1. By: Ohlsson, Henry (Uppsala Center for Fiscal Studies); Roine, Jesper (SITE, Stockholm School of Economics); Waldenström, Daniel (Uppsala Center for Fiscal Studies)
    Abstract: Inherited wealth has attracted much attention recently, much due to the research by Thomas Piketty (Piketty, 2011; 2014). The discussion has mainly revolved around a long-run contrast between Europe and the U.S., even though data on explicit historical inheritance flows are only really available for France and to some extent for the U.K. We study the long-run evolution of inherited wealth in Sweden over the past two hundred years. The trends in Sweden are similar to those in France and the U.K: beginning at a high level in the nineteenth century, falling sharply in the interwar era and staying low thereafter, but tending to increase in recent years. The levels, however, differ greatly. The Swedish flows were only half of those in France and the U.K. before 1900 and also much lower after 1980. The main reason for the low levels in the nineteenth century is that the capital-income ratio is much lower than in “Old Europe”. In fact, the Swedish capital-income ratio was similar to that in the U.S., but the savings and growth rates were much lower in Sweden than in the U.S. Rapid income growth following industrialization and increasing savings rates were also important fac-tors behind the development of the capital-income ratio and the inheritance flow during the twenti-eth century. The recent differences in inheritance flows have several potential explanations related to the Swedish welfare state and pension system. Sweden was “un-European” during the nineteenth century because the country was so poor, Sweden is “un-European” today because so much wealth formation has taken place within the welfare state and the occupational pension systems. JEL: D30,
    Keywords: inheritance; capital accumulation; inverse mortality multiplier *
    JEL: D30 J10 N10
    Date: 2014–06–28
  2. By: Hazarika, Gautam (University of Texas at Brownsville); Jha, Chandan Kumar (Louisiana State University); Sarangi, Sudipta (Louisiana State University)
    Abstract: We posit that historical resource scarcities played a role in the emergence of gender norms inimical to women that persist to this day. This thesis is supported by our finding that nations’ historical resource endowments, as measured by the historical availability of arable land, are statistically significantly negatively related to their present levels of gender inequality, as gauged by the United Nations Development Programme’s Gender Inequality Index.
    Keywords: scarcity, culture, history, gender
    JEL: N90 O15
    Date: 2014–08
  3. By: Francis, Joseph A.
    Abstract: Since the pioneering work of Tulio Halperín Donghi, historians have tried to explain why Argentina experienced a dramatic pastoral expansion in the first half of the nineteenth century even though there were no price incentives for increasing output. Here this ‘Halperín paradox’ is resolved by correcting the methodological error that underlies it. Halperín Donghi made the mistake of looking at the nominal prices of Argentina’s exports in Britain, whereas he should have looked at their prices in Argentina deflated by the prices of the country’s imports – that is, its terms of trade. When this methodological error is corrected, a massive term-of-trade boom can be seen from the 1780s through to the First World War. It is likely that Argentina’s terms of trade improved by at least 2,000 percent over this period, so there were considerable price incentives for the expansion on the Pampas. With the Halperín paradox resolved, future research should look less at the Pampean zone and more at the effects of the terms-of-trade boom on the relatively land-scarce regions of the Interior.
    Keywords: Argentina; nineteenth century; terms of trade; expansion.
    JEL: N96
    Date: 2014–08
  4. By: Francis, Joseph A.
    Abstract: There is a major downward bias in the trend of most existing estimates of the periphery’s nineteenth-century terms of trade. By using prices from the North Atlantic core as proxies for prices in the peripheral countries themselves, historians ignore the dramatic price convergence that took place during the nineteenth century. This has been reflected in Jeffrey Williamson’s recent work. Measured correctly, the periphery’s nineteenth-century terms-of-trade boom would appear considerably longer, greater, and more widespread than Williamson has suggested. His grand narrative about the relation between globalisation and the ‘great divergence’ would therefore be greatly reinforced. Many of the details of his narrative would, however, need to be revised. This is illustrated by the case of India.
    Keywords: terms of trade; periphery; nineteenth century; price convergence.
    JEL: C0 N10
    Date: 2014–08
  5. By: Eren, Ahmet Arif (Artvin Çoruh University, Department of Economics, Artvin, Turkey); Bozkurt, Ahmet Deniz (Gazi University, Department of Economics, Ankara, Turkey)
    Abstract: In this study, the historical roots of individuality will be examined. According to the view of economic individuality, pursuit of self-interest is the fundamental motivation for all of human beings. When we look into the eighteenth century, the main argument was whether the rise of the commercial society erosions the moral values or not. This argument was especially discussed by the philosophers of the Scottish Enlightenment. This subject was most throughly discussed by Adam Smith who finds a solution which is very important and also debatable to date. This solution actually created a problem which is called the Adam Smith problem. Smith, thanks to his approaches to this subject, became the creator of the individual of political economy. And this creates a situation in which his two important books namely Wealth of Nations and Theory of Moral Sentiments are not considered totally. In this context Theory of Moral Sentiments has been ignored and Smith’s individual is narrowed to an individual prototype which economics needs. In this study the adventure of the creation of the prototype, which has mentioned above, and the contributions of Adam Smith and Bernard Mandeville will be evaluated both with their agreements and contradictions.
    Keywords: Individuality, Scottish Enlightenment, Adam Smith Problem, Mandeville
    JEL: B11 B12 B30 B31
    Date: 2013
  6. By: Puhani, Patrick
    Abstract: Using retrospective survey data that covers 1939, 1950, 1960, and 1971, I compare individual-level changes in employment industry and occupational status in Germany from the beginning of World War II to the post-war reconstruction era dubbed the Economic Miracle (Wirtschaftswunder). This comparison reveals that, with only a few exceptions, labor allocation developments remained relatively stable even in the face of huge political and macroeconomic change.
    Keywords: Employment; Evolution; Regime Change; Revolution; Germany; Arab Spring; Iraq
    JEL: N34 J01
    Date: 2014–08
  7. By: Renato Colistete
    Abstract: This article deals with agricultural specialization in regions and farms of the state of São Paulo in the early nineteenth century, after several decades of changes caused by the coffee boom. I use data from more than forty thousand farms to examine the agrarian structure and specialization in eleven regions which cover the whole state of São Paulo at the time. The article also shows how farmers chose between export (coffee) and internal market crops. The results lend support to a part of the literature but add new evidence which diverges from established notions among historians. In the early twentieth century, all regions of São Paulo cultivated coffee, but nearly all of them specialized in more than one agricultural product, except the Mogiana region. Alongside the plantations highlighted by the literature, small farms were drawn into export production and also specialized in coffee. In turn, large properties not only specialized in food crops (apart from coffee), but dominated the supply of the main products for internal markets.
    Keywords: Coffee economy, agricultural specialization, São Paulo
    JEL: N53 O13 Q12
    Date: 2014–08–18
  8. By: Adolfo Meisel R.; María Teresa Ramírez G.; Juliana Jaramillo E.
    Abstract: During the 1920s, the Colombian economy experienced the highest rate of growth in its history. The economic reforms of 1923 (the central bank, gold standard, banking legislation, fiscal reorganization), the coffee boom, and the unprecedented influx of foreign capital were the driving forces behind this success. During that decade, the country received 25 million dollars from the United States as compensation for its role in the separation of Panama from Colombia. Those reforms and the growth in coffee exports also allowed for an enormous increase in foreign loans. The value of the loans obtained by 1929 came to 257 million dollars. Those funds were used mainly to build much needed public infrastructure, particularly railroads. Approximately 45% of the foreign loans during that period were invested in railroad construction. Additionally, 16 of the 25 million dollars received as reparation for Panama were invested in railroads. In this paper, we estimate the global rate of return and the internal rates of return on individual railroads. For those calculations, we consider that Colombia ended up paying only around 85% of the loans obtained in the 1920s’s, owing to the effects of the Great Depression and the suspension of foreign debt payments . The rates of return on the railroads constructed and extended in the 1920´s are comparable to those obtained for European countries in the nineteenth century.
    Keywords: Rate of return, investment, railroads, foreign debt, Colombia.
    Date: 2014–08–11
  9. By: Bauer, Thomas K. (RWI); Breidenbach, Philipp (RWI); Schmidt, Christoph M. (RWI)
    Abstract: Using the location of baroque opera houses as a natural experiment, Falck et al. (2011) claim to document a positive causal effect of the supply of cultural goods on today's regional distribution of talents. This paper raises serious doubts on the validity of the identification strategy underlying these estimates, though. While we are able to replicate the original results, we proceed to show that the same empirical strategy also assigns positive causal effects to the location of historical brothels and breweries. These estimated effects are similar in size and significance to those of historical opera houses. We document that all these estimates reflect the importance of institutions for long-run economic growth, and that the effect of historical amenities on the contemporary local share of high skilled workers disappears upon controlling for regions' historical importance.
    Keywords: human capital, historical amenities, regional competiveness
    JEL: R11 H42 J24
    Date: 2014–08
  10. By: Emiko Kakiuchi (National Graduate Institute for Policy Studies)
    Abstract: This paper shows how the social importance of heritage in Japan has grown, focusing on the evolution of the protection system. Heritage protection has been carried out, largely by the national government, for more than 150 years. Epochal events such as the modernization of the Meiji restoration in 1868 and the democratization at the end of World War II (WWII) in 1945 greatly affected both the designation of the heritage to be protected and the protection system. Rescue of the possessions of the declining aris-tocracy and temples was the original purpose in the late 1800s, and in the immediate pre-WWII period nationalistic motivations became more important. After WWII, heritage was treated as a national asset, but remained a relatively small part of society for a long time. However the importance of heritage val-ues has recently been increasingly recognized and protection measures diversified as Japan has matured in terms of its society and economy. Today heritage is being integrated and linked closely with commu-nity development, and its protection is being carried out not only by government but also by various stakeholders.
    Date: 2014–08
  11. By: Kevin D. Hoover
    Abstract: Samuelson and Solow in their 1960 paper in the American Economic Review: Papers and Proceedings were among the first economists to engage with Phillips’ famous unemployment/wage-inflation analysis, now referred to as the Phillips curve. They addressed the question of the relevance of Phillips’s analysis for the United Kingdom to the United States, and in process formulated the firstunemployment/price-inflation version of the Phillips curve and were the first to interpret the Phillips curve as a menu for policy. Their paper was an informal analysis presented at a conference. The current paper offers a careful reconstruction and assessment of their original formulation, documenting the close relationship between the wage-inflation and price-inflation versions of the Phillips curve. A recent paper of Hall and Hart (2012) that suggests, first, that Samuelson and Solow should have reached different conclusions about the price-Phillips curve on the basis of regression estimates of their own data and, second, that had they done so the “inflationist” course of U.S. macroeconomic policy in the 1960s and 1970s would have been different. With the reconstruction as a background, the current paper demonstrates that Hall and Hart have not grasped the key details of Samuelson and Solow’s analysis, and that they ignore the actual context of the paper, so that neither of their suggestions is likely: Samuelson and Solow would have no reason to reach any different conclusion based on Hall and Hart’s estimates, and the course of macroeconomic policy is unlikely to have been affected in any case.
    Keywords: Phillips curve, Paul A. Samuelson, Robert M. Solow, inflation, unemployment, macroeconomic policy
    JEL: B22 B23 B31 E31 E61 E63
    Date: 2014
  12. By: Michael D. Bordo
    Abstract: “Most people would say that Europe is still sort of coming out of the financial crisis that we had 5 years ago, which was probably the worst since the Great Depression of 1930s. Now just to keep things in context, at the time people were saying that it was going to be worse than the Great Depression, but it was not. It was big, but it was actually not that big compared to some of the crises, especially compared to what happened in the 1930s.” writes prof. Michael Bordo in the newly published mBank – CASE Seminar Proceedings No. 130. He discusses the lessons learned from the history of previous financial crises for the monetary policy, focusing mainly on the recent experience of the United States (and namely its Federal Reserve), where the current crisis began. He argues that the crisis of 2007-2008 was not as devastating as is commonly believed, and - more importantly – claims that the Fed’s policy during the crisis, based on lessons learn from the Great Depression, not only “did not exactly fit the facts of the recent crisis”, but may in fact have “exacerbated the crisis and may have led to serious problems which could contribute to the next (one)”.
    Keywords: Financial sector, Global/Multiregional, Crisis, credit crisis, financial crisis, banking sector, Fed
    Date: 2014
  13. By: Mette Ejrnes (Department of Economics, Copenhagen University); Karl Gunnar Persson (Department of Economics, Copenhagen University)
    Abstract: This paper exploits microdata from parish registers in a rural Tuscan village to trace the relationship between experienced and expected child mortality on household fertility strategies. It turns out that spacing of births and hence completed fertility are not only linked to economic risks and infant mortality but also to expected mortality risks as proxied by past child mortality in the village and in previous generations. The results indicate that before the demographic transition households made sequential fertility choices within marriage as a response to economic shocks as well as expected child mortality.
    Keywords: Fertility, Child mortality, Historical demography, Hazard model
    JEL: J13 N33 C41
    Date: 2014–04–24
  14. By: Gabriel P. Mathy; Nicholas L. Ziebarth
    Abstract: We study the role of political uncertainty on economic outcomes using the case of Huey Long's tenure as governor of Louisiana during the Great Depression. We construct two well-established measures of uncertainty specifically for Louisiana using primary sources: stock price volatility and newspaper mentions of uncertainty. Combining these uncertainty measures with employment data from the Census of Manufactures, we attempt to identify the effects of political uncertainty using the state of Mississippi as a control group. We find limited evidence for the significance of political uncertainty in a standard differences-in-differences framework, even when restricting our attention to border counties. Finally, we conduct an event study on the unexpected assassination of Long in September 1935, and again we find no effect on employment. We conclude that whatever political uncertainty was attributable to Huey Long mattered very little for economic outcomes.
    Date: 2014
  15. By: Löfgren, Karl-Gustaf (Department of Economics, Umeå School of Business and Economics)
    Abstract: This paper studies how envelope theorems have been used in Economics, their history and also who first introduced them. The existing literature is full of them and the reason is that most families of optimal value functions can produce them. The paper is driven by curiosity, but hopefully it will give the reader some new insights.
    Keywords: Envelope theorems; names and history; value functions and cost-benefit analyses
    JEL: B16 B21 B40
    Date: 2014–08–19
  16. By: KAWAMURA Satoshi; TAKEDA Haruhito
    Abstract: 1) The second series of the History of Japan's Trade and Industry Policy , comprising 12 books (the first volume with a general overview and the remaining 11 volumes with detailed expositions on the main policy items) were published that not only record objective facts about the drafting process of the policy at the time and the situation of the industry and the economy that required such drafting, but also analyze and evaluate policy for the period 1980 through 2000. 2) However, it is not easy for people to read all 12 books and understand the history of policy. Subsequently, we made an abstract of each book to assist in using it in policy evaluation and policy making. The 12 abstracts describe the main points of the policy clearly and collect policy evaluation, and our hope is that they are utilized as the guide for each book. 3) This PDP is abstract of Minoru Sawai, History of Japan's Trade and Industry Policy (9) Industrial Technology Policy , Keizai Sangyo Chosakai, 2011.
    Date: 2014–08
  17. By: Akansel, İlkben (Hopa Economics and Administrative Faculty, Artvin Coruh University, Artvin, Turkey)
    Abstract: After Old Institutional economics lost its dominance after the 2nd World War, it entered a new revival period; the beginning of this period was marked with Oliver Williamson’s (1975) use of “New Institutional Economics” (NIE) as a new term in his studies. New Institutional Economics analyzes institutions that influence and determine human life deeply such as government, law, markets and family, by combining different disciplines such as legal science, economics, political sciences, sociology etc. But despite these inter-disciplinary attempts, New Institutional Economics has never been a mainstream that follows Old Institutional Economics in terms of epistemology or politics. On the other hand, the only common feature between New Institutional Economics and Old Institutional Economics is the complete opposition to the established economics which is also named neo-classical economics. Besides all of these, discussions on the market mechanism and role of state have been the topics of dispute in almost all of different economics schools of thought. This is the same in New Institutional Economics. In this study, based on the basic features that distinguish New Institutional Economics from Old Institutional Economics, we will firstly attempt to discuss ideological structure of New Institutional Economics; while doing this, we will analyze which ideological logic of basic assumptions, suggested by New Institutional Economics from the procedural individualism and limited rationalism assumptions to the process of market mechanism, distinguish it from Old Institutional Economics and we will analyze the assumptions that are claimed to be close to the assumptions of established economics. In this way, we will analyze New Institutional Economics on the basis of the question of “will it be able to present a different point of view to market mechanism-state relation?” by presenting market mechanism-state relation in New Institutional Economics, which exists similarly in all school of thought. So, we will attempt to analyze if New Institutional Economics, which reflects a different thought system, can present a new perspective to the market-state dilemma. As a result, by presenting the features of general economic structure of New Institutional Economics, which is sometimes claimed to come close to neo-classical economics, existence of solutions that can shed light on current basic economic problems will be analyzed.
    Keywords: Old Institutional Economics, New Institutional Economics, Veblen, market, government, Neo-liberalism, capitalism, state
    JEL: B15 B25 B52
    Date: 2013

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