|
on Business, Economic and Financial History |
|
Issue of 2014‒09‒05
seventeen papers chosen by |
| By: | Adolfo Meisel |
| Abstract: | This paper examines the non-reversal of fortune thesis proposed by Acemoglu, Johnson, and Robinson (2002) in the light of the Colombian experience over the last 500 years. Using a total of 14 national population censuses and the record of tributary Indians in 1559, it is found that the population density of Colombian regions presented a high degree of persistence through time. Thus, the evidence indicates that those places that were prosperous circa 1500 remain so today, and viceversa. These results indicate that the long run influences of geography on regional economic disparities within a country are not negligible. |
| Keywords: | Comparative Economic History, Demographic Economics, Latin America. |
| JEL: | N16 J10 N36 |
| Date: | 2014–08–21 |
| URL: | http://d.repec.org/n?u=RePEc:col:000094:012051&r=his |
| By: | Foley-Fisher, Nathan; McLaughlin, Eoin |
| Abstract: | We study Ireland´s inheritance of debt following its secession from the United Kingdom at the beginning of the twentieth century. Exploiting structural differences in bonds guaranteed by the UK and Irish governments, we can identify perceived uncertainty about fiscal responsibility in the aftermath of the sovereign breakup. We document that Ireland´s default on intergovernmental payments was an important event. Although payments from the Irish government ceased, the UK government instructed its Treasury to continue making interest and principal repayments. As a result, the risk premium on the bonds the UK government had guaranteed fell to about zero. Our findings are consistent with persistent ambiguity about fiscal responsibility far-beyond sovereign breakup. We discuss the political and economic forces behind the Irish and UK governments´ decisions, and suggest lessons for modern-day states that are eyeing dissolution. "Further, in view of all the historical circumstances, it is not equitable that the Irish people should be obliged to pay away these moneys" - Eamon De Valera, 12 October 1932 -- |
| Keywords: | state dissolution,sovereign default,Irish land bonds,Dublin Stock Exchange |
| JEL: | N23 N24 G15 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:qucehw:1406&r=his |
| By: | Cardow, Andrew; Wilson, Willam |
| Abstract: | Abstract Purpose –This paper addresses corporate governance issues around the use of celebrity independent directors in closely held financial institutions. Design/methodology/approach – The authors employ the failure of Lombard Finance, a closely held New Zealand finance company to illustrate the agency conflict between directors, who were nominally independent, and outside debt holders. This approach is taken as New Zealand finance companies were unique in that they are predominantly closely held bank like firms who sourced the bulk of their funds from retail fixed term deposits. Findings The research highlights the conflict inherent when utilising independent celebrity directors as spokespeople for closely held finance companies in a small loosely regulated market. Originality/value This research contributes to the discussion surrounding independent celebrity directors and their influence in the collapse of closely held finance companies at a particular time in recent history. |
| Keywords: | Independent directors, finance companies New Zealand |
| JEL: | G3 G32 |
| Date: | 2014–08–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:58111&r=his |
| By: | Bögenhold, Dieter |
| Abstract: | This paper deals with methodological principles of Schumpeter’s academic writings. Those principles led Schumpeter to create diverse works and were reflected systematically in some of his writings, where Schumpeter emerged as a theorist of science. Besides working on specific topics, Schumpeter dealt systematically with methodological issues in different works. Schumpeter’s History of Economic Analysis, in particular, must be regarded as the one study among his diverse works, which is considered not only his latest but also his most relevant analysis concerning social sciences and the role of economics in relation to sociology, history and other academic branches. The substantial preface of the History of Economic Analysis can be regarded as a manual on how to refer to different academic branches and integrate them into a coherent universal social science, which is far removed from being an autistic, narrow economic science of some modern representation. Although Schumpeter’s History of Economic Analysis has been extensively printed in several editions, the idea is that the preface especially reveals somewhat neglected thoughts in Schumpeterian discourse. While Schumpeter is mostly regarded as a pioneer of evolutionary economics, this paper argues that Schumpeter could also, perhaps primarily, be interpreted as a well-reasoning institutionalist aiming at a universal social science. From today’s point of view, Schumpeter is a truly interdisciplinary theorist. |
| Keywords: | economics; sociology; Joseph A. Schumpeter; social science; history of economic thought; methodology |
| JEL: | A14 B31 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:58115&r=his |
| By: | Marc Klemp (Brown University); Oded Galor (Brown University) |
| Abstract: | This research presents the first evidence that moderate fecundity was conducive to long-run reproductive success within the human species. Exploiting an extensive genealogy record for nearly half a million individuals in Quebec during the seventeenth and eighteenth centuries, the study traces the number of descendants of early inhabitants in the subsequent four generations. Using the time interval between the date of marriage and the first live birth as a measure of reproductive capacity, the research establishes that while a higher fecundity is associated with a larger number of children, an intermediate level maximizes long-run reproductive success. The finding further indicates that the optimal level of fecundity was below the population median, suggesting that the forces of natural selection favored individuals with a lower level of fecundity. The research lends credence to the hypothesis that during the Malthusian epoch, natural selection favored individuals with a larger predisposition towards child quality, contributing to the onset of the demographic transition and the evolution of societies from an epoch of stagnation to sustained economic growth. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed014:272&r=his |
| By: | Ramana Nanda; Tom Nicholas |
| Abstract: | We find a negative relationship between bank distress and the level, quality and trajectory of firm-level innovation during the Great Depression, particularly for R&D firms operating in capital intensive industries. However, we also show that because a sufficient number of R&D intensive firms were located in counties with lower levels of bank distress, or were operating in less capital intensive industries, the negative effects were mitigated in aggregate. Although Depression era bank distress was associated with the stifling of innovation, our results also help to explain why technological development was still robust following one of the largest shocks in the history of the U.S. banking system. |
| JEL: | G21 N22 O30 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20392&r=his |
| By: | Lorino, Philippe (ESSEC Business School) |
| Abstract: | This paper studies the curious odyssey of "Lean Management"... Under this label, managerial ideas and practices have undergone, first a decisive step towards process thinking, and then a striking return to planning and variance control habits. The study of this historical shift can give us clues about obstacles to process thinking in the managerial world. The paper will first recall the key ideas originally highlighted by the pioneers of "lean management", based on the Toyota Production System (TPS), and their distinctly processual orientation. Then it will review the practices today labelled as "Lean Management" and the surprising historical reversal they reveal. Finally it will review some of the potential reasons why such a reversal took place, with a particular focus on the treatment of time and the notions of slack and wasted time. |
| Keywords: | Complexity; Lean Management; Organizational Learning; Performance; Process; Slack; Time; Wast |
| JEL: | M11 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:essewp:dr-14010&r=his |
| By: | Okoye, Dozie; Pongou, Roland |
| Abstract: | This paper shows that historical missionary activity has had a persistent effect on schooling outcomes, and contributed to a reversal of fortunes wherein historically richer ethnic groups are poorer today. Combining contemporary individual-level data with a newly constructed dataset on mission stations in Nigeria, we find that individuals whose ancestors were exposed to greater missionary activity have higher levels of schooling. This effect is robust to omitted heterogeneity, ethnicity fixed effects, and reverse causation. We find inter-generational factors and the persistence of early advantages in educational infrastructure to be key channels through which the effect has persisted. Consistent with theory, the effect of missions on current schooling is larger for population subgroups that have historically suffered disadvantages in access to education. |
| Keywords: | Missions, Africa, Education, Reversal of Fortunes, Nigeria |
| JEL: | I20 N30 N37 N47 O15 Z12 |
| Date: | 2014–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:58052&r=his |
| By: | Bordo, Michael D. (Federal Reserve Bank of Cleveland); Humpage, Owen F. (Federal Reserve Bank of Cleveland) |
| Abstract: | During the Bretton Woods era, balance-of-payments developments, gold losses, and exchange rate concerns had little influence on Federal Reserve monetary policy, even after 1958 when such issues became critical. The Federal Reserve could largely disregard international considerations because the U.S. Treasury instituted a number of stop-gap devices—the gold pool, the general agreement to borrow, capital restraints, sterilized foreign-exchange operations—to shore up the dollar and Bretton Woods. These, however, gave Federal Reserve policymakers the latitude to focus on domestic objectives and shifted responsibility for international developments to the Treasury. Removing the pressure of international considerations from Federal Reserve policy decisions made it easier for the Federal Reserve to pursue the inflationary policies of the late 1960s and 1970s that ultimately destroyed Bretton Woods. In the end, the Treasury’s stop-gap devices, which were intended to support Bretton Woods, contributed to its demise. |
| Keywords: | Bretton Woods; Federal Reserve; monetary policy; Taylor rule; U.S. Treasury |
| JEL: | F31 F33 N1 |
| Date: | 2014–08–27 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:1407&r=his |
| By: | Gregor Semieniuk (New School for Social Research, New York, NY) |
| Abstract: | This note examines Thomas Piketty’s (2014) explanation and prediction of simultaneously rising capital income ratio and profit share by an elasticity of substitution, σ, greater than one between labor and capital in an aggregate production function. Semieniuk reviews Piketty’s elasticity argument, which relies on a non-standard capital definition. In light of the theory of land rent, he discusses why the non-standard capital definition is problematic for estimating elasticities. For lack of existing results, Semieniuk makes a simple estimate of σ in the class of constant elasticity of substitution functions for Piketty’s data as well as for a subset of his capital measure that comes closer to the standard capital definition. The estimation results cast doubt on Piketty’s hypothesis of a σ greater than one. |
| Keywords: | Piketty, elasticity of substitution, capital definition, theory of rent, classical political economy, wealth |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepawp:2014-8&r=his |
| By: | Koch, Christoffer (Federal Reserve Bank of Dallas) |
| Abstract: | Shocks emanating from and propagating through the banking system have recently gained interest in the macroeconomics literature, yet they are not a feature unique to the 2008/09 financial crisis. Banking disintermediation shocks occured frequently during the Great Inflation era due to fixed deposit rate ceilings. I estimate the effect of deposit rate ceilings inscribed in Regulation Q on the transmission of federal funds rate changes to bank level credit growth using a historic bank level data set spanning half a century from 1959 to 2013 with about two million observations. Measures of the degree of bindingness of Regulation Q suggest that individual banks’ lending growth was smaller the more binding the legally fixed rate ceiling. Interaction terms with monetary policy suggest that the policy impact on bank level credit growth was non-linear at the ceiling “kink” and significantly larger when rate ceilings were in place. At the bank level, short-term interest rates exceeding the legally fixed deposit rate ceilings identify bank loan supply shifts that disappeared with deposit rate deregulation and thus weakened the credit channel of monetary transmission since the early 1980s. |
| Keywords: | Monetary Transmission; Lending Channel; Regulation Q; Deregulation; Great Moderation |
| JEL: | E51 E52 E58 G18 G21 |
| Date: | 2014–07–14 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddwp:1406&r=his |
| By: | Crafts, Nicholas (The University of Warwick) |
| Abstract: | This paper examines contrasting experiences of the United Kingdom in addressing high public debt to GDP ratios following major wars. A clear message is that interest rate/growth rate differentials were more important than primary budget surpluses for the different outcomes. The debt to GDP ratio fell very rapidly under financial repression following World War II but remained stubbornly high despite large budget surpluses with price deflation after World War I. Implications for policymakers today are that averting price deflation is a high priority and that supply-side policies that raise growth could play an important part in debt reduction. |
| Keywords: | balanced budget; debt reduction; financial repression; fiscal rule; fiscal sustainability |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:199&r=his |
| By: | Charles M. Becker; Cecilia Elena Rouse; Mingyu Chen |
| Abstract: | In the 1970s, the American Economic Association (AEA) was one of several professional associations to launch a summer program with the goal of increasing racial and ethnic diversity in its profession. In this paper we estimate the effectiveness of the AEA’s program which, to the best of our knowledge, is the first to rigorously study such a summer program. Using a comparison group consisting of those who applied to, but did not attend, the program and controlling for an array of background characteristics, we find that program participants were over 40 percentage points more likely to apply to and attend a PhD program in economics, 26 percentage points more likely to complete a PhD, and about 15 percentage points more likely to ever work in an economics-related academic job. Using our estimates, we calculate that the program may directly account for 17-21 percent of the PhDs awarded to minorities in economics over the past 20 years. |
| JEL: | I21 I24 J15 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20407&r=his |
| By: | Klaus S. Friesenbichler (WIFO); Michael Böheim (WIFO); Daphne Channa Laster |
| Abstract: | This paper provides a survey of the effects of market competition in the transition economies of Eastern Europe and Central Asia. The pivotal element of the transition was inter-firm competition, which replaced economic planning as the method to identify demand. Pro-competitive policies that facilitated the transition are discussed, including international trade, attracting foreign direct investment and firm entry. Research topics with respect to competition changed as the transition advanced. The focus shifted from churn and macroeconomic shock-management in the initial phases toward firm entry, privatisation and restructuring of incumbents. In the later phases of transition, differentials in aggregate economic performance became obvious, pointing at institutional differences and their interplay with transitions. These are equally reflected by the degree of competition of the business environment. Also the methods changed with the evolution of the research agenda. Early case studies were displaced by large-scale, cross-country econometric studies as survey data became increasingly available. |
| Keywords: | competition, transition, survey, Eastern Europe and Central Asia |
| Date: | 2014–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2014:i:477&r=his |
| By: | Covi, Giovanni |
| Abstract: | The paper aims at understanding if the First Oil Shock has produced long-term effects to the economic system and its fundamentals, if it is still indirectly affecting the energy market and the growth rates of the Western Economies and Less Developed Countries. An historical perspective here will be used as an interpretative tool in order to discern the causes of the 1973’s events and its long-term consequences on the world economy during the two decades following the First Oil Shock. The circumstances and the causes by which the shock has developed, the happenings during the conflict, and the changes in the structure of the energy market play a key role for the analysis and therefore will be deeply investigated. |
| Keywords: | First Oil Shock; Sustainable Development; Long Waves; Oil; |
| JEL: | O11 Q32 Q43 |
| Date: | 2014–08–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:58130&r=his |
| By: | Moen, Jon R. (Federal Reserve Bank of Cleveland); Tallman, Ellis W. (Federal Reserve Bank of Cleveland) |
| Abstract: | Before the Panic of 1907 the large New York City banks were able to maintain the call loan market’s liquidity during panics, but the rise in outside lending by trust companies and interior banks in the decade leading up the panic weakened the influence of the large banks. Creating a reliable source of liquidity and reserves external to the financial market like a central bank became obvious after the panic. The lack of a lender of last resort for investment banks engaged in bank-like activities during the crisis of 2007-09 revealed a similar need for an external liquidity source. |
| Keywords: | Bank panic; stock market; credit rationing; rehypothecation |
| JEL: | G01 N21 |
| Date: | 2014–08–27 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:1408&r=his |
| By: | Hernán Jaramillo; Juanita Villaveces Niño; Natalia Cantor |
| Abstract: | El presente artículo busca responder hasta qué punto pensar y participar en espacios de discusión acerca de la política de ciencia y tecnología permite resolver las tensiones propias de la interrelación de actores de la política de ciencia y tecnología, así como también legitimar la acción y decisión de la entidad llamada a diseñar la política científico-tecnológica. Con el acento puesto en las dos primeras décadas de funcionamiento de Colciencias, se concluye que la participación de los policy makers de esta entidad en las discusiones de ciencia y tecnología, así como la preocupación por pensar la ciencia y la tecnología en el entorno del modelo de desarrollo imperante en el momento, permitió una mayor consistencia y coherencia entre instrumentos y políticas y un diálogo legítimo con otras entidades y actores que por su naturaleza también implementaban políticas que afectaban a la ciencia y la tecnología. |
| Keywords: | Colciencias, política de ciencia y tecnología, principal-agente |
| JEL: | O Y |
| Date: | 2014–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:col:000092:012035&r=his |