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on Business, Economic and Financial History |
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Issue of 2014‒09‒29
twenty-one papers chosen by |
| By: | Kent Deng; Patrick O'Brien |
| Abstract: | The Great Divergence Debate, initiated by the ‘California School’ in 1998 has revitalised a meta question for global history of “when,” “how,” and “why” the economies of Western Europe, on the one hand and the Ming-Qing Empire of East Asia, the Mughal empire of South Asia and the Ottoman Dominions of West Asia and the Balkans on the other, diverged economically and geopolitically over one long cycle of Eurasian economic development. This paper is designed to return to ‘basics’ by interrogating the estimates and proxies utilized by participants in the debate by placing them in a nutritional perspective to see whether and to what extent there was a common trajectory between the Yangtze Delta and England after 1500 for (1) a sustainable intake of food and (2) to support an increasingly urbanised, commercialised and industrialised economy. Our conclusion is that although the Yangtze Delta’s average living standards may have been respectable its economy was not modernising due to the mutually reinforcing factors of a physiocratic state, a labour-intensive farming sector, and low levels of urban development. A similar pattern might be shared by the Mughal and Ottoman empires in the same historical context? |
| Keywords: | Standards of living; Great Divergence; Global History |
| JEL: | N0 R14 J01 I18 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:wpaper:59303&r=his |
| By: | Frederic Teulon |
| Abstract: | James Meade est un économiste anglais, membre du courant keynésien, il a reçu le prix Nobel en 1977 décerné par l’Académie suédoise, pour sa contribution à l'étude du fonctionnement et des mécanismes d’ajustement de la balance des paiements. Il a mené des travaux novateurs conduisant à une meilleure compréhension de la politique économique en économie ouverte. |
| Keywords: | Balance des paiements, GATT, James Meade, Politique économique, Taux de change flottants. |
| Date: | 2014–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:ipg:wpaper:2014-574&r=his |
| By: | Donal Palcic; Eoin Reeves (Department of Economics, University of Limerick) |
| Abstract: | As one of Ireland’s largest agri-business companies the Irish Sugar company played a key role in the country’s economic development in the twentieth century. The company was privatised in 1991 (under the new name Greencore) and has since transformed from a largely commodity-based agri-business into an international convenience food company. This paper analyses the financial and economic performance of the company before and after privatisation. It finds that the change from public to private ownership was not strongly associated with improved financial performance and productivity as the company had experienced rapid growth and improvement in the pre-privatisation period. These findings run counter to perspectives such as public choice theory that suggest a positive relationship between privatisation and company performance. Performance in the post-privatisation period was strongly influenced by greater exposure to market forces in the company’s expanding food division. It is surprising that greater competition did not translate into improved overall performance. |
| Keywords: | privatisation, performance, productivity, Irish Sugar, British Sugar |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:lim:wpaper:022013&r=his |
| By: | Leonor F. Costa,; M. Manuela Rocha,; Paulo Brito |
| Abstract: | In this paper, we address the partial equilibrium functioning of the shortterm credit market in the Eighteenth-century Lisbon and its response to three major events: massive gold inflows from Brazil, a catastrophic destruction of capital caused by the 1755 earthquake and the enactment of a 5% legal ceiling on interest rates 1757. We build a time series for the market interest rate, and a regression shows money stock and real estates as two significant variables. Interest rates were affected negatively by the former and positively by the latter. We conclude that changes in the money stock tended to operate through the supply of loanable funds. The wealth effect, measured by the stock of real estate, operated over demand and tended to be the most significant effect among several other possible countervailing effects (e.g., the impact of wealth effects on supply, the informational effects of collaterals). The inflow of gold clearly generated a liquidity which by itself explained the downward trend in interest rates up until around 1780. However, the huge variations experienced by the stock of capital after the earthquake also explains the steadiness of interest rates in a period when the inflow of money started to recede. For the whole period during which the 5 % ceiling on interest rates was in force we do not find any evidence to confirm the existence of disequilibrium credit rationing: the notional interest rate predicted by our model was very close to the 5% legal ceiling. |
| Keywords: | Interest rates, credit markets, Brazilian gold, Lisbon earthquake. JEL classification : N13, N23, N43 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ise:gheswp:wp522014&r=his |
| By: | George Tavlas (Bank of Greece) |
| Abstract: | This paper examines the different policy rules proposed by Henry Simons, who, beginning in the mid-1930s, advocated a price-level stabilization rule, and by Milton Friedman, who, beginning in the late-1950s, advocated a rule that targeted a constant growth rate of the money supply. Although both rules shared the objective of eliminating the policy uncertainty emanating from discretion, they differed because of the different views of Simons and Friedman about the stability of secular relationships. Simons' rule relates to modern rules which emphasize the pursuit of price stability as representing optimal monetary policy. Â Â |
| Keywords: | Milton Friedman, Henry Simons, monetary-policy rules |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:bfi:wpaper:2014-002&r=his |
| By: | Juan Carmona Pidal; Markus Lampe; Joan R. Rosés |
| Abstract: | During the decades previous to the Civil War, Spain experienced a rapid process of urbanization, which was accompanied by the demographic transition and sizeable rural-urban migrations. This article investigates how urban housing markets reacted to these far-reaching changes that increased demand for dwellings. To this end, we employ a new hedonic index of real housing prices and construct a cross-regional panel dataset of rents and housing price fundamentals. This new evidence indicates that rents were not a significant financial burden on low-income families and, hence, housing was affordable for working classes. Also, we show that families' access to new homes was facilitated by a sizable growth of housing supply. Substantial investments in urban infrastructure and the institutional framework enabled the construction of new homes at affordable prices. Our results suggest that housing problems were not pervasive during the urban transition as the literature often seems to claim. |
| Keywords: | Demand and Supply of Housing, Regulation in Housing Markets, Urban growth, Spain |
| JEL: | N93 N94 R30 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:cte:whrepe:wp14-05&r=his |
| By: | Igor Fedyukin (National Research University Higher School of Economics); Salavat Gabdrakhmanov (National Research University Higher School of Economics) |
| Abstract: | This study employs a unique database covering 2,293 cadets who graduated from the Noble Land Cadet Corps in St Petersburg from 1732 – 1762 to investigate the role of cultural capital in early modern Russia. Our analysis suggests that within this sample cultural capital was negatively correlated with wealth, but positively with father’s rank within the state service. At the corps itself, wealth and social status of families did not directly affect the success of their sons. The only significant factor of success at this school (promotion to a particular rank at graduation) was the family’s access to “Western” education and cultural skills. The results indicate the state was able to create an institutional framework where the possession of new “imported” knowledge and social skills gave the holder a measurable advantage over his peers. This could be considered one of the mechanisms which contributed to the sustainability of the cultural and social regime created by Peter I. |
| Keywords: | cultural capital, nobility, education, early modern state, Peter I, Noble Cadet Corps, Russia |
| JEL: | Z |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:59hum2014&r=his |
| By: | Yew-Kwang NG (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological Univer- sity. Address: 14 Nanyang Drive, Singapore, 637332.) |
| Abstract: | Piketty’s influential book Capital in the Twenty-First Century and its prominent review by Milanovic in the Journal of Economic Literature both assert the inevitability of an increasing share of capital in total income, given a higher rate of return to capital than the rate of growth in income. This paper shows by a specific example, a logical argument and its intuition that the alleged inevitability is not valid. Even just for capital to grow faster than income, we need an additional requirement that saving of non-capital income is larger than consumption of capital income. Even if this is satisfied, the capital share may not increase as the rate of return may fall and non-capital incomes may increase with capital accumulation. |
| Keywords: | capital; capitalism; distribution; income; wealth |
| JEL: | D3 P1 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:nan:wpaper:1410&r=his |
| By: | Enrico Spolaore |
| Abstract: | This chapter discusses the process of European institutional integration from a political-economy perspective, linking the long-standing political debate on the nature of the European project to the recent economic literature on political integration and disintegration. First, we introduce the fundamental trade-off between economies of scale associated with larger political unions and the costs from sharing public goods and policies among more heterogeneous populations, and examine the implications of the trade-off for European integration. Second, we describe the two main political theories of European integration-intergovernmentalism and functionalism- and argue that both theories capture important aspects of European integration, but that neither view provides a complete and realistic interpretation of the process. Finally, we critically discuss the successes and limitations of the actual process of European institutional integration, from its beginnings after World War II to the current crisis. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:tuf:tuftec:0778&r=his |
| By: | P. G. Ardeni |
| Abstract: | After more than half a century, the reflections of Albert O. Hirschman on development assistance, the role of consultant "experts" in providing policy advice and the "visiting economist's syndrome" are still very current. In as much as Hirschman argued against all-encompassing policy frameworks, overall development plans and universal models, "one-size-fits-all" models abstracting from the local, historical, geographic and institutional conditions have remained the prevailing modus operandi of international development agencies and governments in development assistance. In spite of Paul Krugman's criticism of Hirschman's lack of a mathematically-consistent approach in favor of an ad hoc pragmatism, Hirschman's avoidance of assuming a toy model to deal with practical issues and the specificities of development problems in different countries – while still using rigorous and detailed analysis– appears to be a promising attitude of enormous relevance even today. If the rejection of large-scale models of the hey days of development theory was due to the neoliberal policy wave that led to the "Washington consensus" – more market and less State –, development assistance has remained firmly entrenched in the principles of balanced growth, all-encompassing liberalizing policy reforms and diffused marketization with an increasingly limited role for the State. Development assistance approaches have maintained a standard list of prescriptions, policy-reform recipes for all sectors, social, institutional and even political objectives, under the justification that "everything depends on everything". In this paper, I briefly review the evidence regarding the active pursuit of a paradigm that, sidelining Hirschman's unorthodox approach, has confirmed that we have "forgotten nothing and learned nothing", as Hirschman once said. While Hirschmanian concepts like "linkages" and "leading sectors" and some of his famous parables – like the "tunnel effect" on inequality – have left an enduring mark on economists' perspectives, his "unbalanced-growth" has been dismissed on ineffectual grounds, while his "empirical lantern" has been derided and abandoned. The lessons of Hirschman's consultant experience in the tropics have left a legacy that goes beyond his prescriptions: it is a philosophy, a conception of the world, a guiding sets of principles that survives time. From that wilderness where Hirschman led his followers, it is only by re-igniting that lantern that we can wisely contribute to the "development" of others as savvy and informed "experts". |
| JEL: | B2 B3 O2 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp964&r=his |
| By: | Oscar Bajo-Rubio (Universidad de Castilla-La Mancha); Carmen Díaz-Roldán (Universidad de Castilla-La Mancha); Vicente Esteve (Universidad de Valencia, Universidad de La Laguna and Universidad de Alcalá) |
| Abstract: | In this paper, we provide a test of the sustainability of the Spanish government deficit over the period 1850-2000, emphasizing the role played by monetary and fiscaldominance in order to get fiscal solvency. Since the condition of fiscal solvency was satisfied, government deficit would have been sustainable along the sample period. In addition, the whole period can be characterized as one of fiscal dominance. |
| Keywords: | Fiscal policy, Sustainability, Fiscal Theory of the Price Level, Monetary dominance, Fiscal dominance. |
| JEL: | E62 H62 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:eec:wpaper:1408&r=his |
| By: | Eng, Pierre van der |
| Abstract: | Indonesia has long been a major producer of minerals for international markets. Starting in 2014, it implemented legislation banning exports of unprocessed minerals and requiring producers to invest in processing facilities to add more value before export. This paper establishes what light past experiences in Indonesia with mining sheds on this recent development. It quantifies and discusses the growth of mining production in Indonesia since 1870. It analyses the institutional arrangements that past governments used to maximise resource rents and domestic value adding. The paper finds that production and exports of mining commodities were long dominated by oil, but increased and diversified over time, particularly since the 1960s. The development of the mining sector depended on changes in market prices, mining technologies and the cost of production, but particularly on the institutional arrangements that guided the decisions of foreign investors to commit to mining production and processing in Indonesia. |
| Keywords: | natural resources, mining sector, Indonesia, resource rents |
| JEL: | L71 L72 L78 N55 O13 Q32 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hitcei:2014-5&r=his |
| By: | Greasley, David; Hanley, Nick; McLaughlin, Eoin; Oxley, Les |
| Abstract: | Modern macroeconomic theory utilises optimal control techniques to model the maximisation of individual well-being using a lifetime utility function. Agents face choices over current and future consumption (with resultant implied savings decisions) seeking to maximise the present value of current plus future well-being. However, such inter-temporal welfare-maximising assumptions remain empirically untested. In the work presented here we test whether welfare was in (historical) fact maximised in the US between 1870-2000 and find empirical support for the optimising basis of growth theory, but only once a comprehensive view of what constitutes a country's wealth or capital is taken into account. |
| Keywords: | comprehensive wealth; US; modern growth theory; inter-temporal utility maximisation |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:stl:stledp:2014-08&r=his |
| By: | Ramcharan, Rodney (Board of Governors of the Federal Reserve System (U.S.)); Rajan, Raghuram G. (Reserve Bank of India) |
| Abstract: | Theory suggests the reduction in financing capacity after the failure of a financial intermediary can reduce the value of financial assets. Forced sales of the intermediary's assets could consume liquidity, depressing the liquidation value of the assets of healthy intermediaries and causing contagious runs. These financial fire sales can both cause, and exacerbate, real fire sales, the focus of previous studies. This paper investigates the relevance of financial fire sales using new datasets covering bank failures during the farm depression in the United States just before the Great Depression, as well as bank failures during the Great Depression. Using differences in regulation as a means of identification, we find that the reduction in local financing capacity as a result of bank failures reduces the recovery rates on failed assets of nearby banks, depresses local land prices, renders land markets illiquid, and is associated with subsequent distress in nearby banks. All this indicates a rationale for why bank failures are contagious. |
| Keywords: | Bank failures; liquidity; fire sales |
| Date: | 2014–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2014-67&r=his |
| By: | Trew, Alex |
| Abstract: | Using the framework of Desmet and Rossi-Hansberg (forthcoming), we present a model of spatial takeoff that is calibrated using spatially-disaggregated occupational data for England in c.1710. The model predicts changes in the spatial distribution of agricultural and manufacturing employment which match data for c.1817 and 1861. The model also matches a number of aggregate changes that characterise the first industrial revolution. Using counterfactual geographical distributions, we show that the initial concentration of productivity can matter for whether and when an industrial takeoff occurs. Subsidies to innovation in either sector can bring forward the date of takeoff while subsidies to the use of land by manufacturing firms can significantly delay a takeoff because it decreases spatial concentration of activity. |
| Keywords: | Endogenous growth, first industrial revolution, economic geography, structural change, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:edn:sirdps:543&r=his |
| By: | Thomas Barnay |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:tep:teppwp:wp14-08&r=his |
| By: | Tallman, Ellis W. (Federal Reserve Bank of Cleveland); Moen, Jon R. (Federal Reserve Bank of Cleveland) |
| Abstract: | Using an extensive high-frequency data set, we investigate the transmission of financial crisis specifically focusing on the Panic of 1907, the final severe panic of the National Banking Era (1863-1913). We trace the transmission of the crisis from New York City trust companies to the New York City national banks through direct and indirect interconnections. Trust companies held cash balances at national banks, and these balances were liquidated as trust companies suffered depositor runs. Secondly, trust companies and national banks were notable creditors to the New York Stock Exchange; when trusts were suffering runs, the call loan market on the stock exchange seized. The crisis spread to the interior banks after the New York Clearing House banks restricted the convertibility of deposits into cash. Bond returns were sharply negative in the two weeks following the suspension. We highlight commonalities between the Panic of 1907 and the fi nancial crisis of 2007-2009. |
| Keywords: | Banking panic; asset price; asset volatility; correlation risk; correspondent banking |
| JEL: | E44 G01 N11 N21 |
| Date: | 2014–09–03 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:1409&r=his |
| By: | Gerald Steele |
| Abstract: | Tautological structures bring clarity to arguments in macroeconomics: familiar structures relate to the circulation of money, the circular flow of real income, and the balance of international payments. Less familiar is a structure incorporating all aspects of macroeconomic policy interventions. The origins and use of the credit counterparts of broad money are examined in the context of the application of UK monetary policy in the period since 1945. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:64401562&r=his |
| By: | K.Vela Velupillai |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpas:1407&r=his |
| By: | Figura, Andrew (Board of Governors of the Federal Reserve System (U.S.)); Barnichon, Regis (CEPR) |
| Abstract: | This paper presents estimates of the effect of emergency and extended unemployment benefits (EEB) on the unemployment rate and the labor force participation rate using a data set containing information on individuals likely eligible and ineligible for EEB back to the late 1970s. To identify these estimates, we examine how exit rates from unemployment change across different points of the distribution of unemployment duration when EEB is and is not available, controlling for changes in labor demand and demographic characteristics. We find that EEB increased the unemployment rate by about one-third percentage point in the most recent recession but did not affect the participation rate. In previous recessions, the effect of EEB on the unemployment rate was even smaller. |
| Keywords: | Unemployment benefits extensions; unemployment rate; labor force participation rate |
| Date: | 2014–08–13 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2014-65&r=his |
| By: | Tirtha Chatterjee (Indira Gandhi Institute of Development Research) |
| Abstract: | Inter-state diversity has been a perennial feature of Indian agriculture. The study probes if per capita income in Indian agriculture has converged across states in the last four and a half decades. It finds strong evidence in favour of beta convergence but not in favour of sigma convergence. Spatial econometric techniques used in the study aid in identifying the impact of spatial neighbours on the growth of a state. Results indicate significant spatial dependence among states. The study also identifies the drivers of growth agriculture in the last four and a half decades and results indicate that infrastructure like roads, irrigation, electricity aid in growth and so do quality of human capital. Hence, investments targeting higher quality of infrastructure, both physical and human and efficient water management will aid in agricultural growth in India. |
| Keywords: | Agriculture, growth, regional convergence, spatial dependence |
| JEL: | O13 O18 R12 R15 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:ind:igiwpp:2014-035&r=his |