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on Business, Economic and Financial History |
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Issue of 2014‒11‒28
seventeen papers chosen by |
| By: | Hardach, Gerd |
| Abstract: | The First World War was not only a military conflict, but also an economic war. In all belligerent countries labour and material resources were shifted from civilian production to war-related purposes, and a central planning system was established to organise production and distribution. In this context, financial mobilisation played an important role. In Germany, preparations for financial mobilisation began at the end of the nineteenth century. Since 1891 fiscal and monetary policies were designed for the eventuality of a war and became, with few modifications, the basis for the financial mobilisation implemented in August 1914. In accordance with the strategic planning of the time, fiscal and monetary policies were prepared for a short war. However, the fiscal and monetary instruments remained essentially unchanged when the conflict turned at the end of September 1914 into a long, grim war of attrition. The accumulated government debt and the suppressed inflation left a heavy burden to the post-war world. From March 1918 onwards plans for fiscal and monetary stabilization following the war were discussed, but they remained inconclusive. After the armistice of 11 November 1918 they were soon forgotten as the republican governments embarked on an inflationary reconstruction policy. |
| Keywords: | First World War,public finance,inflation |
| JEL: | N14 N24 N44 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:eabhps:1408&r=his |
| By: | Oded Galor; Ömer Özak |
| 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 natural land productivity and their impact on the return to agricultural investment have had a persistent effect on the distribution of long-term orientation across societies. In particular, exploiting a natural experiment associated with the expansion of suitable crops for cultivation in the course of 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. |
| JEL: | O1 O4 Z1 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20438&r=his |
| By: | Douglas L. Campbell (New Economic School (NES)); Ju Hyun Pyun (Korea University Business School) |
| Abstract: | Why are some societies still poor? Recent research suggests that a country’s “genetic distance”—a measure of the time elapsed since two populations had common ancestry—from the United States is a significant predictor of development even after controlling for an ostensibly exhaustive list of geographic, historical, religious and linguistic variables. We find, by contrast, that the correlation of genetic distance from the US and GDP per capita disappears with the addition of controls for geography, including distance from the equator and a dummy for sub-Saharan Africa. |
| Keywords: | Genetic Distance, Economic Development, Geography, Climatic Similarity, Technological Diffusion |
| JEL: | O10 O33 O49 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0211&r=his |
| By: | James Forder |
| Abstract: | Friedman (1968) - his famous Presidential Address to the American Economic Association - contains an elementary error right at the heart of what is usually supposed to be the paper's crucial argument. That is the argument to the effect that during an inflation, changing expectations shift in Phillips curve. It is suggested that the fact of this mistake, and of its having gone all-but unnoticed are points of historical interest. Further reflections, drawing on the arguments of Forder (2014) Macroeconomics and the Phillips curve myth, are suggested. |
| Keywords: | Phillips, Friedman, Expectations |
| JEL: | B22 E31 |
| Date: | 2014–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:723&r=his |
| By: | Serguey Braguinsky (Department of Social and Decision Sciences, Carnegie Mellon University); Atsushi Ohyama (Graduate School of Economics and Business, Hokkaido University); Tetsuji Okazaki (Faculty of Economics, The University of Tokyo); Chad Syverson (University of Chicago Booth School of Business and NBER) |
| Abstract: | We explore how changes in ownership and managerial control affect the productivity and profitability of producers. Using detailed operational, financial, management, and ownership data from the Japanese cotton spinning industry at the turn of the last century, we find a more nuanced picture than the straightforward "higher productivity buys lower productivity" story commonly appealed to in the literature. Acquired firms' production facilities were <i>not</i> on average any less physically productive than the plants of the acquiring firms before acquisition, conditional on operating. They were much less <i>profitable</i>, however, due to consistently higher inventory levels and lower capacity utilization—differences which reflected problems in managing the inherent uncertainties of demand in the industry. When these less profitable plants were purchased by more profitable establishments, the acquired plants saw drops in inventories and gains in capacity utilization that raised both their productivity and profitability levels, consistent with acquiring owner/managers spreading their better demand management abilities across the acquired capital. |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2014cf945&r=his |
| By: | S. M. Ali Abbas; Laura Blattner; Mark De Broeck; Asmaa El-Ganainy; Malin Hu |
| Abstract: | We examine how the composition of public debt, broken down by currency, maturity, holder profile and marketability, has responded to major debt accumulation and consolidation episodes during 1900-2011. Covering thirteen advanced economies, we focus on debt structure shifts that occurred around the two World Wars and global economic downturns, and the subsequent debt consolidations. Notwithstanding data gaps, we are able to recover some broad common patterns. Episodes of large debt accumulation—essentially, large increases in debt supply— were typically absorbed by increases in short-term, foreign currency-denominated, and banking-system-held debt. However, this pattern did not hold during the debt build-ups starting in the 1980s and 1990s, which were compositionally skewed toward long-term local-currency debt. We attribute this change to higher structural demand for sovereign paper, linked to capital account liberalization in advanced economies, the emergence of a large contractual saving sector, and innovative sovereign debt products. With regard to debt consolidations, we find support for the financial repression-cum-inflation channel for post World War II debt reductions. However, the scope for a repeat of this strategy appears limited unless financial liberalization and globalization were materially rolled back or the current globally agreed monetary policy regime built around price stability abandoned. Neither are significant favorable structural demand shifts, as witnessed in the 1980s and 1990s, likely. |
| Keywords: | Sovereign debt;Debt rescheduling;Debt reduction;Public debt management;Developed countries;sovereign debt composition, sovereign debt management, historical debt database |
| Date: | 2014–09–09 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:14/162&r=his |
| By: | Maxime Demarais-Tremblay (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, Centre Walras Pareto - Université de Lausanne) |
| Abstract: | This paper provides an explanation of the emergence of the standars textbook definition of public goods in the middle of the 20th century. It focuses on Richard Musgrave's contribution in defining public goods as non-rival and non-excludable - from 1939 to 1969. Although Samuelson's mathematical definition is generally used in models of public goods, the qualitative understanding of the specificity of pure public goods owes more to Musgrave's emphasis on the impossibility of exclusion. This paper also highlights the importance of the size of the group to which benefits of a public good accrue. This analysis allow for a reassessment of the Summary table of goods which first appeared in Musgrave and Musgrave (1973) textbook. |
| Keywords: | Richard A. Musgrave; social goods; public goods; non-rivalry; non-exclusion |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00951577&r=his |
| By: | Guido de Blasio (Bank of Italy); Samuele Poy (FBK-IRVAPP) |
| Abstract: | This paper measures the impact of wage zones - minimum wage differentials at the province level - on Italy's local labor markets during the 1950s. Using a spatial regression discontinuity design, it finds that for the industrial sectors covered under wage zones there was an increase in employment when one crossed the border from a high-wage province into a low-wage one; the effect diminished, however, as the distance from the boundary increased. The paper also illustrates that the impact on the overall (non-farm) private sector, which includes both covered and uncovered sectors, was basically zero. On balance, the scheme generated some reallocation of economic activity, albeit confined to areas close to the province border. |
| Keywords: | Minimum wages, Regional economic activity, Regression discontinuity |
| JEL: | C14 J38 R11 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:fbk:wpaper:2014-02&r=his |
| By: | Vicki Been; Ingrid Gould Ellen; Michael Gedal; Edward Glaeser; Brian J. McCabe |
| Abstract: | Since Brooklyn Heights was designated as New York City's first landmarked neighborhood in 1965, the Landmarks Preservation Commission has designated 120 historic neighborhoods in the city. This paper develops a theory of heterogeneous impacts across neighborhoods and exploits variation in the timing of historic district designations in New York City to identify the effects of preservation policies on residential property markets. We combine an extensive dataset of residential transactions during the 35-year period between 1974 and 2009 with data from the Landmarks Preservation Commission on the location of the city's historic districts and the timing of the designations. Designation raises property values within historic districts, but only outside of Manhattan. In areas where the value of the option to build unrestricted is higher, designation has a less positive effect on property values within the district. Consistent with theory, properties just outside the boundaries of districts increase in value after designation. There is also a modest reduction in new construction in districts after designation. |
| JEL: | A0 R0 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20446&r=his |
| By: | Richard Hornbeck; Daniel Keniston |
| Abstract: | Historical city growth, in the United States and worldwide, has required remarkable transformation of outdated durable buildings. Private land-use decisions may generate inefficiencies, however, due to externalities and various rigidities. This paper analyzes new plot-level data in the aftermath of the Great Boston Fire of 1872, estimating substantial economic gains from the created opportunity for widespread reconstruction. An important mechanism appears to be positive externalities from neighbors' reconstruction. Strikingly, gains from this opportunity for urban redevelopment were sufficiently large that increases in land values were comparable to the previous value of all buildings burned. |
| JEL: | H23 K11 N31 N91 O18 R3 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20467&r=his |
| By: | Yoshihara, Naoki (The Institute of Economic Research, Hitotsubashi University); |
| Abstract: | This report explores the development of exploitation theory in mathematical Marxian economics by reviewing the main controversies surrounding the definition of exploitation since the contribution of Okishio (1963). The report first examines the robustness and economic implications of the debates on the Fundamental Marxian Theorem, developed mainly in the 1970s and 1980s, followed by the property relation theory of exploitation by Roemer (1982). Then, the more recent exploitation theory proposed by Vrousalis (2013) and Wright (2000) is introduced, before examining its economic implications using a simple economic model. Finally, the report introduces and comments on recent axiomatic studies of exploitation by focusing on the work of Veneziani and Yoshihara (2013a). |
| Keywords: | Fundamental Marxian Theorem; Property Relations Definition of Exploitation; Profit-Exploitation Correspondence Principle. |
| JEL: | D63 D51 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2014-12&r=his |
| By: | Douglas A. Irwin |
| Abstract: | In the Wealth of Nations, Adam Smith argues that a country's national income depends on its labor productivity, which in turn hinges on the division of labor. But why are some countries able to take advantage of the division of labor and become rich, while others fail to do so and remain poor? Smith's answer, in an important but neglected theme of his work, is the security of property rights that enable individuals to "secure the fruits of their own labor" and allow the division of labor to occur. Countries that can establish a "tolerable administration of justice" to secure property rights and allow investment and exchange to take place will see economic progress take place. Smith's emphasis on a country's "institutions" in determining its relative income has been supported by recent empirical work on economic development. |
| JEL: | B12 B25 B31 K2 O43 P14 P16 P48 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20636&r=his |
| By: | Dobis, Elizabeth A.; Delgado, Michael S.; Florax, Raymond |
| Abstract: | Previous work on the growth and location of communities has analyzed only one aspect of community growth at a time, either the location, growth, or birth of settlements. We use these three descriptive aspects of settlements to create a story that addresses when communities were created, where communities are located, and how communities grow in the United States. We study the spatial and temporal development of settlements in the United States by utilizing regression techniques to model the relationship between environmental features and settlement age, geographical location, and size. The poster illustrates the evolution of rural land to communities and how the structure of the American urban system has developed over the last two centuries. |
| Keywords: | urban growth, city size, incorporated places, city location, Community/Rural/Urban Development, R120, O180, N910, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea14:170627&r=his |
| By: | Sean Kimpton (Department of Economics, Faculty of Business and Law, Auckland University of Technology) |
| Abstract: | The Global Financial Crises has motivated some to rethink the dominance of global capitalism. This has revived an interest in Marxist doctrine and in particular its examination of the notion of exploitation. Marx’s theory of value is central to his examination of exploitation. This paper will show that both these posits of Marx are in error. Further, it will show that Marx draws heavily on Smith’s idea of the primacy of wages. However, this paper will demonstrate that profit, and not wages, are the original source of income. This paper reaffirms the importance of profits and the ability of entrepreneurs and capitalists to pursue them. |
| Keywords: | Adam Smith; Karl Marx; Profit; Exploitation; Labour Theory of Value; Classical Economics |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:aut:wpaper:201407&r=his |
| By: | Lance Taylor (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Thomas Piketty attributes increasing wealth inequality to the characteristics of a neoclassical aggregate production function, which is known not to exist. A more plausible narrative is that wage repression can lead to secular stagnation by enriching the rentier. Lower economic activity decreases labor’s bargaining power so that the share of profits in output (pi) tends to rise. Activity (or the output/capital ratio u) is stimulated by increased investment due to a higher pi. Wealth distribution is measured à la Luigi Pasinetti by the ratio Z of capital owned by a capitalist rentier class to the total. Suppose that Z goes up. Rentiers have a high saving rate implying that in a demand driven Keynesian economy u goes down. With the reduction in u the profit share increases, pushing up the growth rate of Z. Depending on economic structure (in particular, differences in saving rates between the classes), this positive feedback may or may not destabilize the system. If stability reigns, there will be a persistent steady state level of Z. If not, there may be euthanasia or triumph of the rentier. In the long run Z is reduced and increased by a downward shift in pi, i.e. less wage repression improves economic performance overall. |
| Keywords: | demand-driven growth, functional income distribution, steady state wealth distribution, Pasinetti, Piketty |
| JEL: | E12 E21 E25 B22 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepawp:2014-7&r=his |
| By: | Hyejin Cho (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne) |
| Abstract: | This article presents a methodology designed to facilitate alternative variables measuring economic growth. A capital-labor split of Cobb-Douglas function is adapted for use in the context of economic growth. A capital/income ratio and two fundamental law of capitalism originated by Thomas Piketty illustrate capital inequality undervalued than labor inequality. In addition, the article includes export and external debt as strong alternatives. Empirical data of the World Bank are analyzed to demonstrate broad differences in economic sizes. The case analysis on Latin America as an example of different sized economy is also discussed. |
| Keywords: | Capital-labor split, factors of production, capital/income ratio, Thomas Piketty, Capitalism, Economic size, Debt sustainability, Latin America, Import substitution industrialization (ISI) model, Insolvent external debt, Openness, External debt to exports ratio |
| Date: | 2014–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01009465&r=his |
| By: | Ho, Mun (Resources for the Future); Wang, Zhongmin (Resources for the Future) |
| Abstract: | This paper has two purposes. The first is to review the emerging literature on green growth, with a focus on the origin and meaning of the concept, as well as the justifications for and criticisms of the concept. The general idea of taking into account the impact of economic growth policies on the environment is not very controversial, but the possibility of simultaneously achieving conventional GDP growth and environmental protection is debated. The second purpose is to consider how China might move on to a green growth path. We summarize a sizable literature that traces China’s rapid economic growth and the associated environmental problems to its unique and fundamental institutions, and discuss the implications of this on how China might grow more sustainably. |
| Keywords: | green growth, economic development, environmental protection, China |
| Date: | 2014–08–07 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-14-22&r=his |