nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2014‒12‒08
twenty papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. The doctrines and the making of an early patent system in the developing world: the Chilean case. 1840s-1910s By Bernardita Escobar
  2. Parallel currencies in historical perspective By Von dem Berge, Lukas
  3. Stealing to Survive : Crime and Income Shocks in 19th Century France By Galbiati, Roberto; Caroli, Eve; Bignon, Vincent
  4. Political Ideology and Economic Growth: Evidence from the French Democracy By François Facchini; Mickaël Melki
  5. The Biocultural Origins of Human Capital Formation By Oded Galor; Marc Klemp
  6. The Making of a Continental Financial System: Lessons for Europe from Early American History By Vitor Gaspar
  7. Piketty’s Elasticity of Substitution: A Critique By Gregor Semieniuk
  8. On the Ethnic Origins of African Development Chiefs and Pre-colonial Political Centralization By Stelios Michalopoulos; Elias Papaioannou
  9. Finance-dominated capitalism and income distribution: A Kaleckian perspective on the case of Germany By Hein, Eckhard; Detzer, Daniel
  10. "Measuring the Extent and Implications of Corporate Political Connections in Prewar Japan" By Tetsuji Okazaki; Michiru Sawada
  11. The Economics of Aesthetics and Three Centuries of Art Price Records By William Goetzmann; Elena Mamonova; Christophe Spaenjers
  12. On John Maynard Keynes’s Anti-Semitism Once Again. A documentary Note By Luca Fiorito
  13. Longevity, Age-Structure, and Optimal Schooling By Noël Bonneuil; Raouf Boucekkine
  14. " Comparing Sales Growth of the Two Major Trading Companies in Prewar Japan: Mitsubishi Corporation and Mitsui & Co." (in Japanese) By Tetsuji Okazaki
  15. Positive Long Run Capital Taxation: Chamley-Judd Revisited By Ludwig Straub; Iván Werning
  16. Early Life Environment and Racial Inequality in Education and Earnings in the United States By Kenneth Y. Chay; Jonathan Guryan; Bhashkar Mazumder
  17. Educational Attainment in the OECD, 1960-2010 By Angel de la Fuente; Rafael Doménech
  18. Legislando minas. Breve recuento de la legislación minera en Colombia (1829 – 2001) By Angelika Rettberg; Juan Felipe Ortiz-Riomalo; Sandra Yañez-Quintero
  19. Public Choice Theory had Negligible Effect on Australian Microeconomic Policy, 1970s to 2000s By Jonathan Pincus
  20. Diaspora networks in international business and transnational entrepreneurship – A literature review By Maria Elo

  1. By: Bernardita Escobar (Facultad de Economía y Empresa, Universidad Diego Portales)
    Abstract: This article analyses the creation of the first Chilean patent law (1840s-1920s), by examining the underlying doctrines and key actors (political and business people) in the making of one of the earliest patent systems in Latin America and the developing world. From three main doctrines supporting IP protection (natural rights, contractarian and utilitarian) the article identifies elements of the first, disregard for the second and some traits of the third doctrine in the law. Protection of „introductions‟, a non-contemporary IP subject matter, resulted from the mix of utilitarian and protectionist beliefs of policy makers, the influence of colonial regulation and a series of petitions for privileges made between 1830-40.
    Date: 2014–09
  2. By: Von dem Berge, Lukas
    Abstract: [Introduction ...] To make the topic accessible to a bachelor thesis, and prevent the discussion from becoming too superficial, only a few representative parallel currency systems will be considered here. The second and third chapter will begin with a discussion of parallel currencies and currency competition throughout ancient, medieval, and modern Europe. Comparing the monetary history of Ancient Greece and Rome will illustrate the virtues of competing parallel currencies. A discussion of imaginary money in medieval Europe will show that separation of the functions of money is a common feature of monetary history. The fourth chapter will look into flexible domestic exchange rates in China and Japan between the 17th and 19th century. The Chinese experience will demonstrate parallel currencies ability to discover the boundaries of optimum currency areas, while the Japanese case will show how separating the functions of money can help protect agents from the detrimental effects of debasements. In the fourth chapter, the introduction of parallel paper currencies in America, such as the continentals and greenbacks, will be considered. These issues usually failed due to a lack of trust in the issuing authorities, illustrating the difficulties of introducing a weak parallel currency. Finally, the fifth chapter will discuss the role of stable and indexed parallel currencies as tools of monetary reform during hyperinflations - namely, the rentenmark in the German hyperinflation of 1932 and the tax pengö in the Hungarian hyperinflation of 1945/46. The conclusion will discuss the differences and communalities between the historical episodes. Last but not least, some tentative conclusions regarding the relevance of historical experience for the introduction of parallel currencies in the Eurozone will be drawn.
    Date: 2014
  3. By: Galbiati, Roberto; Caroli, Eve; Bignon, Vincent
    Abstract: Using local administrative data from 1826 to 1936, we document the evolution of crime rates in 19th century France and we estimate the impact of a negative income shock on crime. Our identification strategy exploits the phylloxera crisis. Between 1863 and 1890, phylloxera destroyed about 40% of French vineyards. We use the geographical variation in the timing of this shock to identify its impact on property and violent crime rates, as well as minor offences. Our estimates suggest that the phylloxera crisis caused a substantial increase in property crime rates and a significant decrease in violent crimes.
    Keywords: Crime; income shock; phylloxera; 19th century France;
    JEL: K42 N33 R11
    Date: 2014–10
  4. By: François Facchini (Université Paris-Sud - Faculté Jean Monnet, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne); Mickaël Melki (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)
    Abstract: We provide a test of the impact of voters' political ideology on economic growth and of the role of preferences for government size as a transmission channel. We focus on France from the beginning of its stable democratic experience in 1871. A move of voters' ideology to the right increases economic growth over total observation period. However, the growth effect of ideology is mediated by voters' preferences for government size only during the post-World War II period. For reverse causality concerns, we use the political ideology of other historical democracies as an instrument variable for France's ideology.
    Keywords: Political ideology; economic growth; public spending
    Date: 2013–11
  5. By: Oded Galor; Marc Klemp
    Abstract: This research explores the biocultural origins of human capital formation. It presents the first evidence that moderate fecundity and thus predisposition towards investment in child quality was conducive for long-run reproductive success within the human species. Using an extensive genealogical record for nearly half a million individuals in Quebec from the sixteenth to the eighteenth centuries, the study explores the effect of fecundity on the number of descendants of early inhabitants in the subsequent four generations. The research exploits variation in the random component of the time interval between the date of first marriage and the first birth to establish that while higher fecundity is associated with a larger number of children, an intermediate level maximizes long-run reproductive success. Moreover, the observed hump-shaped effect of fecundity on long-run reproductive success reflects the negative effect of higher fecundity on the quality of each child. The finding further indicates that the optimal level of fecundity was below the population median, lending credence to the hypothesis that during the Malthusian epoch, the forces of natural selection favored individuals with lower fecundity and thus larger predisposition towards child quality, contributing to human capital formation, the onset of the demographic transition and the evolution of societies from an epoch of stagnation to sustained economic growth.
    JEL: J10 N30 O10
    Date: 2014–09
  6. By: Vitor Gaspar
    Abstract: Alexander Hamilton was the first U.S. Treasury Secretary from 1789 to 1795. When he started, the Federal Government was in default. During his tenure, U.S. Treasuries became the ultimate safe asset. He successfully managed expectations, achieved debt service reduction, and stabilized financial panics. He delivered sound public finances and financial stability. In the end, the U.S. possessed a modern financial system able to finance innovation and growth. At a time when Europe is working its way out of the sovereign debt crisis and implementing Banking Union and Financial Union, it is worthwhile to search for lessons from early U.S. history.
    Keywords: Financial systems;United States;Europe;Public debt;Banking crisis;Crisis management;Public financial management;Financial stability;Political economy;Crisis management, sovereign debt, financial markets, United States
    Date: 2014–10–15
  7. By: Gregor Semieniuk (Schwartz Center for Economic Policy Analysis (SCEPA))
    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, sigma, greater than one between labor and capital in an aggregate production function. I review Piketty's elasticity argument, which relies on a non-standard capital definition. In light of the theory of land rent, I discuss why the non-standard capital definition is problematic for estimating elasticities. For lack of existing results, I make a simple estimate of sigma 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 sigma greater than one.
    Keywords: rent theory, wealth definition, capitalization of land, elasticity of substitution, Piketty
    JEL: B12 E01 E25
    Date: 2014–08
  8. By: Stelios Michalopoulos; Elias Papaioannou
    Abstract: We report on recent findings of a fruitful research agenda that explores the importance of ethnic-specific traits in shaping African development. First, using recent surveys from Sub-Saharan African countries, we document that individuals identify with their ethnic group as often as with the nation pointing to the salience of ethnicity. Second, we focus on the various historical and contemporary functions of tribal leaders (chiefs) and illustrate their influence on various aspects of the economy and the polity. Third, we elaborate on a prominent dimension of ethnicity, that of the degree of complexity of pre-colonial political organization. Building on insights from the African historiography, we review recent works showing a strong association between pre-colonial centralization and contemporary comparative development both across and within countries. We also document that the strong link between pre-colonial political centralization and regional development -as captured by satellite images of light density at night- is particularly strong in areas outside the vicinity of the capitals, where due to population mixing and the salience of national institutions ethnic traits play a lesser role. Overall, our evidence is supportive to theories and narratives on the presence of a "dual" economic and institutional environment in Africa.
    JEL: O10 O40 O43 Z1 Z13
    Date: 2014–09
  9. By: Hein, Eckhard; Detzer, Daniel
    Abstract: We present an investigation into the long-run effects of financialisation on income distribution before the financial and economic crises for Germany, one of the major mercantilist export-led economies. The analysis builds on a Kaleckian approach towards the examination of the effects of financialisation on income distribution, as suggested by Hein (2014a). First, we show that Germany saw considerable re-distribution of income starting in early 1980s, which accelerated in the early 2000s, in particular. Examining the three main channels through which financialisation (and neo-liberalism) are supposed to have affected the wage or the labour income share, according to the Kaleckian approach, we provide evidence for the existence of each of these channels in Germany since the mid-1990s, when several institutional changes provided the conditions for an increasing dominance of finance.
    Keywords: Finance-dominated capitalism,distribution of income,Kaleckian distribution theory,Germany
    JEL: D31 D33 D43
    Date: 2014
  10. By: Tetsuji Okazaki (Faculty of Economics, The University of Tokyo); Michiru Sawada (College of Economics, Nihon University)
    Abstract: This paper investigates the extent, determinants, and implications of the political connections of firms at the peak of democracy in prewar Japan, identifying a firm as politically connected if one of its directors was simultaneously a member of the House of Representatives. We analyze the data of publicly traded companies in the periods before and after the 1928 and 1930 general elections. It is found that almost 20 % of publicly traded companies had political connections through politician directors. Regressions analyses reveal that smaller or badly performing firms and firms in the electric utilities and railroad industries, where government licenses were important, were more likely to have political connections. Furthermore, we find that the stock returns of firms that had new political connections improved from the pre-election period to the post-election period.
    Date: 2014–11
  11. By: William Goetzmann; Elena Mamonova; Christophe Spaenjers
    Abstract: Aggregate art price patterns mask a lot of underlying variation--both in the time series and in the cross- section. We argue that, to increase our understanding of the market for aesthetics, it is helpful to take a micro perspective on the formation of art prices, and acknowledge that each artwork gives rise to a market for trading in its private-value benefits. We discuss relevant recent literature, and illustrate the potential of this approach through a historical study of art price records between 1701 and 2014. Our newly constructed series also points to the importance of developments in the industrial organization of the art market for long-term price trends.
    JEL: D01 D44 G01 N00 Z1
    Date: 2014–08
  12. By: Luca Fiorito
    Abstract: This note presents new archival evidence about John Maynard Keynes’ attitudes toward Jews. The relevant material is composed of two letters sent by Robert G. Wertheimer to Bertrand Russell and Richard F. Kahn along with their replies. Between 1963 and 1964, Wertheimer – an Austrian-born Jewish immigrant then professor of economics at Babson College – wrote to Russell and Kahn asking for their personal reminiscences concerning Keynes’ anti-Semitic utterance. In their brief but still significant responses, both Russell and Kahn firmly denied any hint of anti-Semitism in Keynes, thereby providing significant first-hand testimonies from two of his closest acquaintances.
    Keywords: Anti-Semitism; Keynes, John M.; Kahn, Richard F.; Russell, Bertrand.
    JEL: B00 B31 Z12
    Date: 2014–06
  13. By: Noël Bonneuil (Institut national d’études démographiques, EHESS); Raouf Boucekkine (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS, senior member, Institut universitaire de France)
    Abstract: The mechanism stating that longer life implies larger investment in human capital, is premised on the view that individual decision-making governs the relationship between longevity and education. This relationship is revisited here from the perspective of optimal period school life expectancy, obtained from the utility maximization of the whole population characterized by its age structure and its age-specific fertility and mortality. Realistic life tables such as model life tables are mandatory, because the age distribution of mortality matters, notably at infant and juvenile ages. Optimal period school life expectancy varies with life expectancy and mortality. Applications to stable population models and then to French historical data from 1806 to nowadays show that the population age structure has indeed modified the relationship between longevity and optimal schooling.
    Keywords: longevity, schooling, school life expectancy, age structure
    Date: 2014–11
  14. By: Tetsuji Okazaki (Faculty of Economics, The University of Tokyo)
    Abstract: Mitsubishi Corporation (Mitsubishi Shoji), a trading company under Mitsubishi Zaibatsu, increased its sales rapidly in the 1920s and 1930s, and threatened to catch up with Mitsui & Co. (Mitsui Bussan), the largest trading company in prewar Japan. In this paper, we constructed the data that enabled us to compare the sales growth of these two companies in detail. Using the data, we decomposed the increase of Mitsubishi's share into (a) the effect within each commodity or sales area, (b) the effect between commodities or sales areas, and (c) the interaction effect. It was found that the interaction effect as well as the within effect had a substantial positive impact on Mitsubishi's share increase, which implies that Mitsubishi aggressively expanded business in the growing markets.
    Date: 2014–08
  15. By: Ludwig Straub; Iván Werning
    Abstract: According to the Chamley-Judd result, capital should not be taxed in the long run. In this paper, we overturn this conclusion, showing that it does not follow from the very models used to derive them. For the model in Judd (1985), we prove that the long run tax on capital is positive and significant, whenever the intertemporal elasticity of substitution is below one. For higher elasticities, the tax converges to zero but may do so at a slow rate, after centuries of high capital taxation. The model in Chamley (1986) imposes an upper bound on capital taxation and we prove that the tax rate may end up at this bound indefinitely. When, instead, the bounds do not bind forever, the long run tax is indeed zero; however, when preferences are recursive but non-additive across time, the zero-capital-tax limit comes accompanied by zero private wealth (zero tax base) or by zero labor taxes (first best). Finally, we explain why the equivalence of a positive capital tax with ever rising consumption taxes does not provide a firm rationale against capital taxation.
    JEL: H2 H63
    Date: 2014–08
  16. By: Kenneth Y. Chay; Jonathan Guryan; Bhashkar Mazumder
    Abstract: Chay, Guryan and Mazumder (2009) found substantial racial convergence in AFQT and NAEP scores across cohorts born in the 1960's and early 1970's that was concentrated among blacks in the South. We demonstrated a close tracking between variation in the test score convergence across states and racial convergence in measures of health and hospital access in the years immediately after birth. This study analyzes whether the across-cohort patterns in the black-white education and earnings gaps match those in early life health and test scores already established. It also addresses caveats in the earlier study, such as unobserved selection into taking the AFQT and potential discrepancies between state-of-birth and state-of-test taking. With Census data, we find: i) a significant narrowing across the same cohorts in education gaps driven primarily by a relative increase in the probability of blacks going to college; and ii) a similar convergence in relative earnings that is insensitive to adjustments for employment selection, as well as time and age effects that vary by race and state-of-residence. The variation in racial convergence across birth states matches the patterns in the earlier study. The magnitude of the earnings gains is greater than can be explained by only the black gains in education and test scores for reasonable estimates of the returns to human capital. This suggests that other pre-market, productivity factors also improved across successive cohorts of blacks born in the South between the early 1960's and early 1970's. Finally, our cohort-based hypothesis provides a cohesive explanation for the aggregate patterns in several, previously disconnected literatures.
    JEL: I12 I14 J13 J24 J31
    Date: 2014–10
  17. By: Angel de la Fuente; Rafael Doménech
    Abstract: This paper describes the construction of series of educational attainment of the adult population in a sample of 22 OECD countries covering the period 1960-2010. These series are a revised and extended version of the data set described in de la Fuente and Doménech (2002).
    Keywords: educational attainment, schooling
    JEL: I20
    Date: 2014–10
  18. By: Angelika Rettberg; Juan Felipe Ortiz-Riomalo; Sandra Yañez-Quintero
    Abstract: Este documento presenta un breve recuento de la legislación minera en el país durante su vida republicana, esto es, desde 1829, fecha en que Simón Bolívar expidió el decreto sobre minas o Ley minera, hasta 2001, cuando se expidió el Código de Minas que rige en la actualidad. El objetivo del texto consiste en describir cómo han cambiado, a lo largo del tiempo, el conjunto de reglas y los objetivos de la política minera a nivel nacional para así identificar sus rasgos centrales, principales cambios y continuidades. La descripción se estructura alrededor de los siguientes ejes temáticos: 1) propiedad del recurso minero; 2) sistemas legales o instrumentos jurídicos que regularon el proceso de su aprovechamiento; 3) relación entre minería y entorno (ambiente y comunidades); y 4) legalización y formalización. El documento hace un breve recuento de cerca de doscientos años de historia de la legislación minera y busca servir de herramienta académica de consulta general para nutrir e informar el debate actual, ubicándolo en su contexto histórico.
    Keywords: minería, legislación minera, Colombia
    JEL: N46 N56 Q39 Y20
    Date: 2014–10–01
  19. By: Jonathan Pincus (School of Economics, University of Adelaide)
    Abstract: Since The Calculus of Consent (1962), Public Choice has had little influence on the course of public policy in Australia and, in particular, virtually none on the seismic shift from a policy regime antagonistic to competition, to one that gives conditional approval. Competition, of the attenuated Arrow-Debreu type, led ineluctably to efficiency, if and only if market failures and government failures were corrected. The dismantling of tariff protection illustrates how Computable General Equilibrium modelling reflected the Arrow-Debreu program. Paradoxically, Public Choice antipathy towards interest groups helped create a vast space for public regulation by (presumptively) benevolent and disinterested public servants.
    Date: 2014–04
  20. By: Maria Elo (Turku School of Economics, University of Turku & ZenTra)
    Abstract: Many underlying developments of globalization should be investigated. Diaspora networks represent an invisible actor in international business (IB), and embody a channel and arena for transnational entrepreneurship (TE). Thus, understanding the development of contemporary diaspora networks and exploring their business potential is important. These networks impact multiple aspects of economic activity, such as investment, entrepreneurship, innovation, expansion, internationalization and creation of international businesses. Despite the multifaceted influence of diaspora networks, little empirical research on their effects has been conducted. This gap may originate in the lack of theoretical and conceptual rigor. In short, the term “diaspora network” remains to be fully discovered in international business. This paper contributes to the literature by increasing the understanding of diaspora networks by reviewing the current literature. The purpose is to enrich the conceptual and theoretical development of IB and TE by connecting them to the emerging field of diaspora entrepreneurship. The paper discusses diaspora networks, illustrates extant theories and research findings, and suggests issues for further research.
    Keywords: Diaspora networks, review, international business, international entrepreneurship
    JEL: F22
    Date: 2014–11

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