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on Business, Economic and Financial History |
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Issue of 2014‒12‒29
43 papers chosen by |
| By: | Baten, Jörg; Sohn, Kitae |
| Abstract: | This paper first draws on a unique data set, hojok (household registers), to estimate numeracy levels in Korea from the period 1550–1630. We add evidence from Japan and China from the early modern period until 1800 to obtain a human capital estimate for East Asia. We find that numeracy was high by global standards, even considering the potential sources of upward bias inherent in the data. Therefore, the unusually high level of numeracy in East Asia in the early 21st century was already present in the early modern period. However, East Asia had low national income levels during the 19th and early 20th centuries. We assess this phenomenon in the last section and find that “Impoverished Numerates”, i.e., countries that were poor despite high early numerical human capital formation, had substantially higher growth rates during the late 20th and early 21st centuries. |
| Keywords: | China; Development; Growth; Human-Capital; Japan; Korea; Numeracy |
| JEL: | I21 N30 N35 O15 O40 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9991&r=his |
| By: | Esther Sahle |
| Abstract: | During the late seventeenth century the Atlantic trade experienced unprecedented growth. The New Institutional Economists attribute this to the emergence of new institutions for property rights enforcement. During this period, Quakers emerged as the region’s most prominent trading community. This paper constitutes the first study of the London Quaker community. In contrast to the literature, claiming that they enjoyed a competitive advantage due to their church’s formal institutions for contract enforcement, this paper argues that Friends’ formal institutions for contract enforcement emerged only after 1750. This constituted a response to contemporary concern about debt. |
| Keywords: | institutions; Quakers; early modern trade; merchants; religion; Atlantic |
| JEL: | Z12 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:wpaper:60452&r=his |
| By: | Bonfatti, Roberto; O'Rourke, Kevin Hjortshøj |
| Abstract: | Existing theories of pre-emptive war typically predict that the leading country may choose to launch a war on a follower who is catching up, since the follower cannot credibly commit to not use their increased power in the future. But it was Japan who launched a war against the West in 1941, not the West that pre-emptively attacked Japan. Similarly, many have argued that trade makes war less likely, yet World War I erupted at a time of unprecedented globalization. This paper develops a theoretical model of the relationship between trade and war which can help to explain both these observations. Dependence on strategic imports can lead follower nations to launch pre-emptive wars when they are potentially subject to blockade. |
| Keywords: | blockade; history; trade; war |
| JEL: | F51 F52 N70 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10073&r=his |
| By: | Pauline Grosjean (School of Economics, Australian School of Business, the University of New South Wales); Rose Khattar (School of Economics, Australian School of Business, the University of New South Wales) |
| Abstract: | We document the implications of missing women in the short and long run. We exploit a natural historical experiment, which sent large numbers of male convicts and far fewer female convicts to Australia in the 18th and 19th century. In areas with higher sex ratios, women historically married more, worked less, and were less likely to occupy high-rank occupations. Today, people have more conservative attitudes towards women working, women are still less likely to have high-ranking occupations, and they earn lower wages. We document the role of vertical cultural transmission and of marriage homogamy in sustaining cultural persistence. Our results are robust to controlling for a wide array of geographic and historical controls, which determined spatial variation in the sex ratio, as well as present-day controls and to instrumenting the overall sex ratio by the sex ratio among convicts. |
| Keywords: | Culture, gender roles, sex ratio, natural experiment, Australia |
| JEL: | I31 N37 J16 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2014-29a&r=his |
| By: | Felix Butschek (WIFO) |
| Abstract: | The European economy was of central importance for the worldwide economic development. In pre-industrial times all cultures were agrarian with few cities and similar income. This situation changed fundamentally with the industrialisation of Europe, which caused great income differences. This process started already in antiquity in Greece with a new type of man, acting in democratic structures and continued with the Roman rule of law and the autonomous medieval cities. With Humanism, Renaissance and finally Enlightenment there arose the scientific revolution which engendered technical progress. Given these preconditions Industrial Revolution started about 1800 and increased Europe's economic and technical capacity which caused its dramatic political predominance. In 1900 nearly 70 percent of world GDP was provided by Europe and its overseas offshoots. In spite of two world wars this situation did not change fundamentally, only the share of the offshoots rose dramatically. Beginning with the 1960s the secular process of catching-up set in. Most extra-European cultures started also industrialisation and increased their income. This development is supposed to continue and to reduce regional income differences. As a consequence the share of Europe in world GDP is expected to fall in future. But there remains the fact that the process of industrialisation was created by Europe. |
| Keywords: | Economic history, economic development, European economy, economic growth |
| Date: | 2014–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2014:i:484&r=his |
| By: | Estrada, Fernando |
| Abstract: | This review of the book by Thomas Piketty, The capital in the XXI century, presents the central themes of the work and exposes its scope on the relationship between inequality and wealth. In particular a positive reflections on the progressive tax is added. |
| Keywords: | Piketty, Capital, Distribution, Wealth, Fairness |
| JEL: | B1 B13 B15 B16 B22 B23 B24 B25 B41 B52 C21 C22 C82 E62 E64 H23 H26 N1 O1 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:60682&r=his |
| By: | Michalopoulos, Stelios; Papaioannou, Elias |
| Abstract: | We examine the link between pre-colonial statehood and contemporary regional African development, as reflected in satellite images on light density at night. We employ a variety of historical maps to capture the former. Our within-country analysis reveals a strong positive correlation between pre-colonial political centralization and contemporary development (and urbanization). If anything, the association strengthens when we account for measurement error on the historical maps of pre-colonial political organization. |
| Keywords: | Africa; development; ethnicity; institutions; state capacity |
| JEL: | O10 O40 O43 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10258&r=his |
| By: | Voigtländer, Nico; Voth, Hans-Joachim |
| Abstract: | Can infrastructure investment win “hearts and minds”? We analyze a famous case in the early stages of dictatorship – the building of the motorway network in Nazi Germany. The Autobahn was one of the most important projects of the Hitler government. It was intended to reduce unemployment, and was widely used for propaganda purposes. We examine its role in increasing support for the NS regime by analyzing new data on motorway construction and the 1934 plebiscite, which gave Hitler great powers as head of state. Our results suggest that road building was highly effective, reducing opposition to the nascent Nazi regime. |
| Keywords: | establishment of dictatorships; infrastructure spending; Nazi regime; political economy; pork-barrel politics |
| JEL: | H54 N44 N94 P16 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9983&r=his |
| By: | Jordà, Òscar; Schularick, Moritz; Taylor, Alan M. |
| Abstract: | This paper unveils a new resource for macroeconomic research: a long-run dataset covering disaggregated bank credit for 17 advanced economies since 1870. The new data show that the share of mortgages on banks’ balance sheets doubled in the course of the 20th century, driven by a sharp rise of mortgage lending to households. Household debt to asset ratios have risen substantially in many countries. Financial stability risks have been increasingly linked to real estate lending booms which are typically followed by deeper recessions and slower recoveries. Housing finance has come to play a central role in the modern macroeconomy. |
| Keywords: | business cycles; financial crises; leverage; local projections; mortgage lending; recessions |
| JEL: | C14 C38 C52 E32 E37 E44 E51 G01 G21 N10 N20 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10161&r=his |
| By: | Bertocchi, Graziella; Bozzano, Monica |
| Abstract: | We investigate the determinants of the education gender gap in Italy in historical perspective with a focus on the influence of family structure. We capture the latter with two indicators: residential habits (nuclear vs. complex families) and inheritance rules (partition vs. primogeniture). After controlling for economic, institutional, religious, and cultural factors, we find that over the 1861-1901 period family structure is a driver of the education gender gap, with a higher female to male enrollment rate ratio in upper primary schools being associated with nuclear residential habits and equal partition of inheritance. We also find that only the effect of inheritance rules persists over the 1971-2001 period. |
| Keywords: | convergence; education gender gap; family types; inheritance; institutions; Italian Unification; religion |
| JEL: | E02 H75 I25 J16 N33 O15 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10091&r=his |
| By: | Mario J. Crucini; Gregor W. Smith |
| Abstract: | We study the role of distance and time in statistically explaining price dispersion for 14 commodities from 1732 to 1860. The prices are reported for US cities and Swedish market towns, so we can compare international and intranational dispersion. Distance and commodity-specific fixed effects explain a large share - roughly 60% - of the variability in a panel of more than 230,000 relative prices over these 128 years. There was a negative “ocean effect”: international dispersion was less than would be predicted using distance, narrowing the effective ocean by more than 3000 km. Price dispersion declined over time beginning in the 18th century. This process of convergence was broad-based, across commodities and locations (both national and international). But there was a major interruption in convergence in the late 18th and early 19th centuries, at the time of the Napoleonic Wars, stopping the process by two or three decades on average. |
| Keywords: | distance effect, border effect, law of one price |
| JEL: | N70 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2014-75&r=his |
| By: | Mary Eschelbach Hansen |
| Abstract: | This paper exploits newly-collected, highly-detailed data on sources of credit drawn from documents filed by a sample of petitioners for bankruptcy in Mississippi in the 1930s. The bankruptcy documents reveal that long-distance credit networks were extensive during this period. Credit networks were dominated by trade credit, particularly book credit that was extended from business to business. At this time, the bank-to-business lending channels that are common today were only beginning to develop. Manufacturers had both fewer long-distance creditors and fewer financial intermediaries as creditors than either merchants or farmers. New sources of consumer credit, though, were available even in the relatively under-developed Deep South. Â |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:amu:wpaper:2014-09&r=his |
| By: | Michalopoulos, Stelios; Papaioannou, Elias |
| 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. |
| Keywords: | Africa; development; ethnicity; institutions; state capacity |
| JEL: | O10 O40 O43 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10257&r=his |
| By: | Jun, Bogang; Lee, Joongho |
| Abstract: | Unified Growth Theory suggests the demographic transition and the associated rise in human capital formation were critical forces in the transition from Malthusian stagnation to modern economic growth. This paper provides empirical evidence in support of this hypothesis based on the Korean industrialization in the late 20th century. Using a fixed effects model and a fixed effect two-stage least squares model, this study exploits variations in fertility and in human capital formation across regions in Korea over the period 1970 to 2010. This analysis finds a virtuous cycle, where technological progress increased the demand for human capital, leading to an increase in the level of education and, in turn, to a demographic transition. This establishes the existence of a quantity-quality tradeoff on the Korean development path. |
| Keywords: | Demographic transition,Quantity-quality trade-off,Malthusian stagnation,Unified Growth Theory |
| JEL: | I25 J13 N15 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fziddp:922014&r=his |
| By: | Fabian Wahl (University of Hohenheim) |
| Abstract: | This study investigates the origins of the guild revolts in late medieval central Europe. At first, using newly compiled city level data, their temporal evolution and spatial distribution is discussed. Afterwards, the paper provides a historical discussion and empirical analysis of their origins. The results show that pre-existing city-level political institutions and location in a large territorial state were important for the emergence of late medieval guild revolts. Furthermore, the agricultural productivity of the region around a city matters in a negative way confirming the role of the late medieval agricultural crisis in the outbreak of the revolts. Other important factors are a cityÕs urban environment and market potential, its degree of autonomy and its commercial, industrial as well as political importance. This suggests that economic change can trigger political changes. I also found evidence for the existence of spatial spillovers from the developments in neighboring cities implying that rational strategic considerations played a role in the spread of the revolts. |
| Keywords: | Late Medieval, Early-Modern Period, Political Institutions, Political Change, Guild Revolts, Cities |
| JEL: | N44 N94 O10 R11 H11 D72 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:hes:wpaper:0069&r=his |
| By: | Giavazzi, Francesco; Petkov, Ivan; Schiantarelli, Fabio |
| Abstract: | This paper presents evidence on the speed of evolution (or lack thereof) of a wide range of values and beliefs of different generations of European immigrants to the US. The main result is that persistence differs greatly across cultural attitudes. Some, for instance deep personal religious values, some family and moral values, and political orientation converge very slowly to the prevailing US norm. Other, such as attitudes toward cooperation, redistribution, effort, children's independence, premarital sex, and even the frequency of religious practice or the intensity of association with one's religion, converge rather quickly. The results obtained studying higher generation immigrants differ greatly from those found when the analysis is limited to the second generation, as typically done in the literature, and they imply a lesser degree of persistence than previously thought. Finally, we show that persistence is “culture specific" in the sense that the country from which one's ancestors came matters for the pattern of generational convergence. |
| Keywords: | beliefs; culture; evolution; immigration; integration; persistence; transmission; values |
| JEL: | A13 F22 J00 J61 Z1 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10024&r=his |
| By: | Rafael González-Val; Julio MartÃnez-Galarraga; Daniel A. Tirado-Fabregat |
| Abstract: | In this paper we employ parametric and nonparametric techniques to analyse the effect of the changes registered on regional market potential on the growth of Spanish regions during the period 1860-1930. The study of the Spanish experience during these years conforms a case study that allows analyzing whether the construction of new transport infrastructure, as well as the changes in trade policy, that affected the relative market potential of the Spanish regions, ended up shaping regional growth trajectories. In order to carry out the analysis we make use of new evidence on regional inequality patterns in the long term based on recent estimations of per capita GDP for NUTS III Spanish regions (provinces) and an a la Harris measure of regional market potential that takes into account the economic distance between territories according to the changes registered in transport networks, the variations in the actual transport costs and the tariff policy followed over the period. Our results show a clear positive influence of market potential on regional economic growth, particularly along the years 1900-1930. |
| Keywords: | market potential; New Economic Geography; regional growth; economic history |
| JEL: | R0 N9 O18 N64 F14 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa14p635&r=his |
| By: | B. Zorina Khan |
| Abstract: | Such institutions as patent systems cannot be well understood without an assessment of technological creativity in other contexts. Some have argued that prizes might offer superior alternatives to the award of property rights in inventions. Accordingly, this paper offers an empirical comparison of patents in relation to the award of prizes for technological innovation. The data set comprises a sample of patents, as well as exhibits and prizes at annual industrial fairs in Massachusetts over the course of the nineteenth century. The patterns shed light on the factors that influenced how specific inventions and inventors attempted to appropriate returns. Prizes in general provided valuable prospects for advertisements and commercialization, rather than inventive activity per se. Prize winners typically belonged to more privileged classes than the general population of patentees, as gauged by their wealth and occupational status. Moreover, the award of prizes tended to largely unpredictable, and was unrelated to such proxies for the productivity of the innovation as inventive capital or the commercial success of the invention. Prize-oriented institutions thus appear to be less systematic and not as market-oriented as patent systems. If inventors respond to expected returns, prizes may be less effective at inducing technological creativity. |
| JEL: | K11 N11 O31 O34 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20731&r=his |
| By: | Neil Cummins (London School of Economics) |
| Abstract: | I analyze the age at death of 121,524 European nobles from 800 to 1800. Longevity began increasing long before 1800 and the Industrial Revolution, with marked increases around 1400 and again around 1650. Declines in violence contributed to some of this increase, but the majority must reflect other changes in individual behavior. The areas of North-West Europe which later witnessed the Industrial Revolution achieved greater longevity than the rest of Europe even by 1000 AD. The data suggest that the `Rise of the West' originates before the Black Death. |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:hes:wpaper:0064&r=his |
| By: | Kota Kitagawa |
| Abstract: | This article distills the economic and current significance contained in the political economy of J.R. Commons. It compares descriptions of his three main works that discuss “sovereignty”: A Sociological View of Sovereignty (SVS), Legal Foundations of Capitalism (LFC), and Institutional Economics (IE). Through this comparison, we find that the role of sovereignty in his theory changed dramatically. First, in the period from SVS (1899–1900) to LFC (1924), the theory of sovereignty changes significantly from the standpoint of natural rights, which imply permanence of privileged customs, to “pragmatic philosophy” of the courts, in which laws are relevant to customs at certain times and places. Second, from the manuscripts of IE (1927–1928), sovereignty is defined as comprising part principles, which relate to each other and make up the whole principle, willingness. In other words, Commons views sovereignty as one perspective, which in turn has a high capability of explaining the socioeconomic system. Additional descriptions of IE (1934) derived from its original manuscripts repeatedly emphasize the “power” of economic concerns that are equal to or exceed the power of the state, as well as the importance of the “function” of sovereignty in pragmatic investigations of economic disputes. We distill the economic and current significance of IE. First, the value theory that constructs values institutionally and collectively starts from an analysis of sovereignty and joint evaluations. Second, sovereignty cannot be separated from an analysis of economic transactions. Third, this paper concretely shows elements of a “deliberate space” in which sovereignty and economic interests act in concert. J.R. Commons’s IE sets out specific knowledge on the interface between sovereignty and economic interests, and serves as a useful tool in reconsidering the organ of sovereignty. |
| Keywords: | J.R. Commons; Institutional Economics; Sovereignty; Supreme Court; Commission |
| JEL: | B11 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:kue:dpaper:e-14-013&r=his |
| By: | Sofia Teives Henriques (University of Southern Denmark); Karol J. Borowiecki (University of Southern Denmark) |
| Abstract: | Fossil-fuel-related carbon dioxide emissions have risen dramatically since 1800. We identify the long-run drivers of CO2 emissions for a sample of twelve developed economies using an extended Kaya decomposition. By considering biomass and carbon-free energy sources along with fossil fuels we are able to shed light on the effects of past and present energy transitions on CO2 emissions. We find that at low levels of income per capita, fuel switching from biomass to fossil fuels is the main contributing factor to emission growth. Scale effects, especially income effects, become the most important emission drivers at higher levels of income and also dominate the overall long-run change. Technological change is the main offsetting factor. Particularly in the last decades, technological change and fuel switching have become important contributors to the decrease in emissions in Europe. Our results also individualize the different CO2 historical paths across parts of Europe, North America and Japan. |
| Keywords: | CO2 emissions, Kaya decomposition, Energy transition |
| JEL: | N70 O44 Q40 Q54 Q5 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:hes:wpaper:0062&r=his |
| By: | Marchionatti, Roberto; Mornati, Fiorenzo (University of Turin) |
| Abstract: | The paper deals with the debate on the General Economic Equilibrium in the 1930s in Vienna and at the London School of Economics and offers an interpretation of it different from that of the traditional narratives. It interprets the debate as a renewed confrontation between the two different classical methodological paths of research in GEE, the Paretian and the Walrasian ones. What emerges from this examination is a picture of different approaches and theories in competition, in particular on the issue of the relationship between theory and the real world. This was the fundamental issue at stake. Herein lies also the interest in those distant controversies for the current debate in economics. |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:uto:dipeco:201436&r=his |
| By: | José M. Menudo (Department of Economics, Universidad Pablo de Olavide); José Mª O’Kean (Department of Economics, Universidad Pablo de Olavide) |
| Abstract: | This work analyses the particular and repeated attempt to introduce the entrepreneur into economic activity through the market for entrepreneurs. We shall examine the few suggestions ? Richard Cantillon, Jean-Baptiste Say, Alfred Marshall and Frank Knight ? that propose it. The analysis of the writings of these authors enables us to draw relevant conclusions from their attempts to develop an economic theory of the entrepreneur from the perspective of the market for entrepreneurs. |
| Keywords: | History of Economic Thought, Entrepreneurship, Profit, Production and Organizations, Institutions and Growth. |
| JEL: | B1 M13 M53 D2 O43 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:14.09&r=his |
| By: | Reinhart, Carmen M.; Trebesch, Christoph |
| Abstract: | We take a first pass at quantifying the magnitudes of debt relief achieved through default and restructuring in two distinct samples: 1979-2010, focusing on credit events in emerging markets, and 1920-1939, documenting the official debt hangover in advanced economies that was created by World War I and its aftermath. We examine the economic performance of debtor countries during and after these overhang episodes, by tracing the evolution of real per capita GDP (levels and growth rates); sovereign credit ratings; debt servicing burdens relative to GDP, fiscal revenues, and exports; as well as the level of government debt (external and total). Across 45 crisis episodes for which data is available we find that debt relief averaged 21 percent of GDP for advanced economies (1932-1939) and 16 percent of GDP for emerging markets (1979-2010), respectively. The economic landscape after a final debt reduction is characterized by higher income levels and growth, lower debt servicing burdens and lower government debt. Also ratings recover markedly, albeit only in the modern period. |
| JEL: | E6 F3 H6 N0 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10195&r=his |
| By: | Paul David (Stanford University) |
| Abstract: | In most modern economies scientific and technological research activities are conducted in two distinct organizational modes: commercially oriented R&D based upon proprietary information, and noncommercial “open science.” When taken together and kept in proper balance, these form a complementary pair of institutionally differentiated sub-systems. Each can work to amplify and augment the productivity of the other, thereby spurring long-term economic growth and improvements of social welfare in knowledge driven societies. This paper considers the difference between historical origins of open science and its modern, critically important role in the allocation of research resources. The institutional structure of ‘The Republic of Open Science’ generally is less well understood and has less robust self-sustaining foundations than the familiar non-cooperative market mechanisms associated with proprietary R&D. Although they are better suited for the conduct of exploratory science, they also remain more vulnerable to damages from collateral effects of shifts in government policies, particularly those that impact their fiscal support and regulatory environments. After reviewing the several challenges that such policy actions during the 20th century’s closing decades had posed for continued effective collective explorations at the frontiers of scientific knowledge, the discussion examines the responses that those developments elicited from academic research communities. Those reactions to the threatened curtailment of timely access to data and technical information about new research methods and findings took the form of technical and organizational innovations designed to expand and enhance infrastructural protections for sustained open access in scientific and scholarly communications. They were practical, “bottom-up” initiatives to provide concrete, domain relevant tools and organizational routines whose adoption subsequently could be, and in the event were reinforced by “top-down” policy guidelines and regulatory steps by public funding agencies and international bodies. The non-politicized nature of that process, as well as its largely effective outcomes should be read (cautiously) as positive portents of the future vitality of the Republic of Open Science – and of those societies that recognize, protect and adequately support this remarkable social innovation. |
| Keywords: | science and technology policy, open science, new economics of science, evolution of institutions, patronage, asymmetric information, principal-agent problems, common agency contracting, social networks, ‘invisible colleges,’ scientific academies, intellectual property rights, anti-commons, contractual construction of commons |
| JEL: | D8 H4 O3 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:sip:dpaper:13-037&r=his |
| By: | Michael Pflüger |
| Abstract: | The last one and a half centuries have witnessed dramatic changes in the world economy. The service (tertiary) sector, which at the beginning of the 20th century was of little importance relative to agriculture and manufacturing, has become the dominant sector today, accounting for 80% and more of value added in advanced countries and around 70% and of employment. Innovations in transport technologies and in information and communications technologies have radically reduced the costs of trading goods and have also made an increasing share of services tradeable. We propose a tractable micro-founded Ricardo-Marshall model to study the implications of the rise of the service sector and its interaction with international trade and factor mobility for the location of economic activity. Our model highlights a tension between nontradeable services which exert an agglomerative force and trade costs and comparative advantage which act as dispersion forces. |
| Keywords: | services; comparative advantage; labor mobility; symmetry breaking; agglomeration structural change |
| JEL: | F12 F22 R11 R12 R13 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa14p1347&r=his |
| By: | Francesco Sergi (Centre d'Economie de la Sorbonne) |
| Abstract: | The purpose of the paper is to provide a methodological framework for a critical analysis of a specific class of macroeconomic models, namely the dynamic stochastic general equilibrium models (DSGE). We suggest some epistemological reflections to explore the underlying methodology and history of the DSGE models. To do this, we decided to rely on a literature review on the contributions about the notion of model and modelling in philosophy, history and sociology of sciences. Our approach tries to define, in an interdisciplinary way, a consistent methodology for dealing with a specific object. The review of this large literature has been organized around two complementary definitions of the object (“model” as concept, for the philosophy and history of sciences and “modelling” as a scientific practice, for the sociology of science) and around three fundamental questions (what is a model? how to build a model? what is the purpose of a model?). Starting from this review, we discuss the main elements which are consistent with an analysis of DSGE models, focusing in particular on intra- and interdisciplinary interactions, on the mechanisms of policy expertise and on the mediation between theories and data. |
| Keywords: | Macroeconomic models, DSGE, modelling, new neoclassical synthesis, epistemology of economics. |
| JEL: | B41 B22 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:14067&r=his |
| By: | Wickens, Michael R. |
| Abstract: | This lecture is about how best to evaluate economic theories in macroeconomics and finance, and the lessons that can be learned from the past use and misuse of evidence. It is argued that all macro/finance models are `false' so should not be judged solely on the realism of their assumptions. The role of theory is to explain the data, They should therefore be judged by their ability to do this. Data mining will often improve the statistical properties of a model but it does not improve economic understanding. These propositions are illustrated with examples from the last fifty years of macro and financial econometrics |
| Keywords: | asset price modelling; DSGE modelling; theory and evidence in economics; time series modelling |
| JEL: | B1 C1 E1 G1 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10197&r=his |
| By: | Valeria Gattai; Piergiovanna Natale |
| Abstract: | Joint ventures (JVs) are a very common form of inter-firm collaborations and, not surprisingly, the object of a vast literature, spanning from economics to management and business studies. Issues of control are central to the definition of JV, which naturally begs an interpretation in the context of the property rights theory (PRT) of the firm. In a series of seminal papers, Grossman, Hart and Moore (GHM) offer a rigorous framework to predict the allocation of control rights. Notably, under the standard assumptions of GHM, JVs are suboptimal. However, JVs are not suboptimal in more general settings where some of the original framework’s assumptions are relaxed. In the context of the PRT, this paper surveys more than 20 contributions that deal with the optimality of JVs under contract incompleteness. Questioning GHM’s assumptions, the authors of these contributions unveil relevant circumstances in which JV outperforms sole ownership. Despite contributions being scattered over time and bibliographical space, we believe enough material has accumulated over 25 years of economic modelling to encourage some systematization. The discussion is organized in an intuitive and non-technical way; particular effort is devoted to analyse each contribution in detail and to provide a unitary framework. |
| Keywords: | Incomplete contracts; Property rights; Joint venture; Joint control; Joint ownership |
| JEL: | D23 L24 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:287&r=his |
| By: | Roger Backhouse; Beatrice Cherrier |
| Abstract: | This paper conjectures that economics has changed profoundly since the 1970s and that these changes involve a new understanding of the relationship between theoretical and applied work. Drawing on an analysis of John Bates Clark medal winners, it is suggested that the discipline became more applied, applied work being accorded a higher status in relation to pure theory than was previously the case. Discussing new types of applied work, the changing context of applied work, and new sites for applied work, the paper outlines a research agenda that will test the conjecture that there has been a changed understanding of the nature of applied work and hence of economics itself. |
| Keywords: | Applied economics, theory, Clark Medal, JEL codes, core, policy, computation, data, econometrics |
| JEL: | A10 B20 B40 C00 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:14-11&r=his |
| By: | Vicini, Andrea |
| Abstract: | This paper analyze the historical origin of Fiscal illusion, and introduce to the contribution of Public Choice and in particular James Buchanan which systematized all these concept in a coherent framework. Even the critiques and application of this Theory are mentioned. |
| Keywords: | Public Choice, James Buchanan, Fiscal Illusion. |
| JEL: | H11 H3 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:60240&r=his |
| By: | Philipp Ager (Department of Business and Economics, University of Southern Denmark.); Casper Worm Hansen (Department of Economics, Copenhagen University); Lars Lønstrup (Department of Business and Economics, University of Southern Denmark.) |
| Abstract: | We examine the effect of increased demand for social insurance on church membership.Our empirical strategy exploits the differential impact of the Great Mississippi Flood of 1927 across counties to identify a shock to the demand for social insurance. We find that flooded counties experienced a significant increase in church membership. Consistent with economic theories about determinants of membership of religious organizations, our result suggests that local churches provided ex-post insurance for the needy and in return gained new members. |
| Keywords: | Religion, Informal Insurance, Club Goods, Natural Disasters |
| JEL: | D70 E20 H40 |
| Date: | 2014–11–24 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:1429&r=his |
| By: | Gerlach, Stefan; Lydon, Raemonn; Stuart, Rebecca |
| Abstract: | We study the determination of Irish inflation between 1935 and 2012 using a Phillips curve approach. We find that a simple backward-looking Phillips Curve that incorporates import prices is stable over the sample period and passes a number of diagnostic tests. We also consider the importance of UK and euro area inflation for Irish inflation. While UK inflation is significant in the period 1935 – 1979, and euro area inflation is significant in the period 1980 – 2012, we present evidence that suggests that these findings reflect common shocks. |
| Keywords: | Historical statistics; Import prices; Inflation; Ireland; Output gap |
| JEL: | E3 E4 N14 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10010&r=his |
| By: | Wojciech Kopczuk |
| Abstract: | I discuss available evidence about the evolution of top wealth shares in the United States over the last one hundred years. The three main approaches – Survey of Consumer Finances, estate tax multiplier techniques and capitalization method – generate generally consistent findings until mid-1980s but diverge since then, with capitalization method showing a dramatic increase in wealth concentration and the other two methods showing at best a small increase. I discuss strengths and weaknesses of different approaches. The increase in capitalization estimates since 2000 is driven by a dramatic and surprising increase in fixed income assets. There is evidence that estate tax estimates may not be sufficiently accounting for mortality improvements over time. The non-response and coverage issues in the SCF are a concern. I conclude that changing nature of top incomes and the increased importance of self-made wealth may explain difficulties in implementing each of the methods and account for why the results diverge. |
| JEL: | D31 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20734&r=his |
| By: | Hervas Oliver,Jose Luis; Gonzalez,Gregorio; Caja,Pedro |
| Abstract: | The industrial district and cluster literature has generated an extraordinary quantity of articles, debates, and topics for discussion, and encompasses one of the most vibrant lines of research in the field of economics, geography, management and related disciplines. The literature, however, is fairly fragmented. In this paper, bibliometric methods are used to analyze cluster literature published between 1957 and 2014 in order to explore prospective research priorities through the method of bibliographic coupling. Beyond focusing on foundational works in the past, this approach shifts the focus away from the practice of analyzing co-citations and seminal contributions to one of looking at current and emerging trends in the literature. Using the ISI-Web of Knowledge (Web of Science) as a database, examination of two samples of 3,955 and 2,419 articles is made. Results reveal the existence of sub-fields of inquiry that are following their own particular research agendas, which remain distinct yet interconnected to one another. |
| Keywords: | cluster, industrial district, bibliometric analysis, Web of Science, bibliographic coupling |
| JEL: | R1 |
| Date: | 2014–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:ing:wpaper:201409&r=his |
| By: | Maren Duvendack; Richard W. Palmer-Jones; W. Robert Reed (University of Canterbury) |
| Abstract: | This study reports on various aspects of replication research in economics. It includes (i) a brief history of data sharing and replication; (ii) the results of the authors’ survey administered to the editors of all 333 “Economics” journals listed in Web of Science in December 2013; (iii) an analysis of 155 replication studies that have been published in peer-reviewed economics journals from 1977-2014; (iv) a discussion of the future of replication research in economics, and (v) observations on how replications can be better integrated into research efforts to address problems associated with publication bias and other Type I error phenomena. |
| Keywords: | Replication, data sharing, publication bias |
| JEL: | A1 B4 |
| Date: | 2014–12–03 |
| URL: | http://d.repec.org/n?u=RePEc:cbt:econwp:14/26&r=his |
| By: | Eichhorst, Werner (IZA); Kendzia, Michael J. (Zurich University of Applied Sciences (ZHAW)) |
| Abstract: | Despite a more recent debate about ever deeper segmentation, we argue that since industrialization, Germany has continually experienced a dual labor market. One segment contains the primary segment of better paid and more attractive jobs, while the secondary segment encompasses rather low paid, less stable and less attractive jobs. It has been argued that this dualization is the result of firms which are likely to hire full-time and long-term workforce for its core activities performed by the core workforce while relying on more flexible forms of employment for other activities. Based on an in-depth examination of the structure of the workforce since the founding of the German state, this paper seeks to explore the factors which account for the origin, evolution and the peculiarities of the country's core workforce. It will be shown that a non-negligible part of the working population has always been subjected to marginalization, but that the dividing line between the two segments has changed over time as has the character of the respective groups. |
| Keywords: | workforce segmentation, industrialization, core workforce, peripheral workforce |
| JEL: | N34 J42 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8648&r=his |
| By: | Silves J.C. Moreira (Faculdade de Economia, Universidade do Porto); Pedro Cosme Vieira (Faculdade de Economia, Universidade do Porto); Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC TEC; OBEGEF) |
| Abstract: | Despite the importance of human capital stock to the economic growth of countries, its analysis has been restricted to more developed countries or to cross-country samples from a set of countries. Due to a lack of estimates for this variable in less developed countries, it has not been possible to assess the importance of this determinant for their growth and development. The aim of this study is to partly fill this gap, determining human capital stock in terms of average formal schooling for the Cape Verdean economy in the period 1950-2012. To this end, we resorted to an adaption of the methodology proposed by Barro and Lee (1993), based on past schooling values. We found that between 1950 and 2012 the Cape Verdean working-age population showed a gradual improvement in the levels of schooling, rising from 0.7 years of schooling in the 1950s to 5.4 in late 2012. However, this means that, in each year, the average years of schooling increased only 0.08 years, meaning that, in net terms and on average, only 7.6% of the working-age population was attending some level of formal education. The availability of a time series of number of average schooling years in Cape Verde opens up possibilities for assessing the impact of human capital on the country’s economic growth. |
| Keywords: | Human capital, measurement, economic growth, Cape Verde |
| JEL: | J24 I20 C19 O40 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:547&r=his |
| By: | Luciana Lazzeretti; Francesco Capone |
| Abstract: | The aim of the present research is to participate to the recently resurged debate on cluster life cycle theory among scholars of New Evolutionary Geography and Industrial Economics, starting from the seminal contributions of Menzel and Fornhal (2010). Authors pointed out how the very cluster dynamics is both the driver for the movement of a cluster through a life cycle and the reason why this movement differs from the industry life cycle. Cluster life cycle is recently attracting increasing attention and notwithstanding some authors as Martin and Sunley (2011) showed some criticism, proposing alternative approaches, they agreed the cluster evolution literature is still in search of an appropriate analytical frame work and is necessary to follow an evolutionary approach instead of a deterministic perspective, considering also the analysis of local contexts. Boschma and Fornahl (2011) reaffirming this position, indicate a ?roadmap for future research' able to integrate different approaches and promote the production of a coherent mass of longitudinal empirical study necessary to verify theoretical hypothesis, at the moment not sufficiently adequate. The work deals with the evolution of textile-clothing Marshallian Industrial District (MID) in Prato, focusing on last twenty years, characterised by the settlement of a large numbers of Chinese firms. The Prato MID is in a transformation/decline phase due for many scholars to the entrance of Chinese immigrants as well as the recent economic crisis and the effects of globalization (Johnson et al., 2009). We contribute to this debate following an evolutionary approach according to the Organisational Ecology and density dependence (Hannan and Freeman, 1989; Hannan and Carroll, 1992). The analysis is carried out on Italian and Chinese firms in Prato MID. Data are collected elaborating the Registry of Economic Activity held by the Province of Prato (1990-2011) and integrated with a previous database constructed from REA from Chambers of Commerce of Prato and Florence (1945-1998) (Lazzeretti and Storai, 2003; Lazzeretti and Terchi, 2002). We carried out demographic analysis on the natality and mortality of firms of Prato MID and we tested ecological models in order to establish relationships between legitimation and competition ecological processes and different life cycle phases. Results allow us to reconstruct the internal dynamics of Prato MID from its birth till today and identify in which stage of the life cycle it is currently, providing a theoretical and empirical contribution to the study of cluster evolution, through the Organisational Ecology. |
| Keywords: | Cluster evolution; cluster life cycle; organisation ecology approach; Prato; textile-clothing; Industrial District; Chinese firms population. |
| JEL: | R12 L67 R23 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa14p745&r=his |
| By: | Edward N. Wolff |
| Abstract: | Asset prices plunged between 2007 and 2010 but then rebounded from 2010 to 2013. The most telling finding is that median wealth plummeted by 44 percent over years 2007 to 2010, almost double the drop in housing prices. The inequality of net worth, after almost two decades of little movement, was also up sharply. Relative indebtedness expanded, particularly for the middle class, though the proximate causes were declining net worth and income rather than an increase in absolute indebtedness. The sharp fall in median net worth and the rise in overall wealth inequality over these years are traceable primarily to the high leverage of middle class families and the high share of homes in their portfolio. The racial and ethnic disparity in wealth also widened considerably. Households under age 45 saw their relative and absolute wealth declined sharply. Rather remarkably, there was virtually no change in median wealth from 2010 to 2013 despite the rebound in asset prices. The proximate cause was the high dissavings of the middle class, though their debt continued to fall. Wealth inequality and the racial and ethnic wealth gap also remained largely unchanged, though there was some recovery of net worth for young households. |
| JEL: | D31 J15 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20733&r=his |
| By: | Jan Kregel (Tallinn University of Technology) |
| Abstract: | This paper presents the major changes in financial regulation in the United States starting with the historical background and concluding with the most recent measures contained in, or mandated by, the 2010 Dodd-Frank Act. It will present the most important changes in regulatory legislation proposed in the aftermath of the 2007-8 crisis intended to prevent a collapse of the financial system similar to the recent crisis. |
| Keywords: | financial regulation, Dodd-Frank regulations |
| JEL: | G18 G28 |
| Date: | 2014–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:fes:wpaper:wpaper69&r=his |
| By: | John B. Taylor (Department of Economics, Stanford University) |
| Abstract: | Research in the early 1980s found that the gains from international coordination of monetary policy were quantitatively small compared to simply getting domestic policy right. That prediction turned out to be a pretty good description of monetary policy in the 1980s, 1990s, and until recently. Because this balanced international picture has largely disappeared, the 1980s view about monetary policy coordination needs to be reexamined. The source of the problem is not that the models or the theory are wrong. Rather there was a deviation from the rule-like monetary policies that worked well in the 1980s and 1990s, and this deviation helped break down the international monetary balance. There were similar deviations at many central banks, an apparent spillover culminating in a global great deviation. The purpose of this paper is to examine the possible causes and consequences of these spillovers, and to show that uncoordinated responses of central banks to the deviations can create an amplification mechanism which might be overcome by some form of policy coordination. |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:hoo:wpaper:13101&r=his |
| By: | Henri Busson |
| Abstract: | In the United States, regions with more human capital tend to attract skilled workers (e.g., see Glaeser and Berry, 2005), and as a result, convergence between regions does not occur (e.g., see Barro and Sala-i-Martin, 1992). Presently, many of the most productive European workers try to migrate to the United States. As a consequence, economic growth in Europe could be affected by such migrations (e.g., see G Saint Paul, 2008). Futhermore, Indian and Chinese entrepreneurs are recently coming back to their home countries despite higher wages in the United States. The main explanations are the lack of economic opportunities in the US and the costs of the labour force (e.g., see Saxenian et al., 2011). To comprehend these problems, we develop a theoretical Economic Geography model with heterogeneous skills for workers. It is an extension of Krugman's famous model "History versus expectations". This two regions model describes an economy with one input assuming two levels of skills for labor force, where workers have the opportunity to migrate. The question is whether history completely determines the final equilibrium or whether is it possible to attract skilled workers to areas with less human capital. This is a dynamic model, which is able to explain the location choices of workers between countries or within countries. The model could be extended to more complex new economic geography model with utility functions instead of wages (e.g., see Ottaviano, Tabuchi and Thisse, 2002). With the heterogeneity of workers, several equilibriums appear that were not present in Krugman's model. Dispersion of human capital is now a possibility where all the skilled workers are located in one area and all the unskilled workers are in the other region. Our results suggest that history does not determine the final outcome even with high interest rates conditional on economies scales that are sufficiently high contrary to Krugman. At least one equilibrium path emerges that was not present in Krugman's model. Under certain conditions, the final equilibrium is stable. This finding contradicts previous papers, which demonstrated that heterogeneity was a stabilizing force (e.g., see Morris and Shin, 2006; Herrendorf et al., 2000). |
| Keywords: | Economic geography; location choice; equilibrium paths; linear differential systems |
| JEL: | J61 C62 R12 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa14p1448&r=his |