nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2015‒01‒14
28 papers chosen by

  1. The Rise and Decline of General Laws of Capitalism By Daron Acemoglu; James A. Robinson
  2. From Caesar to Tacitus: Changes in Early Germanic Governance circa 50 BC-50 AD By Andrew T. Young
  3. Navigating constraints: the evolution of Federal Reserve monetary policy, 1935-59 By Carlson, Mark A.; Wheelock, David C.
  4. No price like home: global house prices, 1870-2012 By Knoll, Katharina; Schularick, Moritz; Steger, Thomas
  5. Baby-Boom, Baby-Bust and the Great Depression By Bellou, Andriana; Cardia, Emanuela
  6. Federal Reserve policy and Bretton Woods By Bordo, Michael D.; Humpage, Owen F.
  7. “Gaining Literary Citizenship”: Translators In The Soviet Literary Bureaucracy Of The 1930s By Elena E. Zemskova
  8. From Chips To Pulp In Minutes”: Innovations And Continuous Pulp Cooking In The Soviet Union In The 1940s-1950s By Elena A. Kochetkova
  9. The Federal Reserve engages the world (1970-2000): an insider's narrative of the transition to managed floating and financial turbulence By Truman, Edwin M.
  10. Housing affordability during the urban transition in Spain By Juan Carmona Pidal; Markus Lampe; Joan R. Rosés
  11. Did the Aid Boom Pacify Sub-Saharan Africa? By Azam, Jean-Paul; Thelen, Véronique
  12. The Evolution of the Federal Reserve Swap Lines since 1962 By Michael D. Bordo; Owen F. Humpage; Anna J. Schwartz
  13. Shia-Sunni Interactions In Greater Cental Asia: Retrospective And Current States By Anton K. Alexeev
  14. The Crisis of the Prato Industrial District in the Works of Edoardo Nesi: a Blend of Nostalgia and Self-complacency By Stefano Adamo
  15. Leadership-driven innovation & evolution of societies By Coccia M.
  16. Sticky income inequality in the Spanish transition (1973-1990) By Sara Torregrosa Hetland
  17. Cortiça em Marrocos. A excursão florestal de Octavio Elorriera em 1933 By Ignacio García Pereda
  18. Política Industrial e Empresas Estatais no Brasil: BNDES e Petrobras By Mansueto Almeida; Renato Lima-de-Oliveira; Ben Ross Schneider
  19. The Republic of Open Science : the institution’s historical origins and prospects for continued vitality By David P.A.
  20. Betting the house By Jorda, Oscar; Schularick, Moritz; Taylor, Alan M.
  21. The Myth of Sports-Led Economic Development By Brad R. Humphreys
  22. THE MECHANISM OF LONG-TERM GROWTH IN INDIA By Pulapre Balakrishnan; Mausumi Das; M Parameswaran
  23. Four Centuries of Return Predictability By Benjamin Golez; Peter Koudijs
  24. Geography, Policy, or Productivity? Regional Trade in five South American Countries, 1910-1950 By Marc Badia-Miró; Anna Carreras-Marín; Christopher M. Meissner
  25. The Technological Resilience of U.S. Cities By Balland, Pierre-Alexandre; Rigby, David; Boschma, Ron
  26. Nobility, And Schooling In Russia, 1700s-1760s: Westernization Of An Elite As A Social Process By Igor Fedyukin
  27. Understanding Financial Instability: Minsky Versus the Austrians By Van den Hauwe, Ludwig
  28. Être keynésien au XXIe siècle : Patriotisme économique ou mondialisation keynésienne By Christophe LAVIALLE

  1. By: Daron Acemoglu; James A. Robinson
    Abstract: Thomas Piketty's (2014) book, Capital in the 21st Century, follows in the tradition of the great classical economists, like Marx and Ricardo, in formulating general laws of capitalism to diagnose and predict the dynamics of inequality. We argue that general economic laws are unhelpful as a guide to understand the past or predict the future, because they ignore the central role of political and economic institutions, as well as the endogenous evolution of technology, in shaping the distribution of resources in society. We use regression evidence to show that the main economic force emphasized in Piketty's book, the gap between the interest rate and the growth rate, does not appear to explain historical patterns of inequality (especially, the share of income accruing to the upper tail of the distribution). We then use the histories of inequality of South Africa and Sweden to illustrate that inequality dynamics cannot be understood without embedding economic factors in the context of economic and political institutions, and also that the focus on the share of top incomes can give a misleading characterization of the true nature of inequality.
    JEL: O20 P16 P48
    Date: 2014–12
  2. By: Andrew T. Young (West Virginia University, College of Business and Economics)
    Abstract: Julius Caesar and Cornelius Tacitus provide characterizations of early Germanic (barbarian) society around, respectively, 50 BC and 50 AD. The earlier date corresponds to expansion of Rome to the Rhine and Danube. During the subsequent century Germanic governance institutions changed in a number of ways. In particular, (1) temporary military commanders elected from the nobility gave way to standing retinues under the leadership of professional commanders, (2) public assemblies met more frequently and regularly, (3) councils made up of nobility gained agenda control in the assemblies, and (4) these councils relinquished their control over the allocations of land. I account for these constitutional exchanges in light of Rome’s encroachment upon Germania. In particular, it brought new sources of wealth and also constraints on the expansion of Germans into new lands. Incentives favored a reallocation of resources away from pastoralism and towards both sedentary farming and raids across the frontier.
    Keywords: governance institutions, constitutional exchange, antiquity, early Germanic peoples, the Roman Empire, political economy, Julius Caesar, Tacitus, roving versus stationary bandits, ancient economic history
    JEL: D72 N43 N93 P16
    Date: 2014–12
  3. By: Carlson, Mark A. (Board of Governors of the Federal Reserve System); Wheelock, David C. (Federal Reserve Bank of St. Louis)
    Abstract: The 1950s are often cited as a decade in which the Federal Reserve operated a particularly successful monetary policy. The present paper examines the evolution of Federal Reserve monetary policy from the mid-1930s through the 1950s in an effort to understand better the apparent success of policy in the 1950s. Whereas others have debated whether the Fed had a sophisticated understanding of how to implement policy, our focus is on how the constraints on the Fed changed over time. Roosevelt Administration gold policies and New Deal legislation limited the Fed’s ability to conduct an independent monetary policy. The Fed was forced to cooperate with the Treasury in the 1930s, and fully ceded monetary policy to Treasury financing requirements during World War II. Nonetheless, the Fed retained a policy tool in the form of reserve requirements, and from the mid-1930s to 1951, changes in required reserve ratios were the primary means by which the Fed responded to expected inflation. The inability of the Fed to maintain a credible commitment to low interest rates in the face of increased government spending and rising inflation led to the Fed-Treasury Accord of March 1951. Following the Accord, the external pressures on the Fed diminished significantly, which enabled the Fed to focus primarily on macroeconomic objectives. We conclude that a successful outcome requires not only a good understanding of how to conduct policy, but also a conducive environment in which to operate.
    JEL: E52 E58 N12
    Date: 2014–10–01
  4. By: Knoll, Katharina (Free University of Berlin); Schularick, Moritz (University of Bonn); Steger, Thomas (Leipzig University)
    Abstract: How have house prices evolved in the long-run? This paper presents annual house price indices for 14 advanced economies since 1870. Based on extensive data collection, we are able to show for the first time that house prices in most industrial economies stayed constant in real terms from the 19th to the mid-20th century, but rose sharply in recent decades. Land prices, not construction costs, hold the key to understanding the trajectory of house prices in the long-run. Residential land prices have surged in the second half of the 20th century, but did not increase meaningfully before. We argue that before World War II dramatic reductions in transport costs expanded the supply of land and suppressed land prices. Since the mid-20th century, comparably large land-augmenting reductions in transport costs no longer occurred. Increased regulations on land use further inhibited the utilization of additional land, while rising expenditure shares for housing services increased demand.
    JEL: N10 O10 R30 R40
    Date: 2014–10–01
  5. By: Bellou, Andriana (University of Montreal); Cardia, Emanuela (University of Montreal)
    Abstract: The baby-boom and subsequent baby-bust have shaped much of the history of the second half of the 20th century; yet it is still largely unclear what caused them. This paper presents a new unified explanation of the fertility Boom-Bust that links the latter to the Great Depression and the subsequent economic recovery. We show that the 1929 Crash attracted young married women 20 to 34 years old in 1930 (whom we name D-cohort) in the labor market possibly via an added worker effect. Using several years of Census micro data, we further document that the same cohort kept entering into the market in the 1940s and 1950s as economic conditions improved, decreasing wages and reducing work incentives for younger women. Its retirement in the late 1950s and in the 1960s instead freed positions and created employment opportunities. Finally, we show that the entry of the D-cohort is associated with increased births in the 1950s, while its retirement turned the fertility Boom into a Bust in the 1960s. The work behavior of this cohort explains a large share of the changes in both yearly births and completed fertility of all cohorts involved.
    Keywords: retirement, added worker effect, Great Depression, baby bust, baby boom, fertility
    JEL: J11 J12 J13 J21 J24 J26 J31
    Date: 2014–12
  6. By: Bordo, Michael D. (Rutgers University); Humpage, Owen F. (Federal Reserve Bank of Cleveland)
    Abstract: During the Bretton Woods era, balance-of-payments developments, gold losses, and exchange-rate concerns had little influence on Federal Reserve monetary policy, even after 1958 when such issues became critical. The Federal Reserve could largely disregard international considerations because the U.S. Treasury instituted a number of stopgap devices—the gold pool, the general agreement to borrow, capital restraints, sterilized foreign-exchange operations—to shore up the dollar and Bretton Woods. These, however, gave Federal Reserve policymakers the latitude to focus on the domestic objectives and shifted responsibility for international developments to the Treasury. Removing the pressure of international considerations from Federal Reserve policy decisions made it easier for the Federal Reserve to pursue the inflationary policies of the late 1960s and 1970s that ultimate destroyed Bretton Woods. In the end, the Treasury’s stopgap devices, which were intended to support Bretton Woods, contributed to its demise.
    JEL: F31 F33 N1
    Date: 2014–10–01
  7. By: Elena E. Zemskova (National Research University Higher School of Economics)
    Abstract: This paper focuses on the history of the Translators Section in the Soviet Writers Union in the 1930s and demonstrates how, and under what circumstances, literary translation was constructed in the soviet culture of 1930s as a profession and as a separate type of writing activity. The author uses the conceptual framework invented by Sheila Fitzpatrick for the soviet social system to the soviet literary history, and concludes, that translators were ascribed to the writers stratum by the bureaucratic machine of the Soviet Writers Union
    Keywords: translation studies, literary translation, Soviet Literature, Soviet Writers Union
    JEL: Z
    Date: 2014
  8. By: Elena A. Kochetkova (National Research University Higher School of Economics)
    Abstract: The 1940s – mid-1960s exemplified a rapid development of chemical and cellulose industry internationally. In this period, a number of attempts to introduce new technologies was taken by industrial scientists and engineers, some of which happen simultaneously in different countries. In the late 1930s, Swedish engineer Johan Richter proposed his project to industrialists, and after roughly ten years it succeeded in implementing his specifically designed Kamyr digester at an industrial scale. A couple of years earlier, Soviet engineer Leonid Zherebov offered his own project different from the Swedish one in some technical parameters, but aimed to the same purpose – increasing the production of pulp. This initiative, however, was not introduced as it was planned, and instead after more than 20 years, the Soviet industry mostly produced pulp by continuous method using Kamyr digesters purchased from abroad. Following the question by historian Loren Graham of why Russian innovations often remained lonely ideas, this article seeks to investigate the nature of Soviet innovation by examining Soviet modernization though a case study of continuous pulp cooking. It will focus primarily not only on technological specifics of the innovation, but on social, political conditions. In so doing, this paper will examine activities of engineers and interactions of institutions within the Soviet pulp and paper industry.
    Keywords: innovation, Soviet, technology, pulp and paper industry, technological development
    JEL: N64
    Date: 2014
  9. By: Truman, Edwin M. (Peterson Institute for International Economics)
    Abstract: This paper traces the evolution of the Federal Reserve and its engagement with the global economy over the last three decades of the 20th century: 1970 to 2000. The paper examines the Federal Reserve’s role in international economic and financial policy and analysis covering four areas: the emergence and taming of the great inflation, developments in US external accounts, foreign exchange analysis and activities, and external financial crises. It concludes that during this period the US central bank emerged to become the closest the world has to a global central bank.
    Keywords: Federal Reserve; Federal Open Market Committee; inflation; macroeconomic policies; monetary policy; external balance; exchange rates; exchange market intervention; financial crises; third world debt crises; Mexican crisis; Asian financial crises
    JEL: E4 E42 F3 F31 F32 F33 F34 F5 F52 F53
    Date: 2014–10–01
  10. By: Juan Carmona Pidal; Markus Lampe; Joan R. Rosés
    Abstract: During the decades previous to the Civil War, Spain experienced a rapid process of urbanization, which was accompanied by the demographic transition and sizeable rural-urban migrations. This article investigates how urban housing markets reacted to these far-reaching changes that increased demand for dwellings. To this end, we employ a new hedonic index of real housing prices and construct a crossregional panel dataset of rents and housing price fundamentals. This new evidence indicates that rents were not a significant financial burden on low-income families and, hence, housing was affordable for working classes. Also, we show that families’ access to new homes was facilitated by a sizable growth of housing supply. Substantial investments in urban infrastructure and the institutional framework enabled the construction of new homes at affordable prices. Our results suggest that housing problems were not pervasive during the urban transition as the literature often seems to claim.
    Keywords: Demand and Supply of Housing; Regulation in Housing Markets; urban growth.
    JEL: N0
    Date: 2014–09
  11. By: Azam, Jean-Paul; Thelen, Véronique
    Abstract: The incidence of civil war in Sub-Saharan Africa since the turn of the century is less than half of what it was on average in the last quarter of the 20th century. This paper shows that the aid boom triggered by 9/11 played a key role in achieving purposefully this result using panel data for 46 African countries over four decades. The duly instrumented estimated linear probability model predicts that the observed fall in the probability of a civil war occurring in a typical Sub-Saharan African country/year could have been achieved by increasing foreign aid by 25% on average, had the higher incidence of natural disasters and the commodity price shocks of the 2000s not stacked the odds against peace. However, the small rise in minor conflicts mitigates this achievement to some extent.
    Keywords: Foreign Aid – Africa – Civil Wars
    JEL: F35 N47 P45
    Date: 2014–12
  12. By: Michael D. Bordo; Owen F. Humpage; Anna J. Schwartz
    Abstract: In this paper, we describe the evolution of the Federal Reserve’s swap lines from their inception in 1962 as a mechanism to forestall claims on U.S gold reserves under Bretton Woods to a means of extending emergency dollar liquidity during the Great Recession. We describe a number of consequences associated with swap operations. We argue, for example, that swaps calm crisis situations by both supplementing foreign countries’ dollar reserves and by signaling central-bank cooperation. We show how swaps exposed the Federal Reserve to conditionality and raised fears that they bypassed the Congressional appropriations process.
    JEL: F3 N2
    Date: 2014–12
  13. By: Anton K. Alexeev (National Research University Higher School of Economics)
    Abstract: This paper analyzes the Shia-Sunni interactions in northeastern Iran (Khorasan) and Central Asia. The Shia-Sunni disputes in the region date back to the Middle Ages after the establishment of the Safavids (1501 – 1722) in Iran and the Shibanids (1501 – 1601) in Mawara al-nahr at the beginning of the 16th century. This paper, based on narrative sources, attempts to find the true reasons of this phenomenon and to estimate its influence on history and the future of the region. An overview of both the Sunni and Shi’ite religious community status in Iran, in Mawara al-Nahr, has become particularly important when discussing this issue.
    Keywords: Shia, Sunni, Central Asia, Iran
    JEL: Z
    Date: 2014
  14. By: Stefano Adamo
    Abstract: In 2011, Edoardo Nesi - a former industrialist of the Prato textile district - won the most prestigious Italian literary Prize for his autobiographical novel Storia della mia gente, a book centered upon Prato's past industrial success and present decline. Nesi has since become a regular contributor to the Corriere della Sera, and with his latest book, Le nostre vite senza ieri, he has further emphasized his role as a public intellectual. In Nesi's view, Italy's participation in the global economy has exposed Italian manufacturers to a level of competition that they were not ready to meet. Such disadvantage, Nesi contends, was exacerbated by the adoption of the euro, which put an end to the former practice of using monetary policy to offset trade deficits. As a result, many firms lost market shares, and the Prato textile district ended up being largely taken over by Chinese businesses. This paper criticizes Nesi's account of the Italian industrial decline. In particular, it argues that his sympathetic view of the former political-industrial system is mostly an expression of self-complacency and does not positively contribute to the current debates on the Italian economic crisis.
    Keywords: Literature and Economics; Italian Industrial Crisis; Euro-cultural Perspectives; Chinese Immigration in Italy
    JEL: P19 Z19
    Date: 2014–12
  15. By: Coccia M. (UNU-MERIT)
    Abstract: The fundamental problem in the field of the economics of innovation is which economic subjects are the sources of radical innovations and high technological performances. The study here confronts this problem by developing a theoretical framework underpinned in the concept of purposeful system having a purpose of global leadership, which endeavours to analyse the sources of General-Purpose Technologies GPTs in a Schumpeterian world of innovation-based competition. Through an inductive study based on some societies that in the history have generated technological and economic change Roman and Britain Empire, and current USA, the analysis shows vital characteristics that can be the sources of changes in the techno-economic paradigm. In particular, purposeful country-systems with high economic military potential, supported by a strategy of high RD expenditures, and the objective of global leadership, winning international conflicts against other great powers a very strong competition for the hegemony, tend to generate several inventions and radical innovations that are spread, in the long run, across wide geo-economic areas. It seems that the initial sources of GPTs e.g. aqueduct, steam engine, jet aircraft, computer, etc. are, de facto, associated with the global posture of great powers to achieve/sustain global leadership in intensive effective and/or potential international competitions, rather than warfare per se. This study refers to this nexus as leadership-driven innovation. International conflict is the context that spurs the GPTs, which are driven by global leadership of critical societies, whereas initial military RD, demand and procurement are important mechanisms underlying the process that induces emerging path-breaking technologies. The vital linkages between observed facts can support a general socio-economic framework of the sources of path-breaking innovations based on a leadership of main economic subjects that support innovative activity mainly in communications and energy systems parallel to transportation technology and the evolution and development of human societies.
    Keywords: Economic History: General; Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: U.S.; Canada: Pre-1913; Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: Europe: Pre-1913; Economic Development: General; Innovation and Invention: Processes and Incentives; Technological Change: Other;
    JEL: O31 O39 O10 N00 N31 N33
    Date: 2014
  16. By: Sara Torregrosa Hetland (Facultat d'Economia i Empresa; Universitat de Barcelona (UB))
    Abstract: This paper investigates the evolution of income inequality in Spain during its transition to democracy, suggesting a method for the correction of under-reporting of earnings and profits in the Household Budget Surveys’ data. The contribution is twofold: the methodological proposal, based on income-expenditure discrepancy and scaling-up to National Accounts, improves on previous work, and can be convenient for similar historical sources in other countries. Secondly, its application results in an alternative history of the distribution of income in this case, changing the levels and also the observed trend. Previous literature asserted a substantial equalization, related to the democratization process, while after the adjustment inequality in disposable income is shown to have been quite persistent.
    Keywords: income inequality, income under-reporting, household surveys, democratization.
    JEL: D31 N34
    Date: 2014
  17. By: Ignacio García Pereda
    Abstract: This work uses information available in forest reviews and some Spanish Archives to describe the works made by the Spanish and French forest engineers, in Morocco, in the 1930s. In the colonizing efforts of the Spanish government the foresters provided an essential expertise. The forestry activities deal with cartography, forest management, taxonomic and economic botany and a host of related matters. A visit of the forester Elorrieta, who wrote a chronicle of the trip in the review Montes e Industrias, let us to make a description of the forest works in the cork-oak forests of Morocco.
    Keywords: Octavio Elorrieta, foresters, Morocco, Cork-oak forests, cork
    JEL: A22 N57 O13 O14 Q23
    Date: 2014–12
  18. By: Mansueto Almeida; Renato Lima-de-Oliveira; Ben Ross Schneider
    Abstract: O retorno do Estado desenvolvimentista no Brasil suscita revelações históricas e contrastes comparativos. A principal diferença contemporânea é que o desenvolvimentismo e a política industrial estão sendo definidos e implementados em um contexto político muito mais aberto e participativo do que no Brasil do pós-Guerra ou nos países do Leste Asiático. Da mesma forma, tais políticas estão sendo adotadas em um contexto de abertura comercial e fluxo de capital maiores. No século XX, os governos podiam mais facilmente se concentrar na concepção e na implementação da política industrial. Em contraste, os governos democráticos no século XXI precisam gerenciar uma série de outras políticas, especialmente novas políticas sociais. Estas políticas obviamente competem com a política industrial por recursos e pela atenção da alta hierarquia do Executivo. Este texto analisa o desenho, a implementação e a execução de políticas industriais no contexto democrático que prevalece hoje no Brasil, a partir da atuação de duas empresas estatais, o BNDES e a Petrobras, que são os dois maiores e mais ativos agentes da política industrial brasileira. The return of the developmental State in Brazil raises revealing historical and comparative contrasts. The main contemporary difference is that developmentalism and industrial policy are being defined and pursued in far more open and participatory political contexts than was previously the case in either Brazil or East Asian cases and more open borders in terms of economic flows of trade, finance, and direct investment. In the 20th century, governments could more easily focus on designing and implementing industrial policy. Democratic governments in the 21st century, in contrast, manage a host of other, especially social, policies. These policies of course compete with industrial policy for both resources and top level political support. This paper investigates how industrial policies are designed, implemented and evaluated today in Brazil, focusing on two Brazilian State companies, BNDES and Petrobras, the two largest and most active agents of industrial policy in Brazil.
    Date: 2014–12
  19. By: David P.A. (UNU-MERIT)
    Abstract: In most modern economies scientific and technological research activities are conducted in two distinct organizational modes commercially oriented RD 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 RD. 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 centurys 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: Property Law; Innovation and Invention: Processes and Incentives;
    JEL: K11 O31
    Date: 2014
  20. By: Jorda, Oscar (Federal Reserve Bank of San Francisco); Schularick, Moritz (Department of Economics, University of Bonn); Taylor, Alan M. (Department of Economics, University of California,Davis)
    Abstract: Is there a link between loose monetary conditions, credit growth, house price booms, and financial instability? This paper analyzes the role of interest rates and credit in driving house price booms and busts with data spanning 140 years of modern economic history in the advanced economies. We exploit the implications of the macroeconomic policy trilemma to identify exogenous variation in monetary conditions: countries with fixed exchange regimes often see fluctuations in short-term interest rates unrelated to home economic conditions. We use novel instrumental variable local projection methods to demonstrate that loose monetary conditions lead to booms in real estate lending and house prices bubbles; these, in turn, materially heighten the risk of financial crises. Both effects have become stronger in the postwar era.
    JEL: C14 C38 E32 E37 E42 E44 E51 E52 F41 G01 G21 N10 N20
    Date: 2014–12
  21. By: Brad R. Humphreys (West Virginia University, College of Business and Economics)
    Abstract: Public subsidization of professional sports facilities has been prevalent for the past 40 years in the United States. These subsidies are allegedly justified by economic benefits owing from sports facilities, including the creation of new jobs, new tax revenues and higher income. Recent research suggests that cities have not benefited economically from the boom in professional stadium and arena construction; cities that built new sports facilities over the period 1969-1997 have experienced lower inflation adjusted income per person than those where no new facilities were built. This research calls into question the justification for public subsidization of professional sports facilities.
    Date: 2014–12
  22. By: Pulapre Balakrishnan (Centre for Development Studies Thiruvananthapuram, India); Mausumi Das (Department of Economics, Delhi School of Economics, Delhi, India); M Parameswaran (Centre for Development Studies Thiruvananthapuram, India)
    Abstract: A stylized fact of Indian economic history since 1950 is that the rate of growth of the economy has accelerated periodically and across policy regimes. In this paper we present a mechanism that can account for this behaviour in terms of cumulative causation through positive feedback. We write down a theoretical model incorporating start-up costs and pecuniary externalities that generates the behaviour observed, i.e., periodic acceleration. The model’s implications are tested using the methodology of co-integration analysis. We find evidence of positive feedback and error correction which are at the centre of cumulative causation. Further, we are also able to date the initiation of this process, which has remained the mechanism of growth in India for close to half a century by now. This leads us to conclude that the internal dynamics of the growth process are at least as important as changes in the policy regime to understand growth over the long term in the country. The article has a relevance beyond the context of its investigation. There has been speculation in the theoretical literature on growth and development on the importance of cumulative causation as a generic mechanism of growth. The results presented here attest that.
    Date: 2014–11
  23. By: Benjamin Golez; Peter Koudijs
    Abstract: We analyze four centuries of stock prices and dividends in the Dutch, English, and U.S. market. With the exception of the post-1945 period, the dividend-to-price ratio is stationary and predicts returns throughout all four centuries. “Excess volatility” is thus a pervasive feature of financial markets. The dividend-to-price ratio also predicts dividend growth rates in all but the most recent period. Cash-flows were therefore much more important for price movements before 1945, and the dominance of discount rate news is a relatively recent phenomenon. This is consistent with the increased duration of the stock market in the recent period.
    JEL: G12 G17 N2
    Date: 2014–12
  24. By: Marc Badia-Miró; Anna Carreras-Marín; Christopher M. Meissner
    Abstract: Regional trade in South America since independence has long been much smaller than would be expected if geography were the only constraint on trade. Several potential explanations exist: low technological and demand complementarities; low productivity; high barriers to trade. We first argue that none of these are mutually exclusive and different explanations may be valid at different times. Whatever the causes of low trade, such limits to market access likely hampered economic growth in the region. To address this issue, policy makers have long advocated a South American/Southern Cone Free Trade Area--proposed as early as 1889. Would reductions in trade costs have been sufficient to significantly raise trade? We study bilateral trade between 1910 and 1950, when large external shocks altered global supply and demand. These shocks help us identify the determinants of low intra-regional trade. We find evidence that both low productivity and high trade barriers decreased trade. South American regional trade might have expanded with less restrictive trade policy or improved productivity. Regional trade in textiles, which took off from the 1930s, supports our argument that trade improved when relative productivity and quality improved and when trade costs fell.
    JEL: F02 F15 N16 N76
    Date: 2014–12
  25. By: Balland, Pierre-Alexandre (Department of Economic Geography Utrecht University and Center for Innovation and Research and Competence in the Learning Economy (CIRCLE), Lund University); Rigby, David (Departments of Geography and Statistics, University of California Los Angeles); Boschma, Ron (Center for Innovation and Research and Competence in the Learning Economy (CIRCLE), Lund University and Utrecht University, Urban and Regional research centre Utrecht (URU))
    Abstract: We study the resilience of cities by analyzing their capacity to sustain the production of technology when facing adverse events. Patent applications for 366 U.S. Metropolitan Statistical Areas, spanning the period 1975 to 2002, are used to analyze the vulnerability and response of cities to technological crises. Crises are defined as periods of sustained negative growth in patenting activity. We find that the frequency, intensity and duration of technological crises vary considerably across American cities. We examine how the technological knowledge bases of cities, their network openness and institutional environment condition resilience. Econometric analysis suggests that cities with knowledge bases that are diverse, flexible and proximate to technologies in which they do not currently possess comparative advantage tend to avoid technological crises, have limited downturns in patent production and recover faster from crisis events.
    Keywords: Urban resilience; technological crisis; related knowledge structure; institutions; inter-city networks
    JEL: D83 L65 O33 R11
    Date: 2014–12–25
  26. By: Igor Fedyukin (National Research University Higher School of Economics)
    Abstract: In this paper we use the records of the Heraldry and the Noble Land Cadet Corps to explore the career and educational choices made by Russian nobles in the 1730s and 1740s. We make use of the fact that after the 1736-7 reform of noble service, young members of the elite were allowed to express their preferences regarding enrolment in specific schools or branches of service, and the government promised to respect these choices. Our goal is to investigate how much choice had nobles in reality, what choices they made, and how these choices can be explained. Our analysis demonstrates that post-Petrine nobles had very clear preferences, and that there are deep cleavages within the elite in terms of the attitude of its members towards schooling. While wealthier nobles tended to opt for state schools, especially the Noble Cadet Corps, the poorest nobility overwhelmingly ignored the educational requirement and service registration rules imposed by the state, and did not apply for state schools, preferring instead to enlist directly into regiments as privates. Despite numerous attempts, the government failed to force the poorest nobility to follow the 1736-7 rules for entering schools and the state service, and was forced to regularly issue blank pardons to these offenders. Finally, the paper considers the role of social connections in shaping choices of education and service made by the nobility. The paper presents the Westernization of the Russian elite as a dynamic social process driven by the choices made by the nobles themselves.
    Keywords: Nobility, education, state service, Peter I, Westernization, choices, Heraldry, Cadet Corps, schools, social networks
    JEL: Z
    Date: 2014
  27. By: Van den Hauwe, Ludwig
    Abstract: In the wake of the Financial Crisis and the subsequent Great Recession several commentators have suggested that the analysis of financial instability provided by various strands of heterodox economics got it "right" and that mainstream economics got it "wrong". In this paper two variants of heterodox views about financial instability are compared critically: the views of the late Hyman P. Minsky on the one hand, and the theses of the Austrian School on the other. It is concluded that the apparent similarities between both approaches are superficial, while the divergences are profound and fundamental.
    Keywords: Financial Instability, Business Cycle, Minsky, Austrian School
    JEL: B50 B53 B59 E3 E30 E32
    Date: 2014–12–24
  28. By: Christophe LAVIALLE
    Keywords: , Keynes , nationalisme économique , libéralisme , pragmatisme
    Date: 2014

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.