nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2015‒07‒04
thirteen papers chosen by

  1. Agriculture in Europe's little divergence: the case of Spain By Carlos Álvarez Nogal; Leandro Prados de la Escosura; Carlos Santiago Caballero
  2. Stature and Sibship: Historical Evidence By Hatton, Timothy J.
  3. Agglomeration Economies and Productivity Growth: U.S. Cities, 1880-1930 By Crafts, Nicholas; Klein, Alexander
  4. The Two Revolutions, Landed Elites and Education during the Industrial Revolution By Duarte Nuno Leite; Óscar Afonso; Sandra Tavares Silva
  5. Tax Revenues, Development, and the Fiscal Cost of Trade Liberalization, 1792-2006 By Julia Cage; Lucie Gadenne
  6. Wall of Worries: Reflections on the Secular Stagnation Debate By Barry Eichengreen
  7. The Economics of the African Media By Julia Cage
  8. The Role of Historical Resource Scarcity in Modern Gender Inequality By Sudipta Sarangi; Chandan Jha; Gautam Hazarika
  9. Political economy of the Indonesian mass killing of 1965-1966 By Mushed, Syed Mansoob; Tadjoeddin, Mohammad Zulfan
  10. Edmond Malinvaud: A Tribute to His Contributions in Econometrics By Peter C. B. Phillips
  11. Money and Foreign Trade Ricardo’s “ Magic Numbers” By de Boyer des Roches, Jérôme
  12. The Accumulation of Human and Nonhuman Capital, Revisited By Barbara M. Fraumeni; Michael S. Christian; Jon D. Samuels
  13. Rumors and Runs in Opaque Markets: Evidence from the Panic of 1907 By Caroline Fohlin; Thomas Gehrig; Marlene Haas

  1. By: Carlos Álvarez Nogal; Leandro Prados de la Escosura; Carlos Santiago Caballero
    Abstract: This paper explores the role of agriculture in Spain's contribution to the little divergence in Europe. On the basis of tithes collected by historians over the years, long-run trends in agricultural output are drawn. After a long period of relative stability, output suffered a severe contraction during 1570-1590, followed by milder deterioration to 1650. Output per head moved from a relatively high to a low path that persisted until the Peninsular War. The demand contraction, resulting from the collapse of domestic markets, monetary instability, and war in Iberia, helps to explain a less intensive use of labour and land as incentives to produce for the market sharply diminished. Agricultural output per head moved along population up to 1750. This finding confirms the view of Spain as a land abundant frontier economy. Only in the late eighteenth century a Malthusian pattern emerged.
    Keywords: Agriculture , Little divergence , Early modern Spain , Tithes , Output per head
    JEL: N53 O13 Q10
    Date: 2015–06
  2. By: Hatton, Timothy J.
    Abstract: This paper examines historical evidence for a quality-quantity trade-off between sibship size and height as an indicator of health. The existing literature has focused more on education than on health and has it produced mixed results. Historical evidence is limited by the lack of household level data with which to link an individual’s height with his or her childhood circumstances. Nevertheless a few recent studies have shed light in this issue. Evidence for children in interwar Britain and for soldiers born in the 1890s who enlisted in the British army at the time of WW1 is reviewed in detail. Both studies support the idea of a significant trade-off, partly due to income dilution and partly because, in these settings, large families were a conduit for infection. Evidence from country-level time series is consistent with this view. The fertility decline that began in the late nineteenth century made a modest but nevertheless important contribution to the overall increase in heights during the following century.
    Keywords: height; historical evidence; quality-quantity tradeoff
    JEL: I12 I38 N24
    Date: 2015–06
  3. By: Crafts, Nicholas; Klein, Alexander
    Abstract: We investigate the role of industrial structure in productivity growth in U.S. cities between 1880 and 1930 using a new dataset constructed from the Census of Manufactures. We find that increases in specialization were associated with faster productivity growth but that diversity only had positive effects on productivity performance in large cities. We interpret our results as providing strong support for the importance of Marshallian externalities. Industrial specialization increased considerably in U.S. cities in the early 20th century, probably as a result of improved transportation, and we estimate that this resulted in significant gains in labor productivity
    Keywords: agglomeration economies; industrial structure; Jacobian externalities; manufacturing productivity; Marshallian externalities
    JEL: N91 N92 R32
    Date: 2015–06
  4. By: Duarte Nuno Leite (Munich Cenyter for Economics of Aging); Óscar Afonso (University of Porto, Faculty of Economics); Sandra Tavares Silva (University of Porto, Faculty of Economics)
    Abstract: How we are to understand the Industrial Revolution, the process of transition from a Malthusian equilibrium to today’s Modern Economic Growth, has been the subject of passionate debate. This paper adds more insights to the process of industrialization and the demographic transition that followed this period. By applying the theory of interest groups to landownership and by analyzing landed elites incentives to allow education, it is shown that their political power is important for an understanding of the main events that marked the Industrial Revolution. Contributions are also made to the existence and role of the Agricultural Revolution. It is advanced that it played a significant role in hastening the process of industrialization. A model and numerical simulations are presented to demonstrate these results.
    Keywords: Industrial and Agricultural Revolution; Demographic Transition; Education; Interest Groups.
    JEL: N53 O13 O14 O43
    Date: 2015–06
  5. By: Julia Cage; Lucie Gadenne (University College of London (UCL))
    Abstract: This paper puts the recent evolution of tax revenues in developing countries in historical perspective. Using a novel dataset on total and trade tax revenues we compare the fiscal cost of trade liberalization in developing countries and in today's rich countries at earlier stages of development. We find that trade liberalization episodes led to larger and longer- lived decreases in total tax revenues in developing countries since the 1970s than in rich countries in the 19th and early 20th centuries. The fall in total tax revenues lasts more than ten years in half the developing countries in our sample.
    Keywords: Taxation; Economic development; Trade liberalization; State capacity
    JEL: H10 H20 F13 O17
    Date: 2014–01
  6. By: Barry Eichengreen (George C. Pardee and Helen N. Pardee Professor of Economics and Political Science, University of California, Berkeley (E-mail:
    Abstract: This paper offers some reflections on the debate over secular stagnation. It expresses doubts about explanations for the secular decline in real interest rates and economic growth rates that emphasize the possibility of a global savings glut attributable to the rapid growth of emerging markets and increases in income inequality in the advanced economies. It invokes historical evidence to question whether the commercial potential of new advances in technology have been exhausted. The most convincing explanation for the observed excess of desired saving over desired investment and corresponding low level of real interest rates, it concludes, is probably a sharp, ongoing fall in the relative price of investment goods since the middle of the 20th century. Whether this decline will continue is uncertain. The bottom line is that the case for secular stagnation is at best unproven.
    Keywords: Secular stagnation, Real interest rates, Economic growth
    JEL: E00 N1
    Date: 2015–06
  7. By: Julia Cage
    Abstract: The focus of this chapter is on the economics of sub-Saharan African media. Using the history of sub-Saharan African newspapers as well as historical evidence from Europe and the United States, I study the emergence of market-oriented journalism and of an independent and informative press in sub-Saharan Africa. I document the extent to which sub-Saharan African newspapers have followed the same development steps than newspapers in other countries, moving from living off patronage and government favors to moving more towards mass sales and advertising revenues. I show that the story of the sub-Saharan African media is not a simple story of catching up and convergence. In particular, through the study of the economics of the sub-Saharan African media, I challenge traditional views of the media. I question the long-term sustainability of advertising-dependent media and discuss a new framework to improve the financial sustainability of mass media while preserving the independence of media outlets. I document the pros and cons of ownership concentration and argue in favor of the development of synergies between national and local newspapers as well as of the development of nonprofit media organizations.
    Keywords: Print Media; Advertising Revenues; Nonprofit Media Organizations; Corruption; Political Participation; Government Accountability
    Date: 2014–03
  8. By: Sudipta Sarangi; Chandan Jha; Gautam Hazarika
    Abstract: We propose that historical resource scarcity played a role in the evolution of gender norms inimical to women, cultures that persists to this day. This is a plausible thesis for three reasons. First, male dominance in some species of non-human primate may have been shaped by their resource environments. Second, the prehistoric human skeletal record suggests scarcity led to decline in girls’ share of nutrition in parts of the world. Third, poverty is observed to contribute to gender bias in intra-household resource allocations in less developed countries. The proposition that historical habitual scarcity may have engendered cultures of gender inequality is supported by our finding that nations’ historical resource endowments, measured by the availability of arable land, are negatively related to their present levels of gender inequality as gauged by, for example, the UNDP’s Gender Inequality Index. It is supported as well in analyses at the sub-national level, which discover there are fewer missing women in districts of India better endowed with rainfall and cultivable land, and less bigotry in regard to the rights and abilities of women in sub-national regions of the world whose ancestral lands are better suited to agriculture. JEL Codes: D03, J16, N30
  9. By: Mushed, Syed Mansoob; Tadjoeddin, Mohammad Zulfan
    Abstract: This chapter sketches the build up to the mass killing (politicide) of communists and communist sympathisers in Indonesia, during 1965 to 1966. Our key contribution is to explain why ordinary individuals, not belonging to the elite, might wish to participate in the act of murder. The mass murder aided the consolidation of the new order autocratic regime of Suharto, but his ascension to power cannot be separated from the cold war politics of the time. Over three decades of authoritarian rule did bring about broad based economic progress. In time, the authoritarian contract sustaining the regime became untenable and the contract lacked credible commitment in the absence of the transfer of some political power to the new middle class. This mirrors the modernization theory of endogenous democracy, which states that at higher level of income, the pressure for democracy becomes inexorable.
    Keywords: Indonesia, mass killing, politicide, communists
    JEL: N45
    Date: 2015–03
  10. By: Peter C. B. Phillips (Cowles Foundation, Yale University)
    Abstract: This paper provides a tribute to Edmond Malinvaud's contributions to econometrics. We overview the primary original contributions in Edmond Malinvaud's masterful work The Statistical Methods of Econometrics. This advanced text developed a complete treatment of linear estimation theory using geometric methods and, for the first time, provided rigorous nonlinear regression asymptotics, using this theory as the basis of a rigorous development of the limit theory for simultaneous equations theory. Malinvaud's treatise remained the most complete textbook study of econometric methods for several decades.
    Keywords: Edmond Malinvaud, Statistical Methods of Econometrics, Linear Estimation, Nonlinear regression
    JEL: A19 C10
    Date: 2015–06
  11. By: de Boyer des Roches, Jérôme
    Abstract: The aim of this paper is to present and compare Ricardo’s monetary and foreign exchange analysis in the writings of 1809-1811 on one side, and in the chapter seven of his 1817 book on the other side. By means of a numerical example, the second section recalls the main features of the 1809-1811 analysis. According to Ricardo, the value of money in two trading countries must be equal for the foreign exchange equilibrium to be reached. Several notions such as the price specie flow mechanism, the quantity theory and the criticism of Thornton’s gold point mechanism are emphasized in this section. The third section presents the theory of the comparative advantage developed in chapter seven of the Principles; more than half of this text is consecrated to monetary components. Emphasis is placed on the distinct effects and mechanisms that intervene in the dynamics of money prices and wages that led to international specialization. The numerical example is used to bring to light the quantity of labour effect, the gold points mechanism, the quantity of money effect and the substitution of imports for production effect that lead to the money prices - i.e. £45, £50, £50, £45 , – linked to the "magic numbers" – i.e. 80, 90, 120, 100 . The fourth section studies first the disconnection established by Ricardo in chapter seven of the Principles between the values of currencies and exchange rates, and concludes. Our research provides the following conclusions. Firstly, Ricardo’s statement of the comparative advantage theory involves the monetary theory; specifically it presupposes the validity of the quantity theory. The specie inflow (outflow) in one country drops (increases) the value of money in this country. Secondly, according to the comparative advantage theory, “England would give the produce of the labour of 100 (English) men, for the produce of the labour of 80 (Portuguese)” (Ricardo, 1817, p; 135). It entails that the money price of the produce of 80 Portuguese men is equal to the money price of the produce of 100 English. It means that the money price of the produce of a given quantity of labour is 25% higher in Portugal than in England; i.e. that the value of a given quantity of money is 20% lower in Portugal than in England. Third, the specie flow between countries is not described with Hume’s price specie flow mechanism, but with Thornton’s gold points mechanism. Fourth, fixed exchange rate under gold standard does not involve gold has the same value in various countries. The symmetrical changes, in two countries, in the quantities of money, that lead to symmetrical changes in the values of money, do not modify the market prices of gold in any of these countries. To conclude, the seventh chapter of the Principles does not support Ricardo’s monetary view at the time of the Bullion Committee.
    Keywords: Monnaie; Commerce international;
    JEL: B13 E30 F10 F30
    Date: 2015–03
  12. By: Barbara M. Fraumeni; Michael S. Christian; Jon D. Samuels
    Abstract: In the 25 years since Jorgenson and Fraumeni (1989) published their first article on human capital, the U.S. National Income and Product Accounts (NIPA) and the SNA have changed significantly. The contribution of this paper is two-fold: Creation of a contemporary set of accounts which integrate human capital measures into the latest comprehensive revision of the U.S. national income accounts and an analysis of trends in human capital and national income account aggregates over the post-war period. The paper is a national income accounting paper with production and factor outlay, income, receipt and expenditure, capital accumulation , and wealth accounts. All of these accounts are tied to the NIPA accounts, and supplemented with human capital estimates. A key feature of the human capital accounts is presentation of human capital estimates in current and constant prices. The time period covered is 1949-84 and 1998-2009. We update the human capital national income accounts and examine trends in the aggregate time series. The results in the original Jorgenson and Fraumeni paper are for 1982 and the aggregate time series are from 1949-1984. Subsequent research by Christian (2012) developed modified Jorgenson-Fraumeni (J-F) human capital estimates from 1998 through 2009. Unfortunately there is a gap in coverage. Nonetheless, a comparison of the aggregates and their trends between the earlier and later period will be informative. The accounting tables in this new paper are for 2009, the latest base year for the NIPA accounts.
    JEL: D24 E01 E24
    Date: 2015–06
  13. By: Caroline Fohlin; Thomas Gehrig; Marlene Haas
    Abstract: Using a new daily dataset for all stocks traded on the New York Stock Exchange from 1905 to 1910, we provide the first in-depth, microstructure analysis of the Panic of 1907 - one of the most severe financial crises of the 20th century - and quantify the critical role of asymmetric information in the generation of panic conditions. We first show that quoted equity bid-ask spreads rose six-fold, from 0.5% to 3%, during the peak weeks of the crisis. We then implement a spread decomposition procedure and pinpoint the source of the illiquidity spike in the adverse selection component, that is, the fear of informed trading. Moreover, we show that information costs rose most steeply in the mining sector - the origin of the panic rumors - and in other sectors with opaque corporate reporting standards. In addition to wider spreads and tight money markets, we find other hallmarks of information-based liquidity freezes: trading volume dropped and price impact rose. Importantly, despite short term cash infusions into the market, and abatement of the run, we find that the market remained relatively illiquid for several months following the panic. We go on to show that rising illiquidity enters positively in the cross section of stock returns. Thus, our findings demonstrate how opaque markets can easily transmit an idiosyncratic rumor into a long-lasting, market-wide crisis. Our results also demonstrate the usefulness of illiquidity measures to alert market participants to impending market runs.
    Date: 2015–04

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