nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2016‒02‒12
seventeen papers chosen by

  1. After 200 years, why is Indonesia’s cadastral system still incomplete? By Pierre van der Eng
  2. The innovation-trade nexus: Italy in historical perspective (1861-1939) By Domini, Giacomo
  3. The Political Role of the Russian Consulates in Mongolia in the Mongolian National Liberation Movement in the Early 20th Century By Alexandra A. Sizova
  4. The Emergence of the Corporate Form By Dari-Mattiacci, Giuseppe; Gelderblom, Oscar; Jonker, Joost; Perotti, Enrico C
  5. Das Turgot Problem. The method of Economics By José M. Menudo
  6. A Tale of Two Sics: Japanese and American Industrialization in Historical Perspective By John Tang
  7. Protectionism and the Education-Fertility Trade-off in Late 19th Century France By Vincent Bignon; Cecilia García-Peñalosa
  8. Money demand under free banking: Switzerland 1851-1906 By Gerlach, Stefan; Kugler, Peter
  9. Forty Years of Oil Price Fluctuations: Why the Price of Oil May Still Surprise Us By Baumeister, Christiane; Kilian, Lutz
  10. Historical Education Levels and Present-Day Non-Cognitive Skills By Eiji Yamamura
  11. The Engine and the Reaper: Industrialization and Mortality in Early Modern Japan By John Tang
  12. The evolution of the gender gap in industrialized countries. By Olivetti, Claudia; Petrongolo, Barbara
  13. Returns to Education and Experience in Criminal Organizations: Evidence from the Italian-American Mafia By Campaniello, Nadia; Gray, Rowena; Mastrobuoni, Giovanni
  14. Growth or stagnation in pre-industrial Britain? A revealed income growth approach By Groth, Christian; Persson, Karl Gunnar
  15. The Adam Smith's Banking System: The sources of the analysis of modern banking governance By Nissaf Ben Ayed; Gérard Mondello
  16. "Complementary Currencies and Economic Stability" By Dimitri B. Papadimitriou
  17. A Critique of Modern Money Theory and the Disequilibrium Dynamics of Banking and Government Finance By Tianhao Zhi

  1. By: Pierre van der Eng
    Abstract: This paper discusses Indonesia’s experience with establishing a uniform cadastral system in rural areas since the idea was first mooted in the early 19th century. Until 1961, a formal cadastre that identified, measured, registered and certified land titles existed only in urban areas. A cadastre for rural land did not start until after the 1960 Agrarian Law. Until then, the village-based land tax registers acted as a substitute cadastral register in areas subject to land tax. In the 19th century, this system was imperfect and calls to resolve issues of inequity in tax assessment led to improvements, especially since 1907. A proper rural cadastre was not introduced during the colonial era, because of the high cost involved, and because its certification of individual land rights would have clashed with customary regulations, including notions of communal land tenure. The introduction of a rural cadastre after 1960 was piecemeal, and the use of property tax registration as a substitute cadastre has continued. By 1992 cadastre registrations covered just 20% of land plots, mostly in urban areas. A World Bank-sponsored project helped to increased coverage since 1994 to 32% in 2013. Greater coverage was delayed by the rapid increase in newly opened up agricultural areas, the cost of land title certificates, the difficulties of reconciling individual land ownership with customary regulations, and also the continued use of property tax registers as a substitute cadastre.
    Keywords: land tax, land tenure, land rights, land registration, cadastre, Indonesia
    JEL: N55 Q15 R52
    Date: 2016–02
  2. By: Domini, Giacomo (UNU-MERIT, and Department of Economics and Statistics, University of Siena)
    Abstract: This work investigates the relationship between trade and technological specialisation in Italy, during the long time span ranging from Unification to the eve of the Second World War. To do this, new series of Italy's indices of specialisation in trade and technology are calculated on the base of offcial data. Empirical analysis, based on Spearman rank correlation coefficients and fixed-effects regression, shows the emergence of a positive relationship between specialisation in technology and specialisation in trade after the start of the country's modern economic growth, around the turn of the twentieth century. This, however, was uniquely driven by a negative relationship between technological specialisation and import shares, while no significant relationship between the former and export shares emerges. Furthermore, this finding excludes the most important sector, leading Italian industrialisation, i.e. textiles, the outstanding performance of which can be seen as largely determined by its being particularly suited to the country's factor endowment.
    Keywords: innovation, industrial specialization, trade, import-export, economic history, Italy, specialisation, comparative advantage
    JEL: N73 N74 O14 O33
    Date: 2015–12–10
  3. By: Alexandra A. Sizova (National Research University Higher School of Economics)
    Abstract: This article examines the objectives, specific features and the results of the political and diplomatic work of the Russian consulates in Outer Mongolia during the rise of the Mongolian national liberation movement in the 1900-1910s. The article is based on a wide range of sources, including archives, in Russian, English, Chinese and Mongolian. In the period after the Xinhai revolution, Russian representatives were actively involved in the settlement of the political disputes between China and Mongolia which sought independence from the former and facilitated the achieving the autonomous status by Mongolia. The Russian diplomats participated in the elaboration and implementation of important international agreements, organization of the technical and financial help to the Mongolian government and prevention of the spread of the Pan-Mongolist movement. Therefore, at the beginning of the 20th century, the Russian consulates not only served as powerful protectors of Russia’s strategic interests in Mongolia, but also played a significant regulating role in the political processes in this country. Above that, they were important for maintaining the Russian Empire’s political contacts with China and Mongolia and the political status quo in the regional system of international relations.
    Keywords: Mongol problem, Mongolian autonomy, Russian foreign policy, diplomacy, consulate, Russian-Chinese-Mongolian relations, Mongolia, China
    JEL: Z
    Date: 2016
  4. By: Dari-Mattiacci, Giuseppe; Gelderblom, Oscar; Jonker, Joost; Perotti, Enrico C
    Abstract: We describe how the business corporation gradually emerged in the 17th century in response to the need to lock in long-term capital to profit from trade opportunities with Asia. Since contractual commitments to lock in capital were not fully enforceable in partnerships, this evolution required a legal innovation, essentially granting the corporation a property right over capital. Locked-in capital exposed investors to a significant loss of control, and could only emerge where and when political institutions limited the risk of expropriation. The Dutch East India Company (VOC, chartered in 1602) benefited from the restrained executive power of the Dutch Republic and was the first business corporation with permanent capital. The English East India Company (EIC, chartered in 1600) kept the traditional cycle of liquidation and refinancing until, in 1657, the English Civil War put the crown under strong parliamentary control. We show how the time advantage in the organizational form had a profound effect on the ability of the two companies to make long-term investments and consequently on their relative performance, ensuring a Dutch head start in Asian trade that persisted for two centuries. We also show how other features of the corporate form emerged progressively once the capital became permanent.
    Keywords: capital lock in; corporate form; institutional development; legal innovation; limited liability
    JEL: G30 K22 N24
    Date: 2016–01
  5. By: José M. Menudo (Department of Economics, Universidad Pablo de Olavide)
    Abstract: This paper examines A.R.J. Turgot’s explanation of the scope and method of economic science. We begin by highlighting two contradictory economic methodologies in Turgot’s writings according to the literature: one in his text on progress and another in his papers on concrete economic matters. An initial hypothesis in this paper holds that this ‘contradiction’ does not exist. To do so, we shall use his texts on scientific methodology, history of science and epistemology, mainly written during the decade of the fifties. The argument is that his taxonomy of sciences explains that the different methodologies observed by the literature, depending on the discipline, are the forms that the unit of science can take in each stage of the progress of the human spirit. A corollary to this hypothesis is that Turgot’s multi-disciplinary works describe a scene of the birth of economic science that is very removed from the political arena. Both debates on types of knowledge, the independence of disciplines, the specialized language and the association of authors are better explained from the sociology of science than from the history of political thought.
    Keywords: Turgot, History of Economic Thought, History of Science, Enlightenment, and Economic Methodology.
    JEL: B31 B10 Z13 B11 B41
    Date: 2016–02
  6. By: John Tang
    Abstract: Late developing countries are able to adopt best practice technologies pioneered abroad, allowing more rapid convergence toward leading economies. Meiji Japan (1868-­-1912) is considered a successful example of industrial convergence, but much of the evidence relies on national aggregates or selected industries. Using historical industry data, this paper examines whether Japan adopted new technologies faster compared to the United States. Contrary to conventional wisdom, duration analysis indicates that new sectors did not appear relatively sooner in Japan; however, they did grow to economic significance faster. Higher firm capitalization and capital intensity are also associated with earlier entry for Japanese sectors.
    Keywords: convergence, industry classification, survival analysis, technology adoption and diffusion
    JEL: N11 N15 O14 O33
    Date: 2016–01
  7. By: Vincent Bignon (DGEI-DEMFI-POMONE – Banque de France); Cecilia García-Peñalosa (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM) - AMU - Aix-Marseille Université)
    Abstract: The assumption that education and fertility are endogenous decisions that react to economic circumstances is a cornerstone of the unified growth theory that explains the transition to modern economic growth, yet evidence that such a mechanism was in operation before the 20th century is limited. This paper provides evidence of how protectionism reversed the education and fertility trends that were well under way in late 19th-century France. The Méline tariff, a tariff on cereals introduced in 1892, led to a substantial increase in agricultural wages, thus reducing the relative return to education. Since the importance of cereal production varied across regions, we use these differences to estimate the impact of the tariff. Our findings indicate that the tariff reduced education and increased fertility. The magnitude of these effects was substantial, and in regions with large shares of employment in cereal production the tariff offset the time trend in education for up to 15 years. Our results thus indicate that even in the 19th century, policies that changed the economic prospects of their offspring affected parents’ decisions about the quantity and quality of children.
    Keywords: education,fertility,unified growth theory,protectionism,France
    Date: 2016–01
  8. By: Gerlach, Stefan; Kugler, Peter
    Abstract: This paper studies money demand in Switzerland under free banking before the establishment of the Swiss National Bank. We find that, in addition to income and the interest rate of savings deposits, the number of banks was an important determinant of long run money demand. It also played a role in the monetary adjustment process. We also detect a strong positive long run impact of real income and the interest rate spread on the number of banks. Moreover, positive deviation of the number of banks from long run equilibrium leads to a decrease in the money stock and leads to a fall in interest rates and an increase in real income.
    Keywords: free banking; monetary dynamics; money demand; Switzerland
    JEL: E41 E42 N13
    Date: 2015–12
  9. By: Baumeister, Christiane; Kilian, Lutz
    Abstract: It has been forty years since the oil crisis of 1973/74. This crisis has been one of the defining economic events of the 1970s and has shaped how many economists think about oil price shocks. In recent years, a large literature on the economic determinants of oil price fluctuations has emerged. Drawing on this literature, we first provide an overview of the causes of all major oil price fluctuations between 1973 and 2014. We then discuss why oil price fluctuations remain difficult to predict, despite economists’ improved understanding of oil markets. Unexpected oil price fluctuations are commonly referred to as oil price shocks. We document that, in practice, consumers, policymakers, financial market participants and economists may have different oil price expectations, and that, what may be surprising to some, need not be equally surprising to others.
    Keywords: Oil market; Oil price expectations; Oil price shock; Peak oil; Unconventional oil
    JEL: C53 Q43
    Date: 2016–01
  10. By: Eiji Yamamura
    Abstract: This study examined the extent to which education levels in the 19th century have shaped current norms, which influence individuals' present-day non-cognitive skills and perceptions of life. Cross-country, individual-level data were compared with each country's average years of schooling in 1870. After controlling for various country-level and individual characteristics, the key findings were as follows: (1) people in countries with high historical education levels place importance on hard work, ambition, and education; (2) people in countries with high historical education levels tend to show perseverance and have a sense of responsibility.
    Date: 2015–12
  11. By: John Tang
    Abstract: Economic development leads to improved health over time due to increased access to medical treatment, sanitation, and income, but in the short run the relationship may be negative given disease exposure from market integration. Using a panel dataset of vital statistics for Meiji Japan, I find mortality rates increased during the country's early industrialization, with railroad access accounting for over five percent of average mortality between 1886 and 1893. Estimates from a triple-differences framework indicate that communicable disease mortality accounts for 91 percent of the additional incidence, which suggests that improved transport may have operated as a vector for transmission.
    Keywords: contagion, market integration, mortality Kuznets curve, public health, railroad transport
    JEL: J11 N75 O14
    Date: 2016–01
  12. By: Olivetti, Claudia; Petrongolo, Barbara
    Abstract: Women in developed economies have made major inroads in labor markets throughout the past century, but remaining gender differences in pay and employment seem remarkably persistent. This paper documents long-run trends in female employment, working hours and relative wages for a wide cross-section of developed economies. It reviews existing work on the factors driving gender convergence, and novel perspectives on remaining gender gaps. The paper finally emphasizes the interplay between gender trends and the evolution of the industry structure. Based on a shift-share decomposition, it shows that the growth in the service share can explain at least half of the overall variation in female hours, both over time and across countries.
    Keywords: female employment; gender gaps; industry structure
    JEL: E24 J16 J31
    Date: 2016–01
  13. By: Campaniello, Nadia; Gray, Rowena; Mastrobuoni, Giovanni
    Abstract: Is there any return to education in criminal activities? This is the first paper that investigates whether education has not only a positive impact on legitimate, but also on illegitimate activities. We use as a case study one of the longest running criminal corporations in history: the Italian-American mafia. Its most successful members have been capable businessmen, orchestrating crimes that require abilities that might be learned at school: extracting the optimal rent when setting up a racket, weighting interests against default risk when starting a loan sharking business or organising supply chains, logistics and distribution when setting up a drug dealing system. We address this question by comparing mobsters with their closest (non-mobster) neighbors using United States Census data in 1940. We document that mobsters have one year less education than their neighbors on average. None of the specifications presented identified any significant difference in the returns to education between these two groups. Private returns to education exist also in the illegal activities characterised by a certain degree of complexity as in the case of organized crime in mid-twentieth century United States.
    Date: 2015
  14. By: Groth, Christian (Department of Economics, University of Copenhagen); Persson, Karl Gunnar (Department of Economics, University of Copenhagen)
    Abstract: The extent of growth in pre-industrial Europe in general and in Britain in particular has attracted intense scholarly focus. Growth or Malthusian stagnation? No consensus has evolved. Reconstructions of national income from 1300 and up to the Industrial Revolution come to opposing conclusions and so do econometric studies. Applying Engels’ law, we suggest a new approach in which income growth is revealed by changes in occupational structure. Data needed for this approach are less contested than the wage and output series used in the existing literature. We find that pre-industrial Britain exhibited secular rise in the standard of living.
    Keywords: Malthusian stagnation; Engel’s law; Revealed income growth; Pre-industrial productivity growth; Structural change. JEL Classification: E24, N13, O11, O41, O47
    Date: 2016
  15. By: Nissaf Ben Ayed (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS - Centre National de la Recherche Scientifique - UNS - Université Nice Sophia Antipolis); Gérard Mondello (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS - Centre National de la Recherche Scientifique)
    Abstract: While in this twenty-first Century (XXIe), questions are rising about the banking system governance and the "post-crisis governance reforms", it is useful to revisit the founding debates of the governance of the twentieth century (XXe). In this area, traditionally, we follow Berle and Means (1932) by tracing separation between shareholders and managers. However, Adam Smith’s banking system view already highlighted the importance of strategic choice of bank executives (risk) in the emergence of crisis phenomena. These strategic choices refer to the relationship between shareholders and managers. From his analysis, one can safely conclude that the way in which ‘Ayr’ bank is managed, that is the role of its governance, constitutes a key determinant of the excessive risk and the fragility of this bank. Specifically, we show that the dispersed Ayr bank’s ownership structure, the asymmetric information between Board and Shareholders and the lack of directors expertise and independence for inuring transparency increased both the bank’s risk taking and its fragility. The regulation issue of the banks activity is at the heart of Smith’s banking theory. It finds an echo in controversies over reports of credit and currency issues in the19th century. Smith’s support to banking regulation seems to have been a response to the 1772 Scottish bank crisis understood as the first modern banking crisis. In Smith’s opinion, the banks should be regulated to ensure the correct reflux of credit currency and avoiding an excessive transformation risk.
    Keywords: credit and currency issues. ,bank governance and regulation, Ayr crisis, risk taking behavior, financial fragility, transformation risk
    Date: 2015–06–11
  16. By: Dimitri B. Papadimitriou
    Abstract: A complementary currency circulates within an economy alongside the primary currency without attempting to replace it. The Swiss WIR, implemented in 1934 as a response to the discouraging liquidity and growth prospects of the Great Depression, is the oldest and most significant complementary financial system now in circulation. The evidence provided by the long, successful operation of the WIR offers an opportunity to reconsider the creation of a similar system in Greece. The complementary currency is a proven macroeconomic stabilizer--a spontaneous money creator with the capacity to sustain and increase an economy's aggregate demand during downturns. A complementary financial system that supports regional development and employment-targeted programs would be a U-turn toward restoring people's purchasing power and rebuilding Greece's desperate economy.
    Date: 2016–01
  17. By: Tianhao Zhi (Finance Discipline Group, UTS Business School, University of Technology, Sydney)
    Abstract: This paper critically reviews and examines the relationship between the origin of disequilibrium macroeconomic thinking by John Maynard Keynes, and the development of Keynesian disequilibrium macroeconomic models. Given that the two strands of literature are both plentiful, I will focus on discussing the essence of Keynesian disequilibrium thinking, and its implications of relevant models in the context of Keynes-Metzler-Goodwin and Weidlich-Haag-Lux approaches.
    Keywords: disequilibrium macroeconomics; nonlinear economic dynamics; John Maynard Keynes; Hyman Minsky
    JEL: B22 E5 E12 G21
    Date: 2016–02–01

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