nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2016‒05‒14
23 papers chosen by

  1. Foundations of the Soviet Command Economy, 1917 to 1941 By Harrison, Mark
  2. Historical Shocks and Persistence of Economic Activity: Evidence from a Unique Natural Experiment By Michael Fritsch; Alina Sorgner; Michael Wyrwich; Evguenii Zazdravnykh
  3. Did the agrarian product decrease in early modern Europe? The case of Castile By Enrique Llopis; José Antonio Sebastián; Vanesa Abarca; José Ubaldo Bernardos; Ángel Luis Velasco
  4. Religion and development in post-famine Ireland By Henderson, Stuart
  5. J.M. Keynes and F.H. Knight : How to Deal with Risk, Probability and Uncertainty By Yasuhiro Sakai
  6. The nutritional status of manufacturing workers and craftsmen in central Spain in the eighteenth century By Hector Garcia-Montero
  7. Colonial American Paper Money and the Quantity Theory of Money: An Extension By Farley Grubb
  8. Neoclassical Models in Macroeconomics By Gary D. Hansen; Lee E. Ohanian
  9. The revealed comparative advantages of late-Victorian Britain By Brian Varian
  10. State capacity and public goods: institutional change, human capital and growth in early modern Germany By Jeremiah Dittmar; Ralf R. Meisenzahl
  11. Chinese National Income, ca. 1661–1933 By Xu, Yi; Shi, Zhihong; Van Leeuwen, Bas; Ni, Yuping; Zhang, Zipeng; Ma, Ye
  12. Has Globalization Really Increased Business Cycle Synchronization? By E. Monnet; D. Puy
  13. La informalidad: ¿Una herencia colonial? By Hector Noejovich
  14. Price Convergence Patterns across U.S. States By Christina Christou; Juncal Cunado; Rangan Gupta
  15. Migration and Innovation Diffusion : An Eclectic Survey By Francesco LISSONI
  16. Graduate returns, degree class Premia and higher education expansion in the UK By Robin Naylor; Jeremy Smith; Shqiponja Telhaj
  17. The 1920 Japanese income tax reform: government, business and democratic constraints By Shunsuke Nakaoka
  18. Convergence of Economic Growth and the Great Recession as Seen From a Celestial Observatory By Eamon Duede; Victor Zhorin
  19. The rise of the service economy and the real return on capital By Miguel Leon-Ledesma; Alessio Moro
  20. Inflation Expectations and the Stabilization of Inflation : Alternative Hypotheses By Nalewaik, Jeremy J.
  21. Economic Analysis of Property Rights: First Possession of Water in the American West By Bryan Leonard; Gary D. Libecap
  22. The bond event study methodology since 1974 By Maul, D.; Schiereck, D.
  23. Strategic Alliances: An Introductory Framework By Link, Albert N.; Antonelli, Cristiano

  1. By: Harrison, Mark (University of Warwick)
    Abstract: In a command economy, centralized political priorities take precedence over market equilibrium, and government purchases cannot be refused. This chapter describes the antecedents, origins, evolution, and outcomes of the Soviet command economy from the Bolshevik Revolution to World War II. The Soviet command economy was built in two phases, 1917 to 1920, and 1928 onward, with a ‘breathing space’ between. The present account gives prominence to features of a command economy that, while missing from the first phase, were developed during the breathing space, and then helped to ensure the relative success of the second phase. These were features that assured secrecy, security, and the selection of economic officials for competence and party loyalty. Like any economy in the international system, the command economy had a comparative advantage: the production of economic and military power.
    Keywords: command economy, communism, corruption, economic growth, incentives, personnel, policy reform, power, secrecy, security, Soviet Union, violence, war economy JEL Classification: H12, N44, P21
    Date: 2016
  2. By: Michael Fritsch (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Alina Sorgner (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Michael Wyrwich (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Evguenii Zazdravnykh (National Research University, Higher School of Economics, Saint-Petersburg)
    Abstract: This paper investigates the persistence of entrepreneurship in the region of Kaliningrad between 1925 and 2010. During this time period the area experienced a number of extremely disruptive shocks including; devastation caused by World War II, a nearly complete replacement of the native German population by Soviets, and 45 years under an anti- entrepreneurial socialist economic regime followed by a shock-type transition to a market economy. Nevertheless, we find a surprisingly high level of persistence of industry-specific self-employment rates in the districts of the Kaliningrad region. Our analysis suggests that persistence of entrepreneurship is higher in regions with a history of successful entrepreneurship. That is, in regions where a specific industry was particularly efficient and entrepreneurial activity was especially pronounced.
    Keywords: Entrepreneurship, regional culture, persistence
    JEL: L26 N94 P25 P5
    Date: 2016–04–21
  3. By: Enrique Llopis (Universidad Complutense de Madrid,Spain); José Antonio Sebastián (Universidad Complutense de Madrid,Spain); Vanesa Abarca (Universitat de Barcelona, Spain); José Ubaldo Bernardos (Universidad Nacional de Educación a Distancia, Spain); Ángel Luis Velasco (Universidad Nacional de Educación a Distancia, Spain)
    Abstract: This work quantifies the growth of agricultural product and per capita agricultural product in four provinces of Castile between the late sixteenth century and the third quarter of the eighteenth century. For this purpose we have resourced to tithe documentation generated by the dioceses of Avila, Burgos, Salamanca and Segovia for the distribution of the Subsidio and the Excusado. Our most noticeable conclusion is that the negative image shown by some of the recent literature on the evolution of the primary sector in Castile in the seventeenth and eighteenth centuries is at odds with the evidence. Between 1588-1592 and 1771-1775, both the agricultural product and per capita agricultural product, far from declining, grew in the aforementioned region.
    Keywords: Agrarian Product; Tithes; Castile; Europe; Early Modern Period
    JEL: N13 N53 Q11
    Date: 2016–04
  4. By: Henderson, Stuart
    Abstract: This paper employs a variety of economic and financial indicators to examine the relationship between Roman Catholicism and Irish development in the Post-Famine period. County-level decennial data are used for all census years from 1871 to 1911, and Catholicism is instrumented using the distance from Stranraer in Scotland - exploiting the religious transformation of Ireland via plantation. The results reveal that Catholicism is an important factor in illiteracy, professional class, and saving propensity variation. However, the Catholic association is consistently diminishing in statistical and economic importance over time - indicative of religious convergence in development outcomes, and consistent with the idea of a "Catholic Embourgeoisement" in the Post-Famine period. The lack of a significant association between Catholicism and either company formations or bank branch prevalence suggests that Catholicism was not inhibitive to entrepreneurship or financial development.
    Keywords: religion and economic development,Catholic-Protestant cultural dichotomy,post-famine Irish economic history
    JEL: N33 O15 Z12
    Date: 2016
  5. By: Yasuhiro Sakai (Faculty of Economics, Shiga University)
    Abstract: The purpose of this paper is to discuss and compare two giants in the history of economic thought, J.M. Keynes and F.H. Knight, with special reference to risk, probability, and uncertainty. It is in 1921 that both of them published apparently published similar books on the economics of risk and uncertainty. While Knight's contribution on risk and uncertainty is now well recognized, Keynes's accomplishments on probability and uncertainty have been rather ignored in the shadow of his most famous book The General Theory of Employment, Interest and Money (1936). This paper aims to focus on his earlier yet equally important book A Treatise on Probability (1921), and shed a new light on his outstanding ideas and everlasting influences on his later work including The General Theory. It is really interesting to see that Keynes's concept of probability and uncertainty can be well compared to Knight's distinction between a measurable risk and a non-measurable uncertainty.
    Keywords: Keynes, Knight, risk, probability, uncertainty
    Date: 2016–03
  6. By: Hector Garcia-Montero
    Abstract: This article analyzes the relative level and evolution of the net nutritional status of manufacturing workers and craftsmen born in the last third of the eighteenth century in central Spain. It uses the anthropometric and occupational data included in the records of the general conscription carried out during the Napoleonic invasion. The findings are interpreted in light of the recent contributions made regarding the evolution of the economy and industrial products of central Spain during the second half of the eighteenth century. Significant differences can be observed between the different professions and economic sectors, largely explained by income levels, a possible selection for some occupations in accordance with physical characteristics, and access to animal proteins. Furthermore, the data also reveal an overall decrease in height and an increase in inequality between professions during the period.
    Keywords: Nutritional status, Central Spain, eighteenth century, height, inequality
    Date: 2016–04
  7. By: Farley Grubb
    Abstract: The quantity theory of money is applied to the paper money regimes of seven of the nine British North American colonies south of New England. Individual colonies, and regional groupings of contiguous colonies treated as one monetary unit, are tested. Little to no statistical relationship, and little to no magnitude of influence, between the quantities of paper money in circulation and prices are found. The failure of the quantity theory of money to explain the value and performance of colonial paper money is a general and widespread result, and not an isolated and anomalous phenomenon.
    JEL: E31 E42 E51 N11
    Date: 2016–04
  8. By: Gary D. Hansen; Lee E. Ohanian
    Abstract: This chapter develops a toolkit of neoclassical macroeconomic models, and applies these models to the U.S. economy from 1929 through 2014. We first filter macroeconomic time series into business cycle and long-run components, and show that the long-run component is typically much larger than the business cycle component. We argue that this empirical feature is naturally addressed within neoclassical models with long-run changes in technologies and government policies. We construct two classes of models that we compare to raw data, and also to the filtered data: simple neoclassical models, which feature standard preferences and technologies, rational expectations, and a unique, Pareto-optimal equilibrium, and extended neoclassical models, which build in government policies and market imperfections. We focus on models with multiple sources of technological change, and models with distortions arising from regulatory, labor, and fiscal policies. The models account for much of the relatively stable postwar U.S. economy, and also for the Great Depression and World War II. The models presented in this chapter can be extended and applied more broadly to other settings. We close by identifying several avenues for future research in neoclassical macroeconomics.
    JEL: E13 E2 E6
    Date: 2016–03
  9. By: Brian Varian
    Abstract: This paper calculates indicators of revealed comparative advantage (RCA) and revealed symmetric comparative advantage (RSCA) for 17 British manufacturing industries for the years 1880, 1890, and 1900. The resulting indicators show that the late-Victorian ‘workshop of the world’ was at a marked comparative disadvantage in a number of manufacturing industries. The paper then proceeds to identify the factor determinants of Britain’s manufacturing comparative advantages (disadvantages) using a fourfactor Heckscher-Ohlin model that relies upon these indicators. In contrast with previous scholarship, the manufacturing comparative advantages of late-Victorian Britain were in the relatively labour nonintensive industries, and this pattern became more pronounced throughout the period. The paper concludes with the observation that the factor determinants of Britain’s manufacturing comparative advantages appear closer to those of the United States than had traditionally been thought.
    Keywords: comparative advantage; Heckscher-Ohlin; manufacturing; Britain; nineteenth century
    JEL: N0
    Date: 2016–05
  10. By: Jeremiah Dittmar; Ralf R. Meisenzahl
    Abstract: What are the origins and consequences of the state as a provider of public goods? We study legal reforms that established mass public education and increased state capacity in German cities during the 1500s. These fundamental changes in public goods provision occurred where ideological competition during the Protestant Reformation interacted with popular politics at the local level. We document that cities that formalized public goods provision in the 1500s began differentially producing and attracting upper tail human capital and grew to be significantly larger in the long-run. We study plague outbreaks in a narrow time period as exogenous shocks to local politics and find support for a causal interpretation of the relationship between public goods institutions, human capital, and growth. More broadly, we provide evidence on the origins of state capacity directly targeting welfare improvement.
    Keywords: State capacity; institutions; growth; education; human capital; persistence
    JEL: G18 L15 O47
    Date: 2016–03
  11. By: Xu, Yi; Shi, Zhihong; Van Leeuwen, Bas; Ni, Yuping; Zhang, Zipeng; Ma, Ye
    Abstract: In recent decades, national income has become increasingly important as a measure of a nation’s economic health. In this study, we used a wide array of primary and secondary sources to arrive at values of the Chinese per capita gross domestic product (GDP) during the period of 1661–1933. We found a persistent decline in the per capita GDP between the 17th and 19th centuries, followed by a period of stagnation. This pattern, which shows up in many Asian countries, with the exception of Japan, provides a basis for improving our understanding of the patterns of global economic convergence and divergence.
    Keywords: China, national income, Qing dynasty, growth
    JEL: N15 N35 N55 N65 O11
    Date: 2015
  12. By: E. Monnet; D. Puy
    Abstract: This paper assesses the strength of business cycle synchronization between 1950 and 2014 in a sample of 21 countries using a new quarterly dataset based on IMF archival data. Contrary to the common wisdom, we find that the globalization period is not associated with more output synchronization at the global level. The world business cycle was as strong during Bretton Woods (1950-1971) than during the Globalization period (1984-2006). Although globalization did not affect the average level of co-movement, trade and financial integration strongly affect the way countries co-move with the rest of the world. We find that financial integration de-synchronizes national outputs from the world cycle, although the magnitude of this effect depends crucially on the type of shocks hitting the world economy. This de-synchronizing effect has offset the synchronizing impact of other forces, such as increased trade integration
    Keywords: International Business Cycles, Synchronization, Financial integration, Trade integration, Globalization.
    JEL: E32 F41 F42
    Date: 2016
  13. By: Hector Noejovich (Departamento de Economía de la PUCP del Perú)
    Abstract: Este trabajo desarrolla la vida durante el siglo XVII de un comerciante de Potosí, cuya economía oficial estaba en decadencia de acuerdo con ideas usuales en la historiografía. El análisis se sustenta principalmente en series cronológicas e información institucional. En nuestra opinión, existía una estructura formal/informal de la economía colonial, cuyo polo de desarrollo estaba nucleado en Potosí; esa dualidad se sustentaba en conductas que utilizaban intersticios en las ordenanzas legales. JEL Classification-JEL:
    Keywords: Historia economica, herencia colonial, Peru, Potosi
    Date: 2016
  14. By: Christina Christou (University of Pireaus, Department of Banking & Financial Management, Greece); Juncal Cunado (University of Navarra, School of Economics, Spain); Rangan Gupta (Department of Economics, University of Pretoria)
    Abstract: This study examines the convergence patterns of prices across 50 U.S. states over the period 1960-2007, by applying the convergence algorithm developed by Phillips and Sul (2007). The empirical findings suggest rejection of full convergence across the 50 U.S. states prices, and the presence of a certain number of convergence clubs. In particular, eleven subgroup convergence clubs emerge, suggesting that great differences in prices indices exist across the U.S. states. The main implications of the paper point out to the low degree of market integration across the U.S. states, to the limitations of using a unique national price deflator to calculate real US state variables, and to the different effects that the national monetary policies directed to stabilize national prices, for example, will have on U.S. state prices.
    Keywords: Price converge, Club convergence, U.S. states
    JEL: C33 E31 R10
    Date: 2016–04
  15. By: Francesco LISSONI
    Abstract: In the new era of mass migration, with highly skilled individuals playing a key role, the role of migration in innovation diffusion is a topical issue. The paper organizes several strands of literature, from the history of religious minorities to the spatial analysis of knowledge flows. Three main themes emerge: the distinction between mobility and migration, the directions of flows, and their contents. Migration supports diffusion from origin to host countries, but also in the opposite direction, as well as within and across destinations. Distinguishing between information access and knowledge exchanges remain a major item of the research agenda.
    Keywords: migration ; innovation ; diffusion
    JEL: O33 F22 J61
    Date: 2016
  16. By: Robin Naylor; Jeremy Smith; Shqiponja Telhaj
    Abstract: We investigate the extent to which graduate returns vary according to the class of degree achieved by UK university students and examine changes over time in estimated degree class premia. Using a variety of complementary datasets for individuals born in Britain around 1970 and aged between 30 and 40, we estimate an hourly wage premium for a ‘good’ (relative to a ‘lower’) class of degree of 7% to 9%, implying a wide spread around the average graduate premium. We also estimate the premium for a good relative to a lower degree for different cohorts (those born between the mid-1960s and early-1980s) and find evidence that the premium for a good degree has risen over time as the proportions of cohorts participating in higher education have increased.
    Keywords: Graduate returns; higher education participation; ability composition
    JEL: J1
    Date: 2015–11
  17. By: Shunsuke Nakaoka
    JEL: N0
    Date: 2016–04
  18. By: Eamon Duede; Victor Zhorin
    Abstract: Macroeconomic theories of growth and wealth distribution have an outsized influence on national and international social and economic policy. Yet, due to a relative lack of reliable, system wide data, many such theories remain, at best, unvalidated and, at worst, misleading. In this paper, we introduce a novel economic observatory and framework for high resolution comparison and assessment of the distributional impact of economic development through remote sensing of the earth's surface. Striking visual and empirical validation is observed for broad macroeconomic sigma-convergence in the period immediately following the end of the Cold war as well as strong global divergence dynamics immediately following the financial crisis and Great Recession, the rise of China, the decline of U.S. manufacturing, the euro crisis, Arab Spring, and Middle East conflicts.
    Date: 2016–04
  19. By: Miguel Leon-Ledesma; Alessio Moro
    Abstract: We use a two-sector model of structural transformation and balanced growth to show that the real interest rate, measured as the return on capital in units of GDP or in units of aggregate consumption, declines as income grows. This is due to the differential TFP growth in the goods producing sector relative to the services sector. This differential drives a relative price change that triggers a steady decline in the rate of return on capital along the growth path. We calibrate the model to U.S. data to reproduce the behavior of GDP, the share of services in consumption, the relative price goods/services and the investment/output ratio in the period 1950-2015. We find that the calibrated model displays a decline of the real interest rate of 36% in terms of units of GDP and of 43% in terms of units of aggregate consumption during the period considered.
    Keywords: Structural transformation; productivity of capital; two-sector model
    JEL: E22 E24 E31 O41
    Date: 2016–05
  20. By: Nalewaik, Jeremy J.
    Abstract: This paper examines two candidate hypotheses explaining the stabilization of U.S. inflation since the 1970s and 1980s. The first explanation credits the stabilization of inflation expectations, and assumes those expectations have a strong positive causal effect on actual subsequent inflation, while the second explanation credits the disappearance of such a strong positive causal effect. The paper reports statistical tests favorable to both a stabilization of inflation expectations and a marked decline in the effect of the general public’s inflation expectations on subsequent inflation.
    Keywords: Inflation ; Phillips Curve
    JEL: E31 E52
    Date: 2016–04–21
  21. By: Bryan Leonard; Gary D. Libecap
    Abstract: We analyze the economic determinants and effects of prior appropriation water rights that were voluntarily implemented across a vast area of the US West, replacing common-law riparian water rights. We model potential benefits and test hypotheses regarding search, coordination, and investment. Our novel data set of 7,800 rights in Colorado, established between 1852 and 2013 includes location, date, size, infrastructure investment, irrigated acreage, crops, topography, stream flow, soil quality, and precipitation. Prior appropriation doubled infrastructure investment and raised the value of agricultural output beyond baseline riparian rights. The analysis reveals institutional innovation that informs contemporary water policy.
    JEL: K11 N51 N52 Q15 Q25 Q28
    Date: 2016–04
  22. By: Maul, D.; Schiereck, D.
    Date: 2016
  23. By: Link, Albert N.; Antonelli, Cristiano (University of Turin)
    Date: 2015–10

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