nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2016‒07‒23
eighteen papers chosen by

  1. Building an English wheat annual series in an intriguing era (1645-1761): Methodology, Challenges and Opportunities. A first assessment from the relationship between Landrace seeds and the Agrarian Revolution By José Luis Martínez-González
  2. Liverpool Merchants versus Ohmi Merchants:How and Why They Dealt with Risk and Insurance Differently By Yasuhiro Sakai
  3. Spinning the Industrial Revolution By Jane Humphries; Benjamin Schneider
  4. The Great Mortgaging By Moritz Schularick; Alan Taylor; Oscar Jorda
  5. The regional dispersion of income inequality in nineteenth-century Norway By Jørgen Modalsli
  6. The work treatment in the textile industry of mid-18th century Andalusia: Laujar de Andarax (Almería) and Úbeda (Jaén) By Luis Garrido-González
  7. Revising England's Social Tables Once Again By Robert C. Allen
  8. Physics and Financial Economics (1776-2014): Puzzles, Ising and Agent-Based Models By Didier SORNETTE
  9. Australia in the Asian Century By Ken Henry
  10. Work Ethic, Social Ethic, No Ethic: Measuring the Economic Values of Modern Christians By Christopher L. Colvin; Matthew McCracken
  11. Why local context matters: de jure and de facto property rights in colonial South Africa By Christie Swanepoel and Johan Fourie; Johan Fourie
  12. New Views on a stucco decoration from The Almoravid period in Al-Andalus By Ramadan Mamoon
  13. Macroeconomic trade effects of vehicle currencies: Evidence from 19th century China By El-Shagi, Makram; Zhang, Lin
  14. Economics and Physics: A Forgotten Discussion By Camilo Andrés Mayorquín
  15. A Possible Explanation of the ‘Exchange Rate Disconnect Puzzle’: A Common Solution to Three Major Macroeconomic Puzzles? By Charles Yuji Horioka; Nicholas Ford
  16. 20. Century’s Economic Crises and Their Effects on Turkey’s Economy By İsmail CAKMAK
  17. El Uso de Efectivo y Tarjetas Débito y Crédito en Colombia By José Eduardo Gómez-González; Juliana Jaramillo-Echeverri; Adolfo Meisel-Roca
  18. The role of human capital in pre-industrial societies: Skills and earnings in eighteenth-century Castile (Spain) By Begoña Álvarez; Fernando Ramos Palencia

  1. By: José Luis Martínez-González (Universitat de Barcelona and Universitat Pompeu Fabra, Spain)
    Abstract: This article presents a new methodology to elaborate various British wheat annual series, in physical units, during an intriguing period: 1645-1761. Under this perspective, it can be proved that the recent agrarian GDP which appears in the literature is very precise. Davenant’s Law follows the logic of a minor crop variability in the long term, but it is also in keeping with the yield obtained from probate inventories, farm accounts and weather changes. This takes us to consider the idea that it was a common rule, not just intellectual speculation. Income was not a factor of decision of consumption until the middle of the 18th century. However, it gradually became more and more important since then.Lengthening the series until 1884 we observe a period of stagnation of production in the second half of the 18th century followed by a spectacular take off. Under a physical and environmental perspective, the timing of the Agrarian Revolution seems to be a phenomenon prior to 1750 and later than 1800. In a first practical assessment of the series with the example of the landrace seeds, everything seems to indicate that their improvement might have been one of the keys of the first wave of the agrarian change.
    Keywords: Wheat annual series, England, Early Modern Age, Davenant’s Law, Agrarian Revolution, Seeds, Climate
    JEL: N53 Q11 Q54
    Date: 2016–06
  2. By: Yasuhiro Sakai (Faculty of Economics, Shiga University)
    Abstract: The purpose of this paper is to intensively discuss and carefully compare the Liverpool Merchants of Britain and the Ohmi merchants of Japan in a historical perspective. The question of much interest is how and why those two merchants dealt with risk and insurance differently. In his later years, J.R. Hicks did a great contribution on the theory of economic history. He paid a special attention to the rise of the market in which the merchant played as the main actor of the history theater. According to the Hicks doctrine, the relation between theory and history should not be one-to-one, but rather flexible to a certain degree. Therefore, it would be quite interesting to compare the Liverpool merchants of Britain and the Ohmi merchants of Japan. It will be seen that they were engaged in their respective triangular trade, producing their respective socioeconomic systems. In short, we have to take a pluralistic view in order to fully understand the concept of risk and insurance from the viewpoint of economic history.
    Keywords: Liverpool merchants, Ohmi merchants, risk, insurance, triangular trade
    JEL: F14
    Date: 2016–07
  3. By: Jane Humphries (All Souls College, University of Oxford); Benjamin Schneider (Merton College, University of Oxford)
    Abstract: The prevailing explanation for why the Industrial Revolution occurred first in Britain is Robert Allen’s (2009) ‘high-wage economy’ view, which claims that the high cost of labour relative to capital and fuel incentivized innovation and the adoption of new techniques. This paper presents new empirical evidence on hand spinning before the Industrial Revolution and demonstrates that there was no such ‘high-wage economy’ in spinning, a leading sector of industrialization. We quantify the working lives of frequently ignored female and child spinners who were crucial to the British textile industry in the Early Modern period with evidence of productivity and wages from the late sixteenth to the early nineteenth century. Our results show that spinning was a widespread, low-wage, low-productivity employment, in line with the Humphries (2013) view of the motivations for the factory system.
    Keywords: hand spinning, women's wages, Industrial Revolution, textiles, Great Divergence, High Wage Economy interpretation of invention and innovation
    JEL: J24 J31 J42 J46 N13 N33 N63 O14 O31
    Date: 2016–06–05
  4. By: Moritz Schularick (University of Bonn); Alan Taylor (Department of Economics & Graduate School of Management); Oscar Jorda (Federal Reserve Bank of San Francisco an)
    Abstract: This paper unveils a new resource for macroeconomic research: a long-run dataset covering disaggregated bank credit for 17 advanced economies since 1870. The new data show that the share of mortgages on banks’ balance sheets doubled in the course of the 20th century, driven by a sharp rise of mortgage lending to households. Household debt to asset ratios have risen substantially in many countries. Financial stability risks have been increasingly linked to real estate lending booms which are typically followed by deeper recessions and slower recoveries. Housing finance has come to play a central role in the modern macroeconomy.
    Date: 2016
  5. By: Jørgen Modalsli (Statistics Norway)
    Abstract: This paper documents, for the first time, municipality- and occupation-level estimates of income inequality between individuals in a European country in the nineteenth century, using a combination of several detailed data sets for Norway in the late 1860s. Urban incomes were on average 4.5 times higher than rural incomes, and the average city Gini coefficient was twice the average rural municipality Gini. All high- or medium-income occupation groups exhibited substantial withinoccupation income inequality. Across municipalities, income inequality is positively associated with manufacturing, average crop, and historical land inequality, and is negatively associated with distance to the nearest city, pastoral agriculture, and fisheries. The income Gini for Norway as a whole is found to have been 0.546, slightly higher than estimates for the UK and US in the same period.
    Keywords: Income inequality; economic development; rural-urban differences; economic history
    JEL: N33 D31 O15
    Date: 2016–07
  6. By: Luis Garrido-González (Universidad de Jaén, Spain)
    Abstract: The objectives that emerge from this contribution are manifold. First, study the kinds of employment contracts for those who work in the textile industry of wool, silk and linen in the 18th century Andalusia was regulated. This is used the information from particular responses or memorials of the Cadastre of Ensenada (1751-52) on Laujar de Andarax (Almería) and Úbeda (Jaén). Such contracts which were established in agriculture, livestock and service sectors of these same locations are compared. Finally, discusses the differences that existed in the business dealings of women with respect to men. Following the introduction, the socio-economic context of the tested locations, the textile activity developed in them within the Andalusian mid eighteenth century environment, addresses for ending the study of treatment and working arrangements and annual incomes that were established in textile manufacturing in comparison with the remaining working activities of women and men and their corresponding conclusions.
    Keywords: Labor Market Inequality, Work Treatment, Annual income, 18th Century Andalusia (Spain)
    JEL: J16 J21 J82 R23
    Date: 2016–06
  7. By: Robert C. Allen (New York University ABU Dhabi, UAE)
    Abstract: In the 1980s, Lindert and Williamson famously revised the social tables of King, Massie, Colquhoun, Smee, and Baxter that traverse the British industrial revolution. This paper extends their work in three directions: Servants are removed from middle and upper class households in the tables of King, Massie, and Colquhoun and tallied separately, estimates are made for the same tables of the number and incomes of women and children employed in the various occupations, income estimates are broken down into rents, profits, and employment income. These extensions to the tables allow variables to be computed that can be checked against independent estimates as a validation exercise. The tables are retabulated in a standard format to highlight the changing social structure of Britain during the industrial revolution. Changes in the social structure, the evolution of incomes by classes, and the pace of structural transformation are revealed.
    JEL: N13 N33 N53
    Date: 2016–07–14
  8. By: Didier SORNETTE (ETH Zurich and Swiss Finance Institute)
    Abstract: This short review presents a selected history of the mutual fertilization between physics and economics, from Isaac Newton and Adam Smith to the present. The fundamentally different perspectives embraced in theories developed in financial economics compared with physics are dissected with the examples of the volatility smile and of the excess volatility puzzle. The role of the Ising model of phase transitions to model social and financial systems is reviewed, with the concepts of random utilities and the logit model as the analog of the Boltzmann factor in statistic physics. Recent extensions in term of quantum decision theory are also covered. A wealth of models are discussed briefly that build on the Ising model and generalize it to account for the many stylized facts of financial markets. A summary of the relevance of the Ising model and its extensions is provided to account for financial bubbles and crashes. The review would be incomplete if it would not cover the dynamical field of agent based models (ABMs), also known as computational economic models, of which the Ising-type models are just special ABM implementations. We formulate the "Emerging Market Intelligence hypothesis" to reconcile the pervasive presence of "noise traders" with the near efficiency of financial markets. Finally, we note that evolutionary biology, more than physics, is now playing a growing role to inspire models of financial markets.
    Keywords: order book, Brownian particle, fluctuation-dissipation, dollar-yen OR from paper: Finance, physics, econophysics, Ising model, phase transitions, excess volatility puzzle, logit model, Boltzmann factor, bubbles, crashes, adaptive markets, ecologies
    JEL: A12 B41 C00 C44 C60 C73 D70 G01
  9. By: Ken Henry
    Abstract: The White Paper on Australia in the Asian Century, published in 2012, argued that fundamental policy and attitudinal changes would be required if Australia were to make the most of the opportunities presented by the Asian century. The White Paper presented a challenge to the core narrative that had galvanised support for two decades of economic reforms in Australia, commencing in the early 1980s. The challenge was intended to re-energise a reform effort that had run out of steam. But Australian policy makers have ignored the White Paper. The core economic policy narrative that motivated Australian economic reforms of the 1980s and 1990s might be labelled Australian mercantilism. The narrative's focus on something called ‘international competitiveness’, and especially its narrow interpretation in the form of the real exchange rate, was bound to generate a policy conundrum when, in the first decade of this century, Australia's terms of trade started to accelerate. Australia's success in the Asian century calls for further investments in national capability: the development of collaborative business relationships with Asian partners; a strong contribution to sustainable security in the region; and deep and enduring people-to-people links across a broad sweep of human activity – commercial, social, cultural and political.
    Date: 2016–07–01
  10. By: Christopher L. Colvin; Matthew McCracken
    Abstract: Benito Arruñada finds evidence of a distinct Protestant social ethic in the ISSP’s 1998 Religion II Survey (Economic Journal 2010; 120: 890-918). We replicate Arruñada’s results using his broad definition of Protestantism and our new narrow definition, which includes only those ascetic denominations that Max Weber singled out for possessing a strong capitalist work ethic. We then extend this analysis to the ISSP’s 2008 Religion III Survey, the most recent comparable international questionnaire on religious attitudes and religious change. We find no evidence of a Calvinist work ethic, and suggest that Arruñada’s Protestant social ethic continues into the twenty-first century.
    Keywords: Work Ethic; Social Ethic; International Social Survey Programme; Replication
    JEL: J24 Z12
    Date: 2016–07
  11. By: Christie Swanepoel and Johan Fourie; Johan Fourie
    Abstract: For economic transactions, including debt transactions, to occur in a market system, property rights are essential. The literature has focussed on finding empirical proof of the effect of property right regimes, noting differences between de jure and de facto property rights. Yet most of these studies focus on macroeconomic outcomes, like economic growth and public expenditure. We propose, instead, to use individual debt transactions and property ownership available in probate inventories from early colonial South Africa to investigate the effects of property right regimes on economic outcomes at the individual level. At the Cape, de jure property rights between freehold and loan farms differed. Historians, however, suggest that de facto property rights between these two property types were the same. We exploit the random variation of birth order, specifically being the oldest son, to estimate whether the type of farm, and therefore the type of property rights, matter for economic activity, in our case, debt transactions. Our results suggest that historians were correct: loan farms were as secure in their de facto property rights, despite differences in de jure property rights. Our results confirm that the local context in which property right regimes are embedded are at least as important as the property right regime itself.
    Keywords: Property rights, informal credit markets, institutions, Africa
    JEL: G21 D23 P14 N27 N37
    Date: 2016
  12. By: Ramadan Mamoon (faculty of archaeology, Fayoum university)
    Abstract: This paper presents study and publish to stucco cladding dating back to the era of Almoravid State in Andalusia, the cladding decorated portico of the entrance to one of the hall that belongs to the Palace of Pinohermoso, which was located in Xativa Andalusian. this cladding reserved today at The Municipal Museum of Xativa.In this paper, researcher will re-read the full inscriptions of the friezes which decorated the cladding correctly and accurately.Also study floral and geometrical decorative elements which appeared on this cladding.The kind and the shape of these inscriptions has a special feature in the drawing way of the letters, there are different letters that the artist painted by the same way, which making it difficult difference between them. The research will study the aim of those inscriptions to accurate history to this cladding, because there are differences about the exact date of the construction of this palace.
    Keywords: Stucco, Almoravid, Cladding, Pinohermoso, Xativa, Inscriptions, History
  13. By: El-Shagi, Makram; Zhang, Lin
    Abstract: We use the Chinese experience between 1867 and 1910 to illustrate how the volatility of vehicle currencies affects trade. Today's widespread vehicle currency is the dollar. However, the macroeconomic effects of this use of the dollar have rarely been addressed. This is partly due to identification problems caused by its international importance. China had adopted a system, where silver was used almost exclusively for trade, similar to a vehicle currency. While being important for China, the global role of silver was marginal, alleviating said identification problems. We develop a bias corrected structural VAR showing that silver price fluctuations significantly affected trade.
    Keywords: vehicle currency,China,SVAR,small sample
    JEL: C32 F14 F31 F41 N15
    Date: 2016
  14. By: Camilo Andrés Mayorquín
    Abstract: This paper has the objective of reviewing some of the key aspects that involve the association between physics and economics. It also invites to considerate the history behind the neoclassical model and how its physical origin is not well known. It is curious to see the close relation between these two sciences, but it is also curious how this could lead to misinterpretations and beliefs of economics being dependent on physics, which clearly is not the case.
    Keywords: economics, physics, history, neoclassical, misinterpretation
    JEL: B16 B23 B49
    Date: 2016–07–06
  15. By: Charles Yuji Horioka; Nicholas Ford
    Abstract: Meese and Rogoff (1983) and subsequent studies find that economic fundamentals are apparently not able to explain exchange rate movements, but we argue that this so-called “Exchange Rate Disconnect Puzzle” arose because researchers such as Meese and Rogoff (1983) did not use the right fundamentals and because they did not allow for the forward-looking nature of exchange rate determination. Further, because they apparently were not aware that financial markets by themselves could not equalise interest rates across countries, they did not properly appreciate that the exchange rate is strongly influenced by agents’ expectations of aggregated differences in local returns. Thus, we believe that the same underlying explanation provided by Ford (2015) and Ford and Horioka (2016a and 2016b) for the Feldstein-Horioka (1980) Puzzle and the PPP Puzzle--namely that financial markets alone cannot achieve net transfers of financial capital and cannot equalise real interest rates across countries--also helps explain why previous attempts to connect changes in the exchange rate to economic fundamentals have not been successful, and so can also be said to contribute to solving the Exchange Rate Disconnect Puzzle.
    Date: 2016–07
  16. By: Ä°smail CAKMAK (Hacettepe University, Department of Economics, Ankara)
    Abstract: Crises has evolved from one country’s or one region’s crisis to global systemic crisis which can affect the whole world because of the fact that overseas of the capital get easy anymore. In this context, the aim of this study examined economic crises which occur in 20. Century and analyzed their effects on Turkey’s economy. 1929 Great Depression Crisis and 1974 crises were global crises in essence whereas 1958, 1994 and 2000-2001 crises have been identified as Turkey-based crises. The reasons of these crises, Turkey’s interventions to get rid of crises and disruptions in country’s economy were analyzed in this study.
    Keywords: Turkey, Economic Crises, Great Depression, 2001 Crisis, Petrol Crisis
    JEL: G01 B22 E60
  17. By: José Eduardo Gómez-González (Banco de la República de Colombia); Juliana Jaramillo-Echeverri (Banco de la República de Colombia); Adolfo Meisel-Roca (Banco de la República de Colombia)
    Abstract: En este documento presentamos una radiografía sobre el uso del efectivo y de las tarjetas débito y crédito en Colombia, haciendo énfasis en la evolución histórica de su utilización. También se discuten algunos factores que explican el alto uso del efectivo que persiste en el país. Adicionalmente, haciendo uso del primer Estudio de Demanda de Banca de las Oportunidades (2015), realizamos un ejercicio probabilístico para identificar los principales determinantes de la demanda de cuentas de depósito y de crédito por parte de los hogares colombianos. Classification JEL: E41, D12, L81
    Keywords: Efectivo, Medios de pago transaccionales, Modelos probabilísticos
    Date: 2016–07
  18. By: Begoña Álvarez (Department of Applied Economics, Universidad de Vigo); Fernando Ramos Palencia (Department of Economics, Quantitative Methods and Economic History, Universidad Pablo de Olavide)
    Abstract: Using the Ensenada Cadastre, a unique database on Castilian households circa 1750, we measure the effect of human capital on the structure of male labor earnings. Human capital is proxied by individual indicators of basic skills (literacy and numeracy) and of occupational skills. We employ a Mincerian regression approach and find that, on average, workers with greater skills earned more than otherwise similar workers with lesser skills. This finding is robust to the inclusion of additional controls for age, household composition, job characteristics, and place of residence. Estimated returns were larger for urban than for rural workers and were strongly heterogeneous across activity sectors. The richness of our data set reveals that higher-skilled workers not only reaped positive rewards in their main jobs but also were more likely to diversify and increase their earnings through “by-employment”. However, not all workers benefited to the same degree from increased human capital. Quantile regression analysis shows that earnings disparities between workers with different skills were much smaller at the lower than at the upper end of the earnings distribution. This evidence indicates that, in pre-industrial Castile, human capital contributed to earnings (and income) inequality.
    Keywords: human capital, pre-industrial Spain, skill premia, earnings inequality, quantile regression
    JEL: N33 J24 C21
    Date: 2016–07

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