nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2016‒07‒30
twenty-two papers chosen by

  1. Historical shocks and persistence of economic activity: evidence from a unique natural experiment By Michael Fritsch; Alina Sorgner; Michael Wyrwich; Evguenii Zazdravnykh
  2. Crescimento Econômico Brasileiro e seus Obstáculos – 1930-2015: uma análise histórico-estrutural By Strachman, Eduardo
  3. Lewis revisited : tropical polities competing on the world market 1830-1938 By Tena Junguito, Antonio; Federico, Giovanni
  4. The Effect of the Italian Unification on the Comparative Regional Development in Literacy, 1821-1911 By Carlo Ciccarelli; Jacob Weisdorf
  5. French Textile Specialisation in Long Run Perspective (1836-1938) : Trade Policy as Industrial Policy By Stéphane BECUWE; Bertrand BLANCHETON
  6. "Trust and Communication in a Property Rights Dilemma" By T.K Ahn; Loukas Balafoutas; Mongoljin Batsaikhan; Francisco Campos Ortiz; Louis Putterman; Matthias Sutter
  7. Landownership Concentration and the Expansion of Education By Francesco Cinnirella; Erik Hornung
  8. The (F)Laws of Piketty’s Capitalism: A Fundamental Approach By de la Fonteijne, Marcel R.
  9. Historical education levels and present-day non-cognitive skills By Eiji Yamamura
  10. Historia e institucionalidad en la minería colombiana By Simón Gil Arango; Juan Sebastián Cubillos; Guillermo Andrés Martínez Medina
  11. The Hand-Loom Weaver and the Power Loom: A Schumpeterian Perspective By Robert Allen
  12. Missing Men: World War II Casualties and Structural Change By Christoph Eder
  13. La controversia tra la Camera di Commercio di Roma e il Consiglio del Debito Pubblico Ottomano sulla conversione delle obbligazioni privilegiate del 1890 By Ecchia, Stefania
  14. The paradox of land reform, inequality and local development in Colombia By Jean-Paul Faguet; Fábio Sanches; Marta-Juanita Villaveces
  15. The Long-lasting Shadow of the Allied Occupation of Austria on its Spatial Equilibrium By Christoph Eder; Martin Halla
  16. A Life Course Perspective on the Income-to-Health Relationship: Macro-Empirical Evidence from Two Centuries By Nagel, Korbinian
  17. Climate change impacts on agriculture and internal migrations in Brazil By Joaquim Bento de Souza Ferreira Filho; Mark Horridge
  18. Comparing the role of height between men and women in the marriage market By Eiji Yamamura; Yoshiro Tsutsui
  19. Structural transformation in Africa : a historical view By Enache,Maria; Ghani,Syed Ejaz; O'Connell,Stephen
  20. French legal origins: A Tocquevilian view By Crettez, Bertrand; Deffains, Bruno; Musy, Olivier
  21. If you’re so smart: John Maynard Keynes and currency speculation in the interwar years By Olivier Accominotti; David Chambers
  22. Near-Money Premiums, Monetary Policy, and the Integration of Money Markets : Lessons from Deregulation By Carlson, Mark A.; Wheelock, David C.

  1. By: Michael Fritsch (Friedrich Schiller University Jena); Alina Sorgner (Friedrich Schiller University Jena); Michael Wyrwich (Friedrich Schiller University Jena); Evguenii Zazdravnykh (National Research University Higher School of Economics)
    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
  2. By: Strachman, Eduardo
    Abstract: In a period of harsh political-economic crisis, in Brazil, and in which several interpretations of their causes emerge, this paper tries to explain these turbulences considering their deeper long run roots and developments, presenting a retrospective of the associated and subordinated evolution essential to the conduction of many of the main events which the Brazilian economy encountered, in the time range analyzed. This range is divided in shorter periods which we consider clear, in terms of some inflexions that explain, in a general and fundamental framework – emphasizing the behavior of the primary, secondary and tertiary macro-sectors – the evolution and important changes of the national economy. We begin explaining the period 1930-60, of high economic and industrial growth without any major interruption. In the third section, we analyze the period 1961-80, also of high growth, but with a mild inflexion in the beginning of the 1960’s, followed by the so-called Brazilian miracle and the II PND. In the fourth section, we present the evolution of the Brazilian economy and industry, from 1981 to 1992, under the scourge of the external debt crisis and, in the last years of this period, under the hardships generated by the Collor Plan. Finally, the last section shows the almost continuous anti-industrial trend that emerge and remain in Brazil, since the 1990’s, stirred up or at least not disturbed by the two political parties which ruled the nation in this period (PSDB, 1993-2002, and PT, 2003-2015).
    Keywords: Brazilian Economy; Industrialization; Economic Policy; Development
    JEL: L38 N16 O2
    Date: 2016–07–22
  3. By: Tena Junguito, Antonio; Federico, Giovanni
    Abstract: Since the seminal work by W.A. Lewis, exports of primary products have been deemed the main or sole source of growth in tropical countries before the Great Depression. This conventional wisdom, however, relies on very limited evidence. This paper analyses the growth of exports with a constant market share analysis for 84 tropical polities. Exports grew a lot, but less than total trade, while relative prices of tropical products remained roughly constant. We thus tentatively infer that the decline in the tropical shares on world trade reflects an insufficient demand for tropical products. Asia mastered well these headwinds throughout the whole period, while African polities blossomed after World War One. The loser was (South) America, and most notably the Caribbean former slave colonies especially before 1870.
    Keywords: Twentieth Century; Nineteenth Century; World Trade; Tropical trade; International Trade
    JEL: N10 F14
    Date: 2016–07–01
  4. By: Carlo Ciccarelli (DEF & CEIS,University of Rome Tor Vergata); Jacob Weisdorf (University of Southern Denmark, CEPR, and CAGE)
    Abstract: This paper provides the first ever diachronic homogenous estimates of literacy rates in the Italian provinces during the period 1821-1911, by gender. The estimates exploit the age structure information reported in the population censuses of 1881 and 1911 to back cast literacy rates to the early 19th century. Territorial differences were already huge in the aftermath of the Napoleonic wars, with Southern regions registering extremely low levels and essentially no change before the unification of 1861. Furthermore, the early rise of literacy rates for Northern women suggests a dimension of the North-South gap that significantly the political unification of the country.
    Keywords: Human capital, literacy, regional economics, Italy
    JEL: J24 R11 N13
    Date: 2016–07–25
  5. By: Stéphane BECUWE; Bertrand BLANCHETON
    Abstract: By using a new database covering French international trade between 1836 and 1938 this paper focuses on the country’s specialisation in textiles. It demonstrates, for the first time, the major influence of trade policy on French international trade in textiles during the first globalisation. Tariffs appear to be crucial determinants of specialisation measured by the Lafay Index. Tariffs are also major determinants of intra-industry trade in textiles. By analysing changes in tariffs between raw textiles and finished textiles and decorrelation between tariffs we show that an effective trade protection approach was applied by successive French governments in order to sustain the industrial competitiveness of textiles. Trade policy slowed down textile de-specialisation until WWI.
    Keywords: textile, effective protection, specialisation, international trade, France
    JEL: F6 N23 N73
    Date: 2016
  6. By: T.K Ahn; Loukas Balafoutas; Mongoljin Batsaikhan; Francisco Campos Ortiz; Louis Putterman; Matthias Sutter
    Abstract: A vibrant literature has emerged in recent years to explore the influences of human evolution and the genetic composition of populations on the comparative economic performance of societies, highlighting the roles played by the Neolithic Revolution and the prehistoric “out of Africa” migration of anatomically modern humans in generating worldwide variations in the composition of genetic traits across populations. The recent attempt by Nicholas Wade’s A Troublesome Inheritance: Genes, Race and Human History to expose the evolutionary origins of comparative economic development to a wider audience provides an opportunity to review this important literature in the context of his theory.
    Date: 2016
  7. By: Francesco Cinnirella; Erik Hornung
    Abstract: We study the relationship between the concentration of large landownership and the expansion of mass education in nineteenth-century Prussia. Cross-sectional estimates show a negative association of landownership concentration with enrollment rates. Panel estimates with county-ï¬ xed effects indicate that regions with an initially stronger concentration of large landownership exhibit increasing enrollment over time. These results are consistent with the erosion of large landowners’ feudal power due to agricultural reforms and the resulting emancipation of the peasantry which occurred throughout the nineteenth century. We present evidence consistent with the hypothesis that emancipation from labor coercion increased the private demand for education.
    Keywords: Land concentration, Education, Serfdom, Peasants' emancipation, Prussian economic history
    JEL: O43 Q15 I25 N33
    Date: 2015–05
  8. By: de la Fonteijne, Marcel R.
    Abstract: The book 'Capital in the Twenty-First Century' by the French economist Piketty about the inequality of income and wealth distribution is already quite a while in the spotlights. Throughout his book he uses two formulas which he has named ‘the first fundamental law of capitalism’ and ‘the second fundamental law of capitalism’. With his reasoning he tries to show that, with these laws in place, he is capable to explain inequality phenomena with respect to the income and wealth distribution. Without going into the significance of his reasoning and conclusions, we will show that the use of the laws, the way he does, is fundamentally wrong. We suggest alternative formulas and a new approach. The inequality r>g is in our opinion not a meaningful equation with respect to inequality.
    Keywords: sustainability, inequality, unemployment, GDP growth, income, wealth distribution
    JEL: E00 E10 E20 E60 H20 H30 H60
    Date: 2014–12–24
  9. By: Eiji Yamamura
    Abstract: I 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.
    Keywords: Historical education level, norms, non-cognitive skills.
    JEL: I25 D83 Z13 N30
    Date: 2016–01–13
  10. By: Simón Gil Arango; Juan Sebastián Cubillos; Guillermo Andrés Martínez Medina
    Abstract: El presente documento comprende una revisión de la historia y consolidación de la actividad minera en Colombia y su institucionalidad desde los primeros años de la colonia hasta la primera década del siglo XXI. Así, se desarrolla una revisión crítica del cambio de las formas sociales de producción y el rol del Estado colombiano en la regulación de esta actividad económica, incluidos los cambios en los derechos de propiedad del subsuelo desde los primeros esfuerzos de consolidación de un proyecto político independentista. Se incorporan elementos historiográficos para facilitar la lectura de un periodo tan amplio entre los cuales se destacan: el periodo colonial, periodo de las primeras repúblicas, industrialización clásica, la mineralización dirigida por el Estado (1973-1991), una transición y la apertura minera (2001-2013). El artículo cuestiona la veracidad histórica de la existencia de un paradigma de desarrollo a partir de una vocación minera y pone en evidencia la permanencia de los lazos y formas institucionales coloniales en la consolidación del sector así como también la incapacidad de gestionar algunos aspectos centrales de la actividad económica en mención.
    Keywords: Institucionalismo, minería, tradición, historia.
    JEL: B52 N5 N56
    Date: 2016–07–18
  11. By: Robert Allen (New York University ABU Dhabi, UAE)
    Abstract: Schumpeter’s ‘perennial gale of creative destruction’ blew strongly through Britain during the Industrial Revolution, as the factory mode of production displaced the cottage mode in many industries. A famous example is the shift from hand loom weaving to the use of power looms in mills. As the use of power looms expanded, the price of cloth fell, and the ‘golden age of the hand loom weaver’ gave way to poverty and unemployment. This paper argues that the fates of the hand and machine processes were even more closely interwoven. With the expansion of factory spinning in the 1780s, the demand for hand loom weavers soared in order to process the newly available cheap yarn. The rise in demand raised the earnings of hand loom weavers, thereby, creating the ‘golden age’. The high earnings also increased the profitability of developing the power loom by raising the value of the labour that it saved. This meant that less efficient–hence, cheaper to develop--power looms could be brought into commercial use than would have been the case had the golden age not occurred. The counterfactual possibilities are explored with a model of the costs of weaving by hand and by power. The cottage mode of production was an efficient system of producing cloth, but it self-destructed as its expansion after 1780 raised the demand for sector-specific skills, thus providing the incentive for inventors to develop a power technology to replace it. The power loom, in turn, devalued the old skills, so poverty accompanied progress.
    Keywords: technological change, invention, technological unemployment, creative destruction
    JEL: N63 N34 O31
  12. By: Christoph Eder
    Abstract: A shock to the sector composition of the local labor market can affect long-run economic development of a location. Because structural change ultimately shifts labor from agriculture to services, an early transition to manufacturing may hamper long-run prosperity. The identification strategy exploits military World War II (WWII) casualties in Austrian municipalities as an exogenous shock to the local labor market. WWII casualties shifted labor out of agriculture into manufacturing in the short-run, which eventually led to a differential path of structural change. In the long-run, I find a strong and robust negative effect of WWII casualties on subsequent economic output.
    Keywords: structural change, local labor markets, spatial equilibrium, World War II, Austria
    JEL: O14 J40 N14 R11 R12
    Date: 2016–07
  13. By: Ecchia, Stefania
    Abstract: The paper aims to analyze the reasons for the dispute between the Chamber of Commerce of Rome and the Ottoman Public Debt Administration Council - set up by the Ottoman Empire following the bankruptcy to repay its external debt to the European nations - about the renegotiation the Public Debt of 1890. The Italian delegate to the Council, appointed by the Chamber of commerce of Rome, was accused by the same Chamber for exceeding its mandate because of his consent to the conversion project conceived by the British and French delegate, in concert with the Imperial Ottoman Bank, without having obtained the prior permission of the Italian bondholders represented by the Chamber. Taking a cue from the legal issue, the research will shed light on the financial maneuvers of creditor nations in connection with the Public Debt Administration.
    Keywords: Ottoman Empire; Public Debt; Italy
    JEL: N2
    Date: 2016–01
  14. By: Jean-Paul Faguet; Fábio Sanches; Marta-Juanita Villaveces
    Abstract: Over two centuries, Colombia transferred vast quantities of land, equivalent to the entire UK landmass, mainly to landless and poor peasants. And yet Colombia retains one of the highest concentrations of land ownership in the world. Why? We show that the effects of land reform on inequality and economic and human development were heterogeneous. On average, rural properties grew larger, land inequality and dispersion fell, and development increased across Colombia’s 1100+ municipalities between 1961-2010. But pre-existing inequality counteracts these effects, resulting in smaller rural properties, greater dispersion, and lower levels of development. How? Land reform increased public investment in agriculture, raising consumption of public and private goods. But land concentration again counters these effects. Elites seem to have distorted local decision-making to benefit themselves. We conclude that land reform’s second-order effects, on the distribution of local power, are more important than its first-order effects on the distribution of land.
    Keywords: land reform; inequality; development; latifundia; poverty; Colombia
    JEL: H27 N16 Q15
    Date: 2016–07
  15. By: Christoph Eder; Martin Halla
    Abstract: As a consequence of World War II, Austria was divided into four different occupation zones for 10 years. Before tight travel restrictions came into place, about 11 percent of the population residing in the Soviet zone moved across the demarcation line. We exploit this large internal migration shock to further our understanding of why economic activity is distributed unevenly across space. Our analysis shows that the distorted population distribution across locations has fully persisted until today (60 years after the demarcation line become obsolete). An analysis of more direct measures of economic activity shows an even higher concentration in the former non-Soviet zone. This gap in economic activity is growing over time, mainly due to commuting streams out of the former Soviet zone. This shows that a transitory shock is capable of shifting an economy to a new spatial equilibrium, which provides strong evidence for the importance of increasing returns to scale in explaining the spatial distribution of economic activity.
    Keywords: spatial equilibrium, agglomeration effects, population shock, World War II, Austria
    JEL: R11 R12 R23 J61 N44 N94
    Date: 2016–07
  16. By: Nagel, Korbinian (Helmut Schmidt University, Hamburg)
    Abstract: The epidemiological literature discusses two contrary hypotheses that describe life course variations in the income-to-health relationship: the cumulative advantage and the age as leveller hypothesis. Since related micro level studies are criticised due to an income-rank effect, this study transfers the investigation of both hypotheses to a macro level with a long time horizon. It asks whether increases in per capita income improve population health and whether the improvements differ across population age groups. The analysis uses an unbalanced panel data set with 20 countries and up to 211 years, and relies on an error correction and common factor framework to investigate the long-run equlibrium relationship between income and selected measures of age specific population health. A significant effect of per capita income on survival rates is found for middle ages but not for very young and for old ages. From this it can be concluded that while the cumulative advantage theory describes the transition from young to middle ages, the transition from middle to old ages corresponds to the age as leveller mechanism.
    Keywords: Population Health; Economic Development; Panel Time Series Analysis; Cumulative Advantage; Age as Leveller
    JEL: C22 I15 J11
    Date: 2016–07–26
  17. By: Joaquim Bento de Souza Ferreira Filho; Mark Horridge
    Abstract: Recent internal migration flows in Brazil differ from historical patterns observed since the seventies. In the past internal migration typically flowed from states in Northeast Brazil and Minas Gerais towards the richer states of São Paulo and Rio de Janeiro. According to Brito and Carvalho (2006) between 1960 and 1990 about 8.1 million people left the Northeast and 3.8 million left Minas Gerais. This was the "normal" internal migration pattern in Brazil until the eighties, when, according to Brito and Carvalho (2006), a succession of economic crises and expansion of the agricultural frontiers changed the picture. Actually, during the nineties emigration from the Northeast region slowed down considerably; the region became a net recipient of population in recent years. At the same time, the Southeast states of São Paulo and Rio de Janeiro, the main destination for migrants until the end of the eighties, have recently lost population. Some of the migrants leaving the Southeast return to the Northeast, but many go to the dynamic new agricultural Center-west regions.
    Keywords: Computable General Equilibrium, Climate, Internal Migration
    JEL: C68 E17 Q54 R23
    Date: 2016–07
  18. By: Eiji Yamamura (Department of Economics, Seinan Gakuin University); Yoshiro Tsutsui (Department of Economics, Konan University)
    Abstract: This paper attempts to explore how the different roles of height between men and women in the marriage market changed across generations. Using individual-level data from Japan, we compared the effect of height on marriages between men and women, and investigated how the effect of height on marriage changed across generations. Our key findings are: (1) For those who were born before 1965, a 1% increase in height led to an approximately 0.3% increase in the probability that men were married. Conversely, a 1% increase in height led to an approximately 0.3% decrease in the probability that women were married. (2) For those who were born in or after 1965, a 1% increase in height led to an approximately 1.40% increase in the probability that men were married. However, the height effect disappeared for women. Japan experienced a miraculous economic development post-World War II, which resulted in changes in its economic and social structure. These changes may change the role of height for Japanese women in the marriage market.
    Keywords: Marriage market; Height; Preference change.
    JEL: J12 J16
    Date: 2016–07
  19. By: Enache,Maria; Ghani,Syed Ejaz; O'Connell,Stephen
    Abstract: This paper presents evidence suggesting that the relationship between income and economic structure is shifting over time, with countries across the income distribution uniformly increasing the share of labor in service sectors and an increasingly less stark relationship between manufacturing intensity and gross value added per capita. The paper then assesses historical patterns of productivity convergence at a more detailed sector disaggregation than has been previously available. The analysis finds suggestive evidence that, at least in recent decades, convergent pressures in services industries are stronger than in manufacturing. Focusing on African economies, the paper presents a country-by-country historical analysis of structural change over the past four decades. Given the varied patterns and trends in structural change across African countries, it is difficult to characterize structural change from a single, continent-wide perspective. Some countries saw an early transition of labor out of agriculture, with manufacturing absorbing this labor in the decades prior to the 1990s, while another group of countries saw a later transition out of agriculture, where the services sector played a large role in labor reallocations in the 1990s and 2000s. Finally, the paper provides a country-by-country structural transformation scorecard to assess patterns of structural change in jobs and growth.
    Date: 2016–07–11
  20. By: Crettez, Bertrand; Deffains, Bruno; Musy, Olivier
    Abstract: We provide an alternative explanation of French legal centralization. To do this we develop a rational choice model of the legal architecture around 1789 and the French Revolution. Following Tocqueville we propose to analyze the French movement towards legal centralization as the result of an increase in the aversion to inequality before the law. We show that legal centralization can be preferred to the "Ancien Régime" situation or intermediate legal decentralization if the aversion to legal differences is sufficiently strong. In addition, we show that when the legal system is centralized it is always optimal to allow some degree of judicial discretion. This result is consistent with the historical evidence that the Napoleonic codification, i.e., the culmination of French legal centralization, was associated with a higher degree of judicial discretion than at the beginning of the Revolution. This view contrasts with the interpretation of the Napoleonic codification as a means of transforming judges into automata.
    Keywords: Aversion to inequality before the law, Codification, Legal origins, Legal centralization, French Revolution
    JEL: K40 N40
    Date: 2016–03
  21. By: Olivier Accominotti; David Chambers
    Abstract: This article explores the risks and returns to currency speculation during the 1920s and 1930s. We study the performance of two well-known technical trading strategies (carry and momentum) and compare them with that of a fundamentals-based trader: John Maynard Keynes. Technical strategies were highly profitable during the 1920s and even outperformed Keynes. In the 1930s, however, both technical strategies and Keynes performed relatively poorly. While our results reveal the existence of profitable opportunities for currency traders in the interwar years, they suggest that such profits were necessary compensation for enduring the substantial risks that all strategies entailed.
    Keywords: carry; momentum; foreign exchange; currency markets; currency crises
    JEL: F31 G14 G15 N22 N24
    Date: 2016–05–18
  22. By: Carlson, Mark A. (Bank for International Settlements and Board of Governors of the Federal Reserve System); Wheelock, David C. (Federal Reserve Bank of St. Louis)
    Abstract: The 1960s and 1970s witnessed rapid growth in the markets for new money market instruments, such as negotiable certificates of deposit (CDs) and Eurodollar deposits, as banks and investors sought ways around various regulations affecting funding markets. In this paper, we investigate the impacts of the deregulation and integration of the money markets. We find that the pricing and volume of negotiable CDs and Eurodollars issued were influenced by the availability of other short-term safe assets, especially Treasury bills. Banks appear to have issued these money market instruments as substitutes for other types of funding. The integration of money markets and ability of banks to raise funds using a greater variety of substitutable instruments has implications for monetary policy. We find that, when deregulation reduced money market segmentation, larger open market operations were required to produce a given change in the federal funds rate, but that the pass through of changes in the funds rate to other market rates was also greater.
    Keywords: money markets; deregulation; market integration; monetary policy implementation; Eurodollars; Regulation Q
    JEL: E50 G18 N22
    Date: 2016–06–01

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