nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2016‒08‒07
thirteen papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. Danger to the Old Lady of Threadneedle Street? The Bank Restriction Act and the regime shift to paper money, 1797-1821 By Patrick K. O’Brien; Nuno Palma
  2. Literacy in Spain in the 19th century: An econometric analysis By Rafael Barquín; Pedro Pérez; Basilio Sanz
  3. The Divergent Postcommunist Paths to Democracy and Economic Freedom By Simeon Djankov; Owen Hauck
  4. The Palmer Rule and the convertibility of bank notes in Spain By Yolanda Blasco-Martel
  5. The Gross Agricultural Output of Portugal: A Quantitative, Unified Perspective, 1500-1850 By Jaime Reis
  6. Globalization of World Economy By Razvan GRECU
  7. The Effect of Occupational Licensing on Consumer Welfare: Early Midwifery Laws and Maternal Mortality By Anderson, D. Mark; Brown, Ryan; Charles, Kerwin Kofi; Rees, Daniel I.
  8. Taisho Studies By Haruna Asonuma; Ayako Hotta-Lister; Ian Nish; Naraoka Sochi
  9. Liquidity Management and Central Bank Strength: Bank of England Operations Reloaded, 1889-1910 By Stefano Ugolini
  10. Industrialization in China By Brandt, Loren; Ma, Debin; Rawski, Thomas
  11. The revealed comparative advantages of late-Victorian Britain By Brian D. Varian
  12. Migrant Networks and Trade: The Vietnamese Boat People as a Natural Experiment By Parsons, Christopher; Vézina, Pierre-Louis
  13. The stability of money demand in the long-run: Italy 1861–2011 By Vittorio Daniele; Pasquale Foresti; Oreste Napolitano

  1. By: Patrick K. O’Brien (London School of Economics); Nuno Palma (European University Institute; University of Groningen)
    Abstract: The Bank Restriction Act of 1797 made legal the Bank of England’s suspension of the convertibility of its banknotes. The current historical consensus is that it was a result of the state's need to finance the war, France’s remonetisation, a loss of confidence in the English country banks, and a run on the Bank of England’s reserves. We argue that while these factors help us understand the timing of the Restriction period, they cannot explain its success. We deploy new long-term data which leads us to a complementary explanation: the policy succeeded thanks to the reputation of the Bank of England, achieved through a century of monetary stability.
    Keywords: Bank of England, financial revolution, fiat money, money supply, monetary policy commitment, reputation, and time-consistency, regime shift, financial sector growth
    JEL: N13 N23 N43
    Date: 2016–07
  2. By: Rafael Barquín (Universidad Nacional de Educación a Distancia (UNED), Spain); Pedro Pérez (Universidad Nacional de Educación a Distancia (UNED), Spain); Basilio Sanz (Universidad Nacional de Educación a Distancia (UNED), Spain)
    Abstract: The aim of this paper is to identify variables that could explain Spanish urban literacy growth between 1860 and 1910. We have made use of census data and other public sources. One of the main obstacles is to find appropriate city definition criteria. We have addressed this issue by resorting to the relevant bibliography. A priori, expected key variables are the Church influence, whether or not the city is a provincial capital, the access to the railway system, the mining and industrial activity and, above all, the literacy programs undertaken by Liberal governments. Results of several econometric models - panel data based considering cross and time fixed effects - show firstly, that local idiosyncratic factors were sizeable. Secondly, in the literacy process the educational offer was more decisive than the personal economic incentives, especially among girls. And finally, that Church influence largely explains the literacy levels at the middle of 19th century, as well as its decline in the second half of that century.
    Keywords: Literacy, Schooling, Church, Panel Data Models
    JEL: I25 N33 C23
    Date: 2016–07
  3. By: Simeon Djankov (Peterson Institute for International Economics); Owen Hauck (Peterson Institute for International Economics)
    Abstract: This paper presents evidence from 29 postcommunist countries that the economic transition has been more successful than the political transformation in the quarter century since the fall of the Berlin Wall. The adoption of strong parliamentarian systems has countered the adverse effects of religious and imperial history on economic evolution. As a result, the divergence in democracy and political rights is 4 to 5 times larger than the divergence in the path toward economic freedom and ease of doing business. Democracy is not harder to predict than economic freedom—history and ethnicity predict it well. But recent authoritarian regressions in Hungary and Poland, countries with successful economic reforms and strong parliamentarian systems, present a new challenge to researchers.
    Keywords: Economic Freedom, Ease of Doing Business, Democracy
    JEL: P26 P52
    Date: 2016–07
  4. By: Yolanda Blasco-Martel (Universitat de Barcelona \cf0 Author-Email:
    Abstract: Research on banking systems has token as a frame of reference the English banking system. Precisely because the English banking system was early, it had opportunities to explore certain control mechanisms that favored the extension of the bill of bank. One such mechanism was known as Palmer Rule, a rule stating that a well-managed bank should keep in its cash box one third of its responsibilities. This rule allowed maintaining the convertibility of notes, giving confidence to customers and encouraging the spread paper money. In Spain it has been discussed about the convertibility of the note in the last quarter of the nineteenth century. This work includes to the discussion the Palmer rule, crucial to understanding why the ticket of the Bank of Spain ceased to be convertible de facto in the late nineteenth century, although the inconvertibility is not legally established until 1946.
    Keywords: Palmer rule, Convertibility, Banking history, Banking rules, Spain
    JEL: N14 N24 E42 E58
    Date: 2016–07
  5. By: Jaime Reis (Universidade de Lisboa)
    Abstract: This paper presents the first estimate to date of the anual output of Portugal’s agriculture between 1500 and 1850. It adopts the well-known indirect approach, which uses a consumption function for agricultural products. Prices and wages for this come from a recently created data base. It also verifies the assumption that agricultural consumption is equal or very close to national output. The method for calculating the income variable in the function is innovative since labour supplied per worker is not constant over time as in many estimates. Instead, it is made to vary, reflecting the ‘industrious revolution’ which occurred in Portugal during much of the period considered. The main finding is that the country’s agriculture displays a long-run upward trend, contrary to traditional stagnationist views. It was unable, however, to keep up with the even stronger concomitant growth of population. Food consumption consequently declined, sharply in the 16c. but more slowly in the 17c. It recovered during part of the 18c. but after the 1750s it slipped again and down to 1850 it lost all these welfare gains.
    Keywords: agricultural output, early modern Portugal, cycles, food consumption
    JEL: N53 O13 Q10
    Date: 2016–07
  6. By: Razvan GRECU (Student, Masters Financial Management, Faculty of Economics, Ecological University of Bucharest)
    Abstract: This article addresses a whole evolution of the European integration - deepening, broadening, reforming, relations with third parties - precisely from this perspective of the efforts to obtain more important positions in the global competition. Used after the 1950s, the term globalization is present in all major languages of the world, be it the "globalization" for the English speakers, "mondialisation" for the French speakers, "globalizzazione" for the Italian speakers, "Globlisierung" for the German speakers or "Quan Quai Hua" for the Chinese speakers. The global attribute has a common use in phrases like "global market", "global institutions", "global communications". The widespread use of the term, both in everyday language and in the academic world, is produced since about the 1970s. However, the emergence of the industrial capitalism also marks the presence in the intellectual discourses of the references to a series of events similar to those that today retain the attention in the globalization context: the reduction of time and space as a result of the evolution and the development of transportation and communication, which substantially increases the possibilities of human interaction. It is, however, difficult to trace the border between cause and effect in terms of the globalization process. The world economies evolutions in regards to the trade, production, finances, led on one hand to the global nature of the economy and, on the other hand have influenced and boosted each other.
    Keywords: globalization, regionalization
    JEL: F60
    Date: 2016–04
  7. By: Anderson, D. Mark (Montana State University); Brown, Ryan (University of Colorado Denver); Charles, Kerwin Kofi (Harris School, University of Chicago); Rees, Daniel I. (University of Colorado Denver)
    Abstract: Occupational licensing is intended to protect consumers. Whether it does so is an important, but unanswered, question. Exploiting variation across states and municipalities in the timing and details of midwifery laws introduced during the period 1900-1940, and using a rich data set that we assembled from primary sources, we find that requiring midwives to be licensed reduced maternal mortality by 6 to 7 percent. In addition, we find that requiring midwives to be licensed may have had led to modest reductions in nonwhite infant mortality and mortality among children under the age of 2 from diarrhea. These estimates provide the first econometric evidence of which we are aware on the relationship between licensure and consumer safety, and are directly relevant to ongoing policy debates both in the United States and in the developing world surrounding the merits of licensing midwives.
    Keywords: occupational licensing, midwives, maternal mortality, infant mortality
    JEL: J08 I18
    Date: 2016–07
  8. By: Haruna Asonuma; Ayako Hotta-Lister; Ian Nish; Naraoka Sochi
    Abstract: Professor Naraoka, Associate Professor of Japanese Political and Diplomatic Historty, University of Kyoto, has been visiting Research Fellow in the International History department, LSE. In his researches into the diaries of Horace Rumbold, a senior diplomat in the British Embassy, Tokyo, he has been associated with Dr Asonuma with whom he has written this paper. It presents insights into Japanese politics and diplomacy, 1909-13 as Japan was moving into the Taisho period. One of the important aspects of the Taisho period was the Twenty-one Demands presented to China in January 1915. Here Ian Nish offers a centenary assessment. It is an abbreviated version of a lecture given at the Japan Research Centre, SOAS, on 8 December 2015. Dr Ayako Hotta-Lister, author, has published The Japan-British Exhibition of 1910 (Japan Library, 1999) and Commerce and Culture at the Japan-British Exhibition (Global Oriental, 2013). Her field of interest has moved to Anglo-Japanese relations during the first world war. The present paper deals with British propaganda in Japan together with a topic rarely dealt with: the reactions of Japanese newspapers and politicians to propaganda from her ally.
    Date: 2016–05
  9. By: Stefano Ugolini (University of Toulouse (Institute of Political Studies and LEREPS))
    Abstract: Is a strong commitment to monetary stability enough to ensure credibility? The recent literature suggests it might not be if the central bank cannot perform pure interest rate policy and has to resort to balance sheet policy: the central bank’s financial strength (i.e. the long-term sustainability of its policy) is also a determinant of credibility. This paper provides historical evidence on the issue by focusing on the case of the Bank of England at the heyday of the classical gold standard. It shows that as the Bank was not perceived as having the means to fulfil all of its obligations, the efficacy of its interest rate policy was poor. Failing to reform for political economy reasons, the Bank eventually had to default on its formal convertibility mandate.
    Keywords: Central banking, institutional design, monetary policy implementation, reverse repos, term structure of interest rates, gold standard
    JEL: E42 E43 E58 N13
    Date: 2016–07–01
  10. By: Brandt, Loren (University of Toronto); Ma, Debin (London School of Economics); Rawski, Thomas (University of Pittsburgh)
    Abstract: We see industrialization in China the last 150 years as an ongoing process through which firms acquired and deepened manufacturing capabilities. Two factors have been consistently important to this process: openness to the international economy and domestic market liberalization. Openness and market liberalization are usually complementary: One without the other can seriously limit benefits. For a latecomer like China, modern industry initially finds its most success in more labor-intensive products that require only modest capabilities. Gradual upgrading entails the shift into more skilled-labor and capital-intensive products and processes. China's experience shows that government can both support and obstruct this process. Our review of long-term data shows that i) China's industrial growth rate has consistently exceeded that of Japan, India and Russia/USSR not just in recent decades but throughout most of the 20th century; ii) China's shift from textiles and other light industry toward defense-related industries began before rather than after 1949, as did the geographic spread of industry beyond the initial centers in the Lower Yangzi and the Northeast (formerly Manchuria) regions; iii) the state sector has consistently been a brake on industrial upgrading, highlighting the significance of current reform initiatives in determining China's future industrial path.
    Keywords: China, industrial development, structural change
    JEL: O N
    Date: 2016–07
  11. By: Brian D. Varian (London School of Economics and Political Science)
    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 four-factor 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 non-intensive 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: F11 F14 N63 N73
    Date: 2016–07
  12. By: Parsons, Christopher (University of Western Australia); Vézina, Pierre-Louis (King's College London)
    Abstract: We provide evidence for the causal pro-trade effect of migrants and in doing so establish an important link between migrant networks and long-run economic development. To this end, we exploit a unique event in human history, i.e. the exodus of the Vietnamese Boat People to the US. This episode represents an ideal natural experiment as the large immigration shock, the first wave of which comprised refugees exogenously allocated across the US, occurred over a twenty-year period during which time the US imposed a complete trade embargo on Vietnam. Following the lifting of trade restrictions in 1994, US exports to Vietnam grew most in US States with larger Vietnamese populations, themselves the result of larger refugee inflows 20 years earlier.
    Keywords: migrant networks, US exports, natural experiment
    JEL: F14 F22
    Date: 2016–07
  13. By: Vittorio Daniele; Pasquale Foresti; Oreste Napolitano
    Abstract: Money demand stability is a crucial issue for monetary policy efficacy, and it is particularly endangered when substantial changes occur in the monetary system. By implementing the ARDL technique, this study intends to estimate the impact of money demand determinants in Italy over a long period (1861–2011) and to investigate the stability of the estimated relations. We show that instability cannot be excluded when a standard money demand function is estimated, irrespectively of the use of M1 or M2. Then, we argue that the reason for possible instability resides in the omission of relevant variables, as we show that a fully stable demand for narrow money (M1) can be obtained from an augmented money demand function involving real exchange rate and its volatility as additional explanatory variables. These results also allow us to argue that narrower monetary aggregates should be employed in order to obtain a stable estimated relation.
    Keywords: Italy; money demand stability; monetary aggregates; exchange rate; ARDL
    JEL: C22 E41 E52
    Date: 2016–04–26

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