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on Business, Economic and Financial History |
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Issue of 2016‒08‒28
twenty papers chosen by |
| By: | Calomiris, Charles; Flandreau, Marc; Laeven, Luc |
| Abstract: | This paper offers a historical perspective on the evolution of central banks as lenders of last resort (LOLR). Countries differ in the statutory powers of the LOLR, which is the outcome of a political bargain. Collateralized LOLR lending as envisioned by Bagehot (1873) requires five key legal and institutional preconditions, all of which required political agreement. LOLR mechanisms evolved to include more than collateralized lending. LOLRs established prior to World War II, with few exceptions, followed policies that can be broadly characterized as implementing "Bagehot's Principles" : seeking to preserve systemic financial stability rather than preventing the failure of particular banks, and limiting the amount of risk absorbed by the LOLR as much as possible when providing financial assistance. After World War II, and especially after the 1970s, generous deposit insurance and ad hoc bank bailouts became the norm. The focus of bank safety net policy changed from targeting systemic stability to preventing depositor loss and the failure of banks. Statutory powers of central banks do not change much over time, or correlate with country characteristics, instead reflecting idiosyncratic political histories. |
| Keywords: | bank runs; central banks; economic history; Financial crises; lender of last resort |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11448&r=his |
| By: | Murphy, Anne L. |
| Abstract: | In 1965 Sidney Pollard published The Genesis of Modern Management, an extended discussion of the problems, during Britain's initial period of industrialisation, of the 'internal management' of the firm. But, in his focus on industry, Pollard ignored one of the largest, most significant and most innovative of the enterprises of the late-eighteenth- and early-nineteenth centuries: The Bank of England. This paper focuses on the Bank as a site of precocious managerial development. It first establishes that the Bank, by the latter part of the eighteenth century, encompassed the complexities of a large-scale industrial enterprise. It employed a workforce of several hundred. Its workers operated in specialised and coordinated capacities. Its managerial hierarchy was diffuse and dependent on employed men, rather than the elected directorate. The Bank, therefore, warrants comparison with the types of enterprises identified by Pollard. Focusing on the 1780s, the paper then explores the Bank's organisational and management structure against Pollard's four aspects of management: 'the creation and training of a class of managers; 'the recruitment, training, disciplining and acculturation of labour'; the use of 'accountancy, and other information ... in the rational determination of their decisions' and finally the question of whether there emerged a 'theory and practice of "management"'. It will demonstrate that, although not always applied effectively, the Bank's senior men did show managerial innovation and skill in training and organising the workforce and were able to make informed decisions which had the potential to improve some of the Bank's processes. |
| Keywords: | Bank of England,managerial development,organisational structure,banking history |
| JEL: | N00 N83 L2 J24 J50 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:eabhps:1602&r=his |
| By: | Garcia, Daniel |
| Abstract: | This paper provides a simple model of banking in the shadow of expropriation, which sheds light on the credit markets of XIIIth Century England and the economic reforms introduced by the Angevin Kings. We argue that the fear of expropriation induced bankers to liquidate loans early and reduced the volume of trade in the credit market. To solve this commitment problem, the nobility imposed a restriction on the ability of the king to profit from the loans that fell into his hands. The subsequent demise of these reforms was likely to contribute to the decay of Jewish bankers under Henry III and their eventual expulsion in 1290. |
| Keywords: | Magna Carta; Jewish History; Banking |
| JEL: | G2 G21 K1 K11 N23 |
| Date: | 2016–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:73266&r=his |
| By: | Emilio Depetris-Chauvin (Pontificia Universidad Católica de Chile); Ömer Özak (Southern Methodist University) |
| Abstract: | This research explores the deep historical roots and persistent effects of the division of labor in pre-modern societies. It advances the hypothesis, and establishes empirically that population diversity had a positive causal effect on the division of labor. Based on a novel ethnic level dataset combining geocoded ethnographic, linguistic and genetic data, this research exploits the exogenous variation in population diversity generated by historical migratory patterns to causally establish that higher levels of population diversity were conducive to economic specialization (of labor) and the emergence of trade-related institutions that, in turn, translated into differences in pre-modern comparative development. Additionally, this research provides suggestive evidence that regions historically inhabited by pre-modern societies with higher levels of economic specialization have higher levels of contemporary occupational heterogeneity, economic complexity and development. |
| Keywords: | Economic Specialization, Division of Labor, Trade, Comparative Development, Economic Development, Human Capital, Skill-Bias, Population Diversity, Genetic Diversity, Linguistic Diversity, Cultural Diversity, Persistence, Serial Founder Effect |
| JEL: | D74 F10 F14 J24 N10 O10 O11 O12 O40 O43 O44 Z10 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:smu:ecowpa:1610&r=his |
| By: | Luis Germán Zubero (University of Zaragoza); Vicente Pinilla (University of Zaragoza) |
| Abstract: | En este trabajo se muestran las estrechas relaciones comerciales que Aragón ha mantenido con Cataluña durante la contemporaneidad. La industrialización de Cataluña permitió una creciente complementariedad productiva y comercial con la economía agraria aragonesa. Durante la segunda mitad del siglo XX el avance de la industrialización en Aragón permitió diversificar su especialización productiva. En este contexto, Cataluña ha seguido siendo, con gran diferencia, el principal mercado exterior de Aragón. Desde finales de siglo Aragón ha pasado a ser el principal destino de las exportaciones catalanas, tras Francia, y también su principal proveedor regional. Su comercio muestra ya un claro perfil intraindustrial. |
| JEL: | N73 N74 N93 N94 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:zar:wpaper:dt2016-04&r=his |
| By: | Luis Alberiko Gil-Alaña; Rangan Gupta |
| Abstract: | The study proposes an alternative modelling specification for the real prices of gold and silver that allows the long run trend and cyclical behaviour to be modelled simultaneously by incorporating two differencing parameter in a fractional integration framework. However, we also consider the separate cases of a standard I(d) process, with a pole or singularity at the zero frequency and a cyclical I(d) model that incorporates a single pole in the spectrum at a non-zero frequency. We use annual data spanning from 1833 to 2013for gold and 1792 to 2013 for silver. Based on the more flexible model that permits a pole at both zero (trend) and non-zero (cycle) frequencies, we find that in general the estimates associated to the long run or zero frequency appear to be above 1 in case of gold and below 1 for silver, while the order of integration associated with the cyclical frequency is slightly above 0 in the majority of the cases in the two series. Further, higher orders of integration are associated to the long run component compared with the cyclical one. The implications of these findings are highlighted. |
| Keywords: | Gold and Silver Prices, Cycles, Persistence, Long memory |
| JEL: | C22 Q02 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:nva:unnvaa:wp05-2016&r=his |
| By: | Acheson, Graeme G.; Campbell, Gareth; Turner, John D. |
| Abstract: | This paper examines the origins of investor protection under the common law by analysing the development of shareholder protection in Victorian Britain, the home of the common law. In this era, very little was codified, with corporate law simply suggesting a default template of rules. Ultimately, the matter of protection was one for the corporation and its shareholders. Using c.500 articles of association and ownership records of publicly-traded Victorian corporations, we find that corporations afforded investors with just as much protection as is present in modern corporate law and that firms with better shareholder protection had more diffuse ownership. |
| Keywords: | Law and finance,ADRI,shareholder protection,corporate ownership,common law |
| JEL: | G32 G34 G38 K22 N23 N43 N83 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:eabhps:1603&r=his |
| By: | Horioka, Charles Yuji |
| Abstract: | In this paper, we attempt to shed light on whether Japanese households are rational or if their behavior is influenced by culture and social norms by examining their saving and bequest behavior. To summarize our main findings, we find that Japan’s household saving rate showed great volatility, was often low and even negative, and was high only during the 25-year period from around 1960 until the mid-1980s (if we exclude the war years) and that we can explain the high level of, and trends over time in, Japan’s household saving rate via various socioeconomic and policy variables. This seems to suggest that the Japanese are not a saving-loving people and that their saving behavior is not governed by culture and social norms. Moreover, the bequest behavior of the Japanese suggests that they are less altruistic toward their children and less reliant on their children than otherpeoples, suggesting that the alleged social norm of strong family ties in Japan is largely a myth, and the Japanese do not appear to be appreciably more concerned about the continuation of the family line or the family business than other peoples, suggesting that the influence of the “ie†system is apparently not so pervasive either. However, we argue that these findings do not necessarily mean that culture and social norms do not matter. |
| Keywords: | Altruism, bequest behavior, bequest division, bequest motives, Confucianism, culture, economic rationality, family ties, frugality, households, household behavior, household saving, “ie†system, Japan, Nihonjinron, parent-child relations, rationality, saving, saving behavior, social norms, values 1, Altruism, bequest behavior, bequest division, bequest motives, Confucianism, culture, economic rationality, family ties, frugality, households, household behavior, household saving, “ie†system, Japan, Nihonjinron, parent-child relations, rationality, saving, saving behavior, social norms, values 1, D10, D14, D64, D91, E21, H55, J11, Z10 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:agi:wpaper:00000109&r=his |
| By: | Tetsuji Okazaki (Faculty of Economics, University of Tokyo) |
| Abstract: | This paper provides a new estimation of the income distribution in prewar Japan. Using the income tax statistics and the Pareto interpolation, the top 0.1% income share is estimated at the prefecture-level, for 1890, 1925 and 1935. Based on the estimated data, we examine the relationship between economic development and income inequality, as well as the implication of income inequality on the public security. Positive correlation is found between per capita income and income inequality for 1925 and 1935. Also, it was found that income inequality was associated with poor public security. |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:tky:jseres:2015cj280&r=his |
| By: | Tirthankar Roy |
| Abstract: | Banking experienced large growth in colonial India along with a process of commercialization of agriculture. Yet, the rate of aggregate saving or investment remained low. This article is an attempt to resolve this paradox. It suggests that traditional forms of banking were helped by the formalization of indigenous negotiable instruments, but that transactions between bankers, merchants, and peasants were characterized by a limited use of legal instruments. The limited circulation of bills in this sphere is attributed, among other factors, to high seasonality in the demand for money. Seasonality-induced distortions in the organization of the money market made indigenous banking an unsuitable agent to promote saving and finance industrialization. |
| JEL: | N0 F3 G3 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:67418&r=his |
| By: | Bjarni G. Einarsson; Kristófer Gunnlaugsson; Thorvardur Tjörvi Ólafsson; Thórarinn G. Pétursson |
| Abstract: | Claudio Borio recently quipped that “macroeconomics without the financial cycle is like Hamlet without the Prince” (Borio, 2014, p. 183). We rise to his call to arms and tackle the Prince’s existential question head-on. Our findings suggest that there exists a well-defined financial cycle in Iceland that has gradually become more prominent as the financial deepening and sophistication of the economy has increased. Using a dataset spanning more than a century, including data on credit, house prices, and bank balance sheet size and composition, we find that the aggregate financial cycle is much longer than the typical business cycle, with a median duration of sixteen years. We find that there is a large difference in economic performance over different phases of the financial cycle, suggesting that it has played a prominent role in the country’s macroeconomic development. In fact, we find that almost all of the peaks in the financial cycle coincide with some type of a financial crisis and that cyclical expansions provide a robust early-warning signal for subsequent crises. We find strikingly strong ties between the Icelandic financial cycle and its global counterpart (proxied by the US financial cycle), with almost all of the cyclical peaks in the Icelandic financial cycle occurring close to peaks in the global cycle. Our findings suggest that understanding economic fluctuations in Iceland is hard without understanding the financial cycle and that we ignore the financial cycle at our peril. We conclude with a first attempt at exploring some of the policy questions that our findings raise. |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:ice:wpaper:wp72&r=his |
| By: | Oded Galor; Omer Ozak; Assaf Sarid |
| Abstract: | This research explores the economic causes and consequences of language structures. It advances the hypothesis and establishes empirically that variations in pre-industrial geographical characteristics that were conducive to higher return to agricultural investment, larger gender gap in agricultural productivity, and more hierarchical society, are at the root of existing cross-language variations in the presence of the future tense, grammatical gender, and politeness distinctions. Moreover, the research suggests that while language structures have largely reflected the coding of past human experience and in particular the range of ancestral cultural traits in society, they independently affected human behavior and economic outcomes. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:bro:econwp:2016-7&r=his |
| By: | Guillermo A. Calvo |
| Abstract: | The paper discusses policy relevant models, going from (1) chronic inflation in the 20th century after WWII, to (2) credit sudden stop episodes that got exacerbated in Developed Market economies after the 2008 Lehman crisis, and appear to be associated with chronic deflation. The discussion highlights the importance of expectations and liquidity, and warns about the risks of relegating liquidity to a secondary role, as has been the practice in mainstream macro models prior to the Great Recession. |
| JEL: | E31 E41 E42 E44 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22535&r=his |
| By: | Kose, Esra (University of California, Davis); Kuka, Elira (Southern Methodist University); Shenhav, Na'ama (Dartmouth College) |
| Abstract: | While a growing literature has shown that empowering women leads to increased short-term investments in children, little is known about its long-term effects. We investigate the effect of women's political empowerment on children's human capital accumulation by exploiting plausibly exogenous variation in U.S. state and federal suffrage laws. We estimate that exposure to women's suffrage during childhood leads to large increases in educational attainment for children from economically disadvantaged backgrounds, in particular blacks and Southern whites. An investigation into the mechanisms behind these effects suggests that the educational gains are plausibly driven by the rise in public expenditures following suffrage. |
| Keywords: | women empowerment, suffrage, education |
| JEL: | I21 N32 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10148&r=his |
| By: | Juan Carlos de Pablo |
| Abstract: | “El 9 de julio de 1816, en San Miguel de Tucumán, Argentina dispuso su independencia política. 200 años después seguimos sin disponer la independencia económica”. Esto lo escuché muchas veces, a lo largo de mi vida, y lo reescribo en versión actualizada. ¿Qué contenido específico puede tener la expresión “logremos la independencia económica”; en qué sentido es factible, y en cuál conveniente? Tratar de responder estos interrogantes es el objetivo principal de estas líneas. Para lo cual –como digo, tratando de darle a la expresión contenido específico- se analizarán brevemente las ideas de autarquía, interacción entre iguales e interacción entre el centro y la periferia. |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:cem:doctra:590&r=his |
| By: | Horioka, Charles Yuji; Terada-Hagiwara, Akiko |
| Abstract: | This paper estimates a household saving rate equation for India and Korea using long-term time series data for the 1975-2010 period, focusing in particular on the impact of the pre-marital sex ratio on the household saving rate. To summarize the main findings of the paper, it finds that the pre-marital sex (or gender) ratio (the ratio of males to females) has a significant impact on the household saving rate in both India and Korea, even after controlling for the usual suspects such as the aged and youth dependency ratios and income. It has a negative impact in India, where the bride’s side has to pay substantial dowries to the groom’s side at marriage, but a positive impact in Korea, where, as in China, the groom’s side has to bear a disproportionate share of marriage-related expenses including purchasing a house or condominium for the newlywed couple. |
| Keywords: | Age structure of the population, competitive saving motive, dowries, gender ratio, household saving rate, life cycle hypothesis, marriage expenses, pre-marital sex ratio, population control, saving for education, saving for marriage, saving rate, sex ratio, son preference, wedding expenses, Korea, India, Age structure of the population, competitive saving motive, dowries, gender ratio, household saving rate, life cycle hypothesis, marriage expenses, pre-marital sex ratio, population control, saving for education, saving for marriage, saving rate, sex ratio, son preference, wedding expenses, Korea, India, D12, D14, D91, E21, J11, J12, O16 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:agi:wpaper:00000111&r=his |
| By: | Hugh Rockoff (Rutgers Department of Economics) |
| Abstract: | During World War II the United States rapidly transformed its economy to cope with a wide range of scarcities, such as shortfalls in the amounts of ocean shipping, aluminum, rubber, and other raw materials needed for the war effort. This paper explores the mobilization to see whether it provides lessons about how the economy could be transformed to meet scarcities produced by climate change or other environmental challenges. It concludes that the success of the United States in overcoming scarcities during World War II without a major deterioration in living standards provides a basis for optimism that environmental challenges can be met, but that the unique political consensus that prevailed during the war limits the practical usefulness of the wartime model. |
| Keywords: | World War II, Climate Change, Infrastructure |
| JEL: | N4 |
| Date: | 2016–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:rut:rutres:201609&r=his |
| By: | Tuomas Pekkarinen; Matti Sarvimäki; Salvanes; G. Kjell |
| Abstract: | This paper documents trends in social mobility in Norway starting from fathers born at the turn of the 20th century and ending with sons born in the 1970s. We measure social mobility with intergenerational income elasticities, associations between fathers? and sons? income percentiles, and brother correlations. All approaches suggest that social mobility increased substantially between cohorts born in the early 1930s and the early 1940s. Father-son associations remained stable for cohorts born after WWII, while brother correlations continued to decline. The relationship between fathers? and sons? income percentile ranks is highly nonlinear for the early cohorts, but approaches linearity over time. We discuss increasing educational attainment among low- and middle-income families as a possible mechanism behind these trends. |
| Keywords: | intergenerational mobility, education, sibling correlation |
| JEL: | J08 I24 |
| Date: | 2016–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:fer:wpaper:76&r=his |
| By: | Gilat Levy; Ronny Razin |
| Abstract: | As Weber (1904) recognized, Calvinistic beliefs about predestination may constitute a powerful incentive for good works; an individual wishes to receive assurances about her future prospects of salvation, and good works may provide a positive signal about such prospects. These beliefs can in turn create a social pressure to behave well, as good works can also signal to others that individuals belong to the “elect” and are therefore likely to behave well in social interactions. Moreover, the Consistory, an institution created by Calvin to monitor and publicize individuals’ behaviour, can allow for such social signalling. We analyze these self and social signalling incentives, and show how religions affect levels of cooperation and coordination. |
| JEL: | Z12 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:46849&r=his |
| By: | Galev, Emil; Gurkova, Maria; Galev, Nikolay |
| Abstract: | Visual impact of cultural and historical monuments determined by surrounding plants is the focus of discussion in the paper. Their influence on passengers and onlookers sidelong roadways and trails is described in detail. A great number of practical examples have been examined with the purpose of drawing some general conclusions from this problem to the advantage of landscape design practice. The result of the analysis shows a considerable role of vegetation in visual impact of monuments over the observers. Using color photographs and observations from a number of different positions for a lot of monuments and memorials the survey concludes that from the standpoint of aesthetic value or attractiveness the vegetation often plays a leading role. It is not a detailed study of compositional principles for the formation of spaces around the monuments, but demonstrates the complexity of the problem and gave some results in addition to the theoretical foundations in this respect. Although the scenic beauty metrics are quite debatable and controversial case it is hoped that the conclusions of this paper will facilitate needed discussion on vegetation appropriateness and usefulness in monument's landscape design. |
| Keywords: | monuments, memorials, visual impact, vegetation, aesthetics, tourists |
| JEL: | Q00 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:73142&r=his |