nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2017‒10‒15
25 papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. The general theory at 80: reflections on the history and enduring relevance of Keynes? economics By Thomas I. Palley
  2. Black living standards in South Africa before democracy: New evidence from heights By Bokang Mpeta; Johan Fourie; Kris Inwood
  3. Una historiografía en expansión: los estudios sobre historia económica del Caribe colombiano, 1997-2017 By Adolfo Meisel Roca
  4. Accounting fraud in a pre-modern historical context: An accounting investigation on the use of market (fair) value in the second half of the eighteenth century in Venice By Marisa Agostini; Riccardo Cella; Giovanni Favero
  5. American divergence : lost decades and Emancipation collapse in Latin American and the Caribbean 1820-1870 By Tena Junguito, Antonio; Federico, Giovanni
  6. Interview with 2016 Economics Laureate Bengt Holmström By Holmström, Bengt
  7. Interview with 2016 Laureate in Economics Oliver Hart By Hart, Oliver
  8. Norms and Reform: Legalizing Homosexuality Improves Attitudes By Charles Kenny; Dev Patel
  9. The Sources of Growth in a Technologically Progressive Economy: the United States, 1899-1941 By Bakker, Gerben; Crafts, Nicholas; Woltjer, Pieter
  10. The evolution of markets in China and Western Europe on the eve of industrialisation By Daniel Bernhofen; Markus Eberhardt; Jianan Li; Stephen Morgan
  11. The nature and response to the 1930s agrarian crisis : Spain in a European perspective By Simpson, James
  12. Recovery from the Great Depression: The Farm Channel in Spring 1933 By Paul Rhode; Johannes Wieland; Joshua Hausman
  13. Historical Patterns of Inequality and Productivity around Financial Crises By Paul, Pascal
  14. Dismantled once, diverged forever? A quasi-natural experiment of Red Army misdeeds in post-WWII Europe By Christian Ochsner
  15. Decomposing the U.S. Great Depression: How important were Loan Supply Shocks? By Breitenlechner, Max; Scharler, Johann
  16. Appendix to "Capital Accumulation, Private Property and Rising Inequality in China, 1978-2015" By Thomas Piketty; Li Yang; Gabriel Zucman
  17. Development and Retention of Human Capital in Large Bureaucracies By Darrell J. Glaser; Ahmed S. Rahman
  18. Richard H. Thaler: Easy money or a golden pension? Integrating economics and psychology By Committee, Nobel Prize
  19. Paralyzed by Panic: Measuring the Effect of School Closures during the 1916 Polio Pandemic on Educational Attainment By Keith Meyers; Melissa A. Thomasson
  20. Does going easy on distressed banks help economic growth? By Hundtofte , Sean
  21. Intra-household decision making and long-term welfare effects: New empirical evidence. By Grohmann, Antonia; Filipiak, Ute; Heyerhorst, Franziska
  22. The Employment Effects of Mexican Repatriations: Evidence from the 1930's By Jongkwan Lee; Giovanni Peri; Vasil Yasenov
  23. The Effect of Indian Residential Schools on Height and Body Mass Post-1930 By Donna Feir & M. Chris Auld
  24. From abnormal to normal—Two tales of growth from 25 years of transition By Becker, Torbjörn; Olofsgård, Anders
  25. The Independent Bank of England--20 Years On : a speech at "20 Years On," a conference sponsored by the Bank of England, London, England, September 28, 2017. By Fischer, Stanley

  1. By: Thomas I. Palley
    Abstract: This paper reflects on the history and enduring relevance of Keynes? economics. Keynes unleashed a devastating critique of classical macroeconomics and introduced a new replacement schema that defines macroeconomics. The success of the Keynesian revolution triggered a counter-revolution that restored the classical tradition and now enforces a renewed classical monopoly. That monopoly has provided the intellectual foundations for neoliberalism which has produced economic and political conditions echoing the 1930s. Openness to Keynesian ideas seems to fluctuate with conditions, and current conditions are conducive to revival of the Keynesian revolution. However, a revival will have to overcome the renewed classical monopoly.
    Keywords: Keynes, General Theory, Keynesian revolution, Classical economics, classical counter-revolution
    JEL: E0 E12 B1 B2
    Date: 2017
  2. By: Bokang Mpeta (Department of Economics, Stellenbosch University); Johan Fourie (Department of Economics, Stellenbosch University); Kris Inwood (Department of History, University of Guelph, Canada)
    Abstract: Very little income or wage data was systematically recorded on the living standards of South Africa’s black majority during much of the twentieth century. This paper uses four data sets to document, for the first time, an alternative measure of living standards: the stature of black South Africans over the course of the twentieth century. We find evidence to suggest that the first three decades of the century were particularly bad, perhaps due to the increasingly repressive labour policies in urban areas and famine and land expropriation that weighted especially heavily on the Basotho. The decade following South Africa’s departure from the gold standard, a higher international gold price and the demand for manufactured goods from South Africa due to the Second World War seem to have benefited both black and white South Africans. The data also allow us to disaggregate by ethnicity within the black population group, revealing levels of inequality within race group that has been neglected in the literature. Finally, we compare black and white living standards, revealing the large and widening levels of inequality that characterised twentieth-century South Africa.
    Keywords: apartheid, living standards, South Africa, heights, anthropometric, twentieth century
    JEL: N37
    Date: 2017
  3. By: Adolfo Meisel Roca
    Abstract: Este documento presenta un balance sobre los estudios de historia económica de la región Caribe colombiana en los últimos veinte años. Se comentan los principales avances en investigación sobre el sector exportador, la ganadería, el período colonial y la actividad empresarial de la Costa Caribe. Para esto, se tomaron como referencia importantes libros, haciendo especial énfasis en el de Eduardo Posada Carbó, un hito en la investigación sobre historia económica en la región y el país. En términos generales, las investigaciones han destacado la importancia de la hacienda ganadera, la geografía y las instituciones, para explicar el desarrollo económico que ha presentado el Caribe colombiano. El balance realizado encuentra importantes avances tanto en la cantidad como en la calidad de las investigaciones. Sin embargo, aún persisten enormes vacíos en temas como los sistemas de transporte, estudios de caso sobre haciendas ganaderas y finanzas públicas locales. ******ABSTRACT: This paper presents a review of the studies on the economic history of Colombia´s Caribbean region in the past twenty years. It discusses the main advances in research related to the export sector, cattle industry, the colonial period, and business activity in the region. The analysis is based on important books, with special emphasis on that of Eduardo Posada Carbó, an outstanding piece of research on the economic history of the region. Overall, these studies highlight the importance of cattle raising, geography, and institutions, in understanding the economic development that Colombia's Caribbean region has experienced. The study concludes that even though there have been advances in both the quantity and the quality of research, there are still several gaps in topics such as transportation infrastructure, case studies of cattle haciendas, and local public finances.
    Keywords: Historiografía; región Caribe; desarrollo económico
    JEL: N96 R11
    Date: 2017–10–05
  4. By: Marisa Agostini (Dept. of Management, Università Ca' Foscari Venice); Riccardo Cella (Università di Verona); Giovanni Favero (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: The paper examines accounting practices, institutionsÕ role and the possible ways of defining accounting fraud in pre-modern historical context through the micro-analysis of a Venetian case. The three fraudulent financial statements, investigated in this paper, refer to the years 1781, 1782, and 1783, and regard Geminiano CozziÕs porcelain factory, an enterprise active in Venice in the second half of the eighteenth century. Their preparation was required by a government official (the Inquisitorato alle Arti) that, after the investigation of the statements, issued a report (called ÒRiflessioniÓ), emphasizing the reasons of the accounting fraud. In particular, the Inquisitorato highlighted the wrong evaluation of fixed assets at (historical) cost, arguing that it was far from the market (sale) value of such assets. The present paper examines the accounting criteria sought by the government official and fills part of the gap characterizing accounting history about the Italian peninsula (Zan, 1994).
    Keywords: accounting fraud, Venetian Republic, 18th century, pottery
    JEL: M41 N83
    Date: 2017–10
  5. By: Tena Junguito, Antonio; Federico, Giovanni
    Abstract: The period 1820-1870, commonly referred to as the 'lost decades', is widely regarded as the key moment in the opening of the gap between Latin America and the Unites States. We test this statement with a new export series and some tentative estimates of GDP trends. The overall performance of Latin American countries was quite good, although not outstanding. Mexico was hit by a foreign policy crisis, but the only real losers were the British and French colonies in the Caribbean. The emancipation of slaves caused a collapse in their exports, favoring other tropical countries, including Cuba and Brazil. Further South, independent countries such as Argentine and Chile increased their share of world trade. Overall, most of the divergence during the period 1820-1870 in the Americas was between tropical countries rather than between Latin America and North America.
    Keywords: Independence and Emancipation; Early Nineteenth century; Latin America and the Caribbean; International Trade
    JEL: N10 F14
    Date: 2017–10–01
  6. By: Holmström, Bengt (MIT)
    Abstract: Interview with the 2016 Laureate in Economic Sciences Bengt Holmström on 6 December 2016, during the Nobel Week in Stockholm, Sweden. Interviewer is freelance journalist Henrik Höjer.
    Keywords: Contract Theory;
    JEL: D86
    Date: 2016–12–06
  7. By: Hart, Oliver (Harvard University)
    Abstract: Interview with the 2016 Laureate in Economic Sciences Oliver Hart on 6 December 2016, during the Nobel Week in Stockholm, Sweden. Interviewer is freelance journalist Henrik Höjer.
    Keywords: Contract Theory;
    JEL: D86
    Date: 2016–12–06
  8. By: Charles Kenny (Center for Global Development); Dev Patel (Center for Global Development)
    Abstract: This analysis examines the relationship between legal reform and social norms surrounding homosexuality. We document three main findings. First, about a fifth of the variation in individual preferences can be explained at a country level. Second, using a difference-in-differences strategy, legalizing homosexuality improves how individuals view the tone of their communities. Third, we provide further evidence supporting a legal origins argument by examining former colonies. Countries that were colonized by the British Empire have significantly worse legal rights for same-sex couples than those under other colonial powers. We conclude that adopting legal reform can improve societal attitudes.
    Keywords: Homosexuality, Legal Reform, Social Norms, Colonialism
    JEL: J16
  9. By: Bakker, Gerben (London School of Economics); Crafts, Nicholas (University of Warwick); Woltjer, Pieter (University of Groningen)
    Abstract: We develop new aggregate and sectoral Total Factor Productivity (TFP) estimates for the United States between 1899 and 1941 through better coverage of sectors and better-measured labor quality, and find TFP-growth was lower than previously thought, broadly based across sectors, and strongly variant intertemporally. We then test and reject three prominent claims. First, the 1930s did not have the highest TFP-growth of the twentieth century. Second, TFP-growth was not predominantly caused by four ‘great inventions’. Third, TFP-growth was not driven indirectly by spillovers from great inventions such as electricity. Instead, the creative-destruction-friendly American innovation system was the main productivity driver.
    Keywords: productivity growth; total factor productivity; great inventions; spillovers; United States — history JEL Classification: N11, N12, O47, O51.
    Date: 2017
  10. By: Daniel Bernhofen; Markus Eberhardt; Jianan Li; Stephen Morgan
    Abstract: We use monthly prefectural data for Southern China (1740-1820) to implement a dynamic version of Shiue and Keller’s (2007) seminal analysis of spatial market integration. Our cointegration analysis is carried out for rolling windows of 20 years, rather than their static cross-section, and uncovers a secular decline in market integration across all bilateral distance categories of Southern China. When comparing Chinese prefectures less than 150 km apart with Belgian markets (1765-94) and English counties (1770-1820) in the same distance category, we observe similar degrees of market integration for 1740s China and mid-18th century Belgium and England. While the two European countries maintain stable levels of integration over time, we find substantial decline in China relative to the West, in particular when the analysis is limited to the economically most advanced Lower Yangtze region or the prefectures along the Yangtze River.
    Keywords: market integration, 18th century, China and Western Europe, cointegration
    Date: 2017
  11. By: Simpson, James
    Abstract: The impact of the Great Depression was less in Spain than in most other Western European countries, but government response to the problems was also more limited because of weak state capacity. As economic depression coincided with major changes in political opportunities and constrains created by the Second Republic, there were demands for radical changes in farm policy. Inappropriate policies (land reform) and contradictory goals (higher farm wages and lower food prices) weakened the popular support for the Republic, and quickly divided the Spanish countryside.
    Keywords: Second Republic; Spain; State Capacity; Land Reform; Great Depression
    JEL: R52 Q15 O13 N54
    Date: 2017–10–01
  12. By: Paul Rhode (University of Michigan); Johannes Wieland (UCSD); Joshua Hausman (University of Michigan)
    Abstract: In the four months following the trough of the Great Depression in March 1933, industrial production rose 57 percent. We argue that an important source of recovery was the direct effect of dollar devaluation on farm prices, incomes, and consumption. We call this the farm channel. Using daily spot and futures crop price data, we document that devaluation raised prices of traded crops and their close substitutes (other grains). And using novel state and county auto sales data, we document that recovery proceeded much more rapidly in farm areas. These cross-sectional effects are large, explain a substantial fraction of cross-state variation in auto sales growth, and are concentrated in areas growing traded crops or close substitutes. We also find that given the same exposure to farm price changes, spending rose more in counties with more farm debt. We aggregate our cross-sectional results using a simple incomplete markets model in which indebted farmers have high MPCs. It implies that the farm channel accounts for 30% or more of the spring recovery.
    Date: 2017
  13. By: Paul, Pascal (Federal Reserve Bank of San Francisco)
    Abstract: Leading up to the Great Recession, the U.S. economy experienced a massive expansion of credit, a slowdown in productivity growth, and a rapid increase in income inequality. All of these developments may have contributed to an unusual buildup of financial instability. This paper explores the contribution of each of these three developments in explaining financial crises using long-run historical data for 17 advanced economies. Previous research showed that credit growth is a robust predictor of financial fragility. I find that changes in top income shares and productivity growth are strong early warning indicators as well. In fact, changes in top income shares outperform credit as crises predictors. Moreover, financial recessions that are preceded by strong increases in income inequality or low productivity growth are also associated with deeper and slower recoveries. Overall, the results indicate that both the productive capacity of an economy and the distribution of income matter for financial stability.
    JEL: E24 E44 E51 G01 G20 H12 N10 N20
    Date: 2017–09–25
  14. By: Christian Ochsner
    Abstract: I study the economic consequences of the Red Army’s misdeeds after WWII. I exploit differences in spatial economic activity across the arbitrarily drawn and only for 74 days lasting liberation demarcation line between the Red Army and the Western Allies in South Austria. Dismantling and pillaging, but also (sexual) crimes made regions liberated by the Red Army a less desirable place to live and to start economic activities compared to adjacent regions. Spatial regression discontinuity (RD) estimates show that the liberation causes a relative population decline by around 26 to 31 percent until the present day. Measures of labor productivity also lag behind in Red Army liberated regions. I explain persistence with the selective migration pattern across the demarcation line in the direct aftermath of WWII.
    Keywords: Regional economic activity, population shock, dismantling, Red Army, Austria
    JEL: J11 N14 N94 R12 R23
    Date: 2017
  15. By: Breitenlechner, Max; Scharler, Johann
    Abstract: We evaluate contributions of exogenous loan supply shocks to output dynamics during the Great Depression. Based on a structural VAR, we impose sign restrictions to identify loan supply shocks in addition to standard macroeconomic shocks. Our results indicate that the banking panics that occurred in the early 1930s were associated with negative loan supply shocks, supporting the view that disruptions in financial intermediation contributed significantly to the severity of the Great Depression.
    JEL: C32 E32 E44 N12 N22
    Date: 2017
  16. By: Thomas Piketty (Paris School of Economics); Li Yang (World Bank); Gabriel Zucman (University of California at Berkeley)
    Abstract: This appendix supplements our paper and describes the full set of data files and computer codes ( that were used to construct the series.
    Date: 2017–04
  17. By: Darrell J. Glaser (United States Naval Academy); Ahmed S. Rahman (United States Naval Academy)
    Abstract: This paper examines the effects of engineer-oriented and technical experience on job mobility during an era of rapid technological advance. We first develop an on-the-job search model to help us understand factors leading to job switching under rigid payment systems. Then, using longitudinal data on late 19th-Century British and American naval officer- and engineer-careers, we show how different forms of technical experience and pro- motion rates infl uence job switching. Using our estimates we find rates of return to technical experience rising dramatically by the turn of the 20th Century. To our knowledge these are the earliest estimates of returns to any type of technical skill. These findings help us understand how modernizing organizations can become more vulnerable to loss of skilled personnel, and how organizations might optimally respond to such loss.
    Date: 2017–10
  18. By: Committee, Nobel Prize (Nobel Prize Committee)
    Abstract: The American economist Richard H. Thaler is a pioneer in behavioural economics, a research field in which insights from psychological research are applied to economic decision-making. A behavioural perspective incorporates more realistic analysis of how people think and behave when making economic decisions, providing new opportunities for designing measures and institutions that increase societal benefit.
    Keywords: Behavioral economics;
    JEL: D03 D90 G02
    Date: 2017–10–09
  19. By: Keith Meyers; Melissa A. Thomasson
    Abstract: We leverage the 1916 polio pandemic in the United States as a natural experiment to test whether short-term school closures result in reduced educational attainment as an adult. With over 23,000 cases of polio diagnosed in 1916, officials implemented quarantines and closed schools. Since the pandemic occurred during the start of the 1916 school year, children of working age may have elected not to return to school. Using state-level polio morbidity as a proxy for schooling disruptions, we find that children ages 14-17 during the pandemic had less educational attainment in 1940 compared to their slightly older peers.
    JEL: I18 N22 N3
    Date: 2017–09
  20. By: Hundtofte , Sean (Federal Reserve Bank of New York)
    Abstract: During banking crises, regulators often relax their normal requirements and refrain from closing financially troubled banks. I estimate the real effects of such regulatory forbearance by comparing differences in state-level economic outcomes by the amount of forbearance extended during the U.S. savings and loan crisis. To instrument for forbearance, I use historical variation in deposit insurance—and hence supervision—of similar financial intermediaries (thrifts) and exploit fixed differences between regional supervisors of the same regulator. The evidence suggests a policy-induced increase in high-risk loans during the official forbearance period (1982-89), followed by a broader bust in house prices and real GDP.
    Keywords: financial crises; regulatory policy
    JEL: G01 G2 H12
    Date: 2017–10–01
  21. By: Grohmann, Antonia; Filipiak, Ute; Heyerhorst, Franziska
    Abstract: This paper looks at household consumption and financial decisions made in a matrilineal society where women are by culture the financial household managers. This culture was strongly altered by the British in the mid-19th century. We use the distance to the former base as an instrument for women empowerment. Results show that households that follow the matrilineal Khasi tradition, spend more on education and nutrition, but are less likely to have savings left at the end of the month.
    JEL: I3 O1 R20 Z1
    Date: 2017
  22. By: Jongkwan Lee; Giovanni Peri; Vasil Yasenov
    Abstract: During the period 1929-34 a campaign forcing the repatriation of Mexicans and Mexican Americans was carried out in the U.S. by states and local authorities. The claim of politicians at the time was that repatriations would reduce local unemployment and give jobs to Americans, alleviating the local effects of the Great Depression. This paper uses this episode to examine the consequences of Mexican repatriations on labor market outcomes of natives. Analyzing 893 cities using full count decennial Census data in the period 1930-40, we find that repatriation of Mexicans was associated with small decreases in native employment and increases in native unemployment. These results are robust to the inclusion of many controls. We then apply an instrumental variable strategy based on the differential size of Mexican communities in 1930, as well as a matching method, to estimate a causal "average treatment effect." Confirming the OLS regressions, the causal estimates do not support the claim that repatriations had any expansionary effects on native employment, but suggest instead that they had no effect on, or possibly depressed, their employment and wages.
    JEL: J15 J21 J61 N32
    Date: 2017–09
  23. By: Donna Feir & M. Chris Auld (Department of Economics, University of Victoria)
    Abstract: We study the effects of Canadian Indian residential schooling on two anthropometric measures of health during childhood: adult height and body weight. We use repeated cross-sectional data from the 1991 and 2001 Aboriginal Peoples Surveys and detailed historical data on school closures and location to identify the effect of residential schooling on these outcomes. We find some evidence that on average residential schooling increases adult height and decreases adult body weight of those that attended. However, these effects are concentrated after the 1950s when the schools were subject to tighter health regulations and students were selected to attend residential school based partly on their need for medical care that was otherwise unavailable. Residential schooling is only one policy in Canada that impacted Status Indian peoples’ health, so our results must be understood in the broader social context. We also document significant increases in height and body weight for Status Indian people born after the 1960s which is suggestive of non-trivial changes in diet and living conditions during this time period.
    Keywords: Indigenous peoples, residential schools, health, stature, weight, identity, schooling
    JEL: I12 I14 I15 I18 N32
    Date: 2017–10–11
  24. By: Becker, Torbjörn (Stockholm Institute of Transition Economics); Olofsgård, Anders (Stockholm Institute of Transition Economics)
    Abstract: In this paper we look at the growth experience of 25 transition countries during the 25 years since the dissolution of the USSR. We find that compared to expectations from a parsimonious growth model the region in the 2000’s seems normal in terms of growth performance, i.e. transition in the region is over in this respect. Institutions, speed of reform and macro variables fail to show a stable correlation with (conditional) growth when comparing the early and later periods of transition. We also find that the countries in the former Soviet Union (FSU12), doing substantially worse during the 1990’s, in the 2000’s are performing better than the 10 countries that joined the EU in 2004 and 2007 (EU10). This is partly explained by rising fuel prices but also point to strong macro forces of mean reversion. Despite this, the gap between the regions is wider in 2015 than in 1991, emphasizing the challenge of making up for deep crises. Finally, the model analysis suggests that looking forward the main challenge for the FSU12 countries (in particular the non-fuel exporters) is to promote more capital investment whereas the main challenge for EU10 is to increase the productivity of existing factors of production.
    Keywords: Growth; transition countries; comparative performance; economic crisis; mean reversion
    JEL: O00 P20
    Date: 2017–10–01
  25. By: Fischer, Stanley (Board of Governors of the Federal Reserve System (U.S.))
    Date: 2017–10–05

This nep-his issue is ©2017 by Bernardo Bátiz-Lazo. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.