nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2018‒08‒27
33 papers chosen by

  1. Financial Asset Ownership and Political Partisanship: Liberty Bonds and Republican Electoral Success in the 1920s By Eric Hilt; Wendy M. Rahn
  2. Mass Refugee Inflow and Long-Run Prosperity: Lessons from the Greek Population Resettlement By Murard, Elie; Sakalli, Seyhun Orcan
  3. Spatial Competition, Innovation and Institutions: The Industrial Revolution and the Great Divergence By Klaus Desmet; Avner Greif; Stephen Parente
  4. The Changing Roles of Family Income and Academic Ability for US College Attendance By Lutz Hendricks; Christopher Herrington; Todd Schoellman
  6. 20th Century History of Latvia in Literary Narratives By Alina Romanovska
  7. The quest to bring land under social and political control: land reform struggles of the past and present in Ecuador By Goodwin, Geoff
  8. Income Inequality Trends in sub-Saharan Africa: Divergence, determinants and consequences: Resource Dependence and Inequality in Africa: Impacts, consequences and potential solutions By BHORAT, HAROON; CHELWA, GRIEVE; NAIDOO, KARMEN; STANWIX, BENJAMIN
  10. The Short-Run and Long-Run Effects of Resources on Economic Outcomes: Evidence From the United States 1936-2015 By Karen Clay; Margarita Portnykh
  11. "The Critical Review of the Westernized Late Ottoman Empire Education System in a Cinematic Context with an Education Related Focus" By Ugur Baloglu
  12. Bismarck's Health Insurance and the Mortality Decline By Bauernschuster, Stefan; Driva, Anastasia; Hornung, Erik
  13. Fetal Shock or Selection? The 1918 Influenza Pandemic and Human Capital Development By Brian Beach; Joseph P. Ferrie; Martin H. Saavedra
  14. Zur mathematischen Struktur der Wertformen von Karl Marx in "Das Kapital" By Schneider, Herbert
  15. The Growth of the Italian Economy, 1861−1913: The Composition Of Investment By Fenoaltea, Stefano
  16. Le « miracle Poincaré » et la confiance hiérarchique à l’aune de théories gramsciennes. Tentative d’explication et de développement By Nicolas Pinsard
  17. Evolution of Modern Business Cycle Models: Accounting for the Great Recession By Patrick J. Kehoe; Virgiliu Midrigan; Elena Pastorino
  18. The Evolution of Catholic-Protestant Labour Market Inequality in Northern Ireland, 1983-2014 By Rowlandy, Neil; McVicar, Duncan; Shuttleworth, Ian
  19. Of Gold and Paper Money By Chadha, J.
  20. Saving Rates in Latin America: A Neoclassical Perspective By Andres Fernandez; Ayse Imrohoroglu; Cesar Tamayo
  21. Friedman and Phelps on the Phillips Curve Viewed from a Half Century's Perspective By Robert J. Gordon
  22. What Accounts for the US Ascendancy to Economic Superpower by the Early 20th Century: The Morrill Act – Human Capital Hypothesis By Ehrlich, Isaac; Cook, Adam; Yin, Yong
  23. Slum Upgrading and Long-run Urban Development: Evidence from Indonesia By Mariaflavia Harari; Maisy Wong
  24. Cointegration of Economic growth and External balance in Colombia: 1963-2016 By Barón Ortegón, Brayan Alexander
  25. XX>XY?: The Changing Female Advantage in Life Expectancy By Claudia Goldin; Adriana Lleras-Muney
  26. The Spoils of War: Trade Shocks during WWI and Spain’s Regional Development By Simon Fuchs
  27. К общей теории социально-экономического развития By Polterovich, Victor
  28. Goldmine or Bottomless Pitt? Exploiting Cornwall’s Mining Heritage By Zwegers, Bart
  29. 70 Jahre Soziale Marktwirtschaft By König, Jörg
  30. The Role of Industry, Occupation, and Location-Specific Knowledge in the Survival of New Firms By C. Jara Figueroa; Bogang Jun; Edward L. Glaeser; César Hidalgo
  31. China's Growing Ties with Middle East: Goals and Objectives By Golam Mostafa
  32. Central Bank Reputation and Inflation-Unemployment Performance: Empirical Evidence from an Executive Survey of 62 Countries By In Do Hwang
  33. Britain & Africa: heading for the Brexit rocks By Kohnert, Dirk

  1. By: Eric Hilt; Wendy M. Rahn
    Abstract: We analyze the effects of ownership of liberty bonds, which were marketed to households during World War I, on election outcomes in the 1920s. In order to address the endogeneity of liberty bond subscriptions, we utilize the local severity of the fall 1918 influenza epidemic, which disrupted the largest liberty bond campaign, as an instrument. We find that counties with higher liberty bond ownership rates turned against the Democratic Party in the presidential elections of 1920 and 1924. This was a reaction to the depreciation of the bonds prior to the 1920 election (when the Democrats held the presidency), and the appreciation of the bonds in the early 1920s (under a Republican president), as the Fed raised and then subsequently lowered interest rates. Our results suggest the liberty bond campaigns had unintended political consequences and illustrate the potential for financial asset ownership to increase the sensitivity of ordinary households to economic policy decisions.
    JEL: N1 N2 N3 N4
    Date: 2018–06
  2. By: Murard, Elie (IZA); Sakalli, Seyhun Orcan (Université de Lausanne)
    Abstract: This paper investigates the long-term consequences of mass refugee inflow on economic development by examining the effect of the first large-scale population resettlement in modern history. After the Greco-Turkish war of 1919–1922, 1.2 million Greek Orthodox were forcibly resettled from Turkey to Greece, increasing the Greek population by more than 20% within a few months. We build a novel geocoded dataset locating settlements of refugees across the universe of more than four thousand Greek municipalities that existed in Greece in 1920. Exploiting the spatial variation in the resettlement location, we find that localities with a greater share of refugees in 1923 have today higher earnings, higher levels of household wealth, greater educational attainment, as well as larger financial and manufacturing sectors. These results hold when comparing spatially contiguous municipalities with identical geographical features and are not driven by pre-settlement differences in initial level of development across localities. The long-run beneficial effects appear to arise from agglomeration economies generated by the large increase in the workforce, occupational specialization, as well as by new industrial know-hows brought by refugees, which fostered early industrialization and economic growth.
    Keywords: refugees, immigration, historical persistence, economic development
    JEL: O10 O43 N34 N44
    Date: 2018–06
  3. By: Klaus Desmet; Avner Greif; Stephen Parente
    Abstract: A market-size-only theory of industrialization cannot explain why England developed nearly two centuries before China. One shortcoming of such a theory is its exclusive focus on producers. We show that once we incorporate the incentives of factor suppliers' organizations such as craft guilds, industrialization no longer depends on market size, but on spatial competition between the guilds' jurisdictions. We substantiate our theory (i) by providing historical and empirical evidence on the relation between spatial competition, craft guilds and innovation, and (ii) by showing the calibrated model correctly predicts the timings of the Industrial Revolution and the Great Divergence.
    JEL: N10 O11 O14 O31 O43
    Date: 2018–06
  4. By: Lutz Hendricks (UNC Chapel Hill); Christopher Herrington (Virginia Commonwealth University); Todd Schoellman (Federal Reserve Bank of Minneapolis)
    Abstract: We harmonize the results of three dozen historical studies stretching back to the early 20th century to construct a time series of college attendance patterns. We find an important reversal around the time of World War II: before that, family characteristics such as income were the better predictor of college attendance; after, academic ability was the better predictor. We construct a model of college choice that can explain this reversal as a consequence of the post-War surge in the demand for college, explained by the rise in the college wage premium and declining real tuition. Although these factors affected college demand for all types of students equally, they set off a chain reaction in the model: colleges hit capacity constraints; colleges institute selective admissions; colleges become more dispersed in quality; and students apply to a broader set of colleges. High-ability students become more likely to attend college because their options become more attractive, but the opposite is true of high-income students. The driving forces and mechanisms are consistent with changes in higher education after the war, documented here and elsewhere.
    Date: 2018
  5. By: Arsalan Nezhadfard (Instituto Superior Tecnico); Ana Tostoes (Instituto Superior Tecnico)
    Abstract: The last century was the time for Modern-traditional dichotomy,being effetive in creating monumentality.This was a critical topic to analyze this common contradiction in the borders of Europe to know the dominancy of foundamental desires thorough their manifestations in mouments. This paper aims out to investigate monumentality in Istanbul,Sarajevo and Lisbon as three differenet cities as the case studies with the most critical buildings mentioned by architecture and urban scholars. The research shows that the more geographic location moves toward the west the intensity of modern-Traditional polarity decreases beyond the typical architectural history process which is similar in all areas . The monuments in Istanbul ended in abstract integration of both poles as the effort for defining a real idenitity was hopeless.Sarajevo experienced a dominant modern architecture and urban planning in soclialism and Finally there was a peaceful dialogue as greenspaces evolved in harmony with context and continous spatial tradition
    Keywords: Monumentality, Modernism, Tradition, Architecture, Urban Planning, Istanbul, Lisbon, Sarajevo
    Date: 2018–06
  6. By: Alina Romanovska (Daugavpils University)
    Abstract: The research focuses on contemporary Latvian fiction that reflects the history of the 20th century. Since 2015, the number of such works in Latvia has grown rapidly. To a great extent, it has been facilitated by the today?s historical political situation, namely, the fact that the year 2018 is the centenary of the Republic of Latvia, which becomes an incentive to activate the attempts of restoration and understanding of the state?s history. The analysis of fictional narratives is carried out by using the ideas of New Historicism and Literary anthropology, as well as the theories of collective memory.Writing history in literary form not only constructs a shared space of memories, but also provides an opportunity to reflect, understand and create a national identity. By means of fictional narratives, the past becomes a factor in creating solidarity. Writers develop peculiar testimonies for a certain period of time ? they focus on both the relatively recent past, which can be described by their own and their contemporaries? memories, as well as earlier events, which are described by using archival documents, oral testimonies, diaries and other materials. When representing the past, the narration strategies characteristic to fiction are combined with the reliance on historical documents, thus creating contemporary literary genres.
    Keywords: Latvian fiction, History, New Historicism, Literary anthropology, Collective memory, National identity
    Date: 2018–06
  7. By: Goodwin, Geoff
    Abstract: Land reform was one of the most important policies introduced in Latin America in the twentieth century and remains high on the political agenda due to sustained pressure from rural social movements. Improving our understanding of the issue therefore remains a pressing concern. This paper responds to this need by proposing a new theoretical framework to explore land reform and providing a fresh analysis of historical and contemporary land struggles in Ecuador. Drawing on the pioneering work of Karl Polanyi, the paper characterizes these struggles as the attempt to increase the social and political control of land in the face of mounting commodification. The movement started in the 1960s and remains evident in Ecuador today. Exploring land reform in Ecuador from this theoretical perspective provides new insight into land struggles in the country and contributes to debates over land reforms of the past and present elsewhere in the Global South.
    Keywords: land reform; land markets; social movements; Ecuador; Karl Polanyi
    JEL: Q15
    Date: 2017
    Abstract: Over the last decade an increasing number of the world’s fastest-growing countries have been in Africa. This recent progress created widespread optimism among many as economic development prospects across many parts of the continent improved. This optimism has, however, been accompanied by concerns regarding the inclusivity and longer-term sustainability of the current growth processes, which have been driven largely by extractive industries. Moreover, situating the observed growth in a broader historical context is important. Similar optimism accompanied the relatively short-lived growth boom in Africa following the Second World War (1950-1970), which provided limited longrun gains and should perhaps serve as a cautionary example in the current growth climate (Broadberry and Gardner, 2013). Going further back, Jerven (2010) suggests that periods of rapid growth, followed by reversals, have characterised economic performance in the region for several centuries, with commodity demand always the driving force behind these ‘booms and busts'.
    Keywords: International Development, Resource /Energy Economics and Policy
    Date: 2017–08–01
    Abstract: Most of the ancient philosophies were actively and seriously involved in solving the riddles of Nature. Much owing to this a few centuries rolled on in understanding the world around us than within. One might think that it was mainly from the period of Socrates that we clearly observe philosophers openly toiling to take on the enigmatic human nature as a focal point and enduring to solve the problems which were continually troubling all. Some of the philosophers preferred to rely mostly on religions in vogue to answer back common man's authentic questions. Some of them went to the extent of declaring or labeling persons who doubted the very existence of God and further his justifying nature, as 'Atheists'. However many had unflinchingly stood by the scientific temper which eventually was not tolerable to the enthusiastic adherents of Theology. Using freely uncommon and rich vocabulary or subject jargons, sticking to the religious sentiments was one of the main weapons. Stoicism although belonging to approximately Third century BC had a very clear vision about the human existence and its predicament. Therefore it could dare to deviate from the overtly practiced idealism and seek a path that would be quite accommodative and true to the then existing reality. Therefore one finds a clear pragmatic approach in Stoic outlook which is usable for all. It could stand firmly by embracing the unalloyed reality to guide the humanity that had been enmeshed by depression, misery, anguish, and feeling of the meaninglessness of life. Unfortunately, even in the modern world, the problems continue with same intensity although scientific development has definitely surpassed our levels of expectations. Stoicism takes into account the basic psychology of human nature and then proposes only those guidelines which are feasible for everyone. It has avoided the temptation of clinging itself to some popular age-old philosophy or criticizing the existing ones. It has established its own firm roots to withstand the onslaught of the vagaries of life. The paper attempts to bring forth the main tenets of Stoic philosophy and its utility in the present mart of the world without underestimating other philosophies.
    Keywords: Stoicism, Pragmatic approach, Chief postulates
    Date: 2018–06
  10. By: Karen Clay; Margarita Portnykh
    Abstract: This paper draws on a new state-level panel dataset and a model of domestic Dutch disease to examine the short-run and long-run effects of oil & natural gas, coal, and agricultural land endowments on state economies during 1936-2015. Using a flexible shift-share estimation approach, where the shift is national resource employment and the share is state resource endowment, we find that different resources had different short-run effects in different time periods, across increases and decreases in resource employment, and across different outcomes. Using long differences, we find that long-run population growth was an important margin of adjustment over 1936-2015. States with larger coal and agricultural endowments per square mile experienced significantly slower population growth than states with smaller endowments per square mile. Resource endowments had no effect on long-run growth in per capita income.
    JEL: J2 N12 O4 Q24 Q43
    Date: 2018–06
  11. By: Ugur Baloglu (Communication Faculty, Istanbul University, Turkey. Author-2-Name: Author-2-Workplace-Name: Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: "Objective – An individual improves his/her cognitive level by implementing terminal behaviour changes to his/her own life through educational institution located in his/her living space. In this context, the education system of a country is very important in terms of mental development and how people perceive the world. Developments in the world after the French Revolution had influenced Ottoman. Various institutional reforms had been required because of repeated military defeats in the late Ottoman period. In this regard, renovation of educational institutions modelled on Western-based was thought as a saver solution for the empire in period of regression but this modernization process also brought many problems with it. We can understand the approach to education of societies by way of literary works such as novels written in that period. Methodology/Technique – In this study, the late Ottoman education system is examined by the critical review of through novel. It is narrated the late Ottoman fall reflecting in the field of education. The irregularity system of that period is criticized. It has been adapted to Turkish cinema especially by adhering to the novel which is a remarkable reference about the history of Turkish education system. Findings – The quality difference in education between centrums and suburbans shows administration of suburban was omitted by Ottoman. Besides, the inequality between man and woman can be observed. It was emphasized that, in Ottoman, men is always right and strong and women are useless and not able to consider. Republic let the woman to arm their rights and gave us the belief that women can be powerful and right. Novelty – The study reviews the education system of Ottoman empire based on the novel."
    Keywords: Late Ottoman; Modernization; Westernization; Education Problems.
    JEL: I21 I24
    Date: 2017–06–20
  12. By: Bauernschuster, Stefan (University of Passau); Driva, Anastasia (Ludwig-Maximilians-Universität München); Hornung, Erik (University of Cologne)
    Abstract: We study the impact of social health insurance on mortality. Using the introduction of compulsory health insurance in the German Empire in 1884 as a natural experiment, we estimate flexible difference-in-differences models exploiting variation in eligibility for insurance across occupations. Our findings suggest that Bismarck's health insurance generated a significant mortality reduction. Despite the absence of antibiotics and most vaccines, we find the results to be largely driven by a decline of deaths from infectious diseases. We present evidence suggesting that the decline is associated with access to health services but not sick pay. This finding may be explained by insurance fund physicians transmitting new knowledge on infectious disease prevention.
    Keywords: health insurance, mortality, demographic transition, Prussia
    JEL: I13 I18 N33 J11
    Date: 2018–06
  13. By: Brian Beach; Joseph P. Ferrie; Martin H. Saavedra
    Abstract: Almond (2006) argues that in utero exposure to the 1918 influenza pandemic lowered socioeconomic status in adulthood, whereas Brown and Thomas (2016) find that the effect disappears after controlling for parental characteristics of the 1919 birth cohort. We link microdata from the 1920 and 1930 censuses to WWII enlistment records and city-level influenza data. The result is a data set with much more precisely measured influenza exposure and parental characteristics. Results indicate that in the absence of the pandemic, the 1919 birth cohort would have been more likely to graduate from high school and would have obtained more years of schooling. The impact on high school graduation is largely unaffected by including parental controls and city-specific time trends. Adding household fixed effects (and thus exploiting variation among brothers) yields similar but somewhat larger results.
    JEL: I1 J0 N12
    Date: 2018–06
  14. By: Schneider, Herbert
    Abstract: In the first section of Das Kapital by Karl Marx different forms of values are analysed. From a mathematical point of view one can find therein structures, which correspond to elements of the mathematical theory of categories. These are especially the limit of cones and the definition of subobjects as morphisms. Using the limit cone, the concept of money contains the categorial product of commodities. The concept of the value of a commodity contains the categorial definition of a subobject.
    Keywords: Marx, Kapital,capital, Ware,commodity, Geld, Money, Tauschsphäre, exchange space, Tausch, Exchange, Tauschwert, exchange-value, exchange value, Gebrauchswert, use-value, use value, Wertform, value-form, form of value, Äquivalentform, universal equivalent form, Äquivalentware, universal equivalent commodity, Wert, value, Arbeitsproduktivität, labour productivity, Mathematik, mathematics, Kategorientheorie, category theory, Kategorie, category, kategoriales Produkt, categorical product, Limeskegel, limit cone, Unterobjekt, subobject
    JEL: A12 B14 B16 B51 C02 C60 C65 P16
    Date: 2018–07–26
  15. By: Fenoaltea, Stefano
    Abstract: Previous papers on Italy’s economic growth from Unification to 1913 reestimated 1911-price GDP from the production side, and reconstructed its allocation on the expenditure side; both efforts sharply revised the latest figures in the literature. The present paper examines the composition of investment, as documented by the new series.
    Keywords: Measurement; Pre-WW1 Italy; Investment
    JEL: N13 N63
    Date: 2018–07
  16. By: Nicolas Pinsard (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Le Cartel des Gauches resta au gouvernement de juin 1924 à juillet 1926, mois au cours duquel R. Poincaré revint aux affaires. Trois jours après que l'on sut que R. Poincaré avait accepté de diriger le gouvernement, le franc s'apprécia de 20 % par rapport à la livre sterling. Ce fut la fin de la crise du franc sur le marché des changes, et cela sans qu'aucune annonce politique soit faite, et avant même la déclaration d'investiture du gouvernement. Comment expliquer le "miracle Poincaré" ? La monnaie est "un lien de confiance", elle se décline en trois types de confiance : la confiance méthodique, éthique et hiérarchique. Or, la crise du franc, lors du gouvernement du Cartel, est essentiellement due à une perte de confiance hiérarchique en ce gouvernement. En effet, celui-ci n'était plus capable d'assurer son rôle de souverain monétaire, c'est-à-dire garantir la valeur du franc. Or, la monnaie est ce qui représente symboliquement l'unité d'une communauté de compte, et si celle-ci entre en crise, c'est la communauté en elle-même qui est fragilisée. Ainsi, il y eut une perte de confiance hiérarchique dans la monnaie. Comment expliquer que la crise économique ait suffisamment d'ampleur pour projeter dans la sphère politique des problèmes initialement économiques ? Comment s'opère le passage d'une crise économique à une crise politique qui se traduit par une perte de confiance hiérarchique ? Comment expliquer l'arrêt de la crise monétaire, à la fois économique et politique, et, in fine, comment la confiance hiérarchique a-t-elle été recouvrée, alors que ce phénomène de crise est auto-entraînant ? Gramsci et notamment ses concepts de crise organique et de césarisme seront mobilisés pour répondre à ces problématiques. Le concept de crise organique articule le passage de la crise économique à la crise politique. La notion de césarisme permet d'interpréter la cause du renversement soudain de la valeur du franc sur le marché des changes, dans la mesure où le "César" réussit à instrumentaliser la crise organique pour arriver au pouvoir et à l'arrêter lorsqu'il y parvient. Les raisons de la perte de confiance hiérarchique et son recouvrement peuvent alors être éclairées par ces deux concepts gramsciens qui complètent celui de confiance hiérarchique.
    Keywords: Monnaie , Raymond Poincaré , Cartel des Gauches , Théorie de la Régulation , Antonio Gramsci
    Date: 2016–10–13
  17. By: Patrick J. Kehoe; Virgiliu Midrigan; Elena Pastorino
    Abstract: Modern business cycle theory focuses on the study of dynamic stochastic general equilibrium models that generate aggregate fluctuations similar to those experienced by actual economies. We discuss how this theory has evolved from its roots in the early real business cycle models of the late 1970s through the turmoil of the Great Recession four decades later. We document the strikingly different pattern of comovements of macro aggregates during the Great Recession compared to other postwar recessions, especially the 1982 recession. We then show how two versions of the latest generation of real business cycle models can account, respectively, for the aggregate and the cross-regional fluctuations observed in the Great Recession in the United States.
    JEL: E13 E32 E52 E61 E62
    Date: 2018–06
  18. By: Rowlandy, Neil (Queen's University Belfast); McVicar, Duncan (Queen's University Belfast); Shuttleworth, Ian (Queen's University Belfast)
    Abstract: Ethnic and religious differentials in labour market outcomes within many countries have been remarkably persistent. Yet one very well-known differential – the Catholic/Protestant unemployment differential in Northern Ireland – has largely (although not completely) disappeared. This paper charts its decline since the mid-1980s and examines potential explanations using Census data from 1991, 2001 and 2011 together with annual survey data. These data span the ending of The Troubles, the signing of the Good Friday Agreement, the introduction of fair employment legislation, growth in hidden unemployment, and major structural changes in Northern Ireland. We assess the relative contributions of these changes.
    Keywords: unemployment, religion, economic inactivity, labour market inequality
    JEL: J64 Z12
    Date: 2018–06
  19. By: Chadha, J.
    Abstract: We consider the role of money as a means of payment, store of value and medium of exchange. I outline a number of quantitative and qualitative experiences of monetary management. Successful regimes have sprung up in a variety of surprising places, and been sustained with state (centralised) interventions. Although the link between state and money, and its standard of identity and account may be clear, particularly in earlier stages of economic development, the extent to which the state is widely felt to hold responsibility for 'sound money' is less clear in modern democracies, where there are many other public responsibilities implying ongoing trade-offs.
    Keywords: money, gold standard, paper money, Samuelson
    JEL: B22 E02 E31
    Date: 2018–08–02
  20. By: Andres Fernandez (Inter American Development Bank); Ayse Imrohoroglu (USC); Cesar Tamayo (Inter-American Development bank)
    Abstract: Latin American countries have long exhibited low levels of saving rates when compared to other countries in relatively similar stages of economic development (e.g., Asian economies). Motivated by this fact, this paper examines the time path of the saving rates between 1970 and 2010 in three Latin American countries –Chile, Colombia, and Mexico– through the lens of the neoclassical growth model. The findings indicate that two factors, the TFP growth rate and fiscal policy (via tax rates and government expenditure), are capable of accounting for some of the major fluctuations in saving rates observed in these years. For instance, the impressive increase in Chile’s saving rate following the early 1980s debt crisis is likely to have resulted from a combination of high TFP growth and a tax reform that substantially reduced capital taxation. Our counterfactual experiments reveal that average saving rates in Latin America could have been almost five percentage points higher, had the region experienced TFP growth rates similar to that of the Asian countries. This increase, however, is insufficient to bridge the observed gap between saving rates in the two regions.
    Date: 2018
  21. By: Robert J. Gordon
    Abstract: In the late 1960s the stable negatively sloped Phillips Curve (PC) was overturned by the Friedman-Phelps natural rate model. Their PC was vertical in the long run at the natural unemployment rate, and their short-run curve shifted up whenever unemployment was pushed below the natural rate. This paper criticizes the underlying assumption of the Friedman-Phelps approach that the labor market continuously clears and that changes in unemployment down or up occur only in response to “fooling” of workers, firms, or both. A preferable and resolutely Keynesian approach explains quantity rationing by inertia in price and wage setting. The positive correlation of inflation and unemployment in the 1970s and again in the 1990s is explained by joining the negatively sloped Phillips Curve with a positively sloped dynamic demand curve. For any given growth of nominal GDP, higher inflation caused by adverse supply shocks implies slower real GDP growth and higher unemployment. This “triangle” model based on inflation inertia, demand, and supply worked well to explain why inflation and unemployment were both positively and negatively correlated between the 1960s and 1990s, but in the past decade the slope of the short-run Phillips Curve has flattened as inflation exhibited a muted response to high unemployment in 2009-13 and low unemployment in 2016-2018. It remains to be seen whether a continuation of low unemployment will cause a modest and fixed extra amount of inflation, thus reviving the stable Phillips curve of the early 1960s, or whether inflation will continuously accelerate as Friedman and Phelps would have predicted.
    JEL: B22 C22 E24 E31 E64
    Date: 2018–08
  22. By: Ehrlich, Isaac (University at Buffalo, SUNY); Cook, Adam (State University of New York); Yin, Yong (University at Buffalo, SUNY)
    Abstract: Maddison's international panel data show that technically it was the faster growth rate of the US economy that led to its overtaking the UK as economic superpower. We explore the contributing factors. Identifying the land-grant colleges system triggered by the 1862/1890 Morrill Acts (MAs) as a major contributor, we develop this hypothesis theoretically and test it via difference-in-differences regression analyses viewing the MAs as the experiment, the US or US states as treatment groups, and the UK as chief control group in the country-level comparisons. Using national and state-level data, we estimate that the MAs produced sizeable educational and economic returns which catapulted the US into its leading status.
    Keywords: aggregate human capital, public investment, education and research institutions, economic development, endogenous growth; institutions and growth, comparative studies of countries, economic history-education
    JEL: N3 E24 H42 I2 O1 O57 O4
    Date: 2018–06
  23. By: Mariaflavia Harari (The Wharton School, University of Pennsy); Maisy Wong (University of Pennsylvania)
    Abstract: The United Nations estimates that a quarter of the world’s urban population lives in slums. This paper sheds light on how a developing country city grows out of informality, through the lens of one of the largest slum upgrading programs in the world. The 1969-1984 Kampung Improvement Program (KIP) provided basic public goods in slums, covering 5 million people and 25% of the city of Jakarta, Indonesia. We assemble a granular database with program boundaries, historical maps, current land values, building heights, measures of land fragmentation, and a novel quality index of informal settlements based on Google Street View and field photos. Our research design compares KIP areas with historical slums that were never treated. Our findings are similar using a boundary discontinuity design. KIP areas today have 12% lower land values and buildings with 1.6 fewer floors on average, implying aggregate impacts of US$11 billion. Greater land fragmentation in KIP areas points towards the importance of land assembly costs as a barrier to formalization. These long-term costs need to be weighed against the benefits of the program. Overall, our findings suggest slum upgrading may be more cost effective for cities in early stages of urban development.
    Date: 2018
  24. By: Barón Ortegón, Brayan Alexander
    Abstract: In this paper is analyzed the relation between GDP growth and External balance in Colombia for the study period (1963-2016) by using a VECM. Supposing everything else unchanged, we conclude that Colombian external balance granger caused GDP growth and there was indeed a long run relation between both variables. This outcome helps to explain the Colombian GDP growth dynamics over the last fifty years and the impact of trade policy on economic growth.
    Keywords: Economic growth; External balance; Trade balance; Colombia; VEC model.
    JEL: F00 F14 F17 F43 F47
    Date: 2018–04–07
  25. By: Claudia Goldin; Adriana Lleras-Muney
    Abstract: Females live longer than males in most parts of the world today. Among OECD nations in recent years, the difference in life expectancy at birth is around four to six years (seven in Japan). But have women always lived so much longer than men? The answer is that they have not. We ask when and why the female advantage emerged. We show that reductions in maternal mortality and fertility are not the reasons. Rather, we argue that the sharp reduction in infectious disease in the early twentieth century played a role. The primary reason is that those who survive most infectious diseases carry a health burden that affects organs, such as the heart, as well as impacting general well-being. We use new data from Massachusetts containing information on causes of death from 1887 to show that infectious diseases disproportionately affected females between the ages of 5 and 25. Increased longevity of women, therefore, occurred as the burden of infectious disease fell for all. Our explanation does not tell us why women live longer than men, but it does help understand the timing of the increase.
    JEL: J1 J16 N0
    Date: 2018–06
  26. By: Simon Fuchs (Toulouse School of Economics)
    Abstract: This paper analyzes to what extent labor market frictions limit the gains from market integration. I use an external demand shock to the Spanish economy as a natural experiment to identify and quantify the effect of labor mobility costs on Spain’s development. Using newly digitized trade and labor market data, I show that during WWI (1914-1918) a large, temporary and sectorally heterogeneous de- mand shock emanated from belligerent countries, as a result of which Spain ex- panded its manufacturing employment and exports, while income growth between the north and south in Spain diverged. To quantify and analyse the role of mo- bility costs I build and estimate a multi-sector economic geography model that al- lows for sectoral and spatial mobility costs. Spatial mobility costs dominated with an estimated 80% of reallocation of labor taking place within rather than between provinces. I use the estimated model to calculate counterfactuals to examine the effects of and interaction between output and input market integration: Comparing to the non-shock counterfactual I find that the WWI-shock increased manufactur- ing employment by 10%, and induced highly uneven spatial development with the north growing 27% faster. The shock constituted a 6% increase in market size and increased aggregate real incomes by 20%. Lowering mobility costs by 10% increases real income gains from the WWI-shock by an additional 3%, and exceeds gains in the non-shock scenario, suggesting that labor market integration and output market integration are complements.
    Date: 2018
  27. By: Polterovich, Victor
    Abstract: A new approach to understanding social and economic development is proposed, based on consideration of the evolution of coordination mechanisms. The work consists of two parts. In the first part, a critical analysis of four recently proposed theories of social development, focusing on geographical, institutional or cultural factors, is given. These theories have greatly enriched our understanding of the evolution of society, however, as analysis shows, none of them provides a satisfactory description of the driving forces and mechanisms of this evolution; the main reason is rooted in their common shortcoming - monocausality. It is proposed to distinguish between two types of development, catching up and leading. The basic ideas of the theory of catching-up development are presented. This approach makes it possible to explain the phenomenon of the "economic miracle" as a result of mutually conditioned changes in culture, institutions, technological progress and well-being in the context of interaction of competition, power and collaboration mechanisms. The second part is devoted to the theory of leading socioeconomic development. . It is shown how in Western Europe, as a result of the interaction of the above four factors, specific forms and combinations of the three main mechanisms of coordination - competition, power and cooperation - emerged at each stage of evolution. I emphasize the importance of ideology and the phenomenon of technical progress in the formation of institutions of economic and political competition that contributed to the creation of the welfare state. These changes and economic growth created the conditions for further transformation of civil culture: increasing levels of trust, tolerance, altruism and cosmopolitanism, expanding the planned horizon. The decrease in the level of coercion built into the mechanisms of power and competition are demonstrated as well as the expansion of the role of collaboration. A hypothesis is advanced that the speed of this process depends on geographical factors. The idea of welfare world is discussed.
    Keywords: inclusive and extractive institutions, limited and open access orders, cycle of emancipation, violence, rent, power, competition, collaboration, industrial revolution, welfare state, civic culture
    JEL: B4 B52 D7 H1 N4 O14 P11 P5
    Date: 2018–07–24
  28. By: Zwegers, Bart
    Abstract: This research paper discusses the rise of the heritage and tourist industry in Cornwall. It aims to historically contextualize this process by analyzing it in relation to the neo-liberal political landscape of the 1980s. The paper highlights several consequences of industrial heritage tourism in the region, including the growing gap between rich and poor that resulted from the arrival of newcomers from the richer Eastern counties and the perceived downplaying of Cornish heritage. It will explain how these developments paved the way for regionalist activists who strived for more Cornish autonomy in the field of heritage preservation and exploitation.
    Keywords: Industrial heritage tourism; Cornwall; Thatcherism; Mining heritage
    JEL: L83 M0
    Date: 2018–05–15
  29. By: König, Jörg
    Abstract: Im Juni 2018 jährt sich die Geburtsstunde der Sozialen Marktwirtschaft in Deutschland zum siebzigsten Mal. Währungsreform und Preisfreigabe setzten im Juni 1948 den Startpunkt für ein Gesellschafts- und Wirtschaftsmodell, das die Prinzipen des freien Marktes und des sozialen Ausgleichs miteinander vereint. Seither sorgt dieses Modell für mehr Wohlstand und gesellschaftliche Teilhabe in Deutschland. Das vorliegende Positionspapier der Stiftung Marktwirtschaft bietet einen Überblick über die wesentlichen Grundprinzipien, erreichten Erfolge und künftigen Herausforderungen der Sozialen Marktwirtschaft.
    Date: 2018
  30. By: C. Jara Figueroa; Bogang Jun; Edward L. Glaeser; César Hidalgo
    Abstract: How do regions acquire the knowledge they need to diversify their economic activities? How does the migration of workers among firms and industries contribute to the diffusion of that knowledge? Here we measure the industry, occupation, and location specific knowledge carried by workers from one establishment to the next using a dataset summarizing the individual work history for an entire country. We study pioneer firms–firms operating in an industry that was not present in a region–because the success of pioneers is the basic unit of regional economic diversification. We find that the growth and survival of pioneers increase significantly when their first hires are workers with experience in a related industry, and with work experience in the same location, but not with past experience in a related occupation. We compare these results with new firms that are not pioneers and find that industry specific knowledge is significantly more important for pioneer than non-pioneer firms. To address endogeneity we use Bartik instruments, which leverage national fluctuations in the demand for an activity as shocks for local labor supply. The instrumental variable estimates support the finding that industry related knowledge is a predictor of the survival and growth of pioneer firms. These findings expand our understanding of the micro-mechanisms underlying regional economic diversification events.
    JEL: D22 J24 N1 N16 O1 O14 O15 O5 O54 R12
    Date: 2018–07
  31. By: Golam Mostafa (American University in the Emirates, Dubai, UAE Author-2-Name: Author-2-Workplace-Name: Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: "Objective –This study evaluates China's rapid growth of economic, trade and investment ties with key Middle Eastern countries and its long term economic, geo-political and strategic goals and objectives, as well as opportunities and limitations in the light of the relative decline of US power and influence in the region. Methodology/Technique – A qualitative research methodology is applied in the study and wide range of secondary sources including articles, papers and online resources are used, analyzed and consulted. Data on trade and investment statistics between China and major Middle Eastern countries are also tabulated and used. Findings – The study concludes that economic and trade interests as well as stable and regular oil and gas supply are the primary consideration in this burgeoning relationship. The study also finds that strategic factors like geopolitical locations, large territories with huge natural resources, rising consumer markets and potential areas of military cooperation and arms sales make the Middle East a more lucrative and attractive partner to China. Novelty –The study looks at the relationship between China and the Middle East."
    Keywords: "China; Middle East; Trade; Strategic Interests; Gulf Cooperation Council ('GCC'); One Belt One Road ('OBOR')."
    JEL: N15 N25 N45
    Date: 2017–04–26
  32. By: In Do Hwang (Economic Research Institute, The Bank of Korea)
    Abstract: Although there is a well-established theoretical literature that links central bank (CB) reputation with inflation performance following Barro and Gordon, there is little empirical work testing the relationship rigorously. This paper empirically tests the impact of reputation on inflation-unemployment performance using a novel set of data on CB reputation--an annual local business manager survey on central bank policy covering 62 countries during 1995-2016. This paper finds that CB reputation is a significant determinant of inflation: the results of an FE panel and Arellano-Bond difference GMM model show that high-reputation CBs have achieved better inflation performances over the past 20 years with lower levels of inflation than others, holding the output gap and unemployment rate constant. This result remains robust to various control variables including money growth, past inflation levels, exchange rates, and financial crisis dummies. This paper also finds that high CB reputation is associated with a tight anchoring of inflation expectations to inflation targets in inflation-targeting countries. The effects of reputation on the volatility of inflation and unemployment rates are found to be not robust. This paper offers evidence of the opposite-direction causality as well that goes from high inflation to decreased CB reputation.
    Keywords: Reputation, Credibility, Monetary policy, Anchoring of inflation expectation
    JEL: E31 E52 E58 N10
    Date: 2018–05–29
  33. By: Kohnert, Dirk
    Abstract: High-flying illusions on the part of the proponents and grim predictions of the sceptics characterize the controversy about Brexit. The article analyses five issues at stake for the Post-Brexit relationships between Britain, the EU and Africa with a focus on the Commonwealth Sub-Saharan Africa: market access, FDI, aid, security and partnership . The British government’s vision of a ‘Global Britain’ relies heavily on a reinforced co-operation with Commonwealth nations. However, most likely this would be possible only at the expense of the poor in Africa and elsewhere. Concerning security cooperation with Africa, London apparently exaggerated its defence input in order to enhance its bargaining position with the EU. It will be crucial for both the EU and UK to find post-Brexit agreements to stem irregular migration and the growth of jihadist groups and terrorism. In a nutshell, the analysis of these different policy field shows that expectations of Brexiteers and African politicians alike concerning an enhanced, partner-like Post-Brexit Commonwealth relationship are largely unfounded.
    Keywords: UK, Brexit, EU, Africa, international trade, tariffs, aid, security, partnership
    JEL: F10 F13 F2 F35 F54 G15 G2 H26 N17 N47 N77 O17 P16 Z13
    Date: 2018–08–15

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.