nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2018‒11‒12
29 papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. Advocacy for a history of thought and organizations in Social Banking in France (SSE) By Pascal Glémain
  2. Top Incomes in Germany, 1871-2014 By Bartels, Charlotte
  3. In the shadow of coal: How large-scale industries contributed to present-day regional differences in personality and well-being By Obschonka, Martin; Stuetzer, Michael; Rentfrow, Peter J.; Shaw-Taylor, Leigh; Satchell, Max; Silbereisen, Rainer K.; Potter, Jeff; Gosling, Samuel D.
  4. James M. Buchanan: Neoclassical, Austrian, Neither, or Both? By Durnin, Brian
  5. The Economics of African American Slavery: The Cliometrics Debate By Richard C. Sutch
  6. Studiu retrospectiv privind comerțul exterior al României în ultimii 100 de ani By Zaman, Gheorghe; Georgescu, George
  7. The Reversal of Fortune, Extractive Institution and the Historical Roots of Racism By Bonick, Matthew; Farfan-Vallespin, Antonio
  8. Wesley Clair Mitchell and the “Illiberal Reformers”: A Documentary Note By Luca fiorito; Massimiliano Vatiero
  9. Diasporas, Diversity, and Economic Activity: Evidence from 18th-century Berlin By Hornung, Erik
  10. The Economic Consequences of Family Policies: Lessons from a Century of Legislation in High-Income Countries By Claudia Olivetti; Barbara Petrongolo
  11. Banking on the Boom, Tripped by the Bust: Banks and the World War I Agricultural Price Shock By Matthew S. Jaremski; David C. Wheelock
  12. "Monitoring Money for Price Stability" By Constantino Hevia; Juan Pablo Nicolini
  13. The Rise and Fall of the Natural Interest Rate By Gabriele Fiorentini; Alessandro Galesi; Gabriel Pérez-Quirós; Enrique Sentana
  14. On the long run Phillips Curve genus By Rod Cross
  15. What drives nickel prices: A structural VAR approach By Ehrlich, Lars G.
  16. Mesure du temps et temps de la mesure. Cliométrie des prix de gros en Allemagne avant la Première Guerre mondiale By Claude Diebolt; Magali Jaoul-Grammare
  17. Landscape Change and Trade in Ancient Greece: Evidence from Pollen Data By Anton Bonnier; Tymon Sloczynski; Grzegorz Koloch; Katerina Kouli; Adam Izdebski
  18. The Institutional Foundations of Religious Politics: Evidence from Indonesia By Samuel Bazzi; Gabriel Koehler-Derrick; Benjamin Marx
  19. Monetary and Fiscal History of Peru 1960-2010: Radical Policy Experiments, Inflation and Stabilization By Cesar Martinelli; Marco Vega
  20. Inequality in the Joint Distribution of Consumption and Time Use By Jeehoon Han; Bruce D. Meyer; James X. Sullivan
  21. Conclusion: What finance manufactures By Olivier Godechot
  22. Migrants, Ancestors and Foreign Investments By Konrad B Buchardi; Thomas Chaney; Tarek A Hassan
  23. “The laws of economics.” Economic devices, economics, economists, and the making of the economy By Olivier Godechot
  24. From Prosperity into the Crisis and Back. On the Role of Economic Theories in the Long Cycle By Stephan Schulmeister
  25. Balance of Payments Fluctiations in American Economic History: A Spectral Analytic Study By James Anderson; William J. Duffy
  26. Private Saving in the United States: 1950-85 By Patric H Hendershott; Joe Peek
  27. Modeling Time-Variation Over the Business Cycle (1960-2017): An International Perspective By Martinez-Garcia, Enrique
  28. The Stability of Manufacturing Activity in the U.S. Economy: 1921-1972 By William J. Duffy; Kenneth A. Lewis
  29. 200 años: Principios de Economía Política y Tributación (1817-2017) By Guillermo Maya Muñoz

  1. By: Pascal Glémain (LIRIS - Laboratoire interdisciplinaire de recherche en innovations sociétales - UR2 - Université de Rennes 2 - UNIV-RENNES - Université de Rennes)
    Abstract: Direct heir of the Italian Mount of piety, the "Credit Municipal" or French pawnshop model was born in Nantes in 1813, a metropole which are located in the west part of France. At this period of time, it was public organization of credit with a social mission: to help people who are in financial difficulty (excluded from access to banking currency). In 1955, the "Credit Municipal" became establishment of Public Welfare, with legal personality and financial autonomy under the governance of the City of Nantes. Credit Institution like "cooperative banks" but with a general purpose since 1984, the "Credit Municipal" is located today in the social and solidarity economy (SSE). With this research paper, we want to demonstrate the historical place of the French pawnshops in the microcredit devises landscape. Indeed, since "social banking" is not yet used as a category in official French banking system, we lack an authoritative definition because, we seem to be without social banking model through the French banking system history. But, we try to show that it's not the case. Indeed, French pawnshops, from Middle-Age to nowadays, have always experimented "social banking devises" in order to straight against usury practices and banking exclusion. Since the beginning of the 19th Century, the pawnshops have been an important element of the French model of social microcredit both through their traditional "pawn loans" system and through their "stability loan" devise.
    Keywords: Social enterprise,Banking exclusion,Solidarism,Social movements,Capitalism,Beneficiary,Social Banking,France,Pawnshop,Social microcredit,Pawn loans,Stability,Loan devise,Culture organisationnelle
    Date: 2017
  2. By: Bartels, Charlotte (DIW Berlin)
    Abstract: This study provides new evidence on top income shares in Germany from the period of industrialization to the present. Income concentration was high in the nineteenth century, dropped sharply after World War I and during the hyperinflation years of the 1920s, and increased rapidly throughout the Nazi period beginning in the 1930s. Following the end of World War II, German top income shares returned to 1920s levels. The German pattern stands in sharp contrast to developments in France, the UK, and the US, where World War II brought a sizeable and lasting reduction in top income shares. Since the turn of the millennium, income concentration in Germany has been on the rise and is today among the highest in Europe. Regression analysis reveals that rising top income shares are positively associated with the capital share, trade and technological change.
    Keywords: welfare state, income inequality, income distribution, top incomes, Germany
    JEL: D31 D63 J31 N30
    Date: 2018–09
  3. By: Obschonka, Martin; Stuetzer, Michael; Rentfrow, Peter J.; Shaw-Taylor, Leigh; Satchell, Max; Silbereisen, Rainer K.; Potter, Jeff; Gosling, Samuel D.
    Abstract: Recent research has identified regional variation of personality traits within countries but we know little about the underlying drivers of this variation. We propose that the Industrial Revolution, as a key era in the history of industrialized nations, has led to a persistent clustering of well-being outcomes and personality traits associated with psychological adversity via processes of selective migration and socialization. Analyzing data from England and Wales, we examine relationships between the historical employment share in large-scale coal-based industries (coal mining and steam-powered manufacturing industries that used this coal as fuel for their steam engines) and today’s regional variation in personality and well-being. Even after controlling for possible historical confounds (historical energy supply, education, wealth, geology, climate, population density), we find that the historical local dominance of large-scale coal-based industries predicts today’s markers of psychological adversity (lower Conscientiousness [and order facet scores], higher Neuroticism [and anxiety and depression facet scores], lower activity [an Extraversion facet], and lower life satisfaction and life expectancy). An instrumental variable analysis, using the historical location of coalfields, supports the causal assumption behind these effects (with the exception of life satisfaction). Further analyses focusing on mechanisms hint at the roles of selective migration and persisting economic hardship. Finally, a robustness check in the U.S. replicates the effect of the historical concentration of large-scale industries on today’s levels of psychological adversity. Taken together, the results show how today’s regional patterns of personality and well-being may have their roots in major societal changes underway decades or centuries earlier.
    Keywords: Industrial Revolution, regional well-being, adversity, Big Five personality traits, historical factors
    JEL: I31 N93
    Date: 2018
  4. By: Durnin, Brian
    Abstract: James McGill Buchanan (1919-2013) received the Nobel Memorial Prize in 1986 for his work in public choice theory, set out in his The Calculus of Consent (1962), co-authored with Gordon Tullock. The Virginia School of Political Economy can be seen as a product of the work of Buchanan and Tullock, along with Ronald Coase, who published his ground-breaking paper on “The Problem of Social Cost” in 1960 while he was at the University of Virginia. This school of thought is generally thought to be in some ill-defined sense allied to the Austrian school of economics, mainly perhaps because of a shared pro-market policy stance. On the other hand, links between Buchanan and neoclassical economists such as Friedman and Stigler are frequently drawn, again probably with the pro-market policy recommendations of each in mind. It is notable that Buchanan, Hayek, and Friedman were all at various times presidents of the Mont Pelerin Society. Yet the differences between neoclassical and Austrian perspectives are profound. It has often been said that the one can be characterized as “equilibrium always” and the other as “equilibrium never”. The case of Buchanan and the Virginia School is therefore extremely interesting for the historian of economic thought. Significant questions are raised about the scope for reconciliation between schools of thought at the most profound levels of methodology and social philosophy. I posit that, allowing for a slight amount of breathing room, James Buchanan’s economic writings are more Austrian than anything else. From his earliest writings to his last publications, Buchanan clearly had an Austrian-leaning approach. Additionally, many of the criticisms he laid out about the economics profession were directed toward the more neoclassical minded among his peers. While the act of criticizing neoclassical economists does not indicate that Buchanan was an Austrian, it does seem to lay to rest any conclusions that he was a neoclassical economist himself.
    Keywords: James M. Buchanan; Virginia School of Political Economy; Austrian school of economics; neoclassical economics; public choice; history of economic thought;
    JEL: B30 B53 P16
    Date: 2017–09–28
  5. By: Richard C. Sutch
    Abstract: This working paper explores the significant contributions to the history of African-American slavery made by the application of the tools of cliometrics. As used here “cliometrics” is defined as a method of scientific analysis marked by the explicit use of economic theory and quantitative methods. American slavery of the late antebellum period [1840-1860] was one of the earliest topics that cliometricians focused on and, arguably, the topic upon which they made the largest impact.
    JEL: J0 J43 J61 J81 N11 N21 N31 N51 N92 P10 Q12
    Date: 2018–10
  6. By: Zaman, Gheorghe; Georgescu, George
    Abstract: Throughout the last century, Romania's economy has suffered major adverse costs, especially caused by external factors, with an adverse impact both on the volume of foreign trade and its commodity structure and geographical orientation. The study focuses on the evolution of Romania's foreign trade over the past 100 years trying to highlight the main features and trends in the different stages of the Romanian economy development, covering the periods 1918-1947, 1948-1989 and 1990-2017, marked by the the interwar economy particularities, the socialist political and economic regime, and the Romania's transition to the market economy, in the context of pre-accession and integration in the European Union. The presentation of the main coordinates of Romania's trade policies precedes the foreign trade quantitative and qualitative analysis for each of the above mentioned periods.
    Keywords: foreign trade; trade deficit; transition; EU integration; FDI; Romania
    JEL: B22 F10 F15 N14 N74 O52 P33
    Date: 2018–10
  7. By: Bonick, Matthew; Farfan-Vallespin, Antonio
    Abstract: We show differences in levels of racism within a sample of former European colonies can be traced to historical institutions. Our identification strategy relies on the reversal of fortune, a historical shock capturing the exogenous establishment of different institutions during the onset of European colonization. Using both OLS and multilevel analysis, we find, extractive historical institutions to be a strong predictor of higher levels of racism independent of present and other explanatory factors at the individual and country levels. We argue and provide evidence this relationship is causal and operates through internal norms, beliefs and values.
    JEL: J15 N30 N40 Z10
    Date: 2018
  8. By: Luca fiorito; Massimiliano Vatiero
    Abstract: The aim of this note is to assess whether Wesley Clair Mitchell as a reformer ever expressed concern over the biological quality of individuals and whether he did somehow share the Progressive Era faith in eugenics as an instrument for improving American society’s health, welfare, and morals. Using both published and unpublished evidence, we argue that, as an institutionalist, Mitchell was free from the paternalistic and antidemocratic bent of the progressives described by Leonard and was ready to accept the new faith in the plasticity of human nature that sustained interwar reformism. At the same time, as someone who had been exposed to the Progressive Era cultural milieu, he could not completely divorce himself from the earlier decades preoccupations over the biological quality of individuals.
    Keywords: American Progressive Era; Mitchell, Wesley Clair; Immigration; Race; Eugenics
    JEL: B1 B15
    Date: 2018–09
  9. By: Hornung, Erik (University of Cologne, Center for Macroeconomic Research)
    Abstract: Diversity may either increase economic activity by utilizing complementarities in production or lead to costly conflict over resources. Using citydistrict panel data from 18th-century Berlin, a major center of refuge for persecuted minorities in early modern Europe, we analyze the relationship between changes in diversity and economic activity. Prussian rulers specifically invited groups of skilled immigrants, such as Jews, Huguenots, and Bohemians, to settle in Berlin’s newly-developed city quarters. We find that the resulting ethnic diversity fosters textile production in a much broader range of products than individual ethnicities, arguably reflecting complementarities between groups.Keywords: Ethnic Diversity, Minorities, Huguenots, Jews, Productivity JEL Classification: N33, J61, Z12, O33
    Date: 2018
  10. By: Claudia Olivetti (Boston College; NBER); Barbara Petrongolo (Queen Mary University; Centre for Economic Performance, LSE)
    Abstract: We draw lessons from existing work and our own analysis on the effects of parental leave and other interventions aimed at aiding families. The outcomes of interest are female employment, gender gaps in earnings and fertility. We begin with a discussion of the historical introduction of family policies ever since the end of the nineteenth century and then turn to the details regarding family policies currently in effect across high-income nations. We sketch a framework concerning the effects of family policy to motivate our country- and micro-level evidence on the impact of family policies on gender outcomes. Most estimates of the impact of parental leave entitlement on female labor market outcomes range from negligible to weakly positive. The verdict is far more positive for the beneficial impact of spending on early education and childcare.
    Keywords: parental leave, childcare, family policies, gender gaps
  11. By: Matthew S. Jaremski; David C. Wheelock
    Abstract: Bank lending booms and asset price booms are often intertwined. Although possibly triggered by a fundamental shock, rising asset prices can stimulate lending that pushes asset prices higher, leading to more lending, and so on. Such a dynamic seems to have characterized the agricultural land boom surrounding World War I. This paper examines i) how banks responded to the boom and were affected by the bust; ii) how various banking regulations and policies influenced those effects; and iii) how bank closures contributed to falling land prices in the bust. We find that rising crop prices encouraged bank entry and balance sheet expansion in agricultural counties (with new banks accounting disproportionately for growth in lending and banking system risk). State deposit insurance systems amplified the impact of rising crop prices on bank portfolios, while higher minimum capital requirements dampened the effects. When farmland prices collapsed, banks that had responded most aggressively to the asset boom had a higher probability of closing, and counties with more bank closures experienced larger declines in land prices.
    JEL: E58 N21 N22
    Date: 2018–10
  12. By: Constantino Hevia; Juan Pablo Nicolini
    Abstract: In this paper, we use a simple model of money demand to characterize the behavior of monetary aggregates in the United States from 1960 to 2016. We argue that the demand for the currency component of the monetary base has been remarkably stable during this period. We use the model to make projections of the nominal quantity of cash in circulation under alternative future paths for the federal funds rate. Our calculations suggest that if the federal funds rate is lifted up as suggested by the survey of economic projections made by the members of the Federal Open Market Committee (FOMC), the fall in total currency demanded in the next two years ranges between 50 and 200 billion. Our discussion suggests that specific measures by the Federal Reserve to absorb that cash could be worth considering to make the future path of the price level consistent with the price stability mandate.
    Keywords: Inflation, Money Demand, Currency in Circulation
    JEL: E31 E41 E51
    Date: 2017–12
  13. By: Gabriele Fiorentini (Università di Firenze); Alessandro Galesi (Banco de España); Gabriel Pérez-Quirós (Banco de España); Enrique Sentana (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: We document a rise and fall of the natural interest rate (r*) for several advanced economies, which starts increasing in the 1960’s and peaks around the end of the 1980’s. We reach this conclusion after showing that the Laubach and Williams (2003) model cannot estimate r* accurately when either the IS curve or the Phillips curve is flat. In those empirically relevant situations, a local level specification for the observed interest rate can precisely estimate r*. An estimated Panel ECM suggests that the temporary demographic effect of the young baby-boomers mostly accounts for the rise and fall.
    Keywords: Natural rate of interest, Kalman filter, observability, demographics.
    JEL: E43 E52 C32
    Date: 2018–07
  14. By: Rod Cross (Department of Economics, University of Strathclyde)
    Abstract: This note points out that the long run Phillips curve genus contains upward and downward sloping species as well as the vertical species. Observers have found it difficult to sight the vertical species in certain countries, in certain epochs. This difficulty could well arise from the observers having looked for the wrong species.
    Keywords: Unemployment, Natural Rates, Vertical, Positive Loci, Negative Loci, Hysteresis.
    JEL: B22 E24 E31 N10
    Date: 2018–09
  15. By: Ehrlich, Lars G.
    Abstract: Metal markets play a major role in the challenging area of natural resource economics and have a forceful impact on global and local development. Understanding the behaviour and nature of metal price fluctuation is an essential element for taking countermeasures. Nickel is an indispensable element for modern steel industries and therefore crucial to industrial countries. This paper presents a structural model to explain price fluctuations in the international nickel market. On the basis of a unique long-term data set from 1867 to 2015, demand and supply shocks affecting the real prices of nickel are identified by using a Structural Vector Autoregression (SVAR) model and are traced back to historical developments in the nickel market. The results demonstrate that in the late 19th century real nickel prices were most affected by 'nickel-specific' demand shocks as well as "nickel supply" shocks. While over the course of the 20th century the weight of positive "world domestic product driven" demand shocks grew, from 1980 on nickel-specific demand shocks had the most influence on nickel price development. These findings underline the need to analyse the driving forces of metal prices individually and thereby take its particular features into account rather than generalising over a broad spectrum of mineral commodities.
    Date: 2018
  16. By: Claude Diebolt; Magali Jaoul-Grammare
    Abstract: Cet article prolonge les travaux de Jacobs et Richter (1935) sur les indices de prix gros en Allemagne avant la Première Guerre mondiale. Nous les complétons, d’une part en proposant une série originale des prix, d’autre part en développant une analyse cliométrique soulignant l’importance des guerres dans leur dynamique structurelle.
    Keywords: Allemagne, Cliométrie, Indice des prix.
    JEL: E3 N1 N4
    Date: 2018
  17. By: Anton Bonnier (Uppsala University); Tymon Sloczynski (Brandeis University and IZA); Grzegorz Koloch (Warsaw School of Economics); Katerina Kouli (National and Kapodistrian University of Athens); Adam Izdebski (Jagiellonian University in Krakow and Max Planck Institute for the Science of Human History)
    Abstract: In this paper we use pollen data from a number of sites in southern Greece and Macedonia to study long-term vegetation change in these regions from 1000 BCE to 600 CE. Based on insights from environmental history, we interpret our estimated trends in the regional presence of cereal, olive, and vine pollen as proxies for structural changes in agricultural production. We present evidence that there was a market economy in ancient Greece and a major trade expansion several centuries before the Roman conquest. Our results are consistent with auxiliary data on settlement dynamics, shipwrecks, and ancient oil and wine presses.
    Keywords: agricultural production, ancient Greece, environmental history, market integration, pollen data, trade
    JEL: C81 F14 N53 N73 Q17
    Date: 2018–11
  18. By: Samuel Bazzi; Gabriel Koehler-Derrick; Benjamin Marx
    Abstract: Why do religious politics thrive in some societies but not others? This paper explores the institutional foundations of this process in Indonesia, the world’s largest Muslim democracy. We show that a major Islamic institution, the waqf, fostered the entrenchment of political Islam at a critical historical juncture. In the early 1960s, rural elites transferred large amounts of land into waqf—a type of inalienable charitable trust—to avoid expropriation by the government as part of a major land reform effort. Although the land reform was later undone, the waqf properties remained. We show that greater intensity of the planned reform led to more prevalent waqf land and Islamic institutions endowed as such, including religious schools, which are strongholds of the Islamist movement. We identify lasting effects of the reform on electoral support for Islamist parties, preferences for religious candidates, and the adoption of Islamic legal regulations (sharia). Overall, the land reform contributed to the resilience and eventual rise of political Islam by helping to spread religious institutions, thereby solidifying the alliance between local elites and Islamist groups. These findings shed new light on how religious institutions may shape politics in modern democracies.
    JEL: D72 D74 P16 P26 Z12
    Date: 2018–10
  19. By: Cesar Martinelli (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Marco Vega (Banco Central de Reserva del Peru’ and Universidad Cat’olica del Peru Ì)
    Abstract: We show Peru’s chronic inflation through the 1970s and 1980s was a result of the need for inflationary taxation in a regime of fiscal dominance of monetary policy. Hyperinflation occurred when further debt accumulation became unavailable, and a populist administration engaged in a counterproductive policy of price controls and loose credit. We interpret the fiscal difficulties preceding the stabilization as a process of social learning to live within the realities of fiscal budget balance. The credibility of policy regime change in the 1990s may be linked ultimately to the change in public opinion giving proper incentives to politicians, after the traumatic consequences of the hyper stagflation of 1987-1990.
    Date: 2018–08
  20. By: Jeehoon Han; Bruce D. Meyer; James X. Sullivan
    Abstract: This paper examines inequality in both leisure and consumption over the past four decades using time use surveys stretching from 1975 to 2016. We show that individual and family characteristics, especially when including work hours, explain most of the long run variation in leisure. We then use these characteristics to predict the distribution of leisure in the Consumer Expenditure Survey, a survey that also provides detailed information on consumption. The advantage of this approach is that it gives us measures of consumption and leisure at the family level within a single data source. We find that leisure time is highest for families at the bottom of the consumption distribution, and typically declines monotonically as consumption rises. However, the consumption-leisure gradient is small. We find noticeable differences across family types, with the gradient being largest for single parent families and single individuals and smallest for families with a head age 65 or older. Overall, these results indicate that including both leisure and consumption, as opposed to just consumption, in a measure of economic well-being will result in less inequality. However, because the consumption-leisure gradient is not very steep, the dampening effect of leisure on overall inequality is small.
    JEL: D63 I3 J22
    Date: 2018–10
  21. By: Olivier Godechot (Observatoire sociologique du changement)
    Abstract: Why should we approach the study of finance in an alternative way when other disciplines – such as economics and financial theory – which are older, more legitimate and endowed with more substantial backing, have already been tackling this subject for over fifty years? Admirably, despite any misgivings, the rapid and varied development of a collection of studies on finance has nonetheless originated over the last fifteen years from a variety of disciplines (sociology, anthropology, political science, history, management sciences, geography). This has resulted from the dynamic academic practice of diversifying and reviving research subjects, though also because of a dissatisfaction with the inadequacy of standard approaches. But that is not all, as it has equally stemmed from a desire to understand a much deeper phenomenon: the sudden emergence of finance in social life. [First paragraph]
    Keywords: Study of finance; Social life; Finance; Research subjects
    Date: 2019
  22. By: Konrad B Buchardi (Stockholm University); Thomas Chaney (Département d'économie); Tarek A Hassan (Boston University (Boston, Massachusetts) (BU))
    Abstract: We use 130 years of data on historical migrations to the United States to show a causal effect of the ancestry composition of US counties on foreign direct investment (FDI) sent and received by local firms. To isolate the causal effect of ancestry on FDI, we build a simple reduced-form model of migrations: Migrations from a foreign country to a US county at a given time depend on (i) a push factor, causing emigration from that foreign country to the entire United States, and (ii) a pull factor, causing immigration from all origins into that US county. The interaction between time-series variation in origin-specific push factors and destination-specific pull factors generates quasi-random variation in the allocation of migrants across US counties. We find that doubling the number of residents with ancestry from a given foreign country relative to the mean increases the probability that at least one local firm engages in FDI with that country by 4 percentage points. We present evidence that this effect is primarily driven by a reduction in information frictions, and not by better contract enforcement, taste similarities, or a convergence in factor endowments.
    Keywords: Migrations; Foreign direct investments; International trade; Networks; Social ties
    JEL: O11 J61 L14
    Date: 2018–10
  23. By: Olivier Godechot (Observatoire sociologique du changement)
    Abstract: Twenty years ago, Michel Callon edited The Laws of the Markets, a groundbreaking volume that substantially redefined economic sociology by resetting the relationship between sociology and economics (Callon 1998). Many articles in economic sociology at that time started (and still do today) with sharp criticism of neoclassical economics. The latter was censured for being overly simplistic and complex, overly reductionist and irrelevant. [First lines]
    Keywords: Laws of economics; Economic devices; Economics; Economists; Making of the economy
    Date: 2018–03
  24. By: Stephan Schulmeister
    Abstract: This essay reconsiders the interaction between the development of economic theories and economic reality since the 1920ies. I begin with the systemic cause of the financial crisis, the coincidence of three "bear markets" (stocks, real estate, commodities) which followed three parallel "bull markets". I then sketch the macroeconomic effects of the "manic-depressive" fluctuations of asset prices and show how they paved the road into the present crisis. As next step, I explain how "bulls" and "bears" are brought about. Then I sketch how the treatment of financial markets in economic theory and policy has shaped the long cycle from the financial boom of the 1920ies, the Great Depression, the post-war prosperity under "realcapitalistic" framework conditions to the "finance-capitalistic" regime since the 1970ies. The paper concludes with proposals how Europe could find roads to new prosperity. After the upcoming financial crisis there will be a window of opportunity to implement these proposals.
    Keywords: Asset price dynamics
    Date: 2018–11–02
  25. By: James Anderson (Boston College); William J. Duffy
  26. By: Patric H Hendershott (The Ohio State University); Joe Peek (Boston College)
  27. By: Martinez-Garcia, Enrique (Federal Reserve Bank of Dallas)
    Abstract: In this paper, I explore the changes in international business cycles with quarterly data for the eight largest advanced economies (U.S., U.K., Germany, France, Italy, Spain, Japan, and Canada) since the 1960s. Using a time-varying parameter model with stochastic volatility for real GDP growth and inflation allows their dynamics to change over time, approximating nonlinearities in the data that otherwise would not be adequately accounted for with linear models (Granger et al. (1991), Granger (2008)). With that empirical model, I document a period of declining macro volatility since the 1980s, followed by increasing (and diverging) inflation volatility since the mid-1990s. I also find significant shifts in inflation persistence and cyclicality, as well as in macro synchronization and even forecastability. The 2008 global recession appears to have had an impact on some of this. I ground my empirical strategy on the reduced-form solution of the workhorse New Keynesian model and, motivated by theory, explore the relationship between greater trade openness (globalization) and the reported shifts in international business cycles. I show that globalization has sizeable (yet nonlinear) effects in the data consistent with the implications of the model—yet globalization’s contribution is not a foregone conclusion, depending crucially on more than the degree of openness of the international economy.
    Keywords: Great Moderation; Globalization; International Business Cycles; Stochastic Volatility; Time-Varying Parameters
    JEL: E31 E32 F41 F44
    Date: 2018–10–01
  28. By: William J. Duffy (Boston College); Kenneth A. Lewis (Boston College)
  29. By: Guillermo Maya Muñoz
    Keywords: Principios; Economía; Ricardo
    Date: 2017–01–01

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