nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2018‒12‒24
37 papers chosen by

  1. Ragnar Frisch (1895-1973) By Bjerkholt, Olav
  2. The long-run impact of historical shocks on the decision to migrate: Evidence from the Irish Migration. By Narciso, Gaia; Severgnini, Battista; Vardanyan, Gayane
  3. Economic history and contemporary challenges to globalization By O'Rourke, Kevin Hjortshøj
  4. The Gold Standard and the Great Depression: a Dynamic General Equilibrium Model By Luca Pensieroso; Romain Restout
  5. Regional and Racial Inequality in Infectious Disease Mortality in U.S. Cities, 1900-1948 By James J. Feigenbaum; Christopher Muller; Elizabeth Wrigley-Field
  6. Money Markets and Exchange Rates in Pre-Industrial Europe By Nogues-Marco, Pilar
  7. Institutions, Attitudes and LGBT: Evidence from the Gold Rush By Brodeur, Abel; Haddad, Joanne
  8. Economic Uncertainty and Fertility Cycles: The Case of the Post-WWII Baby Boom By Chabé-Ferret, Bastien; Gobbi, Paula
  9. Richer or more Numerous or both? The Role of Population and Economic Growth for Top Income Shares By Carla Krolage; Andreas Peichl; Daniel Waldenström
  10. Long-lasting social capital and its impact on economic development: the legacy of the commons By Daniel Montolio; Ana Tur-Prats
  11. The big bang and the City of London By Schenk, Catherine R.
  12. The "End of Men" and Rise of Women in the High-Skilled Labor Market By Jaimovich, Nir
  13. The Geography of Repression and Support for Democracy: Evidence from the Pinochet Dictatorship By María Angelica Bautista; Felipe González; Luis R. Martínez; Pablo Muñoz; Mounu Prem
  14. Population and poverty in Ireland on the eve of the Great Famine By Fernihough, Alan; Ó Gráda, Cormac
  15. The Long-term Consequences of the Global 1918 Influenza Pandemic: A Systematic Analysis of 117 IPUMS International Census Data Sets By Sebastian Vollmer; Juditha Wójcik
  16. The Perversion of Land Reform by Landed Elites: Power, Inequality and Development in Colombia By Marta-Juanita Villaveces; Jean-Paul Faguet; Fabio Sánchez
  17. Two Hundred Years of Health and Medical Care: The Importance of Medical Care for Life Expectancy Gains By Maryaline Catillon; David Cutler; Thomas Getzen
  18. Aggregate statistics on trafficker-destination relations in the Atlantic slave trade By Franses, Ph.H.B.F.; van den Heuvel, W.
  19. A Theory of Conservative Revivals By Iyigun, Murat; Rubin, Jared; Seror, Avner
  20. The big bang: Stock market capitalization in the long run By Kuvshinov, Dmitry; Zimmermann, Kaspar
  21. Come rifare Maastricht. L’Europa e la stampa By Giuseppe Vitaletti
  22. Biographical By Holmström , Bengt
  23. Climate Change: The Ultimate Challenge for Economics By Nordhaus, William D.
  24. The introduction of serfdom and labor markets By Jensen, Peter Sandholt; Radu, Cristina Victoria; Severgnini, Battista; Sharp, Paul
  25. Policy Evolution under the Clean Air Act By Richard Schmalensee; Robert N. Stavins
  26. Ludwik Fleck's philosophy and sociology of science and the resilience of modern neoclassical economics: A case study By Heise, Arne
  27. On the Possibility of Progress By Romer, Paul M.
  28. Biographical By Hart, Oliver
  29. Efficient Counterfactual Learning from Bandit Feedback By Gerald D. Jaynes
  30. Social spending as a driver of economic growth: has the theoretical consensus of the 1980s led to successful economic policies? By Sandrine Michel
  31. CasP's 'Differential Accumulation' versus Veblen's 'Differential Advantage' By Bichler, Shimshon; Nitzan, Jonathan
  32. THE SHADOW OF THE FAMILY: HISTORICAL ROOTS OF SOCIAL CAPITAL IN EUROPE By Maria Kravtsova; Aleksey Oshchepkov; Christian Welzel
  33. Walled Cities and Urban Density in China By Du, Jun; Zhang, Junfu
  34. Forms of Democracies and Macroeconomic Volatility: An Exploration of the Political Institutions Black-Box By Clément Mathonnat; Alexandru Minea
  35. Price momentum and the 1719-20 bubbles: A method to compare and interpret booms and crashes in asset markets By Condorelli, Stefano
  36. Private School Usage in Australia 1975 - 2010: Evidence from the Household Expenditure Surveys By Tue Gorgens; Chris Ryan; Guochang Zhao
  37. The Intergenerational Behavioural Consequences of a Socio-Political Upheaval By Booth, Alison L; Fan, Elliott; Meng, Xin; Zhang, Dandan

  1. By: Bjerkholt, Olav (Dept. of Economics, University of Oslo)
    Abstract: Ragnar Frisch was a Norwegian economist and statistician. He is well known for his effort in founding in 1930 the Econometric Society, the first international association in economics. In Europe it was followed by the European Economic Association in the mid-1980s. Ragnar Frisch was awarded the first Prize in Economic Sciences in Memory of Alfred Nobel, jointly with Jan Tinbergen, "for having developed and applied dynamic models for the analysis of economic processes." Frisch appreciated this prize not quite as much as the Antonio Feltrinelli prize awarded to him in 1961 by the Accademia Nazionale dei Lincei, the old and famous Italian society of which Galileo Galilei was one of the first members. Frisch is remembered internationally for his contributions to econometrics, macroeconomics and a number of other fields. He is revered in Norway for his role as teacher of students of economics over a period of 40 years and for having founded the Institute of Economics of the University of Oslo. Frisch is also known as a coiner of terms, e.g. econometrics, macroeconomics and quite a few others. The article is an account of Frisch’s early years, his education as silversmith, study years abroad etc. It includes also his own account of his experiences during the World War II and his advice given to postwar students in 1949.
    Keywords: Ragnar; Frisch
    JEL: B31
    Date: 2018–12–10
  2. By: Narciso, Gaia; Severgnini, Battista; Vardanyan, Gayane
    Abstract: This study investigates how negative historical shocks can explain migration in the long-run. We construct a unique dataset based on the early 20th century Irish Census data and a selection of the Ellis Island Administrative Records which allow us to test whether the Great Irish Famine (1845-1850), one of the most lethal starvation in history, has shaped the decision of migrating to the USA in the following 70 years. We control for several set of individual and geographical characteristics and we find that the Irish Famine was an important significant driver of individuals’ migration choices. Instrumental variable analysis based on the exogenous spread of the potato blight provides consistent results.
    Keywords: Mass migration,negative shock,long-run impact,Great Famine
    JEL: F22 N33 N93
    Date: 2018
  3. By: O'Rourke, Kevin Hjortshøj
    Abstract: The paper surveys three economic history literatures that can speak to contemporary challenges to globalization: the literature on the anti-globalization backlash of the nineteenth century, focused largely on trade and migration; the literature on the Great Depression, focused largely on capital flows, the gold standard, and protectionism; and the literature on trade and warfare.
    Keywords: deglobalization; Globalization
    JEL: F02 N70
    Date: 2018–12
  4. By: Luca Pensieroso (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Romain Restout (Université de Lorraine, Université de Strasbourg, CNRS, BETA)
    Abstract: Was the Gold Standard a major determinant of the onset and the protracted character of the the Great Depression of the 1930s in the United States and Worldwide? In this paper, we model the ‘Gold-Standard hypothesis’ in a dynamic general equilibrium framework. We show that encompassing the international and monetary dimensions of the Great Depression is important to understand what happened in the 1930s, especially outside the United States. Contrary to what is often maintained in the literature, our results suggest that the vague of successive nominal exchange rate devaluations coupled with the monetary policy implemented in the United States did not act as a relief. On the contrary, they made the Depression worse.
    Keywords: Gold Standard, Great Depression, Dynamic General Equilibrium
    JEL: N10 E13 N01
    Date: 2018–12–03
  5. By: James J. Feigenbaum; Christopher Muller; Elizabeth Wrigley-Field
    Abstract: In the first half of the twentieth century, the rate of death from infectious disease in the United States fell precipitously. Although this decline is well-known and well-documented, there is surprisingly little evidence about whether it took place uniformly across the regions of the U.S. We use data on infectious disease deaths from all reporting U.S. cities to describe regional patterns in the decline of urban infectious mortality from 1900 to 1948. We report three main results: First, urban infectious mortality was higher in the South in every year from 1900 to 1948. Second, infectious mortality declined later in southern cities than in cities in the other regions. Third, comparatively high infectious mortality in southern cities was driven primarily by extremely high infectious mortality among African Americans. From 1906 to 1920, African Americans in cities experienced a rate of death from infectious disease greater than what urban whites experienced during the 1918 flu pandemic.
    JEL: I14 J1 N3
    Date: 2018–12
  6. By: Nogues-Marco, Pilar
    Abstract: This article focuses on money markets and exchange rates in preindustrial Europe. The foreign exchange market was mostly based on bills of exchange, the instrument used to transfer money and provide credit between distant centers in pre-industrial Europe. In this chapter, first I explain bill of exchange operations, money market integration, usury regulations and circumventions to hide the market interest rate as well as the evolution of bills of exchange in history, focusing mainly on the most relevant features generalized during the first half of the 17th century: endorsement and the joint liability rule, which facilitated the full expansion of the foreign exchange market beyond personal networks. Then, I describe the European geography of money in the mid-18th century, characterized by a very high degree of multilateralism with the triangle of Amsterdam, London and Paris as the backbone of the European settlement system. Finally, I measure the cost of capital and relate it to liquidity. I show evidence of interest rates in the 18th century for Amsterdam, London, Paris and Cadiz. While Amsterdam, London and Paris presented low and similar interest rates, Cadiz had higher interest rates, mostly being double the cost of capital. These results seem to show a high inverse correlation between liquidity and interest rates, suggesting that the share in international trade of European centers might have been a powerful driver of international monetary leadership. While more empirical evidence and further research is needed, this approach opens the scope of the analysis beyond the national institutional explanation.
    Keywords: Bills of Exchange; cost of capital; Exchange Rates; interest rates; monetary geography; money market; Specie-Point Mechanism; usury regulations
    JEL: E42 F31 G15 N23
    Date: 2018–12
  7. By: Brodeur, Abel (University of Ottawa); Haddad, Joanne (University of Ottawa)
    Abstract: This paper analyzes the determinants behind the spatial distribution of the LGBT population in the U.S. We relate the size of the present-day LGBT population to the discovery of gold mines during the 19th century gold rushes. Comparing the surroundings of these gold mines to other current and former mining counties, we find that there are currently 10-15% more same-sex couples in counties in which gold discoveries were made during the gold rushes. We also provide empirical evidence that residents of gold rush counties still have more favorable attitudes toward homosexuality nowadays. Our findings are consistent with two mechanisms. First, gold rushes led to a large (temporary) increase in the male-to-female ratio. Second, we show that gold rush counties were less likely to house a notable place of worship at the time of the discovery (and in the following decades) and are currently less religious, suggesting a role of institutions in shaping attitudes and norms.
    Keywords: persistence, LGBT, attitudes, religion
    JEL: O13 O18 J10 R23
    Date: 2018–11
  8. By: Chabé-Ferret, Bastien; Gobbi, Paula
    Abstract: Using the US Census waves 1940-1990 and Current Population Surveys 1990-2010, we look at how economic uncertainty affected fertility cycles over the course of the XXth century. We use cross-state and cross-cohort variation in the volatility of income growth to identify the causal link running from uncertainty to completed fertility. We find that economic uncertainty has a large and robust negative effect on fertility. This finding contributes to the unraveling of the determinants of the post-WWII baby boom. Specifically, the difference in economic uncertainty endured by women born in 1910 compared to that faced by women born in 1935 accounts for between 45% and 61% of the one child variation across these cohorts. We hypothesize that a greater economic uncertainty increases the risk of large consumption swings, which individuals mitigate by marrying later, postponing fertility, and ultimately decreasing their completed fertility.
    Keywords: baby boom; baby bust; economic uncertainty; Fertility
    JEL: E32 J11 J13 N30
    Date: 2018–12
  9. By: Carla Krolage; Andreas Peichl; Daniel Waldenström
    Abstract: When measuring income inequality over long periods of time, accounting for population and productivity growth is important. This paper presents three alternative measures of top income shares that more explicitly account for population and income growth than the standard measure. We apply these measures to long-term income data from the United States and find that the U-shaped inequality trend over the past century holds up, but with important qualifications. Using measures that allow top groups to change not only in relative income but also in group size suggest more accentuated top income share growth since 1980 than when keeping top groups fixed. For earlier historical periods, our analysis shows that choice of income deflator (CPI or GDP) matters greatly. Using distributional national accounts data does not change these results. Altogether, our study's findings suggest that one may want to use several complementary top share measures when assessing long-term income inequality trends.
    Keywords: income distribution, inequality, top incomes, growth, measurement
    JEL: D31 D63 H31 N32
    Date: 2018
  10. By: Daniel Montolio (Universitat de Barcelona & Institut d'Economia de Barcelona (IEB)); Ana Tur-Prats (University of California, Merced)
    Abstract: This paper analyzes the historical determinants and long-term persistence of social capital, as well as its effect on economic development, by looking at the legacy of the commons in a Spanish region. In medieval times, common goods were granted to townships and were managed collectively by local citizens. This enabled the establishment of institutions for collective action and self-government. Common goods persisted until the second half of the nineteenth century. We argue that the experience of cooperation among villagers, repeated over the centuries, increased the social capital in each local community. In 1845, a law forced small villages to merge with others, a fact which generated exogenous variation in the number of mergers (i.e., cooperative networks) that each modern municipality was required to have. We exploit this change in an IV and RD setting and find that current municipalities formed by a greater number of old townships have a denser network of associations. We also find that higher social capital is associated with more economic development.
    Keywords: Collective Action, Self-Government, Long-Term Persistence, Common Goods
    JEL: N90 P48 Z10 H49
    Date: 2018
  11. By: Schenk, Catherine R.
    Abstract: Brexit poses an existential challenge the City of London as a European and global financial centre. The withdrawal of 'passporting' threatens the ability of financial institutions in London to sell services to customers in the EU, and this has prompted many predictions of London's financial demise. Banks are considering relocating staff and activities to other European centres such as Frankfurt, Dublin or Paris. Reflecting on London's history offers some insights into how The City might respond to this new challenge.
    JEL: G15 G18 N24 N44
    Date: 2018
  12. By: Jaimovich, Nir
    Abstract: We document a new finding regarding changes in labor market outcomes for high-skilled men and women in the US. Since 1980, conditional on being a college-educated man, the probability of working in a cognitive/high-wage occupation has fallen. This contrasts starkly with the experience for college-educated women: their probability of working in these occupations rose, despite a much larger increase in the supply of educated women relative to men. We show that one key channel capable of rationalizing these findings is a greater increase in the demand for female-oriented skills in cognitive/high-wage occupations relative to other occupations. Using occupation-level data, we find evidence that this relative increase in the demand for female skills is due to an increasing importance of social skills within such occupations. Evidence from both male and female wages is also indicative of an increase in the demand for social skills. Finally, we document how these patterns change across the early and latter portions of the period.
    Date: 2018–11
  13. By: María Angelica Bautista; Felipe González; Luis R. Martínez; Pablo Muñoz; Mounu Prem
    Abstract: We show that exposure to repression under dictatorship increases support for democracy and contributes to regime change when a democratic window of opportunity arises. Studying the military dictatorship of Augusto Pinochet in Chile, we exploit the fact that the predetermined location of military bases predicts local levels of civilian victimization, but is unrelated to historical political preferences. Using two-stage least squares, we show that increased exposure to repression during the dictatorship led to higher voter registration and higher opposition to Pinochet’s continuation in power in the 1988 plebiscite that triggered the democratic transition. Complementary survey data confirms that individuals with greater exposure to repression during the military regime continue to have stronger preferences for democracy. However, exposure to repression does not affect election outcomes after democratization.
    Keywords: Chile; Human rights; Repression; Dictatorship; Democratization; Elections; Derechos humanos; Represión; Dictadura; Democratización; Elecciones
    JEL: D72 N46
    Date: 2018–12
  14. By: Fernihough, Alan; Ó Gráda, Cormac
    Abstract: The link between demographic pressure and economic conditions in pre-Famine Ireland has long interested economists. This paper re-visits the topic, harnessing the highly disaggregated parish-level data from the 1841 Census of Ireland. Using population per value adjusted acre as a measure of population pressure, our results indicate that on the eve of the Great Famine of 1846{50, population pressure was positively associated with both illiteracy rates and the prevalence of poor quality housing. But while our analysis shows that population pressure was one of the primary factors underpinning pre-Famine poverty, it also highlights the importance of geography and human agency. A counterfactual computation indicates that had Ireland's population stayed at its 1800 level, this would have led to only modest improvements in literacy and housing.
    Keywords: Famine,Malthus,Population,Ireland
    JEL: N33 B30 J11
    Date: 2018
  15. By: Sebastian Vollmer (University of Göttingen); Juditha Wójcik (University of Mainz)
    Abstract: Several country-level studies, including a prominent one for the United States, have identified long-term effects of in-utero exposure to the 1918 influenza pandemic (also known as the Spanish Flu) on economic outcomes in adulthood. In-utero conditions are theoretically linked to adult health and socioeconomic status through the fetal origins or Barker hypothesis. Historical exposure to the Spanish Flu provides a natural experiment to test this hypothesis. Although the Spanish Flu was a global phenomenon, with around 500 million people infected worldwide, there exists no comprehensive global study on its long-term economic effects. We attempt to close this gap by systematically analyzing 117 Census data sets provided by IPUMS International. We do not find consistent global long-term effects of influenza exposure on education, employment and disability outcomes. A series of robustness checks does not alter this conclusion. Our findings indicate that the existing evidence on long-term economic effects of the Spanish Flu is likely a consequence of publication bias.
    Keywords: Spanish Flu, 1918 Influenza Pandemic, Fetal Origins Hypothesis
    JEL: I15 N30 O57
  16. By: Marta-Juanita Villaveces; Jean-Paul Faguet; Fabio Sánchez
    Abstract: Over two centuries, Colombia transferred vast quantities of land, equivalent to the entire UK landmass, mainly to landless peasants. And yet Colombia retains one of the highest concentrations of land ownership in the world. Why? We show that land reform’s effects are highly bimodal. Most of Colombia’s 1100+ municipalities lack a landed elite. Here, rural properties grew larger, land inequality fell, and development improved. But where land is concentrated in the hands of a rural elite, distributed land was diverted to bigger farms, resulting in fewer small and more large farms, greater land dispersion, and lower levels of development. We show that these effects – positive and negative – flow through political participation, competition, and policy-making. Landed elites use patron-client ties to distort local and national politics to their benefit. Land reform’s secondary effects, on the distribution of power, are more important than its primary effects on the distribution of land. *** Desde la independencia, Colombia ha transferido una vasta cantidad de tierra, equivalente al área del Reino Unido, principalmente a campesinos desterrados. Sin embargo, Colombia mantiene hoy en día uno de los más altos niveles de concentración de la tenencia de la tierra en el mundo. ¿Por qué? En este artículo mostramos que los efectos de la reforma agraria son bimodales. La mayoría de los más de 1100 municipios no cuentan con una élite terrateniente. En estos municipios, la propiedad rural creció y la desigualdad de la tierra se redujo. Pero, donde la tierra está concentrada en manos de una élite rural, la distribución de la tierra se orientó hacia los beneficios de los grandes terratenientes, con mayor dispersión en la tierra y menor nivel de desarrollo. Mostramos que estos efectos –positivos y negativos- se vinculan a la participación política, la competencia y la implementación de políticas. La élite terrateniente utiliza los vínculos patrón-cliente para distorsionar los beneficios de la política local y nacional. Los efectos secundarios de la reforma agraria en la distribución del poder, son más importantes que los efectos primarios en la distribución de la tierra.
    Keywords: Land reform, inequality, development, latifundia, political competition, Colombia
    JEL: Q15 D63 O1 D72
    Date: 2018–12–07
  17. By: Maryaline Catillon; David Cutler; Thomas Getzen
    Abstract: Using two hundred years of national and Massachusetts data on medical care and health, we examine how central medical care is to life expectancy gains. While common theories about medical care cost growth stress growing demand, our analysis highlights the importance of supply side factors, including the major public investments in research, workforce training and hospital construction that fueled a surge in spending over the 1955-1975 span. There is a stronger case that personal medicine affected health in the second half of the twentieth century than in the preceding 150 years. Finally, we consider whether medical care productivity decreases over time, and find that spending increased faster than life expectancy, although the ratio stabilized in the past two decades.
    JEL: H51 I15 I18 J1 N3 O1
    Date: 2018–12
  18. By: Franses, Ph.H.B.F.; van den Heuvel, W.
    Abstract: The available aggregated data on the Atlantic slave trade in between 1519 and 1875 concern the numbers of slaves transported by a country and the numbers of slaves who arrived at various destinations (where one of the destinations is “deceased”). It is however unknown how many slaves, at an aggregate level, were transported to where and by whom, that is, we know the row and column totals, but we do not known the numbers in the cells of the matrix. In this paper we use a simple mathematical technique to fill in the void. It allows us to estimate the trends in the deceases per transporting country, and also to estimate the fraction of slaves who went to own colonies or to others. For example, we estimate that of all the slaves who were transported by the Dutch only about 7 percent went to Dutch colonies, whereas for the Portuguese this number is about 37 percent.
    Date: 2018–01–01
  19. By: Iyigun, Murat (University of Colorado, Boulder); Rubin, Jared (Chapman University); Seror, Avner (Chapman University)
    Abstract: Why do some societies fail to adopt more efficient political and economic institutions in response to changing economic conditions? And why do such conditions sometimes generate conservative ideological backlashes and, at other times, progressive social and political movements? We propose an explanation that highlights the interplay - or lack thereof - between productivity, cultural beliefs and institutions. In our model, production shocks that benefit one sector of the economy may induce forward-looking elites to provide public goods associated with a different, more traditional sector that benefits their interests. This investment results in more agents generating cultural beliefs complementary to the provision of the traditional good, which in turn increases the political power of the traditional elite. Hence, productivity shocks in a more advanced sector of the economy can increase investment, political power, and cultural capital associated with the more traditional sector of the economy, in the process generating a revival of beliefs associated with an outdated economic environment.
    Keywords: institutions, conservatism, cultural beliefs, cultural transmission, institutional change, technological change
    JEL: D02 N40 N70 O33 O38 O43 Z10
    Date: 2018–11
  20. By: Kuvshinov, Dmitry; Zimmermann, Kaspar
    Abstract: This paper presents annual stock market capitalization data for 17 advanced economies from 1870 to today. Extending our knowledge beyond individual benchmark years in the seminal work of Rajan and Zingales (2003) reveals a striking new time series pattern: over the long run, the evolution of stock market size resembles a hockey stick. The stock market cap to GDP ratio was stable for more than a century, then tripled in the 1980s and 1990s and remains high to this day. This trend is common across countries and mirrors increases in other financial and price indicators, but happens at a much faster pace. We term this sudden structural shift 'the big bang' and use novel data on equity returns, prices and cashflows to explore its underlying drivers. Our first key finding is that the big bang is driven almost entirely by rising equity prices, rather than quantities. Net equity issuance is sizeable but relatively constant over time, and plays very little role in the short, medium and long run swings in stock market cap. Second, much of this price increase cannot be explained by more favourable fundamentals such as profits and taxes. Rather, it is driven by lower equity risk premia. Third, consistent with this risk premium view of stock market size, the market cap to GDP ratio is a reliable indicator of booms and busts in the equity market. High stock market capitalization - the 'Buffet indicator' - forecasts low subsequent equity returns, and low - rather than high - cashflow growth, outperforming standard predictors such as the dividend-price ratio.
    JEL: E44 G10 G20 N10 N20 O16
    Date: 2018
  21. By: Giuseppe Vitaletti (Università di Viterbo)
    Abstract: This work is fully integrated and unitary. It starts by analyzing the 2019 Stability Law and its financial accounts, which are illustrated, discussed and shared. How to reform the Maastricht parameters is then examined in some depth. One of its major conclusions is that the fiscal system should be reoriented toward a national model, similar to the one in vigour in Italy until the 1970s. Most of the work is concerned with this discussion, conducted by reporting all the articles, published and unpublished, sent to ItaliaOggi during this and the previous Legislature (2014-2018). Two papers follow, illustrating what the Bank of Italy should but cannot do, being “entangled” by BCE policy. The papers had in fact been sent to important seminars held in the Bank of Italy (2017 and 2018), but they were both rejected. Then other papers, published in Mondoperaio, Nuovi Lavori, and various newspapers, essentially delve deeper into the macroeconomic question. Here, following Keynes, it is shown that investment and amortisation are now more or less equal in the major European nations, so that net saving equates with the sum of trade surpluses and/or public deficits. This is a fundamental question, since trade surpluses are unsustainable, so public deficits become necessary and the rate of interest is compelled to zero, both in the public and the private system. A period of serious reforms is advocated, following what was thought and taught during most of the past century by the Italian School of public finance. This is illustrated by discussing my comments in a book edited by GORINI, LONGOBARDI, VITALETTI, entitled “Economia, Politica, Cultura nell’Italia del XX Secolo. Il pensiero critico di Sergio Steve”, FrancoAngeli, 2018.
    Keywords: Maastricht parameters, Macroeconomic equilibrium, Fiscal reform, Italian School of public finance
    JEL: H10 H30 H60
    Date: 2018–12
  22. By: Holmström , Bengt (MIT)
    Abstract: I was born in Helsinki in 1949. My sister Marianne was born in 1946. Our parents were married when the war against the Soviet Union ended in 1944. My father had spent five years on the front like so many young Finnish men. The post-war years were challenging socially and economically. The government had to arrange homes for over 400,000 refugees from regions lost in the war. In addition, Finland had to pay onerous reparation fees. Despite these hardships, I remember my early childhood as a happy time. There were plenty of children around to play with. We entertained ourselves with games of all sorts. There were few toys but our imagination more than filled the void. It taught me that material wealth is not essential for happiness.
    Keywords: contract theory;
    JEL: D86
    Date: 2017
  23. By: Nordhaus, William D. (Yale University)
    Abstract: William D. Nordhaus delivered his Prize Lecture on 8 December 2018 at the Aula Magna, Stockholm University.
    Keywords: long-term growth; climate change
    JEL: O00
    Date: 2018–12–08
  24. By: Jensen, Peter Sandholt; Radu, Cristina Victoria; Severgnini, Battista; Sharp, Paul
    Abstract: We provide evidence of how restrictions on labor mobility, such as serfdom and other types of labor coercion, impact labor market outcomes. To do so, we estimate the impact of a large negative shock to labor mobility in the form of the reintroduction of serfdom in Denmark in 1733, which was targeted at limiting the mobility of farmhands. Using a unique data source based on the archives of estates from the eighteenth century, we test whether serfdom affected the wages of farmhands more strongly than other groups in the labor market, and results based on a differences-in-differences approach reveal evidence consistent with a strong negative effect following its introduction. We also investigate whether one mechanism was that boys with rural backgrounds were prevented from taking up apprenticeships in towns, and find suggestive evidence that this was indeed the case. Thus, our results suggest that serfdom was effectively reducing mobility.
    Keywords: coercion; labor mobility; serfdom
    JEL: J3 N33 P4
    Date: 2018–11
  25. By: Richard Schmalensee; Robert N. Stavins
    Abstract: The U.S. Clean Air Act, passed in 1970 with strong bipartisan support, was the first environmental law to give the Federal government a serious regulatory role, established the architecture of the U.S. air pollution control system, and became a model for subsequent environmental laws in the United States and globally. We outline the Act’s key provisions, as well as the main changes Congress has made to it over time. We assess the evolution of air pollution control policy under the Clean Air Act, with particular attention to the types of policy instruments used. We provide a generic assessment of the major types of policy instruments, and we trace and assess the historical evolution of EPA’s policy instrument use, with particular focus on the increased use of market-based policy instruments, beginning in the 1970s and culminating in the 1990s. Over the past fifty years, air pollution regulation has gradually become much more complex, and over the past twenty years, policy debates have become increasingly partisan and polarized, to the point that it has become impossible to amend the Act or pass other legislation to address the new threat of climate change.
    JEL: Q28 Q40 Q48 Q54 Q58
    Date: 2018–11
  26. By: Heise, Arne
    Abstract: [Introduction] Ludwik Fleck’s contribution to the sociology and philosophy of science has gone almost unnoticed to the present day (see Sady 2017). Although his ideas about the development of scientific knowledge as a collective effort organised in ‘thought collectives’ (‘Denkkollektive’) based on shared ‘thought styles’ (‘Denkstile’) may have been elaborated and honed in Thomas S. Kuhn’s works on scientific revolutions and paradigm shifts and those of Imre Lakatos on scientific research programs (srp), Fleck’s work is still insightful beyond Kuhn’s and Lakatos’ contributions, not so much with respect to what triggers scientific progress but rather what impedes the correction of scientific deceptions. While Kuhn and Lakatos built on the rationality of the scientific community not to follow paradigmatic lines or adhere to scientific research programs defeated by empirical falsification or the proof of logical inconsistency or having entered the ‘state of degeneration’, Fleck was more concerned with the sociological forces that explain the resilience of ideas and what today we would call ‘fake knowledge’ even in the face of mounting evidence that does not fit the established wisdom. In the following, Fleck’s philosophy and sociology of science will be briefly outlined in order to establish a ‘theory of the resilience of scientific misapprehension’. This theory will be tested against the development of modern neoclassical economics by singling out a case of extreme deviation of theoretical prediction from empirical evidence: minimum wages’ impact on employment.
    Date: 2018
  27. By: Romer, Paul M. (New York University)
    Abstract: Paul M. Romer delivered his Prize Lecture on 8 December 2018 at the Aula Magna, Stockholm University.
    Keywords: long-term growth;
    JEL: O00
    Date: 2018–12–08
  28. By: Hart, Oliver (Harvard University)
    Abstract: I was born in London in 1948. My parents were both doctors. My mother was a gynecologist at a time when women doctors in the U.K. were relatively uncommon; she was a German-born Jew, who had left Germany in 1933 just after Hitler came to power. My father was an epidemiologist of some distinction whose particular interest was TB. He also was one of the key players in the 1948 Streptomycin trial, which put randomized control trials on the map. He came from a long-standing Anglo-Jewish family. We lived in comfortable but by no means luxurious middle class circumstances in the Hampstead area. I was an only child. My parents had had a son about a year before who died a few hours after being born, and so my arrival was particularly welcome. Perhaps because of this my parents were quite protective of me. Since my mother worked, a caregiver, called Mrs. Shealey, helped out during my childhood. My father was 48 when I was born – very old for a father at the time – but he lived to 106. My mother died at 93. I had a close and loving relationship with both of them.
    Keywords: Contract theory;
    JEL: D86
    Date: 2017
  29. By: Gerald D. Jaynes (Department of Economics, Yale University)
    Abstract: 1960 to 1980 doubling (21% to 41%) of black children in one-parent families emerged from 1940-to-1970 urbanization converging population toward urbanized blacks’ historically stable high rate, not post-1960 welfare liberalization or deindustrialization. Urban and rural child socializations structured di?erent Jim Crow Era black family formations. Agrarian economic enclaves socialized conformity to Jim Crow and two-parent families; urban enclaves rebellion, male joblessness, and destabilized families. Proxying urban/rural residence at age 16 for socialization location, logistic regressions on sixties census data con?rm the hypothesis. Racialized urban socialization negatively a?ected two-parent family formation and poverty status of blacks but not whites.
    Keywords: Behavioral Economics, Logistic Regression
    Date: 2018–11
  30. By: Sandrine Michel (ART-Dev - Acteurs, Ressources et Territoires dans le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UPVD - Université de Perpignan Via Domitia - UM3 - Université Paul-Valéry - Montpellier 3 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique, UM - Université de Montpellier)
    Abstract: The question of how this spending affects the economic growth is a question as old as economics. While the 19th century showed their countercyclical growth during the phase of depression of the business cycle followed by ratchet effects when economic context is improving, the 20th century has studied the causes of their growth. Economic causes insist first on the correction on income losses and then introduce causality as regards with the dynamics of capital accumulation. At the end of the 1980s, a new assumption (Lucas 1988, Fontvieille 1990) suggests that social spending would have become a driver of growth. This paper searches to verify this assumption. In order to do so, it focuses on the european pathway of social spending development since the 1960s to 2014. It is shown that insofar as social spending is still sensitive to the two last business cycle phase of depression, the 1980s assumption is not invalidated. But the assumption is not verified for other reasons than the expected ones. While social spending avoiding the fall of income used to be countercyclical, the other ones, dedicated to the production of the quality of the people, are becoming acyclical.
    Keywords: Economic History,Social spending,Economic growth,Economic Cycles,Endogeneous growth,Régulation Theory,Europe
    Date: 2018–10–17
  31. By: Bichler, Shimshon; Nitzan, Jonathan
    Abstract: This paper clarifies a common misrepresentation of our theory of capital as power, or CasP. Many observers tend to box CasP as an "institutionalist" theory, tracing its central process of "differential accumulation" to Thorstein Veblen's notion of "differential advantage". This view, we argue, betrays a misunderstanding of CasP, Veblen or both. As we show, CasP's notion of differential accumulation is not only different from, but also diametrically opposed to Veblen's differential advantage. Veblen, who wrote at the turn of the twentieth century, before the appearance of business indices and financial benchmarks, emphasized the absolute drive for "maximum profit" and saw strategic sabotage merely as a power means to an economic end. By contrast, CasP, which was developed at the end of the twentieth century, sees power not only as a means of accumulation, but also - and perhaps more importantly - as its ultimate purpose. Accumulators, it argues, are conditioned and driven to augment not their profits and assets as such, but their relative power, and this means that, as symbolic bearers of power, these profits and assets should be measured not absolutely, but relatively to those of others - hence the imperative of differential accumulation.
    Keywords: capital as power,differential advantage,differential accumulation,Thorstein Veblen
    Date: 2018
  32. By: Maria Kravtsova (National Research University Higher School of Economics); Aleksey Oshchepkov (National Research University Higher School of Economics); Christian Welzel (National Research University Higher School of Economics)
    Abstract: This study provides new evidence on the impact of historic household formation patterns on present day levels of social capital (SC). We distinguish effects on bonding and bridging social capital, of which only the latter is beneficial for a society as a whole. Our results challenge the view that large household size in the past per se was responsible for institutional drawbacks of contemporary societies restricting social capital. We unveil the true processes lying behind the idea that prevalence of nuclear households fostered institutional development, testing three mechanisms through which household size may influence social capital: (a) family size in terms of the number of household members; (b) the strength of loyalty bonds within the family, and (c) generational and gendered power hierarchies within the family. Our hypotheses are explored on the basis of 26 European countries covered by the Life in Transition Survey (LiTs) in 2010. The contrast between Western and Eastern European countries in the LiTs provides a controlled environment that is free from the potentially confounding influence of European colonialism. We generate a new historical database using historical census data for 429 sub-national regions in 5 West European and 21 East European countries. Individual responses from the LiTs are attributed to the sub-national region in which the respondent lives. We find that power relations within the family have more essential consequences for contemporary values and attitudes than nuclearity/extendedness dimension. Within-family hierarchies revealed to be the strongest predictor of social capital today, indicating lower levels of bridging SC and higher level of corruption in form of monetary transfers or exchange of favors. We suggest that within-family hierarchies in the past might have affected the contemporary level of SC provoking a longstanding commitment to authority within the society. This evidence is illustrated by the significant positive correlation between the historical index of within-family hierarchy and autocracy preference as measured on LiTs data. Societal commitment to authority rooted in historical family pattern might have prevented generalized trust formation and fostered vertical patron-client relations, favoritism and corruption. Our results may drive further research from concentrating on family extendedness (nuclearity) as a predictor of the current state of modernization towards using more meaningful indicators of within-family hierarchies.
    Keywords: historical family structure, social capital, bridging social capital, bonding social capital, corruption, modernization
    JEL: N33 J12
    Date: 2018
  33. By: Du, Jun (Aston University); Zhang, Junfu (Clark University)
    Abstract: Throughout the imperial era, defensive walls surrounded Chinese cities. Although most city walls have vanished, the cities have survived. We analyze a sample of nearly 300 prefectural-level cities in China, among which about half historically had city walls. We document that cities that had walls in late imperial China have higher population and employment density today, despite the fact that their walls have long gone. Using data from various sources, we test several possible explanations of this fact, including (1) walled cities have a well-defined historical core that helps hold economic activity close to the city center today; (2) walled cities today tend to have different industry compositions that are less conducive to decentralization; (3) walled cities are situated in regions where the local geographies make it less desirable to build out; (4) walled cities have more compact shapes that facilitate high density development; and (5) walled cities are located in regions where rural land is more valuable today and discourages urban sprawl. We find that historically walled cities still have higher density after taking into account all of these factors, which we interpret as evidence of economic persistence.
    Keywords: urban density, city wall, persistence, China
    JEL: R11 R12 N95
    Date: 2018–11
  34. By: Clément Mathonnat (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique); Alexandru Minea (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Although the empirical literature on the determinants of economic growth volatility highlights a robust stabilizing effect of democratic regimes compared to dictatorships, no study focused so far on identifying the precise political institutions explaining this stabilizing effect. We open the political institutions black-box associated to democratic regimes, and study the effects of disaggregated political institutions on macroeconomic volatility along five institutional dimensions, namely forms of government, electoral rules, state forms, the number of veto players, and the age of democracies. Using a large panel of 140 countries over 1975-2007, we show that institutional details are of crucial importance, since the stabilizing effect of democracies depends on the precise institutional dimensions at work. Thus, our study contributes to the institutional design debate, by showing that the simple promotion of democratic regimes might not be sufficient to foster a more stable development path.
    Keywords: Political Institutions,Macroeconomic Volatility,Positive Constitutional Economics,Comparative Politics,Economic Development
    Date: 2018
  35. By: Condorelli, Stefano
    Abstract: This paper attempts to address one major problem with bubble studies: the difficulty to rigorously compare assets bubbles (that is to say compare them via quantitative data, rather than simply anecdotal evidence). The idea of the paper is to use a metric that is not the level of price itself, but that is connected to it. This metric is price momentum (i.e. the magnitude and speed of price changes). Momentum is measured with a technical indicator: the Relative Strength Index (RSI). The RSI is popular among traders, yet it is not normally used as a tool of comparison. In particular, there appears to be no academic study that has hitherto employed the RSI as a metric to compare different booms and crashes. Likewise, it seems that the RSI was never applied to early modern markets (such as the Mississippi and South Sea Bubbles), or to early 20th century markets (such as the 1929 crash). The paper does all this (based on historical securities prices). Furthermore, it develops news concepts and metrics (such as “strong momentum with low volatility”, “momentum efficiency”, and accumulated RSI readings) that are connected to the notion of momentum. These concepts, in turn, are interpreted through the lens of archival evidence. The result is a new method of analysis – which is not concerned with market forecasting, but only with comparison and historical interpretation – that sheds new light on the 1719 20 bubbles themselves.
    Keywords: Financial history, South Sea Bubble, Mississippi Bubble, Dutch Wind Trade, Relative Strength Index, momentum, volatility, stock market bubbles and crashes, euphoria
    JEL: F31 G01 G1 G10 G14 G15 G19 N23
    Date: 2018–09
  36. By: Tue Gorgens; Chris Ryan; Guochang Zhao
    Abstract: The use of private schools in Australia has increased greatly. This paper shows that most of the growth has been concentrated in using low-fee schools, while the growth in using high-fee schools has been modest. Furthermore, the increase has occurred for both two-parent and single-parent households and for households at all income levels. However, increasing income and changes household composition can account only for a small part of the trend.
    JEL: I2 N3
    Date: 2018–12
  37. By: Booth, Alison L; Fan, Elliott; Meng, Xin; Zhang, Dandan
    Abstract: Social scientists have long been interested in the effects of social-political upheavals on a society subsequently. A priori, we would expect that, when traumas are brought about by outsiders, within-group behaviour would become more collaborative, as society unites against the common foe. Conversely, we would expect the reverse when the conflict is generated within-group. In our paper we are looking at this second form of upheaval, and our measure of within-group conflict is the 1966-1976 Cultural Revolution (CR) that seriously disrupted many aspects of Chinese society. In particular, we explore how individuals' behavioural preferences are affected by within-group traumatic events experienced by their parents or grandparents. Using data from a laboratory experiment in conjunction with survey data, we find that individuals with parents or grandparents affected by the CR are less trusting, less trustworthy, and less likely to choose to compete than their counterparts whose predecessors were not direct victims of the CR.
    Keywords: behavioural economics; Cultural Revolution; preferences
    JEL: C91 N4
    Date: 2018–12

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.