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on Business, Economic and Financial History |
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Issue of 2019‒05‒06
sixteen papers chosen by |
| By: | Kehoe, Timothy J. (Federal Reserve Bank of Minneapolis); Machicado, Carlos Gustavo (Institute for Advanced Development Studies); Peres-Cajías, José (University of Barcelona) |
| Abstract: | After the economic reforms that followed the National Revolution of the 1950s, Bolivia seemed positioned for sustained growth. Indeed, it achieved unprecedented growth from 1960 to 1977. Mistakes in economic policies, especially the rapid accumulation of debt due to persistent deficits and a fixed exchange rate policy during the 1970s, led to a debt crisis that began in 1977. From 1977 to 1986, Bolivia lost almost all the gains in GDP per capita that it had achieved since 1960. In 1986, Bolivia started to grow again, interrupted only by the financial crisis of 1998–2002, which was the result of a drop in the availability of external financing. Bolivia has grown since 2002, but government policies since 2006 are reminiscent of the policies of the 1970s that led to the debt crisis, in particular, the accumulation of external debt and the drop in international reserves due to a de facto fixed exchange rate since 2012. |
| Keywords: | Bolivia; Monetary policy; Fiscal policy; Hyperinflation; Public enterprises |
| JEL: | E52 E63 H63 N16 |
| Date: | 2019–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmsr:579&r=all |
| By: | Romain Plassard (Université Côte d'Azur, France; GREDEG CNRS) |
| Abstract: | During the 1970s, Keynesian macroeconomics was challenged by the New Classical Economics of Robert Lucas. This involved a battle between disequilibrium and equilibrium macroeconomics. My article contributes to explain why the equilibrium approach came to dominate. My case study is Robert Barro and Herschel Grossman. In 1971, Barro and Grossman elaborated the basic disequilibrium model. In 1976, they wrote the first book on disequilibrium macroeconomics – i.e., Money, Employment, and Inflation. However, at the end of the 1970s, they came to advocate for equilibrium models à la Lucas (1972, 1975). My article traces how and why |
| Keywords: | business cycle, non-neutrality of money, disequilibrium macroeconomics, equilibrium macroeconomics |
| JEL: | B21 B22 B23 E1 E3 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2019-17&r=all |
| By: | Nadine Geiger; Sebastian Wichert |
| Abstract: | While World War II (WWII) is often employed as natural experiment to identify long-term effects of adverse early-life and prenatal conditions, little is known about the short-term effects. We estimate the short-term impact of the onset of WWII on newborn health using a unique data set of historical birth records ranging from December 1937 to September 1941. Furthermore we investigate the heterogeneity of this effect with respect to health at birth and for different social groups. To evaluate potential channels for our results, we explore how birth procedures changed. While we do not find any effects on birth weight and asphyxia, perinatal mortality increases immediately after the onset of WWII. The mortality effect is driven by live births and strongest for very low birth weight infants. A decline in quality of medical care due to the sudden conscription of trained physicians to military service is the most likely mechanism for our findings. |
| Keywords: | infant mortality, early-life health, health care supply |
| JEL: | I10 I18 N34 N44 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7593&r=all |
| By: | Pamfili Antipa (Département d'économie); Vincent Bignon (Banque de France) |
| Abstract: | Macroeconomic analysis is not just a game of equations; it is a narrative of the real. We argue in this article for a re-evaluation of the importance of narratives. Because each financial crisis is a unique event, the narrative is the natural form of analysis. In addition, the effects of economic policies can no longer be analysed independently of the narratives appropriated by economic agents (Schiller, 2017) and policy makers (Friedman and Schwartz, 1963). There is a twofold value in adding the historical dimension. Economic history is instructive by multiplying case studies, i.e. by increasing the variety of policy successes and failures analysed. History also loosens the shackles of our preconceptions, since comparing the past and present calls into question the exceptional nature of what we are living. |
| Keywords: | Economic history; Cliometrics; Narrative; Economic policy |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/4ithmorhr18kq90pu8cm6fv3ad&r=all |
| By: | Razin, Assaf |
| Abstract: | This essay offers an economic-history perspective of the long struggle towards macroeconomic stability. The paper is a broad analytical overview of major exogenous shocks and shifts in macroeconomic policy and institutions in Israel since the 1977-1985 great inflation through the global financial crisis and the effects of those shifts on long term growth, inflation, the business cycle, the Phillips curve and related economic developments. The paper will discuss three main issues. The first one on the inflation crisis focuses on the 1985 stabilization and on its impact on subsequent reform of monetary institutions. The second discusses the impact of globalization on growth, inflation and the Phillips curve. The third contains a discussion of the reasons for the relatively good performance of Israel during the crisis, including foreign exchange market intervention. |
| JEL: | E0 F0 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13701&r=all |
| By: | Niamh Howlin |
| Abstract: | Contemporary legal practitioners and academics are familiar with the use of juries in criminal trials. To a lesser extent, the use of juries in civil actions, although a rarity in 21st century Ireland, is recognised as having been the norm in the past, and continues to be an essential part of the administration of justice in other common law systems, notably the United States. Juries also continue to be used at coroners’ inquests, delivering verdicts on the causes of death. What might be less widely appreciated, however, was that in the past, juries were used in a much wider range of situations, ranging from the determination of pregnancy or insanity, to the regulation of market practices and the conducting of land valuations. The term ‘jury’ in these scenarios is to be given a wide interpretation, generally meaning a panel of laypersons with no judicial or other specialised training. In this paper, I propose to explore some of these ways in which panels of laypersons were used in 18th and 19th century Ireland as an essential aspect of law, order and the regulation of society. Why were juries used in such diverse contexts? What were the advantages or disadvantages of doing so? Were there alternatives? |
| Keywords: | Legal history; Juries; Laypersons; 18th 19th Century; Regulation of Society; Administration of Justice |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:rru:oapubs:10197/9932&r=all |
| By: | Buera, Francisco J. (Washington University in St. Louis); Nicolini, Juan Pablo (Federal Reserve Bank of Minneapolis) |
| Abstract: | In this chapter, we review the monetary and fiscal history of Argentina for the period 1960–2017, a time during which the country suffered several balance of payments crises, three periods of hyperinflation, two defaults on government debt, and three banking crises. All told, between 1969 and 1991, after several monetary reforms, thirteen zeros had been removed from its currency. We argue that all these events are the symptom of a recurrent problem: Argentina’s unsuccessful attempts to tame the fiscal deficit. An implication of our analysis is that the future economic evolution of Argentina depends greatly on its ability to develop institutions that guarantee that the government does not spend more than its genuine tax revenues over reasonable periods of time. |
| Keywords: | Inflation; Deficits; Fiscal and monetary interactions; Government budget constraint; Macroeconomic history |
| JEL: | E31 E42 E5 E63 N16 |
| Date: | 2019–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmsr:580&r=all |
| By: | Arturo, Ramos |
| Abstract: | We review the classical Gibrat’s process for the population of city sizes. In particular, we are interested in whether the log-population process has stationary and independent (Gibrat’s Law for cities) increments. We have tested these characteristics for the case of the municipalities of Italy and Spain and the places of USA for a time span of more than one century. The results are clear: stationarity and independence are empirically rejected by standard tests. These results open theoretically the way for the observance of other city size distributions other than the lognormal and the double Pareto lognormal, something that in fact has already happened in the literature. |
| Keywords: | Gibrat’s process; log-population process; stationary increments; independent increments; Italian cities; Spanish cities; USA cities |
| JEL: | C46 R11 R12 |
| Date: | 2019–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93562&r=all |
| By: | Bown, Chad P. |
| Abstract: | In 2018, the United States suddenly increased tariffs on nearly 50 percent of its imports from China. China immediately retaliated with tariffs on more than 70 percent of imports from the United States. This paper assesses what happened in 2018 and attempts to explain why. It first constructs a new measure of special tariff protection to put the sheer scope and coverage of the 2018 actions into historical context. It then uses the lens provided by the 2018 special tariffs to explain the key sources of economic and policy friction between the two countries. This includes whether China's state-owned enterprises and industrial subsidies, as well as China's development strategy and system of forcibly acquiring foreign technology, were imposing increasingly large costs on trading partners. Finally, it also examines whether the US strategy to provoke a crisis-which may result in a severely weakened World Trade Organization-was deliberate and out of frustration with the institution itself. |
| Keywords: | retaliation; tariffs; Trade War; WTO |
| JEL: | F13 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13695&r=all |
| By: | Koudijs, Peter A. E. (Stanford University and NBER); Salisbury, Laura (York University and NBER) |
| Abstract: | We study the impact of marital property legislation passed in the U.S. South in the 1840s on household investment. These laws protected the assets of newly married women from creditors in a world of virtually unlimited liability. We compare couples married after the passage of a law with couples from the same state who were married before. Consistent with a simple model of household borrowing that trades off agency costs against risk sharing, the effect on household asset holdings was heterogeneous: if most household property came from the husband (wife), the law led to an increase (decrease) in total assets. |
| JEL: | D14 G33 N21 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3753&r=all |
| By: | Minns, Chris; Crowston, Clare; De Kerf, Raoul; De Munck, Bert; Hoogenboom, Marcel; Kissane, Christopher; Prak, Maarten; Wallis, Patrick |
| Abstract: | Citizenship was the main vehicle through which urban authorities granted political and economic rights to their communities. This article estimates the size of the citizenry and citizenship rates for over 30 European towns and cities between 1550 and 1849. While the extent of citizenship varied between European regions and by city size, our estimates show that citizenship was more accessible than previously thought. |
| JEL: | N0 |
| Date: | 2019–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:100509&r=all |
| By: | Nicolas Brisset (Université Côte d'Azur, France; GREDEG CNRS); Raphaël Fèvre (University of Cambridge; POLIS); Tom Juille (Université Côte d'Azur, France; GREDEG CNRS) |
| Abstract: | le présent article étudie l'inscription du régime de Vichy dans l'histoire de la mise en forme et de l'institutionnalisation des sciences sociales autour d'une "science de l'Homme". Le modèle d'une science sociale unifiée est en particulier porté par la Fondation française pour l'étude des problèmes humains et son secrétaire générale, François Perroux. Cette institution, financée directement et de manière substantielle par le Régime, s'inscrit non seulement dans l'histoire longue de l'émergence des sciences sociales en France , mais constitue également une rupture importante dans ce processus. L'article montrera qu'un point de vue particulier relatif à l'organisation et au contenu des sciences sociales va s'y imposer par effet d'homogénéisation du champ scientifique. |
| Keywords: | Fondation Carrel, régime de Vichy, François Perroux |
| JEL: | B29 B30 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2019-16&r=all |
| By: | Anson, Mike (Bank of England); Bholat, David (Bank of England); Kang, Miao (Bank of England); Rieder, Kilian (University of Oxford); Thomas, Ryland (Bank of England) |
| Abstract: | It is well known that quantitative credit restrictions, rather than Bagehot-style ‘free lending’ constituted the standard response to financial crises in the early days of central banking. But why did central banks in the past frequently restrict the supply of loans during financial crises? In this paper, we draw on a large novel, loan-level data set to study the Bank of England’s policy response to the crisis of 1847. We find that credit rationing due to residual imperfect information in the sense of Stiglitz and Weiss (1981) cannot be a convincing explanation for quantitative credit restrictions during the crisis of 1847. We provide preliminary evidence which could suggest that discriminatory credit rationing on the basis of loan applicants’ type and identity characterized the Bank of England’s (BoE’s) response to the crisis of 1847. Our results also show that collateral characteristics played an important role in the BoE’s loan decisions, even after controlling for the identity of loan applicants. This finding confirms the hypothesis in Capie (2002) and Flandreau and Ugolini (2011, 2013, 2014) that the characteristics of bills of exchange submitted to the discount window mattered. Since our results suggest that the Bank also took decisions on the basis of the identity of loan applicants, our preliminary findings would seem to challenge Capie’s ‘frosted glass’ metaphor, but more work is required to confirm these conjectures. |
| Keywords: | Credit rationing; lender of last resort; collateral management |
| JEL: | E44 E52 E58 G21 N12 N20 |
| Date: | 2019–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0794&r=all |
| By: | Nicolini, Juan Pablo (Federal Reserve Bank of Minneapolis) |
| Abstract: | In this paper, I revisit some recent work on the theory of the money supply, using a theoretical framework that closely follows Karl Brunner's work. I argue that had his research proposals been followed by the profession, some of the misunderstandings related to the instability of the money demand relationship could have been avoided. |
| Keywords: | Money multiplier; Means of payment; Transaction services |
| JEL: | E51 E58 |
| Date: | 2019–04–23 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmsr:582&r=all |
| By: | Borella, Margherita (Università di Torino); De Nardi, Mariacristina (Federal Reserve Bank of Minneapolis); Yang, Fang (Louisiana State University) |
| Abstract: | White, non-college-educated Americans born in the 1960s face shorter life expectancies, higher medical expenses, and lower wages per unit of human capital compared with those born in the 1940s, and men's wages declined more than women's. After documenting these changes, we use a life-cycle model of couples and singles to evaluate their effects. The drop in wages depressed the labor supply of men and increased that of women, especially in married couples. Their shorter life expectancy reduced their retirement savings but the increase in out-of-pocket medical expenses increased them by more. Welfare losses, measured as a one-time asset compensation, are 12.5%, 8%, and 7.2% of the present discounted value of earnings for single men, couples, and single women, respectively. Lower wages explain 47-58% of these losses, shorter life expectancies 25-34%, and higher medical expenses account for the rest. |
| JEL: | E21 H31 |
| Date: | 2019–03–18 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmoi:0019&r=all |
| By: | Felipe Benguria; Alan M. Taylor |
| Abstract: | Are financial crises a negative shock to demand or a negative shock to supply? This is a fundamental question for both macroeconomics researchers and those involved in real-time policymaking, and in both cases the question has become much more urgent in the aftermath of the recent financial crisis. Arguments for monetary and fiscal stimulus usually interpret such events as demand-side shortfalls. Conversely, arguments for tax cuts and structural reform often proceed from supply-side frictions. Resolving the question requires models capable of admitting both mechanisms, and empirical tests that can tell them apart. We develop a simple small open economy model, where a country is subject to deleveraging shocks that impose binding credit constraints on households and/or firms. These financial crisis events leave distinct statistical signatures in the empirical time series record, and they divide sharply between each type of shock. Household deleveraging shocks are mainly demand shocks, contract imports, leave exports largely unchanged, and depreciate the real exchange rate. Firm deleveraging shocks are mainly supply shocks, contract exports, leave imports largely unchanged, and appreciate the real exchange rate. To test these predictions, we compile the largest possible crossed dataset of 200+ years of trade flow data and event dates for almost 200 financial crises in a wide sample of countries. Empirical analysis reveals a clear picture: after a financial crisis event we find the dominant pattern to be that imports contract, exports hold steady or even rise, and the real exchange rate depreciates. History shows that, on average, financial crises are very clearly a negative shock to demand. |
| JEL: | E44 F32 F36 F41 G01 N10 N20 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25790&r=all |