nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2019‒08‒12
thirty-two papers chosen by

  1. Always Egalitarian: Australian Earnings Inequality 1870-1910 1 By Laura Panza; Jeffrey G. Williamson
  2. The Efficient Market Hypothesis and Rational Expectations. How Did They Meet and Live (Happily?) Ever After By Thomas Delcey; Francesco Sergi
  3. Japan's Employment System from a Historical Perspective: Formation, Expansion, and Contraction of Internal Labor Markets (Japanese) By NAKABAYASHI Masaki; MORIMOTO Mayo
  4. Technological Progress and Health Convergence: The Case of Penicillin in Post-War Italy By Marcella Alsan; Vincenzo Atella; Jay Bhattacharya; Valentina Conti; Ivàn Mejìa-Guevara; Grant Miller
  5. The biological standard of living in urban Bolivia, 1880s-1920s: stagnation and persistent inequality By Boris Branisa; José Peres-Cajías; Nigel Caspa
  6. A Vision for a Dynamic World: Reading Capitalism, Socialism and Democracy for Today By Dalton, John; Logan, Andrew
  7. Big D and little d: two types of 21st century development? By Lewis, David
  8. Credit constraints and the propagation of the Great Depression in Germany By Adam, Marc C.; Jansson, Walter
  9. Economic experiences of Japanese civilian repatriates in Hiroshima prefecture, 1945-1956 By Nishizaki, Sumiyo
  10. Surplus Dutch Colonial Big Profits in Indonesia 1878-1942 By Sumardi
  11. The rationale of sharecropping: immigrant bonded laborers and the transition from slavery in Brazil (1830-1890) By Bruno Gabriel Witzel de Souza
  12. U.S. Infrastructure: 1929-2017 By Ray C. Fair
  13. Mapping the emergence of a new research field: an exploration of the intellectual structure of the B Corp research By Silvia Blasi; Silvia Rita Sedita
  14. The Role of Central Banks and the Political Environment in Financial Stability: A Literature Review By Zoe Venter
  15. The Geography of Dictatorship and Support for Democracy By Maria Angelica Bautista; Felipe Gonzalez; Luis R. Martınez; Pablo Munoz; Mounu Prem
  16. Should French municipalities foster urban densification to reduce their expenditures? By Kakpo, Eliakim; Le-Gallo, Julie; Breuillé, Marie; Grivault, Camille
  17. Crime, power, and authoritarian capitalism: a dystopian realism experiment By Soares, Luiz Eduardo
  18. Unregulated and regulated free banking. The case of Switzerland reinterpreted By Nils Herger
  19. Classical Economics: Lost and Found By Vernon L. Smith; Sabiou M. Inoua
  20. El bicentenario: una mirada entre la historia económica y la economía política By Centro de Investigaciones para el Desarrollo
  21. The Consequences of Student Loan Credit Expansions: Evidence from Three Decades of Default Cycles By Looney, Adam; Yannelis, Constantine
  22. Technological regimes and the geography of innovation: a long-run perspective on US inventions By Dario Diodato; Ahmad Andrea Morrison
  23. Deskilling among Manufacturing Production Workers By David Kunst
  25. “The lost ones: the opportunities and outcomes of non-college-educated Americans born in the 1960s” By Margherita Borella; Mariacristina De Nardi; Fang Yang
  26. The Evolution of Wage Inequality in Korea By Koh, Youngsun
  27. Aggregate Effects of Budget Stimulus: Evidence from the Large Fiscal Expansions Database By Jeremie Cohen-Setton; Egor Gornostay; Colombe Ladreit de Lacharriere
  28. The Evolution of Ownership Structures: Privatization, Business Groups, and Pyramids By Aldunate, F; González, F; Prem, M; Urzúa, F
  29. Criptovalute, Sovranismo e Sistema Monetario. By Salvatore Nisticò
  30. Cournot Marked the Turn from Classical to Neoclassical Thinking By Vernon L. Smith; Sabiou M. Inoua
  31. Un bicentenario del café en Colombia: estrategia competitiva y cambio estructural By Ricardo Rocha García
  32. Do African economies grow similarly? By Franses, Ph.H.B.F.

  1. By: Laura Panza; Jeffrey G. Williamson
    Abstract: Trends in Australian inequality across the twentieth century are now well documented and they closely replicate trends in every other advanced economy: from WWI to the 1970s, inequality fell steeply everywhere, and from the 1970s to the present, it rose just as steeply. Despite following a similar trajectory, Australia remained more egalitarian throughout. Why has it been exceptional and what are its origins? Our previous work has found plenty of evidence documenting a steep fall in Australian income and earnings inequality from 1820 to 1870 (Panza and Williamson 2019a). This paper answers two additional questions. First, what was the level of inequality around 1870 after the fall? While we cannot speak to income inequality in 1870, we do find that earnings inequality was much lower in Australia than in the United States, the United Kingdom, and presumably the rest of Europe. Second, we find that there was no rise in Australian earnings inequality over the half century 1870-1910, but rather a modest fall. These findings rely on the use of an array of primary sources – especially the underutilized government Blue Books reporting annual earnings of an impressive range of white collar occupations – as well as better known secondary sources reporting the earnings of manual workers and farm labor. These occupational (average) earnings data are merged with occupational employment data taken from the censuses to construct social tables for Australia’s 1870 earnings distribution. We do the same for postfederation 1910 Australia. This exercise establishes that the source of modern Australia’s relative egalitarianism is the middle third of the colonial nineteenth century. We also apply Goldin-Katz (2008) analysis to the half century 1870-1910 thus to identify the sources of slow skill demand and fast skill supply growth. Australia missed a rise up some Kuznets Curve before World War I, a rise so common in Europe and most of its offshoots.
    Date: 2019–08
  2. By: Thomas Delcey (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Francesco Sergi (UWE Bristol - University of the West of England [Bristol])
    Abstract: This article investigates the origins and early development of the association between the efficient market hypothesis and rational expectations. These two concepts are today distinctive theoretical benchmarks for mainstream approaches to, respectively, finance and macroeconomics. Moreover, scholars in each of these two fields tend to associate the two ideas as related equilibrium concepts; they also claim that the two have a common historical origin. Although some historical accounts have been provided about either the origins of rational expectations or of the efficient market hypothesis, very few historians have been investigating the history of the association between the two concepts (or, more generally, the history of the interactions between macroeconomics and finance). The contribution of this paper is precisely to fill this gap in the historical literature, while assessing and challenging self-produced narratives told by practitioners. We suggest that the two concepts were independently developed in the 1960s. Then, we illustrate how they were associated for the first time the early 1970s, within a debate about the term structure of the interest rates involving Sargent, Modigliani, Shiller, and Fama. Finally, we discuss some early controversies about the association, which nevertheless became, at the turn of the 1970s, a step-stone for both macroeconomics and finance.
    Keywords: Efficient market hypothesis,Fama (Eugene),Lucas (Robert E),history of finance,history of macroeconomics,rational expectations,Sargent (Thomas J)
    Date: 2019–07–17
    Abstract: This paper aims to position the Japanese employment system in historical perspective from the industrial revolution until the present. The contribution of labor to economic growth over the last century can be decomposed into the transfer of labor from the agricultural sector to the non-agricultural sector, the accumulation of general skills through the improvement and spread of public education and the accumulation of industry-specific and firm-specific skills. Additionally, the Constitution of the Empire of Japan of 1889 and the Civil Code of 1896 guaranteed freedom of movement to its citizens,which resulted in high labor mobility of workers into the 1920's, in contrast to western countries which adopted this much later, leaving them with fewer institutions geared towards motivating employers to invest in industry-specific skills of workers. In the age of high mobility, there were two methods of skill accumulation in Japan. One was the private cartels of employers as observed in the silk reeling industry, and the other was indirect management as observed in the mining industry. Both systems declined and ceased to function into the 1920s and skill accumulation was relegated to internal labor markets, under which employees are motivated to work for a specific firm. In the 1980s, even blue collar workers were hired en mass after graduating from high school or college. The employment system that is unique to Japan might not provide people who are not new graduates with equal opportunities of employment. To respond to rapid changes in technologies, we might want to return to the employment system where workers spend several years searching for a firm to which they devote their lifetime.
    Date: 2019–06
  4. By: Marcella Alsan (Stanford University); Vincenzo Atella (CEIS & DEF University of Rome "Tor Vergata"); Jay Bhattacharya (Stanford University); Valentina Conti (Food and Agriculture Organization (FAO) of the United Nations); Ivàn Mejìa-Guevara (Stanford University); Grant Miller (Stanford University)
    Abstract: Throughout history, technological progress has transformed population health, but the distributional effects of these gains are unclear. New substitutes for older, more expensive health technologies can produce convergence in population health outcomes, but may also be prone to "elite capture" leading to divergence. This paper studies the case of penicillin using detailed mortality statistics and exploiting its sharply-timed introduction in Italy after World War II. We find penicillin reduced both the mean and standard deviation of infectious diseases mortality, leading to substantial convergence across disparate regions of Italy. Our results do not appear to be confounded by competing risks or mortality patterns associated with World War II.
    Keywords: Penicillin, Technology, Public health, Health outcomes, Mortality, Italy
    JEL: I10 J10 N00
    Date: 2019–07–30
  5. By: Boris Branisa (Universidad Católica Boliviana); José Peres-Cajías (Universitat de Barcelona); Nigel Caspa (Universidad Mayor de San Andrés)
    Abstract: Based on almost 5.000 direct observations on National Identification Cards, this paper offers the first estimation of the evolution of average heights in urban Bolivia for the decades 1880s-1920s. The analysis focuses on men aged 19-50 years registered in the city of La Paz. Despite city’s growing economic importance and modernization, average heights remained stagnant around 163 cm. This level is not so different to that found in the still disperse available evidence for rural Bolivia. Furthermore, there is evidence of inequalities throughout the period under study: those men who were indigenous, illiterate or worked in manual occupations were persistently shorter than non-indigenous, literates and non-manual workers, respectively. In coincidence with recent studies on Latin America, these findings suggest that the boost in exports and the regained dynamism of the economy that took place at the onset of the 20th century were not accompanied by improvements in biological standards of living.
    Keywords: Anthropometric history; Heights; Welfare; Inequality; First Globalization
    JEL: I31 N16 N36
    Date: 2019–06–28
  6. By: Dalton, John; Logan, Andrew
    Abstract: This paper was written for a symposium on "Reconsidering the Classics." Rereading Joseph Schumpeter's Capitalism, Socialism and Democracy (CSD) for today, we argue Schumpeter's vision for a dynamic world remains essential for understanding the world. We begin the paper by briefly describing some background on Schumpeter and the context in which CSD was written. Then, we summarize the book, which Schumpeter divided into five separate parts on Marx, capitalism, socialism, democracy, and a history of socialist parties. Throughout our summary, we highlight the key arguments and touch on many ideas in the book, such as Schumpeter's description of socialism and his theory of democracy. Instead of tackling all these ideas in depth, we discuss the book's usefulness for readers today by focusing on Schumpeter's Big Idea--"creative destruction." We conclude by discussing how influential CSD has been, and continues to be, in the social sciences and then provide suggestions for those interested in reading CSD today.
    Keywords: Joseph Schumpeter; Capitalism, Socialism and Democracy; Innovation; Entrepreneurship; Creative Destruction
    JEL: B31 O3 P0
    Date: 2019–07–11
  7. By: Lewis, David
    Abstract: Confusion between the idea of development as purposeful intervention and development as outcome has been addressed by efforts to distinguish ‘intentional’ from ‘immanent’ development, and the distinction between ‘big D’ development as Western post- World War Two modernisation in the Global South, and ‘little d’ as the creation of winners and losers within unfolding capitalist change. As a heuristic device this distinction has been put to a variety of uses within development studies, but it has rarely been subjected to further scrutiny. This paper asks (1) whether the distinction remains coherent or risks being stretched too far, and (2) whether it remains relevant within the changing landscape of twenty-first century development. It first traces the historical evolution of the distinction, and then presents an exploratory case study of Bangladesh’s garment sector in order to analyse the relationship between the two kinds of development empirically, identifying a number of contradictions and ambiguities. It finds that while the ‘D/d’ distinction remains useful at a general level, further conceptualisation is now needed, and its relevance may fade as the significance of Western aid declines.
    Keywords: development theory; development history; public policy; social mobilisation; NGOs; Bangladesh
    JEL: N0
    Date: 2019–06–25
  8. By: Adam, Marc C.; Jansson, Walter
    Abstract: We evaluate the role played by loan supply shocks in the decline of investment and industrial production during the Great Depression in Germany from 1927 to 1932. We identify loan supply shocks in the context of a time varying parameter vector autoregression with stochastic volatility. Our results indicate that credit constraints were a significant driver of industrial production between 1927 and 1932, supporting the view that a structurally weak banking sector was an important contributor to the German Great Depression. We find further that loan supply shocks were an important driver of investment in the early phase of the depression, between 1927 and 1929, but not between 1930 and 1932. We suggest possible explanations for this puzzle and directions for future research.
    Keywords: Bayesian,Credit supply,Great Depression,Germany
    JEL: C11 E32 N14 N24
    Date: 2019
  9. By: Nishizaki, Sumiyo
    Abstract: After World War II, more than six million people returned to Japan from various parts of the former Japanese empire. Most studies of Japanese postwar repatriation have focused on the repatriation policies of the Allied powers and the Japanese government, the repatriation process between 1945 and 1956, and postwar memories of repatriates. In contrast, the economic experiences of repatriates in the postwar era have yet to be studied. This paper uses a large-scale national survey of repatriates’ postwar lives conducted by the Japanese government in 1956, focussing more specifically on approximately 110,000 civilian repatriates living in Hiroshima prefecture in 1956. The findings of this research contrast with prevailing suggestions that repatriates were totally neglected by the Japanese government and society. Instead, this research demonstrates that in Hiroshima prefecture, repatriates’ postwar job placement was facilitated by employment in agriculture, public sector employment, and the transferable skills possessed by some repatriates. The information from the 1956 government survey shows that approximately 60 per cent of repatriates fell in these categories, while the remaining 40 per cent found employment in new areas or became unemployed. Research on repatriates in other prefectures (Ibaraki, Osaka, and Kanagawa) shows a similar trend. As a result, despite the scale of the repatriation, the settlement was broadly successful. It can be argued that this type of transition helped to bring political and economic stability, which became a foundation of Japan’s postwar economic recovery.
    JEL: N15 N35 N45 J62
    Date: 2019–07
  10. By: Sumardi (Universitas Jember, Jalan Kalimantan No. 37 Tegalboto, 68121, Jember, Indonesia Author-2-Name: Aryni Ayu Author-2-Workplace-Name: Universitas Jember, Jalan Kalimantan No. 37 Tegalboto, 68121, Jember, Indonesia Author-3-Name: M. Naim Author-3-Workplace-Name: Universitas Jember, Jalan Kalimantan No. 37 Tegalboto, 68121, Jember, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: Objective - This study aims to analyse the Colonial Drain process to prove the colonial land profits based on the theoretical framework. The Surplus Colonial Profit is conceptualized through the term "colonial drain". The study uses historical economics based on the theories of Lenin Imperialism and Gramsci's Hegemony. Methodology/Technique - This research will draw upon both primary and secondary sources. The primary sources include official and organizational publications including The Netherlands-Indies. The secondary sources include all relevant published and unpublished materials collected from diverse sources. Finding - The calculation of the surplus of colonial profits is scrutinized using historical causality by Gramsci's Hegemony theory to strengthen the data where the profits are obtained from public and private companies, and beyond predictions, "private profits" became the biggest commodity. Research Limitations / Implications - This research provides a basis for determining the direction of Indonesia's future economic development, and can also be a consideration of recent Indonesian lawsuits regarding Dutch debt, and can be a useful for reference material for further research. Novelty - Royal Dutch wealth was obtained from international trade and shipping of goods to Europe and ranges from 5.29 billion in 1878-1939 in the trade, services, international shipping sectors for and from Indonesia. This means that about 1 billion guilders missed from the recording of previous research that was around 4.12 billion.
    Keywords: Colonial Drain; Profits; Surplus; Metropolitan Economics; Dutch.
    JEL: N00 N
    Date: 2019–06–18
  11. By: Bruno Gabriel Witzel de Souza (University of Goettingen / Germany)
    Abstract: This paper studies the history of bonded labor in the plantations of São Paulo. Brazilian farmers proposed various contracts to bond immigrant households with a credit-labor interlinkage. The aim is to discuss why different laborrental arrangements were adopted. In particular, vis-à-vis the alternatives of fixed rents and wage systems, it asks why sharecropping contracts were offered to European laborers during the transition from slavery in Brazil. Building on some new historical evidence and a formal model, the paper makes two propositions about the rationale of bonded labor and sharecropping. First, the credit dimension was more important to landowners than specific labor-rental regimes. The credit supplied by landowners allowed for the tying of immigrants via indebtedness. This mechanism guaranteed a secure and stable supply of labor to local agricultural elites and permitted the immigration of poor and credit-constrained Europeans. This prepared the insertion of Brazil into the global circuit of the Age of Mass Migration without promoting institutional reforms to attract non-bonded immigrants. Second, sharecropping became the most prevalent contract in the first phase of the transition from slavery not because of an economically rational decision taken by landowners, but more as an emulation of other historical and international experiences with this labor-rental arrangement.
    Date: 2019–06–19
  12. By: Ray C. Fair (Cowles Foundation, Yale University)
    Abstract: This paper examines the history of U.S. infrastructure since 1929 and in the process reports an interesting fact about the U.S. economy. Infrastructure as a percent of GDP began a steady decline around 1970, and the government budget deficit became positive and large at roughly the same time. The infrastructure pattern in other countries does not mirror that in the United States, so the United States appears to be a special case. The overall results suggest that the United States became less future oriented beginning around 1970. This change has persisted. This is the interesting fact. Whether it can be explained is doubtful.
    Keywords: Infrastructure
    JEL: H41 H5 H62
    Date: 2019–07
  13. By: Silvia Blasi (Department of Economics and Management, University of Padova); Silvia Rita Sedita (Department of Economics and Management, University of Padova)
    Abstract: The paper explores the emergence of a new research field, implementing a bibliometric analysis of the literature on the B Corp. We built a database including 82 articles collected by Scopus and published from 2009 to 2019 that discuss the B Corp, or the benefit corporation, or, more generally, social entrepreneurship. We performed descriptive and citation analyses, with the objective of identifying the roots and the evolution of the concept of B Corp. This emergent field is an important component of the structural change occurring in our society, which, in recent years, has seen the emergence of new for-profit organizational forms with a strong social consciousness. The bibliometric analysis reveals the foundational works and the historical evolution of the research field, which, while rooted in the corporate social responsibility literature, opened up into the analysis of how the legislation, the firm’s strategy, the entrepreneurial orientation, and the policy interventions are intertwined in the concrete development of socially and environmentally conscious businesses.
    Keywords: B Corp, benefit corporation, social entrepreneurship, sustainability, bibliometric analysis
    JEL: M10 M14 L31
    Date: 2019–08
  14. By: Zoe Venter
    Abstract: Financial instability and the subsequent credit crunches experienced by a number of countries following two decades of global structural reforms highlighted the importance of stabilizing credit supply and assigning a higher importance to financial stability. In this paper, I look at the independence of the Central Bank, the political environment and the impact of these factors on financial stability. I substantiate the literature review discussion with a brief empirical analysis of the effect of Central Bank independence on credit growth using an existing database created by Romelli (2018). The empirical results show that fluctuations in credit growth are larger for higher levels of Central Bank Independence and hence, in periods of financial instability or ultimately financial crises, Central Bank Independence would be reined back in an effort to reestablish financil stability.
    Keywords: Central Banks, Central BankIndependence, Financial Stability,Reform, Political Environment
    JEL: E58 F36 N14 N16
    Date: 2019–07
  15. By: Maria Angelica Bautista (University of Chicago); Felipe Gonzalez (Pontificia Universidad Catolica de Chile); Luis R. Martınez (University of Chicago); Pablo Munoz (University of California - Berkeley); Mounu Prem (Universidad del Rosario)
    Abstract: We show that proximity to military bases during the Pinochet dictatorship in Chile (1973-1990) exposed civilians to more state repression and led to (i) stronger electoral opposition to Pinochet and (ii) a long-lasting strengthening of democratic values. Our empirical strategy exploits the location of military bases during the many decades of democratic rule before the military coup, which we show is unrelated to pre-coup electoral outcomes. We find that residents of counties housing these bases both registered and voted “No†to Pinochet’s continuation in power at higher rates in the crucial 1988 plebiscite that bolstered the democratic transition. These counties also experienced more civilian deaths and forced disappearances during the dictatorship, indicating that increased exposure to repression affected voters' behavior. After democratization, residents of these counties who were exposed to the military coup report greater support for democracy in surveys, but there are no persistent effects on electoral outcomes.
    Keywords: Chile,dictatorship, repression, democratization, human rights
    JEL: D72 N46
    Date: 2019–08
  16. By: Kakpo, Eliakim; Le-Gallo, Julie; Breuillé, Marie; Grivault, Camille
    Abstract: The relationship between population density and the costs of public services remains the subject of controversies due to the wide range of estimated elasticities. This disparity derives essentially from measurement and identification issues. Based on a sample of French municipalities for the period 2003-2015, this paper addresses both considerations and provides further evidence in support of a non-linear relationship between density and public expenditures per capita. First, we measure density differently from the traditional literature and consider two metrics. Second, to tackle endogeneity, we exploit historical records of population, settlements and soil characteristics as an exogenous source of variation. Our preferred specifications imply elasticity estimates equal to -0.13 and 0.12 for per capita current and capital expenditures respectively. Under a cubic B-spline specification, current spending initially decreases with density (up to 20 inhabitants plus jobs per ha) before increasing. In contrast, capital spending features several return points at 20, 30 and 50 inhabitants plus jobs per ha respectively
    Keywords: local public finance; population and employment density; capital expenditures; current expenditures
    JEL: H72 R11 R51
    Date: 2019–02
  17. By: Soares, Luiz Eduardo
    Abstract: The article contrasts the richness of academic production on illegal markets in Brazil to the obscurantist context of contemporary Brazilian politics. The text takes up the main topics of the Special Issue and faces a challenging question: considering the knowledge produced by the articles as a whole and the situation opened by the victory of the far- right in Brazil, what can we expect in the near future? Certainly, continuity, if not increase, of mass incarceration with class, racial and territorial bias, as well as strengthening of the most retrograde policies in criminal justice, with official legitimation of police lethality in peripheries and favelas, now consecrated as a State policy. On the one hand the modern edge of capitalism, the most insidiously averse to rights, exclusive and inseparable from crime; on the other, social barbarism.
    Keywords: Public security; Brazil; politics; rights; democracy
    JEL: N0 L81
    Date: 2019–06
  18. By: Nils Herger (Study Center Gerzensee)
    Abstract: The free-banking history of Switzerland is commonly subdivided into a period with unfettered competition (1826 - 1881) and strong banknote regulation (1881 - 1907). This paper suggests that unrestricted competition between private note-issuing banks gave rise to a fragmented paper-money system, which suffered from a lack of standard- ised, and commonly accepted, banknotes. Minimum-reserve requirements and mutual- acceptance rules were introduced to standardise banknotes. Rather than overissuing, these regulatory interventions restricted the exibility (or \elasticity") of the paper- money supply. It turned out that a central note-issuing bank was needed to supply adequate amounts of standardised banknotes.
    Date: 2019–08
  19. By: Vernon L. Smith (Economic Science Institute, Chapman University); Sabiou M. Inoua (Economic Science Institute, Chapman University)
    Abstract: We argue that neoclassical value theory suffers from a more basic and serious logical indeterminacy, which is inherent in the axiom of price-taking behavior, and which renders price dynamics indeterminate before inquiring as to its stability. If everyone in the economy takes price as given, whence come these prices? Who is giving these prices? Jevons avoided the indeterminacy by assuming that people must have complete information on supply and demand, and the consequent equilibrium prices—‘perfect competition.’ Walras in effect imported an external agent who found the prices by trial-and-error-correction (the Walrasian Auctioneer). Paradoxically, both approaches had the potential better to serve central planning, than a market economy. A theory based on price taking agents required some agency for giving prices. Indeed, the fit with socialism was rigorously established by influential neoclassical authors starting from Wieser (1893, ch. VI) and Pareto (1897, 364-371; 1909, 362-364), and, more formally during the Socialist Calculation Debate, by Barone ([1908] 1935), Lerner (1934), and Lange (1936, 1937). The paradox is hidden in the idea of ‘perfect competition’ a passive treatment of individuals who are not even interacting, let alone interacting in a rivalrous manner. ‘Perfect competition’ is the negation of any real competition, as Hayek (1948) emphasized.
    Keywords: Methodology of Economics, Micro-economic Theory, Experimental Economics, History of Economic Thought.
    Date: 2019
  20. By: Centro de Investigaciones para el Desarrollo
    Abstract: En el marco del Bicentenario de la independencia de Colombia, el Centro de Investigaciones para el Desarrollo (CID), en alianza con el periódico Portafolio, ha presentado una serie de reflexiones sobre la trayectoria económica que ha atravesado el país, en aras de entender los retos del futuro y las lecciones aprendidas del pasado. El contenido es muy amplio incluyendo temas que han jugado un rol clave en la historia del país, como el café, la violencia, la tierra, hasta temas que son menos conocidos pero deberían formar parte de la reflexión colectiva, como el papel de la mujer, los estudios sectoriales, o el desarrollo de largo plazo. El lector no tiene que esperarse una narración univoca, ni un recorrido lineal: estos escritos son reflexiones que vienen de investigadores con enfoques teóricos y metodológicos muy diferentes, como tradición en la Universidad Nacional. Así, ensayos de análisis económico de las instituciones son acompañados por reflexiones de análisis marxiano aplicado, y la cliometría se entrelaza a la finanza pública. Por la misma razón, decidimos no proponer una estructura interpretativa o una organización del contenido, prefiriendo reportar los escritos en el orden cronológico en el cual aparecieron en el portal del periódico. *** In the framework of the Bicentennial of the independence of Colombia, the Centro de Investigaciones para el Desarrollo (CID), in alliance with the newpaper Portafolio, has gathered a series of reflections about the economic trajectory that the country has gone through, for the sake of understanding the challenges of the future and the lessons learned from the past. The content is very broad including issues that have played a key role in the history of the country, such as coffee, violence, land, and issues that are less known but should be part of collective reflection, such as the role of women, sectoral studies, or long-term development. The reader should not expect a univocal narrative, nor a linear perspective: these texts are reflections that come from researchers with very different theoretical and methodological approaches, as a tradition at the Universidad Nacional. As a result, economic analysis of the institutions goes hand by hand with applied Marxian analysis, and the cliometry is intertwined with public finance. For the same reason, we decided not to propose an interpretative structure or an organization of the content, opting for an order of presentation that follows the chronological order in which they appeared in the newspaper's portal.
    Keywords: bicentenario; colonia, reforma agraria; paz; mujeres; independencia; gasto militar; conflicto distributivo; desarrollo de largo plazo; café; sector eléctrico; financiarización; impuestos
    JEL: B51 Q24 P14 J16 O11 N86 H24
    Date: 2019–07–18
  21. By: Looney, Adam (The Brookings Institution); Yannelis, Constantine (University of Chicago Booth School of Business)
    Abstract: This paper studies the link between credit availability and student loan repayment using administrative federal student loan data. We demonstrate that expansions and contractions in federal student loan credit to institutions with high default rates explain most of the time series variation in student loan defaults between 1980 and 2010. Expansions in loan eligibility between 1976 and 1988 led to the entry of new, high-risk institutions, and default rates exceeding 30 percent in the late 1980s. Credit access was subsequently tightened through strict institutional and student accountability measures. This contracted credit availability at the highest default rate institutions, which in turn caused an exodus of institutions with high default rates, resulting in lower default rates on student loans. After 1992, the cycle was repeated, with credit access gradually loosened by unwinding many of the pre-1992 reforms. We confirm this time series narrative by examining discrete policy changes governing access to credit to show that tightening credit supply led to the closure of high-default schools and the relaxation of accountability rules resulted in their expansion. Our estimates imply that 85 percent of the increase in default between 1980 and 1990, and 95 percent of the decrease in default between 1990 and 2000 is driven by schools entering and exiting loan programs. One-third of the recent increase in default is associated with the entry of online programs following the relaxation of rules for lending to online schools, and another third is associated with the abolition of rules limiting the share of revenue coming from federal programs
    Keywords: student loans; credit expansion; human capital; loan default
    JEL: D14 G28 H52 H81
    Date: 2019–07–29
  22. By: Dario Diodato; Ahmad Andrea Morrison
    Abstract: The geographical distribution of innovative activities is an emerging subject, but still poorly understood. While previous efforts highlighted that different technologies exhibit different spatial patterns, in this paper we analyse the geography of innovation in the very long run. Using a US patent dataset geocoded for the years 1836-2010, we observe that ? while it is true that differences in technologies are strong determinant of spatial patterns ? changes within a technology over time is at least as important. In particular, we find that regional entry follows the technology life cycle. Subsequently, innovation becomes less geographical concentrated in the first half of the life cycle, to then re-concentrate in the second half.
    Keywords: technological regime, spatial patterns of innovation, life cycle, patents, US Economic Geography
    JEL: R11 O11
    Date: 2019–07
  23. By: David Kunst (Vrije Universiteit Amsterdam)
    Abstract: Although four out of five manufacturing employees work in production occupations in most countries (as opposed to white collar occupations), there is little international evidence on how the transition to more capital intensive production methods has affected the demand for different groups of manufacturing production workers. In this article, I use new occupational wage and employment data to document a global decline in the relative demand for skilled production workers in manufacturing since the 1950s. They tended to work in craftsman occupations, and commanded wages even rivaling those of some white collar workers. However, the demand for manufacturing craftsmen decreased in countries of all income groups and regions over the following decades, and declining relative craftsmen wages and employment have been associated with increasing capital intensities of production. My findings reconcile conflicting characterizations of technological change throughout the 20th century as either `skill biased' or `deskilling', and suggest that the polarization of labor demand in manufacturing precedes ICT. They also point to a decreasing number of manufacturing jobs in which workers with little formal education can acquire significant marketable skills.
    Keywords: manufacturing, polarization, deskilling, technological change
    JEL: O3 J2 J3 N6
    Date: 2019–07–31
  24. By: Donato Masciandaro; Davide Romelli
    Abstract: This chapter reviews the evolution of the theory of monetary policy design since the 1980s, highlighting the emerging role of central banker psychology. Three subsequent stages are evident. First, the central bank was considered as an independent institution (modern economics). Second, central bankers were assumed to be delegated bureaucrats (advanced political economy). Third, a link with psychology was established (behavioural economics).
    JEL: E52 E58
    Date: 2019
  25. By: Margherita Borella (University of Turin and CeRP-Collegio Carlo Alberto); Mariacristina De Nardi (Federal Reserve Bank of Minneapolis); Fang Yang (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.
    Date: 2019–03
  26. By: Koh, Youngsun
    Abstract: Wage inequality in Korea has undergone several changes in 1980-2016. It fell in 1980-1994, rose in 1995-2007, and then fell again in 2008-2016. Different worker characteristics have had different impacts on wage inequality. In the early years, sex, age, and education were the three most important characteristics, but in later years, firm tenure became the most important one, followed by education and establishment size. The impact of each worker characteristic can be decomposed into price effect (the sensitivity of wage inequality to a marginal change in worker characteristics) and distribution effect (the impact of changing distribution of worker characteristics across wage quintiles). In the cases of sex and age, both price and distribution played important roles in reducing inequality. In the case of education, price was the main driver in all periods, reducing inequality in the first period (1980-1994), increasing it in the second (1995-2007), and again reducing it in the third (2008-2016). In the cases of tenure and establishment size, distribution contributed significantly to increasing inequality. Price is determined through the interaction between demand and supply. As for sex, the relative demand for male workers declined in all periods and particularly in the second and third periods, and accordingly their relative wage fell. As for age, the relative demand for older workers increased in all periods. But it was outpaced by the increase in supply, and as a result the relative wage fell for older workers. As for education, the relative demand for college graduates over high school graduates increased faster than the supply in the second period but not in the first and third periods. The relative wage of college graduates rose in the second period but not in the other periods…
    Keywords: Wages,Labor Productivity,Wage Inequality
    Date: 2018
  27. By: Jeremie Cohen-Setton (Peterson Institute for International Economics); Egor Gornostay (Peterson Institute for International Economics); Colombe Ladreit de Lacharriere (Peterson Institute for International Economics)
    Abstract: This paper estimates the effects of fiscal stimulus on economic activity using a novel database on large fiscal expansions for 17 OECD countries for the period 1960-2006. The database is constructed by combining the statistical approach to identifying large shifts in fiscal policy with narrative evidence from contemporaneous policy documents. When correctly identified, large fiscal stimulus packages are found to have strong and persistent expansionary effects on economic activity, with a multiplier of 1 or above. The effects of stimulus are largest in slumps and smallest in booms.
    Keywords: Fiscal Policy, Public Economics, Public Finance, Tax Elasticities, National Government Expenditure, National Budget, Macroeconomic Policy, Stabilization, Macroeconomic History
    JEL: E6 H3 H5 H6 N1
    Date: 2019–07
  28. By: Aldunate, F; González, F; Prem, M; Urzúa, F
    Abstract: What is the contribution of privatization to the formation of business groups and pyramids? We use new data to study how Pinochet’s privatizations in Chile (1973-1990) affected the evolution of ownership structures. Using non-privatized firms in the same industry as comparison, and accounting for pre-privatization characteristics, we find that privatized firms were more likely to become part of business groups, began to act as providers of credit within groups, and pyramidal ownership structures were built on top of them. As most privatized firms became part of new (instead of traditional) business groups we argue that this privatization reform facilitated the renovation of elites and contributed to the formation of contemporaneous business groups.
    Keywords: Business groups, privatization, ownership
    Date: 2019–07–26
  29. By: Salvatore Nisticò (Department of Social Sciences and Economics, Sapienza University of Rome (IT).)
    Abstract: La storia finanziaria dell’ultimo decennio ci offre diversi spunti di riflessione sullo stato e le prospettive dell’attuale sistema monetario. Le dinamiche sui mercati delle criptovalute e le trasformazioni politiche in atto sembrano sottoporre l’attuale assetto monetario a pressioni di segno opposto: mentre le prime promuovono – da una prospettiva liberale e sovranazionale – la riduzione della contiguità tra emissione monetaria e potere politico, le seconde – da una prospettiva populista e sovranista – premono per un suo deciso rafforzamento. Questo lavoro discute la natura e le implicazioni di queste due tensioni, attraverso le lenti della memoria storica del nostro continente, e del pensiero di A. Smith e F. Von Hayek.
    Keywords: Smith, Hayek, Criptovalute, Sovranismo, Moneta, Banche Centrali.
    JEL: B12 B25 E31 E51 E58 N23
    Date: 2019–07
  30. By: Vernon L. Smith (Economic Science Institute, Chapman University); Sabiou M. Inoua (Economic Science Institute, Chapman University)
    Abstract: For classical economists, markets served the highest value buyers without anyone in the market needing to know that it was possible to write aggregate buyer reservation prices in the form, D = F (p). Cournot, thereby launched neoclassical economics as modelling and thinking of economic action in terms of their outcome effects, rather than their roots in human experience.
    Keywords: History of economic thought, micro theory, experimental economics
    Date: 2019
  31. By: Ricardo Rocha García
    Abstract: Un análisis empírico de la estrategia exportadora de Colombia frente a Brasil en el mercado cafetero durante 1826-2018, considerando una competencia oligopolista por productos diferenciados. La relación de cointegración bilateral de las exportaciones según precios, costos, demanda y cambios en la política comercial fue estimada mediante un modelo de mínimos cuadrados ordinarios dinámico. Los resultados sugieren que Colombia transitó desde ser un incipiente exportador y tomador de precios, hasta convertirse en oligopolista del café suave ante la política de valorización del Brasil. Luego de la ruptura del Acuerdo Internacional del Café, protagonizando un intercambio de roles, cuyos efectos se simulan según un escenario contrafactual. *** An empirical analysis of the export strategy of Colombia against Brazil in the coffee market during 1826-2018, considering an oligopolistic competition for differentiated products. The relationship of bilateral cointegration of exports according to prices, costs, demand and changes in trade policy was estimated using a dynamic ordinary least squares model. The results suggest that Colombia went from being an incipient exporter and price taker, until becoming an oligopolist of soft coffee before Brazil's valorization policy. After the breakdown of the International Coffee Agreement, starring in an exchange of roles, whose effects are simulated according to a counterfactual scenario.
    Keywords: café, exportaciones, Colombia, MCOD, política comercial estratégica
    JEL: F14 L13 N76
    Date: 2019–07–16
  32. By: Franses, Ph.H.B.F.
    Abstract: This paper examines economic growth in 52 African countries for 1961-2016 and seeks to find if there is common growth. As all African countries have their particular features, concerning climate, harvest, industry, size, politics, and infrastructure, and more, it seems best to rely on a non-parametric method. Dynamic Time Warping is such a convenient method, also as it allows leads and lags across countries to vary over time, and as it can easily be incorporated into a clustering technique. Five clusters are found, two of which concern Equatorial Guinea and Botswana, and the three other clusters have common growth rates of about 0, 2 and 4 over more than five decades.
    Keywords: Economic growth, Africa, Non-parametric method, Dynamic Time Warping, Clusters
    JEL: C14 E32 N17
    Date: 2019–07–31

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.