nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2021‒11‒22
twenty-two papers chosen by

  1. On the Way to Another Place: Jordi Nadal and Rural Depopulation By Fernando Collantes; Vicente Pinilla
  2. Licence to Dine: 007 and the Real Exchange Rate By Lee A. Craig; Julianne Treme; Thomas J. Weiss
  3. Hilferding, Woytinsky and the fiscal orthodoxy of interwar social democracy By Engelbert Stockhammer
  4. The Becoming of the Past: an Exploration of Temporal Enactments in a Historical Cafe' By Camilla Ferri; Giovanni Favero
  5. Riding the bubble or taken for a ride? Investors in the British bicycle mania By Quinn, William; Turner, John D.
  6. The Deep Roots of Inequality By Kumon, Yuzuru
  7. On the Benefits of Repaying By Paolo Manasse; Ugo Panizza; Francesca G Caselli; Matilde Faralli
  8. The Impact of Individual Wealth on Posterior Political Power By Rossi, Martin
  9. Public Milton Friedman on Bailouts By Hugh Rockoff
  10. O Tell Me The Truth About Central Bank Digital Currency By Riccardo De Bonis; Giuseppe Ferrero
  11. Financial integration and the co-movement of economic activity: Evidence from U.S. states By Götz, Martin; Gozzi, Juan Carlos
  12. Women in Science. Lessons from the Baby Boom By Scott Daewon Kim; Petra Moser
  13. Quantifying political populism and examining the link with economic insecurity: evidence from Greece By Ntentas, Raphael
  14. Cousins from overseas: the labour market impact of half a million Portuguese repatriates By Lara Bohnet; Susana Peralta; Joao Pereira dos Santos
  15. Early-Life War Experiences and Corporate Financial Outcomes By Arman ESHRAGHI; TAKAHASHI Hidetomo; XU Peng
  16. Trade Networks, Heroin Markets, and the Labor Market Outcomes of Vietnam Veterans By Lonsky, Jakub; Ruiz, Isabel; Vargas-Silva, Carlos
  17. Without liberty and justice, what extremes to expect? Two contemporary perspectives By Miller, Marcus; Zissimos, Ben
  18. "Welfare Costs of Exchange Rate Fluctuations: Evidence from the 1972 Okinawa Reversion" By Kazuko Kano; Takashi Kano
  19. Distribution of Long-run Stock Returns: Evidence from Japan and the US By ARIKAWA Yasuhiro; Vikas MEHROTRA
  20. TRAP'd Teens: Impacts of Abortion Provider Regulations on Fertility & Education By Jones, Kelly M.; Pineda-Torres, Mayra
  21. Some International Evidence on Indebted Demand By Hashmat Khan; Joshua Brault
  22. A Test of a modified Committed – Uncommitted Voting Model on 14 Indian States: 1957 – 2018 By J. Stephen Ferris; Bharatee Bhusana Dash

  1. By: Fernando Collantes (Universidad de Oviedo, Spain); Vicente Pinilla (Universidad de Zaragoza e Instituto Agroalimentario de Aragón (IA2), Spain)
    Abstract: In this paper we review the parts of the work of Jordi Nadal most related to the history of rural depopulation in Spain. Nadal examines several key aspects that naturally form part of the wider picture of the current state of affairs, including the role of industrialisation in inducing migratory movements from the countryside to the city and the decisive acceleration of this process during the second part of the Franco regime. We can find greater tension in issues such as the role of agricultural change of the future of depopulation, in which we can observe (inevitably) the influence of the historiographic and demographic context within which Nadal wrote his work. In conclusion, we stress the importance of studying the dynamics of the rural population as an interesting topic in its own right, and not as a stepping stone towards other subjects and debates.
    Keywords: Jordi Nadal, historical demography, rural depopulation, Spanish economic history
    JEL: N33 N34 R23
    Date: 2021–11
  2. By: Lee A. Craig; Julianne Treme; Thomas J. Weiss
    Abstract: We constructed a time series of menu prices for the identifiable restaurants at which James Bond dined in France and the UK that yields one of the few international price series representing luxury services. This series enabled us to calculate a real exchange rate based on prices pertinent to international travelers. We also compiled a time series on the salary of workers in the British Civil Service at Grade 7, like Bond, from 1953 to 2019. Our results indicate that French restaurant prices increased faster than Grade 7 salaries over the entire period and changes in the British exchange rate were not favorable for British travelers. To dine weekly in France, during the 1950s and 1960s, Bond would have spent 18 percent of his salary; whereas over the course of the Euro era the same basket of luxury services would have required on average 26 percent of his salary. Finally, our data indicate a likely violation of the law of one price during both the Pound-Franc and Pound-Euro eras.
    JEL: D4 E3 F2 N10 N14 Z3
    Date: 2021–10
  3. By: Engelbert Stockhammer (King’s College London)
    Abstract: In 1931, when the Great Depression hit Germany, German social democrats discussed a proposal for a (proto-Keynesian) public-debt financed employment program, the so-called WTB plan drafted by Vladimir Woytinsky. But under the leadership of Rudolf Hilferding, the SPD’s main economics spokesperson (and a former finance minister), the SPD rejected the proposal. The paper argues, firstly, that Hilferding’s endorsement of the gold standard and fiscal austerity can be traced to his analysis in Das Finanzkapital. It, secondly, rejects purely ideational interpretation of social democracy’s hostility to public employment programs. This becomes apparent when considering the experience of other European countries. In the British case a non-Marxist labour government under Ramsey MacDonald also endorsed the gold standard and fiscal orthodoxy. The WTB plan represents a missed opportunity to develop a socialist Keynesianism that would have complemented the Austro-Marxist strategy of a democratic socialism well.
    Keywords: Keynesianism, Marxism, social democracy, economic policy, gold standard, Austro-Marxism
    JEL: B14 B24 B31 N14
    Date: 2021–11
  4. By: Camilla Ferri (Dept. of Management, Università Ca' Foscari Venice); Giovanni Favero (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: The uses of the past are the subject of a stream of research at the intersection of organization studies and business history, which highlights the importance of the past as a “tool” for organizations, but also acknowledges its potential being an “arena of struggle” among organizational actors. However, most contributions in this literature study the uses of the past quite statically, at a given moment in time. Adopting a temporality perspective - i.e. considering the past as constantly (re)negotiated in the present and in relation with the future -, and employing a retrospective study based on historical sources, this paper aims at understanding how the past becomes past and how it informs future outcomes. The empirical case used to explore this research question is the Caffè Pedrocchi, an historical café in Padua (Italy), which the founder’s heir left as a bequest to the Municipality, explicitly positing a past-future tension in the use of its past. We found out that in the history of the café there was no such thing as “the” past to be projected for the future, but four main forms that the same café’s past took (legacy, burden, constraint, enabler), varying along two dimensions: the past’s positive/negative value, and the active/passive role assigned to it. Also, every form of the past came with at least two possible future outcomes: continuous future (the maintenance of the status quo) and discontinuous future, occurring whenever some actor intervened influentially, also creating a new form of the past. By disentangling the role of the past beyond being just a tool or an arena of struggle, we provide a processual view on how the past shifts its forms according to the actors’ interventions and future outcomes.
    Keywords: uses of the past, past-future tensions, historical café
    Date: 2021–09
  5. By: Quinn, William; Turner, John D.
    Abstract: Clientele-based theories explaining asset price bubbles are often difficult to test because the identities of investors cannot easily be tracked over time. This paper tests these theories using a hand-collected sample of 12,000 investors during an asset price reversal in the shares of British bicycle companies between 1895 and 1900. We find that informed investors reduced their holdings substantially during the crash, suggesting that they were riding the bubble. Those who performed worst were not typically the least informed groups, but gentlemen living near a stock exchange, who had the most time, money, and opportunity to engage in speculation.
    Keywords: British financial history,financial bubbles
    JEL: G01 N23
    Date: 2021
  6. By: Kumon, Yuzuru
    Abstract: This paper uses a new dataset of Japanese village censuses, 1637-1872, to measure inequality in landownership. Surprisingly, lands were relatively equally distributed, and most peasants were de-facto landowners. Further, there was no trend in wealth inequality. This contrasts with Western Europe where wealth inequality was high and increasing. To explain this, I use a linked multi-generational dataset of village censuses to study land transmissions. I find that Japanese households differed from Europeans due to widespread adoption of male heirs when reproduction failed. As non-marginal landowners almost always had an heir, lands were kept in the family. In contrast, elite English male lines failed 25% of the time leading to a highly unequal redistribution of their lands via will or marriage of heiresses. Finally, the institutional differences in adoption had roots in church policy in the 4th century and this may partially explain why Western Europe was more unequal by 1800.
    Date: 2021–11–08
  7. By: Paolo Manasse; Ugo Panizza; Francesca G Caselli; Matilde Faralli
    Abstract: This paper studies whether countries benefi t from servicing their debts during times of widespread sovereign defaults. Colombia is typically regarded as the only large Latin American country that did not default in the 1980s. Using archival research and formal econometric estimates of Colombia's probability of default, we show that in the early 1980s Colombia's fundamentals were not signifi cantly different from those of the Latin American countries that defaulted on their debts. We also document that the different path chosen by Colombia was due to the authorities' belief that maintaining a good reputation in the international capital market would have substantial long-term payoffs. We show that the case of Colombia is more complex than what it is commonly assumed. Although Colombia had to re-profi le its debts, high-level political support from the US allowed Colombia do to so outside the standard framework of an IMF program. Our counterfactual analysis shows that in the short to medium run, Colombia benefit ted from avoiding an explicit default. Speci fically, we find that GDP growth in the 1980s was higher than that of a counterfactual in which Colombia behaved like its neighboring countries. We also test whether Colombia's behavior in the 1980s led to long-term reputational benefi ts. Using an event study based on a large sudden stop, we find no evidence for such long-lasting reputational gains.
    Keywords: Sovereign Debt; Default; Reputation
    Date: 2021–09–10
  8. By: Rossi, Martin
    Abstract: I exploit a unique historical event to explore the causal relationship between individual wealth and posterior political power. Shortly after the foundation of Buenos Aires, plots of land in the outskirts of the city were randomly assigned to all heads of household that participated in the expedition. Using this random allocation of land as a source of exogenous variation on individuals’ wealth, I find that wealth causes political power. I also explore possible mechanisms and find support for the hypothesis that wealth signals (or improves) ability.
    Keywords: elites; political dynasties; representative political power; natural experiment
    JEL: B00 J45 N46
    Date: 2021–11–07
  9. By: Hugh Rockoff (Rutgers University)
    Abstract: This paper analyzes the evolution of Milton Friedman’s thinking about bailouts. It covers bailouts of commercial banks, shadow banks and other financial firms, manufacturing firms, governments, financial markets, and other cases where the term is commonly used. It is based on his academic writings and on the many interviews, op-eds, letters to the editor, and so on through which he communicated his views during and after his transition from professor to public intellectual. Select number of author(s): : 1
    Keywords: Milton Friedman, Bailouts
    JEL: B22
    Date: 2020–04–17
  10. By: Riccardo De Bonis (Bank of Italy); Giuseppe Ferrero (Bank of Italy)
    Keywords: central bank digital euro, history of money, payment system, digitalization, digital euro
    JEL: E42 E58
    Date: 2021–11
  11. By: Götz, Martin; Gozzi, Juan Carlos
    Abstract: We analyze the effect of the geographic expansion of banks across U.S. states on the co-movement of economic activity between states. Exploiting the removal of interstate banking restrictions to construct time-varying instrumental variables at the state-pair level, we find that bilateral banking integration increases output co-movement between states. The effect of financial integration depends on the nature of the idiosyncratic shocks faced by states and is stronger for financially dependent industries. Finally, we show that integration increases the similarity of bank lending fluctuations between states and contributes to the transmission of deposit shocks across states.
    Keywords: banking integration,synchronization,financial deregulation,business cycles
    JEL: E32 F36 F44 G21
    Date: 2021
  12. By: Scott Daewon Kim; Petra Moser
    Abstract: How do children affect women in science? We investigate this question using rich biographical data, linked with patents and publications, for 83,000 American scientists in 1956 at the height of the baby boom. Our analyses reveal a unique life-cycle pattern of productivity for mothers. While other scientists peak in their mid-thirties, mothers become more productive after age 35 and maintain high productivity in their 40s and 50s. Event studies show that the output of mothers increases after 15 years of marriage, while other scientists peak in the first 10 years. Differences in the timing of productivity have important implications for tenure and participation. Just 27% of mothers who are academic scientists get tenure, compared with 48% of fathers and 46% of women without children. Mothers face comparable tenure rates to other assistant professors for the first six years but fall behind afterwards, suggesting that they face higher standards of early productivity. Mothers who survive in science are extremely positively selected: Compared with other married women, mothers patent (publish) 2.5 (1.4) times more before the median age at marriage. Compared with men, female scientists are more educated, half as likely to marry, one-third as likely to have children, but half as likely to survive in science. Employment records indicate that a generation of baby boom mothers was lost to science.
    JEL: J13 J16 J24 N3 N32 O3
    Date: 2021–10
  13. By: Ntentas, Raphael
    Abstract: At this juncture of human history populism is ubiquitous and Greek politics constitute no exception. This paper sheds light on a methodology that quantifies political populism (i.e. parliamentary populist rhetoric) in Greece through a novel textual dataset, which includes 16.5 years filled with heated debates over times of economic peaks and valleys. Combining computer with human intelligence to identify populism based upon a creative dictionary and strict definitional guidelines that fit the Hellenic Parliament’s context, helps one explore perspectives unimagined just a few years ago. Besides, as Greece has gone through a series of sharp, intense and generalized socio-economic shocks, this paper uses an OLS multiple regression analysis to test whether there is a link between economic insecurity and political populism. Ultimately, it provides empirical evidence on a weak link, indicating economic insecurity’s minimal role in explaining the variation in political populism levels. Our results do offer some tentative insights into how political populism evolves in the country during 2004-2020, confirming the previous empirical finding that assigns higher levels of populism to December when heated parliamentary debates on the following year’s budget occur. Lastly, the empirical results indicate that populism does not intensify in conditions of crises, in alignment with the findings of some of the latest cross-national studies.
    JEL: N0
    Date: 2021–11
  14. By: Lara Bohnet; Susana Peralta; Joao Pereira dos Santos
    Abstract: This paper uses detailed census data to investigate the labour market consequences of a large, exogenous, labour market shock, exploiting the unexpected inflow of repatriates to Portugal following the end of the Portuguese Colonial War in 1974. The labour supply shock entails a composition dimension, as the repatriates were more than twice as likely to have secondary or higher education. We take advantage of the fact that most of the repatriates were Portuguese born to build novel shift-share instrumental variables based on their region of birth. We explore the impact on regional labour force participation, unemployment, employment, and entrepreneurship, for both male and female natives. We find substantial gender differences in the effects, with females absorbing the bulk of the shock. Native workers are driven out of employment as employees, with a sizeable 15% decrease for males and 55% for females. Men compensate for this loss by moving to low quality self-employment, while women move to inactivity. Our results are robust to changing the instrumental variable, the geographical unit of analysis, and to various sample restrictions.
    Keywords: Immigration, labour market, labour supply, entrepreneurship, instrumental variable
    JEL: F22 J20 R23
    Date: 2021
  15. By: Arman ESHRAGHI; TAKAHASHI Hidetomo; XU Peng
    Abstract: This paper examines early-life exposure to war experiences among a comprehensive sample of corporate managers and their subsequent tendency towards leverage, cash-holding, investments and M&A activity. Drawing data from the well-document and severe Japanese experience in WW2, we show managers who survived such experiences in their pre-adolescence demonstrate distinct behavioral patterns of financial decision-making in later life. Specifically, they tend to borrow more, hold less cash, invest more in capital expenditure but engage less in M&A deals. This can be understood in the context of ‘what doesn’t kill you makes you stronger' and in this case, more risk-seeking. Extended analyses confirm that the tendency could be driven by managerial traits of being locally altruistic. In the economic significance tests, we find that the tendency is welcomed by stock market participants.
    Date: 2021–10
  16. By: Lonsky, Jakub; Ruiz, Isabel; Vargas-Silva, Carlos
    Abstract: The role of ethnic immigrant networks in facilitating international trade is a well-established phenomenon in the literature. However, it is less clear whether this relationship extends to illegal trade and unauthorized immigrants. In this paper, we tackle this question by focusing on the case of the heroin trade and unauthorized Chinese immigrants in the early 1990s United States. Between mid-1980s and mid-1990s, Southeast Asia became the dominant source of heroin in the US. Heroin from this region was trafficked into the US by Chinese organized criminals, whose presence across the country can be approximated by the location of unauthorized Chinese immigrants. Instrumenting for the unauthorized Chinese immigrant enclaves in 1990 with their 1900 counterpart, we first show that Chinese presence in a community led to a sizeable increase in local opiates-related arrests, a proxy for local heroin markets. This effect is driven by arrests for sale/manufacturing of the drugs. Next, we examine the consequences of Chinese-trafficked heroin by looking at its impact on US Vietnam-era veterans - a group particularly vulnerable to heroin addiction in the early 1990s. Using a triple-difference estimation, we find mostly small but statistically significant detrimental effects on labor market outcomes of Vietnam veterans residing in unauthorized Chinese enclaves in 1990.
    Keywords: Trade networks,heroin markets,Vietnam veterans,labor market outcomes
    JEL: F16 F22 J15 K42
    Date: 2021
  17. By: Miller, Marcus (University of Warwick); Zissimos, Ben (Exeter University Business School)
    Abstract: From a wide-ranging historical survey, Acemoglu and Robinson conclude that the preservation of liberty depends on being in a ‘narrow corridor’ where there is a balance of power between the state and society. We first examine the support Binmore's game-theoretic treatment of Social Contracts provides for such a ‘narrow corridor’ of liberty and justice – and what extremes to expect without them. We also consider how the biological model of Competing Species helps to describe the dynamics of conflicting powers outside the narrow corridor– where, as in contemporary Russia and China, any Social Contracts that exist are neither free nor fair.
    Keywords: liberty ; social contracts ; repeated games ; Competing Species ; anarchy ; Despotism ; Neofeudalism JEL Classification: C70 ; C73 ; P00 ; Z13
    Date: 2021
  18. By: Kazuko Kano (School of Commerce, Waseda University); Takashi Kano (Graduate School of Economics, Hitotsubashi University and CIRJE, Faculty of Economics, The University of Tokyo)
    Abstract: The main tenet of the New Keynesian (NK) paradigm is that price dispersion caused by nominal price stickiness is the primary source of allocative inefficiency. This study empirically evaluates the welfare implications of NK models by observing how internal and external price dispersion responds to two types of large aggregate shocks: high inflation and sharp currency depreciation. For this purpose, we consider the history of US military deployment on a small southern island in Japan called Okinawa following the Pacific War. We investigate unique data variations in micro-level retail prices surveyed in Okinawa and mainland Japan before and after the Okinawan reversion to Japanese sovereignty in May of 1972. By considering the Okinawan experience of three currency regimes during the high inflation period of the early 1970s as valid quasi-natural experiments, we identify statistically significant deteriorations of currency misalignment associated with the sudden exogenous large USD depreciation versus the JPY following the Nixon Shock. Furthermore, we observe that these massive aggregate shocks left the average absolute size of price changes mostly unchanged, but significantly increased the average frequency of price changes in Okinawa. Because a calibrated small open-economy menu cost model fits these empirical findings better than the Calvo model, the welfare costs of exchange rate fluctuations may be more elusive than suggested by the open-economy NK literature.
    Date: 2021–11
  19. By: ARIKAWA Yasuhiro; Vikas MEHROTRA
    Abstract: We examine the distribution of long-run returns for all stocks listed in Japan and the US from 1977 to 2019. While our findings confirm the extreme skewness in realized long-run returns in the US documented in Bessembinder (2018), they offer two important points of departure. First, we find that over fixed horizons ranging from monthly to semi-decadal, return distributions in Japan are in broad concordance to those in the US – the mean, median, skewness, and fraction of returns greater than the risk-free rate are similar in the two markets. This symmetry is broken at lifetime horizons where the mean return in the US is almost four times as large as that in Japan, while the median return in Japan is seventy times larger than in the US. Second, we find that the probability of being delisted is higher for US-listed firms than for Japan-listed firms, with lifespans, defined as years active on the exchange, being measurably shorter in the US (6.5 years) than they are in Japan (19.3 years). Our results are consistent with a model of long-dated returns presented in Martin (2012) in which long-run stock returns for limited liability assets are characterized by occasional explosions that prevent expected returns from converging to zero.
    Date: 2021–10
  20. By: Jones, Kelly M. (American University); Pineda-Torres, Mayra (Texas A&M University)
    Abstract: Targeted regulations of abortion providers (TRAP laws) are the fastest growing abortion restriction in the U.S. These often result in clinic closures, limiting abortion access. We study how women's exposure to these laws in adolescence affects their fertility and educational attainment. For this study, we codify the legal history of all TRAP laws ever implemented. We explore the impacts of TRAP laws on teen births using an event-study analysis and stacked differences-in-differences methodology to avoid issues of negative weighting inherent in two-way fixed effects approaches. Consistent with other evidence on abortion access, we find that impacts on births are large and robust for Black women. Black teen births in states that implemented TRAP laws increased by 3 percent relative to changes in states without these restrictions. We offer evidence that these impacts are driven by reductions in abortion access, abortion use, and contraception use among Black teens. We further document that adolescent exposure to TRAP laws has downstream impacts on education. We find that Black women first exposed to TRAP laws before age 18 are 1 to 3 percentage points less likely to initiate and complete college. This study documents the important role that abortion access plays in reducing the harmful economic impacts of unintended teen motherhood. The findings suggest that modern abortion restrictions are harming women's efforts at economic advancement and are perpetuating racial inequality.
    Keywords: fertility, education, abortion, adolescence, race
    JEL: J13 I24 I14 J15 J16
    Date: 2021–11
  21. By: Hashmat Khan (Department of Economics, Carleton University); Joshua Brault (Department of Economics, Universite du Quebec a Montreal)
    Abstract: The theory of indebted demand proposed by Mian, Straub and Sufi (2021) has attracted significant attention, in part due to its unifying explanation of several prominent secular trends which have occurred since the 1980s, such as rising income inequality and debt levels, financial deregulation, and declining natural rates of interest.
    Date: 2021–09–02
  22. By: J. Stephen Ferris (Department of Economics, Carleton University); Bharatee Bhusana Dash (Department of Economics, Xavier University)
    Abstract: The model of Besley, Persson and Strum (2010) is extended to incorporate voter turnout and then tested for its predictions on data from 14 Indian States between the years 1957 and 2018.
    Date: 2021–08–10

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