nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2022‒05‒16
25 papers chosen by

  1. Political economy of secession: Lessons from the early years of the Irish Free State By Kenny, Sean; McLaughlin, Eoin
  2. The Stealth Erosion of Dollar Dominance: Active Diversifiers and the Rise of Nontraditional Reserve Currencies By Mr. Serkan Arslanalp; Chima Simpson-Bell; Mr. Barry J. Eichengreen
  3. The Evolution of Owner-Entrepreneurs’ Taxation: Five Tax Regimes over a 160-Year Period By Elert, Niklas; Johansson, Dan; Stenkula, Mikael; Wykman, Niklas
  4. The medium-term impact of non-pharmaceutical interventions. The case of the 1918 influenza in US cities By Guillaume Chapelle
  6. Cliometrics of Climate Change By Olivier Damette; Claude Diebolt; Stephane Goutte; Umberto Triacca
  7. The Academic Market and the Rise of Universities in Medieval and Early Modern Europe (1000-1800) By de la Croix, David; Docquier, Frédéric; Fabre, Alice; Stelter, Robert
  8. Digitizing Historical Balance Sheet Data: A Practitioner's Guide By Sergio Correia; Stephan Luck
  9. Regard rétrospectif et cliométrique sur une étape de la construction européenne. Les activités innovantes : 1981-2001 By Claude DIEBOLT
  10. Independent Regulators and Financial Stability: Evidence from Gubernatorial Campaigns and a Progressive Era Policy Experiment By Marco Del Angel; Gary Richardson
  11. Famine as genocide? Ukraine and Ireland By Kennedy, Liam
  12. The crooked timber that bore fruit: Peruvian fascist intellectuals of the 1930s and the echoes of their influence nowadays By César Castillo-García
  13. The rise of process claims: Evidence from a century of U.S. patents By Ganglmair, Bernhard; Robinson, W. Keith; Seeligson, Michael
  14. Historical Time and the Current State of Post-Keynesian Growth Theory By Ettore Gallo; Mark Setterfield
  15. State Capacity, National Economic Policies and Local Development: The Russian State in the Southern Urals By Gerda Asmus; Raphaël Franck
  16. Perspectives on the Great Irish Famine By Kennedy, Liam; MacRaild, Donald M.
  17. Doubling Back on Double Marginalization By Laurent Linnemer
  18. Did those executed in World War One die in the name of their pacifist ideas ? By Olivier Guillot; Antoine Parent
  19. Waves of Neoliberalism: Revisiting the Authoritarian patterns of capitalism in South America (1940-1990), part I By César Castillo-García
  20. Gravity at Sixty: The Workhorse Model of Trade By Yoto V. Yotov; Yoto V. Yotov
  21. Within-Group Heterogeneity in a Multi-Ethnic Society By Artiles, Miriam
  22. Dale W. Jorgenson: An Intellectual Biography By John G. Fernald
  23. Persistent States: Lessons for Scottish Devolution and Independence By Anton Muscatelli; Graeme Roy; Alex Trew
  24. Labour by Design: Contributions of David Card, Joshua Angrist, and Guido Imbens By Peter Hull; Michal Koles\'ar; Christopher Walters
  25. The Long Run Impacts of Court-Ordered Desegregation By Garrett Anstreicher; Jason Fletcher; Owen Thompson

  1. By: Kenny, Sean; McLaughlin, Eoin
    Abstract: We apply insights from the political economy of secession to analyse the early years of the Irish Free State (IFS). The IFS was fortuitous in a debt settlement that enabled it to begin its existence debt free, whilst also receiving financial assistance to quell civil unrest. Yet the IFS was unable to continue to provide the welfare spending inherited from the old regime thereby exacerbating inequality. The IFS also maintained a sterling peg, which led to a milder experience of the depression era. Ultimately however, the benefits of independence were not forthcoming in the early years of the IFS.
    Keywords: Ireland,economic history,independence,secession
    JEL: N14 N44
    Date: 2022
  2. By: Mr. Serkan Arslanalp; Chima Simpson-Bell; Mr. Barry J. Eichengreen
    Abstract: We document a decline in the dollar share of international reserves since the turn of the century. This decline reflects active portfolio diversification by central bank reserve managers; it is not a byproduct of changes in exchange rates and interest rates, of reserve accumulation by a small handful of central banks with large and distinctive balance sheets, or of changes in coverage of surveys of reserve composition. Strikingly, the decline in the dollar’s share has not been accompanied by an increase in the shares of the pound sterling, yen and euro, other long-standing reserve currencies and units that, along with the dollar, have historically comprised the IMF’s Special Drawing Rights. Rather, the shift out of dollars has been in two directions: a quarter into the Chinese renminbi, and three quarters into the currencies of smaller countries that have played a more limited role as reserve currencies. A characterization of the evolution of the international reserve system in the last 20 years is thus as ongoing movement away from the dollar, a recent if still modest rise in the role of the renminbi, and changes in market liquidity, relative returns and reserve management enhancing the attractions of nontraditional reserve currencies. These observations provide hints of how the international system may evolve going forward.
    Keywords: International reserves, currency composition, dollar; USD share; dollar dominance; currency share; dollar share; share of foreign exchange; Reserve currencies; Currencies; International reserves; Reserves management; Asset valuation; Global; Africa
    Date: 2022–03–24
  3. By: Elert, Niklas (Research Institute of Industrial Economics (IFN)); Johansson, Dan (Örebro University School of Business); Stenkula, Mikael (Research Institute of Industrial Economics (IFN)); Wykman, Niklas (Örebro University Schoolf of Business)
    Abstract: The institutional literature suggests that long-term tax incentives are crucial for entrepreneurs, but studies on this topic are hampered by theoretical and empirical problems related to how to define and measure entrepreneurial income. We resolve these problems by drawing on a theoretical definition of the entrepreneur as an owner, which enables us to identify entrepreneurship empirically by means of investments made by active owners of closely held firms. Using detailed Swedish tax data, we analyze the tax incentives for such owner-entrepreneur investments from 1862 to 2018, thereby highlighting the evolution of a general institutional phenomenon through a long-run, in-depth, country-specific analysis. We calculate the annual marginal effective tax rate (METR) on capital income for investments, distinguishing between average- and top-income entrepreneurs, and between three sources of finance. We identify five tax regimes that indicate substantial differences in institutional quality over time according to the magnitude of the METR and METR differences between average- and top-income entrepreneurs and across sources of finance. Increased taxation of owner-entrepreneurs helps explain the absence of new large entrepreneurial firms in Sweden after World War II, while improved incentives can be associated with Sweden’s recent entrepreneurial renaissance.
    Keywords: High-Impact Entrepreneurship; Institutional Quality; Marginal Effective Tax Rates; Tax Regimes; Tax Reforms
    JEL: H21 H31 H32 L25 L26 N44
    Date: 2022–05–06
  4. By: Guillaume Chapelle (LIEPP - Laboratoire interdisciplinaire d'évaluation des politiques publiques (Sciences Po) - Sciences Po - Sciences Po, CY - CY Cergy Paris Université)
    Abstract: This paper uses a difference-in-differences (DID) framework to estimate the impact of Non-Pharmaceutical Interventions (NPIs) used to fight the 1918 influenza pandemic and control the resultant mortality in 43 U.S. cities. The results suggest that NPIs such as school closures and social distancing, as implemented in 1918, and when applied for a relatively long and sustained time, might have reduced individual and herd immunity and the population general health condition, thereby leading to a significantly higher number of deaths in subsequent years.
    Keywords: non-pharmaceutical interventions,1918 influenza,difference-in-differences,health policies
    Date: 2020–10–01
  5. By: Damir Galaz-Mandakovic Fernández (Universidad de Tarapaca); Francisco Rivera Amaro (UdeM - Université de Montréal)
    Abstract: En este artículo se cuantifica, caracteriza y analiza la migración boliviana en la zona de Ollagüe y comunidades aledañas mediante el hallazgo de 335 expedientes migratorios que datan de 1879 a 1946. Se presentan los períodos de ingreso, los lugares de origen, el oficio y profesión, además del género, estado civil, edad y alfabetización de los migrantes bolivianos que se desenvolvieron en la minería del azufre y el bórax. La caracterización y análisis de los archivos da cuenta del papel central que tuvo la fuerza laboral boliviana para el desarrollo de la minería no metálica, concluyéndose que la expansión capitalista en la frontera chilena fue sustentada por una subsidiariedad étnica de una fuerza laboral internacional subordinada.
    Keywords: Migración,minería,azufre,bórax,subsidiaridad étnica,Ollagüe Migration,mining,sulphur,borax,ethnic subsidiarity,Ollagüe
    Date: 2021
  6. By: Olivier Damette (BETA - Bureau d'Économie Théorique et Appliquée - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Claude Diebolt (BETA - Bureau d'Économie Théorique et Appliquée - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Stephane Goutte (Cemotev - Centre d'études sur la mondialisation, les conflits, les territoires et les vulnérabilités - UVSQ - Université de Versailles Saint-Quentin-en-Yvelines); Umberto Triacca (UNIVAQ - University of L'Aquila [Italy])
    Abstract: This paper presents the findings of climate change impact on a widespread human crisis due to a natural occurrence, focusing on the so-called Little Ice Age period. The study is based on new non-linear econometrics tools. First, we reassessed the existence of a significant cooling period using outliers and structural break tests and a nonlinear Markov Switching with Levy process (MS Levy) methodology. We found evidence of the existence of such a period between 1560-1660 and 1675-1700. In addition, we showed that NAO teleconnection was probably one of the causes of this climate change. We then performed nonlinear econometrics and causality tests to reassess the links between climate shock and macroeconomic indicators. While the causal relationship between temperature and agricultural output (yields, production, price) is strongly robust, the association between climate and GDP identified by the MS Levy model does not reveal a clear causality link. Although the MS Levy approach is not relevant in this case, the causality tests indicate that social disturbance might also have been triggered by climate change, confirming the view of Parker (2013). These findings should inform current public policies, especially with regard to the strong capacity of climate to disrupt social and economic stability.
    Keywords: Economic cycles,Causality,Markov Switching Levy,Non-linear econometrics,Climate change,Little Ice Age,Social crisis
    Date: 2020–04–16
  7. By: de la Croix, David; Docquier, Frédéric; Fabre, Alice; Stelter, Robert (University of Basel)
    Abstract: We argue that market forces shaped the geographic distribution of upper-tail human capital across Europe during the Middle Ages, and contributed to bolstering universities at the dawn of the Humanistic and Scientific Revolutions. We build a unique database of thousands of scholars from university sources covering all of Europe, construct an index of their ability, and map the academic market in the medieval and early modern periods. We show that scholars tended to concentrate in the best universities (agglomeration), that better scholars were more sensitive to the quality of the university (positive sorting) and migrated over greater distances (positive selection). Agglomeration, selection and sorting patterns testify to an integrated academic market, made possible by the use of a common language (Latin).
    Keywords: Upper-Tail Human Capital, Universities, Discrete choice model, Scholars, Publications, Agglomeration
    JEL: N33 O15 I25
    Date: 2022–04–13
  8. By: Sergio Correia; Stephan Luck
    Abstract: This paper discusses how to successfully digitize large-scale historical micro-data by augmenting optical character recognition (OCR) engines with pre- and post-processing methods. Although OCR software has improved dramatically in recent years due to improvements in machine learning, off-the-shelf OCR applications still present high error rates which limits their applications for accurate extraction of structured information. Complementing OCR with additional methods can however dramatically increase its success rate, making it a powerful and cost-efficient tool for economic historians. This paper showcases these methods and explains why they are useful. We apply them against two large balance sheet datasets and introduce "quipucamayoc", a Python package containing these methods in a unified framework.
    Date: 2022–03
  9. By: Claude DIEBOLT
    Abstract: L’objet de cet article est d’étudier les débordements géographiques de connaissance sur l’activité innovante et le processus de convergence des régions européennes de 1981 à 2001. Notre recherche révèle la présence d’effets spatiaux que nous intégrons successivement dans notre analyse de la ? convergence. L’estimation d’un modèle avec autocorrélation spatiale des erreurs montre que les effets de débordement géographique contribuent favorablement au processus de rattrapage des régions les moins performantes. Nous modélisons l’hétérogénéité spatiale par une spécification à deux régimes spatiaux, de type « centre-périphérie ». L’ensemble de ces résultats montrent que le processus de convergence globale masque des disparités au sein des régions européennes où, sur la période considérée, seules convergent les régions appartenant au centre de l’Europe.
    Keywords: Brevets, cliométrie, convergence, effets spatiaux, persistance, régions européennes.
    JEL: C21 N90 N94 O33 R11
    Date: 2022
  10. By: Marco Del Angel; Gary Richardson
    Abstract: Regulatory independence forms a foundation for modern financial systems. To illuminate the value of this ubiquitous institution, we examine a Progressive Era policy experiment in which hitherto independent regulators came under gubernatorial supervision. After this change, failure rates declined during gubernatorial election campaigns for banks under gubernatorial jurisdiction. Declines did not occur during campaigns for other officials or for nationally chartered banks. Declines in bank resolutions during campaigns reduced business bankruptcies. We corroborate these claims with new data and novel IV regressions. Our results indicate that political subservience of financial regulators links electoral and economic cycles.
    JEL: G01 G21 G33 H1 H7 K2 L51 N1 N2
    Date: 2022–04
  11. By: Kennedy, Liam
    Abstract: The Great Irish Famine, 1846-50, and the Great Ukrainian Famine, 1932-33 are searing episodes in the history of the two countries. On some estimates, the relative intensity of famine in the two societies was broadly the same, with famine conditions claiming the lives of one-in-eight of the population. But on closer examination it is the dissimilarities between the two episodes that dominate. The politics and ideology shaping reaction to the emerging catastrophes in the two societies were hugely contrasting. The intent of policy in the Irish case, however inadequate some of the relief measures, was to save lives. Suspicion of the peasantry (not only in Ukraine), the extraction of grain surpluses and the unleashing of state terror against "class enemies" took precedence over saving lives in the Soviet handling of the Ukrainian famine. Paradoxically, it is the collective memory of famine and its politicisation that brings the Irish and Ukrainian calamities into closer relationship with each other.
    Keywords: Great Irish Famine (1846-50),Great Ukrainian Famine (1932-33)
    JEL: N43 N44 H53 N54
    Date: 2022
  12. By: César Castillo-García (Department of Economics, New School for Social Research)
    Abstract: In contrast to European and other Latin American experiences, researchers understand Peruvian fascism as a simple mimicry (a political alternative of the 1930s that regimes and movements look to replicate) or the product of transnational propaganda looking for public support to Mussolini and Franco. To avoid this reductionism, this paper proposes a double-sided definition based on Vajda (1976) and Paxton (1998) to understand fascism as a movement and an ideology. That enables us to identify the Peruvian fascism by studying the actions and ideas of three intellectuals who sympathized with it: José de la Riva-Agüero, Raúl Ferrero Rebagliatti, and Víctor Andrés Belaúnde. I argue that their discourse is a symbiosis between Peruvian authoritarian political tradition and European fascisms. Even though these fascist intellectuals did not create a strong political movement, they incepted political concepts regarding social policy, the government, the nation, the relations between State and the church, and anti-Marxism in public discussion. As a result, they passed on elements of the political repertory supported by the current new right-wing populism in Peru.
    Date: 2022–04
  13. By: Ganglmair, Bernhard; Robinson, W. Keith; Seeligson, Michael
    Abstract: We document the occurrence of process claims in granted U.S. patents over the last century. Using novel data on the type of independent patent claims, we show an increase in the annual share of process claims of about 25 percentage points (from below 10% in 1920). This rise in process intensity is not limited to a few patent classes but can be observed across a broad spectrum of technologies. Process intensity varies by applicant type: companies file more process-intense patents than individuals, and U.S. applicants file more process-intense patents than foreign applicants. We further show that patents with higher process intensity are more valuable but are not necessarily cited more often. Last, process claims are on average shorter than product claims; but this gap has narrowed since the 1970s. These patterns suggest that the patent breadth and scope of process-intense patents are overestimated when claim types are not accounted for. We conclude by describing in detail the code used to construct the claim-type data, showing results from a data-validation exercise (using close to 10,000 manually classified patent claims), and providing guidance for researchers on how to alter the classification outcome to adapt to researchers' needs.
    Keywords: innovation,patent claims,patents,patent breadth,patent scope,process claims,process intensity,R&D,text analysis
    JEL: C81 O31 O34 Y10
    Date: 2022
  14. By: Ettore Gallo (Department of Economics, New School for Social Research); Mark Setterfield (Department of Economics, New School for Social Research)
    Abstract: This paper discusses Joan Robinson’s remarks on the importance of historical time in economic analysis. On the one hand, Joan Robinson expressed skepticism with equilibrium analysis as such, arguing that as soon as economists take into account the uncertainty of expectations, history needs to replace equilibrium. On the other, Robinson stressed that, while building economic models, one must be aware that it is historical time rather than logical time that rules reality, warning against the methodological mistake of confusing comparisons of equilibrium positions with a movement between them. We argue that these criticisms point to the possibility of thinking in terms of two different ‘levels’ of historical time – a higher (fundamentalist) level, and a practical (and more analytically tractable) lower level. Using this distinction, we provide a taxonomy of existing strands of post-Keynesian growth theory that are consistent with the concept of low-level historical time. It is shown that despite appearances to the contrary, much post-Keynesian growth theory displays fidelity to Joan Robinson’s concern with the importance of historical time.
    Keywords: Historical time, economic growth, provisional equilibrium, traverse, shifting equilibrium
    JEL: B31 B41 E11 E12 O41
    Date: 2022–04
  15. By: Gerda Asmus; Raphaël Franck
    Abstract: This study analyzes how state capacity shapes the local impact of national policies by exploiting a quasi-natural experiment in the regional expansion of the state. It uses the local discontinuity created by the boundary of the largest peasant rebellion in 18th century Russia where the state increased security forces and levied taxes more efficiently after the uprising ended. The results show that increased state capacity had limited effects on economic growth until the central government targeted specific development objectives. Namely, when rulers chose to build schools or foster industrialization, their national policies benefited areas which already had strong state capacity.
    Keywords: economic growth, public policies, Russia, state capacity
    JEL: O11 O43 N13 N14
    Date: 2022
  16. By: Kennedy, Liam; MacRaild, Donald M.
    Abstract: This overview of the Great Irish Famine is unfolded in terms of the three major phases of British government policy. The understanding of poverty underlying the paper is in terms of diet, not income per capita, housing or literacy, or any of the other more conventional measures in use by historians of the Famine. The claim is that reliance on a diet consisting almost exclusively of the cheapest foodstuff (potatoes) is both the definition of and the principal measure of poverty in pre-Famine Irish society. There is some emphasis on class conflict, both in its overt and its latent forms, as a constraint on the redistribution of income and food in the face of a massive crisis. A.K. Sen's entitlements thesis on the causes of famine is held to have limited usefulness for the study of the Irish Famine, and there is a renewed emphasis on the absolute shortfall in domestic food production ('food availability decline') in the later 1840s. Ever so briefly, attention is drawn to lives saved as well as lives lost.
    Keywords: Great Irish Famine,poverty,entitlements,government policy
    JEL: I38 N43 N53 Q18
    Date: 2022
  17. By: Laurent Linnemer
    Abstract: “Double marginalization” and “Elimination of Double marginalization” are catch-phrases commonly used in the IO literature. In this note, I trace back the origin of the idea to Chapter IX, on complementary goods monopolies, of Cournot (1838). Through the years Cournot’s contribution remained a reference but ended being viewed as a special case of the bilateral monopoly model. Yet, it is worth wondering why the most cited paper on this issue is nowadays Spengler (1950) which contains only an informal treatment of the question. In addition to retracing the origin of the idea, I emphasize the elegant proof of Cournot for the simultaneous game and extend it to the sequential game. I also show that prices are usually higher in the sequential game but that they could be lower if demand is very convex.
    Keywords: Cournot, complements, successive monopolies
    JEL: B16 B21 K21 L12 L13 L42
    Date: 2022
  18. By: Olivier Guillot (CNRS - Centre National de la Recherche Scientifique, BETA - Bureau d'Économie Théorique et Appliquée - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Antoine Parent (UP8 - Université Paris 8 Vincennes-Saint-Denis)
    Abstract: This article explores the issue of the executions of French soldiers during the Great War from a quantitative perspective. Using the Ministry of Defense's database of the "Fusillés de la Première Guerre mondiale", we first describe the characteristics of these soldiers who were sentenced to death by a council of war or summarily executed, and examine whether the profile of the executed changed over the war years. This statistical portrait is then completed by two analyses conducted with the help of regression models. The first focuses on the temporal distribution of executions. In particular, we seek to determine whether variations in the number of executions from one month to the next are related to variations in the intensity of the fighting. The second analysis seeks to explain differences between French départements in the proportion of soldiers executed. Two main findings emerge from our study. First, the profile of the soldiers shot in 1914 was quite different from that of the soldiers who were executed in the following years: they were more often farmers, serving in the infantry, with no criminal record. On the other hand, the soldiers shot in 1917, a year of mutinies, did not differ much in their characteristics from those shot in 1916. Second, the results of our regressions suggest that the vast majority of the executed soldiers were "poilus" ["grunts"] like others who found themselves facing a firing squad for having committed a fault in a moment of weakness, often after having taken part in particularly violent fighting. Their actions were probably, in most cases, motivated more by the instinct of survival than by pacifist ideas or other political considerations.
    Abstract: Cet article explore la question des exécutions de soldats français durant la Grande Guerre dans une perspective quantitative. À partir de la base de données des Fusillés de la Première Guerre mondiale du Ministère de la Défense, nous décrivons tout d'abord les caractéristiques de ces soldats ayant été condamnés à mort par un conseil de guerre ou exécutés sommairement, et examinons si leur profil a évolué au cours des années de guerre. Ce portrait statistique est ensuite complété par deux analyses menées à l'aide de modèles de régression. La première se focalise sur la répartition temporelle des exécutions. Nous cherchons notamment à déterminer si les variations du nombre d'exécutions d'un mois à l'autre sont liées aux variations de l'intensité des engagements. La seconde analyse vise à expliquer les différences entre départements dans la proportion de soldats exécutés. Deux constats principaux ressortent de notre étude. Tout d'abord, le profil des soldats fusillés en 1914 était assez différent de celui des soldats ayant été exécutés les années suivantes : il s'agissait plus souvent de cultivateurs, servant dans l'infanterie, sans antécédents judiciaires. En revanche, les fusillés de 1917, l'année des mutineries, ne se distinguaient guère, de par leurs caractéristiques, de ceux de 1916. En second lieu, les résultats de nos régressions suggèrent que la grande majorité des soldats exécutés étaient des « poilus » comme les autres qui se sont retrouvés face à un peloton d'exécution pour avoir commis une faute dans un moment de faiblesse, souvent après avoir pris part à des combats particulièrement violents. Leurs actes étaient probablement, dans la plupart des cas, davantage motivés par l'instinct de survie que par des idées pacifistes ou autres considérations politiques.
    Keywords: Executed soldiers,First World War,French army,Military history,Armée française,Première Guerre mondiale,Fusillés,Histoire militaire
    Date: 2021
  19. By: César Castillo-García (Department of Economics, New School for Social Research)
    Abstract: This paper is the first part of a reconstruction of the evolution of neoliberalism in Peru throughout its different historical waves. The Peruvian case was an ideological precursor of the South American neoliberal authoritarianism before the 1950s. In this regard, I challenge a standard historical narrative that states neoliberalism is an outcome of the transfer of ideas like the case of the Chilean Chicago-Boys and their other Latin American counterparts (Valdés 1995). The Peruvian experience also constituted an opening episode of the deep transnational connection between the main neoliberal networks (Walter Lippmann Colloquium and the Mont Pèlerin Society) and Latin American economic experts. Since late 1940s, neoliberal intellectuals have implemented institutions and a hegemonic discourse affecting current economic affairs in Peru. They played a role in influencing public opinion through political relations and media outlets and directly devising economic policies. The discourse and actions of the neoliberals in Peru have left institutional legacies targeting topics as economic systems, the fiscal and monetary policies, the role of the State, development policies, the private initiative and foreign aid.
    Date: 2022–04
  20. By: Yoto V. Yotov; Yoto V. Yotov
    Abstract: On the eve of its 60th anniversary, the gravity model of trade is a ‘celebrity’, due to its intuitive appeal, solid theoretical foundations, and remarkable empirical success. Yet, many economists still view gravity simply as an intuitive but naive reduced-form estimating equation and apply it without guidance from theory, while others are skeptical about its usefulness for counterfactual projections. The objective of this paper is to offer a historical overview of its evolution from an a-theoretical application to an estimating computable general equilibrium (E-CGE) model, which can be nested in more complex frameworks. Along the way, I address some misconceptions about the gravity model, summarize the current best practices for gravity estimations, and highlight some properties that have made gravity so successful.
    Keywords: structural gravity, evolution, theory, estimation general equilibrium
    JEL: F13 F14 F16
    Date: 2022
  21. By: Artiles, Miriam
    Abstract: Is ethnic diversity good or bad for economic development? Most empirical studies find corrosive effects. In this paper, I show that ethnic diversity need not spell poor development outcomes–a history of within-group heterogeneity can turn ethnic diversity into an advantage for long-run development. I collect new data from a natural experiment regarding Peru's colonial history: the forced resettlement of native populations in the 16th century. This intervention forced together various ethnic groups into new jurisdictions. In those jurisdictions where colonial officials concentrated individuals with a history of within-group heterogeneity, who, prior to colonization, worked in complementary climates of the Andes, ethnic diversity results in systematically lower costs and may even become advantageous. Neither precolonial groups' political complexity nor their degree of economic development explain this result. The transmission of prosocial behavior is one likely channel. I also find evidence consistent with a positive role of economic complementarities between ethnic groups.
    Keywords: Ethnic Diversity, Within-Group Heterogeneity, Long-Run Economic Development
    JEL: J15 N16 O10 O12 Q56 Z10
    Date: 2022–04–16
  22. By: John G. Fernald
    Abstract: Dale W. Jorgenson has been a central contributor to a wide range of economic and policy issues over a long and productive career. His research is characterized by a tight integration of economic theory, appropriate data that matches the theory, and sound econometrics. His groundbreaking work on the theory and empirics of investment established the research path for the economics profession. He is a founder of modern growth accounting: Official statistics in many countries, including the United States, implement Jorgenson’s methods. Relatedly, without Jorgenson’s unflagging efforts, consistent industry KLEMS datasets for many countries—which have been widely used in recent decades for growth accounting, econometrics, and other applications—would not exist. Jorgenson is also a pioneer in econometric modeling of producer and consumer behavior and of econometrically estimated, intertemporal general equilibrium modeling for policy analysis.
    Keywords: Dale Jorgenson; investment; growth accounting
    JEL: B21 B31 D20 O40
    Date: 2022–03–30
  23. By: Anton Muscatelli; Graeme Roy; Alex Trew
    Abstract: The equilibrium size of a nation state is, in part, the result of a trade-off between the gains from scale economies in the provision of public services and the costs of applying uniform policy to heterogeneous cultural, institutional, and geographical fundamentals. Changes in such fundamentals can thus place pressure on states to reform over time. We consider this dynamic state formation process in the context of Scotland within the UK. First, we review the recent research in economic history on the persistence and evolution of such fundamentals. Second, we consider the history of Scotland both before and after the 1707 Act of Union in the light of that broader economic history literature. We conclude with some implications of fundamental persistence for current debates on the place of Scotland within the UK.
    Keywords: Scotland, persistence, state formation
    JEL: H77 N43 N44
    Date: 2022
  24. By: Peter Hull; Michal Koles\'ar; Christopher Walters
    Abstract: The 2021 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to David Card "for his empirical contributions to labour economics" and to Joshua Angrist and Guido Imbens "for their methodological contributions to the analysis of causal relationships." We survey these contributions of the three laureates, and discuss how their empirical and methodological insights transformed the modern practice of applied microeconomics. By emphasizing research design and formalizing the causal content of different econometric procedures, the laureates shed new light on key questions in labour economics and advanced a robust toolkit for empirical analyses across many fields.
    Date: 2022–03
  25. By: Garrett Anstreicher; Jason Fletcher; Owen Thompson
    Abstract: Court ordered desegregation plans were implemented in hundreds of US school districts nationwide from the 1960s through the 1980s, and were arguably the most substantive national attempt to improve educational access for African American children in modern American history. Using large Census samples that are linked to Social Security records containing county of birth, we implement event studies that estimate the long run effects of exposure to desegregation orders on human capital and labor market outcomes. We find that African Americans who were relatively young when a desegregation order was implemented in their county of birth, and therefore had more exposure to integrated schools, experienced large improvements in adult human capital and labor market outcomes relative to Blacks who were older when a court order was locally implemented. There are no comparable changes in outcomes among whites in counties undergoing an order, or among Blacks who were beyond school ages when a local order was implemented. These effects are strongly concentrated in the South, with largely null findings in other regions. Our data and methodology provide the most comprehensive national assessment to date on the impacts of court ordered desegregation, and strongly indicate that these policies were in fact highly effective at improving the long run socioeconomic outcomes of many Black students.
    JEL: I24 J71 J78
    Date: 2022–04

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.