nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2022‒06‒13
twenty papers chosen by

  1. Constructive extraction? Encomienda, the colonial state, and development in Colombia By Jean-Paul Faguet; Camilo Matajira; Fabio Sánchez-Torres
  2. The role of sentiment in the US economy: 1920 to 1934 By Kabiri, Ali; James, Harold; Landon-Lane, John; Tuckett, David; Nyman, Rickard
  3. Faith and Assimilation: Italian Immigrants in the US By Stefano Gagliarducci; Marco Tabellini
  4. Omnia Juncta in Uno*: foreign powers and trademark protection in Shanghai's concession era By Laura Alfaro; Cathy Bao; Maggie X. Chen; Junjie Hong; Claudia Steinwender
  5. Can a Catholic be Liberal? Roman Catholicism and Liberalism in a Political Economy Perspective (1800–1970) By Stefano Solari
  6. Physicians and the Production of Health: Returns to Health Care during the Mortality Transition By Liebert, Helge; Mäder, Beatrice
  7. Causal Effects of Countercyclical Interest Rates: Evidence from the Classical Gold Standard By Kris James Mitchener; Gonçalo Pina
  8. The Anatomy of the Global Saving Glut By Luis Bauluz; Filip Novokmet; Moritz Schularick
  9. Good, Economic Welfare and the National Dividend—Pigou’s Welfare Triad By Aldrich, John
  10. Trade persistence and trader identity - evidence from the demise of the Hanseatic League By Max Marczinek; Stephan E. Maurer; Ferdinand Rauch
  11. The return of inflation: a bankerâs perspective By Robert Amzallag
  12. What have the 2021 Nobel laureates done for us? By Jörn-Steffen Pischke
  13. Origine et développement historique de la légitimité By Sylvaine Castellano
  14. Remembering David Marsden By David Metcalf
  15. Wartime governance and state-building trajectories in post-conflict societies By Patricia Justino
  16. A Rising Tide? The Local Incidence of the Second Wave of Globalization By Rowena Gray; Greg C. Wright
  17. Safeguarding Consumers through Minimum Quality Standards: Milk Inspections and Urban Mortality, 1880-1910 By Anderson, D. Mark; Charles, Kerwin Kofi; McKelligott, Michael; Rees, Daniel I.
  18. Payments Evolution from Paper to Electronic Payments by Merchant Type By Ruth Cohen; Oz Shy; Joanna Stavins
  19. Care, Job Guarantee, and Revisiting “Socialization of Investment”: Insights from Institutional Economics By Zdravka Todorova
  20. In Brief... How Pelé changed Brazilian football By Bernardo Guimaraes; Joao Paulo Pessoa; Vladimir Ponczek

  1. By: Jean-Paul Faguet; Camilo Matajira; Fabio Sánchez-Torres
    Abstract: The Spanish encomienda, a colonial forced-labor institution that lasted three centuries, killed many indigenous people and caused others to flee into nomadism. And yet we show that Colombian municipalities with encomiendas in 1560 enjoy better outcomes today across multiple dimensions of development compared to those without: higher municipal GDP per capita, tax receipts, and secondary school enrolments; lower infant mortality and unsatisfied basic needs; larger populations; and superior fiscal performance and tax collection efficiency. Why? A mediation exercise using data on local institutions in 1794 shows that encomiendas affected development overwhelmingly by helping build the local state. Detailed historical evidence shows when and how encomenderos founded local institutions early on in places where they settled. Places lacking encomiendas also lacked local states for up to 300 years. These institutions mobilized public investment in ways that doubtless suited encomenderos, but over time spurred greater economic and human development.
    Keywords: EncomiendaForced laborState capacityExtractionColonialismDevelopmentColombia
    JEL: H7 N36 N96 O1 O43
    Date: 2022–05–12
  2. By: Kabiri, Ali; James, Harold; Landon-Lane, John; Tuckett, David; Nyman, Rickard
    Abstract: This paper investigates the role of sentiment in the US economy from 1920 to 1934 using digitised articles from The Wall Street Journal. We derive a monthly sentiment index and use a 10-variable vector error correction model to identify sentiment shocks that are orthogonal to fundamentals. We show the timing and strength of these shocks and their resultant effects on the economy using historical decompositions. Intermittent impacts of up to 15 per cent on industrial production, 10 per cent on the S&P 500 and bank loans, and 37 basis points for the credit risk spread suggest a large role for sentiment.
    Keywords: algorithmic text analysis; business sentiment; Great Depression; US interwar economy; EP/P016847/1; ESRC-NIESR Rebuilding Macroeconomics network
    JEL: N12 N22 E32 D89
    Date: 2022–04–25
  3. By: Stefano Gagliarducci; Marco Tabellini
    Abstract: How do ethnic religious organizations influence immigrants’ assimilation in host societies? This paper offers the first systematic answer to this question by focusing on Italian Catholic churches in the US between 1890 and 1920, when four million Italians moved to America, and anti-Catholic sentiments were widespread. Relying on newly collected data on the presence of Italian Catholic churches across counties over time, we implement a difference-in-differences design. We find that Italian churches reduced the social assimilation of Italian immigrants, lowering intermarriage, residential integration, and naturalization rates. We provide evidence that stronger coordination within the Italian community and natives' backlash and negative stereotyping can explain these effects. Despite the negative effects on Italians' social assimilation, Italian churches had ambiguous effects on immigrants' economic outcomes, and increased children's literacy and ability to speak English.
    JEL: J15 N31 Z12
    Date: 2022–04
  4. By: Laura Alfaro; Cathy Bao; Maggie X. Chen; Junjie Hong; Claudia Steinwender
    Abstract: We investigate how firms adapt to trademark protection, an extensively used but underexamined form of IP protection, by exploring a historical precedent: China's trademark law of 1923 - an unanticipated and disapproved response to end foreign privileges in China. By exploiting a unique, newly digitized firm-employee-level dataset from Shanghai in 1872-1941, we show that the trademark law shaped firm dynamics on all sides of trademark conflicts. The law spurred growth and brand investment among Western firms with greater dependence on trademark protection. In contrast, Japanese businesses, which had frequently been accused of counterfeiting, experienced contractions while attempting to build their own brands after the law. The trademark law also led to new linkages with domestic agents, both within and outside the boundaries of Western firms, and the growth of Chinese intermediaries. At the aggregate level, trademark-intensive industries witnessed a net growth in employment and the number of product categories. A comparison with previous attempts by foreign powers - such as extraterritorial rights, bilateral treaties, and an unenforced trade-mark code - shows that those alternative institutions were ultimately unsuccessful. *Omnia Juncta in Uno ("All Joined in One") was the Latin motto on the municipal seal of the Shanghai International Settlement (1843-1941) and signified the joint governance of foreign powers in the settlement.
    Keywords: trademark, firm dynamics, intermediaries, intellectual property institutions
    Date: 2022–12
  5. By: Stefano Solari (Università di Padova)
    Abstract: The philosophy of the Enlightenment and political thought of modernity found tough opposition in the Roman Catholic Church. Liberalism was associated with Free Masons and revolutionary intent. Nonetheless, liberalism and political economy stimulated some theoretical analysis and specific theoretical positions in terms of social philosophy and social economics by the Church. This paper presents an analysis of encyclical letters and other papal documents, as well as the writings of other Catholic scholars, to elaborate on the theoretical points used to contrast liberalism. Compromises, as well as turning points in the evolution of the Catholic position, are investigated. Lastly, the epistemological and historical reasons for the affinity of Roman Catholicism with ethical liberalism and the limits of this similarity are discussed. 1. Liberal and Catholic, an Italian drama
    Date: 2022–03–24
  6. By: Liebert, Helge (University of Zurich); Mäder, Beatrice (University of St. Gallen)
    Abstract: This paper investigates the returns to health care provision during the mortality transition. We construct a new panel data set covering German municipalities from 1928 to 1936. The endogeneity of health care supply is addressed by using the expulsion of Jewish physicians from statutory health insurance as exogenous variation in regional physician supply. Increases in the supply of physicians reduce infant mortality and mortality from common childhood diseases. Using a semiparametric control function approach, we find diminishing marginal returns to health care provision. The results are consistent with historical trends in infant mortality over the 20th century.
    Keywords: infant mortality, physicians, health care supply, mortality transition, semiparametric IV
    JEL: I10 I18 N34
    Date: 2022–04
  7. By: Kris James Mitchener; Gonçalo Pina
    Abstract: We estimate the causal impact of countercyclical interest rates on macroeconomic outcomes in open economies. To identify countercyclical interest rates, we construct a new database of short-term interest rates, principal exports, and international commodity prices for 40 economies from 1870 to 1913. This era of capital mobility, nominal anchors, specialization and trade integration, exposed economies to multiple exogenous demand-side shocks. Specialization and trade integration subjected economies to a “commodity lottery” in the form of price fluctuations in world markets. Capital mobility and a currency peg exposed them to interest-rate movements originating in the U.K., the largest economy and linchpin of the classical gold standard. We identify (i) positive effects of commodity-export prices on real GDP and the domestic price level and (ii) negative effects of exogenous changes in short-term interest rates on the same variables. We then show that countercyclical interest rates, defined relative to export-price shocks, stabilized both output and the domestic price level. This stabilization was more effective for the price level than for output.
    Keywords: countercyclical interest rates, stabilization, gold standard, commodity lottery
    JEL: E52 E32 F33 F41 F62 N10
    Date: 2022
  8. By: Luis Bauluz; Filip Novokmet; Moritz Schularick
    Abstract: This paper provides a household-level perspective on the rise of global saving and wealth since the 1980s. We calculate asset-specific saving flows and capital gains across the wealth distribution for the G3 economies – the U.S., Europe, and China. In the past four decades, global saving inequality has risen sharply. The share of household saving flows coming from the richest 10% of household increased by 60% while saving of middle-class households has fallen sharply. The most important source for the surge in top-10% saving was the secular rise of global corporate saving whose ultimate owners the rich households are. Housing capital gains have supported wealth growth for middle-class households despite falling saving and rising debt. Without meaningful capital gains in risky assets, the wealth share of the bottom half of the population declined substantially in most G3 economies.
    Keywords: income and wealth inequality, household portfolios, historical micro data
    JEL: D31 E21 E44 N32
    Date: 2022
  9. By: Aldrich, John
    Abstract: Pigou’s welfare treatises are exercises in practical ethics. The exercises were founded on the ethical concepts of goodness and economic welfare with the economist’s national dividend providing the practical instrument for solving economic problems. This paper follows this triad from its origins in Pigou’s earliest writings on ethics and economic policy, into the welfare treatises and onto his last writings—a period of around 50 years.
    Date: 2022–04–09
  10. By: Max Marczinek; Stephan E. Maurer; Ferdinand Rauch
    Abstract: How do trade networks persist following disruptions of political networks? We study different types of persistence following the decline of the Hanseatic League using a panel of 21,590 city-level trade flows over 190 years, covering 1,425 cities. We use the Sound Toll data, a dataset collected by the Danish crown until 1857 that registered every ship entering or leaving the Baltic Sea, forming one of the most granular and extensive trade data sets. We measure trade flows by counting the number of ships sailing on a particular route in a given year and estimate gravity equations using PPML and an appropriate set of fixed effects. Bilateral gravity estimation results show that trade among former Hansa cities only shows persistence after its dissolution in 1669 for about 30 years, but this persistence is not robust across different regression specifications. However, when we incorporate the flag under which a ship is sailing and consider trilateral trade (where an observation is a combination of origin, destination, and flag), we find that trade persistently exceeds the gravity benchmark: Hansa cities continued to trade more with each other, but only on ships that were owned in another former Hansa city and thus sailed under a Hansa flag. Similar effects are found for trade among former Hansa cities and their trading posts abroad, yet again only conditional on the ship sailing under a former Hanseatic flag. Trade flows among the same pair of origin and destination cities, but under a different flag, do not show this persistence. Our main result shows that the identity of traders persists longer and more strongly than other forms of trading relationships we can measure. Apart from these new quantitative and qualitative insights on the persistence of trade flows, our paper is also of historic interest, as it provides new and detailed information on the speed of decline of trade amongst members of the Hanseatic League.
    Keywords: Hanseatic League, Hansa, gravity
    Date: 2022–12
  11. By: Robert Amzallag
    Abstract: The COVID 19 pandemic followed by the invasion of Ukraine is a two-punch economic strike never seen in recent history. The pandemic not only disrupted many aspects of a tightly knit integrated world but also exposed its fragility. The devastation of Ukraine and the sanctions quickly imposed by most major developed countries have accelerated the retreat of globalization. For many decades, Central Bankers and economists considered stable prices as an almost permanent feature. Today, the consumer price index in the US hit a 40-year high at more than 8 per cent and experts were unable to predict such course of inflation. In this paper, Robert Amzallag, CIRANO Invited Fellow, looks at these recent events in the light of the factors that have altered significantly and reliably inflation since World War II. Despite the dire economic challenges, the economy recovered quickly after the war. The financial imbalances rectified in only a few years and inflation was tamed. Can the same thing be achieved today? The author’s analysis suggests that this is highly improbable. Deep-rooted inflationary forces are at work because of the distortions that the economic order of the last 40 years has created. These distortions, exacerbated by the dual crisis of COVID 19 and the invasion of Ukraine, will take long to repair. La pandémie de COVID 19 et l'invasion de l'Ukraine ont créé un choc économique d’une ampleur jamais vue dans l'histoire récente. La pandémie a perturbé de nombreux aspects d'une économie mondiale tissée serrée. Elle a également mis en évidence sa fragilité. La dévastation de l'Ukraine et les sanctions rapidement imposées par la plupart des grands pays développés ont accéléré le processus de repli de la mondialisation. Pendant de nombreuses décennies, les gouverneurs des banques centrales et les économistes ont considéré la stabilité des prix comme quelque chose de permanent. Aujourd'hui, l'indice des prix à la consommation aux États-Unis a atteint son plus haut niveau depuis 40 ans, à plus de 8 pour cent, une évolution que les experts ont été incapables de prévoir. Dans cet article, Robert Amzallag, Fellow invité CIRANO, examine les événements récents à la lumière de ceux qui ont profondément marqué l’évolution de l'inflation depuis la Seconde Guerre mondiale. Malgré les graves difficultés économiques, l'économie s'est rapidement redressée au sortir de la guerre. En seulement quelques années, les déséquilibres financiers se sont corrigés et l'inflation a été maîtrisée. Est-ce qu’on aura un tel succès aujourd’hui ? Selon l’auteur c’est très improbable. Au cours des 40 dernières années, l’ordre économique a créé des distorsions telles que les forces inflationnistes sont maintenant profondément enracinées. Ces distorsions, exacerbées par le double choc de la COVID 19 et l’invasion de l’Ukraine, mettront du temps à se résorber.
    Keywords: Economic crisis,Inflation,Covid-19,War in Ukraine,Distortions, Crise économique,Inflation,Covid-19,Guerre en Ukraine,Distorsions
    Date: 2022–05–31
  12. By: Jörn-Steffen Pischke
    Abstract: The 2021 Nobel Prize in Economic Sciences was awarded to David Card, Joshua Angrist and Guido Imbens. Jörn-Steffen Pischke explains how the use of natural experiments in empirical economics, work in which they were pioneers, has ushered in much progress in the analysis of causal relationships, transforming the study of key policy challenges, including education, immigration and the minimum wage.
    Keywords: immigration, schools, social mobility, wages, policy, equality,
    Date: 2022–02–22
  13. By: Sylvaine Castellano (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie)
    Abstract: Legitimacy is a multidimensional concept of great importnce for firms, especially when considering the environmental context. Its multidimensionality is based on the diversity of the audiences that confer it and on the different layers of the environment in which the firm operates. Each audience forms its own expectations and each level of the environment has its legitimacy dynamic. The main objectif of this article is to study the historical foundations of legitimacy that have led, different perspectives, and different pillars of legitimacy that are commonly accepted in the academic world, with a focus on the neo-institutional approach.
    Abstract: La légitimité est un concept multidimensionnel qui est prépondérant pour les firmes, surtout si l'on prend en compte le contexte environnemental. Sa multidimensionalité est fondée sur la diversité des entités qui la confèrent et sur la multitude d'environnements au sein desquels la firme évolue. Chaque entité forme ses propres attentes et chaque niveau de l'environnement possède ses propres logiques de légitimité. Il est donc intéressant d'étudier les fondements historiques de la légitimité qui ont aboutit aux différents prismes, differentes perspectives, et différents piliers de la légitimité et qui sont communément acceptés dans le monde académique, notamment l'approche néo-institutionnelle.
    Keywords: Neo-institutional approach,History,Legitimacy,Légitimité,Approche néo-institutionnelle,Histoire
    Date: 2022–01–03
  14. By: David Metcalf
    Abstract: David Marsden, who passed away in August 2021, was involved in CEP research for many years, working on employment and industrial relations, youth employment and training, performance-related pay, performance management and individual employee voice. His long-time colleague David Metcalf recalls his broad-ranging contributions to academic life.
    Date: 2022–02–22
  15. By: Patricia Justino
    Abstract: To date, there is limited understanding about the consequences of wartime dynamics for post-war state-building processes. This paper explores one such dynamics—the forms of governance exercised by armed groups during wartime—and proposes a theoretical framework outlining how forms of wartime governance affect trajectories of state-building in the aftermath of civil wars. Six possible trajectories are mapped out: stable democracy, weak democracy, stable autocracy, fragmented rule, contested autocracy, and durable disorder.
    Keywords: Political violence, War, Conflict, Statebuilding, Peace, Development
    Date: 2022
  16. By: Rowena Gray; Greg C. Wright
    Abstract: We estimate the short- and long-run local labor market impacts of the large increase in U.S. imports and exports that occurred over the 1970s. We exploit the sequential opening of overseas shipping container ports over the period, which generated discontinuous changes in U.S. trade ows. We find that the impacts of the export shock on employment, income, and home and rental prices were large, but short-lived, suggesting that U.S. local labor markets equilibrated quickly. The import effects were also large and mostly short-lived, but we find strong persistence in the impact on home and rental prices. We exploit differences in housing supply elasticities across markets to show that this is due to the fact that the housing stock is durable and so does not easily contract, a result with important welfare implications. Overall, we estimate that the net impact of the shock was to raise manufacturing sector employment by 250,000 workers over the decade of the 1970s.
    Keywords: containerization, international trade, globalization, housing durability
    JEL: F14 F16 F66 J21 R31
    Date: 2022
  17. By: Anderson, D. Mark (Montana State University); Charles, Kerwin Kofi (Yale University); McKelligott, Michael (University of Chicago); Rees, Daniel I. (Universidad Carlos III de Madrid)
    Abstract: We examine the effect of enforcing minimum quality standards (MQSs) on consumer health. In the late 1800s, the urban milk supply was regularly skimmed and diluted with water, but consumers could not easily determine its quality because dyes, caramel, and salt were added. To protect consumers, milk inspectors were tasked with enforcing a well-defined MQS. Using city-level data for the period 1880-1910, we find that milk inspections reduced mortality from waterborne and foodborne diseases by 8-19 percent. Ours is the first study to provide evidence that MQSs can improve consumer health when directly applied to an experience or credence good.
    Keywords: milk inspections, infant mortality, waterborne mortality, urban mortality
    JEL: H75 I18 J18 L51 N31
    Date: 2022–05
  18. By: Ruth Cohen; Oz Shy; Joanna Stavins
    Abstract: The use of paper instruments—cash and checks—has been declining in the United States, and consumers have been gradually replacing paper with cards and electronic payments. Stavins (2021) examines the evolution of payments from paper to cards and electronic payments, while Shy (2020) shows the payments landscape across merchant types. This paper combines the cross-sectional analysis across merchants with the aggregate time series study to analyze the evolution of consumer payments by merchant type. Using data from a representative diary survey of US consumers collected annually over the past several years, we examine changes for each merchant type to assess which transactions shifted from paper to electronic payments and from in-person to remote transactions. We find that cash use declined faster than check use, in large part because transactions shifted from in person to remote. While the cash-use share of transactions dropped for almost all merchant types, changes in check use were much more heterogenous across merchants. COVID-19 accelerated the payments evolution away from cash for some merchant types, as their drop in cash payments was much larger during the pandemic than prior to it. Merchants whose transactions are typically conducted in person experienced the largest decline in cash payments during the pandemic. Regression results show that the probability of using either cash or checks declined significantly in 2019 and 2020, even after controlling for merchant types, the dollar value of transactions, and consumers’ socio-demographic attributes.
    Keywords: consumer payments; merchant category; cash; check; cards; electronic payments; COVID-19
    JEL: D12 D14 E42
    Date: 2022–02–01
  19. By: Zdravka Todorova
    Abstract: The article discusses commitment to full employment in light of institutional theory and offers a renewed examination of Keynes’s "socialization of investment" concept. The discussion builds on Veblen's theory of human development, predation, and capitalism. It highlights contemporary institutional inquiry in a discussion of ongoing issues of care and social disparities. Based on this, the article formulates problems for a broader inquiry about socialization of investment. The article provides insights about Job Guarantee based on original institutional economics concepts.
    Keywords: job guarantee, care systems, Feminist Post Keynesian-Institutional economics, social stratification, socialization of investment, Modern Money Theory and institutions
    JEL: B52 B54 E12 P16 Z18
    Date: 2022–05
  20. By: Bernardo Guimaraes; Joao Paulo Pessoa; Vladimir Ponczek
    Abstract: A ban on non-compete agreements in Brazilian football led to an increased lifetime income for players. But as research by Bernardo Guimaraes, João Paulo Pessoa and Vladimir Ponczek reveals, it was older players who gained the most, whereas the wages of young players fell.
    Keywords: labor mobility, labor frictions, wage profile, labor turnover, labour, turnover, frictions
    Date: 2022–02–22

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