nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2022‒10‒10
nineteen papers chosen by

  1. Extending Cliometrics to Ancient History with Complexity By Laurent Gauthier
  2. Slavery and the British Industrial Revolution By Stephan Heblich; Stephen J. Redding; Hans-Joachim Voth
  3. Private insurance, public welfare, and financial markets: Alpine and Maritime countries in comparative-historical perspective By van der Heide, Arjen; Kohl, Sebastian
  4. Health and Safety vs. Freedom of Contract: The Tortured Path of Wage and Hours Limits Through the State Legislatures and the Courts By Price V. Fishback
  5. Perks and Pitfalls of City Directories as a Micro-Geographic Data Source By Albers, Thilo N. H.; Kappner, Kalle
  6. Community, state and market: Understanding historical water governance evolution in Central Asia By Amirova, Iroda; Petrick, Martin; Djanibekov, Nodir
  7. The Chinese accounting profession in the People’s Republic: A preliminary understanding from an oral history perspective By xue, qingmei; zan, luca
  8. Competition and Innovation: The Breakup of IG Farben By Pöge, Felix
  9. Sophocles's Play: Greek Theater and Psychological Game Theory By Laurent Gauthier
  11. The Decline of the Labor Share is not Explained by the Capitalization of Intellectual Property Products By Barkai, Simcha
  12. The Start of Yugoslavia's Disintegration: Where Borders Cut Commuting Spheres By Hoffstadt, Martin
  13. The Fiscal State in Africa: Evidence from a Century of Growth By Albers, Thilo N. H.; Jerven, Morten; Suesse, Marvin
  14. Climate Risks and Predictability of Commodity Returns and Volatility: Evidence from Over 750 Years of Data By Jacobus Nel; Rangan Gupta; Mark E. Wohar; Christian Pierdzioch
  15. Unable to innovate or just bad circumstances? Comparing the innovation system of a state-led and market-based economy By Ann Hipp; Udo Ludwig; Jutta Günther
  16. Gender Discrimination and the Sex Ratio of Immigrants By Lach, Saul; Sicherman, Nachum
  17. What analytical framework for Sovereign Money? Some insight from the 100% Money literature, and a comment on criticisms By Samuel Demeulemeester
  18. Monetary policy frameworks since Bretton Woods, across the world and its regions By Cobham, David
  19. L'imprévisibilité relative des forces économiques mondiales Une analyse du « futur du capitalisme » de Lester Thurow (1996) By Jacques Fontanel

  1. By: Laurent Gauthier (LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8 Vincennes-Saint-Denis)
    Abstract: Traditional cliometrics usually focus on economic data from the modern and contemporary periods, and do not have much to do with ancient history, mostly due to a lack of relevant data. Separately, the field of cliometrics and complexity, by looking at data in the light of complex systems analysis, gives access to a broader range of sources. Concentrating on the distinction between cliometrics and historical economics, we explore the epistemic gap between economics and history, which we reduce to two fundamental differences: the relationship to primary sources, and the presence of a nomothetic framework. Using this gap as a guide, we argue that a logical expansion of cliometrics and complexity, which do not have to be about the economy, but can operate on primary historical sources, could address a much broader set of periods, societies, and phenomena, leaning on microeconomic models. Redefining cliometrics in that way gives them access to the extensive corpora of historical material that digital humanities have produced. Working closer to primary sources contributes to bridging the epistemic gap between economics and history, and the systematic and explicit way in which cliometrics and complexity tackle data contributes to making historical research more scientific.
    Keywords: Cliometrics,historical economics,historical method
    Date: 2022–08–20
  2. By: Stephan Heblich; Stephen J. Redding; Hans-Joachim Voth
    Abstract: Did overseas slave-holding by Britons accelerate the Industrial Revolution? We provide theory and evidence on the contribution of slave wealth to Britain’s growth prior to 1835. We compare areas of Britain with high and low exposure to the colonial plantation economy, using granular data on wealth from compensation records. Before the major expansion of slave holding from the 1640s onwards, both types of area exhibited similar levels of economic activity. However, by the 1830s, slavery wealth is strongly correlated with economic development – slave-holding areas are less agricultural, closer to cotton mills, and have higher property wealth. We rationalize these findings using a dynamic spatial model, where slavery investment raises the return to capital accumulation, expanding production in capital-intensive sectors. To establish causality, we use arguably exogenous variation in slave mortality on the passage from Africa to the Indies, driven by weather shocks. We show that weather shocks influenced the continued involvement of ancestors in the slave trade; weather-induced slave mortality of slave-trading ancestors in each area is strongly predictive of slaveholding in 1833. Quantifying our model using the observed data, we find that Britain would have been substantially poorer and more agricultural in the absence of overseas slave wealth. Overall, our findings are consistent with the view that slavery wealth accelerated Britain’s industrial revolution.
    JEL: F60 J15 N63
    Date: 2022–09
  3. By: van der Heide, Arjen; Kohl, Sebastian
    Abstract: Contemporary capitalist societies use different institutions to manage economic risks. While different public welfare state and financial institutions (banks, capital markets) have been studied across coordinated and liberal market economies, this paper adds the private insurance sector to the study of countries' security arrangements, following up on Michel Albert's classical distinction between Alpine and Maritime insurance cultures. Building on extensive new insurance data collections (1880-2017) and institutional analysis, this paper corroborates the long-run historical existence of two worlds of private insurance. Maritime countries (USA, GBR, CAN) developed much bigger life and non-life insurance earlier, with no state-associated insurance enterprises and riskier investments steered towards financial markets. Alpine insurance (AUT, DEU, CHE), by contrast, was initially smaller, with strong state involvement, a significant reinsurance tradition and relatively heavy investments in mortgages and property, due to economic and financial backwardness. We argue that the larger and more "Maritime" the insurance sector, the more it made welfare states liberal and securities markets large. Insurance is thus a hidden factor for countries' varieties of capitalism and world of welfare. The recent convergence on the Maritime model, however, implies that the riskier and risk-individualizing type of private insurance has added to privatization and securitization trends everywhere.
    Keywords: financial development,historical comparison,insurance,varieties of capitalism,welfare,finanzielle Entwicklung,historischer Vergleich,Spielarten des Kapitalismus,Versicherungen,Wohlfahrtsstaat
    Date: 2022
  4. By: Price V. Fishback
    Abstract: The paper examines changes in wage and hour labor regulation between 1898 and 1938. Many see the 1905 Lochner Supreme Court decision striking down hours limits for men as the beginning of 30 years in which labor regulation was stymied by the doctrine of “freedom of contract.” That issue played a role but judges often weighed it against safety issues. As a result, hours limits for men in dangerous industries were found to be constitutional. The debates over minimum wages for women also centered on these issues. These laws passed muster in state supreme courts and initially at the U.S. Supreme Court. In 1923 a majority of Supreme Court judges emphasized freedom of contract in declaring a female minimum wage unconstitutional. Seeing close votes and substantial turnover of judges on the Supreme Court, many states continued promulgating advisory minimums and passed new laws. Ultimately, turnover on the Court and a renewed emphasis on the role of minimum wages in ensuring health and safety of women and children during the Depression led the Court to declare minimums for women constitutional. This opened the door for federal minimum wage legislation for all workers.
    JEL: J81 K31 N32 N42
    Date: 2022–09
  5. By: Albers, Thilo N. H. (HU Berlin); Kappner, Kalle (HU Berlin)
    Abstract: Historical city directories are rich sources of micro-geographic data. They provide information on the location of households and firms and their occupations and industries, respectively. We develop a generic algorithmic work flow that converts scans of them into geo- and status-referenced household- level data sets. Applying the work flow to our case study, the Berlin 1880 directory, adds idiosyncratic challenges that should make automation less attractive. Yet, employing an administrative benchmark data set on household counts, incomes, and income distributions across more than 200 census tracts, we show that semi-automatic referencing yields results very similar to those from labour-intensive manual referencing. Finally, we discuss potential applications in economic history and beyond.
    Keywords: city directories; data extraction; granular spatial data;
    Date: 2022–01–29
  6. By: Amirova, Iroda; Petrick, Martin; Djanibekov, Nodir
    Abstract: In Central Asia, community water governance institutions emerged and prevailed for a long time. By employing an analytical modelling approach using variants of the evolutionary Hawk-Dove game, we scrutinise three epochs' (pre-Tsarist, Tsarist and Soviet) coordination mechanisms and qualitatively compare them in the efficiency spectrum. We find that the pre-Tsarist community water governance setting, due to its synergetic and pluralistic aspects, was associated with higher efficiency than the Tsarist and Soviet periods' settings. The pre-Tsarist community arrangement linked irrigation duties with benefits. Our analytical model reveals how the Tsarist Russian regulation that replaced the election-sanctioning element with a de-facto system appointing the irrigation staff and paying them fixed wages corrupted the well-established pre-Tsarist decentralised water governance. We term this move the "Kaufman drift". Resulting inadequacies in the water governance could have been averted either by restoring the community mechanism's election-sanctioning attribute or else with an alternative approach such as privatising water resources. With the use of the "Krivoshein game," we produce an alternative scenario for the region where we envisage the potential consequences of the water privatisation. Modelling history might not disentangle the complex nature of water governance evolution fully, however, the heuristics we use in the analysis assist in guiding the diagnosis of the matter and its solution. This makes our study well-timed for contemporary Central Asia. The analyses assess current water management's chances to return to ancient principles of election-sanctioning and perspectives of private irrigation water rights.
    Keywords: Central-Asian water,self-governance,hierarchy,markets,evolution
    Date: 2022
  7. By: xue, qingmei; zan, luca
    Abstract: While oral history still has a marginal role in accounting literature in general, it has not been applied at all in relation to the history of Chinese accounting. Within broader research on accounting change in China, this paper uses oral history to investigate patterns of the career of accountants in China. We interviewed 21 retired accountants, aging from 60 to 90 at the time of the interview, asking them to share their professional experience in open and unstructured talk. We reconstruct individual experiences, which provides insights into the working lives of our interviewees. Unlike previous studies that only focus on influential informants, we investigate Chinese accounting changes as they emerge from the collective memory of everyday accountants. Taking a pluralist perspective, we collect non-archival data to illustrate the education and common elements in accounting career development. Our approach takes a ‘view from below’, underlining the limitations of top-down perspectives in most of the literature on accounting change in China. The findings contribute to our understanding of accounting changes in China and their social and economic impacts on the profession while providing interesting implications for oral history in accounting in general.
    Keywords: oral history; accounting profession; China; Chinese accounting
    JEL: M41 N35
    Date: 2022
  8. By: Pöge, Felix (Boston University)
    Abstract: The relationship between competition and innovation is difficult to disentangle, as exogenous variation in market structure is rare. The 1952 breakup of Germany's leading chemical company, IG Farben, represents such a disruption. After the Second World War, the Allies occupying Germany imposed the breakup because of IG Farben's importance for the German war economy instead of standard antitrust concerns. In technology areas where the breakup reduced concentration, patenting increased strongly, driven by domestic firms unrelated to IG Farben. An analysis of patent texts shows that an increased propensity to patent does not drive the effect. Descriptively, IG Farben's successors increased their patenting activities as well, and their patenting specialized relative to the pre-breakup period. The results are consistent with a breakup-induced innovation increase by the IG Farben successors, which then spilled over to the wider chemical industry.
    Keywords: innovation, competition, merger, antitrust, IG Farben
    JEL: O31 L44 N44
    Date: 2022–08
  9. By: Laurent Gauthier (LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8 Vincennes-Saint-Denis)
    Abstract: The application of economic approaches, in particular game theory, to literature (Brams 2011) or to historical narratives (Mongin 2018) has seen some development over time but has generally remained an off-the-run endeavour, one important issue being that they may reflect the authors' interpretation more than the underlying texts. A loosely related body of research, focused on quantitative approaches to character relations in literature, has shown their complexity but not provided any theoretical framework (Kenna, MacCarron, and MacCarron 2017; Labatut and Bost 2019). We aim to bridge this gap by focusing on decision in drama as devices for writers to produce works of optimal interest to their audience. We use the apparatus of psychological game theory (Gilboa and Schmeidler 1988; Battigalli and Dufwenberg 2020) in order to represent the tension between surprise and convention in literary work, and obtain certain theoretical optimal patterns. We test this model on the earliest plays available, from the Greek theater of the 5th century BC, which were produced in a highly competitive environment. We show that the frequency of refusals and of important decisions, the unpredictability of these important decisions, the distribution of decisions among characters, and of the timing between actions, all behave in a manner consistent with the model.
    Keywords: Ancient Greece,psychological game theory,games and literature,Theater Studies
    Date: 2022–08–20
  10. By: Michael McLure (Economics Department, Business School, The University of Western Australia)
    Abstract: In this essay, I investigate Pareto’s understanding of classical political economy as a science, with particular emphasis on the themes of surplus, value and the cost of production. For those themes, this study reveals that Pareto considered substantive economic knowledge to have developed asymptotically. In reaching that view, and in emphasising the substantive continuity in the progress of economics from classical political economy to the economics of the Lausanne school, I attempt to clarify why Francesco Ferrara’s critical assessment of, and positive contribution to, classical political economy was important for Pareto’s appreciation of the classical approach.
    Date: 2022
  11. By: Barkai, Simcha
    Abstract: The U.S. labor share has clearly been declining since the early 1980s. This does not depend on whether or not we capitalise intellectual property products. Koh, Santaeulàlia-Llopis and Zheng (2020) approximate the labor share by a single linear time trend over the entire period of 1929{2019. This period includes a long period of time over which the labor share is known to be mostly stable and a shorter period of time over which the labor share is known to decline. Once we separate out the period starting in the 1980s we recover the decline in the labor share.
    Date: 2021
  12. By: Hoffstadt, Martin
    Abstract: Borders are often associated with low economic activity. A popular explanation for this phenomenon argues that borders cut market access. But as a growing amount of literature demonstrates that border effects persist after the removal of formal barriers, the forces behind low economic activity near borders remain unclear. This paper develops a new methodology to measure the market access of 16,596 settlements in the Socialist Federal Republic of Yugoslavia in 1965, right before the hardening of Yugoslavia’s federal borders. Based on elevation, rivers, roads and the Dijkstra algorithm, this methodology identifies 4,682 settlements whose commuting spheres crossed Yugoslavia’s federal borders. Using panel data for the 1948-1991 period, a difference-in-differences estimation identifies that the settlements that lost access to their nearest town due to hardened federal borders experienced strong decline in population growth following the reforms. Robustness checks demonstrate that depopulation occurred when settlements lost access to towns of significant size. This effect appears regardless of ethnicity and history. Instead, depopulation occurred in the absence of a nearby alternative town in the same federal unit.
    Keywords: federal borders; market access; population growth; Yugoslavia
    JEL: H77 N44
    Date: 2022–09
  13. By: Albers, Thilo N. H. (HU Berlin and Lund University); Jerven, Morten (Norwegian University of Life Sciences); Suesse, Marvin (Trinity College Dublin)
    Abstract: What is the level of state capacity in developing countries today, and what have been its drivers over the past century? We construct a comprehensive new dataset of tax and revenue collection for 46 African polities from 1900 to 2015. Descriptive analysis shows that many polities in Africa have been characterized by strong growth in fiscal capacity. As a next step, we explain this growth using a fixed-effects long-run panel setting. The results show that canonical state-building factors such as democratic institutions and interstate warfare can increase revenue collection, while government turnover reduces it. Access to external credit and foreign aid are even more important, and both negatively affect fiscal capacity. In addition, access to external revenues, especially from commodity exports and debt, moderates the operation of canonical state-building factors such as democracy and conflict. These insights add important nuances to established theories of state building. Not only are states in Africa more capable than hitherto thought, but the international environment shapes their capacity, both directly and indirectly.
    Keywords: fiscal capacity; Africa; statehood; resources; external finance;
    Date: 2022–01–29
  14. By: Jacobus Nel (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Rangan Gupta (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Mark E. Wohar (College of Business Administration, University of Nebraska at Omaha, 6708 Pine Street, Omaha, NE 68182, USA); Christian Pierdzioch (Department of Economics, Helmut Schmidt University, Holstenhofweg 85, P.O.B. 700822, 22008 Hamburg, Germany)
    Abstract: We analyze whether metrics of climate risks, as captured primarily by changes in temperature anomaly and its stochastic volatility, can predict returns and volatility of 25 commodities, covering the overall historical period of 1258 to 2021. To this end, we apply a higher-order nonparametric causality-in-quantiles test to not only uncover potential predictability in the entire conditional distribution of commodity returns and volatility, but also to account for nonlinearity and structural breaks which exist between commodity returns and the metrics of climate risks. We find that, unlike in the misspecified linear Granger causality tests, climate risks do predict commodity returns and volatility, though the impact on the latter is stronger, in terms of the coverage of the conditional distribution. Insights from our findings can benefit academics, investors, and policymakers in their decision-making.
    Keywords: Climate risks, Commodities, Returns and volatility predictions, Higher-order nonparametric causality-in-quantiles test
    JEL: C22 C53 Q02 Q54
    Date: 2022–09
  15. By: Ann Hipp; Udo Ludwig; Jutta Günther
    Abstract: State socialism failed due to its inner contradictions. Despite huge investments in R&D-intensive industries, the soviet-type economy collapsed in 1989 in Eastern Germany, and the market-based system in the Western part prevailed. We compare the two parallel existing innovation systems in Germany to shed light on the success and failure of the state-led innovation system. Based on newly created indicators from archive data we show in a natural experiment setting that modernization efforts in relation to GDP was much bigger in the socialist as compared to the market economy in the last decades.These achievements, however, could not fully unfold in favor of economic growth due to obstacles related to the setting of research priorities, innovation incentives, and knowledge flow.
    Keywords: Comparative economic systems, natural experiment, innovation system, Germany
    JEL: O11 O31 N94
    Date: 2021–12
  16. By: Lach, Saul (Hebrew University, Jerusalem); Sicherman, Nachum (Columbia University)
    Abstract: We use data on international migration to study the causal effect of gender discrimination on the sex-ratio of immigrants to the U.S. during the 1970-2019 period. We measure gender discrimination in the countries of origin using the Women, Business, and the Law (WBL) index, which measures legal differences in access to economic opportunities between men and women. Controlling for country fixed effects and regional time trends, as well as for potentially confounding factors, we find that a one standard deviation increase in the WBL index in a country of origin (a decrease in gender discrimination) decreases the share of women immigrating to the U.S. from that country by 1.7 percentage points, on average. This large effect of gender discrimination on the sex ratio of immigrants is robust to specification changes, and is not significant when examining senior citizens.
    Keywords: gender discrimination, sex-ratios, international migration
    JEL: F22 J16
    Date: 2022–08
  17. By: Samuel Demeulemeester (TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The 2007-2008 Global Financial Crisis has brought renewed interest in the 100% Money reform idea of the 1930s', the essence of which was to require 100% reserves on transaction deposits so as separate money issuance from bank loans. A modern version of this idea, the Sovereign Money proposal, has been much discussed in recent years. Some heterodox economists have harshly criticized Sovereign Money advocates for lacking a clear analytical framework, as well as for disregarding "established" literature on such topics as the causality relationship between money and prices, the accommodation of business needs, financial instability, or the seigniorage privilege. The literature on 100% Money, however, appears to have been largely overlooked by both sides of the debate-even though, as this article shows, it could have brought valuable theoretical insight to the discussion. Building upon the arguments of the 100% Money writers, this paper concludes that many of the criticisms addressed to the Sovereign Money proposal are either inconclusive or misplaced.
    Keywords: 100% money,Sovereign Money,full reserve banking,endogenous money,financial instability B26,E30,E42
    Date: 2022–08–15
  18. By: Cobham, David
    Abstract: The Comprehensive Monetary Policy Framework (CMPF) project, which considers de jure and de facto, domestic (money, inflation) and external (exchange rate), monetary policy targets, has now classified 179 countries/currency areas from 1974 to 2017. This means that it is now possible to track the evolution of monetary policy frameworks across the world and its regions. This paper outlines the methodology of the classification, presents the broad trends at global, regional and sub-regional levels, discusses the economic performance associated with different frameworks and the policy implications thereof, and identifies scope for further work.
    Keywords: monetary policy framework; exchange rates; inflation targeting; inflation; economic growth
    JEL: E42 E52 E58 F33
    Date: 2022–09–07
  19. By: Jacques Fontanel (CESICE - Centre d'études sur la sécurité internationale et les coopérations européennes - UGA - Université Grenoble Alpes - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UGA - Université Grenoble Alpes)
    Abstract: Forecasting is always difficult, especially the future. Economists have sought to develop a scientific infrastructure designed to improve the productive performance and living standards of consumers and citizens. However, this body of knowledge hardly allows for the development of effective instruments to fulfill these objectives. Contrary to Fukuyama's idea of the "end of history", Lester Thurow has presented an outline of the future evolution of a capitalism whose strength as well as precariousness he measures. His analysis highlights the inadequacies of capitalism, the absence of a competing economic system, the emergence of a multipolar world without a hegemonic power, the development of regional blocs, the shortcomings of the market, the development of inequalities, the rise of the grey matter industry, the threat of demographics, the crisis of work, and economic and political instability. Several elements of analysis remain relevant, but three essential elements of the political-economic situation in the world today are unfortunately absent, such as the permanence of military warfare, especially in developed countries, and the conflict of world leadership between the United States and China. Finally, the issue of global warming and pollution is never mentioned.
    Abstract: Il est toujours difficile de prévoir, surtout l'avenir. Les économistes ont cherché à élaborer une infrastructure scientifique destinée à améliorer les performances productives et le niveau de vie des consommateurs et citoyens. Cependant, l'ensemble de ces connaissances ne permettent guère de développer des instruments efficaces pour remplir ces objectifs. En contestation de l'idée de Fukuyama sur la « fin de l'histoire », Lester Thurow a présenté les grandes lignes des évolutions à venir d'un capitalisme dont il mesure aussi bien la force que la précarité. Son analyse met en lumière les insuffisances du capitalisme, l'absence d'un système économique concurrent, l'apparition d'un monde multipolaire sans puissance hégémonique, le développement des blocs régionaux, les défauts du marché, le développement des inégalités, l'essor de l'industrie de la matière grise, la menace de la démographie, la crise du travail, et l'instabilité économique et politique. Plusieurs éléments d'analyse restent d'actualité, mais trois éléments essentiels de la situation politico-économique du monde d'aujourd'hui sont malheureusement absents, comme la permanence des actions de guerres militaires, notamment dans les pays développés, et le conflit de leadership mondial entre les Etats-Unis et la Chine. Enfin, la question du réchauffement climatique et de la pollution n'est jamais évoquée.
    Keywords: Capitalism,demography,hegemony,social inequalities,wars,economic wars,global warming,Capitalisme,démographie,hégémonie,inégalités sociales,guerres,guerres économiques,réchauffement climatique.
    Date: 2022–08–19

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