nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2023‒08‒28
thirty-two papers chosen by

  1. Tracing Economic Policies to Ancient Indian Economic Ethics By Satish Y. Deodhar
  2. Fiscal Dominance, Monetary Policy and Exchange Rates: Lessons from Early-Modern Venice By Donato Masciandaro; Davide Romelli; Stefano Ugolini
  3. Black empowerment and white mobilization: The effects of the Voting Rights Act By Andrea Bernini; Giovanni Facchini; Marco Tabellini; Cecilia Testa
  4. Edo Koban 60-me By Atsuko Suzuki
  5. Origins of Latin American inequality By Eslava, Francisco; Valencia Caicedo, Felipe
  6. Panic politics on the US West Coast By Nicolas Berman; Björn Brey; Jérémy Laurent-Lucchetti
  7. Stabilization Policy: A Turbulent Journey Through Time By Oliver Landmann
  8. Why did agriculture’s share of Australian GDP not decline for a century? By Kym Anderson
  9. The Pillars of Shared Prosperity: Insights From State versus Elite Extraction And From a New Instrument By Andres Irarrazaval
  10. Education and Later-Life Mortality: Evidence from a School Reform in Japan By Masuda, Kazuya; Shigeoka, Hitoshi
  11. Quantifying the Influence of Climate on Human Mind and Culture: Evidence from Visual Art By Shuhei Kitamura
  12. Analyzing biases in genealogies using demographic microsimulation By Liliana P. Calderón Bernal; Diego Alburez-Gutierrez; Emilio Zagheni
  13. Entrepreneurship in China's Structural Transitions: Network Expansion and Overhang By Ruochen Dai; Dilip Mookherjee; Kaivan Munshi; Xiaobo Zhang
  14. The historical social cost of fossil and industrial CO2 emissions By Rickels, Wilfried; Meier, Felix; Quaas, Martin
  15. Imputation der rechtszensierten Tagesentgelte für die BeH By Drechsler, Jörg; Ludsteck, Johannes; Moczall, Andreas
  16. Testing hysteresis for the US and UK involuntary part-time employment By Congregado, Emilio; Garcia-Clemente, Javier; Rubino, Nicola; Vilchez, Inmaculada
  17. Migration and trust: Evidence on assimilation from internal migrants By Diego Marino Fages
  18. On the Origins of the Federal Reserve System and Its Structure By Owen F. Humpage
  19. The Gift of Sanctions: An Analysis of Assessments of the Russian Economy, 2022 to 2023 By James K. Galbraith
  20. How big is the “lemons” problem? Historical evidence from French wines By Pierre Mérel; Ariel Ortiz-Bobea; Emmanuel Paroissien
  21. What inflation disrupts? A comment on “Inflation – Pragmatics of money and inflationary sensoria” by Federico Neiburg By Jeanne Lazarus
  22. The Pursuit of Shareholder Value: Cisco's Transformation from Innovation to Financialization By Marie Carpenter; William Lazonick
  23. Educational expansion and class mobility trends in Brazil By Costa Ribeiro, Carlos A.
  24. A Trilateral Approach: Community-based Europe, Việt Nam, and ASEAN. From Strategic Dilemma to Đổi Mới Apotheosis (1976-1995) By Maxime Ghazarian
  25. Anti-austerity riots in late developing states: evidence from the 1977 Egyptian Bread Intifada By Ketchley, Neil; Eibl, Ferdinand; Gunning, Jeroen
  26. Consequences of a Shortage and Rationing: Evidence from a Pediatric Vaccine By Eli B. Liebman; Emily C. Lawler; Abe Dunn; David B. Ridley
  27. Spatial wage inequality in North America and Western Europe: Changes between and within local labour markets 1975-2019 By Bauluz, Luis; Bukowski, P.; Fransham, M.; Lee, A.; López Forero, M.; Novokmet, Filip; Breau, S.; Lee, Neil; Malgouyres, Clément; Schularick, Moritz; Verdugo, Gregory
  28. Constitutions and Order: A Theory and Evidence from Colombia and the United States By Leopoldo Fergusson; Javier Mejia; James A. Robinson; Santiago Torres
  29. Gender-Biased Technological Change: Milking Machines and the Exodus of Women from Farming By Ager, Philipp; Goñi, Marc; Salvanes, Kjell G.
  30. Compte rendu de lecture. La dette publique. Ses mécanismes, ses enjeux, ses controverses, de Bernard Blancheton, Paris, Dunod, 2022 (189 pages) By François Facchini
  31. When is the fiscal multiplier high? A comparison of four business cycle phases By Berge, Travis; De Ridder, Maarten; De Ridder, Maarten; Pfajfar, Damjan
  32. Effect of the Conserving Base Requirement on the Response to the Set-Aside Program in the Great Plains By Miller, Thomas A.; Vermeer, James

  1. By: Satish Y. Deodhar
    Abstract: Ancient Indian Treatises, History of Economic Thought, Vedas, Upanishads, Mahabharata, Ramayana, Arthashastra, Shukranitisara, Narada, Bhishma, Kautilya, Shukracharya, Science of Political Economy, Sanskrit.
    Abstract: Science without history is like a man without memory. The colossal history of India stores many ideas on economic ethics and public policy which have been forgotten in the course of time. This paper is an attempt to bring to the fore, contributions from ancient Indian treatises. In this context, the paper briefly summarizes alternative economic ideas such as communism, capitalism, and the holistic approach of ancient Indian writings. I discuss the idea of the welfare brick for an individual consisting of three dimensions – Purusharthas, Ashramas, and Varnas. Given the contours of the welfare brick, next I discuss the concept of state and its economic policies, followed by coverage of markets, prices, interest rates, and credit. Thereafter, I delve into treatment of land, property rights, and guilds and unions, with special attention to labour relations covered in Arthashastra and Shukranitisara. The penultimate section summarises the economic advice author of Shukrantisara offers to the head of a household. Finally, in concluding comments, I bring out the relevance of ancient Indian writings for modern times –both for pedagogy and economic policies.
    Date: 2023–08–10
  2. By: Donato Masciandaro; Davide Romelli; Stefano Ugolini
    Abstract: The impact of fiscal dominance on exchange rates has been relatively overlooked by the literature. We focus on an early unique experiment of freely floating State-issued money, implemented in Venice from 1619 to 1666. Building on a new hand-collected database from a previously unused archival source, we show that despite the Venetian government’s reputation for fiscal prudence, the external value of the ducat was highly sensitive, and increasingly so, to episodes of automatic government deficit monetization through the Banco del Giro during the shocks of 1630 (outbreak of the bubonic plague) and 1648-50 (escalation of the Cretan War).
    JEL: F31 E63 N33 N43
    Date: 2023
  3. By: Andrea Bernini; Giovanni Facchini; Marco Tabellini; Cecilia Testa
    Abstract: The 1965 Voting Rights Act (VRA) paved the road to Black empowerment. How did southern whites respond? Leveraging newly digitized data on county-level voter registration rates by race between 1956 and 1980, and exploiting pre-determined variation in exposure to the federal intervention, we document that the VRA increases both Black and white political participation. Consistent with the VRA triggering counter mobilization, the surge in white registrations is concentrated where Black political empowerment is more tangible and salient due to the election of African Americans in county commissions. Additional analysis suggests that the VRA has long-lasting negative effects on whites’ racial attitudes.
    Keywords: Civil Rights, Race, Voting Behaviour, Enfranchisement
    Date: 2023
  4. By: Atsuko Suzuki (Graduate School of Economics, Osaka University)
    Abstract: The title of this study, "Edo Koban 60-me" means the following: in "Edo, " one ryo (a unit of gold currency) of "Koban" (a middle-sized oval gold coin) was equal to "60-me" (me: the abbreviation of a unit of silver currency, momme, in round numbers) as the fixed exchange rate. This is a phenomenon seen only in the Edo commodity market, and the fixed exchange rate was used only when Edo citizens bought silver-denominated commodities from Kamigata (Osaka and Kyoto area) in gold coins. Osaka and Edo were the two major markets in early modern Japan. Osaka was the center of commerce, and exported large volumes of goods mainly to Edo. Edo was the political center and the largest consumer of goods from the Kamigata region. The early modern monetary system was a bimetallism of gold and silver coins, with copper coins used as small denominations. In Osaka, the pricing of goods and settlement of accounts was conducted in silver denomination. Contrarily, in Edo, transactions were handled in gold and copper coins. Gold and silver had fluctuating market prices. The shogunate set the rate at 60 momme per one ryo in 1700, but the Edo commodity market was the only one that adhered to this rate. The Kamigata market and the Edo financial market continued with the existing fluctuating prices. A unique phenomenon occurred. Kamigata merchants manipulated silver prices before shipping goods to Edo. In the mid-Edo period, silver usually had a high price, and the Edo selling price had already caused a price spike in Osaka before exporting. Thus, "Edo Koban 60-me" was a sociocultural phenomenon that could not have been created unless all the following conditions were met: a fixed exchange rate in the Edo commodity market, floating market prices in the Kamigata market, transactions in gold denomination in Edo, settlements in silver denomination in Kamigata, goods shipped to Edo being denominated in silver, and the pricing method in futures of Kamigata merchants. These historical commercial facts are readily apparent in the documents of merchant families in the early modern period, and are also discussed in early modern books. Even ukiyoe woodblock prints depict "Koban 60-me" in scenes of buying and selling inside Edo stores. However, this has not become common academic knowledge in modern Japan, and is hardly known to the general public even though the Japanese love their own history. For instance, in the academic world, the current understanding is that, despite the shogunate's effort to fix an exchange rate between gold and silver, in effect, they floated against each other in all markets. The specific circumstances of the Edo market are not recognized. Thus, the understanding of East-West trade also assumes only a unitary floating exchange rate; that when silver was high, the purchasing power of gold would decline, leading to a decrease in Edo's imports, which would, in turn, increase demand for the Edo market and lead to higher prices. This does not recognize that prices had been raised prior to exportation. The purpose of this study is to incorporate the "Edo Koban 60-me" phenomenon into the common knowledge of early modern Japanese history.
    Keywords: history of money, commodity money, early modern Japan, fixed and floating exchange rates, Edo and Osaka.
    JEL: D46 E31 K42 N15 Z13
    Date: 2022–10
  5. By: Eslava, Francisco; Valencia Caicedo, Felipe
    Abstract: How deep are the roots of Latin America’s economic inequalities? In this chapter we survey both the history and the literature about the region’s extreme economic disparities, focusing on the most recent academic contributions. We begin by documenting the broad patterns of national and sub-national differences in income and inequality, building on the seminal contributions of Engerman and Sokoloff (2000; 2002, 2005) and aiming to capture different dimensions of inequality. We then proceed thematically, providing empirical evidence and summarizing the key recent studies on colonial institutions, slavery, land reform, education and the role of elites. Finally, we conduct a “replication” exercise with some seminal papers in the literature, extending their economic results to include different measures of inequality as outcomes.
    Keywords: inequality; Latin America; history; colonization; persistence; slavery; land reform; education; elites
    JEL: J1 N0
    Date: 2023–07–01
  6. By: Nicolas Berman; Björn Brey; Jérémy Laurent-Lucchetti
    Abstract: This study shows that military attacks —through fear and panic— can distort political behavior and create a “conservative shift” in subsequent elections. Using the distance to the Ellwood bombardment in 1942, a shelling of civilian installations on the US mainland during WW2 which caused minimal damage but that created a large wave of panic, we find that support for Republican candidates increased in subsequent Gubernatorial, Presidential and House elections in Californian counties in the vicinity of the incident. Interestingly, the effect appears to persist for a long time, even after WW2 ended. Using a large corpus of articles from Californian newspapers and text analysis, we provide evidence that the event led to a persistent shift in conservative beliefs of local communities. We conclude that attacks, through their psychological effects, might have long-run consequences through preference-shifting and changes in voting behaviors.
    Keywords: attack, bombing, elections, conservatism, World War II
    Date: 2023
  7. By: Oliver Landmann (Department of International Economic Policy, University of Freiburg)
    Abstract: The theory and practice of stabilization policy has taken many turns as it evolved over the past century, oscillating between high hopes and deep skepticism regarding the capacity – and desirability - of governments taking responsibility for macroeconomic stability. This paper reviews the turbulent history of stabilization policy, highlighting the close interaction between events, policies, and ideas. The focus is on the single most debated issue in this history: the resilience of a market economy in the face of macroeconomic shocks. Views on this question have been shaped by experience, theory and ideology to varying degrees.
    Keywords: Stabilization Policy, Macroeconomics, Fiscal Policy, Monetary Policy, History of Economic Thought
    JEL: B10 B20 E00 E32 E50 E62
    Date: 2022–09
  8. By: Kym Anderson
    Abstract: The agricultural sector’s share of GDP in growing economies typically declines but, for a century from the early 1850s, Australia’s did not. Drawing on recent structural transformation literature, this paper seeks explanations for this unusual phenomenon, which is all the more striking because agriculture’s share of employment continued to decline throughout and growth in manufacturing was being stimulated by tariff protection from imports. Several factors contributed, including a huge land frontier that took more than a century for settlers to explore, rapid declines in initially crippling domestic and ocean trade costs for farm products, the absence of a need to do any processing of the two main exports during that period (gold and wool), and innovations by farmers and via a strong public agricultural R&D system that contributed to farm labour productivity nearly doubling over those ten decades. The ban on iron ore exports from 1938 and low export prices for fuels, minerals and metals during the two world wars and in the intervening decades also contributed.
    Keywords: agricultural development, farm productivity growth, trade costs, mining booms, manufacturing protection
    JEL: F13 F63 N47 O13 Q17
    Date: 2023
  9. By: Andres Irarrazaval
    Abstract: What are the origins of shared prosperity? By synthesizing the literature on development, institutions and state capacity, this paper develops a new instrumental variable (IV) approach to identify the pivotal mechanisms explaining cross-country income and inequality differences. Exploiting the interaction between climate zones (using latitude) and native state history faced by European colonizers as an IV, this research explains 70-80% of colonial settlements in 1900 and subsequent institutional and economic development. This novel IV strategy also addresses the flaws of previous attempts, suffering from measurement error, weak instrument bias, and narrow research frameworks. That is, to identify better the causality chains going from colonial institutions to current outcomes. The results support the neoinstitutionalists' thesis, stressing executive checks for development (by checking elite capture), but challenge the key role given to market over state institutions. Prosperity and equality appear chiefly driven by state capacity, rather than by market rules or property rights. Across Africa, Latin America, and Asia, despite convergence to more "pro-market" and "inclusive" economic systems in the 20th century, both underdevelopment and high elite extraction persist via a state capacity trap. In the Periphery, persistently limited executive checks have undermined forming the state’s credible commitments to public probity necessary for building tax capacity. Then, this limits these nations' ability to (I) support markets and private sector development via an ample public goods provision, and (II) check elite extraction via progressive taxes and transfers ensuring significant redistribution. These stand out as the two pillars of shared prosperity.
    Date: 2023–08
  10. By: Masuda, Kazuya (Hitotsubashi University); Shigeoka, Hitoshi (Simon Fraser University)
    Abstract: We examine the mortality effects of a 1947 school reform in Japan, which extended compulsory schooling from primary to secondary school by as much as 3 years. The abolition of secondary school fees also indicates that those affected by the reform likely came from disadvantaged families who could have benefited the most from schooling. Even in this relatively favorable setting, we fail to find that the reform improved later-life mortality up to the age of 87 years, although it significantly increased years of schooling. This finding suggests limited health returns to schooling at the lower level of educational attainment.
    Keywords: education, later-life mortality, secondary school, Japan, regression discontinuity design
    JEL: H52 I12 I21 I28
    Date: 2023–07
  11. By: Shuhei Kitamura
    Abstract: This paper examines the influence of climate change on the human mind and culture from the 13th century to the 21st century. By quantitatively analyzing 100, 000 paintings and the biological data of over 2, 000 artists, an interesting U-shaped pattern in the lightness of paintings was found, which correlated with trends in global temperature. Event study analysis revealed that when an artist is subjected to a high-temperature shock, their paintings become brighter in later periods. Moreover, the effects are more pronounced in art genres that rely less on real things and more on the artist's imagination, indicating the influence of artists' minds. Overall, this study demonstrates the significant and enduring influence of climate on the human mind and culture over centuries.
    Date: 2023–07
  12. By: Liliana P. Calderón Bernal (Max Planck Institute for Demographic Research, Rostock, Germany); Diego Alburez-Gutierrez (Max Planck Institute for Demographic Research, Rostock, Germany); Emilio Zagheni (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Genealogies are promising sources for addressing many questions in historical and kinship demography. So far, an incomplete understanding of the biases that affect their representativeness has hindered their full exploitation. Here, we report on a series of experiments on synthetic populations aimed at understanding how different sources of bias in ascendant genealogies can affect the accuracy of demographic estimates. We use the SOCSIM demographic microsimulation program and data for Sweden from the Human Fertility Collection (1751-1890), the Human Fertility Database (1891-2022), and the Human Mortality Database (1751-2022). We analyze three sources of bias: selection in direct lineages, incomplete reconstruction of family trees, and missing information on some subpopulations. We evaluate their effect by comparing common demographic measures estimated from ‘perfectly-recorded’ and ‘bias-infused’ synthetic populations. Our results show that including only direct lineages leads to an underestimation of Total Fertility Rate (TFR) (c.a. −39% or 0.61 times lower) before the onset of fertility decline, and an overestimation of life expectancy at birth (e0) over the first two centuries (c.a. +42.2%). However, after adding selected collateral kin, the accuracy of the estimates improves: TFR is underestimated by only −0.11% during the first century and e0 is overestimated by only +1.5% over the whole period.
    JEL: J1 Z0
    Date: 2023
  13. By: Ruochen Dai; Dilip Mookherjee; Kaivan Munshi; Xiaobo Zhang
    Abstract: This research examines the determinants of entrepreneurship in the initial transition from agriculture to industrial production and the subsequent transition to higher value exporting in China. Using data covering the universe of registered firms over the 1994-2009 period, we find that individuals born in rural counties with higher agricultural productivity and population density had a greater propensity to enter domestic production in the first transition, but that this association was reversed in the second transition to exporting. This is despite the fact that revenues (and productivity) were increasing more steeply over time for firms drawn from denser birth counties in both activities. The model that we develop to reconcile these facts incorporates a productivity enhancing role for hometown (birth county) networks. We provide causal evidence, using shift-share instruments, that these networks of firms were active and that more densely populated rural counties gave rise to networks that were more effective at increasing the revenues of their members, both in domestic production and exporting. While this generated faster transition in the first stage, the incumbent (more successful) domestic networks drawn from denser counties created a disincentive to subsequently enter exporting. Our analysis identifies a novel dynamic inefficiency that could arise in any developing economy where (overlapping) networks are active.
    JEL: O11 O12 O14
    Date: 2023–07
  14. By: Rickels, Wilfried; Meier, Felix; Quaas, Martin
    Abstract: Past CO 2 emissions have been causing social costs and continue to reduce wealth in the future. Countries differ considerably in their amounts and time profiles of past CO 2 emissions. Here we calibrate an integrated assessment model on past economic and climate development to estimate the historical time series of social costs of carbon and to assess how much individual countries have reduced global wealth by their fossil and industrial-process CO 2 emissions from 1950 to 2018. Historical social costs of carbon quantify the long-lasting wealth reduction by past CO 2 emissions, which we term ‘climate wealth borrowing’, as economic output has been generated at the expense of future climate damages. We find that the United States and China have been responsible for the largest shares of global climate wealth borrowing since 1950, while the per-capita pattern is quite different.
    Date: 2023
  15. By: Drechsler, Jörg (IAB); Ludsteck, Johannes (IAB); Moczall, Andreas (IAB)
    Abstract: "This method report describes the imputation of right-censored daily wages in the IAB Beschäftigtenhistorik (BeH, IAB employment history data set) and provides information and hints for users of the imputed variable." (Author's abstract, IAB-Doku) ((en))
    Keywords: Bundesrepublik Deutschland ; IAB-Open-Access-Publikation ; Datenaufbereitung ; IAB-Beschäftigtenhistorik ; Imputationsverfahren ; Lohnhöhe ; Regression ; Schätzung
    Date: 2023–07–07
  16. By: Congregado, Emilio; Garcia-Clemente, Javier; Rubino, Nicola; Vilchez, Inmaculada
    Abstract: In this paper we test the persistence of involuntary part-time employment, making use of large historical series for the US and UK. To evaluate the robustness of our results a comprehensive macro-econometric approach, a battery of panel and time series unit root/stationarity tests were performed, also allowing for flexible specifications as fractional integration and structural breaks in the series. Our results confirm that underemployment in both countries has not returned to its pre-recession levels providing robust evidence about the existence of a long memory process in the involuntary part-time employment and a structural break in the mean of the series in the Great Recession surroundings. Importantly, the two phenomena, identified by a sudden deterministic break in the levels of the models employed and by a unit root process of order one or higher, coexist an interact together.
    Keywords: Involuntary part-time, underemployment, long-memory hysteresis, persistence, structural breaks
    JEL: C22 E24 J21
    Date: 2023–07–27
  17. By: Diego Marino Fages
    Abstract: I study whether internal migrants assimilate culturally to the locals. Investigating this question with observational data has been challenging because it requires disentangling assimilation from sorting and because data on immigrants before migrating is typically not available. I overcome this challenge by studying the Swiss context, which provides an ideal setting for two reasons. First, as a result of its history, Switzerland presents substantial cultural differences between its regions. Second, the Swiss Household Panel tracks individuals for a long period before and after they move. I exploit these two features to compare early and late migrants in a difference-in-difference framework. I focus specifically on trust in strangers, one of the most important components of culture and which has been shown to predict growth and other desirable economic, social and political outcomes. I find a statistically and economically significant evidence on assimilation of migrants moving to higher and lower trust cantons, and this assimilation starts in the first few years. Finally, using the Sorted Effects Method, I find that assimilation is driven by the youngest immigrants, which is in line with the impressionable years hypothesis in psychology.
    Keywords: Trust, Assimilation, Migration, Switzerland, Impressionable years hypothesis
    Date: 2023
  18. By: Owen F. Humpage
    Abstract: The creation of the Federal Reserve System ultimately stemmed from fundamental changes in the banking industry that heightened the risks associated with shifts in the public’s liquidity preferences and that created an atmosphere of distrust between the small, traditional, country banks and the large, transforming, Wall Street banks. The severity of the Panic of 1907 became the proximate factor in the Federal Reserve’s formation. The panic, which the New York Clearing House’s slow, discriminative, and insufficient response characterized, gave credence to concerns of growing financial risks and invigorated calls for reform. The Federal Reserve’s unique structure reflects compromises reached in attempts to dampen the risks in the banking industry while easing the distrust and fears of dominance among its various stakeholders.
    Keywords: Inelastic/Elastic Currency; New York Clearing House; Reserve pyramiding; Panic of 1907; Aldrich Plan; Federal Reserve Act; Reserve Bank Organization Committee
    JEL: E58 N20
    Date: 2023–08–02
  19. By: James K. Galbraith (The University of Texas at Austin)
    Abstract: This essay analyzes a few prominent Western assessments, both official and private, of the effect of sanctions on the Russian economy and war effort. It seeks to understand the main goals of sanctions, alongside bases of fact and causal inference that underpin the consensus view that sanctions have been highly effective so far. Such understanding may then help to clarify the relationship between claims made by economist-observers outside Russia and those emerging from sources inside Russia - notably from economists associated with the Russian Academy of Sciences (RAS) - which draw sharply different inferences from the same facts. We conclude that when applied to a large, resource-rich, technically proficient economy, after a period of shock and adjustments, sanctions are isomorphic to a strict policy of trade protection, industrial policy, and capital controls. These are policies that the Russian government could not plausibly have implemented, even in 2022, on its own initiative.
    Keywords: Sanctions, Russia
    JEL: F51
    Date: 2023–04–10
  20. By: Pierre Mérel (UC Davis - University of California [Davis] - UC - University of California); Ariel Ortiz-Bobea (Cornell University [New York]); Emmanuel Paroissien (Université Paris-Saclay, INRAE, UR ALISS)
    Abstract: This paper provides empirical evidence on the welfare losses associated with asymmetric information about product quality in a competitive market. When consumers cannot observe product characteristics at the time of purchase, atomistic producers have no incentive to supply costly quality. We compare wine prices across administrative districts around the enactment of historic regulations aimed at certifying the quality of more than 250 French appellation wines to identify welfare losses from asymmetric information. We estimate that these losses amount to more than 7% of total market value, suggesting an important role for credible certification schemes.
    Keywords: Asymmetric information, Adverse selection, Quality uncertainty, Welfare, Wine appellation
    Date: 2021–09
  21. By: Jeanne Lazarus (CSO - Centre de sociologie des organisations (Sciences Po, CNRS) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)
    Keywords: Inflation, poverty
    Date: 2023
  22. By: Marie Carpenter (Institut Mines-Telecom Business School); William Lazonick (The Academic-Industry Research Network)
    Abstract: Once the global leader in telecommunication systems and the Internet, over the past two decades the United States has fallen behind global competitors, and in particular China, in mobile communication infrastructure specifically 5G and Internet of Things (IoT). This national failure, with the socioeconomic and geopolitical tensions that it creates, is not due to a lack of US government investment in the knowledge required for the mobility revolution. Nor is it because of a dearth of domestic demand for the equipment, devices, and applications that can make use of this infrastructure. Rather, the problem is the dereliction of key US-based business corporations to take the lead in making the investments in organizational learning required to generate cutting-edge communication-infrastructure products. No company in the United States exemplifies this deficiency more than Cisco Systems, the business corporation founded in Silicon Valley in 1984 that had explosive growth in the 1990s to become the foremost global enterprise-networking equipment producer in the Internet revolution. This paper provides in-depth analysis of Cisco's organizational failure, attributing it ultimately to the company's turn from innovation in the last decades of 20th century to financialization in the early decades of the 21st century. Since 2001, Cisco's top management has chosen to allocate corporate cash to open-market share repurchases aka stock buybacks for the purpose of giving manipulative boosts to the company stock price rather than make the investments in organizational learning required to become a world leader in communication-infrastructure equipment for the era of 5G and IoT. From October 2001 through October 2022, Cisco spent $152.3 billion - 95 percent of its net income over the period - on stock buybacks for the purpose of propping up its stock price. These funds wasted in pursuit of "maximizing shareholder value" were on top of the $55.5 billion that Cisco paid out to shareholders in dividends, representing an additional 35 percent of net income. In this paper, we trace how Cisco grew from a Silicon Valley startup in 1984 to become, through its innovative products, the world leader in enterprise-networking equipment over the next decade and a half. As the company entered the 21st century, building on its dominance of enterprise-networking, Cisco was positioned to upgrade its technological capabilities to become a major infrastructure-equipment vendor to service providers. We analyze how and why, when the Internet boom turned to bust in 2001, the organizational structure that enabled Cisco to dominate enterprise networking posed constraints related to manufacturing and marketing on the company's growth in the more sophisticated infrastructure-equipment segment. We then document how from 2002 Cisco turned from innovation to financialization, as it used its ample profits to do stock buybacks to prop up its stock price. Finally, we ponder the larger policy implications of Cisco's turn from innovation to financialization for the competitive position of the US information-and-communication-technology (ICT) industry in the global economy.
    Keywords: Cisco Systems, communication technology, enterprise networking, strategic control, organizational integration, financial commitment, acquisitions, stock-based compensation, share repurchasers, dividends, shareholder value, global competition, innovation, financialization.
    JEL: D20 E22 E23 E24 G34 G35 L21 L22 L63 M10 N81 O16 O32
    Date: 2023–02–21
  23. By: Costa Ribeiro, Carlos A.
    Abstract: This paper examines trends in intergenerational class mobility for six birth cohorts of individuals born between 1921 and 1981, observed in surveys carried out in 1973, 1982, 1988, 1996 and 2014. Besides analysing the variation of trends on the basis of three temporal dimensions —age, birth cohort and survey year— the paper determines the effects of educational attainment on intergenerational mobility. The analysis reveals a historical trend of increasing social mobility across birth cohorts in Brazil. The effects of educational attainment are determined by three mechanisms: educational expansion, equality of educational opportunities and returns to education. While educational expansion is the main mechanism responsible for increasing mobility among the three younger cohorts of persons born between 1951 and 1981, the other two mechanisms play minor roles. In the period under review, the origin-destination class association, net of educational attainment, also declined and contributed to the increasing intergenerational mobility trend. Nevertheless, the expansion of higher education is the main reason for the increase in social mobility. This paper also examines racial disparities in intergenerational mobility. Despite the impressive educational expansion and increased mobility opportunities observed overall, the racial gap in intergenerational mobility opportunities does not change over time, with black people facing a greater probability of downward mobility.
    Date: 2023–07–19
  24. By: Maxime Ghazarian (CRISES - Centre de Recherches Interdisciplinaires en Sciences humaines et Sociales de Montpellier - UPVM - Université Paul-Valéry - Montpellier 3)
    Abstract: Based on French archives of the Ministry of European and Foreign Affairs and European historical archives, this study focuses on links between community-based Europe, Việt Nam, and ASEAN. Việt Nam had a key role in the EU and ASEAN communitarization, from creating mechanisms to reinforcing approaches to political cohesion to face Việt Nam's issues (migration management, Cambodian conflict, Việt Nam's opening). In these processes, beyond European Economic Community support of ASEAN diplomatic engagements, many dissensions were observed inside the community-based organs. The EEC had to preserve its particular status in South East Asia, deepen relations with ASEAN, and maintain dialogue with Việt Nam while condemning Vietnamese regional policy and ensuring its development assistance diplomacy. For ASEAN, the challenge was to pursue its opening toward Europe, develop interregional economic relations, and claim itself as a leader to resolve the regional doldrums. Between these two regional organizations, Việt Nam tried to adopt a complex strategy: to sanctuarize its national security and also to keep extremely limited room for maneuver with both ASEAN and the EEC. Việt Nam attempted on the one hand to maintain a bilateral dialogue or through international organizations with ASEAN member states, and in another hand, to request European aid as an ultimate exchange channel. The diplomatic game of Go ended thanks to Đổi Mới. This paradigm shift opened a new era where several ASEAN and EU member states allowed Việt Nam to be reintegrated into international relations. The diplomatic effervescence created new opportunities for Hà Nội which tended to increase profoundly its relations with the EU and to integrate ASEAN.
    Keywords: ASEAN, European Economic Community EEC, European Union, Doi Moi, Inter-regionalism, Diplomacy, Đổi Mới
    Date: 2022–12–19
  25. By: Ketchley, Neil; Eibl, Ferdinand; Gunning, Jeroen
    Abstract: In late developing states, labor markets are often segmented as a result of import substitution and political coalitions centered on the formally employed. Building on insider-outsider and moral economy frameworks from political economy, we theorize that in such contexts labor market insiders develop strong expectations about welfare provision and public transfers that make them more likely to riot against proposed austerity measures. We test our argument with the case of Egypt during the 1977 Bread Intifada, when the announcement of subsidy cuts sparked rioting across the country. To conduct our analysis, we match an original event catalog compiled from Arabic-language sources with disaggregated employment data. Spatial models, rich micro-level data, and the sudden and short-lived nature of the rioting, help us to disentangle the importance of an area’s labor force from its location and wider socioeconomic context. As we show, despite the diffuse impact of the subsidy cuts, rioting was especially concentrated in areas with labor market insiders – and this is after accounting for a range of plausible alternative explanations. The results suggest that moral economies arising from labor market segmentation can powerfully structure violent opposition to austerity.
    Keywords: austerity; riot; segmented labor markets; moral economy; Egypt; faculty grant
    JEL: R14 J01 N0
    Date: 2023–07–02
  26. By: Eli B. Liebman; Emily C. Lawler; Abe Dunn; David B. Ridley
    Abstract: Shortages and rationing are common in health care, yet we know little about the consequences. We examine an 18-month shortage of the pediatric Haemophilus Influenzae Type B (Hib) vaccine. Using insurance claims data and variation in shortage exposure across birth cohorts, we find that the shortage reduced uptake of high-value primary doses by 4 percentage points and low-value booster doses by 26 percentage points. This suggests providers largely complied with rationing recommendations. In the long-run, catch-up vaccination occurred but was incomplete: shortage-exposed cohorts were 4 percentage points less likely to have received their booster dose years later. We also find that the shortage and rationing caused provider switches, extra provider visits, and negative spillovers to other care.
    JEL: I12 I18 L65
    Date: 2023–07
  27. By: Bauluz, Luis; Bukowski, P.; Fransham, M.; Lee, A.; López Forero, M.; Novokmet, Filip; Breau, S.; Lee, Neil; Malgouyres, Clément; Schularick, Moritz; Verdugo, Gregory
    Abstract: The rise of economic inequalities in advanced economies has been often linked with the growth of spatial inequalities within countries, yet there is limited comparative research that studies the relationship between national and subnational economic inequality. This paper presents the first systematic attempt to create internationally comparable evidence showing how different countries perform in terms of geographic wage inequalities. We create cross-country comparable measures of spatial wage disparities between and within similarly-defined local labour market areas (LLMAs) for Canada, France, (West) Germany, the UK and the US since the 1970s, and assess their contribution to national inequality. By the end of the 2010s, spatial inequalities in LLMA mean wages are similar in Canada, France, Germany and the UK; the US exhibits the highest degree of spatial inequality. Over the study period, spatial inequalities have nearly doubled in all countries, except for France where spatial inequalities have fallen back to 1970s levels. Due to a concomitant increase in within-place inequality, the contribution of places in explaining national wage inequality has remained fairly constant over the 40-year study period, except in the UK where we document a significant increase. Whilst common global social, economic and technological shocks are important drivers of spatial inequality, this variation in levels and trends of spatial inequality opens the way to comparative research exploring the role of national institutions in mediating how global shocks translate into economic disparities between places.
    Keywords: regional inequality, wage inequality, local labour markets
    JEL: J3 R1 R23
    Date: 2023
  28. By: Leopoldo Fergusson; Javier Mejia; James A. Robinson; Santiago Torres
    Abstract: We propose a framework to explain why some societies may end up with different constitutional solutions to the problem of maintaining order in the face of self-interested behavior. Though the salient intellectual tradition since Hobbes has focused on how institutional design is used to eradicate violence, our framework illustrates that equilibrium constitutions may in fact have to deliberately allow for violence. This arises because some societies are unable to use institutions to influence income distribution. In this case, a constitutional tolerance of violence emerges as a credible way for an incumbent to meet the participation constraint of a challenger. We illustrate the results with the comparative constitutional history of the US and Colombia.
    JEL: D70 D74 K10 P00
    Date: 2023–07
  29. By: Ager, Philipp (University of Mannheim); Goñi, Marc (University of Bergen); Salvanes, Kjell G. (Norwegian School of Economics)
    Abstract: This paper studies the link between gender-biased technological change in the agricultural sector and structural transformation in Norway. After WWII, Norwegian farms began widely adopting milking machines to replace the hand milking of cows, a task typically performed by women. Combining population-wide panel data from the Norwegian registry with municipality-level data from the Census of Agriculture, we show that the adoption of milking machines triggered a process of structural transformation by displacing young rural women from their traditional jobs on farms in dairy-intensive municipalities. The displaced women moved to urban areas where they acquired a higher level of education and found better-paid employment. These findings are consistent with the predictions of a Roy model of comparative advantage, extended to account for task automation and the gender division of labor in the agricultural sector. We also quantify significant inter-generational effects of this gender-biased technology adoption. Our results imply that the mechanization of farming has broken deeply rooted gender norms, transformed women's work, and improved their long-term educational and earning opportunities, relative to men.
    Keywords: gender biased technological change, migration, intergenerational mobility
    JEL: J16 J24 J43 J61 N34 O14 O33
    Date: 2023–07
  30. By: François Facchini (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Cette note de lecture se propose de résumer le propos du dernier livre du PR Bertrand Blancheton (Université de Bordeaux) sur la dette publique. Elle défend que le recours aux travaux des économistes, qui traitent de la liberté économique comme un facteur de croissance et une dimension morale aurait permis de poser un autre diagnostic et de soutenir une feuille de route sensiblement différente pour réduire la dette publique que celle qui est défendue dans le livre. Ce dernier s'organise autour de douze chapitres, chacun abordant une question relative à la dette publique : la mesure de la dette (Chapitre 1), les caractéristiques de la dette française (Chapitre 2), la hausse plus forte de la dette française par rapport à ses principaux concurrents et partenaires (Chapitre 3), la justification de la dette publique (Chapitre 4), la montée de la dette publique en France depuis 1970 (Chapitre 5), la critique de l'idée que la dette publique française serait la conséquence de la loi de 1973 sur la Banque de France (Chapitre 6), la relation qu'entretient la dette et la construction européenne via les critères de convergence (Chapitre 7), les liens qu'entretiennent la dynamique de la dette et la politique monétaire (Chapitre 8), la soutenabilité de la dette (Chapitre 9), les expériences de désendettement (Chapitre 10), les liens entre la dette publique et la hausse des dépenses publiques (Chapitre 11) et pour conclure l'élaboration d'une feuille de route pour réduire la dette et équilibrer le solde budgétaire (Chapitre 12). Le propos est peu technique, et soutient que la France devra rembourser sa dette par une réforme des impôts et une baisse des dépenses. Il défend, en ce sens, une position plutôt non keynésienne et que ne renierait pas les économistes classiques. Le livre ne fait, cependant, aucune référence aux travaux des économistes libéraux qui ont travaillé sur la dette publique comme James Buchanan et Richard Wagner. La plupart des solutions proposées à la dette publique se placent d'ailleurs dans un cadre institutionnel inchangé, sans modification du partage des compétences entre le privé et le public.
    Keywords: dette publique, impôt, dépenses publiques, Blancheton, taux d'intérêt, privatisation
    Date: 2023
  31. By: Berge, Travis; De Ridder, Maarten; De Ridder, Maarten; Pfajfar, Damjan
    Abstract: This paper compares the effect of fiscal spending on economic activity across various phases of the business cycle. We show that the fiscal multiplier is higher when unemployment is increasing than when it is decreasing. Conversely, fiscal multipliers do not depend on whether the unemployment rate is above or below its long-term trend. This result emerges both in the analysis of long time-series at the U.S. national level as well as for a post-Vietnam War panel of U.S. states. Our findings synthesize previous, at times conflicting, evidence on the state-dependence of fiscal multipliers and imply that fiscal intervention early on in economic downturns is most effective at stabilizing output.
    JEL: N0 J1 E6
    Date: 2021–09–01
  32. By: Miller, Thomas A.; Vermeer, James
    Abstract: Soon after the congressional enactment of the 1973 Farm Act, Secretary of Agriculture Earl L. Butz announced that: There will be no set-aside requirement and no restriction on planting for the 1974 crop program and there will be no conserving base requirement for the 1974 through 1977 crop years, the duration of the Agriculture and Consumer Protection Act of 1973. With this statement Secretary Butz considerably reduced the options available to control production during the latter years of the 1973 Farm Act, should such control appear desirable. The purpose of this paper is to evaluate the possible impact of the decision by Secretary Butz to lift the conserving base requirement from program participants. The specific objective is to estimate the possible effect of this decision if set-aside is required in the Great Plains in 1975.
    Keywords: Agricultural and Food Policy, Crop Production/Industries, Land Economics/Use, Research Methods/ Statistical Methods

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.