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on Business, Economic and Financial History |
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Issue of 2024‒07‒29
23 papers chosen by |
| By: | Pattit, Jason M.; Pattit, Katherina G.; Spender, J-C |
| Abstract: | When Edith T. Penrose became Fritz Machlup’s student in the late-1940s, she found little in mainstream or Austrian economics to guide her as she began her explorations into the growth of the firm. While she acknowledged Kenneth Boulding’s influence on her work, we suspect she drew on a broader tradition that includes, among others, Alfred Marshall, Frank Knight (Boulding’s teacher), and Ronald Coase. We seek to demonstrate Penrose’s connection to this ‘invisible college’, particularly to Knight, and its influence on her investigation of the growth of the firm. Given mainstream economists’ pursuit of rigor at the expense of practical relevance and their continuing inattention to Coase’s work, we suggest Penrose’s work on the growth of the firm can be understood as part of a broader tradition represented by this ‘invisible college’, lending to useful new insights for business strategy and business ethics scholarship. |
| Keywords: | Edith T. Penrose, Frank Knight, Theory of the Firm, Management History |
| JEL: | B31 M0 N8 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121229&r= |
| By: | Mervyn A. King |
| Abstract: | Inflation targets were introduced well ahead of the development of the theory of inflation targeting. The practice was successful because it comprised a new set of procedures and institutions for setting monetary policy in a transparent and accountable fashion – “constrained discretion”; the later theory was less useful because it purported to be a theory of the determination of the price level. But inflation targeting does not constitute a new theory of the monetary transmission mechanism. The belief that it does led to the replacement of Milton Friedman’s dictum that “inflation is always and everywhere a monetary phenomenon” by the new dictum that “inflation is always and everywhere a transitory phenomenon”. This had unfortunate consequences during the recent inflation. The paper concludes with a discussion of the challenges facing inflation targets in the future. |
| JEL: | E42 E43 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32594&r= |
| By: | Stephen Machin |
| Abstract: | It is now just over a quarter of a century since a national minimum wage was introduced in the UK. Once a source of controversy due to fears that it would lead to fewer jobs, the policy has instead proved to be highly successful. Stephen Machin reflects on how it has reduced wage inequality - and what needs to happen next. |
| Keywords: | UK Economy, minnimum wage, Employment, Wages |
| Date: | 2024–06–20 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepcnp:682&r= |
| By: | Shi, Xiangyu |
| Abstract: | Why China was not the origin of the Industrial Revolution but rose from imperial dynasties and experienced a growth miracle in the past four decades? We find that its root is China's imperial examination system (keju), which explains the fall and rise of historical, modern, and contemporary China. Using three instrumental variable approaches, we find that keju significantly facilitates contemporary innovation and business creation, by raising the contemporaneous level of human capital, shaping an innovative and productive culture, and fostering efficient institutions. Keju had positive effects on the development of modern China before the People's Republic of China era, but its effects were most salient after the economic reform in 1978. In historical periods, keju diverted talents away from scientific/technological sectors, leading to sluggish development in the Ming and Qing dynasties. |
| Keywords: | imperial examination system, human capital, culture, institution, innovation, business creation, China |
| JEL: | D2 E2 J2 N3 O1 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121348&r= |
| By: | Kenny, Seán (Department of Economic History, Lund University) |
| Abstract: | This paper constructs annual GDP estimates for Ireland (1924-47) to join the first complete official aggregates. The new series is deployed to revisit Ireland’s economic performance in the post-independence decades. Ireland’s economy grew at 1.5 per cent per annum and average living standards improved by 40 per cent. The bulk of this was due to labour productivity improvements stemming from workers moving out of agriculture. Starting in 1924 captures the civil war recovery and paints a more positive picture of the 1920s, while the traditional narrative of a “mild” Great Depression is upheld. The 1930s recovery was aided by strong contributions from services and industry, while the economy contracted by 7 per cent during the early “Emergency”. Though supporting O’Rourke’s view that Irish growth was not unique against European peers, the new data provide evidence of stronger convergence against UK regions. Industry contributed most to growth during the period, growing at 3.6 per cent per annum. The equivalent rate for services was 1.3 per cent, though it contributed substantially during recovery periods. Agricultural output hardly changed due to its post-war contraction. This paper joins a growing number of studies that suggest that Ireland was poorer at independence than previously believed. |
| Keywords: | Historical National Accounts; Interwar period; Ireland; GDP; Comparative Growth; Regional GDP; Productivity |
| JEL: | N10 N14 O47 |
| Date: | 2024–05–27 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:luekhi:0258&r= |
| By: | Antonio Savoia; Kunal Sen; Abrams M.E. Tagem |
| Abstract: | There is a broad agreement that political and economic institutions matter for long-term development. Yet relatively little is known as to how to adopt good quality institutions and reform weak or poor institutions, for which one needs to know how institutions change. This paper provides a systematic econometric investigation of long-run patterns of institutional change, offering panel time series evidence that allows for different forms of country-specific heterogeneity and cross-section dependence. |
| Keywords: | Institutions, Institutional change, Rule of law, Property rights, Constraints on the executive |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2024-39&r= |
| By: | Harari, Mariaflavia; Wong, Maisy |
| Abstract: | We study the role of Dutch colonial institutions on urban development for the megacity of Jakarta, Indonesia. Using historical maps of Dutch settlements and a rich granular database, we implement a boundary discontinuity design comparing locations within 200 meters of Dutch boundaries. We find that historical Dutch areas today have significantly lower parcel density, are more likely to have formally registered parcels, and have more regular parcel layout, pointing to the importance of planning and mapping. Dutch settlements are also more likely to appear formal, as per a photographic index that ranks the appearance of neighborhoods. More broadly, Dutch areas are 11 percentage points more likely to have tall buildings (with more than 3 floors) and have 17 log points higher assessed land values. We consider channels such as natural advantage, direct Dutch investments, and land market institutions. |
| Keywords: | Urbanization, Property Rights, Informality, Institutions |
| JEL: | R0 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121334&r= |
| By: | Félix Jiménez (Departamento de Economía de la Pontificia Universidad Católica del Perú) |
| Abstract: | Este trabajo trata de mostrar que el Perú ha seguido desempeñando el papel de productor de materias primas durante cerca de 150 años desde la década de los años 1870, no obstante haber ocurrido cambios dramáticos en el escenario internacional, en su institucionalidad política y estructura de poder económico. Los intentos de redefinición de este estilo de crecimiento, en distintos momentos de este largo período, fueron frustrados por la persistencia del dominio conservador-defensivo en las élites de poder político y económico. Cambiaron los actores y los pesos relativos de las actividades económicas en la generación del PBI y del empleo, pero no hubo solución de continuidad en la dependencia de la economía de los requerimientos y dinámica de los mercados de los países industrializados, ni en el relativo desinterés de las elites por transformar las relaciones sociales internas a favor de la población campesina y rural para construir un Estado incluyente y democrático. Palabras claves: Crecimiento económico; Desarrollo Económico; Historia económica; Ciclos Económicos; Economía política; Comercio. JEL Classification-JE: O40; O47; O49; O11; O14; N00; N10; E32; P16; F14 |
| Keywords: | Crecimiento económico; Desarrollo Económico; Historia económica; Ciclos Económicos; Economía política; Comercio. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pcp:pucwps:wp00535&r= |
| By: | Brevin Franklin; Emily Silcock; Abhishek Arora; Tom Bryan; Melissa Dell |
| Abstract: | Social scientists and the general public often analyze contemporary events by drawing parallels with the past, a process complicated by the vast, noisy, and unstructured nature of historical texts. For example, hundreds of millions of page scans from historical newspapers have been noisily transcribed. Traditional sparse methods for searching for relevant material in these vast corpora, e.g., with keywords, can be brittle given complex vocabularies and OCR noise. This study introduces News Deja Vu, a novel semantic search tool that leverages transformer large language models and a bi-encoder approach to identify historical news articles that are most similar to modern news queries. News Deja Vu first recognizes and masks entities, in order to focus on broader parallels rather than the specific named entities being discussed. Then, a contrastively trained, lightweight bi-encoder retrieves historical articles that are most similar semantically to a modern query, illustrating how phenomena that might seem unique to the present have varied historical precedents. Aimed at social scientists, the user-friendly News Deja Vu package is designed to be accessible for those who lack extensive familiarity with deep learning. It works with large text datasets, and we show how it can be deployed to a massive scale corpus of historical, open-source news articles. While human expertise remains important for drawing deeper insights, News Deja Vu provides a powerful tool for exploring parallels in how people have perceived past and present. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2406.15593&r= |
| By: | Tom Günther; Jakob Conradi; Clemens Hetschko |
| Abstract: | Unemployment influences people’s life satisfaction beyond negative income shocks. A large body of literature investigates these non-pecuniary costs of unemployment and stresses the importance of social identity and therefore social norms, especially for men. We add to this literature by showing that norm non-compliance may equally inflate the non-pecuniary loss of well-being for unemployed women. Drawing upon large-scale German panel data, we use the German division as a natural experiment to compare unemployment-related life satisfaction losses between different cohorts of East and West German women. We hypothesise that being exposed to different legal norms concerning workforce participation and different opportunity cost of working after the division shaped social identities and thus social norms around work for the two German female populations in different ways. Specifically, East German women were required to work full-time whereas West German women were expected to focus on family care. We find that East German women suffer significantly more from unemployment than West German women. This difference is driven by a significantly worse unemployment experience for East German females that were exclusively raised in the former GDR. We do not find such diverging patterns for German men. Our findings imply that women may suffer as much from unemployment as men, if socialised in the same way. |
| Keywords: | well-being, gender, unemployment, social identity, social norms, German division |
| JEL: | P30 I31 J16 J60 N34 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11154&r= |
| By: | Felicia Odamtten |
| Abstract: | To inspire the next generation of black economists, how important is it for them to see people like themselves working in the profession? Felicia Odamtten, an economist at the Resolution Foundation and founder of The Black Economists Network, outlines her experiences. |
| Keywords: | equality, gender, Employment, Social mobility |
| Date: | 2024–06–20 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepcnp:683&r= |
| By: | Raphael Auer; Mathieu Pedemonte; Raphael Schoenle; Raphael A. Auer |
| Abstract: | Is inflation (still) a global phenomenon? We study the international co-movement of inflation based on a dynamic factor model and in a sample spanning up to 56 countries during the 1960-2023 period. Over the entire period, a first global factor explains approximately 58% of the variation in headline inflation across all countries and over 72% in OECD economies. The explanatory power of global inflation is equally high in a shorter sample spanning the time since 2000. Core inflation is also remarkably global, with 53% of its variation attributable to a first global factor. The explanatory power of a second global factor is lower, except for select emerging economies. Variables such as a broad dollar index, the US federal funds rate, and a measure of commodity prices positively correlate with the first global factor. This global factor is also correlated with US inflation during the 70s, 80s, the GFC, and COVID. However, it lags these variables during the post-COVID period. Country-level integration in global value chains accounts for a significant proportion of the share of both local headline and core inflation dynamics explained by global factors. |
| Keywords: | globalization, inflation, Phillips curve, monetary policy, global value chain, international inflation synchronization |
| JEL: | E31 E52 E58 F02 F41 F42 F14 F62 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11148&r= |
| By: | Paul Cheshire |
| Abstract: | Paul Cheshire began to investigate the economic effects of the UK's planning system 40 years ago. Here he draws on a recent public lecture - and panel discussion with Stephen Aldridge, Kate Barker and Simon Wolfson - to explain how two generations of failure to build enough houses have led to considerable damage to employment, productivity and equality. |
| Keywords: | UK Economy, housing, planning, Economic geography |
| Date: | 2024–06–20 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepcnp:680&r= |
| By: | Richard Hornbeck; Guy Michaels; Ferdinand Rauch |
| Abstract: | We examine "agglomeration shadows" that emerge around large cities, which discourage some economic activities in nearby areas. Identifying agglomeration shadows is complicated, however, by endogenous city formation and "wave interference" that we show in simulations. We use the locations of ancient ports near the Mediterranean, which seeded modern cities, to estimate agglomeration shadows cast on nearby areas. We find that empirically, as in the simulations, detectable agglomeration shadows emerge for large cities around ancient ports. These patterns extend to modern city locations more generally and illustrate how encouraging growth in particular places can discourage growth of nearby areas. |
| Keywords: | agglomeration shadow, urban hierarchy, new economic geography |
| Date: | 2024–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2013&r= |
| By: | de Bromhead, Alan (University College Dublin); Kenny, Seán (Department of Economic History, Lund University) |
| Abstract: | This paper constructs the first estimates of Irish regional GDP over the twentieth century and traces the relative economic performance of Ireland’s regions since independence. Using an array of data sources available at a county level, output inAgriculture, Industry and S ervices in benchmark census years is estimated. Applying a variety of alternative measures, we find a reduction in regional inequality over the period that is similar to the broader European pattern. Regional convergence over the period 1926-1991 was driven by both within-sector convergence in productivity and structural change. Our paper helps to understand the regional dimensions to Irish economic development from the birth of a newly independent state up to the eve of Ireland's growth 'miracle' in the 1990s, when the first official efforts were initiated to construct these figures. Finally, we connect our estimates to these official figures to examine GDP at the level of NUTS regions up to 2021. |
| Keywords: | Regional GDP; Ireland; Economic History; Inequality; Economic Growth |
| JEL: | N34 N94 O18 R11 R12 |
| Date: | 2024–06–12 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:luekhi:0259&r= |
| By: | Alogoskoufis, George |
| Abstract: | This paper reviews, analyses and interprets the evolution of the state and the economy of post-war Greece, before and after the political transition to democracy in 1974. The transition led to a regime-change involving a very large part of the ideological and institutional edifice that characterised Greece in the twenty-five years between the end of the civil war in 1949 and the transition to democracy in 1974. Although social and political institutions and performance improved significantly after 1974, economic performance deteriorated sharply. The analysis suggests that although this was to be partly expected because of international developments, the sharp deterioration is economic performance was mainly the result of the failures of the post-1974 political regime to substitute the commitment and coordination mechanisms that had contributed to the economic ‘miracle’ of the 1950s and the 1960s, follow appropriate and consistent rules in economic policy and introduce the necessary reforms. In addition, Greece entered the E.U and, later, the euro area relatively unprepared, something which contributed to the deterioration in its economic performance and, eventually, the debt crisis of the 2010s and the great depression that followed. The final section of the paper discusses several reforms that could help put Greece back on track economically, consolidating and improving its position in the E.U and the euro area, while strengthening the desirable social and political characteristics of the post-1974 regime. |
| JEL: | N0 |
| Date: | 2024–07–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:124056&r= |
| By: | Angelou, Angelos |
| Abstract: | The article examines potential linkages between the management of the Eurozone crisis and the EU’s economic response to the COVID-19 pandemic. It does so by focusing on the Commission and its approach to conditionality-based lending. The analysis employs the concept of inter-crisis learning to argue that the lessons the Commission drew from the Eurozone crisis informed its conditionality-related proposals for the National Recovery and Resilience Plans (NRRPs). By using qualitative data, including eight elite interviews, the article suggests that the Commission derived lessons regarding the design, negotiation, implementation, and monitoring of conditionality programs. These lessons led to cognitive changes within the organisation and to behavioral changes that were reflected in its proposals regarding the conditionality attached to NRRPs. The article contributes to the literature examining the EU’s economic response to the pandemic by discussing the Commission’s drivers and preferences during that period. It also complements the literature on coordinative Europeanisation by offering insights on how the European Commission shapes its proposals on conditionality-based lending; a central element of its relationship with member states when it comes to crisis management. Finally, it discusses the implications of the article’s main thesis for the process of European integration. |
| Keywords: | crises; European Commission; Eurozone; learning; RRF |
| JEL: | N0 |
| Date: | 2024–05–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:123867&r= |
| By: | Kliem, Martin; Kriwoluzky, Alexander; Müller, Gernot J.; Scheer, Alexander |
| Abstract: | Financial repression lowers the return on government debt and contributes, all else equal, towards its liquidation. However, its full effect on the debt-to-GDP ratio hinges on how repression impacts the economy at large because it alters investment and saving decisions. We develop and estimate a New Keynesian model with financial repression. Based on U.S. data for the period 1948-1974, we find, consistent with earlier work, that repression was pervasive but gradually phased out. A model-based counterfactual shows that GDP would have been 5 percent lower, and the debt-to-GDP ratio 20 percentage points higher, had repression not been phased out. |
| Keywords: | Financial repression, Government debt, Interest rates, Banks, Regulation, Bayesian estimation |
| JEL: | H63 E43 G28 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bubdps:299242&r= |
| By: | Abhishek Arora; Emily Silcock; Leander Heldring; Melissa Dell |
| Abstract: | Massive-scale historical document collections are crucial for social science research. Despite increasing digitization, these documents typically lack unique cross-document identifiers for individuals mentioned within the texts, as well as individual identifiers from external knowledgebases like Wikipedia/Wikidata. Existing entity disambiguation methods often fall short in accuracy for historical documents, which are replete with individuals not remembered in contemporary knowledgebases. This study makes three key contributions to improve cross-document coreference resolution and disambiguation in historical texts: a massive-scale training dataset replete with hard negatives - that sources over 190 million entity pairs from Wikipedia contexts and disambiguation pages - high-quality evaluation data from hand-labeled historical newswire articles, and trained models evaluated on this historical benchmark. We contrastively train bi-encoder models for coreferencing and disambiguating individuals in historical texts, achieving accurate, scalable performance that identifies out-of-knowledgebase individuals. Our approach significantly surpasses other entity disambiguation models on our historical newswire benchmark. Our models also demonstrate competitive performance on modern entity disambiguation benchmarks, particularly certain news disambiguation datasets. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2406.15576&r= |
| By: | Hanna Schwank |
| Abstract: | Natural disasters are growing in frequency globally. Understanding how vulnerable populations respond to these disasters is essential for effective policy response. This paper explores the short- and long-run consequences of the 1906 San Francisco Fire, one of the largest urban fires in American history. Using linked Census records, I follow residents of San Francisco and their children from 1900 to 1940. Historical records suggest that exogenous factors such as wind and the availability of water determined where the fire stopped. I implement a spatial regression discontinuity design across the boundary of the razed area to identify the effect of the fire on those who lost their home to it. I find that in the short run, the fire displaced affected residents, forced them into lower paying occupations and out of entrepreneurship. Experiencing the disaster disrupted children’s school attendance and led to an average loss of six months of education. While most effects attenuated over time, the negative effect on business ownership persists even in 1940, 34 years after the fire. Therefore, my findings reject the hope for a “reversal of fortune” for the victims, in contrast to what is found for more recent natural disasters such as hurricane Katrina. |
| Keywords: | Natural Disasters; Internal Migration; Economic History, Regional and Urban Economics |
| JEL: | N91 N31 Q54 O15 J61 J62 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_571&r= |
| By: | Vlados, Charis (Democritus University of Thrace, Department of Economics); Chatzinikolaou, Dimos (Democritus University of Thrace, Department of Economics) |
| Abstract: | Purpose: This study aims to analyze the emergence of a new structural configuration of globalization, with the 2008 global financial crisis serving as the first symptom of this change. By introducing the “Evolutionary Structural Triptych” (EST), this research seeks to understand the basic components of the new evolutionary trajectory of global capitalism post-2008. The study places emphasis on its interdependent and coevolving economic, political and technological dynamic facets. Design/methodology/approach: This research introduces the EST framework, critically contrasting it with conventional understandings in international political economy (IPE) to provide a comprehensive and structured analysis of global developments after 2008. It traces the phases of global capitalism since Second World War, examines the central dynamic dimensions during each evolutionary phase, identifies the basic patterns and delves into the foundational elements of the emerging era of globalization. Findings: The analysis reveals three key findings. First, the emerging restructured globalization indicates a need for a new balance in the contemporary world system; however, this balance cannot be achieved within the architecture of the old system. Second, the new era of globalization necessitates a re-equilibrated approach across different dimensions of geopolitical stability, economic development and innovation. This approach should emphasize sustainability, adaptability, resilience and inclusivity and lean toward responsible, open and organic innovation models for a revamped global structure. Third, while many current IPE theories tend to compartmentalize aspects of the new globalization, the EST advocates for a holistic perspective that integrates politics, economics and technology within the framework of global trends. This perspective bridges existing gaps and offers actionable insights for a dynamic and inclusive global future. Originality/value: The paper presents the EST as a novel analytical instrument in the realm of the modern IPE. This tool uniquely places technology and innovation at the forefront, parallel to economic and political spheres, to comprehend the progression of globalization. In doing so, it highlights the intertwined relationship of these structural dimensions in shaping the future of the subject of the IPE. |
| Keywords: | new globalization; evolutionary structural triptych; international political economy; evolutionary economics; global responsibility; world system phases |
| JEL: | B52 F50 M14 |
| Date: | 2024–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:ris:duthrp:2024_002&r= |
| By: | Ruveyda Gozen; Richard Hornbeck; Anders Humlum; Martin Rotemberg |
| Abstract: | We characterize female-owned manufacturing establishments using newly digitized manuscripts from the US Census of Manufactures (1850, 1860, 1870, 1880). Female-owned establishments were smaller than male-owned establishments and had lower capital-to-output ratios, which could reflect more-constrained financial access and other distortions. Female-owned establishments employed more women and paid women higher wages, creating a potential cycle between increased female business ownership and increased female labor market participation. Female-owned establishments concentrated in sub-industries like women's clothing and millinery, which is associated with some but not all of these differences. We also show how female owners differed from other women in the Population Census. |
| JEL: | M1 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32575&r= |
| By: | Callen, Mike; Gulzar, Saad; Rezaee, Arman; Shapiro, Jacob N. |
| Abstract: | Why do modern states allow parts of their territory to be governed by non-state actors? We study this question using the Frontier Crimes Regulation (FCR) in Pakistan, a British Colonial law abrogated only in 2018, which left governance to pre-colonial tribal councils in large parts of modern day Pakistan. In areas where the FCR did not apply, the British and then Pakistani state built modern political and bureaucratic institutions. Using primary legal documents, we build a dataset of when and where the FCR applied between 1901 and 2012. The territorial extent of the formal state is both cleanly demarcated by this law and varies substantially over time, permitting an empirical examination of the determinants of state control. The data reveal that the Green Revolution's potential to transform agriculture played a major role in extending the formal state. The law was repealed first from areas where agricultural productivity benefited the most from the Green Revolution. This is consistent with a model in which technological changes that shift the returns to control influence where states choose to govern. |
| Keywords: | legal institutions; innovation; agriculture; green revolution; Pakistan; Frontier Crimes Regulation; Wiley deal |
| JEL: | O12 P16 P48 |
| Date: | 2024–05–28 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:123677&r= |