nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2006‒04‒08
five papers chosen by
Erik Thomson
University of Chicago

  1. Does Financial Integration Spur Economic Growth? New Evidence from the First Era of Financial Globalization By Moritz Schularick; Thomas Steger
  2. Bloodshed or Reforms? The Determinants of Sovereign Bond Spreads in 1870-1913 and Today By Mauro, Paolo; Sussman, Nathan; Yafeh, Yishay
  3. The Empirics of International Currencies: Historical Evidence By Flandreau, Marc; Jobst, Clemens
  4. Cognitive Dissonance and Choice By Larry Epstein; Igor Kopylov
  5. "Value, Social Capabilities, Alienation:The Right to Revolt" By Haider A. Khan

  1. By: Moritz Schularick; Thomas Steger
    Abstract: Does international financial integration boost economic growth? The question has been discussed controversially for a long time. As of yet, robust evidence for a positive impact is lacking (Edison et al., 2002). However, there is substantial narrative evidence from economic history that highlights the contribution European capital made to economic growth of peripheral economies before 1914. We have compiled the first comprehensive data set to test this hypothesis. The main finding is that there was indeed a significant and robust growth effect. Our theoretical explanation stresses property rights protection as a prerequisite for the standard neoclassical model to work properly.
    Keywords: international financial integration, economic growth, first era of globalization
    JEL: F15 F21 F30 N10 N20 O11 O16
    Date: 2006
  2. By: Mauro, Paolo; Sussman, Nathan; Yafeh, Yishay
    Abstract: Drawing on a newly-collected data set on bond yields, macroeconomic variables, and news of various categories for a panel of emerging markets, we provide the first comparative analysis of the determinants of sovereign bond spreads in the first era of financial globalization and bond finance (1870-1913) and today (1994-2002). We find that news about wars or episodes of politically-motivated violence are a significant and robust determinant of spreads; fiscal variables also play a role; in contrast, news about institutional reforms seldom have a rapid and significant impact. There are also important differences between the two eras: country-specific fundamentals account for a greater share of variation in spreads during the pre-WWI period than today.
    Keywords: bond yields; emerging markets; financial globalization
    JEL: F34 G15 N20
    Date: 2006–03
  3. By: Flandreau, Marc; Jobst, Clemens
    Abstract: Using a new database for the late 19th century, when the pound sterling circulated all over the world, this paper provides the first review of critical empirical issues in the economics of international currencies. First, we report evidence in favor of the search-theoretic approach to international currencies. Second, we give empirical support to strategic externalities. Third, we provide strong confirmation of the existence of persistence. Finally, we reject the view that the international monetary system is subject to pure path dependency in that it cannot remain locked into some past equilibrium. Our conclusion is that, for the late 19th century at least, money and trade were complements.
    Keywords: dollar; international currencies; persistence; search theoretic approach to money; sterling; strategic externalities
    JEL: F31 N32
    Date: 2006–03
  4. By: Larry Epstein (University of Rochester); Igor Kopylov (University of California Irvine)
    Abstract: People like to feel good about past decisions. This paper models self- justification of past decisions. The model is axiomatic: axioms are defined on preference over ex ante actions (modeled formally by menus) The representation of preference admits the interpretation that the agent adjusts beliefs after taking an action so as to be more optimistic about its possible consequences. In particular, the ex post choice of beliefs is part of the representation of preference and not a primitive assumption. Behavioral characterizations are given to the comparisons "1 exhibits more dissonance than 2" and "1 is more self-justifying than 2."
    Keywords: cognitive dissonance, optimism, temptation, self-control, self-justification, choice-theoretic, choosing beliefs
    JEL: D81
    Date: 2006–03
  5. By: Haider A. Khan (GIGS, University of Denver)
    Abstract: The labor theory of value in classical political economy, particularly as developed in Marx's Capital, has been the source of a number of interpretations and controversies. The purpose of this paper is to make an analytical distinction between two types of labor theories of value that can illuminate the role of the less well known of the two different theories in understanding the dynamics of capital accumulation and of systemic changes. This qualitative theory of value can be used to explore the significance of value form in both capitalism and the concept and practices of socialism.It can also offer a new way of defending the right to revolt on the part of those who are exploited under both capitalism and socialism.
    Date: 2006–04

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