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on Business, Economic and Financial History |
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Issue of 2015‒05‒02
twelve papers chosen by |
| By: | Natacha Postel-Vinay (University of Warwick) |
| Abstract: | This paper reassesses the causes of Chicago bank failures during the Great Depression by tracking the evolution of their balance sheets in the 1920s. I find that all Chicago banks suffered tremendous deposit withdrawals; however banks that failed earlier in the 1930s had invested more in mortgages in the 1920s. The main problem with mortgages was their lack of liquidity, not their quality. Banks heavily engaged in mortgages did not have enough liquid assets to face the withdrawals and failed. This paper thus reasserts the importance of pre-crisis liquidity risk management in preventing bank failures. While not excluding an important role for lenders of last resort as a within-crisis solution, emphasis on banks' long-term investments in illiquid assets implies a role for regulatory authorities in crisis prevention. |
| Keywords: | Great Depression, Commercial Banks, Portfolio Choice and Mortgage |
| JEL: | G11 G21 N22 |
| Date: | 2015–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:cmh:wpaper:22&r=his |
| By: | José Aguilar-Retureta (Facultat d'Economia i Empresa; Universitat de Barcelona (UB)) |
| Abstract: | In the last years, Economic History literature has paid close attention to the long-term changes undertaken by regional income inequality in different countries after the integration of their domestic markets. Nevertheless, this literature has mainly focused on developed economies (US and Europe). New evidence is required from peripheral economies, where economic growth has had different features, and income inequality may have been dominated by other forces and followed different trends. The aim of this paper is to analyse several dimensions of the long-term evolution of Mexican regional income inequality, from the early stages of domestic markets integration to the present (1895–2010). This analysis may be taken as basis for further explanatory analysis and may contribute to the emergence of new hypothesis to explain the long-term changes in regional inequality in peripheral economies. |
| Keywords: | Economic History, Regional Inequality, Economic Growth. |
| JEL: | N16 N96 R11 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ewp:wpaper:323web&r=his |
| By: | JosŽ L. Mart’nes-Gonz‡lez (University of Barcelona) |
| Abstract: | In this paper I analyze the ÔNitrogen ParadoxÕ stated by Robert Allen in his interpretation of the English Agricultural Revolution as an adaptive response to the agro-climatic impacts of the last phase of the Little Ice Age. The colder and more humid climate during the second half of the 17th century negatively affected the yield of the land, but it also accelerated change in the agrarian sector. The first evidence suggests that the efforts from farmers could begin to be felt in the cold period from 1660-70. Although the results were not very visible at first, this increased effort prevented a greater fall in production. This can be seen in the wheat series, where production rose slightly. As wheat demand stagnated due to a slowdown in the rise of the population, wheat prices fell, determining the evolution of relative prices and a diversification in production. In others words, the crucial driving forces of the transition from the crisis to the agrarian revolution were climate, population and the capacity of adaptation. In order to prove this hypothesis, I developed new intermediate tools, opening an interesting research field in economic history. |
| Keywords: | Climate Change, Agrarian Revolution, Adaptation |
| JEL: | N53 O13 Q10 Q24 Q54 Q55 Q57 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:hes:wpaper:0075&r=his |
| By: | Farley Grubb (Department of Economics, University of Delaware) |
| Abstract: | The British North American colonies were the first western economies to rely on legislature-issued paper monies as an important internal media of exchange. This system arose piecemeal. In the absence of banks and treasuries that exchanged paper monies at face value for specie monies on demand, colonial governments experimented with other ways to anchor their paper monies to real values in the economy. These mechanisms included tax-redemption, land-backed loans, sinking funds, interest-bearing notes, and legal tender laws. The structure and performance of these mechanisms are explained and assessed. This was monetary experimentation on a grand scale. |
| Keywords: | Adam Smith, Benjamin Franklin, bills of credit, fiat currency, interest-bearing money, land banks, legal tender laws, paper money, sinking funds, tax redemption, zero-coupon bonds |
| JEL: | E42 E50 F31 G10 H60 K29 N11 N21 N41 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:dlw:wpaper:15-07&r=his |
| By: | Raphael Franck; Oded Galor |
| Abstract: | The research explores the effect of industrialization on human capital formation. Exploiting exogenous regional variations in the adoption of steam engines across France, the study establishes that in contrast to conventional wisdom that views early industrialization as a predominantly deskilling process, the industrial revolution was conducive for human capital formation, generating broad increases in literacy rates and education attainment. |
| Keywords: | Capital-Skill Complementarity, Economic Growth, Industrialization, Human Capital, Steam Engine. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:bro:econwp:2015-3&r=his |
| By: | Aviral K. Tiwari (aviral.eco@gmail.com); Claudiu T. Albulescu (claudiu.albulescu@upt.ro); Rangan Gupta (Department of Economics, University of Pretoria) |
| Abstract: | Commodity and asset prices have a well-documented effect on economic growth, manifested through various channels. At the same time, the business cycle influences the commodity and asset prices. Whereas empirical evidence on the effect of commodity and asset prices on the long-run economic growth is ambiguous, most of the previous researches highlight a positive correlation in the short-run. The aim of this paper is to disentangle the short- and long-run co-movements between U.S. historical business cycles and commodity and asset prices, over the period 1859-2013. For this purpose we use a time-frequency approach and we test the historical influence of oil, gold, housing and stock prices, over the output growth. Different from other studies, we control for the effect of other prices and monetary conditions, using the wavelet partial coherency. In line with the previous works, we discover that co-movements between economic growth and commodity and assets prices manifest especially in the short-run. We also find that stock returns and housing prices have a more powerful effect on the U.S. economic growth rate than the oil and gold prices. The long-run co-movements are documented especially around the World War II. Finally, when controlling for the influence of the interest rate, inflation and other commodity and asset prices, co-movements become weaker in the short-run. In general the oil and housing prices lead the GDP growth, the U.S. output lead the gold prices, while there is no clear causality direction between business cycle and stock prices. |
| Keywords: | Commodity and asset prices, economic growth, U.S. business cycle, historical co-movements, wavelets |
| JEL: | E32 C22 N11 N12 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201523&r=his |
| By: | Konstantin Yanovskiy (Gaidar Institute for Economic Policy); Sergey Zhavoronkov (Gaidar Institute for Economic Policy); Ilia Zatcovetsky (Samuel Neaman Institute for Advanced Studies in Science and Technology); Vladimir Lisin (Chairman of the board of directors of Novolipetsk Steel Company); Dmitry Cherny (Ministry of Economic Development of the Russian Federation Department for Innovative Development); Sergey Shulgin (The Russian Presidential Academy of National Economy and Public Administration (RANEPA)) |
| Abstract: | How to import modern Western Institutions to suppress economic growth in underdeveloped countries? Russian experience and some warnings for newcoming reformers The monograph «Institutional Constraints on Modern Economic Growth" deals with the most dangerous obstacles standing in the way of long term economic growth. Some of these obstacles have been studied extensively, while others are well known but have been largely forgotten over time; finally, there are some that for various reasons are normally ignored. "I believe that the United States today is not an appropriate model for Mexico or other low-income countries…. There have been no summits about how you privatize governmental activities. You have seen summits about how to raise taxes, about spending more of the taxpayers' money, about how to impose more controls on the people. That is the sense in which I say, take as your model the U.S. in its first 150 years. We can afford our nonsense now because we had so long a period during which to build a base. You can't." wrote Milton Friedman[1] in 1994. The book contains specification of the principal cases of "nonsense". The authors are searching for historic records of "damaged" institutions their roots and causes of the damages, tracking them to universal suffrage rising and to the earlier, pre-capitalist institutions, so that to develop the policy advice for new democracies how to escape all these traps. |
| Keywords: | private property safeguards, import of institutions; Economic Growth; Government failures; political institutions |
| JEL: | D72 D73 H41 N40 P16 P51 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:gai:wpaper:0112&r=his |
| By: | Mark R. Cullen; Michael Baiocchi; Karen Eggleston; Pooja Loftus; Victor Fuchs |
| Abstract: | Sex differences in mortality (SDIM) vary over time and place as a function of social, health, and medical circumstances. The magnitude of these variations, and their response to large socioeconomic changes, suggest that biological differences cannot fully account for sex differences in survival. We document “stylized facts” about SDIM with which any theory will have to contend. We draw on a wide swath of mortality data, including probability of survival to age 70 by county in the United States, the Human Mortality Database data for 18 high-income countries since 1900, and mortality data within and across developing countries over time periods for which reasonably reliable data are available. We show that, in each of the periods of economic development after the onset of demographic and epidemiologic transition, cross-sectional variation in SDIM exhibits a consistent pattern of female resilience to mortality under adversity. Moreover, as societies develop, M/F survival first declines and then increases, a “SDIM transition” embedded within the demographic and epidemiologic transitions. |
| JEL: | I14 I15 J10 J16 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21114&r=his |
| By: | Lehmann, Sibylle; Streb, Jochen |
| Abstract: | Analysing 474 cases of firms going public in the German capital between 1892 and 1913, we show that innovative firms could rely on the Berlin stock market as a source of financing. The data also reveal that initial public offerings (IPO) of innovative firms were characterized by particularly low underpricing, comparatively high first trading prices, and no long-run underperformance. We interpret these empirical results as evidence for the surprising fact that contemporary investors had rational expectations. |
| Keywords: | industrialisation; innovation; IPO; stock exchange |
| JEL: | G14 N23 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10558&r=his |
| By: | Fabrizio Cipollini; Camilla Ferretti; Piero Ganugi; Renato Giannetti (Dipartimento di Scienze per l'Economia e l'Impresa) |
| Abstract: | The firms’ size distribution in the Italian Golden age has been described as a successful example of the adoption of the big business model which is characterized by large firms able to exploit the economies of scale of the modern technologies. Two main questions are present in literature: was it enough or could have been done better? Are the two decades homogeneous? The paper tries to answer to these questions observing a panel of a Core of firms, estimating their changing of size distribution and the tendency to upsize, by the Mover-Stayer model. The upsizing of firms emerges clearly, considering the distribution among the size classes in the years 1950, 1960 and 1970, the transition matrices and directional index which shows a rate of growth more than considerable and a strong tendency to upsizing of firms in every class. Moreover, the equilibrium distribution is characterized by a relevant increase of the frequencies in the last two classes. A slowdown of the growth of the size in the last years of the second decade appears too, but the remarkable shift of frequencies on the last two classes - both of the effective and equilibrium distribution- point anyway to a success story. The difference observed in the equilibrium configuration according to 1960-1970 decade, shows a stronger shift of frequencies on the right of the distribution and it seems to confirm the traditionally observed effect of a more selective industrial policy at sectorial level - in the second part of the Sixties - than to an early presence of the perverse effect of intrusive policy in management. |
| Keywords: | Firms size, Italian Golden Age, equilibrium distribution, Mover-Stayer model, directional index. |
| JEL: | C4 M2 N8 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2015_05.rdf&r=his |
| By: | Edmar Lisboa Bacha; Regis Bonelli |
| Abstract: | This paper is devoted to a quantitative assessment of Brazil’s long-term growth experience. The analysis herein shows that savings alone do not explain the growth slump after 1980. Our explanation centers on the evolution of the output-capital ratio and on changes in the relative price of investment goods. A lower degree of capacity utilization also helps to elucidate Brazil’s mediocre growth performance since 1980. Decadal decompositions of capital stock and GDP growth highlight the factors accounting for Brazil’s growth in particular sub-periods. O trabalho contém uma avaliação quantitativa da experiência brasileira de crescimento no longo prazo, cobrindo o período 1940-2002. A análise mostra que o desempenho da poupança, por si só, não explica a redução das taxas de crescimento depois de 1980. Nossa explicação para esse fenômeno está baseada na evolução da relação produto-capital e nas mudanças dos preços relativos dos bens de investimento. A redução do grau de utilização da capacidade instalada também ajuda a explicar o medíocre desempenho brasileiro desde 1980. Um conjunto de decomposições do crescimento do estoque de capital e do PIB segundo períodos selecionados destaca quais foram os fatores responsáveis pelo crescimento brasileiro nesses períodos. |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:ipe:ipetds:0128&r=his |
| By: | Nicholas Oulton; Gavin Wallis |
| Abstract: | This paper presents annual estimates of fixed capital stocks and capital services for the United Kingdom, 1950-2013, for the whole economy and for the market sector. Our estimates cover eight asset types (structures, machinery, vehicles, computers, purchased software, own-account software, mineral exploration and artistic originals) and also a ninth, R&D, from 1981 to 2013. We compare the effect on the estimates of capital services of using either an exogenous (ex post) rate of return or an endogenous one. The latter uses a model which allows for ex ante risk: firms’ expectations may not be satisfied so the realised rate of return may not be equalised across assets. We see how much the inclusion of R&D matters. We also look at what has happened to capital intensity (capital services per hour worked) in the Great Recession, a period when labour productivity fell in the UK. And we consider the evolution of the aggregate depreciation rate and of capital consumption as a proportion of GDP. |
| Keywords: | Capital services; capital stocks; rate of return; ex post; hybrid |
| JEL: | D24 E22 E23 O47 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:61697&r=his |