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on Business, Economic and Financial History |
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Issue of 2017‒11‒05
25 papers chosen by |
| By: | Aurélien Goutsmedt (Centre d'Economie de la Sorbonne, Chaire Energie et Prospérité); Erich Pinzon-Fuchs (Los Andes University); Matthieu Renault (Centre d'Economie de la Sorbonne); Francesco Sergi (University of Bristol) |
| Abstract: | We illustrate how the Lucas Critique was called into question by Keynesian macroeconomists during the 1970s and 1980s. Our claim is that Keynesians' reactions were carried out from a pragmatic approach, which addressed the empirical and practical relevance of the Critique. Keynesians rejected the Critique as a general principle with no relevance for concrete macroeconometric practice; their rejection relied on econometric investigations and contextual analysis of the U.S. 1970s stagflation and its aftermath. Keynesians argued that the parameters of their models remained stable across this period, and that simpler ways to account for stagflation (such as the introduction of supply shocks into their models) provided better alternatives to improve policy evaluation |
| Keywords: | History of macroeconomics; Lucas Critique; Keynesian macroeconometrics; Stagflation |
| JEL: | B22 B41 E60 E12 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:17042&r=his |
| By: | Hazem Alshaikhmubarak; R. Richard Geddes; Shoshana Amyra Grossbard |
| Abstract: | Under the common-law system of coverture in the United States, a married woman relinquished control of property and wages to her husband. Many U.S. states passed acts between 1850 and 1920 that expanded a married woman’s right to keep her market earnings and to own separate property. The former were called married women’s earnings acts (MWEAs) and the latter married women’s property acts (MWPAs). Scholarly interest in the acts’ effects is growing. Researchers have examined how the acts affected outcomes such as women's wealth-holding and educational attainment. The acts' impact on women’s non-marital birth decisions remains unexamined, however. We postulate that the acts caused women to anticipate greater benefits from having children within rather than outside of marriage. We thus expect passage of MWPAs and MWEAs to reduce the likelihood that single women become mothers of young children. We use probit regression to analyze individual data from the U.S. Census for the years 1860 to 1920. We find that the property acts in fact reduced the likelihood that single women have young children. We also find that the “de-coverture†acts’ effects were stronger for literate women, U.S.-born women, in states with higher female labor-force participation, and in more rural states, consistent with predictions. |
| Keywords: | property, earnings, family, law, fertility, marriage |
| JEL: | D10 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6471&r=his |
| By: | Jakob B Madsen |
| Abstract: | In his 2014 book, Thomas Piketty argues that wealth inequality is sharply increasing in r-g and refers to r>g as ‘the central contradiction of capitalist economics’, where r is asset returns and g is real income growth. To assess whether inequality is increasing in the (r-g)-gap this paper: 1) constructs unique annual data on asset returns for a balanced portfolio and several other variables for Britain over the period 1210-2013, and 2) examines whether the dynamics in the wealth-income ratio, W-Y, and capital’s income share, SW, are governed by (r-g). It is shown that r and g are robust and significant determinants of wealth and income inequality and that they have been the major forces behind the large inequality waves over the past eight centuries. |
| Keywords: | Inequality and the (r-g)-gap; dynamics of inequality; inequality in Britain, 1210-2013 |
| JEL: | E1 E2 O4 N1 N30 P1 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2017-63&r=his |
| By: | Ricardo T. Fernholz; Kris James Mitchener; Marc Weidenmier |
| Abstract: | We use the demise of silver-based standards in the 19th century to explore price dynamics when a commodity-based money ceases to function as a global unit of account. We develop a general equilibrium model of the global economy with gold and silver money. Calibration of the model shows that silver ceased functioning as a global price anchor in the mid-1890s - the price of silver is positively correlated with agricultural commodities through the mid-1890s, but not thereafter. In contrast to Fisher (1911) and Friedman (1990), both of whom predict greater price stability under bimetallism, our model suggests that a global bimetallic system, in which the gold price of silver uctuates, has higher price volatility than a global monometallic system. We confirm this result using agricultural commodity price data for 1870-1913. |
| Keywords: | bimetallism, classical gold standard, silver, unit of account, fixed exchange rates |
| JEL: | E42 F33 N10 N20 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6436&r=his |
| By: | Alessandro Iaria; Carlo Schwarz; Fabian Waldinger |
| Abstract: | We show that WWI and the subsequent boycott against Central scientists severely interrupted international scientific cooperation. After 1914, citations to recent research from abroad decreased and paper titles became less similar (evaluated by Latent Semantic Analysis), suggesting a reduction in international knowledge flows. Reduced international scientific cooperation led to a decline in the production of basic science and its application in new technology. Specifically, we compare productivity changes for scientists who relied on frontier research from abroad, to changes for scientists who relied on frontier research from home. After 1914, scientists who relied on frontier research from abroad published fewer papers in top scientific journals, produced less Nobel Prize-nominated research, introduced fewer novel scientific words, and introduced fewer novel words that appeared in the text of subsequent patent grants. The productivity of scientists who relied on top 1% research declined twice as much as the productivity of scientists who relied on top 3% research. Furthermore, highly prolific scientists experienced the starkest absolute productivity declines. This suggests that access to the very best research is key for scientific and technological progress. |
| Keywords: | frontier knowledge, scientific production, international knowledge flows, WWI |
| JEL: | O3 N3 N4 O31 O5 N30 N40 J44 I23 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1506&r=his |
| By: | Aurélien Goutsmedt (Centre d'Economie de la Sorbonne, Chaire Energie et Prospérité) |
| Abstract: | The article studies the 1978 macroeconomics conference titled “After the Phillips Curve”, where Lucas and Sargent presented their fierce attack against structural macroeconometric models, “After Keynesian Macroeconomics”. The article aims at enlarging the comprehension of changes in macroeconomics in the 1970s. It shows: 1) that Lucas and Sargent dit not tackle directly the issue of the explanation of stagflation; 2) but that the struggle between different methodological stances in the conference cannot be separated from the way macroeconomists interpreted stagflation; 3) that it was not an opposition between being in favor or against microfounded models, but rather on the way we build microfoundations; 4) finally that the study of the 1978 conference opens the doors for scrutinizing the evolution of institution macroeconometric models of the 1970s which were not totally overthrown by Lucas and Sargent's arguments |
| Keywords: | History of macroeconomics; Keynesian economics; Microfoundations; Structural Macroeconometric Models |
| JEL: | B22 B41 E60 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:17043&r=his |
| By: | Howard Bodenhorn |
| Abstract: | Theories of household saving posit that households add to or draw down wealth to equalize the discounted presented value of consumption over time. This paper examines the extent to which nineteenth-century urban American industrial workers used saving and dissaving to smooth consumption in response to unanticipated, plausibly exogenous, shocks to income. Information on the expected and unexpected number of days unemployed is used to construct estimates of transitory income. The data are then used to estimate the marginal propensity to save from transitory income, and the results are broadly consistent with Friedman’s (1957) permanent income hypothesis. |
| JEL: | N21 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23948&r=his |
| By: | Peter Grajzl; Peter Murrell |
| Abstract: | We use machine-learning methods to study the features and origins of the Baconian program, a cultural paradigm that provided intellectual roots for modern economic development. We estimate a structural topic model, a state-of-the-art methodology for analysis of text corpora. The estimates uncover sixteen topics prominent in Bacon’s opus. Two are central in the Baconian program: fact-finding and inductive epistemology. While Bacon’s epistemology arises from his jurisprudence, fact-finding is sui generis Bacon. The utilitarian promise of science, embraced by Bacon’s followers, was not emphasized by him. Bacon’s use of different topics varies notably with intended audience and chosen medium. |
| Keywords: | Baconian program, culture, law, knowledge, natural philosophy, politics, religion |
| JEL: | B31 Z10 N73 K10 P10 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6443&r=his |
| By: | Christian Ochsner; Felix Rösel |
| Abstract: | We study whether long-gone but activated history can shape social attitudes and behavior even after centuries. We exploit the case of the sieges of Vienna in 1529 and 1683, when Turkish troops pillaged individual municipalities across East Austria. In 2005, Austrian right-wing populists started to campaign against Turks and Muslims and explicitly referred to the Turkish sieges. We show that right-wing voting increased in once pillaged municipalities compared to non-pillaged municipalities after the campaigns were launched, but not before. The effects are substantial: Around one out of ten votes for the far-right in a once pillaged municipality is caused by salient history. We conclude that campaigns can act as tipping points and catalyze history in a nonlinear fashion. |
| Keywords: | salience, persistence, right-wing populism, political campaigns, collective memory, Turkish sieges, Austria |
| JEL: | D72 N43 N44 Z13 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6586&r=his |
| By: | Czarniawska, Barbara (Gothenburg Research Institute); Sevón, Guje (Dept. of Management and Organization) |
| Abstract: | This text starts with counts of men and women authors quoted in some early and late works of organization theory. An analysis of works of classical authors, and of our own works, reveals that over the years the proportion of references to women’s work has increased, although it is still far from half of the references. The text invites to a discussion about why women authors are systematically underrecognized, and initiates by listing some reasons for why full names in references instead of initials might enhance the proper recognition of research conducted by women. |
| Keywords: | gender; referencing; academic excellence; organization studies |
| Date: | 2017–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhb:hastma:2017_005&r=his |
| By: | Daniel Treisman |
| Abstract: | How does democracy emerge from authoritarian rule? Influential theories contend that incumbents deliberately choose to share or surrender power. They do so to prevent revolution, motivate citizens to fight wars, incentivize governments to provide public goods, outbid elite rivals, or limit factional violence. Examining the history of all democratizations since 1800, I show that such deliberate choice arguments may help explain up to one third of cases. In about two thirds, democratization occurred not because incumbent elites chose it but because, in trying to prevent it, they made mistakes that weakened their hold on power. Common mistakes include: calling elections or starting military conflicts, only to lose them; ignoring popular unrest and being overthrown; initiating limited reforms that get out of hand; and selecting a covert democrat as leader. These mistakes reflect well-known cognitive biases such as overconfidence and the illusion of control. |
| JEL: | K00 N20 P16 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23944&r=his |
| By: | Kaminsky, Graciela |
| Abstract: | A common belief in both academic and policy circles is that capital flows to the emerging periphery are excessive and ending in crises. One of the most frequently mentioned culprits is the cycles of monetary easing and tightening in the financial center. Also, many focus on the role of crises in the financial center, pointing to excess international borrowing predating crises in the financial center and global retrenchment in capital flows in its aftermath. I re-examine these views using a newly-constructed database on capital flows spanning two hundred years. Extending the study of capital flows to the first episode of financial globalization has two major advantages: During this episode, monetary policy in the financial center is constrained by the adherence to the Gold Standard, thus providing a benchmark for capital flow cycles in the absence of an active role of central banks in the financial centers. Second, panics in the financial center are rare disasters that need to be examined in a longer historical episode. I find that boom-bust capital flow cycles in the periphery are milder in the second episode of financial globalization when the financial center follows a cyclical monetary policy. Also, cyclical monetary policy in the financial center is far more pronounced in times of crises in the financial center, cutting short capital flow bonanzas in the periphery and injecting liquidity in the aftermath of the crisis. |
| Keywords: | International borrowing cycles, systemic and idiosyncratic capital flow bonanzas |
| JEL: | F3 F30 F34 |
| Date: | 2017–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82125&r=his |
| By: | Maya Lavrinovich (National Research University Higher School of Economics) |
| Abstract: | This paper discusses the problem of the adaptation of a new cultural model by the educated members of the Russian “middle class” in the late 18th century when new social skills and new kinds of the perception of social reality were transmitted to the public through the emotionally very intensive theatre performances. Examining the translation of the drama Poverty and Nobleness of Mind by August von Kozebue and taking into account that the drama was staged at the private theatre of Alexandr Vorontsov, Malinovskii’s patron, in 1799, I suggest that he had some apprehensions about his own noble status which he obtained in a specific way. He seems to face the choice: to act on his feelings as sentimental dramas instructed him and marry a poor but noble girl in 1790s, or wait until Vorontsov’s niece became a wealthy heiress what actually happened in a decade |
| Keywords: | Russia, 18th century, Aleksei Malinovskii, August von Kotzebue, theatre, translation, ennoblement, sentimentalism, marriage strategies. |
| JEL: | Z |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:155/hum/2017&r=his |
| By: | Wu, Cheng |
| Abstract: | Keynes’ General Theory (1936) is probably the most challenging economics book ever written, with an abundance of hypotheses, concepts and theories. Twenty five years after its publication, Clower proposed an insightful explanation on Keynes, the Dual-Decision Hypothesis (DDH). Hall (1978) and Flavin (1981) seemingly reached the conclusion that, under certain conditions, consumption was independent of income. In contrast, Wu (2016) has shown that, change in saving has to be a function of income growth. In fact, applying Wu’s corrected consumption for period t+1, it is possible to show DDH equations leading to Keynes’ change in saving (and disequilibrium) conclusion. |
| Keywords: | consumption; martingale; savings; growth; income; trade; Clower; dual decision hypothesis; keynes |
| JEL: | A10 B22 C2 E2 E6 F0 J0 N1 |
| Date: | 2017–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82120&r=his |
| By: | Michel Serafinelli; Guido Tabellini |
| Abstract: | Creativity is often highly concentrated in time and space, and across different domains. What explains the formation and decay of clusters of creativity? In this paper we match data on thousands of notable individuals born in Europe between the XIth and the XIXth century with historical data on city institutions and population. After documenting several stylized facts, we show that the formation of creative clusters is not preceded by increases in city size. Instead, the emergence of city institutions protecting economic and political freedoms facilitates the attraction and production of creative talent. Keywords: innovation, agglomeration, political institutions, immigration, gravity. JEL: R10, O10, J61, N13 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:608&r=his |
| By: | Stefan Bauernschuster; Anastasia Driva; Erik Hornung |
| Abstract: | We investigate the impact on mortality of the world’s first compulsory health insurance, established by Otto von Bismarck, Chancellor of the German Empire, in 1884. Employing a multi-layered empirical setup, we draw on international comparisons and difference-in-differences strategies using Prussian administrative panel data to exploit differences in eligibility for insurance across occupations. All approaches yield a consistent pattern suggesting that Bismarck’s Health Insurance generated a significant mortality reduction. The results are largely driven by a decline of deaths from infectious diseases. We present prima facie evidence that diffusion of new hygiene knowledge through physicians was an important channel. |
| Keywords: | health insurance, mortality, demographic transition, Prussia |
| JEL: | I13 I18 N33 J11 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6601&r=his |
| By: | Amaral, S.; Bhalotra, Sonia |
| Abstract: | This paper investigates the consequences of sex imbalance in India's population for violence against women. We match district level administrative crime data by category to age- specific sex ratios in census data across four decades and, to analyse mechanisms, we also use administrative data on marriage rates and household survey data on attitudes to violence against women and marriage quality. We estimate that the elasticity of violence against women with respect to the surplus of men age 20-24 is unity, and that this explains about 35% of the rise in gender-based violence since 1995. Although less robust, there is some evidence that the youth sex ratio also raises non-gendered forms of violence, but we find no discernible impact upon property and economic crime. In probing mechanisms we argue that men are more prone to crime than women, that the share of unmarried men is increasing in the youth sex ratio, that attitudes to violence against women are evolving as a function of the sex ratio at birth and marriage quality measures, including self-reported domestic violence, are negatively related to sex ratios. |
| Date: | 2017–10–24 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2017-12&r=his |
| By: | John M. de Figueiredo; Edward H. Stiglitz |
| Abstract: | Presidents often attach statements to the bills they sign into law, purporting to celebrate, construe, or object to provisions in the statute. Though long a feature of U.S. lawmaking, the President has avowedly attempted to use these signing statements as tool of strategic influence over judicial decisionmaking since the 1980s—as a way of creating “presidential legislative history” to supplement and, at times, supplant the traditional congressional legislative history conventionally used by the courts to interpret statutes. In this Article, we examine a novel dataset of judicial opinion citations to presidential signing statements to conduct the most comprehensive empirical examination of how courts have received presidential legislative history to date. Three main findings emerge from this analysis. First, contrary to the pervasive (and legitimate) fears in the literature on signing statements, courts rarely cite signing statements in their decisions. Second, in the aggregate, when courts cite signing statements, they cite them in predictably partisan ways, with judges citing Presidents’ signing statements from their own political parties more often than those of the opposing parties. This effect, however, is driven entirely by the behavior of Republican-appointed appellate jurists. Third, courts predominately employ signing statements to buttress aligned statutory text and conventional sources of legislative history, and seemingly never rely on them to override contrary plain statutory text or even unified traditional legislative history. This suggests that signing statements have low rank among interpretative tools and courts primarily use them to complement rather than substitute for congressional legislative history. In this sense, Presidents have largely failed to establish an alternative corpus of valid interpretive material. |
| JEL: | H70 K00 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23951&r=his |
| By: | Ager, Philipp (Department of Business and Economics); Hansen, Casper Worm (Department of Economics) |
| Abstract: | The introduction of immigration quotas in the 1920s fundamentally changed U.S. immigration policy. We exploit this policy change to estimate the economic consequences of immigration restrictions for the U.S. economy. The implementation of the quota system led to a long-lasting relative decline in population growth in areas with larger pre-existing immigrant communities of affected nationalities. This effect was largely driven by the policy-restricted supply of immigrants from quota-affected nationalities and lower fertility of first- and second-generation immigrant women. In the more affected areas labor productivity growth in manufacturing declined substantially and native workers were pushed into lower-wage occupations. While native white workers faced sizable earnings losses, black workers benefited from the quota system and improved their relative economic status within the more affected areas. |
| Keywords: | Immigration restrictions; productivity growth; local labor markets; racial wage gap |
| JEL: | J31 J61 N31 O15 |
| Date: | 2017–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sdueko:2017_011&r=his |
| By: | Gema Aparicio (Independent Scholar, Fort Wayne, Indiana, U.S.A); Ángel Luis González-Esteban (Universitat Pompeu Fabra, Barcelona, Spain); Vicente Pinilla (Universidad de Zaragoza and Instituto Agroalimentario de Aragón, Zaragoza, Spain); Raúl Serrano (Universidad de Zaragoza, Zaragoza, Spain) |
| Abstract: | In the last two hundred years, agricultural trade has grown at a remarkably rapid rate. In the first globalizing wave, international trade was based on the exchange of primary products for manufactured goods. This provided important opportunities for complementarity in certain countries on the periphery that took advantage of the opportunity to base their economic development on the growth of their exports and the linkages between them and the rest of the economy. However, most of the agricultural exporting countries, obtained few benefits from this model of development. In the second wave of globalisation, an intra-industrial trade increasingly replaced this pattern of trade. In addition, the more developed countries tended to protect their agricultural production, which have been a major obstacle to agricultural trade. |
| Keywords: | Agricultural and Food Trade, Globalisation, World Periphery |
| JEL: | F14 N50 N70 Q17 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:ahe:dtaehe:1706&r=his |
| By: | Yellen, Janet L. (Board of Governors of the Federal Reserve System (U.S.)) |
| Date: | 2017–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgsq:980&r=his |
| By: | Jean-Daniel Boyer (University of Strasbourg); Magali Jaoul-Grammare (University of Strasbourg); Sylvie Rivot (University of Strasbourg) |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:afc:wpaper:11-17&r=his |
| By: | Claude Diebolt (University of Strasbourg) |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:afc:wpaper:10-17&r=his |
| By: | Lars Hornuf; Marc Oliver Rieger |
| Abstract: | Can television have a mitigating effect on xenophobia? To examine this question, we exploit the fact that individuals in some areas of East Germany – due to their geographic location – could not receive West German television until 1989. We conjecture that individuals who received West German television were exposed more frequently to foreigners and thus have developed less xenophobia than people who were not exposed to those programs. Our results show that regions that could receive West German television were less likely to vote for right-wing parties during the national elections from 1998 to 2013. Only recently, the same regions were also more likely to vote for left-wing parties. Moreover, while counties that hosted more foreigners in 1989 were also more likely to vote for right-wing parties in most elections, we find counties that recently hosted more foreign visitors showed less xenophobia, which is in line with intergroup contact theory. |
| Keywords: | mass media, television, xenophobia, attitudes towards foreigners, East Germany, natural experiment |
| JEL: | D72 L82 P30 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6632&r=his |
| By: | László Jankovics; Monika Sherwood |
| Abstract: | This study takes stock of the early history of independent fiscal institutions (IFI) in the EU and draws horizontal lessons for the future from the experiences of Member States. First, it briefly recalls how the consensus of the economic literature about well-designed IFIs was reflected in the EU legislation which prompted the spread of IFIs across the whole EU. The paper then describes the significant differences between IFIs across the Member States in terms of the breadth of their mandates, their resources, their visibility in public debates etc. Subsequently, the paper zooms in on two core tasks of IFIs: i) their production or endorsement of the official macroeconomic forecasts used for fiscal planning, and ii) their assessment of national compliance with numerical rules. Qualitative and some tentative quantitative evidence suggest that in the early years of their operation, IFIs have already played a useful role in national budgetary processes, although some common challenges remain present. The discussion paper concludes with a number of potential ideas for strengthening the role of IFIs to the benefit of sound fiscal policymaking. These include, most notably, ensuring more appropriate independence safeguards, improvements in the forecast endorsement process, a more timely and comprehensive monitoring of numerical rules, as well as a broader application of the comply-or-explain principle in relation to IFIs’ assessments. |
| JEL: | E62 H61 H68 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:euf:dispap:067&r=his |