EREH new editor: Dan Bogart

The European Review of Economic History will soon have two new editors – Dan Bogart (UC-Irvine) and Joan Rosés (LSE). They will work together with Nikoulas Wolf (Univ. Humboldt) who will remain in office. We managed to get quick interviews both with Dan Bogart and Joan Rosés. First one out is Dan Bogart:

 

Dan Bogart is Associate Professor in Economic History
at UC-Irvine and new editor of the EREH.

How did you get interested in Economic history?

As an undergraduate at the University of Minnesota, I read two books that peaked my interest in economic history. The first was Robert Fogel's Railroads and American Economic Growth: Essays in Econometric History, and the second was Doug North's Structure and Change in Economic History. I thought Fogel's methodology of counter-factual history was very innovative and gave a shocking answer to a big question. I wanted to imitate Fogel's work. North's books was inspiring in that it provided a perspective on the long-run and stimulated my thinking on the role of the state. I have been grappling with this issue ever since. 

As new editor of the EREH, what role will you play in the journal?

My role as editor is three-fold. The first and most important is to ensure that the best papers get published. My second role is to encourage high quality submissions to EREH. Third, is to promote research in economic history more generally.

In general, what do you look for in a submission and how would you describe the perfect EREH article?

In my view the best papers tell us something new about economic history and are well executed. Novelty is important because the field of economic history needs to continually advance. Good execution is also important as we would like the results of published papers to be regarded as credible or believable long into the future.  I should add that in terms of methodology, I don't believe there is any 'right' approach to economic history. I am regularly surprised by new and informative approaches to research. 

What important changes do you see happening in Economic History research right now? How do you think this will influence future contributions in the journal?

For the last decade, there has been a trend in economic history towards greater theoretical rigor and improved identification in econometrics.  I see this trend as continuing for the foreseeable future. However, I would hope that scholars don't focus exclusively on identification when choosing their research questions.  Economic history has always focused on the big questions, like the sources of the Great Divergence, even if a precise answer cannot be given with current data or techniques. There will always be room in the field for more exploratory research. 

Announcement: Call for papers Esbjerg FRESH Meeting

Topic: Ancient Economy and Early Economic Developments

Date: October 1-2, 2014

Hosting Institution: Department of Environmental and Business Economics, University of Southern Denmark, Esbjerg

Keynote Speakers: Erwin Bulte, Wageningen UR; Carl Hampus Lyttkens, Lund University

Local Organizer: Brooks Kaiser

FRESH Organizers: Rowena Gray, Paul Sharp and Martin Uebele

For this meeting we particularly encourage papers on all aspects of ancient economy and early economic developments, but submissions from scholars working in other areas may be considered. 

 Prospective speakers should submit a one-page abstract and a short CV via the link on the FRESH website by May 31.

Notification of acceptance will be given by July 1.

For more information about FRESH meetings, please visit the FRESH website at http://www.sdu.dk/en/ivoe/fresh

please see also the EHES website

http://www.ehes.org

and the HEDG website

http://www.sdu.dk/en/ivoe/hedg

Economic Liberty in the Long Run: Evidence from OECD Countries

 Leandro Prados de la Escosura is professor in

Economic history at Universidad Carlos III de Madrid.

How has freedom evolved over time? A distinction has been made between ‘negative’ freedom, defined as lack of interference or coercion by others (freedom from), and ‘positive’ freedom, that is, the guarantee of access to markets that allow people to control their own existence (freedom to) (Berlin, 1958). An example of negative freedom is economic liberty. A country will be economically free in so far privately owned property is securely protected, contracts enforced, prices stable, barriers to trade small, and resources mainly allocated through the market (Friedman, 1962).

Empirical research on economic liberty has been restricted to the last decades (de Haan et al., 2006). The resulting indices of economic freedom exhibit wide spatial coverage but their time dimension is limited and, in the most comprehensive measure of economic liberty, the Fraser Institute’s index, only goes back to 1970 (Gwartney et al., 2013). The lack of a long-run perspective reduces the value of its lessons and policy implications, with the risk of identifying what it is specific to the recent past, with empirical regularities that apply across space and time.

A new Historical Index of Economic Liberty (HIEL) provides a long-run view of economic freedom and its main dimensions for today’s advanced nations, more specifically, those included in the OECD prior to its enlargement since 1994 (Prados de la Escosura, 2014).


Given the bounded nature of any index of economic freedom, the use of its percentage change or rate of growth would be misleading as increases achieved at low levels cannot be matched at high levels. It is preferable, then, to look at the absolute shortfall of economic freedom from its upper bound at the initial point and, then, compute its relative decline over a given period. Thus, the improvement is measured as the proportion of the maximum possible (that is, the reduction in its shortfall).

The Historical index of Economic Liberty, HIEL.
(click on image to enlarge)

Economic liberty is higher nowadays in the OECD than at any time over the last one and a half centuries and, probably, in history. Over 1850-2007, the shortfall declined by nearly three-fourths. However, its evolution has been far from linear. Different phases can be established. From the mid-nineteenth century to the eve of World War I steady advancement of economic liberty took place across the board, peaking in 1913, although it is up to early 1880s when most of the action happened. Over three-fourths of the overall progress in economic liberty in the OECD up to 2007 had been achieved before World War I.

During the first half of the twentieth century economic freedom suffered a severe reversal. After a dramatic decline during the war and its aftermath, the recovery was fast and peaked by 1929, but at the level of the late 1890s. The Great Depression pushed down economic freedom again and the post-Depression recovery did not imply a rebound of economic liberty so, by the eve of World War II, it had shrunk to the level of the early 1850s.

Economic freedom expanded in the second half of the twentieth century and peaked by 2007. However, in between two expansionary phases: a quick recovery in the 1950s and a post-1980 expansion, economic freedom came to a halt, stabilising during the 1960s around the late 1920s level, and declining in the early 1970s. From the early 1980s to the eve of the current recession, a sustained expansion took place, overcoming the 1913 peak after 1989 and reducing the early 1980s shortfall to half by the mid-2000s. In the last two decades the highest levels of economic freedom have been reached.

Improvements to economic liberty, by dimension and period.
(click on image to enlarge)

Over time improvements in economic liberty derived from different dimensions. Thus, between 1850 and 1914, the improvement in property rights made the main contribution. Then, during the first half of the twentieth century, it was the collapse of freedom to trade internationally the main responsible for the contraction in economic liberty.  Since the mid-20th century, specifically in the 1950s and the post-1980 era, the liberalization of trade and factor flows was the leading force, accounting for more than half of the reduction in the economic freedom shortfall over 1950-2007. During the 1960s and 1970s, increases in regulation and unsound monetary policies offset the gains in freedom to trade and improvements in property rights. Overall, improvements in the legal structure and property rights emerge as the main force behind long-term gains in economic liberty during the last one and a half centuries.

The trends exhibited by the new historical index of economic liberty raise pressing questions. If economic freedom is usually associated to economic growth, how can we reconcile good economic performance in the OECD during the 1960s and early 1970s with stagnant and relatively low levels of economic freedom? Furthermore, are there any trade-offs between economic liberty, as a negative freedom, and other kinds of positive freedom, in particular, human development and democracy? Answering these questions provides an exciting and worth pursuing research agenda.

This blog post was written by:

LeandroPrados de la Escosura (Universidad Carlos III, LSE, CEPR)

The results can also be found in a new working paper by the EHES, no 54

Stating the obvious? Co-authorship and scientific contribution

One particularly controversial issue in recent case of  the Abilitazioni Scientifiche Nazionali in economic history in Italy has been the decision of not considering co-authored publications that did not include an explicit statement in which it was indicated the individual contribution of each author to the different sections of the paper. 

Below, we publish  two letters of editors of the leading journals in the field of Economic History and in the field of History of Economic Though that provide an important clarification concerning the editorial policies of these journals concerning co-authored papers. 

Stating the obvious? Apparently, sometimes it is necessary.

Durham, April 7th, 2014

Professor Paola Pierucci

Presidente di Commissione

Abilitazione Scientifica Nazionale – settore 13/C1

pieruccip@yahoo.it

cc: dottor Simona Corvaja

Responsabile del procedimento

Abilitazione Scientifica Nazionale – settore 13/C1

scorvaja@unime.it

cc: dottor Gianluca Cerracchio

MIUR – Direzione Generale Ufficio I

MIUR-DGUS@miur.it

cc: Ministero per l’Istruzione, l’Università e la Ricerca – MIUR

Direzione Generale per l’Università

direzione.universita@miur.it

Re: National Scientific Qualification (ASN – Abilitazione Scientifica Nazionale) – Economic History/History of Economic Thought/Economic Methodology

Dear professor Pierucci, Dear dottor Corvaja and dottor Cerracchio,

We have been informed by our Italian colleagues that the ASN Commission is developing criteria that will govern academic promotion in Italy. As we understand it, the ASN rules (DM 76/2012, art.4, sec. 2, letter B) state that the Commission must check for “the individual contribution in the case of co-authored works.” We, the undersigned editors of the principal international journals in the history of economic thought and economic methodology, believe that we can contribute important information to the ASN committee for the history of economic thought and economic methodology regarding the nature of the international practices for our specific discipline. In conjunction with our editorial boards and the community of scholars who aid in reviewing scientific articles, we largely determine which papers are published in the peer-reviewed journals in our field. 

Co-authorship of articles in the wider economics discipline is increasingly more common, so that, in many subfields of economics, it is the rule, not the exception. Co-authored articles do not yet dominate the history of economic thought and economic methodology, although they are very frequently encountered. The nature of scholarly collaboration in our field does not typically admit of any neat division of the total credit for a scholarly article into the individual contributions of its co-authors. As a result, we do not encourage – much less require – authors to report their individual contributions in the published versions of their articles. 

Our presumption is that the co-authors are each equally responsible for the final product, except in those rare cases in which the co-authors volunteer to apportion the credit in some other way. We also adhere to the common practice in several fields – though we know some other fields may follow a different one – in which co-authors are listed alphabetically, with no implication that the order of listing conveys any information about the importance of an individual co-author’s contribution. Exceptions to this rule are rare and, again, at the discretion of the co-authors themselves. The increasing prevalence of scholarly collaboration and co-authorship represents a vital element in scientific progress in many fields. We hope that the ASN committee for the history of economics/history of economic thought/economic methodology will not adopt rules that in any way discourage such collaboration by penalizing co-authors who fail to apportion their individual scholarly contributions within published articles. It would be particularly invidious to discount those articles completely in assessing the fitness of scholars for promotion. Much of the best work is co-authored; apportionment of scholarly effort into distinct shares is often impossible; and none of the major journals in our field require, nor even encourage nor welcome, such apportionment.

Yours sincerely,

John B. Davis (Marquette University and University of Amsterdam; Co-editor Journal of Economic Methodology)

Riccardo Faucci (University of Pisa; Co-editor, HEI – History of Economic Ideas)

Luca Fiorito (University of Palermo; Co-editor, Research in the History of Economic Thought and Methodology)

Nicola Giocoli (University of Pisa; Co-editor, HEI – History of Economic Ideas)

D. Wade Hands (University of Puget Sound; Co-editor Journal of Economic Methodology)

Kevin D. Hoover (Duke University; Editor, History of Political Economy)

Roberto Marchionatti (University of Turin; Co-editor, HEI – History of Economic Ideas)

Stephen Meardon (Bowdoin College; Editor, Journal of the History of Economic Thought)

Richard Sturn (Institute of Public Economics and Schumpeter Centre, Graz University; Managing Editor, European Journal of the History of Economic Thought)

April 14th, 2014

Professor Paola Pierucci

Presidente di Commissione

Abilitazione Scientifica Nazionale – settore 13/C1

pieruccip@yahoo.it

cc: dottor Simona Corvaja

Responsabile del procedimento

Abilitazione Scientifica Nazionale – settore 13/C1

scorvaja@unime.it

cc: dottor Gianluca Cerracchio

MIUR – Direzione Generale Ufficio I MIUR-DGUS@miur.it

cc: Ministero per l’Istruzione, l’Università e la Ricerca – MIUR Direzione Generale per l’Università

direzione.universita@miur.it

Re: National Scientific Qualification (ASN – Abilitazione Scientifica Nazionale) – Economic History

Dear Professor Pierucci, dottor Corvaja and dottor Cerracchio,

We understand that the recent rules on the Abilitazione Scientifica Nazionale state that in co-authored works the Selection Commission must check for “the individual contribution in the case of co-authored works.”

Following the letter of the editors of the history of economic thought and economic methodology journals JEM, HEI, HOPE, JHET, EJHET we would like to state that, in the field of economic history, the international journals we edit operate a similar editorial policy to that expressed in their letter. 

In our journals the majority of articles are co-authored. We rarely publish statements that delineate the specific contribution of each author to the different sections of the paper. The norm is for authors simply to be listed alphabetically, unless there is some desire by the authors to assign more credit to one of their number. Alphabetical listing implies that the authors all made contributions of equivalent value.

We operate with such a convention because, unlike in some fields of physical science, papers in economic history still typically have small numbers of co-authors, and it is the norm to only list as authors people who have contributed substantially, and in broadly equal measure, to the writing of the paper, the research design, and the data collection.

Yours sincerely,

Stephen Broadberry, LSE, London. Co-Editor, Economic History Review.

Gregory Clark, University of California, Davis. Co-Editor, European Review of Economic History.

William Collins, Vanderbilt University, Nashville. Co-Editor, Explorations in Economic History. 

Claude Diebolt, Université de Strasbourg. Editor, Cliometrica. 

Şevket Pamuk, Bogaziçi University, Istanbul. Co-Editor, European Review of Economic History.

Paul Rhode, University of Michigan, Ann Arbor. Co-Editor, Journal of Economic History.

Jean-Laurent Rosenthal, Caltech, Pasadena. Co-Editor, Journal of Economic History.

Hans-Joachim Voth, University of Zurich. Co-Editor, Explorations in Economic History.

Nikolaus Wolf, Humboldt University, Berlin. Co-Editor, European Review of Economic History.

Announcement: FRESH incorporated into EHES

The Frontier Research in Economic and Social History (FRESH) organizers are pleased to announce that at the recent European Historical Economics Society (EHES) trustees meeting on March 29, 2014 it was decided to incorporate FRESH within the EHES. FRESH will continue to be supported by and administered from the University of Southern Denmark and the Historical Economics and Development Group (HEDG), but we believe that becoming an initiative of the EHES gives us the solid academic backing we need to continue promoting economic history and the FRESH workshop format around the world. Moreover, the EHES has generously offered to fund each FRESH meeting, so that we can offer some limited financial support to junior scholars who wish to attend, enabling even more to benefit from the high international standards of our workshops.

For more information about FRESH meetings, please visit the FRESH website at http://www.sdu.dk/en/ivoe/fresh

Would you like to organize a FRESH meeting?

FRESH meetings have no permanent venue but take place at any institution around the world where there is an interest in having the FRESH meeting. Hosting institutions will be asked to provide a venue, including electronic equipment, and lunch and dinner for the meeting participants (usually 10-15). If you would like to organize a FRESH meeting at your institution, please contact the meeting organizers (contact details on the FRESH website: www.sdu.dk/en/ivoe/fresh).

Would you like to keep updated on FRESH activities?

There are two ways to sign up for updates on our activities. You can either ‘like’ FRESH on our facebook page (www.facebook.com/freshmeetings), or you can subscribe to eh.news at eh.net.

From the FRESH organizers: Rowena Gray, Paul Sharp and Martin Uebele

About Italian Economic history: A reply

A reply from the Boards of the Italian Associations of Economic History (SISE) and the History of Economic Thought (AISPE)

To: Profs. Robert C. Allen, Stephen Broadberry, Gregory Clark, Nicholas Crafts, Jane Humphries, Deirdre McCloskey, Joel Mokyr, Douglass North, Kevin O’Rourke, Leandro Prados de la Escosura, Jan Luiten Van Zanden, and Jeffrey G. Williamson

April 7, 2014
Re: Abilitazione Scientifica Nazionale 2012, Storia Economica (13 C/1)

Dear Colleagues,
As members of the Boards of the Italian Associations of Economic History (SISE) and the History of Economic Thought (AISPE), it was with surprise and dismay that we read the letter you sent to the Prime Minister and other Italian authorities regarding the results of the qualifying examination for the certification of professor of Economic History. 
It is not for us to dispute the choices made by the Commission responsible for the certification procedure, the minutes of which are available online for consultation and which we assume you read carefully prior to sending the letter. Your observations presume that the evaluation criteria adopted were arbitrary and inadequate. However, it must be remembered that Italian university professors are employed by the State and that the selection procedure is regulated by specific Government regulations which, while they may seem anachronistic, must be adhered to. 
Moreover, as representatives of Italian academics of Economic History and the History of Economic Thought, whose reputation has been compromised by your intervention, we feel it is our duty to clarify some points. The summary judgement which you pronounced is based exclusively on the criteria of international visibility as an indicator of the quality of an academic. While this is certainly an important factor, it is not the only one to be taken into consideration when evaluating a researcher. 
Economic Historians in Italy have widely discussed the scientific statute of the discipline and the methods for evaluating research and agree on the fact that only the careful, critical reading of a book, paper or article can allow us to express a valid judgement, in other words “the proof of the pudding is in the eating”. It is well-known that the widespread use of bibliometric criteria is a more immediate application tool, but it is also true that these methodologies are subject to severe criticism. The fact that most of our scientific production is in Italian obviously makes an international comparison difficult, but this does not give the right to make superficial judgements on a historiographic tradition such as the Italian one which has contributed to the general progress of Economic History and the History of Economic Thought not only with publications in Italian but also in French, Spanish, German and English.

We are in no doubt that your letter was based on a misunderstanding and that collaboration and mutual respect between Economic Historians in Italy and colleagues in other countries will continue to be fruitful.

Yours sincerely,

Franco M. Amatori, Università Bocconi – Milano
Francesco Asso, Università di Palermo
Massimo Augello, Presidente Associazione Italiana Storici del Pensiero Economico e Rettore
dell’Università di Pisa
Carlo Marco Belfanti, Università di Brescia
Giuseppe Di Taranto, Università LUISS – Roma
Antonio Di Vittorio, Presidente della Società Italiana degli Storici Economici e Professore Emerito
Università di Bari
Paolo Frascani, Università di Napoli L’Orientale
Andrea Leonardi, Università di Trento
Luca Michelini, Università di Pisa
Giampiero Nigro, Università di Firenze
Giovanni Pavanelli, Università di Torino
Rosario Patalano, Università di Napoli Federico II
Mario Taccolini, Università Cattolica del Sacro Cuore – Brescia
Carlo M. Travaglini, Università di Roma Tre
Gianfranco Tusset, Università di Padova

Economic history in Italy: A letter to the Minister of University and Scientific Research

Re: Abilitazione Scientifica Nazionale 2012, Storia Economica (13 C/1)

Dear Prime Minister, dear Minister,

We would like to express our concern about the results of the National Scientific Qualification (Abilitazione Scientifica Nazionale) in Economic History (13 C/1). In particular, we are puzzled by the failure of a number of applicants with an outstanding track record to obtain the “qualification” (abilitazione) for Full Professor (professore prima fascia) or for Associate Professor (professore seconda fascia). These individuals are well known outside Italy for their publications, their conference and seminar presentations, their refereeing of papers for leading journals, and their collaboration in international research projects. For example, we refer to three extremely valuable colleagues, Mark Dincecco (University of Michigan), Alessandro Nuvolari (Sant’Anna School of Advanced Studies) and Giovanni Vecchi (University  of Rome “Tor Vergata”), none of whom was awarded the qualification to Full Professor. It would be a terrible shame if these outcomes inhibited the full development of these scholars’ research agendas; economic history would be the poorer for it.

Another troubling feature of these results is the fact that candidates with a very limited track record of research in terms of international publications have been awarded the qualification. This is not the direction in which Italian economic history should go if it wants to secure its rightful place at the research frontier in our field.

Yours sincerely,

  

Robert C. Allen (New York University Abu Dhabi)

Stephen Broadberry (London School of Economics)

Gregory Clark (University of California, Davis)

Nicholas F. R. Crafts (University of Warwick)

Jane Humphries (All Souls College, University of Oxford)

Deirdre McCloskey (University of Gothenburg and University of Illinois at Chicago)

Joel Mokyr (Northwestern University)

Douglass C. North (Washington University in St. Louis; Nobel Memorial Prize in Economic Sciences 1993)

Kevin O’Rourke (All Souls College, University of Oxford)

Leandro Prados de la Escosura (Universidad Carlos III de Madrid)

Jan Luiten Van Zanden (University of Utrecht)

Jeffrey G. Williamson (Harvard University and University of Wisconsin)

Comment by Giovanni Federico, President of the European Historical Economics Society

Giovanni Federico is Professor in Economic
History at University of Pisa, and President of
the European Historical Economics Society.

This letter by twelve distinguished economic historians does not need much comment. However, some additional information might be helpful for readers not used to the byzantine procedures of the Italian university.  According to a 2010 law, professors are recruited in two distinct stages. In the first stage (Abilitazione Scientifica Nazionale), a national committee decides, on the basis of her publication record, whether a candidate is qualified (abilitato) to hold associate or full professor position in a given subject.  The qualification does not guarantee a position, but it is necessary to apply for actual jobs, which the universities will advertise in the next four years. Afterwards, the qualification would expire. There are 186 committees for as many fields (settori concorsuali), including Economic History, which must assess also candidates for History of Economic Thought. The deadline for application was  November 20, 2012  and 145 and 81  scholars applied respectively for associate and (full) professor (some of them applied for both positions). 

The CVs of  the candidates and the assessments of the committee (individual and collective) are available at https://abilitazione.cineca.it/ministero.php/public/esito/settore/13%252FC1/fascia/1  

and

https://abilitazione.cineca.it/ministero.php/public/esito/settore/13%252FC1/fascia/2

This transparency is highly praiseworthy, a welcome change from the bad habits of the past. 

The assessments show that the committee has denied the qualification to Nuvolari, Dincecco and Vecchi, at least officially, on a technicality. Its members have stated not to be able to distinguish the personal contribution of these three authors to the co-authored papers. This mention of the personal contribution to a joint paper may seem strange in the 21^st century. Indeed, it follows an old tradition of the Italian concorsi (competitions) for university positions, which prescribed that the contribution of each author must be recognizable. In fact, authors still use to add in Italian books and articles odd-looking footnotes such as 'although the work is the outcome of a joint work, author X has written Section 1,3,5 while author Y has written section 2 and 4'. Needless to say, such statements would be absolutely unthinkable in an international journal. Indeed, other committees in Economics have had no qualm to assess joint works, paying lip service to the tradition with formulas such as 'we ascertain as much as possible the individual contribution of the candidate to joint works’ or ‘we are able to assess the individual contribution of the candidate’. The committee for Economic History (with one dissenting voice) has decided otherwise and has labelled ‘non valutabili’ (impossible to assess) all the joint work without an explicit statement of the contribution. Thus it assessed only 4 out of the 18 publications submitted by Nuvolari and found them insufficient for qualifying him.

 A quick look at the candidates’ CVs can buttress the second claim of the letter – that the committee has qualified some candidates with a “very limited” number of international publications. One can define these latter as articles in the list of A-rated journals suggested by the  ANVUR, the official agency overseeing the Abilitazione, at an earlier stage of the procedure. The list (available at http://www.anvur.org/attachments/article/254/Area13_classeA.pdf) is not very selective. It includes nine Economic History journals (Journal of Economic History, Explorations in Economic History, Economic History Review, European Review of Economic History, Cliometrica, Australian Economic History Review, Financial History Review, Journal of Latin America and Iberian Economic History and Technology and Culture), three business history  journals (Business History, Business History Review and Enterprise and Society), four journal of history of economic thought (European Journal of the History of Economic Thought, Journal of the History of Economic Thought, Journal of Economic methodology and History of Political Economy).

 Yet, as of November 2012, only thirty candidates to full professor out of 81 had published at least one paper in any of these journals or in any of the long list of economics journals. Only ten candidates, including the three above mentioned, have published four paper or more. The results do not change much if we use a less demanding standard, the number of publications (books, chapter of books and articles) in the Econlit database. Thirty candidates have not a single title in the data-base - i.e. have no ‘international publications’ at all. Eighteen of them have been qualified. In contrast, 5 out of the top 10 candidates in terms of Econlit publications (ranging from 18 to 35) have not qualified. As a result, the average number of publications in Econlit is slightly higher for not qualified (5.80) than for qualified (5.65).  Both criteria would yield worse results if we concentrate on economic historians only. In fact, several specialists in the history of economic thought who applied are professional economists with a substantial publication record.

Of course, the international impact is not the only yardstick for good work. Econlit might omit  relevant work by Italian authors because it covers only very sketchily the Italian journals and publishing houses. However, if this is the case, it is arguably even worse. Any author who forfeits the opportunity of letting his work known outside the native borders not only damages his own standing but makes the international discourse poorer.

Giovanni Federico.

The letter has been reported on 26 March in Corriere della Sera, one of the most important newspaper in Italy.

Read it (in Italian) here.

Debating Big Ideas in Economic History

A tribute to Jaime Reis

Lisbon, 6 June 2014 

We are pleased to announce a conference in honour of Professor Jaime Reis who will retire in 2014. The conference is organized by the Social Sciences Institute, University of Lisbon and Nova School of Business and Economics, and will be held on 6 June 2014.

Jaime Reis is well-known for his contributions to Portuguese, European and International Economic History on a widespread range of topics that include studies on economic backwardness, on financial and banking history, on education and institutional developments, as well as on the determinants of long-term growth. These topics will be discussed in four panels with contributions from specialists in the fields and the public.

All those who wish to attend are welcome to join. For further details, including recommendations for accommodation and dinner registration, please contact the convenors or Marta Castelo Branco (at marta.castelobranco@ics.ulisboa.pt).

Programme

14:00-15:00 – Long-term growth

Leandro Prados de la Escosura (U. Carlos III) & Regina Grafe (EUI, Florence)

15:00-16:00 – The development of financial systems

Larry Neal (U. Illinois) & Rui Pedro Esteves (U. Oxford)

16:00-16:30 – Coffee-break

16:30-17:30 – Human capital and living standards

Cormac O’Grada (U. College, Dublin) & Joan Rosés (LSE)

17:30-18:30 – Portuguese economic history

Luciano Amaral (Nova, Lisbon) & Pablo Martín-Aceña (U. Alcalá)

19:30-20:30 – Tba

20:30 – Dinner at Nova School of Business and Economics

Convenors:

José Luís Cardoso, Leonor Freire Costa, Pedro Lains & Álvaro Ferreira da Silva

NEW EHES Working paper on “Debt Dilution in 1920s America: Lighting the Fuse of a Mortgage Crisis”

Much like the recent crisis, the U.S. Great Depression saw serious and widespread troubles among banks. Also like the recent crisis, the U.S. Great Depression was preceded by a large nationwide boom in real estate, peaking in 1926. Unlike in the current crisis, however, the interwar link - if any - between the real estate boom and the subsequent bank failures has been far from evident. An important argument against the existence of such a link has to do with the conservatism of mortgage contracts at the time. The average commercial bank mortgage contract had a maturity of only three to five years, and required a down payment of 50 per cent of the property value. This in theory would have significantly reduced both foreclosure risk and the negative consequences of foreclosures for banks.

NATACHA POSTEL-VINAY is a 

PhD Candidate in Economic History, 

London School of Economics

In this paper Natacha Postel-Vinay re-examines the question and uncovers the darker side of 1920s U.S. mortgage lending: the so-called “second mortgage system,” one of the most widespread and least well-known forms of debt dilution in the twentieth century. As a majority of borrowers in fact could not make a 50 per cent down payment, they took on a second, junior mortgage from another lender to help with the high down payment. As theory predicts, debt dilution, even in the presence of seniority rules, would have been highly detrimental to original lenders’ health, as it increases default risk on the original loan. In addition, second mortgages’ shorter maturity, higher interest rates and more frequent principal payments requirements created a seniority reversal effect which further impaired borrowers’ ability to repay first mortgages. Through foreclosure, banks would still be able to retrieve 50 per cent of the property value, but often after a protracted foreclosure process - a great impediment to bank survival in case of a liquidity crisis.

Using newly-discovered archival documents and a newly-compiled dataset from 1934, this paper thus sheds new light on a financial phenomenon President Hoover then described as “the most backward segment of [the US's] whole credit system.” In today's world of “piggyback” mortgage lending and multi-party over-the-counter trading in credit-default swaps, this paper provides timely empirical support to the idea that debt dilution, or “sequential banking” can be highly detrimental to credit.

The working paper can be found here:

http://ehes.org/EHES_No53.pdf

NEW EHES Working paper: “Market potential estimates in history: a survey of methods and an application to Spain, 1867-1930”

The distribution of economic activity in Spain by night.

New Economic Geography (NEG) stresses the role of accessibility as an explanatory factor of the spatial 
distribution of economic activity. According to this theoretical framework, when transport costs decline, production (mainly that characterised by increasing returns and imperfect competition) will tend to agglomerate in locations with a better access to demand. Hence, from a regional perspective, a rise in inequality may be expected to occur during the early stages of economic growth. To empirically test this prediction and others emanating from NEG models a sound measure of accessibility is needed. Economic historians have increasingly contributed on this topic seeking to explain a variety of experiences ranging from Victorian Britain to interwar Poland, the Habsburg Empire or the US at the turn of the 20^th century. In this study, the focus is placed on Spain, a country characterised by large regional disparities still today. Here, accessibility for the Spanish provinces is calculated using the Harris market potential equation, an indicator with a long-standing tradition among geographers and economists.

The period under study, going from 1867 to 1930, seems particularly relevant. First, industrialisation was going through the early stages. In addition, transport costs fell significantly leading to an increasing integration of the domestic market. The gradual expansion of railways (with a radial design of the network) and the improvement in coastal shipping navigation with the transition from sail to steam had a notable impact on the decline of transport costs. This was particularly important in a mountainous country like Spain where roads where scarce and in a poor state of conservation and which lacked of navigable rivers. Finally, trade policy also underwent changes all across Europe (and indeed in Spain), especially during the interwar period, affecting the relevance of the domestic and external markets. As a result of this changing context, the relative accessibility of regions may have experienced an asymmetric impact which may have had consequences on the economic fortune of Spain’s provinces.

The study finds that the main variations in the spatial distribution of market potential were experienced in the second half of the 19^th century, a period characterised by a marked centrifugal tendency. By 1900, a clear distinction in terms of accessibility between coastal and inland provinces, with the former showing a higher market potential than their inland counterparts, had emerged. The only exception was Madrid, located at the geographical centre of the Peninsula but with a market potential similar to that of the coastal regions. Thus, with the integration of the domestic market, the geographical periphery of Spain had become the core in terms of economic potential, and, in turn, inland central provinces suffered an increase in their relative remoteness. Interestingly, once established, this dual structure showed a considerable degree of persistence during the first decades of the 20^th century.

These changes in market potential can be considered as being a factor that turned out to have persistent effects on the spatial distribution of economic activity in Spain. The period under study witnessed a notable increase in the concentration of manufacturing in a limited number of regions and an upswing of regional inequality. Overall, the availability of an indicator of accessibility like the market potential becomes a key tool for undertaking empirical exercises in order to further examine the roots of the current spatial disparities through the lens of NEG. 

Julio Martinez-Galarraga is associate
professor at Universitat de València

The working paper can be found here:

http://ehes.org/EHES_No51.pdf