Frehen R., Goetzmann W. and Rouwenhorst G. (2009) Why invest in the bubbles?

August 31, 2009

Frehen, Rik, William Goetzmann and Geert Rouwenhorst (2009) “New Evidence on the First Financial Bubbles”, Yale international Center for Finance, Working Paper 04, 24p.

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This article is available online.

Why did investors decide to bet on the various companies that would form the three 1720 bubbles in France, England and the Netherlands? (p.1). How did these bubbles affect companies which unlike the Compagnie des Indes and the South Sea Company were neither involved in the Atlantic trade nor in public finance?

Read the rest of this entry »


Industrial production

August 31, 2009

As usual Rebecca Wilder of News N Economics has some seriously good charts and smart comments.

ip_chart2[1]


This week in Economic History (August 31-September 5, 2009)

August 31, 2009

From August the 31st to September the 4th, there will be a Summer University in Greece on History, Philosophy and Economic Thought.

From Wednesday to Friday, the 41st UK History of Economic Thought Conference will take place at the University of Manchester.You can contact Terry Peach for more information.

The 8th Conference of the European Historical Economics Society will take place on Friday the 4th and Saturday the 5th. The Conference is organized by the European Historical Economics Society, and is chaired by Marc Flandreau in the Graduate Institute of International and Development Studies, in Switzerland.

And well, on to some personal advertising. On Saturday the 5th (a day after my 25th birthday!), a TV show where I participated, Expedición 1808, will air in the National Geographic Channel in Latin America. Expedición 1808 is a “one-of-its-kind show, following the journey [expedición] of seven Mexico City youngsters in seven Hispanic American countries, to determine the path and relevance of ideas that gave birth to the independence wars of the 19th century” [taken from the press brief].

Out of the official aim of the show, I will talk about some aspects of economics and economic history: from sugar production nearby Caracas to smuggling and free trade inValparaíso, then and now… Here’s an advance of the show.

Stay tuned for news on web broadcasts…


Saint Catherine of the week

August 30, 2009

Martyrdom of St Catherine by Fernando Gallego

Martyrdom of St Catherine by Fernando Gallego

The quality of the image is not excellent but it is interesting to see a Spanish painting for once.


Webography

August 30, 2009

I don’t have access to any meaningful internet connection for a little while so very light blogging. However in conjunction with the absolutely fantastic article of Marc Flandreau et al. summarized below (by far the best I’ve read on the matter so far, sorry Oscar) I’d like to add a few links about early bubbles:

Harvard University has been digitilizing tens of images related to the South Sea Bubble. It is really worth checking out this site, if anything because they have beautiful and hilarious illustrations (here an article summing up the matter).

Harvard has also put online two books about the matter: one by Cole Arthur and one by John Sperling.

The great blog BibliOdyssey also has several engravings coming from the collection know as the Great Mirror of Folly.

Of course the Cato Institute also has an article on the matter.

Our dear friend Andrea Matranga also has an unfinished paper on the Tulipmania.

That’s all for now but more to come


Flandreau M. et al. (2009) The question was not how to develop finance

August 30, 2009

Flandreau, Marc, Christophe Galimard, Clemens Jobst and Pilar Nogués-Marco (2009) “The bell-jar: commercial interest rates betwee two revolutions” in The Origin and Development of Financial Markets and Institutions. From the Seventeenth Century to the Present, eds. Jeremy Atack and Larry Neal, Cambridge: Cambridge University Press, 161-208.

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An earlier version of this paper is available here.

For institutionalist economists as well as for contemporary commentators, the wealth of nations in 18th century Europe was rooted in their political system which influenced the level of interest rates and thus trade (p.165). The confidence investors had in the government’s credit was thus seen as critical (tellingly John Law’s primary aim was to bring interest rates down; p.166). Read the rest of this entry »


On [growing] American inequality

August 24, 2009

How much household income has received the top 0.01% of Americans since 1913?
Here‘s a graph in Paul Krugman’s blog showing it.

The richest 0.01% individuals in America and their income

The richest 0.01% individuals in America and their income

The graph was made with the tables and figures updated to 2007 prepared by Emmanuel Saez, Professor of Economics at the University of California at Berkeley and the most recent winner of the John Bates Clark medal.
Read the rest of this entry »


On hyperinflations

August 24, 2009

Hyperinflations through history

Here’s a chart by Steve H. Hanke and Alex K. F. Kwok comparing the Zimbabwean hyperinflation with other periods  of [hyper]accelerated growth of price levels in the 20th century.

The current Zimbabwean hyperinflation is second only to the Hungarian episode after WWII. Then, prices doubled each 15 hours.

Found via Alejandro Villagomez‘s blog.


Saint Catherine of the week

August 23, 2009

Sainte Catherine III

A good remainder of why Saint Catherine was picked as the Saint Patron of this blog: she was a brilliant scholar (well had she existed that is). Frankly at the moment a bookish saint really talks to me!

Carlo Dolci (1616-1687), Saint Catherine reading a book, Residenzgalerie, Salzburg.


Webshopping: potatoes, Thomson and Thompson, serfdom and a few other stuff

August 22, 2009

Oxonomics has a link to Acemoglu’s new article.

Projesh Banerjea receives a grant to study Economic History at the LSE (good luck to him).

Paul Kedrosky has a post about why going in circles may not be so stupid after all (he has another post about the Utrecht conference).

A bit late, but it’s better than never, VOX has three interesting pieces one about the causes of Africa underdevelpment (by Nathan Nunn), another about the impact of potatoes on growth (by Nathan Nunn and Nancy Qian) and the last about France’s Sterling trap in the 1920s (by Olivier Accominotti).

Very very useful: Virtual Library of Economic and Business History.

Business history: Smirnoff, the king of vodka (on authors@google, via blog university). Great character, but truly boring speaker, one of the reasons why I do not like business history.

And Krugman picks a petty fight with Niall Ferguson, ridiculous and a good example of why America, though admirable, is truly an unlivable country.

PS: Just read the guest article in The Economist by Justin Lin, chief economist at the World Bank, and I beg to differ. Mr Lin’s point is that developping countries need small banks to fund small businesses, not gigantic ones nor a buoyant stockmarket. He wrongly interprets US financial history as one dominated by local banks since most of these local banks were based on foreign money, i.e. foreign investment channeled by the stock market. More importantly he falls into the one-size-fits-all fallacy (whose to say, as he does, that Peru and Kenya need to follow the same model?) and he supports the deeply armful protectionist approach many developing countries (China first among them) have adopted towards financial services.


John Law’s System

August 21, 2009

A charming short anime by the Canadian director Richard Contie. Admittedly it is somewhat simplistic and the image offered of John Law is too candid, but it is a nice way to start thinking about the issue.

Vodpod videos no longer available.

more about “John Law’s Système“, posted with vodpod


Velde F. (2009) Eighteenth-century France’s one-man-bubble

August 21, 2009

Velde, François R. (2009) “Was John Law’s System a bubble? The Mississipi Bubble revisited” in The Origin and Development of Financial Markets and Institutions. From the Seventeenth Century to the Present, eds. Jeremy Atack and Larry Neal, Cambridge: Cambridge University Press, 99-120.

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A slightly different version of this paper is available online.

The shares of the Compagnie des Indes created by John Law to manage the colonization of Louisiana, public finances and monopolies went from 250 Livres in July 1718 when the initial offering closed to just under 10,000 L days before Christmas 1719 and finally to 50 L in March 1721 (p.108). Can this jump followed by an even more impressive collapse in under 3 years be described as a bubble? (p.109) Read the rest of this entry »