December 25, 2009
Kindleberger, Charles P. (1991) The economic Crisis of 1619 and 1623. The Journal of Economic History, 51/1 : 149-175.
The early European 17th century has commonly been described as the troublesome transition from a medieval to a modern economy (p.149). The multi-layered crisis of 1619-23 is a perfect embodiment of the woes of the time. However, the author’s “interest in that crisis does not concern its potential role as a catalyst of modern economies, but rather its function in the mechanism for the spread of a primarily financial crisis from one part of Europe to another” (p.150). Read the rest of this entry »
December 25, 2009
The currency of a great state, such as France or England, generally consists almost entirely of its own coin. Should this currency therefore be at any time, worn, clipt or otherwise degraded below its standard value, the state by a reformation of its coin can effectively re-establish its currency. But the currency of a small state, such as Genoa or Hamburgh, can seldom consist altogether in its own coin, but must be made up, in great measure, of the coins of all the neighboring states with which its inhabitants have a continual intercourse. Such a state, therefore, by reforming its coin will not always be able to reform its currency.
The Wealth of Nations, p.446, New York 1937
December 21, 2009
Buchinsky, Moshe & Ben Polak (1993) The Emergence of a National Capital Market in England, 1710-1880. The Journal of Economic History, 53/1: 1-24.
Introduction: the invisible hand is hard to see
“Two economic ‘revolutions’ took place in eighteenth-century England: an industrial revolution in the North and a financial revolution in the South”. Of course historians have tried to figure out whether these two events were connected. Less ambitious, the authors wonder to what extent what was happening in London could affect the industrializing Northern and the Western parts of the kingdom (p.1). In other words, was there a national financial market or a collection of regional ones? Previous researches on this matter have yielded widely different results. Read the rest of this entry »
December 19, 2009
Caporale, Tony and Kevin B. Grier (2000) Political Regime Change and the Real Interest Rate, Journal of Money, Credit and Banking, 32/3: 320-334.
A number of influential macroeconomic models, from Keynes to the monetarists, assume that real interest rates (i.e. discounted for inflation) change over time and are sensitive to their political environment, other words that they are policy variant. However this assumption has not been empirically tested, should this assumption be in fact contradicted, it would have important repercussions on these models’ viability. Moreover, the policy-variant hypothesis apparently conflicts with Eugene Fama’s conclusion that the mean of the real rate is essentially constant (p.322). The literature has found to match Fama’s views more closely with reality: real interest rates are “essentially constant over long periods of times but subject to infrequent mean shifts that are not related to policy regime changes”. Read the rest of this entry »
December 2, 2009
A new form on finance on the coast of Somalia.
I particularly enjoyed this part:
Piracy investor Sahra Ibrahim, a 22-year-old divorcee, was lined up with others waiting for her cut of a ransom pay-out after one of the gangs freed a Spanish tuna fishing vessel.
“I am waiting for my share after I contributed a rocket-propelled grenade for the operation,” she said, adding that she got the weapon from her ex-husband in alimony.
“I am really happy and lucky. I have made $75,000 in only 38 days since I joined the ‘company’.”