In this paper, using new estimates of the size of the UK's capital market, we examine financial d... more In this paper, using new estimates of the size of the UK's capital market, we examine financial development and investor protection laws in Britain c.1900 to test the influential law and finance hypothesis. Our evidence suggests that there was not a close correlation between financial development and investor protection laws c.1900 and that the size of the UK's share market is a puzzle given the paucity of statutory investor protection. To illustrate that Britain was not unique in its approach to investor protection in this era, we examine investor protection laws across legal families c.1900.
The Policy Research Working Paper Series disseminates the findings of work in progress to encoura... more The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
London School of Economics and Political Science, Mar 9, 2021
The return of state capitalism? How the Covid-19 pandemic put the liberal market economies to the... more The return of state capitalism? How the Covid-19 pandemic put the liberal market economies to the test As states across the world increase their interventions in the economy to deal with the fallout from the pandemic, we are likely to see an uptick in state ownership of assets (again). States can use various tools for proactive intervention in economic production and the functioning of markets, in addition to its regulatory and security roles.
The Virtual Special Issue on State Capitalism in International Context is posthumously dedicated ... more The Virtual Special Issue on State Capitalism in International Context is posthumously dedicated to Mike Wright (1952-2019) who was the driving force behind the original ideas in the call for proposals, helped shape the overall contribution of the SI, and served as lead editor until his passing in late 2019.We are hugely indebted to him for this issue to come to life. The Virtual Special Issue Editors.
Resumen: Investigación reciente relaciona la desigualdad actual entre países y regiones con las i... more Resumen: Investigación reciente relaciona la desigualdad actual entre países y regiones con las instituciones coloniales. Este artículo argumenta que choques comerciales pudieron alterar la trayectoria de desarrollo de los países o de unidades subnacionales, a pesar de sus instituciones coloniales. Esta hipótesis es analizada utilizando datos a nivel estatal para Brasil, un país con gran heterogeneidad regional en dotaciones inciales de factores. Nosotros encontramos que choques comerciales positivos, o aumentos en los ingresos por concepto de impuestos a la exportación, incrementaron los gastos y resultados en educación en los estados brasileños entre 1889 y 1930. De hecho, dichos choques alteraron la desigualdad educativa entre estados de una manera permanente. El artículo finaliza explicando porque los políticos utilizaron estos ingresos fiscales para invertir en educación.
Unlisted Wholly-State-Owned Enterprises (WSOEs) issue a tenth of global corporate bonds. This pap... more Unlisted Wholly-State-Owned Enterprises (WSOEs) issue a tenth of global corporate bonds. This paper explores the pricing of these securities. Compiling a database of global bond issuances we find that, in fact, WSOEs' bonds achieve cheaper yields-to-maturity, 30-80bp below those of comparable listed corporations. This discount survives a battery of robustness tests controlling for size, liquidity or even explicit guarantees, among many others. Moreover, WSOE yield discounts are stronger for more creditworthy sovereigns. These facts are consistent with a simple model in which markets do weak monitoring of WSOE issues because they anticipate bailouts. Among various implications, WSOEs should include the implicit default insurance as true cost of debt rather than as economic value added. For a median WSOE this is between 13 and 25% of its net earnings.
Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be s... more Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB's name for any purpose other than for attribution, and the use of IDB's logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license. Note that link provided above includes additional terms and conditions of the license. The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the Inter-American Development Bank, its Board of Directors, or the countries they represent.
How does the development of financial markets change the interaction between banks and corporatio... more How does the development of financial markets change the interaction between banks and corporations? This paper compares the importance of interlocking boards of directors between corporations and banks in Brazil, Mexico and the United States circa 1909. The hypothesis tested is that the development of financial markets and the institutions that accompany it (e.g. financial disclosure rules, investor protections, etc) allows corporations to rely less on connections to banks. There are two hypotheses tested in this work. First, bankers were less central in Brazil than in Mexico and the United States. Second, the availability of other financing options reduced the importance of bank connections for corporations in Brazil and Mexico. I test these hypotheses using network analysis and a simple multivariate regression that explains bank connections. I use comparable business directories to create databases with names of directors and financial information for all major corporations for M...
Page 1. 1 XIV International Economic History Congress, Helsinki Session 69 JOINT-STOCK COMPANIES ... more Page 1. 1 XIV International Economic History Congress, Helsinki Session 69 JOINT-STOCK COMPANIES AS THE SINEWS OF WAR: THE SOUTH SEA AND ROYAL AFRICAN COMPANIES. Helen Julia Paul University of St Andrews, Scotland ...
provided superb research assistance for this work. We also want to thank the comments of Jeff Wil... more provided superb research assistance for this work. We also want to thank the comments of Jeff Williamson, Kevin H. O'Rourke, and conference participants at Oxford University. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
Brazil has experienced several major epidemics of influenza, and the most destructive was in 1918... more Brazil has experienced several major epidemics of influenza, and the most destructive was in 1918-1919. This article focuses on mortality, mitigation policies, and the consequences of pandemic influenza during the national period. We provide the first mortality estimates for the 1890-1894 influenza pandemic and correct figures for later epidemics. The 1918-1919 episode cost more lives than assumed, although some cities suffered less, possibly because of public health actions. Influenza caused pandemics in 1957, 1968, 1976, and 2009, but these did not cause unusual outbreaks in Brazil.
How does the development of financial markets change the interaction between banks and corporatio... more How does the development of financial markets change the interaction between banks and corporations? This paper compares the importance of interlocking boards of directors between corporations and banks in Brazil, Mexico and the United States circa 1909. The hypothesis tested is that the development of financial markets and the institutions that accompany it (e.g. financial disclosure rules, investor protections, etc) allows corporations to rely less on connections to banks. There are two hypotheses tested in this work. First, bankers were less central in Brazil than in Mexico and the United States. Second, the availability of other financing options reduced the importance of bank connections for corporations in Brazil and Mexico. I test these hypotheses using network analysis and a simple multivariate regression that explains bank connections. I use comparable business directories to create databases with names of directors and financial information for all major corporations for M...
In this article, using new estimates of the size of the UK's capital market, we examine financial... more In this article, using new estimates of the size of the UK's capital market, we examine financial development and investor protection laws in Britain c. to test the influential law and finance hypothesis. Our evidence suggests that there was not a close correlation between financial development and investor protection laws c. and that the size of the UK's share market is a puzzle given the paucity of statutory investor protection. To illustrate that Britain was not unique in its approach to investor protection in this era, we examine investor protection laws across legal families c..
In this paper, we examine the role of trade shocks in promoting the diffusion of elementary educa... more In this paper, we examine the role of trade shocks in promoting the diffusion of elementary education in subnational units in Brazil during a period (1889-1930) in which they had relative financial autonomy to collect export taxes and spend on public goods. The argument is that trade shocks affect asymetrically the tax revenues of state governments and, thus, their expenditures on elementary education per capita according to what crop mix they had. We then show that states with more egalitarian and democratic institutions use positive trade shocks to invest in education, while the opposite takes place in states with less democratic institutions (e.g., in states that had more slaves). We also show using OLS and instrumental variables that positive trade shocks increased expenditures on education per capita and led to higher literacy rates and to more schools per children. The resulting distribution of human capital across states persists until today.
Can we assume that the effect of early institutions is persistent over time? Work by La Porta, Lo... more Can we assume that the effect of early institutions is persistent over time? Work by La Porta, Lopez de Silanes, Shleifer, and Vishny, also known as the “law and finance” literature, implicitly argues that the legal tradition countries inherited or adopted in the far past has an important long-term effect on financial development. They argue financial development is related to the extent countries legally protect shareholders and creditors. Also, they find that countries that use the common law legal system have (on average) better investor protections than most civil law countries. I test three hypotheses that stem from the law and finance literature. First, I test if strong creditor rights are actually related to having larger bond markets once we look at a long time series. I look at the relationship between these two variables using data of creditor rights and bond market development in Brazil since 1850. I find support for this part of their argument. Second, I explore the supp...
We analyze the repercussions of the 1918 Influenza Pandemic on demographic measures, human capita... more We analyze the repercussions of the 1918 Influenza Pandemic on demographic measures, human capital, and productivity markers in Sao Paulo, Brazil, the most populous city in South America today. Leveraging temporal and spatial variation in district-level estimates of influenza-related deaths for the 1917-1920 time-period combined with a unique database on socio-economic, health and productivity outcomes and determinants newly constructed from historical data, we find that the 1918 Influenza Pandemic had significant impacts on infant mortality, sex ratios at birth, literacy rates differentiated by gender, and agricultural productivity in 1920, the short-run. We find robust evidence that effects persist in 1940.
While some argue that market forces are imperative to stimulate the increased supply of critical ... more While some argue that market forces are imperative to stimulate the increased supply of critical products and services to address the COVID-19 crisis, others contend that dealing with the pandemic requires coordination and rapid adjustments in supply that may be constrained by a host of factors. Although discussions have centered on policies to promote financial liquidity, we examine whether the state apparatus-not only state-owned enterprises but also development agencies and investment funds-can innovate and adjust production processes to improve infrastructure and capabilities to prevent and treat the disease. Potential actions include public-private effort addressing both discovery and coordination problems-such as a collaborative effort to develop prevention and treatment technologies, as well as state capital to stimulate retooling and expansion of strategic infrastructure. The state apparatus can also help access remote and critical areas with relatively lower private returns...
In this paper, using new estimates of the size of the UK's capital market, we examine financial d... more In this paper, using new estimates of the size of the UK's capital market, we examine financial development and investor protection laws in Britain c.1900 to test the influential law and finance hypothesis. Our evidence suggests that there was not a close correlation between financial development and investor protection laws c.1900 and that the size of the UK's share market is a puzzle given the paucity of statutory investor protection. To illustrate that Britain was not unique in its approach to investor protection in this era, we examine investor protection laws across legal families c.1900.
The Policy Research Working Paper Series disseminates the findings of work in progress to encoura... more The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
London School of Economics and Political Science, Mar 9, 2021
The return of state capitalism? How the Covid-19 pandemic put the liberal market economies to the... more The return of state capitalism? How the Covid-19 pandemic put the liberal market economies to the test As states across the world increase their interventions in the economy to deal with the fallout from the pandemic, we are likely to see an uptick in state ownership of assets (again). States can use various tools for proactive intervention in economic production and the functioning of markets, in addition to its regulatory and security roles.
The Virtual Special Issue on State Capitalism in International Context is posthumously dedicated ... more The Virtual Special Issue on State Capitalism in International Context is posthumously dedicated to Mike Wright (1952-2019) who was the driving force behind the original ideas in the call for proposals, helped shape the overall contribution of the SI, and served as lead editor until his passing in late 2019.We are hugely indebted to him for this issue to come to life. The Virtual Special Issue Editors.
Resumen: Investigación reciente relaciona la desigualdad actual entre países y regiones con las i... more Resumen: Investigación reciente relaciona la desigualdad actual entre países y regiones con las instituciones coloniales. Este artículo argumenta que choques comerciales pudieron alterar la trayectoria de desarrollo de los países o de unidades subnacionales, a pesar de sus instituciones coloniales. Esta hipótesis es analizada utilizando datos a nivel estatal para Brasil, un país con gran heterogeneidad regional en dotaciones inciales de factores. Nosotros encontramos que choques comerciales positivos, o aumentos en los ingresos por concepto de impuestos a la exportación, incrementaron los gastos y resultados en educación en los estados brasileños entre 1889 y 1930. De hecho, dichos choques alteraron la desigualdad educativa entre estados de una manera permanente. El artículo finaliza explicando porque los políticos utilizaron estos ingresos fiscales para invertir en educación.
Unlisted Wholly-State-Owned Enterprises (WSOEs) issue a tenth of global corporate bonds. This pap... more Unlisted Wholly-State-Owned Enterprises (WSOEs) issue a tenth of global corporate bonds. This paper explores the pricing of these securities. Compiling a database of global bond issuances we find that, in fact, WSOEs' bonds achieve cheaper yields-to-maturity, 30-80bp below those of comparable listed corporations. This discount survives a battery of robustness tests controlling for size, liquidity or even explicit guarantees, among many others. Moreover, WSOE yield discounts are stronger for more creditworthy sovereigns. These facts are consistent with a simple model in which markets do weak monitoring of WSOE issues because they anticipate bailouts. Among various implications, WSOEs should include the implicit default insurance as true cost of debt rather than as economic value added. For a median WSOE this is between 13 and 25% of its net earnings.
Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be s... more Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB's name for any purpose other than for attribution, and the use of IDB's logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license. Note that link provided above includes additional terms and conditions of the license. The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the Inter-American Development Bank, its Board of Directors, or the countries they represent.
How does the development of financial markets change the interaction between banks and corporatio... more How does the development of financial markets change the interaction between banks and corporations? This paper compares the importance of interlocking boards of directors between corporations and banks in Brazil, Mexico and the United States circa 1909. The hypothesis tested is that the development of financial markets and the institutions that accompany it (e.g. financial disclosure rules, investor protections, etc) allows corporations to rely less on connections to banks. There are two hypotheses tested in this work. First, bankers were less central in Brazil than in Mexico and the United States. Second, the availability of other financing options reduced the importance of bank connections for corporations in Brazil and Mexico. I test these hypotheses using network analysis and a simple multivariate regression that explains bank connections. I use comparable business directories to create databases with names of directors and financial information for all major corporations for M...
Page 1. 1 XIV International Economic History Congress, Helsinki Session 69 JOINT-STOCK COMPANIES ... more Page 1. 1 XIV International Economic History Congress, Helsinki Session 69 JOINT-STOCK COMPANIES AS THE SINEWS OF WAR: THE SOUTH SEA AND ROYAL AFRICAN COMPANIES. Helen Julia Paul University of St Andrews, Scotland ...
provided superb research assistance for this work. We also want to thank the comments of Jeff Wil... more provided superb research assistance for this work. We also want to thank the comments of Jeff Williamson, Kevin H. O'Rourke, and conference participants at Oxford University. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
Brazil has experienced several major epidemics of influenza, and the most destructive was in 1918... more Brazil has experienced several major epidemics of influenza, and the most destructive was in 1918-1919. This article focuses on mortality, mitigation policies, and the consequences of pandemic influenza during the national period. We provide the first mortality estimates for the 1890-1894 influenza pandemic and correct figures for later epidemics. The 1918-1919 episode cost more lives than assumed, although some cities suffered less, possibly because of public health actions. Influenza caused pandemics in 1957, 1968, 1976, and 2009, but these did not cause unusual outbreaks in Brazil.
How does the development of financial markets change the interaction between banks and corporatio... more How does the development of financial markets change the interaction between banks and corporations? This paper compares the importance of interlocking boards of directors between corporations and banks in Brazil, Mexico and the United States circa 1909. The hypothesis tested is that the development of financial markets and the institutions that accompany it (e.g. financial disclosure rules, investor protections, etc) allows corporations to rely less on connections to banks. There are two hypotheses tested in this work. First, bankers were less central in Brazil than in Mexico and the United States. Second, the availability of other financing options reduced the importance of bank connections for corporations in Brazil and Mexico. I test these hypotheses using network analysis and a simple multivariate regression that explains bank connections. I use comparable business directories to create databases with names of directors and financial information for all major corporations for M...
In this article, using new estimates of the size of the UK's capital market, we examine financial... more In this article, using new estimates of the size of the UK's capital market, we examine financial development and investor protection laws in Britain c. to test the influential law and finance hypothesis. Our evidence suggests that there was not a close correlation between financial development and investor protection laws c. and that the size of the UK's share market is a puzzle given the paucity of statutory investor protection. To illustrate that Britain was not unique in its approach to investor protection in this era, we examine investor protection laws across legal families c..
In this paper, we examine the role of trade shocks in promoting the diffusion of elementary educa... more In this paper, we examine the role of trade shocks in promoting the diffusion of elementary education in subnational units in Brazil during a period (1889-1930) in which they had relative financial autonomy to collect export taxes and spend on public goods. The argument is that trade shocks affect asymetrically the tax revenues of state governments and, thus, their expenditures on elementary education per capita according to what crop mix they had. We then show that states with more egalitarian and democratic institutions use positive trade shocks to invest in education, while the opposite takes place in states with less democratic institutions (e.g., in states that had more slaves). We also show using OLS and instrumental variables that positive trade shocks increased expenditures on education per capita and led to higher literacy rates and to more schools per children. The resulting distribution of human capital across states persists until today.
Can we assume that the effect of early institutions is persistent over time? Work by La Porta, Lo... more Can we assume that the effect of early institutions is persistent over time? Work by La Porta, Lopez de Silanes, Shleifer, and Vishny, also known as the “law and finance” literature, implicitly argues that the legal tradition countries inherited or adopted in the far past has an important long-term effect on financial development. They argue financial development is related to the extent countries legally protect shareholders and creditors. Also, they find that countries that use the common law legal system have (on average) better investor protections than most civil law countries. I test three hypotheses that stem from the law and finance literature. First, I test if strong creditor rights are actually related to having larger bond markets once we look at a long time series. I look at the relationship between these two variables using data of creditor rights and bond market development in Brazil since 1850. I find support for this part of their argument. Second, I explore the supp...
We analyze the repercussions of the 1918 Influenza Pandemic on demographic measures, human capita... more We analyze the repercussions of the 1918 Influenza Pandemic on demographic measures, human capital, and productivity markers in Sao Paulo, Brazil, the most populous city in South America today. Leveraging temporal and spatial variation in district-level estimates of influenza-related deaths for the 1917-1920 time-period combined with a unique database on socio-economic, health and productivity outcomes and determinants newly constructed from historical data, we find that the 1918 Influenza Pandemic had significant impacts on infant mortality, sex ratios at birth, literacy rates differentiated by gender, and agricultural productivity in 1920, the short-run. We find robust evidence that effects persist in 1940.
While some argue that market forces are imperative to stimulate the increased supply of critical ... more While some argue that market forces are imperative to stimulate the increased supply of critical products and services to address the COVID-19 crisis, others contend that dealing with the pandemic requires coordination and rapid adjustments in supply that may be constrained by a host of factors. Although discussions have centered on policies to promote financial liquidity, we examine whether the state apparatus-not only state-owned enterprises but also development agencies and investment funds-can innovate and adjust production processes to improve infrastructure and capabilities to prevent and treat the disease. Potential actions include public-private effort addressing both discovery and coordination problems-such as a collaborative effort to develop prevention and treatment technologies, as well as state capital to stimulate retooling and expansion of strategic infrastructure. The state apparatus can also help access remote and critical areas with relatively lower private returns...
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