The Economics Impact of Sovereign Defaults in Latin America 1870-2012

TJEERD MENNO BOONMAN

REVISTA DE HISTORIA ECONOMICA, Volume 35, Issue 1

Abstract: This article analyzes sovereign debt defaults in four Latin American countries—Argentina, Brazil, Chile and Mexico—for the period 1870-2012. The impact of sovereign defaults on real GDP growth is generally short-lived, while the impact in terms of output losses is deep and lasts long. Defaults in the period 1972-2012 show a deep and long-lasting impact compared to defaults in earlier periods. Moreover, the length of the contraction that follows a default is associated with favourable international conditions in the run-up to a default, while the depth of the contraction is associated with an expansive domestic economy in the run-up to a default. The results fit with boom–bust theories and sudden stop models.

Language Shapes People’s Time Perspective and Support for Future-Oriented Policies

EFRÉN O. PÉREZ & MARGIT TAVITS

AMERICAN JOURNAL OF POLITICAL SCIENCE

Abstract: Can the way we speak affect the way we perceive time and think about politics? Languages vary by how much they require speakers to grammatically encode temporal differences. Futureless tongues (e.g., Estonian) do not oblige speakers to distinguish between the present and future tense, whereas futured tongues do (e.g., Russian). By grammatically conflating “today” and “tomorrow,” we hypothesize that speakers of futureless tongues will view the future as temporally closer to the present, causing them to discount the future less and support future-oriented policies more. Using an original survey experiment that randomly assigned the interview language to Estonian/Russian bilinguals, we find support for this proposition and document the absence of this language effect when a policy has no obvious time referent. We then replicate and extend our principal result through a cross-national analysis of survey data. Our results imply that language may have significant consequences for mass opinion.

The Problem of Natural Religion in Smith’s Moral Thought

COLIN HEYDT

JOURNAL OF THE HISTORY OF IDEAS

Abstract: Adam Smith is one of the philosophers whose views on the relation of morality to religion have been very actively debated. It is accepted that Smith had unorthodox personal religious beliefs. The crux of the debate, however, is whether or not the God of natural religion is essential, in one or more ways, to Smith’s moral theory. A number of recent interpretations defend the description of Adam Smith as “a strong supporter of natural theology.”2 This paper argues [End Page 73] against that claim, using both novel evidence and familiar evidence applied in novel ways. I demonstrate here that Smith took positions at odds with a commitment to natural religion’s importance for morality. In particular, I show that it is hard to square Smith’s alleged support of natural religion with his account of conscience, his natural-rights theory, and his omission of piety from his catalogue of virtues.

Cognitive rules, institutions, and economic growth: Douglass North and beyond

AVNER GREIF &  JOEL MOKYR

JOURNAL OF INSTITUTIONAL ECONOMICS, Volume 13, Issue 1

Abstract:  Douglass North’s writing on institutional change recognized from the very start that such change depends on cognition and beliefs. Yet, although he focused on individual beliefs, we argue in this paper that such beliefs are social constructs. We suggest that institutions – rules, expectations, and norms – are based on shared cognitive rules. Cognitive rules are social constructs that convey information that distills and summarizes society’s beliefs and experience. These rules have to be self-enforcing and self-confirming, but they do not have to be ‘correct’. We describe the characteristics of such rules in the context of a market for ideas, and illustrate their importance in two developments central to the growth of modern economies: the rise of the modern state with its legitimacy based on consent, and the rise of modern science-based technology that was the product of the scientific revolution and the Enlightenment.

The rise and fall of income inequality in Chile

FRANCISCO PARRO & LORETO REYES

LATIN AMERICAN ECONOMIC REVIEW

Abstract: This paper presents evidence on a rise and fall in income inequality in Chile during the past two decades. We show that income inequality rises from 1990 to 2000 and then falls from 2000 to 2011. We perform simple but informative decompositions to figure out the contributing factors behind that dissimilarity in the behavior of inequality across those two subperiods. Our results are consistent with a story in which economic growth increases the demand for more educated workers, initially increasing inequality. However, those higher returns to education encourage agents to invest in higher education, producing a subsequent human capital deepening that reduces inequality at later stages of the development process.

Micro foundations in the Great Divergence debate: opening up a new perspective

LUCA ZAN

HISTORY AND PHILOSOPHY OF ECONOMICS

Abstract: Prevailing approaches in historical studies adopt a macro view and place an overwhelming emphasis on the Industrial Revolution as a major discontinuity in Western development. On the contrary, recent research in accounting, management and business history has suggested a different direction. When opting for a micro-level focus, crucial discontinuities in management and accounting in the West can be traced back to the Renaissance Period. The paper thus searches for ‘micro foundations’ in managing and accounting practices to address the on-going debate on the East-West divergence. Despite the obvious problems with source availability, we outline a new research agenda for the debate.

The Economics of Property Rights in Early and Medieval Christianity

BENEDIKT KOEHLER

ECONOMIC AFFAIRS

Abstract: Early and medieval Christianity pioneered an economics of property rights that had no precedent in antiquity. The early Church Fathers Tertullian, Ambrose, and John Chrysostomos successively evolved conceptions of the right to own property as a prerequisite for poor relief, and the basis of the right to own property was later formulated by Pope John XXII to settle a dispute on this issue instigated by Francis of Assisi. This article challenges assessments advanced by Joseph Schumpeter, Jacob Viner, and Frank Knight, who argued that the doctrines of Christianity were devoid of economics, and draws attention to the work of Georg Ratzinger (1844–1899), who first expounded how in early Christianity property rights and poor relief were linked.