Credit rationing and crowding out during the Industrial Revolution: Evidence from Hoare's Bank, 1702-1862

Crowding-out during the British Industrial Revolution has long been one of the leadingexplanations for slow growth during the Industrial Revolution, but little empirical evidence exists to support it. We argue that examinations of interest rates are fundamentally misguided, and that the eighteenth- and early nineteenth-century private loan market balanced through quantity rationing. Using a unique set of observations on lending volume at a London goldsmith bank, Hoare s, we document the impact of wartime financing on private credit markets. We conclude that there is considerable evidence that government borrowing, especially during wartime, crowded out private credit.

Does foreign direct investment crowd out domestic entrepreneurship?

In analyzing firm entry and exit across Belgian manufacturing industries,this paper presents evidence that import competition and foreign directinvestment discourage entry and stimulate exit of domestic entrepreneurs.These results are in line with theoretical occupational choice modelsthat predict foreign direct investment would crowd out domesticentrepreneurs through their selections in product and labor markets.However, the empirical results also suggest that this crowding out effectmay be moderated or even reversed in the long-run due to the long termpositive effects of FDI on domestic entrpreneurship as a result oflearning, demonstration, networking and linkage effects between foreignand domestic firms.

Multiple prisoner's dilemma games with (out) an outside option: An experimental study

Experiments in which subjects play simultaneously several finite prisoner's dilemma supergames with and without an outside optionreveal that: (i) subjects use probabilistic start and endeffect behaviour, (ii) the freedom to choose whether to play the prisoner's dilemma game enhances cooperation, (iii) if the payoff for simultaneous defection is negative, subjects' tendency to avoid losses leads them to cooperate; while this tendency makes them stick to mutual defection if its payoff is positive.

Optimal bail out policy, conditionality and constructive ambiguity

This paper addresses the issue of the optimal behaviour of the Lender of Last Resort (LOLR) in its microeconomic role regarding individual financial institutions in distress. It has been argued that the LOLR should not intervene at the microeconomic level and let any defaulting institution face the market discipline, as it will be confronted with the consequences of the risks it has taken. By considering a simple costbenefit analysis we show that this position may lack a sufficient foundation. We establish that, instead, uder reasonable assumptions, the optimal policy has to be conditional on the amount of uninsured debt issued by the defaulting bank. Yet in equilibrium, because the rescue policy is costly, the LOLR will not rescue all the banks that fulfill the uninsured debt requirement condition, but will follow a mixed strategy. This we interpret as the confirmation of the "creative ambiguity" principle, perfectly in line with the central bankers claim that it is efficient for them to have discretion in lending to individual institutions. Alternatively, in other cases, when the social cost of a bank's bankruptcy is too high, it is optimal for the LOLR to bail out the insititution, and this gives support to the "too big to fail" policy.

Sovereign debt markets in turbulent times: Creditor discrimination and crowding-out effects

In 2007, countries in the Euro periphery were enjoying stable growth, low deficits, and lowspreads. Then the financial crisis erupted and pushed them into deep recessions, raising theirdeficits and debt levels. By 2010, they were facing severe debt problems. Spreads increased and,surprisingly, so did the share of the debt held by domestic creditors. Credit was reallocatedfrom the private to the public sectors, reducing investment and deepening the recessions evenfurther. To account for these facts, we propose a simple model of sovereign risk in which debtcan be traded in secondary markets. The model has two key ingredients: creditor discriminationand crowding-out effects. Creditor discrimination arises because, in turbulent times, sovereigndebt offers a higher expected return to domestic creditors than to foreign ones. This providesincentives for domestic purchases of debt. Crowding-out effects arise because private borrowingis limited by financial frictions. This implies that domestic debt purchases displace productiveinvestment. The model shows that these purchases reduce growth and welfare, and may lead toself-fulfilling crises. It also shows how crowding-out effects can be transmitted to other countriesin the Eurozone, and how they may be addressed by policies at the European level.

National Identity and the Preference for State Opting-Out in the Basque Country

We argue that preferences for secession are the expression of a common unobserved mechanisms determining national identity. This paper examines the hypothesis of independence of both preferences for secession (independent Euskadi) and Basque national identity in the light of Akerloff and Kranton (2000). We deal with psychological determinants of individuals' national identity formation as well as those that influence the propensity of individuals to support the secession of their perceived ¿imagined community¿ or nation.. We undertake econometric survey analysis for the Basque Country using a bivariate probit model and publicly available data from the Spanish Centre for Sociological Research. Our results provide robust evidence of a common determination of national identity and political preferences for the secession of the Basque Country consistently with Akerloff and Kranton model.

Nonideal particle distributions from kinetic freeze-out models

In fluid dynamical models the freeze-out of particles across a three-dimensional space-time hypersurface is discussed. The calculation of final momentum distribution of emitted particles is described for freeze-out surfaces, with both spacelike and timelike normals, taking into account conservation laws across the freeze-out discontinuity.

Freeze-out in hydrodynamical models

We study the effects of strict conservation laws and the problem of negative contributions to final momentum distribution during the freeze-out through 3-dimensional hypersurfaces with spacelike normal. We study some suggested solutions for this problem, and demonstrate it in one example.

Covariant description of kinetic freeze-out through a finite spacelike layer

The problem of freeze-out (FO) in relativistic heavy-ion reactions is addressed. We develop and analyze an idealized one-dimensional model of FO in a finite layer, based on the covariant FO probability. The resulting post FO phase-space distributions are discussed for different FO probabilities and layer thicknesses.

Regular wave propagation out of noise in chemical active media

A pacemaker, regularly emitting chemical waves, is created out of noise when an excitable photosensitive Belousov-Zhabotinsky medium, strictly unable to autonomously initiate autowaves, is forced with a spatiotemporal patterned random illumination. These experimental observations are also reproduced numerically by using a set of reaction-diffusion equations for an activator-inhibitor model, and further analytically interpreted in terms of genuine coupling effects arising from parametric fluctuations. Within the same framework we also address situations of noise-sustained propagation in subexcitable media.

Spatiotemporal order out of noise

Experimental observations of self-organized behavior arising out of noise are also described, and details on the numerical algorithms needed in the computer simulation of these problems are given.

Regular wave propagation out of noise in chemical active media

A pacemaker, regularly emitting chemical waves, is created out of noise when an excitable photosensitive Belousov-Zhabotinsky medium, strictly unable to autonomously initiate autowaves, is forced with a spatiotemporal patterned random illumination. These experimental observations are also reproduced numerically by using a set of reaction-diffusion equations for an activator-inhibitor model, and further analytically interpreted in terms of genuine coupling effects arising from parametric fluctuations. Within the same framework we also address situations of noise-sustained propagation in subexcitable media.

Spatiotemporal order out of noise

Experimental observations of self-organized behavior arising out of noise are also described, and details on the numerical algorithms needed in the computer simulation of these problems are given.

National Identity and the Preference for State Opting-Out in the Basque Country

We argue that preferences for secession are the expression of a common unobserved mechanisms determining national identity. This paper examines the hypothesis of independence of both preferences for secession (independent Euskadi) and Basque national identity in the light of Akerloff and Kranton (2000). We deal with psychological determinants of individuals' national identity formation as well as those that influence the propensity of individuals to support the secession of their perceived ¿imagined community¿ or nation.. We undertake econometric survey analysis for the Basque Country using a bivariate probit model and publicly available data from the Spanish Centre for Sociological Research. Our results provide robust evidence of a common determination of national identity and political preferences for the secession of the Basque Country consistently with Akerloff and Kranton model.