GDP in the Dutch Cape Colony: The National Accounts of a Slave‐Based Society

New estimates of the gross domestic product of the Dutch Cape Colony (1652‐1795) suggest that the Cape was one of the most prosperous regions during the eighteenth century. This stands in sharp contrast to the perceived view that the Cape was an “economic and social backwater,” a slave economy with slow growth and little progress. Following a national accounts framework, we find that Cape settlers' per capita income is similar to the most prosperous countries of the time – Holland and England. We trace the roots of this result, showing that it is partly explained by a highly skewed population structure and very low dependency ratio of slavery, and attempt to link the eighteenth‐century Cape Colony experience to twentieth‐century South African income levels.     

New Belgian Stock Market Returns: 1832–1914

The limited availability of high quality and computer readable data seriously impedes research in history and finance. We introduce a new monthly return series for Belgian owned equity based on Brussels Stock Market data for the period 1832–1914 as an improvement to the popular Drappier index. Over this period, our dataset includes 446,374 prices, 23,976 dividends, 371 stock and reverse splits (or other capital operations) on 2037 stocks of 1387 (foreign and Belgian) companies. Our dataset includes all shares and bonds but also high-quality information on prices, dividends, shares outstanding and market capitalization. In addition, company, country and sector information is available. We construct value weighted, price weighted and equally weighted indices as well as dividend yields. We find three important results. First, total nominal returns hover between 3.29% and 5.35% per annum, depending on how individual stocks are aggregated into the index. Second, dividend income constitutes the major part of total return and dividend distributions have a clear seasonal pattern. Third, the results highlight several drawbacks of the Drappier indices, especially an upward bias in expected equity performance.     

The "Invisible Hand"

The argument of the "Invisible Hand" is that the system of free enterprise benefits society in general even though it is not the aim of any particular economic agent to do that. This article proposes an analysis of why this is so. The key is that the morality of the market forbids only force and fraud; it does not require people to do good to others. Nevertheless, when all transactions are voluntary to both parties, that is exactly what we can expect to happen. This is both because the sum of the benefits of innumerable transactions, which are beneficial to both parties, is very great, but also and especially because of Positive Externalities. People use the particular products and services they get in market exchanges in ways that benefit others in ways not at all foreseen by the agents to those transactions at the time. These externalities range from the benefits of invention and ingenuity to the exercise of charity and philanthropy, all of which flourish in developed capitalist societies.     

The Maddison Project: collaborative research on historical national accounts

The Maddison Project, initiated in March 2010 by a group of close colleagues of Angus Maddison, aims to develop an effective system of cooperation between scholars to continue Maddison's work on measuring economic performance in the world economy. This article is a first product of the project. Its goal is to explain the aims and approach of the project, and, as a first result of this ‘collaboratory’, to inventory recent research on historical national accounts. We also briefly discuss some of the problems related to these historical statistics and we extend and where necessary revise the estimates published by Maddison in his latest overviews. Most new work relates to the period before 1820; it leads to a reassessment of levels of GDP per capita in western Europe in the early modern period, and to a confirmation of Maddison's previous estimates of Asian levels of real income.     

Welfare-State Retrenchment: The Partisan Effect Revisited

This paper aims to shed light on the role of the ‘ideology’of political parties in shaping the evolution of the welfarestate in 18 developed democracies, by providing empirical findingson the determinants of social-programme entitlements and socialspending over the period 1981–99. The paper shows thatstructural change is a major determinant of the extent of socialprotection. Our results suggest that overall spending is drivenup by structural change. On the other hand, strong structuralchange has a negative influence on welfare entitlements measuredby the net rate of sickness insurance. Partisan influence playsan important role in the dynamics of the welfare state. Left-winggovernments strengthen the positive effect of shocks on aggregatesocial expenditure, while right-wing governments undertake evenstronger cutbacks in replacement rates as a reaction to structuralchange. Footnotes ¹ E-mail addresses: bruno.amable{at}ens.fr; donatella.gatti{at}cepremap.cnrs.fr;jan.schumacher{at}wiwi.uni-regensburg.de     

Bringing Unemployed Back to Work: Effective Active Labor Market Policies

We present a theoretical analysis of different types of active labor market policies in the context of a search-matching model. We find that labor market training is effective in bringing down unemployment while public employment services and subsidized jobs are not effective at all. This theoretical finding is confirmed in an explorative empirical analysis using data from 20 OECD countries.     

Measuring Lifetime Redistribution in Dutch Occupational Pensions

Summary  This paper assesses how the Dutch system of occupational pensions redistributes between and within generations. The approach in this paper deviates from the usual approach by incorporating the full life cycle in the measurements, rather than only the annual effects. In order to quantify redistribution, we use the level of educational attainment, gender and age to classify the pension fund population. For all groups distinguished, we measure in present value terms the average net benefit from participating in occupational pensions. The results indicate a sizable redistribution from males to females and from low educated to higher educated workers. On a lifetime basis, the impact of intergenerational transfers is modest. I am grateful to the two anonymous referees, Ed Westerhout, Casper van Ewijk, Lex Meijdam, Yvonne Adema and Peter Kooiman for their helpful comments on earlier drafts of this paper, and to Andre Nibbelink for his valuable computational assistance.     

U.S. House Prices over the Last 30 Years: Bubbles,Regime Shifts and Market (In)Efficiency

This paper studies U.S. house prices across 45 metropolitan areas from 1980 to 2012. It applies a version of the Gordon dividend discount model for long‐run “fundamentals” and uses Mean Group and Pooled Mean Group estimation to estimate long‐run and short‐run determinants of house prices. We find great similarity across cities in that the long‐run house prices are largely explained by the same fundamentals; the long‐run rent to price ratio is approximately 5% plus 0.75 times the real interest rate (which is on the order of 2%). However, adjustments to deviations from the fundamentals are slow, in the long‐run, closing the gap at a rate of around 10% per year. We find sharp differences in short‐run adjustments (momentum) away from the fundamentals across cities, and the differences are correlated with local supply elasticities (more momentum with lower elasticity). Analysis of residuals suggests strong cyclical deviations, which are mean‐reverting.