List of completed PhD Theses/Dissertations by members and associated scientists of SPP 1859:
Lenel, Laetitia (2021): The Hopeful Science. A Transatlantic History of Business Forecasting, 1920-1960, Humboldt-Universität zu Berlin: Dissertation.
How is it possible that most people agree that economists generally fail to foresee recessions and that forecasting has nevertheless not lost its appeal and importance? This paradox has formed the starting point of The Hopeful Science. By tracing the transatlantic history of business forecasting between 1920 and 1960 and its implications for economic and political decision-making until the late 1980s, this dissertation looks for an answer. In five chapters that focus on the origins and the transnational and, in some cases, global circulation of five different forecasting tools and techniques, this dissertation investigates how the role of business forecasting has changed over the course of the twentieth century, and how this was both a factor and an indicator of a changed conception of economic change and economics’ place in it that, in turn, shaped economic and political decision-making. As The Hopeful Science argues, business forecasting has produced several, often unforeseen and unintended effects, and in the process turned into an indispensable tool to reduce economic uncertainty and stabilize the capitalist order.
Expectations play a fundamental role for the dynamics of modern economies. They facilitate decision-making in the light of an unknown future. The media certainly contribute to the formation and transmission of expectations by providing information and perceptions of other actors. Both the information they provide and the narratives they tell can be inﬂuential on economic and ﬁnancial markets. In this thesis, I investigate the relationship between the media, the expectations they convey, and economic outcomes in three empirical studies. With a historical focus on two great crises, my approach is to combine text analyses of media articles with economic and ﬁnancial variables.
First, I analyze inﬂation expectations in the recovery from the Great Depression in Germany. I conduct a narrative study of media sources and apply a frequency analysis of words related to inﬂation in newspaper articles. I relate my ﬁndings to inﬂation forecasts from a factor model, quantitative news series and using the real interest rate. For the case of the United States a regime shift towards increased inﬂation expectations is credited with jump-starting the recovery from the Great Depression. Germany experienced a recovery similarly successful in the 1930s. Consistently across the approaches, the evidence presented in this chapter does not indicate a shift towards increased inﬂation expectations. Therefore, the causes for Germany’s recovery lie elsewhere.
The second study focuses on news coverage during the Greek debt crisis from 2009 to 2015. I investigate the role of global media in the transmission of events to ﬁnancial markets. To identify news coverage about the Greek debt crisis, I apply topic modeling to a newly compiled extensive dataset of articles from global newspapers. I identify a Greek debt crisis topic and relate it to events concerning Greece during this time period. I ﬁnd that events are only relevant for ﬁnancial markets if they are covered in the media, whereas events without media coverage in global newspapers have no eﬀect. News coverage without immediate events is not relevant for ﬁnancial markets.
In the third part, I take a qualitative perspective and evaluate the results from topic modeling with respect to news coverage in the Greek debt crisis. For a selection of articles a possible causality between the news coverage and the ﬁnancial markets will be examined in a structured content analysis. My ﬁndings suggest that a causal nexus between news coverage and credit conditions is possible on the majority of dates. Moreover, the analysis shows that topic modeling is carrying out a meaningful classiﬁcation of the news coverage about the Greek debt crisis.
The central purpose of this dissertation is to study investors characteristics, as well as investment decisions on the different German stock exchanges in the period 1869 to 1955. It offers three studies that reveal typical characteristics of investors and their investment behavior over time. Increasing our knowledge of investors and how they built expectations therefore crucially improves our understanding about the economic and political situation in Germany in the considered time period.
The dataset is new and unique and includes information of more than 10,000 individual investors. The investors data are taken from archival resources containing lists of shareholders who attended a firms’ general assembly, shareholder books of different companies, portfolio choices over the lifetime of a single private banker and diary entries of individual investors.
The first part of this dissertation presents a study of investors characteristics and the ownership structure of joint-stock firms for the period of 1869 to 1945. It is shown that after the hyperinflation of 1923, when shares became cheaper, the ownership share among lower social classes rose significantly. Moreover, with the rise of women rights after 1919, the number of shares owned by women also increased significantly. However, despite these shifts, the majority of shares remained in the hands of institutional investors and investors from the upper class.
The second part analyzes investors’ expectations and investment decisions in regional stock exchanges in Germany from 1898 to 1934. The statistical analysis, which is based on shareholder lists attending general meetings first indicates that local investment was clearly important during this period. Then, challenging these findings and analyzing different sub-samples, suggests that investors’ home bias is potentially overestimated using this kind of source. In a supplementary exploration of so-called shareholder books, it is shown that the home bias phenomenon was indeed present.
The bias towards local investments can to a large extent be explained by overall economic and political circumstances, the general performance of the market and the level of activity of the investor. The examination of portfolio choices over the period 1923 to 1955 of the private banker Joseph Frisch, in Stuttgart, shows that the preference for local shares was highest in times of insecurity, low returns and reduced investment activity. Furthermore, the analysis of diary entries of an investor from the late 19th century provides further insights into the investment behavior.
The final part of this dissertation gives a general conclusion and a brief outlook about future Research.
This dissertation aims at advancing our understanding of the state-finance nexus in times of globalized financial market capitalism. It sheds light on the profound changes that have occurred on both sides of this relationship since OECD countries have transitioned into debt states since the 1970s. This is done in a first part by examining the financialization of the state in the area of government debt management. Based on the development of a concept that makes it possible to measure this phenomenon, a discernible trend is shown according to which states have aligned their handling of debt with financial markets along two dimensions.
First, the sense-making frameworks that guide action in debt management, nowadays, originate from financial economics, so that a portfolio view on indebtedness has found its way into the public realm. Second, the financial market has become the predominant governance mechanism in which economic coordination takes place in this area. Thus, states have increasingly adopted financial market logics and practices in public finance, one of the core areas of modern democracies. At the same time, governments have made a decisive contribution to the development of modern financial markets by the increasing orientation towards international investors and marketability of public debt. These interpenetrations of politics and finance are not limited to the national, but also extend to the subnational level. Local governments in Germany, the US and UK have introduced financial derivatives since the 1980s and continue to use them in some cases, even though they suffered major losses from these instruments during the financial crisis. By combining political economy with an economic sociological perspective, the causes that led to the local manifestation of this phenomenon are scrutinized. It is shown that the chronically underfinanced municipalities hoped to regain financial and political leeway through the use of financial innovations, which were strongly promoted and lobbied by financial institutions.
The second part of the thesis analyzes the state-finance nexus from the perspective of the financial industry and the business with public debt, which is embodied in the emergence of pure public sector lending banks in the German mortgage banking sector. Unpacking the manifold state-banks relations demonstrates that the historical emergence of this crisis-ridden business model focusing on public finance closely interacts with the different roles played by the state in financial markets as economic policy maker, borrower, regulator and supervisor. The state is deeply involved in the process of coping with competition between banks by enabling change and stabilization of the social structures in which banks’ activities play out.
Overall, this dissertation reiterates that the relationship between the state and finance is by no means one-sided, but rather characterized by mutual conditionality. It further highlights that the state-finance nexus is a complex configuration that also arises from the multilayered nature of the two entities themselves. Neither the financial sector nor the state are monolithic, but highly differentiated social arenas in which different actors and interests coexist. It is therefore of great importance that intra-state politics and dynamic relations within both entities are taken into account when studying relations between state and finance.