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on History and Philosophy of Economics |
| By: | Orley C. Ashenfelter |
| Abstract: | In this essay I review Sylvia Nasar’s long awaited new history of economics, Grand Pursuit. I describe how the book is really an economic history of the period from 1850-1950, with distinguished economists’ stories inserted in appropriate places. Nasar’s goal is to show how economists work, but also to show that they are people too--with more than enough warts and foibles to show they are human! I contrast the general view of the role of economics in Grand Pursuit with Robert Heilbroner’s remarkably different conception in The Worldly Philosophers. I also discuss more generally the question of why economists might be interested in their history at all. |
| JEL: | A11 B20 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17607&r=hpe |
| By: | Vieru, Elena Bianca |
| Abstract: | Approaching the theory of economic cycle is not an issue that comes in hand! We are permitted to make such a statement based on the idea that explanations concerning the business cycle theory are strictly related to how each school of thought was able to understand the system that makes market, with its habitual basic functions, operate; how was the idea of equilibrium understood and, last but not least, which is the role of the state in this entire „story”. Although some of the doctrines tend to insist on a particular factor, considered to be the most important one and also the one that is responsable for triggering the economic crisis, in fact we can talk about a consistent number of factors that include some worth mentioning like monetary expansion, state interventionism, excessive regulation, lack of regulation, low level of consumption, various changes in consumer preferences and so on. The serious problems that economy had to face during the years rise, therefore, many questions that require a thorough and consistent analysis. The limited space that we have at our disposal determines this essay to be considered only a „superficial” investigation of how the economic cycle can be addressed, from various points of view. Throughout this paper we will make a brief doctrinaire promenade starting with the monetary theory, reaching the Keynesian doctrine and finishing with the point of maximum interest, the Austrian School. Exhaustively passing through the theories mentioned above, along with their fundamental ideas about the phenomenon of economic cycles, does not represent the basis for the current paper. The specialized literature has no shortage of such work. The purpose of this research, as we will try to highlight, is to present the main differences that can be noticed between the ideologies that built, over time, their way into the history of economic thought. We are particularly interested in the problem of business cycle and the recurrence of crises. |
| Keywords: | Crisis; business cycle; Austrian School; Keynesian; Monetarist |
| JEL: | E32 E12 E50 B53 A11 |
| Date: | 2011–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:34124&r=hpe |
| By: | van Suntum, Ulrich; Böhm, Tobias; Oelgemöller, Jens; Ilgmann, Cordelius |
| Abstract: | Walter Eucken was the head of the Freiburg school of economics, a circle of German ordoliberal scholars of the interwar period, whose thoughts were highly influential in the immediate post war period. Being disillusioned by what he called the age of experiments- the failure of both classical liberalism and socialism - he formulated eleven principles for what he called a market economy, in which competition would not only limit the extent of private economic power, but also lead to an efficient allocation of resources and hence to economic prosperity. Although the principles never received much international attention, in light of recent economic research on both institutions and welfare economics, the essence of Eucken's work appears to be very modern indeed. This paper highlights these parallels and proposes a reformulation of Eucken's principles against the background of modern economic theory. We thus attempt to make a contribution to the current debate on the efficient design of those institutions that shape economic activity. -- |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cawmdp:49&r=hpe |
| By: | Douglas A. Irwin |
| Abstract: | The intellectual response to the Great Depression is often portrayed as a battle between the ideas of Friedrich Hayek and John Maynard Keynes. Yet both the Austrian and the Keynesian interpretations of the Depression were incomplete. Austrians could explain how a country might get into a depression (bust following an investment boom) but not how to get out of one (liquidation). Keynesians could explain how a country might get out of a depression (government spending on public works) but not how it got into one (animal spirits). By contrast, the monetary approach of economists such as Gustav Cassel has been ignored. As early as 1920, Cassel warned that mismanagement of the gold standard could lead to a severe depression. Cassel not only explained how this could occur, but his explanation anticipates the way that scholars today describe how the Great Depression actually occurred. Unlike Keynes or Hayek, Cassel explained both how a country could get into a depression (deflation due to tight monetary policies) and how it could get out of one (monetary expansion). |
| JEL: | E5 N1 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17597&r=hpe |
| By: | Colignatus, Thomas |
| Abstract: | Arrow’s Impossibility Theorem in social choice finds different interpretations. Bordes-Tideman (1991) and Tideman (2006) suggest that collective rationality would be an illusion and that practical voting procedures do not tend to require completeness or transitivity. Colignatus (1990 and 2011) makes the distinction between voting and deciding. A voting field arises when pairwise comparisons are made without an overall winner, like in chess or basketball matches. Such (complete) comparisons can form cycles that need not be transitive. When transitivity is imposed then a decision is made who is the best. A cycle or deadlock may turn into indifference, that can be resolved by a tie-breaking rule. Since the objective behind a voting process is to determine a winner, then it is part of the very definition of collective rationality that there is completeness and transitivity, and then the voting field is extended with a decision. |
| Keywords: | economic crisis; voting theory; democracy; economics and mathematics; |
| JEL: | D71 A10 P16 |
| Date: | 2011–11–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:34919&r=hpe |
| By: | Herrmann-Pillath, Carsten |
| Abstract: | This paper presents an overview of recent research in neuroeconomics, in the light of the question how these relate to institutional economics. I present a critique of Glimcher's recent internalist standard model of neuroeconomics and put forward the claim that only an externalist approach can provide a consistent framework for relating neuroscience and economics, which implies a pivotal role for institutions. I discuss the relation between neuroeconomics and institutional economics from three different perspectives. How does neuroeconomics improve our knowledge about the relation between behavior and institutions (rule follwoing)? Can neuroeconomics provide deeper insights into the effects of institutions on behavior? In which way does neuroeconomics change the relation between institutional analysis and welfare analysis? In all these respects, I show that the orginal Hayekian conjectures applies, namely that the analysis of the human brain contributes substantially to our understanding of institutions, and that mental phenomena cannot be isolated from institutional phenomena. -- |
| Keywords: | neuroeconomics,institutions,multiple selves,identity,rule following,distributed cognition,imitation |
| JEL: | B41 B52 D02 D87 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fsfmwp:176&r=hpe |
| By: | Simon Halliday (SALDRU, School of Economics, University of Cape Town) |
| Abstract: | In attempting to understand cooperation, economists have used the methods of experimental economics to focus on spheres of human behavior in which humans display altruism, reciprocity, or other social preferences through giving and through punishment. Recent work has begun to examine whether allowing allocations in the negative domain, that is, allowing subjects to take (or steal) other subjects' endowments, might affect participants' behavior. If participants' behavior is a affected, then our understanding of experimental results generally, and social preferences specifically, should be affected too (List 2007, Bardsley 2008). In this paper we propose an experimental variation on the Dictator Game with third-party punishment (Fehr & Fischbacher 2004b). We examine, first, a basic Dictator Game with third-party punishment, after which we introduce a treatment allowing the dictator to take from the receiver, in the knowledge that the third party could punish them. The results conict. Many dictators choose the most self-interested option, while, when taking is introduced as an option for the dictator, third parties punish the most self-interested option more than in the baseline. |
| Keywords: | Experimental Economics, Social Norms, Punishment, Strong Reciprocity, Social Preferences, Third Party. |
| JEL: | C91 D63 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:ldr:wpaper:62&r=hpe |
| By: | Carfì, David; Musolino, Francesco |
| Abstract: | The aim of this paper is to propose a methodology to stabilize the financial markets using Game Theory and in particular the Complete Study of a Differentiable Game, introduced in the literature by David Carfì. Specifically, we will focus on two economic operators: a real economic subject and a financial institute (a bank, for example) with a big economic availability. For this purpose we will discuss about an interaction between the two above economic subjects: the Enterprise, our first player, and the Financial Institute, our second player. The only solution which allows both players to win something, and therefore the only one desirable, is represented by an agreement between the two subjects: the Enterprise artificially causes an inconsistency between spot and future markets, and the Financial Institute, who was unable to make arbitrages alone, because of the introduction by the normative authority of a tax on economic transactions (that we propose to stabilize the financial market, in order to protect it from speculations), takes the opportunity to win the maximum possible collective (social) sum, which later will be divided with the Enterprise by contract. |
| Keywords: | Financial Markets; Game Theory; Stabilization of Financial Markets; arbitrages |
| JEL: | D53 N2 G32 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:34901&r=hpe |
| By: | Kozhurin, Fedir |
| Abstract: | A new management technology, based on modern developments in macroeconomics, was offered. It is aimed at the highest issues of state and society governing as well as finding methods of their solving. The grounding of necessity of separate supramacroeconomical level of management establishment was made; the methods and tools on its realization were developed. Examples of their implementation in Ukraine are still being interpreted. |
| Keywords: | supramacroeconomic; supramacroeconomics; macroeconomics; economic; economics; technology; management; development |
| JEL: | B00 A10 E60 C13 B40 H40 P41 C14 C02 C80 B41 C01 |
| Date: | 2011–11–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:34842&r=hpe |
| By: | Piet-Hein Van Eeghen |
| Abstract: | Although still very much a minority view, there is a growing sense of unease about the high degree of abstraction involved in contemporary macro-monetary theory, in particular concerning its representative-agent microfoundation (see e.g. Colander et al., 2008; Goodhart, 2005, 2008; Buiter, 2009; Caballero, 2010; Hoover, 2010; Du Plessis, 2010; Meeusen, 2010). The paper shares this unease but questions another aspect of contemporary theory: its equilibrium conditions as consisting of its market coordination conditions and budget equation. The paper derives, from scratch, an alternative set of such conditions which it rigorously grounds in the nature of monetary exchange. This alternative set has implications for a wide variety of issues, including the aptness of MIU and CIA modelling, the nature of real and monetary disturbances, and the linkage between the financial and real sectors. The paper also assesses the conceptual soundness of commonly used constructs like Keynes’s income-spending (saving-investment) equation of IS analysis, Hicks’s wealth constraint, Fisher’s quantity equation, Walras’s Law, and the budget constraint of contemporary DSGE modelling. |
| Keywords: | monetary exchange, equilibrium condition, budget equation, market coordination, market price |
| JEL: | E11 E12 E40 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:255&r=hpe |
| By: | Sung-Ha Hwang (Department of Economics, Sogang University, Seoul) |
| Abstract: | This paper shows how larger group size can enhance punishing behavior in social dilemmas and hence support higher levels of cooperation. This occurs when agents can punish fellow group members who violate cooperative norms. Unlike existing approaches that focus on decentralized punishment, I view punishment to be a collective activity and show that pun- ishers can ?divide and conquer?defectors more e¢´ectively as the size of the group increases. To describe the punishment activities more precisely I develop a con?ict model which gener- alizes Lanchester?s equations - equations which describe the time evolution of the strengths of two competing armies. |
| Keywords: | Collective action, group size, collective punishment, Lanchester?s equation |
| JEL: | H41 D74 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:sgo:wpaper:1113&r=hpe |
| By: | Bourjade, Sylvain; Jullien, Bruno |
| Abstract: | We analyze situations in which an expert is biased toward some decision but cares also about his reputation in the market for experts. The information the expert reveals decreases as his bias moves toward stronger preference for the status quo. We show that it is optimal to publicly disclose both the expert's contribution and his identity. Surprisingly, revealing the intensity of the expert's bias doesn't always improve the information he reveals in equilibrium. The presence of a second expert raises the first expert's incentives to report truthfully when reports are public, but reduces them when they are secret. In particular, having an option to call another expert may be detrimental in terms of information production if reports are not public. Finally, sequential consultation of experts reduces the information obtained when reports are public, but raises it when they are secret. |
| Keywords: | Experts; Bias; Reputation |
| JEL: | D82 L40 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:34813&r=hpe |
| By: | Ilgmann, Cordelius; Menner, Martin |
| Abstract: | Given the renewed interest in negative interest rates as a means for overcoming the zero bound on nominal interest rates, this article reviews the history of negative nominal interest rates and gives a brief survey over the current proposals that received popular attention in the wake of the financial crisis of 2007/08. It is demonstrated that taxing money proposals have a long intellectual history and that instead of being the conjecture of a monetary crank, they are a serious policy proposal. In a second step the article points out that, besides the more popular debate on a Gesell tax as a means to remove the zero bound on nominal interest rates, there is a class of neoclassical search-models that advocates a negative tax on money as efficiency enhancing. This strand of the literature has so far been largely ignored by the policy debate on negative interest rates. -- |
| Keywords: | negative interest rates,history of economic thought,Silvio Gesell,zero bound,search-theoretical models,monetary policy |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cawmdp:43&r=hpe |
| By: | Hiona Balfoussia (Bank of Greece); Sophocles N. Brissimis; Manthos D. Delis (City University) |
| Abstract: | The three-equation New-Keynesian model advocated by Woodford (2003) as a self-contained system on which to base monetary policy analysis is shown to be inconsistent in the sense that its long-run static equilibrium solution implies that the interest rate is determined from two of the system’s equations, while the price level is left undetermined. The inconsistency is remedied by replacing the Taylor rule with a standard money demand equation. The modified system is seen to possess the key properties of monetarist theory for the long run, i.e. monetary neutrality with respect to real output and the real interest rate and proportionality between money and prices. Both the modified and the original New-Keynesian models are estimated on US data and their dynamic properties are examined by impulse response analysis. Our research suggests that the economic and monetary analysis of the European Central Bank could be unified into a single framework. |
| Keywords: | Monetary theory; Central banking; New-Keynesian model; Impulse response analysis |
| JEL: | E40 E47 E52 E58 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:bog:wpaper:138&r=hpe |
| By: | Monique Reid; Stan Du Plessis |
| Abstract: | Central bank communication is widely recognised as crucial to the implementation of monetary policy. This communication should enhance a central bank’s management of the inflation expectations of the financial markets as well as the general public — the latter being a part of the central bank’s audience that has received relatively little research attention. In this paper, the role of the media in transmitting the SARB’s communication to the general public is explored, with the aim of improving our understanding of its impact on the expectations channel of the monetary policy transmission mechanism. A deliberate evaluation of this channel could aid the design of future strategies to communicate with the general public. |
| Keywords: | South Africa, central bank communication, consistency, monetary policy transmission mechanism, transparent monetary policy. |
| JEL: | E42 E52 E58 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:254&r=hpe |
| By: | Didier Bensadon (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris Dauphine - Paris IX) |
| Abstract: | The aim of this paper is to shed light on the role of legislators and lawyers in establishing accounting regulations concerning corporate groups in France during the 1930s and the Occupation (1940 - 1944). A review of bills proposing accounting regulation shows that no significant progress was to be achieved. Furthermore, while some lawyers called for a comprehensive regulation of corporate groups, no such progress was made during the inter-war period. Ultimately it's the Vichy government which introduced the first regulations on accounting subsidiaries in the French Plan Comptable and limited the reciprocal shareholdings in the Act of March 4, 1943. |
| Keywords: | Accounting history, corporate groups, accounting regulation, inter war period, Occupation period, France |
| Date: | 2011–09–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00640504&r=hpe |
| By: | Didier Bensadon (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris Dauphine - Paris IX) |
| Abstract: | The expansion of groups of companies during the inter-war years is one of the most profound transformations in the structure of French capitalism. Studies in economic history have shown the importance of the subsidiary creation phenomenon in relation to Compagnie Générale d'Electricité, Energie industrielle or Schneider . By contrast, these studies are less interested in the specific arrangements for auditing subsidiaries and managing Company Groups. This article seeks to show how and why the directors of Alais, Froges et Camargue - The largest French company in the aluminum sector- established specific audit measures from the 1920s onwards. This research is essentially based on the company's archives (annual reports, general organisation chart and memoranda from the general secretariat). Even if the results published in the annual reports should be treated with the utmost caution, in particular owing to the absence of accounting regulation in France in the inter-war years, they remain essential for assessing the important position of subsidiaries and main shareholdings in assets. The scope of the subsidiary creation phenomenon, which is behind the establishment of specific controls, is highlighted. This trend, far from being linear, is strongly influenced by the economic and political situation. The size of the Group's growth gave rise to two types of requirements for the directors of Alais, Froges et Camargue, namely to audit the subsidiaries and to measure the group's net cash flow. The response to the need for auditing the subsidiaries was provided by the introduction of financial reporting from 1921. Faced with the increasing number of subsidiaries and main shareholdings held by Alais, Froges et Camargue, this control mechanism was to be strengthened in 1931. Furthermore, the necessity of measuring the Group's net cash flow led the directors in 1927 to draw up a financial statement whose conceptual foundations were based on those of the consolidation of accounts |
| Keywords: | financial reporting, accounting history, group accounts, French aluminium industry, shareholdings. |
| Date: | 2011–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00640503&r=hpe |