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on History and Philosophy of Economics |
| By: | Duncan Foley (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Recent claims, particularly in Paul Krugman’s column and blog, on the superiority of the Hicks-Modigliani version of Keynesian economics calls for a re-thinking of the issues raised in the early controversies over what Joan Robinson called ”bastard Keynesianism”. ”Good, old-fashioned, Keynesian economics” (GOKE) substitutes the general and unmotivated assumption of downward money wage rigidity for the detailed examination of the varied social coordination problems that characterize modern capitalist economies. This underrates Keynes’ role as a precursor of modern information economics, and risks losing significant policy insights. The political economy background of the New Classical counter-revolution in economic theory, stemming from the unravelling of the ”capital-labor accord” of the SecondWorldWar, provides some important lessons for the development of a macroeconomic analysis that is relevant to the real problems of modern capitalist economies. |
| Keywords: | Keynes, macroeconomics, sticky wages, information economics, multiple equilibria |
| JEL: | B22 D83 E41 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepawp:2014-4&r=hpe |
| By: | Joseph E. Stiglitz |
| Abstract: | Macroeconomics has not done well in recent years: The standard models didn't predict the Great Recession; and even said it couldn't happen. After the bubble burst, the models did not predict the full consequences. The paper traces the failures to the attempts, beginning in the 1970s, to reconcile macro and microeconomics, by making the former adopt the standard competitive micro-models that were under attack even then, from theories of imperfect and asymmetric information, game theory, and behavioral economics. The paper argues that any theory of deep downturns has to answer these questions: What is the source of the disturbances? Why do seemingly small shocks have such large effects? Why do deep downturns last so long? Why is there such persistence, when we have the same human, physical, and natural resources today as we had before the crisis? The paper presents a variety of hypotheses which provide answers to these questions, and argues that models based on these alternative assumptions have markedly different policy implications, including large multipliers. It explains why the apparent liquidity trap today is markedly different from that envisioned by Keynes in the Great Depression, and why the Zero Lower Bound is not the central impediment to the effectiveness of monetary policy in restoring the economy to full employment. |
| JEL: | E00 E12 E24 E5 G01 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20517&r=hpe |
| By: | Ismail M.S. (GSBE) |
| Abstract: | In this note, we introduce a new sufficient condition, called sign-quasiconcavity, on the existence of a pure equilibrium in two-person symmetric zerosum games, which generalizes both generalized ordinal potentials Monderer and Shapley, 1996 and quasiconcavity Duerschet al., 2012. |
| Keywords: | Noncooperative Games; |
| JEL: | C72 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2014035&r=hpe |
| By: | Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Peter Sudhölter (University of Southern Denmark - Department of Business and Economics and COHERE) |
| Abstract: | We generalize the characterizations of the positive core and the positive prekernel to TU games with precedence constraints and show that the positive core is characterized by non-emptiness (NE), boundedness (BOUND), covariance under strategic equivalence, closedness (CLOS), the reduced game property (RGP), the reconfirmation property (RCP) for suitably generalized Davis-Maschler reduced games, and the possibility of nondiscrimination. The bounded positive core, i.e., the union of all bounded faces of the positive core, is characterized similarly. Just RCP has to be replaced by a suitable weaker axiom, a weak version of CRGP (the converse RGP) has to be added, and CLOS can be deleted. For classical games the prenucleolus is the unique further solution that satisfies the axioms, but for games with precedence constraints it violates NE as well as the prekernel. The positive prekernel, however, is axiomatized by NE, anonymity, reasonableness, the weak RGP, CRGP, and weak unanimity for two-person games (WUTPG), and the bounded positive prekernel is axiomatized similarly by requiring WUTPG only for classical two-person games and adding BOUND. |
| Keywords: | TU games; restricted cooperation; game with precedence constraints; positive core; bounded core; positive prekernel; prenucleolus |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01020282&r=hpe |
| By: | William James Fear (Department of Organizational Psychology - Birkbeck College University of London); Ricardo Azambuja (MC - Management et Comportement - Grenoble École de Management (GEM)) |
| Abstract: | Patient Safety is a global institution in the field largely assumed to have emerged following the publication of To Err Is Human by the Institute of Medicine in 1999. In this paper we demonstrate that Patient Safety has been constructed as an institution separately in the practice of anaesthesia since 1954 and in hospitalised care since 1964. The publication of To Err was, in fact, only one of a number of later field configuring events. We use Bruner's (1991) theory of narrative to frame the institution building process which we term deliberative instauration in recognition of the historic literature on the subject. We further link the process of institution building to Vygotsky's theory of social mediation and the use of artefacts in relation to the object of intended action. We conclude that a narrative can be understood as both an artefact and a process used in the social construction of institutions by professional psychological collectives (in this case physicians). |
| Keywords: | Institution; Artefact; Narrative; Patient Safety; Healthcare |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00991744&r=hpe |
| By: | Heckman, James J. (University of Chicago) |
| Abstract: | Gary Becker's classic study, A Theory of the Allocation of Time, laid the analytical foundations for the study of household production and the allocation of time within the household. The analytical framework of household production theory developed in this paper remained a pillar of his later work on the economics of the family and the economics of nonmarket activities more generally. Becker provided a formal model of households producing outputs like food, children, and housing that bundled goods and time. Becker's great contribution was to apply the model to interpret a broad array of empirical phenomena. Becker's framework allowed for a deeper understanding of the mechanisms of consumer choice, and interpretation of income and substitution effects. Its continuing relevance in empirical economics is a testimony to its power. |
| Keywords: | household production, economics of the family, empirical economics |
| JEL: | B31 D13 J24 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8424&r=hpe |
| By: | Sebastian Edwards |
| Abstract: | In this paper I discuss the effectiveness of foreign aid from a historical perspective. I show that foreign aid is a relatively new concept in economics, and I emphasize the role of exchange rate policies in the foreign aid controversies of the 1970s through 1990s. I show that in the early 1980s there were major changes in views regarding aid and agriculture. I emphasize the role of “ownership” of aid programs by the recipient countries as a way of increasing effectiveness. I argue that there is little hope of making progress in these debates if the economics profession continues to rely, almost exclusively, on cross section regressions. In order to move forward, these analyses need to be supplemented by in depth case studies that follow a country’s history for many decades. |
| JEL: | B20 F31 O10 O13 O19 O40 O43 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20685&r=hpe |
| By: | John Knight; Ramani Gunatilaka |
| Abstract: | The paper contrasts early theories of the utility function (starting with Bentham and elaborated by Jevons) with the modern theory (laid down by Fisher and Samuelson). The former include in the utility function not only the sensation of current events but also the memory of past events and the anticipation of future events. The alternative hypotheses are tested by introducing both past and expected future income into the estimated subjective well-being function, using an appropriate data set for China. The tests favour the early theories. Implications are drawn. |
| Keywords: | Anticipation, China, Discounted utility, Memory, Subjective well-being, Utility function |
| JEL: | B13 B21 D60 |
| Date: | 2014–08–28 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:721&r=hpe |
| By: | Hans Pitlik (WIFO); Martin Rode (WIFO) |
| Abstract: | Recent research has shown that the degree to which people feel they are in control of their lives is an important correlate of individual happiness, where those that feel more in control are also found to be systematically happier. In turn, the economic sources of perceived life control are only insignificantly established in the relevant literature. The present paper employs individual data from the most recent version of the World Value Survey, covering the period from 1981 to 2013, to establish the macro-determinants of individual life control. We find that living in a country with high overall economic freedom is a major determinant of feeling in control of one's own life. The effect is very similar for individuals in high and low income countries, while the impact of democracy is negligible in both cases. Interacting relative income with economic freedom, we find that – contrary to conventional wisdom – it is by far the lower income groups that derive the biggest gain of perceived life control from living in a country with comparatively high economic freedom. |
| Keywords: | Locus of control, Economic institutions, Well-Being, Democracy |
| Date: | 2014–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2014:i:482&r=hpe |
| By: | David Autor |
| Abstract: | In 1966, the philosopher Michael Polanyi observed, "We can know more than we can tell... The skill of a driver cannot be replaced by a thorough schooling in the theory of the motorcar; the knowledge I have of my own body differs altogether from the knowledge of its physiology." Polanyi's observation largely predates the computer era, but the paradox he identified--that our tacit knowledge of how the world works often exceeds our explicit understanding--foretells much of the history of computerization over the past five decades. This paper offers a conceptual and empirical overview of this evolution. I begin by sketching the historical thinking about machine displacement of human labor, and then consider the contemporary incarnation of this displacement--labor market polarization, meaning the simultaneous growth of high-education, high-wage and low-education, low-wages jobs--a manifestation of Polanyi's paradox. I discuss both the explanatory power of the polarization phenomenon and some key puzzles that confront it. I then reflect on how recent advances in artificial intelligence and robotics should shape our thinking about the likely trajectory of occupational change and employment growth. A key observation of the paper is that journalists and expert commentators overstate the extent of machine substitution for human labor and ignore the strong complementarities. The challenges to substituting machines for workers in tasks requiring adaptability, common sense, and creativity remain immense. Contemporary computer science seeks to overcome Polanyi's paradox by building machines that learn from human examples, thus inferring the rules that we tacitly apply but do not explicitly understand. |
| JEL: | J23 J24 J31 O3 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20485&r=hpe |
| By: | David de la CROIX (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)) |
| Abstract: | Abstract: The first challenge for economic growth theory is to understand the transition from stagnation to growth at the time of the Industrial Revolution and in particular to identify the main factor(s) that triggered the take-off. Doing so also helps to understand why there are poor and rich countries today, and whether the poorest ones will ultimately catch-up. This chapter reviews the main theories of growth, including the Malthus model (useful to understand stagnation), the neo-classical model where technical progress is the engine of growth, the endogenous growth model where growth is self-sustained and policy is of particular importance for the long-run, and unified growth theory, providing the big picture and linking the growth take-off to the demographic transition. |
| Keywords: | Stagnation, Capital, Fertility, Mortality, Education, Human Capital, Convergence, Poverty trap, Technical Progress, Decline, Inequality |
| JEL: | O40 |
| Date: | 2014–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2014019&r=hpe |