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on History and Philosophy of Economics |
| By: | Guglielmo Forges Davanzati (University of Salento) |
| Abstract: | Nicholas Kaldor’s contribution to economic theory covers a wide range of topics, elaborated in different historical contexts, such as theories of economic growth and the balance of payments, studies on interregional divergences and monetary theory. In most cases, historians of economic thought have devoted their attention to single aspects of his contributions. This paper aims at integrating Kaldor’s monetary theory and his view of the relevance of increasing returns. His theory of endogenous money is very similar to the view proposed in the contemporary monetary theory of production, and, in this respect, Kaldor’s contribution can certainly be considered an “antecedent” of this line of thought. |
| Keywords: | endogenous money, aggregate demand, labour productivity. |
| JEL: | B3 E4 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp1505&r=hpe |
| By: | Aurélien Goutsmedt (Centre d'Economie de la Sorbonne); Erich Pinzon-Fuchs (Centre d'Economie de la Sorbonne); Matthieu Renault (Centre d'Economie de la Sorbonne); Francesco Sergi (Centre d'Economie de la Sorbonne) |
| Abstract: | The standard history of macroeconomics considers Lucas (1976)– “the Lucas Critique” –as a path-breaking innovation for the discipline. According to this view Lucas's article dismissed the traditional macroeconometric practice calling for new ways of conceiving the quantitative evaluation of economic policies. The Lucas Critique is considered, nowadays, as a fundamental principle of macroeconomic modeling (Woodford, 2003). The interpretation and the application of the Critique, however, represent still unsolved issues in economics (Chari et al., 2008). Even if the influence of Lucas's contribution cannot be neglected, something seems to be missing in the narrative: the reactions of the economists that were directly targeted by the Critique. Modeling practices of economic policy evaluation were not overthrown immediately after Lucas (1976), creating a divide between theoretical and applied macroeconomics (Brayton et al., 1977). The purpose of this paper is to study the reactions of the macroeconometricians criticized by Lucas. We focus especially on those macroeconometricians who worked on policy evaluation and who held an expertise position in governmental institutions. We categorize the different reactions to the Critique, in order to enrich the understanding of the evolution of modeling and expertise practices through the analysis of the debates–which have not yet been completely solved. In the first section, we propose a careful account of Lucas's argument and of some of the previous works anticipating the substantial outline of the Critique (like Frisch's notion of autonomy). Second, we bring our own interpretation of Lucas (1976). We think that we find two points of view in Lucas paper: a prescriptive one that tell you how to build a good macroeconometric model (it is the standard interpretation of the article); a positive one that relies on the fact that the Lucas critique could be seen as an attempt to explain a real-world phenomenon, the stagflation. Third, we classify the reactions of the Keynesian macroeconometricains following this line of interpretation. On the prescriptive side, the Keynesians protested against the New Classical solution to the Lucas critique (the use of the rational expectation hypothesis among other things). Klein, for instance, proposed an alternative microfoundational programme to study more empirically the formation of expectations. On the positive side, the Keynesians put into question the relevance of the Lucas Critique to explain the rise of both unemployment and inflation in the 1970s. They tried to test the impact of policy regime changes and of shifts in agents behaviour. According to us, in general, the explanation of the stagflation was elsewhere |
| Keywords: | History of macroeconomics; Keynesian economics; Lucas critique; Macroeconometrics; Rational expectations |
| JEL: | B22 B41 E60 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:15059&r=hpe |
| By: | Daniyal Khan (Department of Economics, New School for Social Research) |
| Abstract: | After discussing and analyzing exploitation as an analytical category in The Economics of Imperfection Competition and An Essay on Marxian Economics, Joan Robinson hardly mentioned it in The Accumulation of Capital. Despite analyzing her contributions at length, the literature has completely failed to recognize this curious turn, let alone explain it. This paper explains the abandonment of exploitation by arguing that it was one way to resolve the tension between the inherently normative aspects of the concept and her increasing discomfort with conflation of ideology and analysis across the first two books mentioned above. |
| Keywords: | Joan Robinson, exploitation, theory of value, ideology |
| JEL: | B50 B22 B31 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:new:wpaper:1515&r=hpe |
| By: | Philippe Bich (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS); Rida Laraki (LAMSADE - Laboratoire d'analyse et modélisation de systèmes pour l'aide à la décision - CNRS - Université Paris IX - Paris Dauphine, Department of Economics, Ecole Polytechnique - Polytechnique - X - CNRS) |
| Abstract: | Endogenous sharing rules was introduced by Simon and Zame to model payoff indeterminacy in discontinuous games. Their main result concerns the existence of a solution, i.e., a mixed Nash equilibrium and an associated sharing rule. This note extends their result to abstract economies where, by definition, players are restricted to pure strategies, and provide an interpretation of Simon and Zame's model in terms of preference incompleteness. |
| Abstract: | La notion de règle de partage endogène (« Endogenous sharing rules ») a été introduite par Simon et Zame (Econometrica 1990) afin de modéliser la possible indétermination des paiements dans les jeux stratégiques discontinus. Leur résultat principal est l'existence d'une solution, c'est à dire qu'un équilibre de Nash mixte et d'une règle de partage associée. Dans cette note, l'on étend leur résultat au cas d'une économie abstraite, où, par définition, les joueurs doivent choisir des stratégies pures, et l'on fournit une interprétation du modèle Simon et Zame en terme de préférences incomplètes. |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-01179102&r=hpe |
| By: | Tisdell, Clem; Svizzero, Serge |
| Abstract: | Examines two parallel approaches, one in economics and the other in anthropology, intended to explain the behaviours of Neolithic societies, particularly their transit from foraging to agriculture. Both approaches assume that human behaviour is a response to rational human decisions to optimise. The application of microeconomic theory by a Danish professor to explain the transition of foragers to agriculture and the corresponding complementary views of some American anthropologists about this transition are outlined and discussed. While these approaches provide valuable insights into the evolution of Neolithic societies, it is also important to be aware of their limitations, several of which are identified in this article. Such approaches are unlikely to provide a general theory of the evolution of Neolithic societies. Because of the diversity of human behaviours, a range of theories are required. |
| Keywords: | Economic evolution, economic optimisation, human behavioural ecology, hunter-gatherers, Neolithic Revolution, satisficing behaviour, Research and Development/Tech Change/Emerging Technologies, D01, 010, P00, Q10, |
| Date: | 2015–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uqseet:197550&r=hpe |
| By: | Martin Kaae Jensen |
| Abstract: | Many important games are aggregative allowing for robust comparative statics analysis even when a game does not exhibit strategic complements or substitutes (Acemoglu and Jensen (2013)). This paper establishes such comparative statics results for contests improving upon existing results by (i) allowing payoff functions to be discontinuous at the origin, and (ii) allowing for asymmetric rent-seeking contests and patent races. A leading example where (i) is relevant is the classical Tullock contest (Tullock (1980)). The paper also studies existence and uniqueness of equilibria extending the results of Szidarovszky and Okuguchi (1997) and Cornes and Hartley (2005) to patent races. |
| Keywords: | Comparative statics, Uniqueness, Existence, Contest, Rent-seeking, Aggregative game, Local solvability condition. |
| JEL: | C61 D80 D90 E20 I30 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:15/16&r=hpe |
| By: | M. Mitka; K. Mumford; C. Sechel |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:15/10&r=hpe |
| By: | Patrick Aquino (Harvard Graduate School of Education); Robert S. Gazzale (University of Toronto); Sarah Jacobson (Williams College) |
| Abstract: | The public good literature has often found that a punishment option increases cooperation while the gift exchange literature has found the opposite. We use a novel experiment to seek the cause of this difference. We begin with a gift exchange game with punishment as it has typically been implemented therein, and modify two features to replicate conditions more like those usually used in a public good game: punishment's power and its timing (whether the punisher publicly pre-commits to punishment before the punishee decides or acts after the punishee). We replicate the result that punishment institutions as they have typically been implemented in gift exchange games "backfire," but show that this bad outcome disappears if punishment is more powerful. We find three reasons that punishment decreases cooperation: lower wages are offered (a stick is substituted for a carrot); punishment is poorly chosen by many punishers; and some agents spitefully choose low cooperation in retribution against a punishing principal, but only if the punishment is weak so that spite is relatively cheap. We find that punishment that is not publicly pre-committed to is not effective in this game, even though this kind of punishment is similar to that used in many public good games in the literature where punishment does seem to increase cooperation. The only punishment institution that increases cooperation is high-power punishment that is publicly pre-committed to. Finally, the existence of a punishment institution often decreases social surplus (when punishment-related losses are considered), although it may eventually increase social surplus if it is powerful and publicly pre-committed to. |
| Keywords: | punishment, cooperation, reciprocity, gift exchange, public good |
| JEL: | C91 D03 D64 H41 J41 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:wil:wileco:2015-15&r=hpe |
| By: | Oben Kurtulus Bayrak; John Hey |
| Abstract: | This paper presents a new theory, called Preference Cloud Theory, of decision-making under uncertainty. This new theory provides an explanation for empirically-observed Preference reversals. Central to the theory is the incorporation of preference imprecision which arises because of individualsâ vague understanding of numerical probabilities. We combine this concept with the use of the Alpha model (which builds on Hurwiczâs criterion) and construct a simple model which helps us to understand various anomalies discovered in the experimental economics literature that standard models cannot explain. |
| JEL: | D81 |
| Date: | 2015–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:jmp:jm2015:pba1276&r=hpe |
| By: | Tisdell, Clem; Svizzero, Serge |
| Abstract: | Presents a simple economic theory explaining how some agriculturally based preindustrial societies (for example, in the Neolithic period) developed despite most of their population being subject to Malthusian dynamics. Their development depended on a dominant class (limited in size) extracting the economic surplus which could be used (among other things) to accumulate capital and advance knowledge and thereby, add to this surplus. Cities facilitated this process. Extraction of the surplus prevented increased population from dissipating it and curtailing development. Several early extractive and non-inclusive societies were long lasting. This is at odds with the theories of some contemporary development economists. |
| Keywords: | Institutional economics, Malthusian trap, Neolithic development, population dynamics, social inequality and development, Research and Development/Tech Change/Emerging Technologies, O1, P4, N00, |
| Date: | 2015–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uqsese:197551&r=hpe |
| By: | Robin Cubitt (Department of Economics, University of Nottingham); Simon Gaechter (Department of Economics, University of Nottingham); Simone Quercia (University of Bonn, Institute for Applied Microeconomics) |
| Abstract: | We investigate whether there is a link between conditional cooperation and betrayal aversion. We use a public goods game to classify subjects by type of contribution preference and by belief about the contributions of others; and we measure betrayal aversion for different categories of subject. We find that, among conditional cooperators, only those who expect others to contribute little to the public good are significantly betrayal averse, while there is no evidence of betrayal aversion for those who expect substantial contributions by others. This is consistent with their social risk taking in public goods games, as the pessimistic conditional cooperators tend to avoid contribution to avoid exploitation, whereas the optimistic ones typically contribute to the public good and thus take the social risk of being exploited. |
| Keywords: | public goods game, conditional cooperation, trust, betrayal aversion, exploitation aversion, free riding, experiments |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2015-14&r=hpe |
| By: | Di Bartolomeo Giovanni; Papa Stefano |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:ter:wpaper:0112&r=hpe |
| By: | Siddiqi, Hammad |
| Abstract: | I argue that the Bitcoins market is an example of a complex system without a stable equilibrium. The users of Bitcoins fall into two broad categories: 1) Capital gain seekers: who have no functional use for the currency apart from an expectation of capital gains. 2) Functional users: who use the currency to save on transaction costs as it provides a less costly medium of exchange over traditional fiat currencies. I assume that each category consists of mean-variance optimizers, and specify simple evolutionary dynamics for each category. I identify two simple routes to Chaos in the Bitcoins market. If only capital gain seekers are present, then one route to chaos is via the logistic map. If both categories of users matter then a possible route to Chaos is via the delay logistic-Henon map. As Chaos is common in nonlinear maps, and capital gain seekers make the dynamical map nonlinear, the emergence of Chaos in the Bitcoins market is a likely scenario in the presence of capital gain seekers. A policy recommendation follows: in order to pre-empt Chaos in the Bitcoins market, currency exchanges should be allowed to convert Bitcoins into dollars and vice versa if and only if there is an associated transaction involving buying and selling of goods or services or if the Bitcoins are freshly mined. Such a regulation pre-empts Chaos by reducing the impact of capital gain seekers on the virtual currency’s value. |
| Keywords: | Bitcoins, Chaos, Speculation, Digital Currency, Complex System, Mean-Variance Optimization, Medium of Exchange, Store of Value, Logistic Map, Delay Logistic-Henon Map, Financial Economics, G12, |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uqsers:164178&r=hpe |
| By: | Iván Barreda Tarrazona (LEE & Economics Department, Universitat Jaume I, Castellón, Spain); Aurora García-Gallego (LEE & Economics Department, Universitat Jaume I, Castellón, Spain); Nikolaos Georgantzis (UJI-LEE, Spain and Agriculture Policy and Development, University of Reading, UK); Nikolas Ziros (Department of Economics, University of Cyprus, Cyprus) |
| Abstract: | We study an experimental exchange market based on Shapley and Shubik (1977). Two types of players with different preferences and endowments independently submit quantities of the goods they wish to exchange in the market. We implement a case in which the Nash equilibrium involves minimum exchange or no trade at all. This is almost never confirmed by our laboratory data. On the contrary, after a sufficiently large number of periods, convergence close to full trade is obtained, which can be supported as an epsilon symmetric strategy evolutionary stable equilibrium. We also study cheap talk communication within pairs of traders from the same (horizontal) and opposite (vertical) sides of the market. As predicted by the theory, horizontal communication restricts trade, whereas vertical communication leads to higher bids, but always lower or equal than those achieved tacitly by learning alone. Vertical messages limit the collusive effect of horizontal communication when the former precede the latter. Results do not differ when players are allowed to choose the communication mode. |
| Keywords: | Efficiency, strategic market games, experiments, vertical communication, horizontal communication Technology |
| JEL: | D43 C91 C73 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2015/10&r=hpe |
| By: | Tisdell, Clem; Svizzero, Serge |
| Abstract: | Several contemporary economists claim that ‘real’ economic development only occurred following the Industrial Revolution. We contend that this is only so if a narrow view is taken of what constitutes economic development, namely increasing per capita income. Given a wider perspective, we argue that economic development occurred in hunter-gatherer societies and eventually accelerated in the second stage of the Agricultural Revolution. During this stage, a small dominant class (the elite) were able to extract rent (the economic surplus) from the mass of the population (the dominated) which they could use for development purposes. As a result of this rent extraction, the bulk of the population remained at subsistence level. Nevertheless, dissipation of the rent as a result of population increase was prevented. Consequently, the Malthusian trap could be avoided and the economic surplus could be used by the elite for development or other purposes. Whether or not economic development occurred depended on how the elite allocated the economic surplus. In the second stage of the Agricultural Revolution, the economic surplus was extracted primarily in the form of staples and the exchange of commodities was mostly directly controlled by the elite. This situation changed as states became larger in size and commodities became more diverse. In the few centuries preceding the Industrial Revolution in Europe, monarchs exerted decreasing direct control over the exchange, production and use of commodities. This was particularly noticeable in England. Also devolution of increased political power to nobles and local areas added to principal-and-agent problems. Sovereigns, instead of concentrating on the extraction of the economic surplus in the form of staples, increasingly relied on its extraction and storage in the form of treasures, precious metals and gems. Monarchs (in order to maximize their net extraction) focused on increasing the number of different markets and the extent of these but at the same time, extracted rent from them in the form of levies. Consequently, this Age of Mercantilism was marked by a substantial expansion in marketing even though this was combined with royal imposts on markets. This increase in marketing activities helped to pave the way for the Industrial Revolution by altering the balance of political power and facilitating sales of the products of the Industrial Revolution. Despite this, it seems likely that the Industrial Revolution only happened as a result of the chance occurrence of a combination of events. It was not inevitable. |
| Keywords: | economic development, economic surplus, Malthus, pre-industrial economics, rent extraction., Community/Rural/Urban Development, Institutional and Behavioral Economics, Research and Development/Tech Change/Emerging Technologies, N00, O1, |
| Date: | 2015–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uqseet:204256&r=hpe |