nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2012‒04‒17
nineteen papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  1. Noncomputability, Unpredictability, Undecidability and Unsolvability in Economic & Finance Theories By Ying-Fang Kao; V.Ragupathy; K. Vela Velupillai; Stefano Zambelli
  2. Institutional change for creating capacity and capability for sustainable development: A club good perspective By Platje, Joost
  3. From the Neoliberal crisis to a new path of development By Russo, Alberto
  4. A Social Accounting Matrix for Nepal for 2007: Methodology and Results By Raihan, Selim; Khondker, Bazlul Haque
  5. Measuring absorptive capacity of national innovation systems By Effelsberg, Martin
  6. Promotional benefits of 99-ending prices: the moderating role of intuitive and analytical decision style By Charlotte Gaston-Breton; Lola C. Duque
  7. Mechanisms of Financial Crises in Growth and Collapse: Hammurabi, Schumpeter, Perez, and Minsky. By Erik S. Reinert
  8. Shifted labor market risks? The changing economic consequences of job loss in the United States and West Germany By Ehlert, Martin
  9. "Control of Finance as a Prerequisite for Successful Monetary Policy: A Reinterpretation of Henry Simons's Rules versus Authorities in Monetary Policy" By Thorvald Grung Moe
  10. Payer peut nuire à votre santé : une étude de l’impact du renoncement financier aux soins sur l’état de santé By Paul Dourgnon; Florence Jusot; Romain Fantin
  11. Evolutionary Model of the Personal Income Distribution By Kaldasch, Joachim
  12. Die sozialen Klassen im ethnisch heterogenen Milieu: Ein soziologischer Ansatz zur Erklärung der Unterschiede der Einkommensverteilung in den Ländern der Welt By Haller, Max
  13. Who faces higher prices? -An empirical analysis based on Japanese homescan data- By Abe, Naohito; Shiotani, Kyosuke
  14. Diversité et fragilité des associations en Europe By Edith Archambault
  15. Improving Ethical Decision-Making in Organizations through Ethical Competencies By Rafael Morales Author-1-Name-First: Rafael Author-1-Name-Last: Morales; Carmen Cabello Author-2-Name-First: Carmen Author-2-Name-Last: Cabello
  16. Public Health und das gute Leben: Der Capability-Approach als normatives Fundament interventionsbezogener Gesundheitswissenschaften? By Bittlingmayer, Uwe H.; Ziegler, Holger
  17. Add Producers and Stir? (Re) politicizing Fairtrade participation By Shannon Sutton
  18. Beneficio positivo, teorema de Euler y el problema de la distribución en la economía neoclásica By Galvis Ciro, Juan Camilo
  19. On error: undisciplined thoughts on one of the causes of intellectual path dependency By Yalcintas, Altug

  1. By: Ying-Fang Kao; V.Ragupathy; K. Vela Velupillai; Stefano Zambelli
    Abstract: We outline, briefly, the role that issues of the nexus between noncomputability and unpredictability, on the one hand, and between undecidability and un-solvability, on the other, have played in Computable Economics. The mathematical underpinnings of Computable Economics are provided by (classical) recursion theory, varieties of computable and constructive analysis and aspects of combinatorial optimization. The inspiration for this outline was provided by Professor Graca's thought-provoking recent article.
    Keywords: Computable Economics, Unpredictability, Undecidability, Uncomputability
    Date: 2012
  2. By: Platje, Joost
    Abstract: Although the socio-economic development of many nations during the last two centuries has been very impressive, there are many issues questioning the sustainability of this development. Questions have been raised whether increased consumption will lead to increased happiness, or whether people will become more dependent on growth (Galbraith, 1958). While the so-called consumption society may lead to questionable results for social welfare, the increased use of natural resource and problems of waste, pollution, lack of regeneration of renewable resources and too slow progress in finding substitutes for non-renewable resources pose increasing threats for environmental sustainability (Boulding, 1966; Rao, 2000). These issues are slowly being recognized. The focus in this article is on the need for institutional change for entering a path of more sustainable (or, less unsustainable) development in the context of the seemingly infinite need for increased production and welfare. Arguments will be provided that the New Institutional Economics (NIE) may be useful in creating a theory of institutional change, strengthening society's capacity and capability for sustainable development (SD). However, without changing paradigms (worldviews) that growth is necessary and, in combination with technological advance, a mean to solve social and environmental problems, there are incredible challenges in entering a path of SD. First, some conditions for NIE to become a theory on society's capacity and capability for SD will be discussed in the context of its current focus on economic and environmental issues. Then, the notion of institutional capital will be developed and some of its determinant presented (value in the public domain, institutional strength, good governance, an institutional equilibrium). The level of transaction costs and assignment of property rights seem to be crucial for the process of institutional change. Finally, it will be argued that with the current techno-centric paradigm, when technological advance is too slow, there exists a danger that SD will become, at most, a kind of club good. --
    Keywords: institutional change,institutional capital,institutional economics,sustainable development,club good
    Date: 2011
  3. By: Russo, Alberto
    Abstract: In our view, the causes of the crisis are tied to the political change towards a Neoliberal phase from the 1970s on: a wide process of “deregulation” – from the labour market to the globalisation of production, from the national to the international finance – has allowed a partial recovery in the profitability of the capitalist system, contrasting the post-war decline of the profit rate which led to the 1970s “stagflation”. The same key elements of the Neoliberal model – deregulation, financialisation, globalisation – have eventually led to a large crisis as a result of the huge increase of inequality, financial instability, and trade imbalances. In this perspective, the “financial crisis” is the signal of underlying problems concerning the global process of capital accumulation. It is now necessary to support a recovery of the public intervention (“top down”) in order to create the conditions for an economic restart that, in turn, would strengthen the construction of a radical alternative (from the “bottom up”) to the Neoliberal course. A wider access to education should be the key to this progressive strategy aimed at supporting a more egalitarian and green path of development. A radical rethinking of bequest taxation and, in general, of the taxation on wealth would have a clear symbolic value in this perspective, providing, at the same time, the material basis for extending the right to a “universal education”.
    Keywords: capital accumulation; deregulation; crisis; austerity; public intervention
    JEL: E66 P17 G01
    Date: 2012–04–10
  4. By: Raihan, Selim; Khondker, Bazlul Haque
    Abstract: This paper provides an analysis of methodology and results of construction of a Social Accounting Matrix for Nepal for 2007
    Keywords: SAM; Nepal
    JEL: C68 C67 C80
    Date: 2011–12
  5. By: Effelsberg, Martin
    Abstract: A rising competitive pressure for innovations comes along with an increasing number of companies and public research facilities that include external sources of information into the innovation process. This trend towards an open innovation process can be verified empirically. External R&D expenditures are those invested in R&D activities outside the firm's boundaries, e. g. license fees, research assignments or collaborations with public research institutes and companies. Investments in external R&D allow fast adaptations within the innovation process in case of changing market trends or radical innovations. Furthermore, opening up the innovation process simplifies an integration of required know-how from another industry. Altogether, the flexibility of innovation can be increased without an expansion of a company's own capacities. Beside the trend of integrating knowledge from outside the firm's boundaries, an increasing internationalization of R&D can be observed in several branches. Hence, this article examines the following questions: Which factors determine the absorptive capacity of national economies? How can these factors be operationalized and how can an adequate framework be developed to increase national absorptive capacity? --
    Keywords: innovation systems,absorptive capacity,theory
    Date: 2011
  6. By: Charlotte Gaston-Breton; Lola C. Duque
    Abstract: Evidence suggests that retailers use 99-ending prices as a promotional technique. This paper explores the consumer perceived benefits of such promotional practices and the information processing conditions under which hedonic benefits are higher (lower) than utilitarian ones. In line with the benefit framework of sales promotion proposed by Chandon, Wansink, and Laurent (2000), 99-ends are not expected to be strictly associated to monetary savings benefit but also to a more hedonic benefit, fulfilling consumer’s needs for exploration. In addition, the analytic or intuitive consumer decision style (Mantel & Kardes, 1999) is likely to activate either the utilitarian benefit of savings or the hedonic benefit of exploration with more strength. The analysis of an on-line survey among 317 shoppers shows that both perceived savings and exploration benefits have a positive impact on proneness to buy 99-ends products with the saving benefits being stronger (weaker) for analytical decision makers (intuitive decision makers). The findings contribute to the better understanding of the image effect of 99-ends underlying its individual differences and help retailers and also pricing managers in their use of 99-ends as a promotional technique.
    Keywords: 99-ending prices, Image effect, Perceived benefits, Decision style
    Date: 2011–12
  7. By: Erik S. Reinert
    Abstract: This paper provides a historical and theoretical overview of the mechanisms leading up to financial crises and financial bubbles. It suggests that the potentially explosive growth of the financial sector at the expense of the real economy fed by compound interest has . since before Ancient Mesopotamia under the rule of Hammurabi . represented a real threat for such crises. A more modern and additional factor that builds up crises is Joseph Schumpeterÿs observation of the clustering of innovations. Carlota Perez has more recently developed Schumpeterÿs vision into a theory of techno-economic paradigms which . about midway in their trajectory . produce the build-up to financial crises. The theories of Schumpeterian economist Hyman Minsky, describing the mechanisms producing the collapse of financial bubbles complete the overview. The paper ends with recommendations to bring the West out of the present crisis by .once again . putting the real economy rather than the financial economy in the driverÿs seat of capitalism.
    Date: 2012–04
  8. By: Ehlert, Martin
    Abstract: This article analyzes how institutional changes in the welfare state influence income mobility around job loss in the United States andWest Germany. Drawing both on an analysis of changes in provisions for the unemployed and on panel data from the Panel Study of Income Dynamics (PSID) and the German Socio-Economic panel (GSOEP), I demonstrate that the material well-being of American households hit by job loss has decreased substantially over time because of welfare state retrenchment, while unemployed German households have experienced only little deterioration of their economic well-being despite worsening labor market circumstances and institutional changes. The analysis also reveals that women in the United States are especially disadvantaged by job loss because, in their case, the withdrawal of the state has not been counteracted by an increase in influence on the part of the family. --
    Date: 2011
  9. By: Thorvald Grung Moe
    Abstract: Henry Simons's 1936 article "Rules versus Authorities in Monetary Policy" is a classical reference in the literature on central bank independence and rule-based policy. A closer reading of the article reveals a more nuanced policy prescription, with significant emphasis on the need to control short-term borrowing; bank credit is seen as highly unstable, and price level controls, in Simons's view, are not be possible without limiting banks' ability to create money by extending loans. These elements of Simons's theory of money form the basis for Hyman P. Minsky's financial instability hypothesis. This should not come as a surprise, as Simons was Minsky's teacher at the University of Chicago in the late 1930s. I review the similarities between their theories of financial instability and the relevance of their work for the current discussion of macroprudential tools and the conduct of monetary policy. According to Minsky and Simons, control of finance is a prerequisite for successful monetary policy and economic stabilization.
    Keywords: Monetary Policy; Financial Stability; Narrow Banking; Financial Regulation
    JEL: B22 E42 E52 G28
    Date: 2012–04
  10. By: Paul Dourgnon (IRDES institut for research and information in health economics); Florence Jusot (IRDES institut for research and information in health economics); Romain Fantin (IRDES institut for research and information in health economics)
    Abstract: Cet article propose d’analyser des déterminants du renoncement aux soins pour raisons financières, puis d’étudier ses conséquences sur l’évolution de l’état de santé quatre ans plus tard à partir des données de l’Enquête santé protection sociale (ESPS). L’analyse des déterminants du renoncement montre le rôle important joué par l’accès à une couverture complémentaire, au côté de celui de la situation sociale présente, passée et anticipée. L’analyse montre ensuite que les difficultés d’accès aux soins contribuent aux inégalités de santé.
    Keywords: renoncement aux soins, inégalités de santé, accès financier aux soins.
    JEL: I14
    Date: 2012–04
  11. By: Kaldasch, Joachim
    Abstract: The aim of this work is to establish the personal income distribution from the elementary constituents of a free market; products of a representative good and agents forming the economic network. The economy is treated as a self-organized system. Based on the idea that the dynamics of an economy is governed by slow modes, the model suggests that for short time intervals a fixed ratio of total labour income (capital income) to net income exists (Cobb-Douglas relation). Explicitly derived is Gibrat’s law from an evolutionary market dynamics of short term fluctuations. The total private income distribution is shown to consist of four main parts. From capital income of private firms the income distribution contains a lognormal distribution for small and a Pareto tail for large incomes. Labour income contributes an exponential distribution. Also included is the income from a social insurance system, approximated by a Gaussian peak. The evolutionary model is able to reproduce the stylized facts of the income distribution, shown by a comparison with empirical data of a high resolution income distribution. The theory suggests that in a free market competition between products is ultimately the origin of the uneven income distribution.
    Keywords: income distribution; labour income; capital income; Gibrat's law; power law distribution; exponential distribution; Laplace distribution; evolutionary economics; self-organization; competition; price dispersion
    JEL: D11 D31 D33 D01 E11
    Date: 2012–03–30
  12. By: Haller, Max
    Abstract: Die Einkommensverteilung innerhalb der verschiedenen Länder der Welt weist enorme Unterschiede auf. Diese Form der Ungleichheit bleibt im Zeitalter der Globalisierung zentral, da auf der Ebene des Staates die relevanten politischen Entscheidungen getroffen werden; die intranationale Ungleichheit nimmt neuerdings zu, während jene zwischen den Nationen kleiner wird. Es wird ein soziologischer Ansatz entwickelt, der ausgeht von der These, dass die Interaktion zwischen Klassenbildung/Schichtung und ethnischer Differenzierung entscheidend für die innerstaatliche Ungleichheit des Einkommens ist. Sie explodiert geradezu, wenn sich eine ethnische Klassenschichtung herausgebildet hat, d.h. soziale Klassen auch ethnisch voneinander differenziert sind. Anknüpfend an die Weber'sche Idee der Soziologie als Wirklichkeitswissenschaft wird argumentiert, dass die Vielfalt und Komplexität der Formen ethnischer Schichtung am besten dadurch zu erfassen ist, dass idealtypische Strategien und Schichtungsmuster herausgearbeitet werden, die in verschiedenen Regionen und Kulturen der Welt entwickelt worden sind. Dabei werden drei Grundformen unterschieden: Strategien zur Bewahrung bzw. Wiederherstellung ethnischer Homogenität, Strategien zur Kontrolle der Herausbildung ethnischer Heterogenität, und Strategien zur Etablierung der Herrschaft von Ethnoklassen. Im Lichte dieser Typologie finden die internationalen Differenzen in den nationalen Einkommensverteilungen eine plausible Erklärung. -- Income inequality differs tremendously across the countries of the world. It remains central even in the age of globalisation because most relevant political decisions are still made on the national level. In recent years, within-country inequalities have risen, while inequalities among nations have decreased. This paper argues that intra-national inequality of income is decisively shaped by the interaction between class formation/stratification and ethnic differentiation. This inequality is greatly exacerbated if an ethnic class stratification has evolved, i.e. if social class differences coincide with ethnic differences. Following Weber's idea of sociology as a science of reality it is argued that the diversity and complexity of types of ethnic stratification can best be grasped by defining ideal-typical strategies and stratification patterns that have developed in different regions and cultures of the world. Three basic types are distinguished: strategies for the preservation or restoration of ethnic homogeneity, strategies to control the formation of ethnic heterogeneity, and strategies to establish the rule of ethno classes. Country differences in income inequality can be plausibly explained using this typology.
    Date: 2011
  13. By: Abe, Naohito; Shiotani, Kyosuke
    Abstract: On the basis of household-level scanner data (homescan) for Japan over a three-year period, we construct a household-level price index, and we investigate the causes of the differences in prices across households. As noted by Aguiar and Hurst (2007), large price differentials across households are observed. The differences across age and income groups, however, are small. In addition, we find that elderly people face higher prices than younger people, which is opposite of the results of Aguiar and Hurst (2007). The most important determinant of the price level is the reliance on bargain sales; an increase in the purchase at bargain sales by one standard deviation decreases the price level by more than 0.9%, while the shopping frequency has only limited effects on the price level.
    Date: 2012–03
  14. By: Edith Archambault (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne)
    Abstract: Formant un modèle régional diversifié, les institutions sans but lucratif en Europe sont fragilisées par la crise économique et l'évolution libérale de la politique communautaire. Appauvries, transformées en sous-traitantes des programmes européens, leur innovation bridée, elles risquent, surtout dans le secteur social, de ne plus pouvoir comme aujourd'hui garantir une part importante du bien-être des Européens.
    Keywords: institutions sans but lucratif; variantes du modèle européen; convergence; politiques européennes; crise
    Date: 2012
  15. By: Rafael Morales Author-1-Name-First: Rafael Author-1-Name-Last: Morales (Department of Business Administration, Universidad Pablo de Olavide); Carmen Cabello Author-2-Name-First: Carmen Author-2-Name-Last: Cabello (Department of Business Administration, Universidad Pablo de Olavide)
    Abstract: This research conceptualizes ethical competencies as a factor that can help to improve the understanding of ethical decision-making process in organizations. The authors discuss some limitations of existing models that describe the components of the ethical decision-making process as well as the main factors influencing on it. To overcoming these limitations, the authors propose the concept of ethical competencies as the set of knowledge, skills, and abilities acquired by experience which facilitates the engagement in ethical behaviours that produce an excellent performance in a specific job. The paper theoretically addresses how ethical competencies can influence each component of the ethical decision making process. In addition, the benefits of ethical behaviour for both individuals and organizations are discussed. Finally, some interesting managerial implications are also addressed.
    Keywords: Ethical decision-making process. Ethical competencies. Individual and Organizational Benefits. Ethical / unethical behaviour. Competencies.
    Date: 2012–04
  16. By: Bittlingmayer, Uwe H.; Ziegler, Holger
    Abstract: Das vorliegende Paper versucht zur Theoriebildung in Public Health beizutragen. Zu diesem Zweck wird der Capability-Approach (CA), wie er maßgeblich von Amartya Sen und Martha Nussbaum entwickelt wurde, im Lichte unterschiedlicher Public Health-Diskussionskontexte eingebettet. Das Paper beginnt mit dem Nachweis der unhintergehbaren Normativität der Disziplin Public Health. Auf dieser Folie wird dann der CA eingeführt und entlang konkurrierender Ansätze aus dem Bereich der politischen Theorie konturiert. Im Anschluss daran wird in einem eigenen Kapitel aus der Perspektive des CA die für anwendungsorientierte Wissenschaften wie Public Health zentrale Problematik des Paternalismus und möglicher Maßstäbe diskutiert, bevor dann der CA für das Themenfeld Gesundheit spezifisch aufbereitet wird. Im folgenden Kapitel wird dann eine Analyse von Gesundheitszielen aus der Perspektive des CA versucht. Das Paper endet mit offenen Forschungsfragen und einigen Schlussfolgerungen. -- Our paper aims in contributing to the theory of public health. Therefore we discuss intensively the Capability-Approach (CA) - based on the writings of Amartya Sen and Martha Nussbaum - on the background of different Public Health-topics. In the first chapter we argue that Public Health is inescapably grounded on a normative fundament. Based on that argument we introduce the CA, especially with regard to the serious problem of paternalism in Public Health. Furthermore, we analyze the discussion about health targets on the basis of the theory of CA. We end with a few open research questions and conclusions.
    Date: 2012
  17. By: Shannon Sutton
    Abstract: While recent changes to Fairtrade's governance structures aim to facilitate 'stronger voices' for producers (Fairtrade International 2011b), relatively little is known about the impact of these new structures on individuals. Utilizing Fung and Wright's (2003) framework of Empowered Participatory Governance, I am to explore the nature of participation in Fairtrade governance for the co-operatives and individuals belonging to the Fairtrade Africa producer network. I then consider Fung's (2002) notion of countervailing power as a means of understanding representation, particularly as it pertains to those individuals who are typically marginalized within governance processes such as women, the landless, and migrant workers. This paper is part of a broader research project on Tanzanian Fairtrade coffee farmers.
    Keywords: Fairtrade, co-operatives, collaborative governance, participation, representation
    JEL: J45 H11 J23
    Date: 2012–03
  18. By: Galvis Ciro, Juan Camilo
    Abstract: This document tries to show the requirements for the process of profit maximization in the microeconomic analysis and show their relation to those with Euler's theorem. The aim is to recognize the importance of decreasing returns to scale and give a possible explanation for the positive profits they entail. The result is that the distribution problem has not been resolved in the neoclassical theory because the positive profits involves value judgments about the product distribution
    Keywords: positive profit; decreasing returns; product distribution
    JEL: B21 D33 B00
    Date: 2012–02–02
  19. By: Yalcintas, Altug
    Abstract: Is there not any place in the history of ideas for the imperfect character of human doings (i.e. capability of error) that is repeated for so long until we lately start to think that it had long been wrong? The answer is: In the conventional histories of ideas there is almost none. The importance of the phenomenon,however, is immense. Intellectual history is full of errors. Scholarly errors are among the factors that generate intellectual pathways in which consequences of historical small events feed back up on each other positively and give rise to historical pathologies in the end. Pathways hold the intellectuals dependent on the consequences of errors which interact upon each other and prevent resulting pathologies to disappear fully. As a result, ideas do not converge to a level of perfection. Evolutionary account of errors suggests that errors in the history of ideas matter even though they are often corrected.
    Keywords: Errors in the history of ideas; intellectual path dependence; intellectual pathologies; the Coase Theorem; historical small events
    JEL: B52 B25 B41
    Date: 2011

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