nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2014‒07‒13
seventeen papers chosen by
Carlo D'Ippoliti
La Sapienza University of Rome

  1. Mainstream Aversion to Economic Methodology and the Scientific Ideal of Physics By Drakopoulos, Stavros A.
  2. Antinomias del capitalismo: Una reseña sobre El malestar en la globalización de Joseph Stiglitz By Estrada, Fernando
  3. Moving to Greener Societies: Moral Motivation and Green Behaviour. By Lorenzo Cerda Planas
  4. Standards are Poor: On Competence and Professional Integrity at the Leading Rating Agency By Gaertner, Manfred
  5. Behavioural Labour Economics: Advances and Future Directions By Dohmen, Thomas
  6. Il coordinamento nella mediazione civile e commerciale: l’emergenza di norme hayekiane e il percorso “protetto” verso l’ordine sociale By Ambrosino, Angela
  7. A Kaleckian Model with Intermediate Goods By Kemp-Benedict, Eric
  8. Equilibre et déséquilibre dans le canal de distribution : Les apports du concept de résistance By Carole Poirel
  9. Hacia una nueva comprensión de un viejo problema: una propuesta metodológica para la medición del desempeño institucional de largo plazo By Sabrina Siniscalchi
  10. Issues in Identifying Economic Crises: Insights from History By Xavier De Scheemaekere; Kim Oosterlinck; Ariane Szafarz
  11. A New Perspective on Classical Choice Problems Using Selection Functions By Hedges, Jules; Oliva, Paulo; Winschel, Evguenia; Winschel, Viktor; Zahn, Philipp
  12. The domestic segment of global supply chains in China under state capitalism By Tang, Heiwai; Wang, Fei; Wang, Zhi
  13. The anatomy of failure : an ethnography of a randomized trial to deepen democracy in rural India By Ananthpur, Kripa; Malik, Kabir; Rao, Vijayendra
  14. Cross-Hauling in Input-Output Tables: Comments on CHARM By Randall Jackson
  15. How Variability in Individual Patterns of Behavior Changes the Structural Properties of Networks By Somayeh Koohborfardhaghighi; Jorn Altmann
  16. World Input-Output Network By Federica Cerina; Zhen Zhu; Alessandro Chessa; Massimo Riccaboni
  17. Belgian Development Cooperation through a Gender Lens (2002-2012) By Inberg, Liesbeth; Holvoet, Nathalie

  1. By: Drakopoulos, Stavros A.
    Abstract: There is a persistent aversion towards methodological discourse by most mainstream economists. Frank Hahn (1992) exemplified this attitude and provoked a number of reactions concerning the role and the reasons for methodological aversion. After offering a categorization of the main explanations for methodological aversion, the paper suggests an explanation that is based on the role of the physics scientific ideal. It argues that the strive to achieve the high scientific status of physics by following the methods of physics, contributed to the negative mainstream attitude towards economic methodology. This can be reinforced by examining the writings of extremely influential mainstream economists such as Irwin Fisher and Milton Friedman. These works clearly imply that the hard science status of economics renders methodological discussions and especially methodological criticism, rather pointless. Given that the existing prescriptions for making economic methodology more attractive do not give much thought to this important aspect of mainstream economics, the paper also argues for a more systematic discussion of this issue.
    Keywords: Economic Methodology; History of Economic Thought; Economics and Physics.
    JEL: B0 B3 B4
    Date: 2014–07
  2. By: Estrada, Fernando
    Abstract: The core issue raised in Globalization and its Discontents, what is the critical evaluation of the IMF's role in the financial crisis in Asian countries and modern Russian transition. The Asian crisis began in July 1997 when the Thai devaluation came to their impact throughout Southeast Asia, as the region plunged into a social setback never seen before. Stiglitz maintains that the main cause of the devaluation of financial liberalization was recommended by Washington in previous years.
    Keywords: Globalization, Stiglitz, IMF, Economic, Asian, Markets
    JEL: H0 H11 H44 I14 I18 O19 O53
    Date: 2014
  3. By: Lorenzo Cerda Planas (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: This paper intends to provide an alternative explanation of why societies behave differently from an environmental point of view. To do so, I use a Kantian moral approach at a microeconomic level. Under this premise, I show that two identical societies (according to income and political system) might follow different paths with respect to their "green" behaviour. Additionally, I identify tipping points that could nudge a society from a polluting behaviour to a green one. I find that environmental perception as well as how governments are elected can be important factors in this shift.
    Keywords: Environmental motivation, Kantian morale, green behaviour, tipping points.
    JEL: Q50 D64 H41 C62
    Date: 2014–01
  4. By: Gaertner, Manfred
    Abstract: Competence behind the rating of sovereign countries is crucial, given that the market for government bonds may be vulnerable to multiple equilibria and self-fulfilling prophecies. With this in mind, this paper reviews and scrutinizes an official Standard and Poor’s (S&P) publication that addresses key issues surrounding the market for government bonds and the role of sovereign ratings. It encounters: a low level of competence, revealed in an inability to engage in logical discourse and an inadequate grasp of crucial concepts such as multiple equilibria and self-fulfilling prophecy; obliviousness to S&P’s own rating methodology; and a nonchalant treatment of facts that casts a poor light on its professional integrity.
    Keywords: Credit rating agencies, competence, integrity, sovereign ratings, Standard and Poor’s
    JEL: E65 G12 G24 H63
    Date: 2014–07
  5. By: Dohmen, Thomas (University of Bonn)
    Abstract: In the past decades, behavioural economics has become an influential and important field of economics. Interest in behavioural economics derives from unease with standard economic models that are based on restrictive assumptions, which confine the nature of human motivation. Although Adam Smith, the founding father of modern economics, had highlighted the multitude of psychological motives that drive human behaviour, and despite the fact that many influential economists thereafter believed in tenets of modern behavioural economics, the homo economicus assumption became prevalent, until this construct was challenged by compelling evidence on social, cognitive and emotional factors that drive decision-making and social interaction. Since human interaction is germane to labour markets, one would expect behavioural economics to be highly relevant for labour economics. This paper gauges whether and how behavioural economics has left its mark on labour economics, considers the timing and structure of this development, and contemplates its future impact on labour economics.
    Keywords: behavioural economics, labour economics, behavioural labour economics
    JEL: J00 J01 D03
    Date: 2014–06
  6. By: Ambrosino, Angela (University of Turin)
    Abstract: The mediation procedure, as outlined by D.lg 28/2010 and subsequent amendments, introduced in our legal system a new tool for coordinating the decisions of economic agents. The new civil mediation is proposed, therefore, as an instrument characterized by a different procedure and objectives from those of ordinary judgment. The evaluation of its efficiency requires the introduction of new theoretical tools that allow to evaluate the different aspects of social interaction in mediation. The traditional cost-benefit analysis proposed by the economic analysis of law, or simple considerations on Pareto-efficiency proposed by standard economics seem not sufficient analytical tools in this perspective. This article shares Mitchell’s cognitive approach to the theory of law, and it is aimed at analyzing the new model of mediation introduced into Italian legislation through the lens offered by F.A. Hayek’s theory of law (1973, 1976, 1979), with particular reference to the distinction he made between law and legislation and its consequence on the analysis of the role of the judge in common law as the discoverer of law. Moreover, Hayek’s legal theory will be analyzed jointly to his concept of social order. In the light of the contribution of this author, in fact, the choice of our legislator seems to be close to the idea of developing regulatory structures that simply delineate the action of subjects without imposing specific behaviors or ex ante solutions to given situations
    Date: 2014–03
  7. By: Kemp-Benedict, Eric
    Abstract: Kaleckian models are widely used for macroeconomic analysis due to their flexibility and simplicity. Sraffians counter that the Kaleckian model fails to capture a central fact of modern economies, the existence and importance of intermediate consumption. The critique is correct, but as the remedy appears to be a detailed analysis with multi-sectoral input-output tables, Sraffian models have not displaced their more tractable Kaleckian counterparts. This paper presents a model with intermediate consumption that is Kaleckian in spirit, although prompted by the Sraffian critique. It is shown that the profit share of GDP can be decomposed into two factors, an average profit share at firm level and a factor capturing intermediate goods consumption. The corresponding firm-level markups for a sample of fourteen OECD countries cluster closely around a common value that remains steady when averaged over business cycles. Taking this as evidence that the factorization is empirically meaningful, the paper then constructs a modified Kaleckian model. Using the modified model it is shown that economies are always profit-led with respect to a change in intermediate consumption, but may be either profit-led or wage-led with respect to a change in the firm-level markup, opening the possibility for diverse trajectories over business cycles. The model is applied to France, which has a particularly long data series, and is shown to perform well in explaining changes in utilization rates.
    Keywords: Kaleckian; Sraffian; intermediate consumption; business cycles
    JEL: E11 E12 E32
    Date: 2014–05–30
  8. By: Carole Poirel
    Abstract: The concept of power has been widely addressed by sociopolitical as well as strategic theories to highlight the functioning of the distribution channel. We fin, however, an other – close yet distinct – concept to be highly relevant when it comes to discus
    Date: 2014–06–23
  9. By: Sabrina Siniscalchi (Programa de Historia Económica y Social, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: The measurement of the institutions has been, over decades, a subject refused by a part of the literature which studies the role of institutions in development. Particularly, the New Institutional Economics has focused more on discussing the theoretical channels through which institutions determine growth, than to find ways of measuring them. Most exceptions to this are works that use as a measurement, indicators designed to assess the governance of countries, or the liability of the investment environments, but the reconstruction of them for the long term is almost impossible. This paper presents an alternative way of measuring institutions conceived theoretically from the main tenets of the New Institutional Economic, and with a set of indicators traceable in the long term. Therefore, the Synthetic Indicator of Institutional Performance (SIIP), unlike other indicators, has been constructed taking into account the interaction between political and economic dimensions and emphasizing the importance of analyzing the institutional combinations which best explain each institutional development process.
    Keywords: Institutions, institutional measurements, institutional development.
    JEL: B15 C38 N26
    Date: 2014–06
  10. By: Xavier De Scheemaekere; Kim Oosterlinck; Ariane Szafarz
    Abstract: Economists have been blamed for their inability to forecast and address crises. This paper attributes this inability to intertwined factors: the lack of a coherent definition of crises, the reference class problem, the lack of imagination regarding the nature of future crises, and sample selection biases. Specifically, economists tend to adapt their views on crises to recent episodes, and omit averted and potential crises. Threshold-based definitions of crises run the risk of being ad hoc. Using historical examples, this paper highlights some epistemological shortcomings of the current approach.
    Keywords: Economic Crisis; Single-Case Probability; Epistemology; Economic History
    JEL: B40 G00 N00
    Date: 2014–06–23
  11. By: Hedges, Jules; Oliva, Paulo; Winschel, Evguenia; Winschel, Viktor; Zahn, Philipp
    Abstract: We use quantifiers and selection functions to generalize the classical economic approach to choice. Our framework encompasses preference and utility based approaches as special cases, but also extends to non-maximizing behavior and context-dependent motives such as social concerns. We adapt the method of quantifiers and selection functions which is based on higher-order functions and originate in computer science.
    Keywords: behavioral economics , social preferences , beauty contest , higher order functions , quantifiers , selection functions
    JEL: C0 D01 D03 D63 D64
    Date: 2014
  12. By: Tang, Heiwai; Wang, Fei; Wang, Zhi
    Abstract: This paper proposes methods to incorporate firm heterogeneity in the standard input-output table-based approach to portray the domestic segment of global value chains in a country. The analysis uses Chinese firm census data for the manufacturing and service sectors, along with constrained optimization techniques. The conventional input-output table is split into sub-accounts, which are used to estimate direct and indirect domestic value added in exports of different types of firms. The analysis finds that in China, state-owned enterprises and small and medium domestic private enterprises have much higher shares of indirect exports and ratios of value-added exports to gross exports compared with foreign-invested and large domestic private firms. Based on input-output tables for 2007 and 2010, the paper finds increasing value-added export ratios for all firm types, particularly for state-owned enterprises. It also finds that state-owned enterprises are consistently more upstream while small and medium domestic private enterprises are consistently more downstream within industries. These findings suggest that state-owned enterprises still play an important role in shaping China's exports.
    Keywords: Economic Theory&Research,Free Trade,Microfinance,Trade Policy,Investment and Investment Climate
    Date: 2014–06–01
  13. By: Ananthpur, Kripa; Malik, Kabir; Rao, Vijayendra
    Abstract: Programs that induce citizen participation to improve the quality of government at the local level are the subjects of large amounts of funding and intense debate. This paper combines a randomized control trial of a citizenship training and facilitation program in rural India, with an in-depth, four-year ethnography of the intervention to understand the underlying mechanisms of change. The quantitative data show no impact from the intervention. Household and village survey data from 100 treatment and 100 control villages show considerable improvement across a wide variety of governance and participation indicators over time, but the differences in the changes between treatment and control villages are not statistically significant. The detailed qualitative data from a 10 percent subsample allow us to unpack the reasons why the intervention"failed,"highlighting the role of variations in the quality of facilitation, lack of top-down support, and difficulties with confronting the stubborn challenge of persistent inequality. However, the qualitative investigation also uncovered subtle treatment effects that are difficult to observe in structured surveys. The paper thus demonstrates that a concerted effort to use"thick description"to uncover the process of change using careful and detailed qualitative work can add value to standard impact evaluations.
    Keywords: Social Accountability,Housing&Human Habitats,Poverty Monitoring&Analysis,Governance Indicators,Public Sector Corruption&Anticorruption Measures
    Date: 2014–06–01
  14. By: Randall Jackson (Regional Research Institute, West Virginia University)
    Abstract: This brief note draws further attention to cross-hauling in regional input-output table estimation, and specifically identifies conceptual issues associated with Kronenberg?s CHARM method for adjusting input-output regionalization methods. Despite the shortcomings of the CHARM approach as it now stands, this is a very important line of research. I believe that progress made on the CHARM method is encouraging, and hope that future work will resolve remaining issues.
    Keywords: Input-output, cross-hauling, CHARM, Regional Economics
    JEL: C67 O18 R15 R1
    Date: 2014–02
  15. By: Somayeh Koohborfardhaghighi (Technology Management, Economics, and Policy Program, College of Engineering, Seoul National University); Jorn Altmann (Technology Management, Economics, and Policy Program, College of Engineering, Seoul National University)
    Abstract: Dynamic processes in complex networks have received much attention. This attention reflects the fact that dynamic processes are the main source of changes in the structural properties of complex networks (e.g., clustering coefficient and average shortest-path length). In this paper, we develop an agent-based model to capture, compare, and explain the structural changes within a growing social network with respect to individuals’ social characteristics (e.g., their activities for expanding social relations beyond their social circles). According to our simulation results, the probability increases that the network’s average shortest-path length is between 3 and 4, if most of the dynamic processes are based on random link formations. That means, in Facebook, the existing average shortest path length of 4.7 can even shrink to smaller values. Another result is that, if the node increase is larger than the link increase when the network is formed, the probability increases that the average shortest-path length is between 4 and 8.
    Keywords: Network Properties, Network Growth Models, Small World Theory, Network Science, Simulation, Clustering Coefficient, Complex Networks.
    JEL: C02 C6 C15 D85
    Date: 2014–06
  16. By: Federica Cerina; Zhen Zhu; Alessandro Chessa; Massimo Riccaboni
    Abstract: Economic systems, traditionally analyzed as almost independent national systems, are increasingly connected on a global scale. Only recently becoming available, the World Input-Output Database (WIOD) is one of the first efforts to construct the multi-regional input-output (MRIO) tables at the global level. By viewing the world input-output system as an interdependent network where the nodes are the individual industries in different economies and the edges are the monetary goods flows between industries, we study the network properties of the so-called world input-output network (WION) and document its evolution over time. We are able to quantify not only some global network properties such as assortativity, clustering coefficient, and degree and strength distributions, but also its subgraph structure and dynamics by using community detection techniques. Over time, we detect a marked increase in cross-country connectivity of the production system, only temporarily interrupted by the 2008-2009 crisis. Moreover, we find a growing input-output regional community in Europe led by Germany and the rise of China in the global production system. Finally, we use the network-based PageRank centrality and community coreness measure to identify the key industries and economies in the WION and the results are different from the one obtained by the traditional final-demand-weighted backward linkage measure.
    Date: 2014–07
  17. By: Inberg, Liesbeth; Holvoet, Nathalie
    Abstract: Since the nineties more attention has been paid to the gender dimension in development. Through the 1995 Being Declaration and Platform for Action and various policy documents of the OECD/DAC the shift from a Women in Development (WID) approach to a Gender and Development (GAD) approach has been internationally spread. Within the GAD approach the need to integrate a gender dimension in all different phases (diagnosis, planning, implementation, budgeting, monitoring and evaluation) (= vertical gender mainstreaming) of interventions in different sectors (=horizontal mainstreaming) is emphasised. In line with the 1995 Being declaration and Platform for Action and similar to the majority of bilateral and multilateral donors, Belgium has adopted a gender mainstreaming strategy. In order to take stock of and analyse the effective implementation of the gender mainstreaming strategy and its effects on the ground, the Belgian´s Special Evaluation Office of International Cooperation has recently (July 2013) commissioned an evaluation. The focus of the evaluation is both on headquarters and a selection of five case study countries. This working paper presents a selection of the first findings of the head quarters evaluative exercise and identifies several strengths, weaknesses, opportunities and challenges.
    Keywords: development cooperation; Belgium; gender
    Date: 2014–04

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