nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2014‒07‒28
thirteen papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Economists as political philosophers : a critique of normative trade theory By Robert Lepenies
  2. From Resilient Regions to Bioregions: An Exploration of Green Post-Keynesianism By Rhydian Fôn James; Molly Scott Cato
  3. Network economics and the environment: insights and perspectives By Sergio Currarini; Carmen Marchiori; Alessandro Tavoni
  4. Milton Friedmans economics and political economy: an old Keynesian critique By Thomas I. Palley
  5. Consistency in Pluralism and Microfoundations By Sheila C Dow
  6. Concepts and methods for sustainability assessment: Insights from food security By Paolo PROSPERI; Luri Peri
  7. Heurística: notas muy preliminares para analizar problemas en economía By Estrada, Fernando
  8. Nominal Rigidities and Asset Pricing By Michael Weber
  9. Pour un usage soutenable du chiffre dans l'action publique : retour réflexif sur un processus de construction d'indicateurs alternatifs dans l'agglomération grenobloise By Anne Le Roy; Fiona Ottaviani
  10. What is ambiguity? By AMARANTE, Massimiliano
  11. Bank-firm credit network in Japan. An analysis of a bipartite network By Luca Marotta; Salvatore Miccich\`e; Yoshi Fujiwara; Hiroshi Iyetomi; Hideaki Aoyama; Mauro Gallegati; Rosario N. Mantegna
  12. The socioeconomic drivers of China's primary PM2.5 emissions By Dabo Guan; Xin Su; Qiang Zhang; Glen Peters; Zhu Liu; Yu Lei; Kebin He
  13. Using Cognitive Dissonance to Manipulate Social Preferences By Oxoby, Robert J.; Smith, Alexander

  1. By: Robert Lepenies
    Abstract: Economists are political philosophers. This claim is defended based on an investigation of normative arguments made in economics textbooks. The paper aims to explain, reconstruct and contest the neoclassical vision implicit in mainstream economic trade theory. Analyzing arguments made by international economists from the perspective of political philosophy, I show how the contemporary defence of free markets and trade liberalization is linked to a specific normative ideal of the political and social good.
    Keywords: Political philosophy, Neoclassical economics, Normative trade theory, Free trade, Efficiency
    JEL: A12 A13 B21 B50 D60 F11
    Date: 2014–06
  2. By: Rhydian Fôn James (Bangor University); Molly Scott Cato
    Abstract: TThis paper develops an answer to the question of what constitutes a resilient region (Bristow, 2010) by arguing that the resilient region can be seen as a prototype bioregion. The transition from a proto-bioregion to a bioregion, and thus from proto-bioregionalism to bioregionalism proper, is examined. The paper begins with a review of the existing literature on regional resilience. The authors then explore the possible heterodox theoretical underpinnings of this approach, drawing on post-Keynesian, Marxian and green economy concepts. The paper’s final section extends the theory to a bioregional conclusion, and discusses the policy approaches that might be applied to extend a resilient region into a bioregion.
    Keywords: bioregion; green economy; resilient regions; post-Keynesian
    JEL: P16 R1 Q57 B50
    Date: 2014–07
  3. By: Sergio Currarini; Carmen Marchiori; Alessandro Tavoni
    Abstract: Recent research in the field of network economics has shown how explicitly modelling the network structure of social and economic relations can provide significant theoretical insights, as well as account for previously unexplained empirical evidence. Despite their critical importance to many environmental problems, network structures and dynamics have been largely disregarded by the environmental economics literature. This paper aims to begin to fill this gap by analysing how networks can provide new insights for both theory and practice, and identifying several avenues for future research. The paper addresses questions pertaining to a wide range of issues, including the adoption and diffusion of green technologies, access to and distribution of natural resources, common-pool resource management and governance, and the stability of international environmental coalitions.
    Date: 2014–01
  4. By: Thomas I. Palley
    Abstract: Milton Friedman's influence on the economics profession has been enormous. In part, his success was due to political forces that have made neoliberalism the dominant global ideology, but Friedman also rode those forces and contributed to them. Friedman's professional triumph is testament to the weak intellectual foundations of the economics profession which accepted ideas that are conceptually and empirically flawed. His success has taken economics back in a pre-Keynesian direction and squeezed Keynesianism out of the academy. Friedman's thinking also frames so-called new Keynesian economics which is simply new classical macroeconomics with the addition of imperfect competition and nominal rigidities. By enabling the claim that macroeconomics is fully characterized by a divide between new Keynesian and new classical macroeconomics, new Keynesianism closes the pincer that excludes old Keynesianism. As long as that pincer holds, economics will remain under Friedman's shadow.
    Keywords: Friedman, monetarism, new classical macroeconomics, new Keynesian, neoliberalism
    Date: 2014
  5. By: Sheila C Dow (University of Stirling)
    Abstract: John King has made challenging contributions to our thinking in many areas. This paper focuses on two of these: the case for pluralism and the case against requiring macroeconomic theory to be expressed in terms of its microfoundations. The purpose of this paper is to explore further the relationship between the two, requiring discussion of the relationship between the different levels of philosophy, methodology, theory and reality. A particular focus is put on the role of the concept of consistency in these two papers. This concept is explored further here at different levels and according to different methodological approaches. The contrast is drawn between its meaning in classical logic and in human logic.
    Keywords: consistency, pluralism, microfoundations
    JEL: B4 B5
    Date: 2014–07
  6. By: Paolo PROSPERI (Marchés, Organisations, Institutions et Stratégies d'Acteurs, INRA; Institut Agronomique Méditerranéen de Montpellier (CIHEAM); Università degli Studi di Catania); Luri Peri (Università degli Studi di Catania)
    Abstract: According to the concept of sustainable development, available natural resources are limited and disproportionately exploited. The growing depletion of these resources is leading to intergenerational disparities, as it systematically deprives future generations of a standard of living even remotely comparable to the current one. Sustainability is an integrative and dynamic concept, composed of issues that have often been described as crossroads of interests and social initiatives, both economic and environmental. Being such a complex and multidimensional phenomenon, sustainability is thus very difficult to explore through traditional measurement approaches. The objective of this study is to define the research questions that subtend the concept of sustainability. In particular, the complexity of sustainability measurement in food security contexts and the approaches used for incorporating its economic, environmental and social facets will be analyzed.
    Keywords: sustainable development, metrology, food security
    Date: 2014
  7. By: Estrada, Fernando
    Abstract: In the field of economics could highlight three theses models to evaluate information and arguments that are opposed to the schemes existing political economy. Thesis work we derive Albert Hirschman around what he calls "rhetorical intransigence." Explain this author: (1) the perversity thesis, which holds that any deliberate action to improve some aspect of political, social or economic order only serves to exacerbate the situation to be remedied; (2) the futility thesis which states that attempts to carry out social reforms will be zero or limited in scope; (3) the theory of risk, ensuring that the political and social costs of the proposed reforms is considerably high and jeopardize what has been achieved. An applied research from studies of argumentation can describe how these rhetorical enroll in specific cases, to show two things: first, what were the predominant communication techniques in the economic environment over a historical period and why some groups are reported as abnormally
    Keywords: Heuristics, Methodology, Language, Rhetoric, Hirschman, Von Neumann, Game Theory
    JEL: A2 B4 B40 B41 D74 Z13
    Date: 2014
  8. By: Michael Weber (UC Berkeley)
    Abstract: This paper examines the asset-pricing implications of nominal rigidities. I find that firms that adjust their product prices infrequently earn a cross-sectional return premium of more than 4% per year. Merging confidential product price data at the firm level with stock returns, I document that the premium for sticky-price firms is a robust feature of the data and is not driven by other firm and industry characteristics. The consumption-wealth ratio is a strong predictor of the return differential in the time series, and differential exposure to systematic risk fully explains the premium in the cross section. The sticky-price portfolio has a conditional market beta of 1.3, which is 0.4 higher than the beta of the flexible-price portfolio. The frequency of price adjustment is therefore a strong determinant of the cross section of stock returns. To rationalize these facts, I develop a multi-sector production-based asset-pricing model with sectors differing in their frequency of price adjustment.
    Date: 2014
  9. By: Anne Le Roy (CREG - Centre de recherche en économie de Grenoble - Université Pierre-Mendès-France - Grenoble II : EA4625); Fiona Ottaviani (CREG - Centre de recherche en économie de Grenoble - Université Pierre-Mendès-France - Grenoble II : EA4625)
    Abstract: Face aux difficultés d'observation locales et prenant acte du rôle du chiffre dans les manières de gouverner, de ses usages et mésusages, et plus généralement des apports et ses méfaits de la mesure dans le cadre des politiques publiques, un collectif grenoblois composé d'acteurs de la politique de ville et d'universitaires, a mis en place une démarche de quantification locale alternative Indicateurs de Bien-être Soutenable Territoriales (IBEST). Cherchant initialement à analyser différemment leurs territoires d'intervention en se situant de manière explicite dans la lignée des travaux sur les nouveaux indicateurs de richesse, le projet vise la mise en place d'une démarche d'observation locale reproductible et au service de l'acteur et l'action publique. C'est à une analyse réflexive de la démarche sous-tendant le projet IBEST impulsée en 2002 et à laquelle nous participons depuis 2009, que cette communication sera consacrée.
    Keywords: action publique ; bien être ; indicateur économique ; indicateur social ; politique publique ; mesure ; France ; Grenoble
    Date: 2014–07–02
  10. By: AMARANTE, Massimiliano
    Abstract: The concept of Ambiguity designates those situations where the information available to the decision maker is insufficient to form a probabilistic view of the world. Thus, it has provided the motivation for departing from the Subjective Expected Utility (SEU) paradigm. Yet, the formalization of the concept is missing. This is a grave omission as it leaves non-expected utility models hanging on a shaky ground. In particular, it leaves unanswered basic questions such as: (1) Does Ambiguity exist?; (2) If so, which situations should be labeled as ‘ambiguous’?; (3) Why should one depart from Subjective Expected Utility (SEU) in the presence of Ambiguity?; and (4) If so, what kind of behavior should emerge in the presence of Ambiguity? The present paper fills these gaps. Specifically, it identifies those information structures that are incompatible with SEU theory, and shows that their mathematical properties are the formal counterpart of the intuitive idea of insufficient information. These are used to give a formal definition of Ambiguity and, consequently, to distinguish between ambiguous and unambiguous situations. Finally, the paper shows that behavior not conforming to SEU theory must emerge in correspondence of insufficient information and identifies the class of non-EU models that emerge in the face of Ambiguity. The paper also proposes a new comparative definition of Ambiguity, and discusses its relation with some of the existing literature.
    Keywords: Non-expected utility, Information, Ambiguity
    JEL: D81
    Date: 2014
  11. By: Luca Marotta; Salvatore Miccich\`e; Yoshi Fujiwara; Hiroshi Iyetomi; Hideaki Aoyama; Mauro Gallegati; Rosario N. Mantegna
    Abstract: We present an analysis of the credit market of Japan. The analysis is performed by investigating the bipartite network of banks and firms which is obtained by setting a link between a bank and a firm when a credit relationship is present in a given time window. In our investigation we focus on a community detection algorithm which is identifying communities composed by both banks and firms. We show that the clusters obtained by directly working on the bipartite network carry information about the networked nature of the Japanese credit market. Our analysis is performed for each calendar year during the time period from 1980 to 2011. Specifically, we obtain communities of banks and networks for each of the 32 investigated years, and we introduce a method to track the time evolution of these communities on a statistical basis. We then characterize communities by detecting the simultaneous over-expression of attributes of firms and banks. Specifically, we consider as attributes the economic sector and the geographical location of firms and the type of banks. In our 32 year long analysis we detect a persistence of the over-expression of attributes of clusters of banks and firms together with a slow dynamics of changes from some specific attributes to new ones. Our empirical observations show that the credit market in Japan is a networked market where the type of banks, geographical location of firms and banks and economic sector of the firm play a role in shaping the credit relationships between banks and firms.
    Date: 2014–07
  12. By: Dabo Guan; Xin Su; Qiang Zhang; Glen Peters; Zhu Liu; Yu Lei; Kebin He
    Abstract: Primary PM2.5�emissions contributed significantly to poor air quality in China. We present an interdisciplinary study to measure the magnitudes of socioeconomic factors in driving primary PM2.5�emission changes in China between 1997–2010, by using a regional emission inventory as input into an environmentally extended input–output framework and applying structural decomposition analysis. Our results show that China's significant efficiency gains fully offset emissions growth triggered by economic growth and other drivers. Capital formation is the largest final demand category in contributing annual PM2.5�emissions, but the associated emission level is steadily declining. Exports is the only final demand category that drives emission growth between 1997–2010. The production of exports led to emissions of 638 thousand tonnes of PM2.5, half of the EU27 annual total, and six times that of Germany. Embodied emissions in Chinese exports are largely driven by consumption in OECD countries.
  13. By: Oxoby, Robert J. (University of Calgary); Smith, Alexander (Worcester Polytechnic Institute)
    Abstract: We explore the role of cognitive dissonance in dictator and public goods games. Specifically, we motivate cognitive dissonance between one's perception of “fair treatment” and self-interested behaviour by having participants answer a question about fairness. Utilizing two manipulations (reminding participants about their answer to the fairness question and publicly reporting aggregate answers to the question), we find that there is greater cognitive dissonance and behavioural change when there is a social component (i.e., reporting of aggregate answers). When a participant's answer to the fairness question is private, there is less dissonance and hence no behavioural change.
    Keywords: cognitive dissonance, experiments, social preferences
    JEL: C91 D64 H41
    Date: 2014–07

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