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on Heterodox Microeconomics |
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Issue of 2015‒11‒15
eighteen papers chosen by Carlo D’Ippoliti Università degli Studi di Roma “La Sapienza” |
| By: | silvestri, paolo |
| Abstract: | The paper aims to address the following two questions: what kind of discourse is that which attempt to found or defend the autonomy or the boundaries of a discipline? Why do such discourses tend to turn into normative, dogmatic-excommunicating discourses between disciplines, schools or scholars? I will argue that an adequate answer may be found if we conceive disciplines as dogmatics, where such discourses often take the form of a discourse on the foundation of a discipline, a foundation in the name of which the scholar speaks and with which he/she entertains an identity relationship. To this purpose I will re-examine the methodological discourses of (and debates between) Pareto, Croce and Einaudi on the demarcation issue between philosophy, economics and value-judgments as highly instructive to understand such issues. |
| Keywords: | philosophy, economics, value-judgements, realism, nominalism, economist’s discourse, dogmatics, disciplinary boundaries |
| JEL: | A12 B31 B41 B59 |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67645&r=hme |
| By: | Wieber, Anna (DIW Berlin); Holst, Elke (DIW Berlin) |
| Abstract: | This paper aims to verify results of the innovative study on gender identity for the USA by Bertrand et al. (2015) for Germany. They found that women who would earn more than their husbands distort their labor market outcome in order not to violate traditional gender identity norms. Using data from the German Socio-economic Panel Study we also find that the distribution of the share of income earned by the wife exhibits a sharp drop to the right of the half, where the wife's income exceeds the husband's income. The results of the fixed effects regression confirm that gender identity has an impact on the labor supply of full time working women, but only in Western Germany. We also show that gender identity affects the supply of housework but in contrast to the US where women increase their contribution to non-market work when they actually have a higher income than their husbands, we find for Germany that women only barely reduce their weekly hours of non-market work once their income exceeds that of their husbands. |
| Keywords: | gender roles, gender gap, female labor supply, non-market work |
| JEL: | D10 J12 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9471&r=hme |
| By: | Salustri, Andrea; Mosca, Michele; Viganò, Federica |
| Abstract: | The paper introduces a theoretical model to show how in a spatial framework characterized by urban-rural imbalances, the production of goods and services decreases moving from urban to rural areas. Specifically in rural and peripheral areas, the market and the public sector might supply an insufficient level of goods and services due to higher distance costs and lack of financial resources. Cooperatives and nonprofit organizations, i.e. social enterprises, are able to overcome distance costs and therefore spatial inequalities, by developing a productive and distributive function in marginalized areas, ensuring a fair and equal treatment among residents. Moreover, cooperatives and nonprofit organizations endorse the inclusiveness of the labor market, and raise peoples’ intrinsic motivation. |
| Keywords: | cooperative economics; nonprofit institutions and social enterprises; urban-rural development; size and spatial distributions of regional economic activity |
| JEL: | J54 R11 R12 |
| Date: | 2015–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67685&r=hme |
| By: | Heinrich, Torsten; Gräbner, Claudius |
| Abstract: | Two-sided markets are an important aspect of today's economies. Yet, the attention they have received in economic theory is limited, mainly due to methodological constraints of conventional approaches: two-sided markets quickly lead to non-trivial dynamics that would require a computational approach, as analytical models quickly become intractable. One approach to this problem is to opt for models that operate on an aggregated level, abstracting from most of the (micro-level) causes of these non-trivial dynamics. Here we revisit a well known equilibrium model by Rochet and Tirole of two-sided markets that has taken this approach. Analyzing the model from an agent-based perspective, however, reveals several inconsistencies and implicit assumptions of the original model. This, together with the highly implausible assumptions that are required to make the model analytically tractable, limits its explanatory power significantly and motivates an alternative approach. The agent-based model we propose allows us to study the phenomenon of two-sided markets in a more realistic and adequate manner: Not only are we able to compare different decision making rules for the providers, we are also able to study situations with more than two providers.%We find that Thus, our model represents a first step towards a more realistic and policy-relevant study of two-sided markets. |
| Keywords: | Two-sided markets; Network externalities; Agent-based modeling; Simulation; Heuristic decision making; Reinforcement learning; Satisficing; Differential evolution; Evolutionary economics; Market structure; IT economics; Equilibrium dynamics |
| JEL: | C61 C62 C63 D4 L14 L15 |
| Date: | 2015–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67860&r=hme |
| By: | Gül Ertan Özgüzer (Department of Economics, Izmir University of Economics); Alper Duman (Department of Economics, Izmir University of Economics) |
| Abstract: | This paper investigates the relationship between economic growth performances of countries and their structural input-output network characteristics. We employ a new centrality measure developed by Blöchl et al. (2011) for directed networks with self-loops to determine sectoral heterogeneities in IO tables of 33 OECD countries over the period 1995-2011. Relating the gini indices of these centrality measures to output growth reveals that countries with less heterogenous IO networks tend to grow faster. Such finding implies a key role for the inter-linkages across sectors in economic growth, and underlines the importance of designation of sectoral policy measures to counteract heterogeneity of IO networks. |
| Keywords: | input-output tables, networks, centrality, economic growth, heterogeneity |
| JEL: | C67 O50 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:izm:wpaper:1504&r=hme |
| By: | Bruce Caldwell |
| Abstract: | The paper offers a revisionist account of certain episodes in the development of F. A. Hayek's thought. It offers a new reading of his 1937 paper, "Economics and Knowledge," that draws on unpublished lecture notes in which he articulated more fully the distinctions he made in the paper between a "pure logic of choice," or the economic calculus, and an "empirical element," which he would later call the competitive market order. Next, the paper shows that Hayek continued to try to develop his ideas about the role of the economic calculus through the 1950s and early 1960s, an effort that has been missed because it never led to any published work. Finally, the paper examines Hayek's attempt to articulate a theory of the market process, one that would be at the same level of generality as the economic calculus, in lectures he gave at the University of Virginia. He never developed a full ‐ fledged formal theory, but his failed efforts still bore fruit in leading him to his contributions on spontaneous orders and the (verbal) theory of complex phenomena. This work anticipated contributions by others who were more technically trained. |
| Keywords: | F. A. Hayek, economic calculus, market process, pure logic of choice, structure of economic theory, spontaneous orders |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hec:heccee:2015-8&r=hme |
| By: | Carolina Castagnetti (Department of Economics and Management, University of Pavia) |
| Abstract: | This paper analyzes the gender wage gap in the Italian public sector for the years 2005 - 2010. We find a consistent level of gender wage gaps and an increasing path along the wage distribution. We use quantile regression methods to estimate and decompose the wage gap. The decomposition analysis supports the idea of a glass ceiling mechanism in action. However, the results change dramatically when we take into account the unobserved individual-specific heterogeneity by means of quantile technique for panel data. The evidence of a glass ceilings vanishes and the significant unexplained GWG is almost stable across the distribution. |
| Keywords: | Gender wage gap, quantile regression for panel, public-private wage differential |
| JEL: | J3 J45 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:pav:demwpp:demwp0109&r=hme |
| By: | Ferlito, Carmelo |
| Abstract: | Joseph A. Schumpeter developed a very well-known theory of entrepreneurs and entrepreneurship, centred on the concept of ‘new combinations’. According to him, innovation and entrepreneurship are destructive elements driving the system beyond an equilibrium position and setting in motion a competitive process, in order to reach a new equilibrium point. Though Austrian, Schumpeter was never a member of the Austrian School of Economics. However, his position as regards entrepreneurship is widely commented on by Austrian School members. In particular, Israel M. Kirzner devoted his research activity to develop an alternative concept of entrepreneurship rooted in Misesian human action and the concept of ‘alertness’. This paper aims to analyze and compare the two positions, in an attempt not so much to stress differences but to find possible common paths for further developments of the concept of entrepreneurship. |
| Keywords: | Schumpeter, Kirzner, Entrepreneur, Entrepreneurship, Innovation, Austrian School of Economics. |
| JEL: | B13 B25 B53 L26 O31 O33 |
| Date: | 2015–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67694&r=hme |
| By: | Antonio Bianco (Dipartimento di Scienze Sociali ed Economiche, Sapienza University of Rome (Italy).) |
| Abstract: | A simple stock-flow consistent methodological account of the influence of financial markets over the real economy is here presented. The model is so devised as to allow a tidy comparison of relationship or shadow banking interpreted as alternative schemes of liquidity (not credit) risk management. The essential mechanism that is here at work is that fluctuations in the composition of property incomes lead to fluctuations in borrowing for non-financial purposes that, in their turn, drive fluctuations in spending. Having this in mind, the model emphasizes the interdependencies in entrepreneurs’ variations in animal spirits, financial institutions’ idiosyncratic liquidity risk management (ILRM), and households’ effective demand. The model key finding is that both relationship and shadow banking entail a pro-cyclical impact and that differences implied in the two cases can be reduced to the different ILRM aggregate cost functions. As for policy implications, the model suggests that securitisation is not per se leading to financial unsustainability, yet regulatory measures aimed at checking predatory lending and the CDO industry are needed: failing these, securitisation is likely to have a depressive impact on non-financial entrepreneurs’ confidence, and hence on the financial sustainability of a growth process. |
| Keywords: | animal spirits, endogenous money, liquidity risk management, securitisation, originate-to-hold, originate-to-distribute. |
| JEL: | B52 E12 E20 E44 M40 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:saq:wpaper:05/15&r=hme |
| By: | Uddin, Md Akther |
| Abstract: | Islamic finance, a complete rule based financial system, fundamentals of which are originated from revealed verses of the Holy Quran considered direct ordinance from the God and the practices of Prophet Muhammad (PBUH) commonly known as ahadith. Although the concept of Islamic finance is as old as the religion itself but in the Middle Ages Muslims diverted from the original teachings of Islam, only recently Islamic finance has started to reemerge. Therefore, it is necessary to understand the fundamental rules that make Islamic finance different from its counterpart. In this paper an attempt has been made to discuss briefly fundamental principles of Islamic finance namely prohibition of Riba (interest), Gharar(uncertainty) and Maysir (gambling). It is found in the study that these principles are based on the fundamental sources and early Islamic jurists, scholars and contemporary researchers uphold them in carrying out financial transactions. In order to run financial system according to the Islamic principles these concepts must be understood clearly and all transactions must be free from them. |
| Keywords: | Islamic finance, Riba, Gharar, Maysir |
| JEL: | A1 A2 B0 P0 |
| Date: | 2015–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67711&r=hme |
| By: | Ulrich Hoffmann |
| Abstract: | Many economists and policymakers advocate a fundamental shift towards “green growth” as the new, qualitatively-different growth paradigm, largely based on enhanced material/resource/energy efficiency, structural changes towards a service-dominated economy and a switch in the energy mix favouring renewable forms of energy. “Green growth” may work well in creating new growth impulses with reduced environmental load and facilitating related technological and structural change. But can it also mitigate climate change at the required scale (i.e. significant, absolute and permanent decline of greenhouse gas (GHG) emissions at global level) and pace (i.e. in no more than two to three decades)? This paper argues that growth, technological, population-expansion and governance constraints as well as some key systemic issues cast a very long shadow on the “green growth” hopes. One should not deceive oneself into believing that such an evolutionary (and often reductionist) approach will be sufficient to cope with the complexities of climate change. It may rather give much false hope and excuses to do nothing really fundamental that should bring about a U-turn of global GHG emissions. The proponents of a resource efficiency revolution, re-structuring of economies and a drastic change in the energy mix need to scrutinize the historical evidence, in particular the arithmetic of economic and population growth. Furthermore, they need to realize that the required transformation goes far beyond innovation and structural changes to include better distribution of income and wealth, limitation of market power of economic agents that promote biased approaches to GHG reduction, and a culture of sufficiency. Climate change calls into question the global equality of opportunity for prosperity (i.e. ecological justice and development space) and is thus a huge developmental challenge for all countries, but particularly for the global South and a question of life and death for some developing countries. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:unc:dispap:222&r=hme |
| By: | Gül Ertan Özgüzer (Department of Economics, Izmir University of Economics); Ayla Ogus Binatli (Department of Economics, Izmir University of Economics) |
| Abstract: | This paper tests, in the context of the EU countries, the evidence presented by Hidalgo and Hausmann (2009) that economic complexity indicator is a good predictor of economic growth. Our results suggest that a group of countries in the EU with an economic complexity exceeding a certain threshold tends to converge to the levels of income corresponding to their measured complexity. On the other hand, current account deficits in interaction with economic complexity have important eects on growth for a second group of countries with lower levels of complexity. We also find that income convergence is faster within the first group. Therefore, we argue that convergence is much faster for countries whose economic complexity exceeds certain a threshold. |
| Keywords: | economic complexity, growth, income convergence, European Union,heterogeneity |
| JEL: | O11 O52 F43 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:izm:wpaper:1503&r=hme |
| By: | Sen, Sugata |
| Abstract: | Indian society is characterized by multiple forms of exclusion associated with group identities. This work wants to examine the nature and dimensions of social exclusion from development programmes in the Indian state of West Bengal on the basis of various castes and to analyze the factors behind. It is tested here whether there exists any relationship between different castes and level of social exclusion, and that between intra-group heterogeneity and group social exclusion values. Both secondary and primary data have been used. Sample of 320 households was chosen through multi-stage stratified random sampling. In a three dimension exclusion space of health, education and income the household level social exclusion is measured by Normalized Euclidean Distance. Calculated value is regressed on caste characteristics of the sample households. Tukey Post Hoc study is undertaken to judge the inter-group differences. Generalized Entropy Index is used to study the intra-group concentration of the households with respect to social exclusion level within different castes. It is observed that social exclusion becomes significant for scheduled tribe (ST) community. The intensity of social exclusion of ST is significantly different from others. Among all the castes ST has the highest within group concentration with respect to household level social exclusion values. The concentration of household level social exclusion values within any caste increases with the rise in corresponding group mean social exclusion values. In West Bengal social exclusion on the basis of caste arises out of some strong historical informal norms. Indigenous culture of different communities is also one of the major reasons behind their exclusion. The strong current of global convergence has also failed to bring the excluded to a level playing field. The inverse relationship between group social exclusion value and within group heterogeneity and its implications on policy measures are unique in the discourses on social exclusion. |
| Keywords: | caste-based exclusion, capability, exclusion space, regression, inter-caste variation, tukey post hoc, generalised entropy index, intra-caste divergence |
| JEL: | O1 O2 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67610&r=hme |
| By: | Giuseppe Capuano |
| Abstract: | The principal objective of the article is to show how the economic theory is not an exact science. It does no't have universal value and it is not just link to mathematics, because it does not make itself as a scientific discipline. For this economics has not to use too much mathematics to imitate the exact sciences, The approach that we would like to propose in this article is a " historicist " vision of the economic theories. It wants to be more pragmaticas and less dogmatic to the advantage to deliver unassailable theories from economists, but simply ideas with solid scientific bases and supported by some statistic bases. It represents exactly what a policy maker needs to make decision in a right historical moment. |
| Keywords: | economic theory; mathematics; vision "historicist"; policy makers |
| JEL: | A11 |
| Date: | 2015–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:udf:wpaper:2015134&r=hme |
| By: | Rishabh Kumar (Department of Economics, New School for Social Research) |
| Abstract: | This paper proposes that high savings out of top incomes con- tributed to the steady wealth income ratio amongst US households. I explore counter claims regarding capital gains and housing prices and nd they had very little in uences on the trends and magnitudes of household net worth, relative to income. Using the dynamics of inter-group accumulation rates, I propose an accounting decomposi- tion formula which captures savings rates for any reference group. This methodology is applied to data from national accounts, balance sheets and income distribution statistics in order to compute saving rates for the Top 1% of households in the US income distribution. The estimates support the idea that high savings from top incomes have captured a growing share of wealth between 1980 and 2010. |
| Keywords: | Saving rates, Top incomes, Wealth, National Accounts |
| JEL: | D3 E21 O51 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:new:wpaper:1524&r=hme |
| By: | Ferlito, Carmelo |
| Abstract: | While in the early 1930s Keynes and Hayek were the major figures in a heated academic debate about money and capital, in which Keynes also and especially involved the Italian Piero Sraffa, it might seem at first sight that the Austrian economist set aside an organic demolition of the ideas expressed in 1936 by his rival in the General Theory. But the ‘Austrian knight’ of a new Vienna-Cambridge debate, in the subsequent decades, was the German economist Ludwig M. Lachmann (1906-1990), a student of Hayek at LSE during the 1930s and later a professor in Johannesburg and New York. Lachmann was one of the protagonists of the Austrian revival after 1974 and the founding leader of the ‘hermeneutic stream’, opposed by the Rothbardian stream. Lachmann, defending Keynes’s subjectivism and expectation theory, revived the Vienna-Cambridge controversy, criticising not Keynes but his followers, in particular the ‘new’ Cambridge School, developed by Joan Robinson and Piero Sraffa. Lachmann’s life sight was to build a new economics paradigm, centred on the idea of market process, expectations and kaleidic society (Shackle). |
| Keywords: | Lachmann, Sraffa, Keynes, Hayek, Expectations, Macroeconomics, Innovation, Business Cycles |
| JEL: | B13 B24 B25 B41 E32 |
| Date: | 2015–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67759&r=hme |
| By: | Ferlito, Carmelo |
| Abstract: | The present paper aim to develop the Austrian Theory of Business Cycle in order to conclude that economic fluctuations are unavoidable. The conventional version of Austrian business cycle theory focuses on a temporary imbalance between natural and monetary rates of interest. When, because of the role of monetary authorities in defining the monetary rate, the two values are in a situation of imbalance, the resulting expansion stage is followed by a recession. On the other hand, if instead the expansive phase arises without any interference by monetary authorities but through re-adaptation of the productive structure to a modified structure of temporal preferences, a period of sustainable growth begins that will not be followed by a crisis. The purpose of this essay is to demonstrate, on the other hand, that because of profit-expectations and the combined action of Schumpeterian elements (imitations-speculations and the ‘creation of money’ by banks), even a so-called ‘sustainable’ boom will be affected by a liquidation and settling crisis. What distinguishes the latter situation from the conventional case of imbalance between monetary and natural rates is not the onset or otherwise of a crisis but, rather, its intensity and duration. We will define as natural an economic cycle characterised by a stage of expansion considered to be ‘sustainable’ in the Austrian theory but followed by an inevitable readjustment crisis. In conclusion we will try to link our theoretical conclusions with the crisis emerged in the Western world in 2007, to test the explanatory power of our theoretical framework. |
| Keywords: | Economic Crises, Business Cycles, Schumpeter, Lachmann, Hayek, Austrian Economics, Expectations. |
| JEL: | B13 B25 B31 B53 E32 E58 O33 |
| Date: | 2015–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67708&r=hme |
| By: | Phaneuf, Emile; Ferlito, Carmelo |
| Abstract: | In this paper we first address a long-standing criticism of human rationality and what that means for the role of government. We review and compare much of the literature on rationality and demonstrate that various authors within various fields often mean very different things by the word “rational.” While we make no claims as to whether or not humans always behave rationally, we point out the flawed logic for what is suggested for the role of government as a way of addressing the human irrationality problem. Building on the Mises-Rothbard-Huerta de Soto tradition, we argue that what is more important than perfect rationality is purposeful action. We explain the dynamic nature of the market in which time plays an important role, and humans act with expectations to accomplish goals, learn from past mistakes, discover new information and modify their plans accordingly. Using Hayek’s approach, we discuss the knowledge problem in which data is dispersed among millions of individuals (unknown in its entirety to any central authority) as well as the problems with applying the scientific method exactly as it is used in the natural sciences to the human behavioral sciences. These problems combined, we argue, make for a much more disastrous system than would be a system in which often-irrational individuals would be free to make mistakes for themselves, discover new information and take actions for their own betterment. |
| Keywords: | Rationality, Government intervention, Equilibrium, Human Action, Purposeful Behaviour |
| JEL: | B53 D80 D84 H10 H30 |
| Date: | 2014–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67746&r=hme |