nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2005‒06‒14
eight papers chosen by
Andy Denis
City University

  1. Adam Smith e seu contexto: o Iluminismo escocês By Hugo E. A. da Gama Cerqueira
  2. Back to Keynes? By van der Ploeg, Frederick
  3. Another Distortion of Adam Smith: The Case of the "Invisible Hand" By Michael Meeropol
  4. Economics Ideas and Institutions in Historical Perspective: Cairú and Hamilton on Trade and Finance By Matias Vernengo
  5. Free Banking and the Bank of Canada By David Laidler
  6. THE NEW GROWTH THEORIES AND THEIR EMPIRICS, Discussion Paper in Economics, University of Glasgow, N. 2005-04 ( By Rosa Capolupo
  7. UTILITY COMPLEX By Gopinath VadirajaRao Bangalore
  8. Theory of Economics in natural societies By Krishna Gopal Misra

  1. By: Hugo E. A. da Gama Cerqueira (Cedeplar-UFMG)
    Abstract: This essay argues that Adam Smith's thought should be interpreted within the intellectual context of the Scottish enlightenment. It discusses the origins and the specific nature of the enlightenment in Scotland in order to highlight the differences between the social theory of the Scottish literati and the dominant approach to economics.
    Keywords: Adam Smith, Scottish enlightenment, political economy
    JEL: B30 A13
    Date: 2005–05
  2. By: van der Ploeg, Frederick
    Abstract: After a brief review of classical, Keynesian, New Classical and New Keynesian theories of macroeconomic policy, we assess whether New Keynesian Economics captures the quintessential features stressed by JM Keynes. Particular attention is paid to Keynesian features omitted in New Keynesian workhorses such as the micro-founded Keynesian multiplier and the New Keynesian Phillips curve. These theories capture wage and price sluggishness and aggregate demand externalities by departing from a competitive framework and give a key role to expectations. The main deficiencies, however, are the inability to predict a pro-cyclical real wage in the face of demand shocks, the absence of inventories, credit constraints and bankruptcies in explaining the business cycle, and no effect of the nominal as well as the real interest rate on aggregate demand. Furthermore, they fail to allow for quantity rationing and to model unemployment as a catastrophic event. The macroeconomics based on the New Keynesian Phillips curve has quite a way to go before the quintessential Keynesian features are captured.
    Keywords: bankruptcy; inventories; Keynesian economics; liquidity; monetary policy; monopolistic competition; New Keynesian Phillips curve; nominal wage rigidity; pro-cyclical real wage; unemployment; welfare
    JEL: E12 E32 E63
    Date: 2005–02
  3. By: Michael Meeropol
    Abstract: This paper addresses a major omission in the way textbook writers and journalists utilize Adam Smith’s concept of the “invisible hand” to make Adam Smith an intellectual precursor of modern neo-liberal economic policy. Specifically, the paper addresses the use of the concept of the “invisible hand” by Adam Smith to address two major issues in the debate over neo-liberal policy: the international flow of capital and its role in the location of investment projects and the inequality in the distribution of income that might result from certain policies. The neo-liberal mantra about Adam Smith’s invisible hand asserts that so long as there is sufficient competition and no government intervention beyond the protection of life, liberty and property, the pursuit of individual self interest will result in an improvement in the aggregate well being of society as a whole. This is true even if investments are made overseas and if economic inequality increases. Aside from some contributions to the professional literature, virtually everyone else who writes about the invisible hands ignores what Adam Smith actually said. This paper restates what Smith said when he used the term “invisible hand” in both The Wealth of Nations and in The Theory of Moral Sentiments. It places his use of the term in context to illustrate how far Smith departs from the distortions of his neo-liberal self-described admirers.
    Date: 2004
  4. By: Matias Vernengo
    Abstract: This paper deals with the role of economic ideas in institutional development. Conventional wisdom in Brazilian historiography suggests that, in part, the relative backwarderness of Brazil with respect to the United States was the result of the economic liberalism of its elites, represented by José da Silva Lisboa, the Viscount of Cairú. The paper argues that Cairú’s defense of an open economy, integrated to the world economy, in which agricultural production would prevail over the industrial interests, should be seen as a discourse for landowners and the mercantile class connected to the slave trade. It is also argued that, in contrast to Alexander Hamilton, Cairú and the Brazilian elites had a naive view of public finance that is central to understand the backwarderness of Brazilian financial markets. Political conservatism and a negative view of finance are seen as more relevant than liberalism in explaining the relative backwarderness of Brazil.
    Keywords: Cairú; Hamilton; brazil
    JEL: B12 B31 N16 N26
    Date: 2005–08
  5. By: David Laidler (University of Western Ontario)
    Abstract: It is argued that today's Canadian monetary system has certain important characteristics in common with a free banking regime such as might have evolved had matters been left to market forces, and that the Bank of Canada's recent success probably has more than a little to do with this fact. It is also argued, however, that, in Canada at the current juncture, further progress towards "free banking" as this alternative is nowadays known, would likely involve unilateral adoption of the US dollar as the basis for the monetary system. Hence, on the 70th anniversary of the Bank of Canada's founding, the author's wish that it may enjoy many happy returns of its birthday is a particularly sincere one.
    Keywords: Bank of Canada; central banking; free banking; price stability rates; unemployment; multiplier
    JEL: B22 E24 E59
    Date: 2005
  6. By: Rosa Capolupo (Dipartimento di Scienze Economiche)
    Abstract: The aim of this paper is to update the reviews on endogenous growth theories in order to explore whether recent empirical studies are more supportive of their main predictions. Among the core topics studied in the growth econometric framework, namely, convergence, identifications of growth determinants and factors responsible of growth differences in the data, the primary focus of this paper is on the last two. Since the use of econometrics was originally motivated by convergence issues, in this work we will review econometric studies that test primarily the relevance of endogenous models in terms of significance and robustness of growth’s determinant coefficients. We argue that: (i) causal inference drawn from the empirical growth literature remains highly questionable, ii) there are estimates for a wide range of potential factors but their magnitude and robustness are still under debate. Overall, however, if properly interpreted, endogenous growth models' predictions are increasingly gaining empirical support.
    Keywords: endogenous growth, growth regressions, convergence
    JEL: O47 O41 C31
    Date: 2005–06–06
  7. By: Gopinath VadirajaRao Bangalore (No affiliation)
    Abstract: The branch of science (or Economics) that deals with nature, properties, laws and classification of wealth is yet to be named. This branch of science is a mirror image of chemistry. The utility ( I call utility as all that a human being needs) is similar to water. The utility complex of every economic entity, be it an individual or a family or a society or state or nation consists of two components- A) WANTS that consist of goods and services and B)MEANS that consist of money and money related forms of wealth. Every economic entity tries to attain equilibrium between wants and means. If wants are more than means, due to application of Law of Conservation, costlier wants are replaced by cheaper wants or some wants are transfered from Current Wants category to furure Wants category. Wants and Means are forms of wealth and hence cannot be created or destroyed but can be changed to other forms. This leads us to classification of wealth.
    Keywords: Law of Conservation, Wants and Means
    JEL: A
    Date: 2005–06–03
  8. By: Krishna Gopal Misra (QUALITYMETER.COM)
    Abstract: Conventional economics is unfortunately not wholistic. 'A whole is greater than sum of the parts'. Natural societies are charactistically whole and without duality ('you and me' approach). For example, river, ponds, jungle are whole, none claim to be owners and yet it belongs to every body. Wholistic living is about respecting natural resources without claiming rights. This is wholism. When people have separate wash rooms in stead of the rivers, and have a mechanism to pay for water, this is not wholism but caused by cruel division of the whole that gave rise to a need of private ownership. The dividing a whole reduces it to parts, and causes shortages. Shortages coupled with ownership problem require a body of knowlege to deal with peaceful distribution of a divided whole, and this mechanism of problem solving is 'economics'. The conventional economics based on demand supply is not so far attempted to bring pack parts into whole, but only the peace making in distribution.
    Keywords: natural economics
    JEL: A
    Date: 2005–06–10

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