nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2006‒09‒23
eight papers chosen by
Erik Thomson
University of Chicago

  1. Keynes on sustainable development (In French) By Eric BERR (CED-IFReDE-GRES)
  2. Axel Leijonhufvud and the Quest for Micro-foundations -- Some Reflections By David Laidler
  3. Equity and Equality By Jean-Yves Duclos
  4. Liberté ou égalité? By Jean-Yves Duclos
  5. What We Research in Social Sciences: Is Homo Oeconomicus Dead? By Kaire Põder
  6. Konsum im Jenseits? By Schlicht, Ekkehart
  7. A Comparison of Five Federal Reserve Chairmen: Was Greenspan the Best? By Ray C. Fair
  8. Generalized Utilitarianism and Harsanyi’s Partial Observer Theorem By Simon Grant; Atsushi Kajii; Ben Polak; Zvi Safra

  1. By: Eric BERR (CED-IFReDE-GRES)
    Abstract: Since the beginning of the 1970s, the questions related to ecology come in the forefront and progressively led to the adoption of the concept of sustainable development, which now appears to be a new world-wide objective. We argue that numerous writings of Keynes contain the premises of such a sustainable development. We present his views relatively to the three pillars of sustainability: ecological, social and financial. Indeed, Keynes’ positions on uncertainty, money, the place of economics, arts, financing, philosophy, etc. are consistent with a strong sustainability. Finally, we try to give some insights for an indispensable 21st century post Keynesian sustainable development program.
    Keywords: Keynes, sustainable development, Post Keynesian
    JEL: B31 E12
    Date: 2006
  2. By: David Laidler (University of Western Ontario)
    Abstract: Axel Leijonhufvud's On Keynesian Economics and the Economics of Keynes (1968) was a seminal contribution to the literature on what came to be known as the micro-foundations of macro-economics, but its Marshallian approach, which involved analysing the disequilibrium dynamics of markets in which trade at non-market clearing prices would occur, was not that eventually adopted in the early 1970s. Instead, a Walrasian development of monetarism, namely new- classical macroeconomics, which combined the postulate of continuously clearing markets with the rational expectations hypothesis became dominant. Even so, Leijonhufvud's subsequent work on the costs of inflation had an important influence in establishing this phenomenon's policy importance, and, along with his earlier analysis of employment fluctuations, provides still important insights about why the relevance of now-orthodox economics might be limited to helping us understand the economy's performance within a corridor whose boundaries lie close to its full-employment-price-stability equilibrium.
    Keywords: macroeconomics; micro-foundations; Keynesian economics; monetarism; new-classical economics; general equilibrium; disequilibrium; auctioneer; false prices; money; unemployment; inflation
    JEL: B22 B31 D50 D80 D90 E12 E31
    Date: 2006
  3. By: Jean-Yves Duclos (Université Laval, CIRPÉE and IZA Bonn)
    Abstract: Is horizontal equity (HE) the "most widely accepted principle of equity"? Or does it stand in "opposition to the advancement of human welfare"? This paper argues that the case for the HE principle is not as straightforward as is usually thought and that it requires advanced notions of justice and wellbeing. The most likely ethical basis for HE appears to combine a Rawlsian maximin principle and a view of well-being that allows for relative local comparison effects. The paper also explores some of the dimensions of equality and well-being along which the HE principle can be applied and presents a number of examples showing how HE considerations can provide an important input into policy analysis.
    Keywords: horizontal equity, vertical equity, redistribution, equality, social justice
    JEL: D31 D60 D63 I30
    Date: 2006–09
  4. By: Jean-Yves Duclos
    Abstract: Qu'es-ce que la liberté? Qu'es-ce que l'égalité? En quoi une plus grande égalité peut-elle accroître la liberté? Telles sont les questions principales auxquelles tente de répondre cet article. Le problème du choix entre liberté et égalité soulève en effet le problème de la définition de ces deux objets. Une fois cette définiton clarifiée, il ressort que, sous certaines conceptions de la liberté et de l'égalité, il n'est pas nécessaire ou utile de choisir entre ces deux objets: ils deviennent alors complémentaires plutôt que substituts. L'égalité peut en effet renforcer à la fois la liberté réelle et la liberté morale des individus, et ainsi contribuer au bien-être de tous. L'article traite aussi des difficultés de mesure de l'égalité, et en quoi ces difficultés peuvent affecter la comparaison de l'égalité à travers le temps et l'espace.
    Keywords: Liberté, égalité, efficacité, bien-être, justice sociale
    JEL: D31 D63 D64 I30 I31
    Date: 2006
  5. By: Kaire Põder (Tallinn University of Technology)
    Abstract: Transition is not just transition of formal institutions, convergence of price levels and living standards. The closure or the gap in formal institutions is probably less time demanding than the closure of ideological or mental gap, created in many fields in academy or social life. Social sciences have been erased during half a century and post-soviets still struggle for academic prestige of these areas. We have seen many misunderstandings concerning the interrelations, hierarchy and even object of study in social sciences. Superiority of economics is sometimes created by market signals, or superiority of some other discipline by “political signals”. Our aim is to show that in the body of social sciences economics is a normal science which can be defined by method, not by subject matter. We will introduce the alternative methodological approaches to rational choice and indicate their advantages and disadvantages. Mainly two questions are answered. First, is there some alternative methodology which has been more successful in producing efficient predictions and explanations of social affairs? Second, how methodological criticism has changed rational choice perspectives and can these changes be justified? Finally, changes in methodology of economics are discussed showing that there is no clear answer – how to parcel our social sciences?
    Keywords: rational choice, methodology in economics, structuralism
    JEL: B4 B5
    Date: 2006
  6. By: Schlicht, Ekkehart
    Abstract: Many contributions to the economics of religion postulate an "afterlife consumption motive." People are assumed to maximize total utility--including afterlife utility. This essay argues that the approach is unsatifactory for several reasons. First, many regularities in religious participation may be explained by ordinary consumption theory without invoking an afterlife; second, there exist religions that do not postulate an afterlife, and there are religions that suppose an afterlife yet do not allow men to influence their fate in the hereafter by good deeds; and third, if afterlife consumption were the foundation for religious demand, we would observe an inflation of promises about afterlife bliss, brought about by competition among the religions. It is proposed to follow David Hume (1775) and see religious demand as originating from the desire of human beings to understand the world and justify their action. This religious motive ("quest for sense") can explain the emergence of ideas about an afterlife and afterlife consumption in monotheistic religions and permits to understand why an inflation of afterlife promises does not occur.
    Keywords: religion; afterlife
    JEL: Z12
    Date: 2006–09
  7. By: Ray C. Fair (Cowles Foundation, Yale University)
    Abstract: This paper examines the performances of the past five Federal Reserve chairmen using optimal control techniques and a macroeconometric model. Each chairman is judged by the actual performance of the economy under his term relative to what the performance would have been had he behaved optimally. Comparing chairmen only on the basis of the actual performance of the economy is not appropriate because it does not control for different exogenous-variable values and shocks that the Fed has no control over. The results suggest that Greenspan was indeed the best, but followed closely by Martin. Volcker also does well, but probably not quite as well as Greenspan and Martin. However, Volcker does much better than one would conclude he did by just looking at the actual state of the economy during his term. Miller and Burns do poorly; they should have been considerably tighter than they were.
    Keywords: Fed chairmen, Optimal control, Economic performance
    JEL: E52
    Date: 2006–09
  8. By: Simon Grant (Dept. of Economics, Rice University); Atsushi Kajii (Institute of Economic Research, Kyoto University); Ben Polak (Dept. of Economics and School of Management, Yale University); Zvi Safra (Tel Aviv University and College of Management)
    Abstract: We provide an axiomatization of generalized utilitarian social welfare functions in the context of Harsanyi's impartial observer theorem. To do this, we reformulate Harsanyi's problem such that lotteries over identity (accidents of birth) and lotteries over outcomes (life chances) are independent. We show how to accommodate (first) Diamond's critique concerning fairness and (second) Pattanaik's critique concerning differing attitudes toward risk. In each case, we show what separates them from Harsanyi by showing what extra axioms return us to Harsanyi. Thus we provide two new axiomatizations of Harsanyi's utilitarianism.
    Keywords: Generalized utilitarianism, Impartial observer, Social welfare function, Fairness, Ex ante egalitarianism
    JEL: D63 D71
    Date: 2006–09

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