nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2008‒07‒05
seven papers chosen by
Erik Thomson
University of Chicago

  1. Essays in Applied Theory By Viola Chen
  2. The Political Economics Side of the J-Curve By António Caleiro
  3. The Quantity Theory of Money in Historical Perspective By Michael Graff
  4. Uses of National Accounts; History, International Standardization and Applications in the Netherlands By Bos, Frits
  5. A Mathematical Representation of "Excitement" in Games: A Contribution to the Theory of Game Systems By Kumagai, Satoru
  6. Crisis and Responses: the Federal Reserve and the Financial Crisis of 2007-2008 By Stephen G. Cecchetti
  7. Performance budgeting: Its rise and fall By Nguyen, Hoang-Phuong

  1. By: Viola Chen
    Date: 2008–06–27
  2. By: António Caleiro (Department of Economics, University of Évora)
    Abstract: About twenty years ago, an article by van der Ploeg analysed the implications of the J-curve effect for the political business cycle in a small open economy [van der Ploeg (1989c)]. It was then shown that a sudden jump on the exchange rates in the election day should be observed if the government, in order to maximise its popularity, explores a J-curve effect. As a way of celebrating this work, that should have been more influential, it is presented in the paper a simulation study, which confirms that exchange rate overvaluation result a la van der Ploeg.
    Keywords: Exchange rates, J-Curve, Partisan Business Cycles, Political Business
    JEL: E31 E32 F31
    Date: 2008
  3. By: Michael Graff (KOF Swiss Economic Institute, ETH Zurich)
    Abstract: The paper reconstructs the origins of the quantity theory of money and its applications. Against the background of the history of money, it is shown that the theory was flexible enough to adapt to institutional change and thus succeeded in maintaining its relevance. To this day, it is useful as an analytical framework. Although, due to Goodhart's Law, it now has only limited potential to guide monetary policy and was consequently abandoned by most central banks, an empirical analysis drawing on a panel data set covering more than hundred countries from 1991 to the present confirms that the theory still holds: a positive correlation between the excess growth rate of the stock of money and the rate of inflation cannot be rejected. Yet, while the correlation holds for the whole sample, proportionality is driven by a small number of influential observations with very high inflation
    Keywords: Quantity theory of money, demand for money, monetary targeting
    JEL: B10 E41 E58
    Date: 2008–04
  4. By: Bos, Frits
    Abstract: The national accounts is commonly known by its key-aggregates (e.g. GDP and saving) and their role in public debate and decision-making. However, the national accounts plays many different roles for many different uses. This paper provides an overview of the development of these roles and uses since the seventeenth century. Three periods are distinguished: the early estimates (1660-1930), revolutionary decades (1930-1950) and the era of the international guidelines (1950-present). The paper discusses these roles and uses also much more in detail for one country: the Netherlands, a country which played an important role in modern national accounting and where expert data users, like the CPB, SCP and the Dutch central bank, have developed several interesting applications of the national accounts.
    Keywords: Uses of the national accounts; history of national accounting; history of taxation; economic growth; Dutch national accounts; relevance and reliability of the national accounts; Petty; King; Vauban; Quesnay; Keynes; Clark; Kuznets; Leontief; Tinbergen; Hicks; van Cleeff; Stone; Meade; guidelines on national accounting; European unification; macro-economic modeling and forecasting; CPB; SCP; Dutch central bank; fiscal policy; productivity analysis; performance management; national accounts and welfare; measurement in economics
    JEL: B0 C82 E01
    Date: 2008
  5. By: Kumagai, Satoru
    Abstract: Researchers have long believed the concept of "excitement" in games to be subjective and difficult to measure. This paper presents the development of a mathematically computable index that measures the concept from the viewpoint of an audience and from that of a player. One of the key aspects of the index is the differential of the probability of "winning" before and after one specific "play" in a given game. The index makes a large contribution to the study of games and enables researchers to compare and analyze the “excitement†of various games. It may be applied in many fields, especially the area of welfare economics, and applications may range from those related to allocative efficiency to axioms of justice and equity.
    Keywords: Game, Game system, Excitement, Mathematics
    JEL: C69 D63
    Date: 2008–06
  6. By: Stephen G. Cecchetti
    Abstract: Realizing that their traditional instruments were inadequate for responding to the crisis that began on 9 August 2007, Federal Reserve officials improvised. Beginning in mid-December 2007, they implemented a series of changes directed at ensuring that liquidity would be distributed to those institutions that needed it most. Conceptually, this meant America's central bankers shifted from focusing solely on the size of their balance sheet, which they use to keep the overnight interbank lending rate close to their chosen target, to manipulating the composition of their assets as well. In this paper, I examine the Federal Reserve's conventional and unconventional responses to the financial crisis of 2007-2008.
    JEL: E5
    Date: 2008–06
  7. By: Nguyen, Hoang-Phuong
    Abstract: Among various budgeting theories and practices at the federal level, performance budgeting has played an important role with its long developmental history. Performance budgeting was short-lived as it was replaced by program budgeting in the early 1960s. Looking at the period between the first decade of the twentieth century and the mid-1960s, the present paper seeks to investigate two major questions to which budgetary literature has given short shrift: 1) What forces led to the emergence of performance budgeting and its earlier forms?, and 2) Why did the budgeting practice fall into disfavor at the federal level shortly after a prolonged period to get institutionalized? The paper's investigation of the first question reveals three major factors that gave rise to performance budgeting and its forerunners: the rise of scientific management by Frederick Taylor, increasing public pressure on the government's role and practices, and the expansion of government responsibilities. Three principal opposing forces attributed to the long gestation of performance budgeting and its premature decline are its inherent weaknesses and limitations, the legislature's hostility to it, and the rapid rise of a new budgeting practice.
    JEL: H83
    Date: 2007–11

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