nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2011‒01‒03
seventeen papers chosen by
Erik Thomson
University of Manitoba

  1. Testing William Baumol's "Toward a Newer Economics: The Future Lies Ahead!" By Marco Piatti; Benno Torgler
  2. La dissémination de la recherche en sciences économiques: les « cahiers de recherche » By Zimmermann, Christian
  3. Experimental Practices in Economics: Performativity and the Creation of Phenomena By Dorothea Kübler
  4. The "solitude of the reformist" Public Policy and Value Judgments in the Work of Federico Caffè By Paolo Ramazzotti
  5. "Money" By L. Randall Wray
  6. Harvard meets the crisis: U.S. fiscal policy in the 1930s and the political economy of Lauchlin B. Currie, Jacob Viner, John H. Williams and Harry D. White By Michele Alacevich; Pier Francesco Asso; Sebastiano Nerozzi
  7. A Critique of the Threshold Concept Hypothesis and an Application in Economics By Rod O'Donnell
  9. Economic Behavior - Evolutionary vs. Behavioral Perspectives By Ulrich Witt
  10. Labour as an Agent of Production: A Classical Economy Perspective By Pillai, Rajasekharan
  11. Heterodox production and cost theory of the business enterprise By Lee, Frederic; Jo, Tae-Hee
  12. Economic Theory and Banking Regulation: The Italian Case (1861-1930s) By Alfredo Gigliobianco; Claire Giordano
  13. On the modernity of Walras By Roger Guesnerie
  14. Fundamental and Real-World Challenges in Economics By Dirk Helbing; Stefano Balietti
  15. Emotional Prosperity and the Stiglitz Commission By Oswald, Andrew J.
  16. Every Symmetric 3 x 3 Global Game of Strategic Complementarities Is Noise Independent By Christian Basteck; Tijmen R. Daniëls
  17. Ambiguous games with contingent beliefs By De Marco, Giuseppe; Romaniello, Maria

  1. By: Marco Piatti; Benno Torgler
    Abstract: 20 years ago, William Baumol provided an interesting wish list that outlined his hopes for the future of economics over the next hundred years. Impatiently, this paper puts his wish list to the test by comparing the characteristics of publications that appeared in the American Economic Review before Baumol’s contribution in 1991 (1984 to 1988) and those published 20 years later (2004 to 2008), and by looking at the Job Openings for Economists between 1991 and 2009. Focusing on issues such as the role of mathematics, the short-run orientation of macroeconomics, the emphasis of economic history versus the history of economic ideas, as well as a more concrete menu of wishes for applied economics, we observe that this was not just a wish list, but is in many ways a list that offers an accurate picture of what has changed over time and what has happened in recent years.
    Keywords: American Economic Review, William Baumol, Mathematics, Macroeconomics, Applied Economics, Job Openings
    JEL: B41 A20 A10
    Date: 2010–12
  2. By: Zimmermann, Christian
    Abstract: Publishing articles in Economics involves long time frames of up to several years from submission to publication. Consequently, journal contents tend to lag behind what is happening on the research frontier. The most usual sources of information on frontier research are conferences and "working papers," which are photocopied documents that circulate among certain scientists. This practice is fostering the emergence of exclusive small groups and prevents third parties from participating in pioneering research. The Internet has radically changed possibilities for access to working papers, but Internet access still needs to be organized and to allow others to read one’s work. This article describes the RePEc initiative, which effectively places all economists on the same footing and has become an essential instrument in its field. Similar initiatives in other fields are also investigated.
    Keywords: economics; publication; research; working papers
    JEL: A14
    Date: 2010
  3. By: Dorothea Kübler
    Abstract: This contribution provides a brief overview and discussion of the role of experiments in economics. It is argued that economic experiments have convinced economists and the public of the existence of phenomena that have been outside the scope of economics. The success of these experiments is partly due to the performative nature of experiments. To develop this argument, examples of experiments are provided, and two different sets of criticisms of experiments are discussed. The paper concludes with a discussion of which questions economists should address and how experiments can be used to study policy-relevant questions. <br> <br> <i>ZUSAMMENFASSUNG - (Experimentelle Praktiken in der Ökonomie: Performativität und die Erzeugung neuer Phänomene) <br>Der Beitrag beschäftigt sich mit der Rolle von Experimenten in der Ökonomie. Es wird argumentiert, dass Experimente dazu in der Lage sind, sowohl Ökonomen als auch eine breitere Öffentlichkeit davon zu überzeugen, dass bestimmte Phänomene existieren, die vorher nicht als relevant für die Ökonomie angesehen oder gar nicht wahrgenommen wurden. Diese Wirkung von Experimenten beruht zu einem wichtigen Teil auf ihrer Performativität. Um dieses Argument zu entwickeln, werden Beispiele für Experimente gegeben, verschiedene Kritikpunkte an Experimenten diskutiert sowie die Frage aufgeworfen, was die Grenzen der Ökonomie sind und wie Experimente zur Beantwortung wirtschaftspolitischer Fragen eingesetzt werden können.<i>
    Date: 2010–01
  4. By: Paolo Ramazzotti (University of Macerata)
    Abstract: <p>Caffè's pursuit of a more humane society is strictly related to his view of the economy as a human construction within a more encompassing historical process. Based on this view, he conceives of economics as a policy-oriented social science where value judgments play a crucial role. They frame the questions that need to be answered in order to carry out purposeful change. They also structure the analysis, thus the way questions are answered. A commonly shared understanding of the economy is, therefore, unlikely. Although this would seem to undermine Caffè's view that a "reasonable core" in economic thought exists, the paper -based on methodological premises that differ, to some extent, from those of Caffè- contends that disciplinary dialogue remains possible provided economists acknowledge the need to make their methodological value judgments explicit.</p>
    Date: 2010–12
  5. By: L. Randall Wray
    Abstract: This paper advances three fundamental propositions regarding money: (1) As R. W. Clower (1965) famously put it, money buys goods and goods buy money, but goods do not buy goods. (2) Money is always debt; it cannot be a commodity from the first proposition because, if it were, that would mean that a particular good is buying goods. (3) Default on debt is possible. These three propositions are used to build a theory of money that is linked to common themes in the heterodox literature on money. The approach taken here is integrated with Hyman Minsky’s (1986) work (which relies heavily on the work of his dissertation adviser, Joseph Schumpeter [1934]); the endogenous money approach of Basil Moore; the French-Italian circuit approach; Paul Davidson’s (1978) interpretation of John Maynard Keynes, which relies on uncertainty; Wynne Godley’s approach, which relies on accounting identities; the “K” distribution theory of Keynes, Michal Kalecki, Nicholas Kaldor, and Kenneth Boulding; the sociological approach of Ingham; and the chartalist, or state money, approach (A. M. Innes, G. F. Knapp, and Charles Goodhart). Hence, this paper takes a somewhat different route to develop the more typical heterodox conclusions about money.
    Keywords: Money; Credit; Debt; Uncertainty; Default; Unit of Account; Heterodox; Circuit Approach; Godley; Minsky; Knapp; Schumpeter; Endogenous Money
    JEL: E4 E5 E6 E11 E12 B5 B15 B22
    Date: 2010–12
  6. By: Michele Alacevich (Center for European Studies, Harvard University); Pier Francesco Asso (Università degli Studi di Palermo, Dipartimento di Scienze Economiche); Sebastiano Nerozzi (Università Cattolica, Milano)
    Abstract: The paper aims to describe the contribution of four Harvard economists to the interpretation of the Great Depression and the policy decision making from 1933 to 1938. Lauchlin B. Currie, Jacob Viner, John H. Williams, Harry D. White, eminent scholars in the field of monetary and international economics, were deeply involved in policy decisions during the New Deal. In our synoptic analysis we will benefit from extensive scholarly work that has been provided in the last few years. We shall examine the extensive biographical connection between Currie, Viner, White and Williams with special regard to their common training at Harvard. Then we shall compare their interpretations of the causes of crisis and their proposals in fiscal, monetary and banking policy. Finally, we shall describe their advisory activity in the Roosevelt administration and try to assess their influence.
    Keywords: Great Depression; Monetary Theory; Monetary Policy; Fiscal Policy, Keynesism
    JEL: B22 E32 E58 E63 N12
    Date: 2010
  7. By: Rod O'Donnell (School of Finance and Economics, University of Technology, Sydney)
    Abstract: In exploring the learning experiences of students, some educationalists have advanced the 'threshold concept hypothesis' according to which certain concepts in various disciplines act as thresholds. Such concepts need to be mastered before further progress can be made in a discipline - they act like portals or entrances to be traversed before students can think like practitioners of that discipline. In economics, the concept of opportunity cost is often advanced as a prime example of a threshold concept. This paper subjects the threshold concept hypothesis to critical scrutiny on logical and methodological grounds, and then investigates its applicability to the economic concept of opportunity cost. The main conclusions are that the hypothesis has deep-seated conceptual problems, that it is subject to disturbingly elastic interpretation, that its claim to be an improvement over existing approaches is highly questionable, that some of its educational and social consequences are undesirable and that, in economics, the construal of opportunity cost as a threshold concept is unsustainable.
    Keywords: threshold concepts; opportunity cost; teaching economics
    JEL: A10 A20 D00
    Date: 2010–12–01
  8. By: Benjamin Beranek (Department of Economics, Izmir University of Economics); Alper Duman (Department of Economics, Izmir University of Economics)
    Abstract: While the public good experiment has been used to analyze cooperation among various groups in Western Europe and North America, it has not been extensively used in other contexts such as Turkey. This project seeks to rectify that and explore how Turkish university students informally self govern. By employing the public good experiment among a cohort of students attending universities in Ýzmir, Turkey and Adýyaman, Turkey, we hope to quantitatively analyze the factors which lead to altruistic punishment, to antisocial punishment, and ultimately to enhanced cooperation in Turkish society.
    Keywords: Cooperation, Free Riding, Altruism, Punishment, Trust, Experimental Economics, Public Good Experiments
    JEL: C72 C91
    Date: 2010–10
  9. By: Ulrich Witt
    Abstract: An evolutionary perspective on economic behavior has to account for the influences that the human genetic endowment has on the choices the agents make. Likely to have been fixed in times of fierce selection pressure, this endowment is presumably adapted to the living conditions of early humans. If at all, behavioral economics accounts for its influences on economic decision making in a way similar to the approach taken by evolutionary psychology, i.e. by focusing on decision heuristics and their tensions with modern rationality standards. In an evolutionary perspective, that focus needs to be extended so as to also embrace the motivational underpinnings of economic behavior. In the language of economics this means to inquire into the agents' preferences and to explain how they relate to the human genetic endowment and how they change over time. The paper discusses several implications of such an extension.
    Keywords: behavioral economics, evolutionary economics, Darwinism, decision heuristics, preferences, development, growth, welfare Length 21 pages
    JEL: A12 B25 B52 D01 D63 O10
    Date: 2010–12
  10. By: Pillai, Rajasekharan
    Abstract: Seminal works on labour and its contribution to the economy were attempted by classical economists. The classical political economy considered labour as the sole source of value, and only it can create an addition. The predominance of ascribed it as basis of all social life. This paper reviews the works of two classical political economy writers: Marx and Smith.
    Keywords: Labour; labour power; abstract labour; concrete labour; Karl Max; Adam Smith; classical economy; division of labour
    JEL: J00 J01
    Date: 2010–12–13
  11. By: Lee, Frederic; Jo, Tae-Hee
    Abstract: Heterodox economists long complained about having no systematic alternative to neoclassical production and cost theory. This paper deals with this complaint. That is, it presents a theory of production and costs of the business enterprise that is a complete alternative to the neoclassical theory of production and costs of the firm.
    Keywords: heterodox theory; accounting rules; structure of production and costs; segmented plants; direct costs; shop expenses; enterprise expenses
    JEL: D2 B5
    Date: 2010–12
  12. By: Alfredo Gigliobianco (Bank of Italy, Structural Economic Analysis Department); Claire Giordano (Bank of Italy, Structural Economic Analysis Department)
    Abstract: The paper provides a qualitative assessment of the role mainstream economic theory had in orienting Italy’s banking legislation from its political unification (1861) to the introduction of the 1936 Banking Act. Five regulatory regimes are considered. Whilst market discipline and self-regulation arguments characterized the first sub-period (1861-1892), the debate over convertibility and limits on note issuance was intense in the second (1893-1906). The third sub-period (1907-1925) was punctuated by two banking crises: the first (1907) vindicated economists who had stressed the need of a lender of last resort à la Bagehot; the second (1921-23) confirmed – to no avail – the dangers congenital to bank-industry ties. The following sub-period (1926-1930) was inaugurated by the first commercial bank regulation (1926) and responded to the prevailing economists’ call for restricting bank competition. The 1936 regulation, which inaugurated the approximately five-decade long fifth regime, matured in a virtual vacuum of professional economic debate. Overall, two key factors were found to affect the degree to which legislation drew upon contemporary economic thought: a) the severity of the preceding crisis; and b) the timing of the subsequent regulation.
    Keywords: banking crises, prudential regulation, economic theory
    JEL: B15 G28 N4
    Date: 2010–11
  13. By: Roger Guesnerie
    Abstract: This text is to appear in a volume produced at the occasion of the 100th anniversary of Léon Walras death. The first part (introduction) answers one initial demand (to the solicited authors), i.e the evaluation of Walras influence on their own research and more generally on contemporary research. The second part "Between the Capitol Hill and the Tarpeian Rock?" goes further into the discussion of the contemporary status of the intellectual schemes inherited from the development of the walrasian program. The third part argues that part of the questions raised by Walras, f.e those concerning the mechanics of price adjustments, have not yet received satisfactory answers. It then argued that a post-walrasian program, with a strong focus on the explanation of market expectations, is on the agenda.
    Date: 2010
  14. By: Dirk Helbing; Stefano Balietti
    Abstract: In the same way as the Hilbert Program was a response to the foundational crisis of mathematics, this article tries to formulate a research program for the socio-economic sciences. The aim of this contribution is to stimulate research in order to close serious knowledge gaps in mainstream economics that the recent financial and economic crisis has revealed. By identifying weak points of conventional approaches in economics, we identify the scientific problems which need to be addressed. We expect that solving these questions will bring scientists in a position to give better decision support and policy advice. We also indicate, what kinds of insights can be contributed by scientists from other research fields such as physics, biology, computer and social science. In order to make a quick progress and gain a systemic understanding of the whole interconnected socio-economic-environmental system, using the data, information and computer systems available today and in the near future, we suggest a multi-disciplinary collaboration as most promising research approach.
    Date: 2010–12
  15. By: Oswald, Andrew J. (University of Warwick)
    Abstract: This paper argues – in line with the proposals of the recent Stiglitz Commission on the Measurement of Economic Performance and Social Progress – that we should now be measuring a nation's emotional prosperity rather than its economic prosperity (that is, we ought to focus on the level of mental well-being not the number of pounds in people's bank accounts). The paper reviews recent ideas in this field. It also describes seven recent studies that, worryingly, suggest that emotional prosperity may be declining through time. For labour-market specialists, a key question for future research is how much this downward trend can be traced back to increased pressures in working life. That question currently remains open.
    Keywords: well-being, biomarkers, GHQ, happiness, Easterlin paradox
    JEL: I1 I3
    Date: 2010–12
  16. By: Christian Basteck; Tijmen R. Daniëls
    Abstract: We prove that the global game selection in all 3 x 3 payoff-symmetric supermodular games is independent of the noise structure. As far as we know, all other proofs of noise independence of such games rely on the existence of a so-called monotone potential (MP) maximiser. Our result is more general, since some 3 x 3 symmetric supermodular games do not admit an MP maximiser. Moreover, a corollary is that noise independence does not imply the existence of an MP maximiser.
    Keywords: global games, noise independence
    JEL: C72 D82
    Date: 2010–12
  17. By: De Marco, Giuseppe; Romaniello, Maria
    Abstract: The Nash equilibrium concept combines two fundamental ideas. First, rational players choose the most preferred strategy given their beliefs about what other players will do. Second, it imposes the consistency condition that all players' beliefs are correct. This consistency condition has often been considered too strong and different solution concepts have been introduced in the literature in order to take into account ambiguous beliefs. In this paper, we show, by means of examples, that in some situation beliefs might be dependent on the strategy profile and that this kind of contingent ambiguity affects equilibrium behavior differently with respect to the existing models of ambiguous games. Hence we consider a multiple prior approach and subjective beliefs correspondences which depend on the strategy profile; we investigate existence of the equilibrium concepts corresponding to different attitudes towards ambiguity (namely optimism and pessimism). Finally we analyze particular beliefs correspondences: beliefs given by correlated equilibria and by ambiguity levels on events.
    Keywords: Noncooperative games; ambiguity; beliefs correspondence; equilibrium
    JEL: D81 C72
    Date: 2010–12–20

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