|
on History and Philosophy of Economics |
| By: | Franco Donzelli (University of Milano) |
| Abstract: | After many explorations in different directions during the early 1930s, in 1934 Hicks ends up by advocating an interpretation of Walrasian equilibrium and capital theory along stationary lines, but the suggested interpretation is at variance with the view endorsed by the last Walras and by Pareto at the turn of the century. In the second half of the 1930s, during the long gestation of Value and Capital (VC), Hicks’s ideas on equilibrium and capital progressively change and mature, to eventually culminate, with the publication of VC in 1939, in the rediscovery of a method of analysis and an equilibrium concept, Hicks’s temporary equilibrium, that are substantially similar to the method of analysis and equilibrium concept put forward by the last Walras and by Pareto about forty years before. Yet this direct link with the Walrasian tradition is not overtly recognised by Hicks in VC: in particular, the essentially Walrasian character of the equilibration process supporting Hicks’s temporary equilibrium concept is carefully disguised under Marshallian garments. This fact will not only delay Hicks’s own recognition of the limits of the VC approach, which will start to be questioned by him only in the mid-1950s, but will also concur to spreading unsubstantiated ideas about the origins and theoretical foundations of the neo-Walrasian research programme. The aim of this paper is to clarify the theoretical reasons behind the winding path followed by Hicks over the 1930s, especially as far as the Walrasian conception of equilibrium and equilibration is concerned, and to identify the roots of Hicks’s ambiguity about the theoretical ancestry of the VC model in his previous intellectual history. |
| Keywords: | Hicks, Walras, Marshall, equilibrium, equilibration, temporary equilibrium, |
| Date: | 2010–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:bep:unimip:unimi-1107&r=hpe |
| By: | Franco Donzelli (University of Milano) |
| Abstract: | In developing their equilibrium theories over the decade 1871-1881, Jevons (1871), Walras (1874-7), and Edgeworth (1881) made use of some version of a Law, called Law of Indifference by Jevons and Edgeworth and often referred to as the Law of One Price in connection with Walrasian economics. In Jevons’s theory of exchange, the Law of Indifference is a quasi-tautology playing a fundamental role in both the derivation of the equilibrium conditions and the characterisation of Jevons’s equilibrium concept. In Walras’s pure-exchange model, the Law of One Price, assumed as a postulate and lacking any proper theoretical underpinnings, is no longer confined to equilibrium analysis, as in Jevons, but is so conceived as to embrace Walras’s equilibration analysis, namely, the celebrated tâtonnement construct, too. Finally, in Edgeworth’s theory of exchange, the Law of Indifference, once again restricted to equilibrium analysis only, is made to emerge as a limiting result, produced by the joint operation of Edgeworth’s replication and recontracting mechanisms and associated with the unbounded increase in the size of the economy. One century after Edgeworth’s achievements, Negishi (1982) resumed Jevons’s and Edgeworth’s interpretation of the Law of Indifference as an equilibrium property; yet, parting company with Edgeworth, he tried to prove that the arbitrage mechanism underlying the Law is at work and fully effective even in very small finite economies. The aim of this paper is twofold: first, to reconstruct the various uses of the Law of Indifference and its variants in the diverse theoretical traditions originated by Jevons, Walras, and Edgeworth; secondly, to critically discuss Negishi’s attempt to revive Jevons’s Law of Indifference as a fully micro-founded and extremely powerful equilibrium property of finite competitive economies where arbitraging activities are allowed for. |
| Keywords: | Jevons, Walras, Edgeworth, Law of Indifference, equilibrium, equilibration, arbitrage, |
| Date: | 2011–05–13 |
| URL: | http://d.repec.org/n?u=RePEc:bep:unimip:unimi-1110&r=hpe |
| By: | Ole Peters |
| Abstract: | Karl Menger's 1934 paper on the St. Petersburg paradox contains mathematical errors that invalidate his conclusion that unbounded utility functions, specifically Bernoulli's logarithmic utility, fail to resolve modified versions of the St. Petersburg paradox. |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1110.1578&r=hpe |
| By: | Jacqueline de Chazal (Crawford School of Economics and Government, The Australian National University) |
| Abstract: | Whilst there has been progress in understanding the role that values play in determinations of vulnerability and resilience, I suggest some key points continue to be overlooked. I offer three propositions to describe how values underpin such concepts, summarised as ‘no fixed characterization’, ‘no fixed relationships’ and ‘no fixed trends’. These propositions are not new and have been made in other contexts. Based on a literature review of vulnerability and resilience in the global environmental change area, I elaborate on how these propositions are not adequately accommodated, in particular in relation to ideas of biophysical and social vulnerability, specified versus general resilience, and assignments of desired trend direction (increasing resilience or decreasing vulnerability). I conclude that irrespective of the concept label, characterisations and assessments of ecosystems and their attendant change are inescapably dependent on values. |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:een:eenhrr:1082&r=hpe |
| By: | Pissarides, Christopher A. (London School of Economics) |
| Abstract: | I was born in Nicosia, Cyprus, on 20 February 1948. My father Antonios was born in the village of Agros, in the Troodos mountains, a village in a valley surrounded by mountains on three sides and with an opening to the south overlooking in the distance the bay of Limassol. He was one of seven children, and at the age of ten he was taken out of school and sent to Nicosia to work as a shop assistant for his uncle. He lived and worked with his uncle’s family until his twenties, when he was able to open his own shop, selling materials for making clothes and other items for the home. His business flourished when we were growing up but late in his life economic development and cheap imports made his trade obsolete. |
| Keywords: | Search frictions; |
| JEL: | E24 J64 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ris:nobelp:2010_006&r=hpe |
| By: | Marisa Faggini (Department of Economics and Statistics, University of Salerno) |
| Abstract: | To show that a mathematical model exhibits chaotic behaviour does not prove that chaos is also present in the corresponding data. To convincingly show that a system behaves chaotically, chaos has to be identified directly from the data. From an empirical point of view, it is difficult to distinguish between fluctuations provoked by random shocks and endogenous fluctuations determined by the nonlinear nature of the relation between economic aggregates. For this purpose, chaos tests test are developed to investigate the basic features of chaotic phenomena: nonlinearity, fractal attractor, and sensitivity to initial conditions. The aim of the paper is not to review the large body of work concerning nonlinear time series analysis in economics, about which much has been written, but rather to focus on the new techniques developed to detect chaotic behaviours in the data. More specifically, our attention will be devoted to reviewing the results reached by the application of these techniques to economic and financial time series and to understand why chaos theory, after a period of growing interest, appears now not to be such an interesting and promising research area. |
| Keywords: | Economic dynamics, nonlinearity, tests for chaos, chaos |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:tur:wpaper:25&r=hpe |
| By: | James L. Butkiewicz (Department of Economics,University of Delaware) |
| Abstract: | While federal financial rescues have become a common response to crises, federal provision of finance was not one of the original powers of the federal government. One man, Eugene Meyer, is largely responsible for the origin of federal financial rescues, through both the War Finance Corporation and Reconstruction Finance Corporation. Meyer learned laissez faire economics from William Graham Sumner at Yale. However, German economist Adolph Wagner’s state-socialism philosophy heavily influenced Meyer’s thinking, and Meyer developed an interventionist philosophy. Serving in key government positions, Meyer put his beliefs into practice. These channels of influence and the resulting policies are examined. |
| Keywords: | Financial rescues; War Finance Corporation; Reconstruction Finance Corporation. |
| JEL: | B N |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dlw:wpaper:11-19.&r=hpe |
| By: | Luis Carvalho (Faculdade de Economia, Universidade do Porto); Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto; OBEGEF) |
| Abstract: | Despite the fact that a very significant proportion of the human population is living with financial difficulties and other constraints typical of poverty, scientific studies in the areas of Economics and especially in International Economics that address the issue of poverty and of poor countries are very few. Using bibliometric techniques, we measured the attention paid by authors from the field of International Economics to poverty and poor countries. To this end, we sorted and analyzed all articles published in the most important journal in the field, the Journal of International Economics (JIE) over the last forty years. Evidence shows that the authors who have published articles in the JIE have mostly developed studies focused on ‘Meso (industry, region) and microeconomic policies and issues of ‘International Trade’ and ‘International Finances’, and are usually of the ‘Formal’ and ‘Formal and Empirical’ types, where the topic ‘Poverty’ is very marginal (only 13 articles published in the JIE, less than 1% of the total, address this matter in any of its dimensions). Furthermore, in the more empirical articles, no country among those included in the group ‘Less Developed Countries’ deserved particular attention. The neglect of poverty and of the poor contrasts (and is related to) with the significant weight of articles that make use of formalization (more than 80%). Despite the trend for a decrease in exclusively ‘Formal’ articles, without any applied/empirical component, the (still) excessive focus on ‘mathematical’ accuracy (i.e., formalization), and the concomitant limited capacity to deal with the (social) problems of the real world, is an effective challenge to authors in the field of international economics and, in particular, to those who publish in the JIE, which must be overcome if we do not want international economics to become a “cyborg” science. |
| Keywords: | International Economics; Poor Countries; Poverty; Bibliometrics |
| JEL: | I39 F00 C89 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:425&r=hpe |
| By: | Balgah, Roland Azibo; Buchenrieder, Gertrud |
| Abstract: | Irving Fisher's theory on time preference in the 1930s arguably influenced the analysis of agents' current behavior with respect to future outcomes. By suggesting linear discount rates implying rational and self-interested motives of agents, Fisher substantiated neoclassical economic thinking. However, Fisher's notion of time preference, the choice between present and future enjoyment that actually integrates a psychological discounting component has not received similar attention in the scholarly literature. This paper aims at closing this gap. It empirically examines agent behavior under uncertain conditions culminating from natural shocks, and differentiates the psychic from the physical component. To empirically test Fisher's notion of time preference, we analyze disaster households from the 1986 Lake Nyos natural shock in rural Cameroon. We look at differences in incomes for impatient households, who illegally moved back to the disaster area and more patient and stationary households in official resettlement camps. Results show that, contrary to Fisher's contention, wealth is positively correlated with impatience. Households in the disaster zone display higher incomes than stationary ones. This finding assumes that differences in incomes existed before the movement. The results lead us to conclude that Irving Fisher's theory is only partially relevant in explaining agent behavior under conditions of risk and uncertainty. Partiality is attributed by the finding that impatience was rather positively correlated with income, with the exception of social capital. The results lead us to conclude that Irving Fisher's theory is only partially relevant in explaining agent behavior under conditions of risk and uncertainty. |
| Keywords: | Risks, uncertainty, agent behavior, Fisher, time preference, Cameroon, Risk and Uncertainty, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaae11:114214&r=hpe |
| By: | Gabriel Galvez-Behar (IRHiS - Institut de Recherches Historiques du Septentrion - CNRS : UMR8529 - Université Charles de Gaulle - Lille III) |
| Abstract: | Dès le XIXe siècle, les questions relatives à l'appropriation économique des découvertes étaient au cœur de certaines réflexions juridiques et de certaines pratiques des savants eux-mêmes. Point de départ d'un projet de plus grande ampleur, cette communication s'attache à analyser certains rapports entretenus entre les savants et la propriété intellectuelle. L'analyse des controverses relatives au droit de priorité laisse apparaître que ces dernières étaient motivées à la fois par des considérations propres au développement des connaissances et par la volonté de voir le travail des savants reconnus. La prétention à cette reconnaissance s'appuyant sur des arguments semblables à ceux qui légitiment au même moment la propriété intellectuelle, les deux autres parties de cette communication sont consacrées aux usages du droit d'auteur et du brevet d'invention par les savants. |
| Keywords: | Edition scientifique; Propriété intellectuelle; Science ; Université |
| Date: | 2010–11–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00628341&r=hpe |
| By: | ZHOU, Ge |
| Abstract: | This paper explores the existence of rational bubbles in the pricing of an asset that pays no dividend. I find that when "the spirit of capitalism" is introduced into a growth model, rational bubbles do exist provided that the marginal benefit from holding wealth is nontrivial relative to the marginal utility of consumption as time goes to infinity. I use phase diagrams to discuss the property of the bubbly equilibrium and I use two examples to describe the bubbly equilibrium trajectory explicitly and more intuitively. Moreover, I show that a stochastic bubble, which bursts with an exogenous probability, could exist. This could provide a simple theoretical foundation to explore economic implications of the collapse of bubbles. |
| Keywords: | bubbles; the spirit of capitalism; growth |
| JEL: | E2 E44 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:33988&r=hpe |
| By: | Siamond, Peter A. (Massachusetts Institute of Technology) |
| Abstract: | My grandparents immigrated to the U.S. around the turn of the last century. My mother’s parents and six older siblings came from Poland. My father’s parents met in New York, she having come from Russia and he from Romania. My parents, both born in 1908, grew up in New York and never lived outside the metropolitan area. Both finished high school and went to work, my father studying at Brooklyn Law School at night while selling shoes during the day. When they married in 1929, my mother was earning $15 a week as a bookkeeper and my father, $5 a week as a novice lawyer. |
| Keywords: | Search frictions; |
| JEL: | E24 J64 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ris:nobelp:2010_004&r=hpe |
| By: | Katia Béguin (IDHE - Institutions et Dynamiques Historiques de l'Economie - CNRS : UMR8533 - Université Panthéon-Sorbonne - Paris I - Université Paris VIII Vincennes-Saint Denis - Université de Paris X - Nanterre - École normale supérieure de Cachan - ENS Cachan, modernité et révolution - EA127 - centre de recherche en histoire moderne - Université Panthéon-Sorbonne - Paris I : EA127); Pierre-Charles Pradier (SAMM - Statistique, Analyse et Modélisation Multidisciplinaire (SAmos-Marin Mersenne) - Université Panthéon-Sorbonne - Paris I) |
| Abstract: | La course à l'abime financier de la monarchie française d'Ancien Régime, qui s'est soldée par la convocation des États Généraux de 1789, en raison de la dérobade finale des prêteurs convaincus de l'imminence du défaut souverain, est un objet d'interrogations déjà ancien. La fin de cette histoire a puissamment influé sur la manière de l'interpréter, du fait de la propension des révolutionnaires à stigmatiser " l'imbécilité de [l'] ancien gouvernement ". Elle l'a été aussi à cause du parallèle qui s'est imposé d'emblée avec l'Angleterre rivale, opposée à la France dans toutes les guerres depuis le dernier quart du XVIIe siècle et qui l'a défaite sur les mers comme sur le terrain de la solidité financière. Un point central des controverses est la bifurcation qui a conduit la France à tourner le dos à l'instrument d'emprunt le moins coûteux, la rente perpétuelle, dont elle s'était dotée dès 1522 avec la création des rentes sur l'Hôtel de Ville, pour aller vers les rentes viagères qui ont entraîné les finances de la monarchie vers l'impasse au dix-huitième siècle. On montre comment, en amont de la faillite de Law qui fait écran à la compréhension du temps long, les problèmes financiers du siècle des Lumières étaient déterminés par l'expérience du Grand Siècle. |
| Keywords: | dette souveraine ; france ; louis xiv ; dix-septième siècle ; rentes sur l'hôtel de ville |
| Date: | 2011–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00623931&r=hpe |
| By: | Kaplan, Todd (Department of Economics, University of Haifa); Ruffle, Bradley (Department of Economics, Ben-Gurion University) |
| Abstract: | We introduce a two-player, binary-choice game in which both players have a privately known incentive to enter, yet the combined surplus is highest if only one enters. Repetition of this game admits two distinct ways to cooperate: turn taking and cutoffs, which rely on the player's private value to entry. A series of experiments highlights the role of private information in determining which mode players adopt. If an individual's entry values vary little (e.g., mundane tasks), taking turns is likely; if these potential values are diverse (e.g., difficult tasks that differentiate individuals by skill or preferences), cutoff cooperation emerges. |
| JEL: | C90 Z13 |
| Date: | 2011–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:haf:huedwp:wp201105&r=hpe |
| By: | Mortensen, Dale T. (Northwestern University) |
| Abstract: | As the children of immigrants, my parents were raised in Scandinavian Minnesota. My mother, Verna Ecklund, was a university student for only one year but my father, Thomas Peter Mortensen, graduated from the School of Forestry at the University of Minnesota in 1936. They were married shortly after and moved to Enterprise, Oregon, where I was born in 1939. Enterprise, located in the far northeastern corner of the state, was in cattle ranching country surrounded by one of the most beautiful mountain ranges in the U.S. In these mountains, my father began his career as a lookout officer for the U.S. Forest Service. In the war years, they migrated further west to the Portland area where Dad help build Liberty ships in Mr. Kaiser’s ship yards and Mom provided day care for the children of Rosy the Riveter. After the war, the family, which now included my brother Arne born in 1942, moved to the Hood River Valley 60 miles east of Portland where again my father returned to the practice of forestry. There my brothers and I, who included Irving born in 1947, were raised. |
| Keywords: | Search frictions; |
| JEL: | E24 J64 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ris:nobelp:2010_005&r=hpe |
| By: | Katerina Sherstyuk (Department of Economics, University of Hawaii at Manoa); Nori Tarui (Department of Economics, University of Hawaii at Manoa); Majah-Leah Ravago (Department of Economics, University of Hawaii at Manoa); Tatsuyoshi Saijo (Department of Economics, Osaka University) |
| Abstract: | We consider payment schemes in experiments that model infinite-horizon games by using random termination. We compare paying subjects cumulatively for all periods of the game; with paying subjects for the last period only; with paying for one of the periods, chosen randomly. Theoretically, assuming expected utility maximization and risk neutrality, both the cumulative and the last-period payment schemes induce preferences that are equivalent to maximizing the discounted sum of utilities. The last-period payment is also robust under different attitudes towards risk. In comparison, paying subjects for one of the periods chosen randomly creates a present-period bias. Experimentally, we find that the cumulative payment appears the best in inducing long-sighted behavior. |
| Keywords: | economic experiments; infinite-horizon games; random termination |
| JEL: | C90 C73 |
| Date: | 2011–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:201102&r=hpe |
| By: | Wieland Mueller; Fangfang Tan |
| Abstract: | Previous experimental results on one-shot sequential two-player games show that group de- cisions are closer to the subgame-perfect Nash equilbirum than individual decisions. We extend the analysis of inter-group versus inter-individual decision making to a Stackelberg market game, by running both one-shot and repeated markets. Whereas in the one-shot markets we ?nd no signi?cant di¤erences in the behavior of groups and individuals, we ?nd that the behavior of groups is further away from the subgame-perfect equilibrium of the stage game than that of individuals. To a large extent, this result is independent of the method of eliciting choices (sequential or strategy method) and the method used to account for observed ?rst- and second- mover behavior. We provide evidence on followers?response functions and electronic chats to o¤er an explanation for the di¤erential e¤ect that the time horizon of interaction has on the extent of individual and group players?(non)conformity with subgame perfectness. |
| JEL: | C72 C92 L13 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:vie:viennp:1111&r=hpe |
| By: | Catherine Figuière (CREG - Centre de recherche en économie de Grenoble - Université Pierre Mendès-France - Grenoble II : EA4625); Michel Rocca (CREG - Centre de recherche en économie de Grenoble - Université Pierre Mendès-France - Grenoble II : EA4625) |
| Abstract: | Cette communication a pour objectif de rendre compte d'une expérimentation menée à l'Université des Sciences Sociales de Grenoble dans le cadre d'une formation en économie au niveau Master (1 et 2) dans le domaine de l'éducation en vue du développement durable. La carte des formations permet de suivre de nombreux cours sur le développement durable (DD) en Master 1. De plus, les étudiants peuvent choisir le séminaire (66h/an + mémoire) qui porte sur "DD et stratégie d'entreprise" afin de s'approprier les fondamentaux, tant dans le champ du développement durable, que de la stratégie d'entreprise dans ce domaine. Néanmoins, tout en souhaitant conserver leur orientation DD, de nombreux étudiants choisissent le Master 2 pro "Expertise socio-économique et conduite du changement organisationnel" alors qu'il n'aborde pas explicitement la question du DD. Il est en effet davantage fondé sur un apprentissage à la conduite du changement et forme aux méthodes (participatives notamment) et aux outils de l'expertise pour conduire des stratégies de changement en contexte de mutation, indispensables pour "faire" du DD. Cette contribution souligne la pertinence de ce "bricolage", qui répond aux attentes des employeurs soucieux de développer des "pratiques durables" dans leur organisation, en attestent les trajectoires professionnelles des jeunes diplômés. |
| Keywords: | développement durable ; économiste ; formation initiale ; métier ; enseignement supérieur ; université ; Master ; France ; Grenoble |
| Date: | 2011–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00628843&r=hpe |
| By: | Mehmet Y. Gurdal; Ayca Ozdogan; Ismail Saglam |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:tob:wpaper:1106&r=hpe |
| By: | Ashima Goyal (Indira Gandhi Institute of Development Research) |
| Abstract: | An SIIO paradigm, based on structure and ideas that become engraved in institutions and affect outcomes, is developed to examine and assesses monetary policy in India after independence. Narrative history, data analysis, and reporting of research demonstrate the dialectic between ideas and structure. Exogenous supply shocks are used to identify policy shocks and isolate their effects. It turns out policy was sometimes exceedingly tight when the common understanding was of a large monetary overhang. Fiscal dominance made policy procyclical. But the three factors that cause a loss of monetary autonomy-governments, markets and openness-are moderating each other. Markets moderate fiscal profligacy and global crises moderate markets and openness. Greater current congruence between ideas and structure is improving institutions and contributing to India's better performance. |
| Keywords: | Monetary policy history, Structure, Ideas, Institutions, Outcomes, India |
| JEL: | E42 E5 E58 E63 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:ind:igiwpp:2011-018&r=hpe |
| By: | Eric Chancellier (Maître de conférences en sciences économiques, Université de Metz) |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:afc:wpaper:11-11&r=hpe |