nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2013‒08‒10
nine papers chosen by
Erik Thomson
University of Manitoba

  1. J.M. Keynes, Neoclassical Synthesis, New Neoclassical Synthesis and the Crisis: the Current State of Macroeconomic Theory By Waldo Mendoza
  2. Entwickeln sich wirtschaftswissenschaftliche Forschung und Politikberatung auseinander? Warum engagieren sich nicht mehr ökonomische Spitzenforscher in der Politikberatung? By Haucap, Justus; Mödl, Michael
  3. Liberal Egalitarianism and the Harm Principle By Michele Lombardi; Kahame Miyagishima; Roberto Veneziani
  4. Social Democracy and Distributive Conflict in the UK, 1950-2010 By Carlo V. Fiorio; Simon Mohun; Roberto Veneziani
  5. The Skin In The Game Heuristic for Protection Against Tail Events By Nassim N. Taleb; Constantine Sandis
  6. Relative Injustice Aversion By Moreno-Garrido, Luis José Blas
  7. Take the Money and Run: The Business Enterprise in the Age of Money Manager Capitalism By Jo, Tae-Hee; Henry, John F.
  8. Limits to Reputations By Mehmet Ekmekci; Nuh Dalkiran
  9. Why Is Finance Important? Some Thoughts on Post-Crisis Economics By Yew-Kwang NG

  1. By: Waldo Mendoza (Departamento de Economía - Pontificia Universidad Católica del Perú)
    Abstract: The aim of this paper is to describe chronologically the evolution of macroeconomic theory since the publication of the General Theory of J. M. Keynes in 1936 until the most recent macroeconomic developments motivated by the global economic crisis of 2008-2009.
    Keywords: Teoría Macroeconómica, estado actual de la Macroeconomía, síntesis neoclásica y nueva síntesis neoclásica.
    JEL: B22 E12 E13
    Date: 2013
  2. By: Haucap, Justus; Mödl, Michael
    Abstract: Die mangelnde Relevanz wirtschaftswissenschaftlicher Forschung wird nicht nur in Deutschland und nicht erst seit der Finanz- und Wirtschaftskrise (und dem in Deutschland resultierenden Ökonomenstreit) und nicht nur in Politik und Medien beklagt. So hat z. B. Marc Blaug schon 1997 sein Unbehagen über die Ausrichtung der modernen Ökonomie geäußert: '(...) modern economics is sick; economics has increasingly become an intellectual game played for its own sake and not for its practical consequences' (Blaug 1997, S. 3). Ein Jahrzehnt später hat Gregory Mankiw (2007) diese Kritik, wenn auch mit etwas anderem Zungenschlag, in seiner Auseinandersetzung mit der sog. Freakonomie in seinem Blog wiederholt: '[M]ore young economists today are doing Levitt-style economics and fewer are studying the classic questions of economic policy. That is disconcerting, to a degree. It could be especially problematic twenty years from now, when President Chelsea Clinton looks for an economist to appoint to head the Federal Reserve, and the only thing she can find in the American Economic Association are experts on game shows and sumo wrestling'. (...) --
    Date: 2013
  3. By: Michele Lombardi (University of Glasgow); Kahame Miyagishima (Waseda University); Roberto Veneziani (University of Massachusetts, Amherst)
    Abstract: This paper analyses the implications of classical liberal and libertarian approaches for distributive justice in the context of social welfare orderings. An axiom capturing a liberal non-interfering view of society, named the Weak Harm Principle, is studied, whose roots can be traced back to John Stuart Mill s essay On Liberty. It is shown that liberal views of individual autonomy and freedom can provide consistent foundations for social welfare judgements, in both the finite and the infinite context. In particular, a liberal non-interfering approach can help to adjudicate some fundamental distributive issues relative to intergenerational justice. However, a surprisingly strong and general relation is established between liberal views of individual autonomy and non-interference, and egalitarian principles in the Rawlsian tradition. JEL Categories:
    Date: 2013–05
  4. By: Carlo V. Fiorio (University of Milan); Simon Mohun (Queen Mary University of London); Roberto Veneziani (University of Massachusetts, Amherst)
    Abstract: ln the last three decades, two questions have been central for the Left. ls there a future for electoral socialism and social democracy? And, is it any longer possible to promote a significant redistribution of income in favour of labour? Political and economic events seem to suggest negative answers. ln his influential work, Adam Przeworski suggests that this is an irreversible trend that makes it impossible in the long-run to promote genuinely socialist objectives in capitalist democracies. ln particular, the structural dependence of labour on capital severely constrains feasible income distributions. ln this paper, a detailed quantitative and qualitative analysis of the post-war UK economy is provided which casts doubts on the structural dependence thesis. A short run profit-squeeze mechanism seems to exist, but income shares are more variable than the structural dependence argument suggests, and the power resources available to the two main classes in the economy are among the key determinants of distributive outcomes, different political-economic equilibria corresponding to different configurations of the balance of power between the two classes. JEL Categories:
    Date: 2013–05
  5. By: Nassim N. Taleb; Constantine Sandis
    Abstract: Standard economic theory makes an allowance for the agency problem, but not the compounding of moral hazard in the presence of informational opacity, particularly in what concerns high-impact events in fat tailed domains. But the ancients did; so did many aspects of moral philosophy. We propose a global and morally mandatory heuristic that anyone involved in an action which can possibly generate harm for others, even probabilistically, should be required to be exposed to some damage, regardless of context. While perhaps not sufficient, the heuristic is certainly necessary hence mandatory. It is supposed to counter risk hiding in the tails. We link the rule to various philosophical approaches to ethics and moral luck.
    Date: 2013–08
  6. By: Moreno-Garrido, Luis José Blas (Universidad de Alicante, Departamento de Métodos Cuantitativos y Teoría Económica)
    Abstract: I propose a new utility function based on the relative aversion to injustice to explain why, in classical bargaining games, classical equilibria do not hold when money is not windfall, but it is result of the effort.
    Keywords: Distribution; Equity; Justice; Altruism; Property Rights
    JEL: D30 D63 D64 P14
    Date: 2013–08–02
  7. By: Jo, Tae-Hee; Henry, John F.
    Abstract: Most heterodox theories of the business enterprise base themselves on the Veblenian going concern in which managers pursue the long-run survival and growth of the enterprise, whereas absentee owners are occupied with short-run financial interests. Since Veblen’s era, the capitalist social provisioning process has evolved toward money manager capitalism in a dialectical fashion. At the heart of the transformation are changes in the business enterprise. In this paper, we make a threefold argument. First, while the Veblenian account of a going concern still holds true for many enterprises, more and more of the economy is being directed toward financial concerns. Second, as a consequence, the social provisioning process becomes more unstable and people’s welfare becomes more vulnerable. Third, the concept of a going concern is therefore to be modified in order to put the business enterprise in the context of money manager capitalism.
    Keywords: Thorstein B. Veblen, Hyman P. Minsky, Going Concern, Money Manager Capitalism, Mergers and Acquisitions, Social Provisioning Process
    JEL: B5 D20 G34
    Date: 2013–08–01
  8. By: Mehmet Ekmekci (Northwestern University); Nuh Dalkiran (Bilkent University)
    Abstract: Much of the interest in the adverse selection approach to reputations in repeated games arises from the fact that quite small departures from the complete information model seems to have large effects on the set of equilibrium payoffs. We show that this is not the case in reputation games where a long-run player plays a fixed stage-game against an infinite sequence of short-run players under imperfect public-monitoring. We conclude that in such games, introducing arbitrarily small incomplete information cannot open the possibility of new equilibrium payoffs that are far away from the complete information equilibrium payoff set, even when the long-run player's discount factor is very high but fixed. Our main result implies that the standard reputation results hold true due to a specific order of limits.
    Date: 2013
  9. By: Yew-Kwang NG (Division of Economics, Nanyang Technological University, Singapore 637332, Singapore)
    Abstract: The global financial crisis around 2008 and the subsequent great recession have forced attention on the relevance of economics. In particular, the core of economic theory suggests that money is neutral (affecting only the price level but not real economic variables) and hence finance and financial crises are not very important. This papers shows that this neutrality is based on the unrealistic institutional assumption of perfect competition. Relaxing this alone (without time lags, price rigidities, menu costs, and other frictions) makes money no longer necessarily neutral and hence makes finance and financial crisis much more important. The presence of increasing returns to scale at the firm level and to specialization at the economy level due to the division of labour also makes finance much more important than suggested by traditional economics. It also makes pecuniary external effects possibly of efficiency relevancy. The reasons for these are explained using simple analyses.
    Keywords: Finance; financial crisis; economics; relevance; money.
    JEL: G00 G01 E30 E50 D40
    Date: 2013–05

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