nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2013‒09‒06
five papers chosen by
Erik Thomson
University of Manitoba

  1. "Keynes's Employment Function and the Gratuitous Phillips Curve Disaster" By Egmont Kakarot-Handtke
  2. Correlated Equilibria and Communication Equilibria in All-pay Auctions By Gregory Pavlov
  3. Does economic prosperity bring about a happier society? Empirical remarks on the Easterlin Paradox debate By Beja Jr., Edsel
  4. Measuring capabilities with random scale models. Women’s freedom of movement By Andreassen, Leif; Dagsvik, John; Di Tommaso, Maria Laura
  5. The new economics of the business case for sustainability By Michele Pinelli

  1. By: Egmont Kakarot-Handtke
    Abstract: Keynes had many plausible things to say about unemployment and its causes. His "mercurial mind," though, relied on intuition, which means that he could not strictly prove his hypotheses. This explains why Keynes's ideas immediately invited bastardizations. One of them, the Phillips curve synthesis, turned out to be fatal. This paper identifies Keynes's undifferentiated employment function as a sore spot. It is replaced by the structural employment function, which also supersedes the bastard Phillips curve. The paper demonstrates in a formal and rigorous manner why there is no trade-off between price inflation and unemployment.
    Keywords: New Framework of Concepts; Structure-centric; Axiom Set; Say's Regime; Keynes's Regime; Market Clearing; Full Employment; Product Price Flexibility; Intertemporal Budget Balancing; Multiplier; Trade-Off; Price Inflation; Wage Inflation
    JEL: E12 E24
    Date: 2013–08
  2. By: Gregory Pavlov (University of Western Ontario)
    Abstract: We study cheap-talk pre-play communication in the static all-pay auctions. For the case of two bidders, all correlated and communication equilibria are payoff equivalent to the Nash equilibrium if there is no reserve price, or if it is commonly known that one bidder has a strictly higher value. Hence, in such environments the Nash equilibrium predictions are robust to preplay communication between the bidders. If there are three or more symmetric bidders, or two symmetric bidders and a positive reserve price, then there may exist correlated and communication equilibria such that the bidders’ payoffs are higher than in the Nash equilibrium. In these cases, pre-play cheap talk may affect the outcomes of the game, since the bidders have an incentive to coordinate on such equilibria.
    Keywords: Communication; Collusion; All-pay auctions
    JEL: C72 D44 D82 D83 L41
    Date: 2013
  3. By: Beja Jr., Edsel
    Abstract: Empirical analysis confirms the Easterlin Paradox: there is indeed a statistically significant and positive, albeit very small, relationship between economic growth and happiness. Notwithstanding a conclusion based on statistical significance, economic analysis of the results, on the other hand, still affirms the Easterlin Paradox: there is little economic significance in a very small estimate of the relationship between economic growth and happiness. An argument can also be forwarded that the increase in happiness is not an automatic outcome of economic growth because happiness is more than about income.
    Keywords: Easterlin Paradox; economic growth; happiness; time
    JEL: A2 C4 I3 O4
    Date: 2013–09–02
  4. By: Andreassen, Leif; Dagsvik, John; Di Tommaso, Maria Laura (University of Turin)
    Abstract: Sen’s capability approach distinguishes between what people are free to do and to be (their ‘capabilities’) and what they do and who they are (their ‘functionings’). In the capability approach,individuals’ well-being is evaluated not only in terms of achieved functionings, but also in terms of the freedom to choose between different functionings. I t implies that individuals with the same observed functionings may have different well-being because their choice sets (i.e. capabilities) are different. The measurement of capabilities is difficult because they are not observed. In this paper, we measure the capability of Italian women to move freely even if we only observe the realized choices. In order to distinguish between the latent capabilities of movement and the observed functionings, we adopt a new methodology based on the theory of random scale models. The data set is selected from a domestic violence survey of 25,000 Italian women for year 20 06. We demonstrate that such models can offer a suitable framework for measuring well-being freedom and therefore capabilities. In particular, we find out that the percentage of women who are predicted to be restricted in their freedom of movement is about 25% . Moreover, if all women were unconstrained, 16.4 percent of them would choose to do more activities, i.e to have more freedom of movement.
    Date: 2013–07
  5. By: Michele Pinelli (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: This paper joins the debate on businessÕ role in the implementation of sustainable development and argues that firms are beginning to run more sustainable practices as these are becoming increasingly profitable. It is also argued that such evolution of the economics of social environmental performance is the result of a three stage dynamics which involves consumer awareness, industrial policies, new cost structures and stakeholdersÕ pressure. Moreover, it is also considered that such a phenomenon implies that corporations can be of huge help to regulations in the implementation of sustainability. Finally, by running analyses of the relevant literature on the business case for sustainability, this paper reconciles the mixed and inconclusive results which the academic research on the economic rationale of sustainability has always produced.
    Keywords: corporate social responsibility, sustainable development, social impact, environment, sustainability.
    JEL: M14 M21
    Date: 2013–09

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