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on History and Philosophy of Economics |
| By: | Scott Scheall |
| Abstract: | The present essay investigates F.A. Hayek’s epistemology and his methodology of sciences of complex phenomena for implications relevant to an explanation of Hayek’s own so- called “epistemic turn.” The thesis defended here is that Hayek’s dissatisfaction with his technical economics – in particular, his business cycle project – prompted, in keeping with his evolutionary theory of belief revision, the develo pment of an approach less susceptible to the same disappointment. |
| Keywords: | Hayek, epistemic turn, methodology, complex phenomena, explanation of the principle |
| JEL: | B2 B25 B3 B31 B4 B41 B53 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hec:heccee:2014-4&r=hpe |
| By: | Robert W. Dimand |
| Abstract: | This paper examines the relationship of the monetary economics of James Tobin to modern monetary theory, which has diverged in many ways from the directions taken by Tobin and his associates (for example, moving away from multi-asset models of financial market equilibrium and from monetary models of long-run economic growth) but which has also built upon aspects of his work (e.g., the use of simulation and calibration in his work on inter-termporal consumption decisions). Particular attention will be paid to Tobin's unpublished series of three Gaston Eyskens Lectures at Leuven on Neo-Keynesian Monetary Theory: A Restatement and Defense, and the paper draws on my forthcoming volume of Tobin for Palgrave Macmillan's series on Great Thinkers in Economics. |
| Keywords: | James Tobin, modern monetary theory, microeconomic foundations, Keynesian economics, corridor of stability |
| JEL: | B22 B31 E12 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hec:heccee:2014-5&r=hpe |
| By: | Kukushkin, Nikolai S. |
| Abstract: | A rather general class of strategic games is described where the coalition improvements are acyclic and hence strong equilibria exist: The players derive their utilities from the use of certain "facilities"; all players using a facility extract the same amount of "local utility" therefrom, which amount depends both on the set of users and on their actions, and is decreasing in the set of users; the "ultimate" utility of each player is the minimum of the local utilities at all relevant facilities. Two important subclasses are "games with structured utilities," basic properties of which were discovered in 1970s and 1980s, and "bottleneck congestion games," which attracted researchers' attention quite recently. The former games are representative in the sense that every game from the whole class is isomorphic to one of them. The necessity of the minimum aggregation for the "persistent" existence of strong equilibria, actually, just Pareto optimal Nash equilibria, is established. |
| Keywords: | Strong equilibrium; Weakest-link aggregation; Coalition improvement path; Congestion game; Game with structured utilities |
| JEL: | C72 |
| Date: | 2014–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55499&r=hpe |
| By: | Julia V. Ivanova (National Research University Higher School of Economics) |
| Abstract: | The article deals with the epistemological background of the early modern theories of sociability: taking as a starting point the ‘prudential theorems’ from the sixth chapter of Hobbes’ Leviathan, the author examines in consecutive order the Cartesian foundations of sociability in Samuel Pufendorf’s theory of the natural right, the sensualist scienza del commercio of Celestino Galiani, and the refutation of both Cartesian ‘hypothetical metaphysics’ and ‘politics of merchants’ on the grounds of ‘practical Platonism’ by Paolo Mattia Doria. |
| Keywords: | Th. Hobbes, natural right, political Platonism, commercial republicanism, political Cartesianism, scienza nuova |
| JEL: | Z |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:51hum2014&r=hpe |
| By: | Alexander J. Gill |
| Abstract: | Ben Bernanke researched monetary policy for over 25 years prior to becoming a policymaker, and his two-term career as Chairman of the Federal Reserve featured a severe recession coupled with a nancial crisis, a chief subject of Bernanke's research. His reaction to economic events is noteworthy in its originality and breadth, but its intellectual underpinnings are, with a few exceptions discussed in the paper, not without written precedent. This paper will summarize and connect Bernanke's research and policymaking and show that the two are closely aligned. |
| Keywords: | Economic thought, history of economic thought, central banking, Fed, Bernanke |
| JEL: | B31 E58 E65 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hec:heccee:2014-6&r=hpe |
| By: | Meacci, Ferdinando |
| Abstract: | The notion of wealth appears and reappears in Ricardo’s works within three different sets of arguments. One is concerned with the distinction between wealth and value, another with the causes of the progress of wealth, the third with the consequences of this progress on the trend of natural wages, profit and rent. Ricardo deals with these subjects sometimes in agreement and sometimes in disagreement with Smith. The agreement reaches a climax on the notion of wealth as such as well as on the causes of its progress while the disagreement ramifies into the foundations both of that distinction and of the resulting conclusions on the trend of natural wages, profits and rent. This entry will focus on the details of Ricardo’s agreements and disagreements with Smith on the subject of wealth as distinct from the close subject of value. We will prove that, except for some minor differences, Ricardo’s notion of wealth is the same as Smith’s. As such, it is used by Ricardo as synonymous with the notion of the “annual produce of the land and labour”, or of the “necessaries, conveniences and amusements of human life”, available in a country in a period. This coincidence permeates Ricardo’s theory of wealth in so far as this theory is focused on the progress, as distinct from the distribution, of wealth. Thus, starting from a similar theory of wealth but from a very different theory of value, Ricardo develops some of his criticisms of Adam Smith’s theory on the basis of his distinction between value and riches (wealth) as well as of his exclusive notion of rent as a price paid to the owner of land “for the use of its original and indestructible powers”. These criticisms are consistent with Ricardo’s starting point on value as labour embodied and are in contrast with Smith’s different starting point on value as labour commanded. A draft of this paper has been submittted for publication in the Elgar Companion to David Ricardo, edited by H. Kurz and N. Salvadori, E. Elgar, forthcoming |
| Keywords: | Wealth, Value, Rent, Ricardo, Smith |
| JEL: | B1 B12 B3 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55496&r=hpe |
| By: | Homburg, Stefan |
| Abstract: | This paper is about 'Capital in the Twenty-first Century' by Thomas Piketty. It identifies his central macroeconomic claims and examines them, arguing that the contentions are theoretically and empirically unwarranted. |
| Keywords: | Capital, wealth, income distribution, taxes |
| JEL: | D31 E H24 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-530&r=hpe |
| By: | John D.Singleton |
| Abstract: | Milton Friedman was the leading public proponent for an all-volunteer military. This chapter traces his influence upon the national debate over conscription, which culminated in Friedman’s service on the Gates Commission. Friedman’s argument relied on economic reasoning and appeal to cost-benefit analysis. Central was his conjecture that the social cost of the draft, which imposed an “implicit tax” on draftees, exceeded that of the all-volunteer military. This was supported by the work of Walter Oi. Friedman’s position attracted support both within the conservative movement and from across the political landscape, allowing Friedman to form coalitions with prominent individuals otherwise in disagreement with his politics. With the social context ripened by the draft and the Vietnam War, Friedman’s argument echoed in influential circles, reaching policymakers in Washington and Martin Anderson on the Nixon advising team. The successful institution of the all-volunteer armed force reflected Friedman’s intellectual entrepreneurship. |
| Keywords: | Military draft, conscription, all-volunteer armed force, Gates Commission, Vietnam War, implicit tax, Walter Oi, Martin Anderson |
| JEL: | B20 B31 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hec:heccee:2014-7&r=hpe |
| By: | Gerardo Serra |
| Abstract: | The paper presents the history of the contribution of two American economists to a radical cause: the establishment of a socialist and politically united Africa. The setting is 1960s Ghana which under Kwame Nkrumah, the man who led the country to independence from British colonial rule, emerged as the epicentre of this Pan-African vision. Ann Seidman and Reginald H. Green became, as members of the research team on ‘The Economics of African Unity’ established at the University of Ghana in 1963, the most sophisticated and systematic advocates of Nkrumah’s economic argument for continental planning and political union. The paper argues that Green and Seidman’s support for Pan- Africanism was rooted in an attempt to question radically the applicability of mainstream economic theory to African conditions, and find an alternative framework to conceptualise African trade, institutions and economic integration. Ultimately the vision associated with Nkrumah and economists like Green and Seidman failed to gain any significant political legitimacy and ended in 1966 with Nkrumah’s overthrow. Yet, it is argued that the story of the ‘economics of African unity’ is a useful departure point to deepen our understanding of the relationship between economics and political imagination in postcolonial Africa. |
| Keywords: | Ann Seidman, Reginald H. Green, Ghan a, Pan-Africanism, Kwame Nkrumahn |
| JEL: | B24 B29 B31 P41 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hec:heccee:2014-8&r=hpe |
| By: | Pintér, Miklós |
| Abstract: | Meier (2012) gave a "mathematical logic foundation" of the purely measurable universal type space (Heifetz and Samet, 1998). The mathematical logic foundation, however, discloses an inconsistency in the type space literature: a finitary language is used for the belief hierarchies and an infinitary language is used for the beliefs. In this paper we propose an epistemic model to fix the inconsistency above. We show that in this new model the universal knowledgebelief space exists, is complete and encompasses all belief hierarchies. Moreover, by examples we demonstrate that in this model the players can agree to disagree Aumann (1976)'s result does not hold, and Aumann and Brandenburger (1995)'s conditions are not sufficient for Nash equilibrium. However, we show that if we substitute selfevidence (Osborne and Rubinstein, 1994) for common knowledge, then we get at that both Aumann (1976)'s and Aumann and Brandenburger (1995)'s results hold. |
| Keywords: | Incomplete information game, Agreeing to disagree, Nash equilibrium, Epistemic game theory, Knowledge-belief space, Belief hierarchy, Common knowledge, Self-evidence, Nash equilibrium |
| JEL: | C70 C72 D80 D82 D83 |
| Date: | 2014–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:cvh:coecwp:1530&r=hpe |
| By: | Gaëtan Fournier (Centre d'Economie de la Sorbonne); Marco Scarsini (Dipartimento di Economia e Finanza - LUISS, Roma) |
| Abstract: | We consider a Hotelling game where a finite number of retailers choose a location, given that their potential customers are distributed on a network. Retailers do not compete on price but only on location, therefore each consumer shops at the closest store. We show that when the number of retailers is large enough, the game admits a pure Nash equilibrium and we construct it. We then compare the equilibrium cost bore by the consumers with the cost that could be achieved if the retailers followed the dictate of a benevolent planner. We perform this comparison in term of the induced price of anarchy, i.e., the ratio of the worst equilibrium cost and the optimal cost, and the induced price of stability, i.e., the ratio of the best equilibrium cost and the optimal cost. We show that, asymptotically in the number of retailers, these ratios are two and one, respectively. |
| Keywords: | Induced price of anarchy, induced price of stability, location games on networks, pure equilibria, large games. |
| JEL: | C72 R30 R39 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:14033&r=hpe |
| By: | Bruno S. Frey; Lasse Steiner |
| Abstract: | This paper discusses and proposes random selection as a component in decision-making in society. Random procedures have played a significant role in history, especially in classical Greece and the medieval city-states of Italy. We examine the important positive features of decisions by random mechanisms. Random processes allow representativeness with respect to individuals and groups. They significantly reduce opportunities to influence political decisions by means of bribery and corruption and decrease the large expenses associated with today’s democratic election campaigns. Random mechanisms can be applied fruitfully to a wide range of fields, including politics, the judiciary, the economy, science and the cultural sector. However, it is important that random selection processes are embedded in appropriately designed institutions. |
| Keywords: | Random selection; lot; democracy; representativeness; corruption |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2014-09&r=hpe |
| By: | Gebhard Kirchg�ssner |
| Abstract: | Whenever the economic model of behaviour is to be applied, the utility function has � at least somewhat � to be specified. Buchanan generally prefers to apply a rather narrow version. However, he acknowledges that it is hardly possible to explain actual behaviour of individuals with such a version, so in performing empirical economic research he accepts that we have to use a more open one. He also ac knowledges that people might be have differently in markets than they do in politics; other-regarding beha viour might be more pronounced in politics as compared to markets. Which version should be applied in constitutional economics, however, is a different question. Follo wing a long ongoing tradition in political philosophy, he insists that � for methodological reasons � the narrow version is the correct one to be applied; this is the way to compare different sets of rules when analysing the possible abuse of power by rulers in order to prevent it as far as possible. The same should also be taken into account when analysing the process of policy advice . The narrow Homo Oeconomicus model should, however, not be misunderstood as a normative prescription. |
| Keywords: | Homo Oeconomicus; Economic Model of Behaviour; Empirical Public Choice; Constitutional Economics; Self-Interest; Policy Advice |
| JEL: | B41 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2014-01&r=hpe |
| By: | Powdthavee, Nattavudh (London School of Economics); Stutzer, Alois (University of Basel) |
| Abstract: | Are people condemned to an inherent level of experienced happiness? A review of the economic research on subjective well-being gives reason to the assessment that happiness can change. First, empirical findings clearly indicate that people are not indifferent to adverse living conditions when reporting their subjective well-being as observed for limited freedom of choice, low levels of democratization, unemployment, low income, etc. Second, considering people's adaptation to life events and (external) conditions reveals substantial heterogeneity in the speed as well as the degree of reversion. Together, the evidence suggests that reported subjective well-being is a valuable complementary source of information about human well-being and the phenomenon of adaptation. Many challenges, of course, remain. First, we are only at the beginning of understanding variation in the process of adaptation. The modeling of happiness over the life course promises a productive perspective. Second, adaptation might well pose a challenge to individual decision-making when people are not good in predicting it. Third, adaptation might have great consequences for public policy and the idea of social welfare maximization depending on how fast and slow adapting people are treated. |
| Keywords: | adaptation, economics and happiness, life course perspective, subjective well-being |
| JEL: | D03 D60 I31 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8131&r=hpe |
| By: | Roine, Jesper (Sockholm Institute of Transition Economies); Waldenström, Daniel (Uppsala Center for Fiscal Studies) |
| Abstract: | This paper reviews the long run developments in the distribution of personal income and wealth. It also discusses suggested explanations for the observed patterns. We try to answer questions such as: What do we know, and how do we know, about the distribution of income and wealth over time? Are there common trends across countries or over the path of development? How do the facts relate to proposed theories about changes in inequality? We present the main inequality trends, in some cases starting as early as in the late eighteenth century, combining previous research with recent findings in the so-called top income literature and new evidence on wealth concentration. The picture that emerges shows that inequality was historically high almost everywhere at the beginning of the twentieth century. In some countries this situation was preceded by increasing concentration, but in most cases inequality seems to have been relatively constant at a high level in the nineteenth century. Over the twentieth century inequality decreased almost everywhere for the first 80 years, largely due to decreasing wealth concentration and decreasing capital incomes in the top of the distribution. Thereafter trends are more divergent across countries and also different across income and wealth distributions. Econometric evidence over the long run suggests that top shares increase in periods of above average growth while democracy and high marginal tax rates are associated with lower top shares. |
| Keywords: | Income inequality; Income distribution; Wealth distribution; Economic history; Top incomes; Welfare state; Taxation |
| JEL: | D31 H20 J30 N30 |
| Date: | 2014–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uufswp:2014_005&r=hpe |