nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2014‒09‒05
eight papers chosen by
Erik Thomson
University of Manitoba

  1. Schumpeter's Idea of a Universal Science By Bögenhold, Dieter
  2. Differential Games with (A)symmetric Players and Heterogeneous Strategies (II) By Benteng Zou
  3. The happiness of economists: Estimating the causal effect of studying economics on subjective well-being By Haucap, Justus; Heimeshoff, Ulrich
  4. Piketty’s Elasticity of Substitution: A Critique By Gregor Semieniuk
  5. Federal Reserve Policy and Bretton Woods By Bordo, Michael D.; Humpage, Owen F.
  6. The Portuguese Law on Social Economy By Deolinda APARÍCIO MEIRA
  7. Monetary Policy and the Maginot Line (With Reference to Jonathan Swift, Neil Irwin, Shakespeare's Portia, Duck Hunting, the Virtues of Nuisance and Paul Volker) By Fisher, Richard W.
  8. Declining Moral Standards and the Role of Law By Sue H. Mialon

  1. By: Bögenhold, Dieter
    Abstract: This paper deals with methodological principles of Schumpeter’s academic writings. Those principles led Schumpeter to create diverse works and were reflected systematically in some of his writings, where Schumpeter emerged as a theorist of science. Besides working on specific topics, Schumpeter dealt systematically with methodological issues in different works. Schumpeter’s History of Economic Analysis, in particular, must be regarded as the one study among his diverse works, which is considered not only his latest but also his most relevant analysis concerning social sciences and the role of economics in relation to sociology, history and other academic branches. The substantial preface of the History of Economic Analysis can be regarded as a manual on how to refer to different academic branches and integrate them into a coherent universal social science, which is far removed from being an autistic, narrow economic science of some modern representation. Although Schumpeter’s History of Economic Analysis has been extensively printed in several editions, the idea is that the preface especially reveals somewhat neglected thoughts in Schumpeterian discourse. While Schumpeter is mostly regarded as a pioneer of evolutionary economics, this paper argues that Schumpeter could also, perhaps primarily, be interpreted as a well-reasoning institutionalist aiming at a universal social science. From today’s point of view, Schumpeter is a truly interdisciplinary theorist.
    Keywords: economics; sociology; Joseph A. Schumpeter; social science; history of economic thought; methodology
    JEL: A14 B31
    Date: 2014–03
  2. By: Benteng Zou (CREA, Université de Luxembourg)
    Abstract: One family of heterogeneous strategies in differential games with (a)symmetric players is developed in which one player adopts an anticipating open-loop strategy and the other adopts a standard Markovian strategy. Via conjecturing principle, the anticipating open-loop strategic player plans his strategy based on the possi- ble updating the rival player may take. These asymmetric strategies frame non- degenerate Markovian Nash Equilibrium, which can be subgame perfect. Except the stationary path, this kind of strategy makes the study of short-run trajectory possible, which usually are not subgame perfect. However, the short-run non- perfection provides very important policy suggestions.
    Keywords: Differential Games, subgame perfect Markovian Nash Equilibrium, Heterogeneous strategy, anticipating open-loop strategy
    JEL: C73 C72
    Date: 2014
  3. By: Haucap, Justus; Heimeshoff, Ulrich
    Abstract: This is the first paper that studies the causal effect of studying economics on subjective well being. Based on a survey among 918 students of economics and other social sciences, we estimate the effects of studying in the different fields on individual life satisfaction. Controling for personal characteristics we apply innovative instrumental variable methods developed in labor and conflict economics. We find a positive relationship between the study of economics and individual well-being. Additionally, we also find that income and future job chances are the most important drivers of happiness for participants of our survey. --
    Keywords: Happiness,Life Satisfaction,Economists,Students,Economics Education
    JEL: A11 A13 I21 I31
    Date: 2014
  4. By: Gregor Semieniuk (New School for Social Research, New York, NY)
    Abstract: This note examines Thomas Piketty’s (2014) explanation and prediction of simultaneously rising capital income ratio and profit share by an elasticity of substitution, σ, greater than one between labor and capital in an aggregate production function. Semieniuk reviews Piketty’s elasticity argument, which relies on a non-standard capital definition. In light of the theory of land rent, he discusses why the non-standard capital definition is problematic for estimating elasticities. For lack of existing results, Semieniuk makes a simple estimate of σ in the class of constant elasticity of substitution functions for Piketty’s data as well as for a subset of his capital measure that comes closer to the standard capital definition. The estimation results cast doubt on Piketty’s hypothesis of a σ greater than one.
    Keywords: Piketty, elasticity of substitution, capital definition, theory of rent, classical political economy, wealth
    Date: 2014–08
  5. By: Bordo, Michael D. (Federal Reserve Bank of Cleveland); Humpage, Owen F. (Federal Reserve Bank of Cleveland)
    Abstract: During the Bretton Woods era, balance-of-payments developments, gold losses, and exchange rate concerns had little influence on Federal Reserve monetary policy, even after 1958 when such issues became critical. The Federal Reserve could largely disregard international considerations because the U.S. Treasury instituted a number of stop-gap devices—the gold pool, the general agreement to borrow, capital restraints, sterilized foreign-exchange operations—to shore up the dollar and Bretton Woods. These, however, gave Federal Reserve policymakers the latitude to focus on domestic objectives and shifted responsibility for international developments to the Treasury. Removing the pressure of international considerations from Federal Reserve policy decisions made it easier for the Federal Reserve to pursue the inflationary policies of the late 1960s and 1970s that ultimately destroyed Bretton Woods. In the end, the Treasury’s stop-gap devices, which were intended to support Bretton Woods, contributed to its demise.
    Keywords: Bretton Woods; Federal Reserve; monetary policy; Taylor rule; U.S. Treasury
    JEL: F31 F33 N1
    Date: 2014–08–27
  6. By: Deolinda APARÍCIO MEIRA (Law Department of the Polytechnic Institute of Oporto/ISCAP/CECEJ, CIRIEC-Portugal, Portugal)
    Abstract: This study is a reflection on the Portuguese Framework Law on Social Economy, highlighting, from a critical point-of-view, its contribution to the explicit institutional and legal recognition of the social economy sector. It does so by defining the concept of social economy and listing the entities engaged in this sector, by defining its guiding principles and the mechanisms for its promotion and encouragement, and also by describing the creation of a tax and competition regime which will take into account its specificities. The setting up of this foundation of the social economy was based on the constitutional principle of protection of the social and co-operative sector, which substantiates the adoption of differentiating solutions in view of the positive discrimination of this sector.
    Keywords: social economy, framework law, guiding principles, social economy entities, legal regulation
    JEL: K29 K40
    Date: 2014–12
  7. By: Fisher, Richard W. (Federal Reserve Bank of Dallas)
    Abstract: Monetary Policy: Debate, Dissent and Discussion with Richard Fisher at the University of Southern California, Annenberg School for Communication and Journalism, Los Angeles, CA, July 16, 2014.
    Date: 2014–07–16
  8. By: Sue H. Mialon
    Abstract: This paper examines how moral rules form in the process of social learning in order to analyze the relationship between legal rules and moral rules. Members of society learn morality from the observed behavior of other members. Their incentive to act morally is influenced by their expectation of other members' moral behavior. The moral standards of a society are built on the outcomes of such interactions over time. We show that moral standards can quickly deteriorate even if the majority of the members have a strong moral sense individually. When insufficient moral sanctions for wrongful actions are observed, the members form a belief that the society's moral standards are lower than what they had expected. Such a belief encourages more wrongful actions and results in less incentive for the members to act morally. As the moral standards decline, moral rules may not be able to regulate behavior. Legal sanctions can prevent such a decline as they offer an objective and time-invariant level of expectation for the enforcement of rules. Hence, morality is less likely to degenerate in the presence of legal rules. We discuss how strong morality can enhance the effectiveness of law enforcement, in turn.
    Date: 2014–08

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