nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2014‒12‒29
twenty-one papers chosen by
Erik Thomson
University of Manitoba

  1. Quakers, coercion and pre-modern growth: why friends’ formal institutions for contract enforcement did not matter for early Atlantic trade expansion By Esther Sahle
  2. La vision du travail chez les premiers jansénistes : Entre spiritualité et politique au coeur du grand siècle By Christophe LAVIALLE; Maxime MENUET
  3. Economics in Times of Crisis. In Search of a New Paradigm By Joanna Dzionek-Kozlowska
  4. Economic Theories in Competition. A New Narrative of the Debate on General Economic Equilibrium Theory in the 1930s By Marchionatti, Roberto; Mornati, Fiorenzo
  5. Onblog Economics Muddle Busting By Kakarot-Handtke, Egmont
  6. Time to Abandon Group Thinking in Economics - Updated By Da Silva, Sergio
  7. An Analysis of J.R. Commons’s Changing Views on the Role of Sovereignty in the Political Economy By Kota Kitagawa
  8. How did we get to where we are now? Reflections on 50 years of macroeconomic and financial econometrics By Wickens, Michael R.
  9. Stability and Cooperative Solution in Stochastic Games By Alessandro Tampieri; Elena M. Parilina
  10. Sraffa’s price equations in light of Garegnani and Pasinetti - The ‘core’ of surplus theories and the ‘natural’ relations of an economic system By Bellino, Enrico
  11. Becoming Applied: The Transformation of Economics after 1970 By Roger Backhouse; Beatrice Cherrier
  12. Quelle méthodologie pour une étude des modèles DSGE ? Suggestions à partir d'un état des lieux des recherches sur la modélisation. By Francesco Sergi
  13. Replications in Economics: A Progress Report By Maren Duvendack; Richard W. Palmer-Jones; W. Robert Reed
  14. Essai sur l’Économie de «l’Égalitarisme Libéral». Une Combinaison Sélective des Travaux de Rawls, Sen et Kolm By Claude Gamel
  15. Essays in applied microeconomics By Bernal Lobato, N.
  16. Equilibrium in risk-sharing games By Michail Anthropelos; Constantinos Kardaras
  17. Dishonesty under Scrutiny By van de Ven, Jeroen; Villeval, Marie Claire
  18. On the origins and main consequences of fiscal illusion. a short tribute to a big Economist: James Buchanan By Vicini, Andrea
  19. The Republic of Open Science - The institution’s Historical Origins and Prospects for Continued Vitality By Paul David
  20. Integrating Uncertainty and Monetary Policy-Making: A Practitioner’s Perspective By Stephen S. Poloz
  21. Economic Growth in the Potterian Economy By Avichai Snir; Daniel Levy

  1. By: Esther Sahle
    Abstract: During the late seventeenth century the Atlantic trade experienced unprecedented growth. The New Institutional Economists attribute this to the emergence of new institutions for property rights enforcement. During this period, Quakers emerged as the region’s most prominent trading community. This paper constitutes the first study of the London Quaker community. In contrast to the literature, claiming that they enjoyed a competitive advantage due to their church’s formal institutions for contract enforcement, this paper argues that Friends’ formal institutions for contract enforcement emerged only after 1750. This constituted a response to contemporary concern about debt.
    Keywords: institutions; Quakers; early modern trade; merchants; religion; Atlantic
    JEL: Z12
    Date: 2014–11
  2. By: Christophe LAVIALLE; Maxime MENUET
    Keywords: , Jansénisme , travail , esprit du capitalisme
    Date: 2014
  3. By: Joanna Dzionek-Kozlowska (University of Lodz, Faculty of Economics and Sociology)
    Abstract: The relationship between the development of economics and economic performance is not reducible to any set of simple rules. Among the historians of economic thought there is even a handful of those who perceive the progress in economics mostly as an outcome of the attempts to solve the problems, inconsistencies and paradoxes within economic theory itself. Seen from this perspective, economic reality has minor (or no) importance. On the other hand, the endeavours to modify a mainstream approach are significantly greater in times of economic downturns. Seeing that economics is in such a state of ‘intellectual ferment’ nowadays, it is worth reconsidering the connection between economics and the economy. Thus the main aim of the paper is to analyse the current state of economic science in relation to the last economic slump. Although it is of course not possible to predict the future trajectories of economic theorising, taking into consideration the nature of the crisis the most feasible and potentially most fruitful areas are indicated.
    Keywords: economic methodology, economics imperialism, economic performance, economic crisis, homo economicus, value judgements
    JEL: B41 B50
    Date: 2014–12
  4. By: Marchionatti, Roberto; Mornati, Fiorenzo (University of Turin)
    Abstract: The paper deals with the debate on the General Economic Equilibrium in the 1930s in Vienna and at the London School of Economics and offers an interpretation of it different from that of the traditional narratives. It interprets the debate as a renewed confrontation between the two different classical methodological paths of research in GEE, the Paretian and the Walrasian ones. What emerges from this examination is a picture of different approaches and theories in competition, in particular on the issue of the relationship between theory and the real world. This was the fundamental issue at stake. Herein lies also the interest in those distant controversies for the current debate in economics.
    Date: 2014–11
  5. By: Kakarot-Handtke, Egmont
    Abstract: The representative economist does not understand the two most important phenomena in the economic universe: profit and income. Because of this economists have nothing to offer in the way of a scientifically founded advice. Therefore, the contributions to economic blogs cannot claim to offer more than personal opinion. Of opinions, though, economics always had plenty. What is needed is knowledge – scientific knowledge, that is. With the outline of the correct economic paradigm at hand it is straightforward to refute obsolete approaches. For this purpose the economics blogs are ideal. A selection of recent comments is reproduced in the present paper.
    Keywords: new framework of concepts; structure-centric; axiom set; economics blogs; dead-ideas-recycling
    JEL: B49 B59
    Date: 2014–12–11
  6. By: Da Silva, Sergio
    Abstract: Group thinking is the notion that natural selection favors what is good for the group or the species, not for the individual. Most mainstream evolutionary biology rejects this idea and natural selection is viewed as working on the individual’s genes to promote their own survival and reproduction. Here I show through a couple of examples how group thinking also pervades economics. I argue that the reason for the mistake relies on the fact that economics fails to ground itself in the underlying knowledge provided by biology. Then I suggest how economics can aspire more than being applied logic and turn into a scientific discipline by placing biology on its basis. Finally, I outline how economics should treat group behavior properly.
    Keywords: Economic methodology, Biological basis of economics, Group thinking, Group behavior
    JEL: B41
    Date: 2014–03–31
  7. By: Kota Kitagawa
    Abstract: This article distills the economic and current significance contained in the political economy of J.R. Commons. It compares descriptions of his three main works that discuss “sovereignty”: A Sociological View of Sovereignty (SVS), Legal Foundations of Capitalism (LFC), and Institutional Economics (IE). Through this comparison, we find that the role of sovereignty in his theory changed dramatically. First, in the period from SVS (1899–1900) to LFC (1924), the theory of sovereignty changes significantly from the standpoint of natural rights, which imply permanence of privileged customs, to “pragmatic philosophy” of the courts, in which laws are relevant to customs at certain times and places. Second, from the manuscripts of IE (1927–1928), sovereignty is defined as comprising part principles, which relate to each other and make up the whole principle, willingness. In other words, Commons views sovereignty as one perspective, which in turn has a high capability of explaining the socioeconomic system. Additional descriptions of IE (1934) derived from its original manuscripts repeatedly emphasize the “power” of economic concerns that are equal to or exceed the power of the state, as well as the importance of the “function” of sovereignty in pragmatic investigations of economic disputes. We distill the economic and current significance of IE. First, the value theory that constructs values institutionally and collectively starts from an analysis of sovereignty and joint evaluations. Second, sovereignty cannot be separated from an analysis of economic transactions. Third, this paper concretely shows elements of a “deliberate space” in which sovereignty and economic interests act in concert. J.R. Commons’s IE sets out specific knowledge on the interface between sovereignty and economic interests, and serves as a useful tool in reconsidering the organ of sovereignty.
    Keywords: J.R. Commons; Institutional Economics; Sovereignty; Supreme Court; Commission
    JEL: B11
    Date: 2014–12
  8. By: Wickens, Michael R.
    Abstract: This lecture is about how best to evaluate economic theories in macroeconomics and finance, and the lessons that can be learned from the past use and misuse of evidence. It is argued that all macro/finance models are `false' so should not be judged solely on the realism of their assumptions. The role of theory is to explain the data, They should therefore be judged by their ability to do this. Data mining will often improve the statistical properties of a model but it does not improve economic understanding. These propositions are illustrated with examples from the last fifty years of macro and financial econometrics
    Keywords: asset price modelling; DSGE modelling; theory and evidence in economics; time series modelling
    JEL: B1 C1 E1 G1
    Date: 2014–10
  9. By: Alessandro Tampieri (CREA, Université du Luxembourg); Elena M. Parilina (Saint Petersburg State University)
    Abstract: Cooperative game theory is effective in explaining many economic interactions, such as risk-sharing agreements or the enforcing role of social norms. In a stochastic environ- ment, the analysis of these issues is generalised by taking into account the presence of shocks. The paper finds the conditions of dynamic stability for cooperative stochastic games. Principles of dynamic stability include three conditions: subgame consistency, strategic stability and irrational-behaviour-proof of the cooperative agreement.
    Keywords: Cooperative Stochastic Game, stationary strategies, time consistency, subgame consistency, strategic stability, irrational-behaviour-proof
    JEL: C71 C73
    Date: 2014
  10. By: Bellino, Enrico
    Abstract: Within the rich literature that has flowed from Sraffa’s framework of Production of Commodities by means of Commodities a prominent position is occupied by the research programmes carried out independently by two authoritative exponents of this school: Pierangelo Garegnani and Luigi Pasinetti. Certain specific features of their approaches might lead one to perceive them as alternative to one another. Yet, when analysed through a constructive perspective, one discovers not only a common origin and methodology, but also strict complementarity in analysing the main characteristics of industrial systems.
    Keywords: surplus approach, ‘core’ of a capitalist system, structural economic dynamics, ‘natural system’, Garegnani, Pasinetti, Sraffa, Keynes, post-Keynesians
    JEL: B12 B24 B51 D33 E11 E12 E2
    Date: 2014–12–18
  11. By: Roger Backhouse; Beatrice Cherrier
    Abstract: This paper conjectures that economics has changed profoundly since the 1970s and that these changes involve a new understanding of the relationship between theoretical and applied work. Drawing on an analysis of John Bates Clark medal winners, it is suggested that the discipline became more applied, applied work being accorded a higher status in relation to pure theory than was previously the case. Discussing new types of applied work, the changing context of applied work, and new sites for applied work, the paper outlines a research agenda that will test the conjecture that there has been a changed understanding of the nature of applied work and hence of economics itself.
    Keywords: Applied economics, theory, Clark Medal, JEL codes, core, policy, computation, data, econometrics
    JEL: A10 B20 B40 C00
    Date: 2014–12
  12. By: Francesco Sergi (Centre d'Economie de la Sorbonne)
    Abstract: The purpose of the paper is to provide a methodological framework for a critical analysis of a specific class of macroeconomic models, namely the dynamic stochastic general equilibrium models (DSGE). We suggest some epistemological reflections to explore the underlying methodology and history of the DSGE models. To do this, we decided to rely on a literature review on the contributions about the notion of model and modelling in philosophy, history and sociology of sciences. Our approach tries to define, in an interdisciplinary way, a consistent methodology for dealing with a specific object. The review of this large literature has been organized around two complementary definitions of the object (“model” as concept, for the philosophy and history of sciences and “modelling” as a scientific practice, for the sociology of science) and around three fundamental questions (what is a model? how to build a model? what is the purpose of a model?). Starting from this review, we discuss the main elements which are consistent with an analysis of DSGE models, focusing in particular on intra- and interdisciplinary interactions, on the mechanisms of policy expertise and on the mediation between theories and data.
    Keywords: Macroeconomic models, DSGE, modelling, new neoclassical synthesis, epistemology of economics.
    JEL: B41 B22
    Date: 2014–09
  13. By: Maren Duvendack; Richard W. Palmer-Jones; W. Robert Reed (University of Canterbury)
    Abstract: This study reports on various aspects of replication research in economics. It includes (i) a brief history of data sharing and replication; (ii) the results of the authors’ survey administered to the editors of all 333 “Economics” journals listed in Web of Science in December 2013; (iii) an analysis of 155 replication studies that have been published in peer-reviewed economics journals from 1977-2014; (iv) a discussion of the future of replication research in economics, and (v) observations on how replications can be better integrated into research efforts to address problems associated with publication bias and other Type I error phenomena.
    Keywords: Replication, data sharing, publication bias
    JEL: A1 B4
    Date: 2014–12–03
  14. By: Claude Gamel (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS)
    Abstract: Dans "The Idea of Justice" (2009), Sen formule une critique systématique des théories « transcendantales » de la justice, dont l’archétype se trouve dans l’œuvre de Rawls et propose de leur substituer une approche « comparative », plus pragmatique. Dans "Macrojustice" (2005), Kolm défend une conception du « choix social endogène » qui le conduit, lui aussi, à se démarquer des notions rawlsiennes trop abstraites de « position originelle » et de « voile d’ignorance ». Quant à Rawls lui-même, la formulation  philosophique qu’il a pu donner de son second principe de justice (« juste égalité des chances » et « principe de différence ») semble trop floue pour contenir à elle seule des propositions précises de politique économique et sociale. En dépit des profondes différences d’ordre épistémologique sur le sens qu’ils donnent à leur réflexion normative respective, Sen, Kolm et Rawls sont pourtant tous des représentants d’un « égalitarisme libéral », dont l’économie générale reste toutefois à préciser (1) : si la hiérarchie rawlsienne des principes de justice fournit à notre essai son armature générale (2), l’approche des capacités de Sen légitime une conception plus ambitieuse de l’égalité des chances (3) et les transferts redistributifs « ELIE » de Kolm constitue une traduction possible du principe de différence (4). Portée et limites de notre essai font l’objet en conclusion d’un premier examen (5).
    Keywords: égalitarisme, libéralisme, principes de justice, capacités, macrojustice
    JEL: A12 B41 D6
    Date: 2014–12–08
  15. By: Bernal Lobato, N. (Tilburg University, School of Economics and Management)
    Abstract: This thesis consists of three chapters dealing with important topics for the well-being of individuals: retirement, health and happiness. All together are micro studies that deal with policy relevant research questions. The first chapter focuses on whether a pension reform has effects on income smoothing and labor supply of older single individuals in the Netherlands, in the presence of uncertainty about income, health and life expectancy. The second one is about the effects of health insurance on individuals' behavior. It evaluates the impact of access to a very popular Health Insurance program in Peru for individuals who work outside the formal labor market on a variety of measures for health care utilization, expenditure and health indicators. Finally, the third chapter explores individuals’ behavior from a different perspective: happiness. It investigates whether reported happiness and utility measures are correlated. The former can be obtained from questions about individual life satisfaction, happiness or well-being that are available in social surveys nowadays. But the latter are not available and have to be constructed. That is exactly what this chapter does and, afterwards, it explores whether there is any correlation between both types of measures. By doing so, the chapter shows that it is possible to link utility economic theory to data on happiness.
    Date: 2014
  16. By: Michail Anthropelos; Constantinos Kardaras
    Abstract: The paper studies equilibrium sharing of risk among limited number of strategically-behaved agents. We propose a Nash game where agents' strategic sets consist of all possible sharing securities and pricing kernels that are consistent with Arrow-Debreu sharing rules. First, it is shown that the best response problem of each agent admits a unique solution. The risk-sharing Nash equilibrium admits a finite-dimensional characterisation and it is proved to be unique in the case of two agents. In Nash risk-sharing equilibrium agents choose to share random endowments that are different than their actual ones, and the shared securities are endogenously bounded, implying (amongst other things) loss of efficiency. In addition, an analysis regarding extremely risk tolerant agents indicates that they profit more from the Nash risk-sharing equilibrium as compared to the Arrow-Debreu one.
    Date: 2014–12
  17. By: van de Ven, Jeroen (University of Amsterdam); Villeval, Marie Claire (CNRS, GATE)
    Abstract: We investigate how different forms of scrutiny affect dishonesty, using Gneezy's (2005) deception game. We add a third player whose interests are aligned with those of the sender. We find that lying behavior is not sensitive to revealing the sender's identity to the observer. The option for observers to communicate with the sender, and the option to reveal the sender's lies to the receiver also do not affect lying behavior. Even more striking, senders whose identity is revealed to their observer do not lie less when their interests are misaligned with those of the observer.
    Keywords: deception, lies, dishonesty, social image, experiment
    JEL: C91 D83
    Date: 2014–11
  18. By: Vicini, Andrea
    Abstract: This paper analyze the historical origin of Fiscal illusion, and introduce to the contribution of Public Choice and in particular James Buchanan which systematized all these concept in a coherent framework. Even the critiques and application of this Theory are mentioned.
    Keywords: Public Choice, James Buchanan, Fiscal Illusion.
    JEL: H11 H3
    Date: 2011–04
  19. By: Paul David (Stanford University)
    Abstract: In most modern economies scientific and technological research activities are conducted in two distinct organizational modes: commercially oriented R&D based upon proprietary information, and noncommercial “open science.” When taken together and kept in proper balance, these form a complementary pair of institutionally differentiated sub-systems. Each can work to amplify and augment the productivity of the other, thereby spurring long-term economic growth and improvements of social welfare in knowledge driven societies. This paper considers the difference between historical origins of open science and its modern, critically important role in the allocation of research resources. The institutional structure of ‘The Republic of Open Science’ generally is less well understood and has less robust self-sustaining foundations than the familiar non-cooperative market mechanisms associated with proprietary R&D. Although they are better suited for the conduct of exploratory science, they also remain more vulnerable to damages from collateral effects of shifts in government policies, particularly those that impact their fiscal support and regulatory environments. After reviewing the several challenges that such policy actions during the 20th century’s closing decades had posed for continued effective collective explorations at the frontiers of scientific knowledge, the discussion examines the responses that those developments elicited from academic research communities. Those reactions to the threatened curtailment of timely access to data and technical information about new research methods and findings took the form of technical and organizational innovations designed to expand and enhance infrastructural protections for sustained open access in scientific and scholarly communications. They were practical, “bottom-up” initiatives to provide concrete, domain relevant tools and organizational routines whose adoption subsequently could be, and in the event were reinforced by “top-down” policy guidelines and regulatory steps by public funding agencies and international bodies. The non-politicized nature of that process, as well as its largely effective outcomes should be read (cautiously) as positive portents of the future vitality of the Republic of Open Science – and of those societies that recognize, protect and adequately support this remarkable social innovation.
    Keywords: science and technology policy, open science, new economics of science, evolution of institutions, patronage, asymmetric information, principal-agent problems, common agency contracting, social networks, ‘invisible colleges,’ scientific academies, intellectual property rights, anti-commons, contractual construction of commons  
    JEL: D8 H4 O3
    Date: 2014–08
  20. By: Stephen S. Poloz
    Abstract: This paper discusses how central banking is evolving in light of recent experience, with particular emphasis on the incorporation of uncertainty into policy decision-making. The sort of post-crisis uncertainty that central banks are dealing with today is more profound than that which is typically subjected to rigorous analysis and does not lend itself easily to formal modelling. As a practical matter, the policy-maker is dependent on macro models to develop a coherent monetary policy plan, and this burden of coherence means that fundamental uncertainty must be incorporated explicitly into the policy formulation process. As suggested here, doing so transforms policy formulation from an exercise in reverse engineering to one of risk management, one consequence of which is to inject a little more realism about uncertainty into the policy narrative, while trusting markets to wrestle with the data flow and deliver two-way trading. The evolution is likely to be a long one - researchers are encouraged to keep focusing on developing a practical understanding of how the economy works, one that admits that rules around economic behaviour are not cast in stone, but are almost certainly subject to variation through time and events.
    Keywords: Economic models; Financial stability; Monetary policy framework; Uncertainty and monetary policy
    JEL: C50 E37 E5 E61
    Date: 2014
  21. By: Avichai Snir (Department of Economics, Bar-Ilan University, Israel); Daniel Levy (Department of Economics, Bar-Ilan University, Israel; Department of Economics, Emory University, USA; The Rimini Centre for Economic Analysis, Italy)
    Abstract: We study the economic structure of the life of Harry Potter and his co-actors as an economic model that governs the social organization of their economic activities. Our goal is to study and understand the internal consistency of the Potterian economic model and explore the relationships between its assumptions and the situation in the real world, as reflected in the Potterian model. To accomplish this, we focus on a textbook version of Solow's economic growth model. The analysis of the Potterian economy reveals that the Potterian model fits quite well the predictions of the economic growth model. We discuss potential implications of this finding, and explore the link between Potterian economic structure and performance in a broader context by discussing the link between economic institutions and economic outcomes.
    Date: 2014–11

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