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on History and Philosophy of Economics |
| By: | Carlson, Mark A. (Board of Governors of the Federal Reserve System); Wheelock, David C. (Federal Reserve Bank of St. Louis) |
| Abstract: | The 1950s are often cited as a decade in which the Federal Reserve operated a particularly successful monetary policy. The present paper examines the evolution of Federal Reserve monetary policy from the mid-1930s through the 1950s in an effort to understand better the apparent success of policy in the 1950s. Whereas others have debated whether the Fed had a sophisticated understanding of how to implement policy, our focus is on how the constraints on the Fed changed over time. Roosevelt Administration gold policies and New Deal legislation limited the Fed’s ability to conduct an independent monetary policy. The Fed was forced to cooperate with the Treasury in the 1930s, and fully ceded monetary policy to Treasury financing requirements during World War II. Nonetheless, the Fed retained a policy tool in the form of reserve requirements, and from the mid-1930s to 1951, changes in required reserve ratios were the primary means by which the Fed responded to expected inflation. The inability of the Fed to maintain a credible commitment to low interest rates in the face of increased government spending and rising inflation led to the Fed-Treasury Accord of March 1951. Following the Accord, the external pressures on the Fed diminished significantly, which enabled the Fed to focus primarily on macroeconomic objectives. We conclude that a successful outcome requires not only a good understanding of how to conduct policy, but also a conducive environment in which to operate. |
| JEL: | E52 E58 N12 |
| Date: | 2014–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddgw:205&r=hpe |
| By: | Daron Acemoglu; James A. Robinson |
| Abstract: | Thomas Piketty's (2014) book, Capital in the 21st Century, follows in the tradition of the great classical economists, like Marx and Ricardo, in formulating general laws of capitalism to diagnose and predict the dynamics of inequality. We argue that general economic laws are unhelpful as a guide to understand the past or predict the future, because they ignore the central role of political and economic institutions, as well as the endogenous evolution of technology, in shaping the distribution of resources in society. We use regression evidence to show that the main economic force emphasized in Piketty's book, the gap between the interest rate and the growth rate, does not appear to explain historical patterns of inequality (especially, the share of income accruing to the upper tail of the distribution). We then use the histories of inequality of South Africa and Sweden to illustrate that inequality dynamics cannot be understood without embedding economic factors in the context of economic and political institutions, and also that the focus on the share of top incomes can give a misleading characterization of the true nature of inequality. |
| JEL: | O20 P16 P48 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20766&r=hpe |
| By: | Pasche, Markus |
| Abstract: | This brief note rises doubts on the argument that nudging will help people to behave more rational in terms of their own preferences. This justification of soft paternalism overlooks some methodological problems of expected utility theory which are one of the roots of behavioral economics. |
| Keywords: | soft paternalism; nudging; behavioral economics, utility theory, rationality |
| JEL: | B4 D03 D04 |
| Date: | 2014–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:61140&r=hpe |
| By: | Estrada, Fernando |
| Abstract: | Thomas Piketty's "Capital in the 21st century" has been the most important book economy in recent times. Its aim integrates the debate theories of growth, income distribution, inequality and differences between the extremes income and income of the majority. The work predicts a slow increase in the share of capital income and inequality. His proposal for a global tax on capital is a way to evaluate such tendencies. |
| Keywords: | Piketty, Capital in the 21st century, Capitalism, Distribution, Theory of economics |
| JEL: | D3 D31 D33 E2 E22 E25 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:61133&r=hpe |
| By: | Mermer, A.G. (Tilburg University, School of Economics and Management) |
| Abstract: | Behavioral Economics aims at understanding the decision of economic agents who are not necessarily monetary utility maximizers and accounts for the fact that agents may have other concerns next to economic gain. This thesis contributes to the literature by studying the behavior of economic agents who are not necessarily monetary utility maximizers in situations with strategic interaction. The second chapter solves a game-theoretic model of contests assuming that agents have reference-dependent preferences. The results help to explain behavior observed in recent experiments that is hard to reconcile with the assumption of standard preferences. The optimal price mechanism is derived which differs markedly from the one derived under the assumption of standard preferences. The third and fourth chapters use laboratory experimentation which allows for careful scrutinizing of behavioral assumptions made in economic models. The third chapter experimentally investigates agents’ cooperative behavior in indefinitely-repeated dilemma games with different strategic environments. It is reported that subjects play collusive choices significantly more often when actions exhibit strategic substitutability than when actions exhibit strategic complementarity. In Chapter 4 we experimentally study information acquisition in a social dilemma game. It is reported that in a twice-repeated trust game trustors choose to be informed about the type of the trustee in a setting where, theoretically, having such information is detrimental for cooperation and material payoffs. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:eaadb29a-8041-4e76-a8d1-3adc17186ac7&r=hpe |
| By: | Van den Hauwe, Ludwig |
| Abstract: | In the wake of the Financial Crisis and the subsequent Great Recession several commentators have suggested that the analysis of financial instability provided by various strands of heterodox economics got it "right" and that mainstream economics got it "wrong". In this paper two variants of heterodox views about financial instability are compared critically: the views of the late Hyman P. Minsky on the one hand, and the theses of the Austrian School on the other. It is concluded that the apparent similarities between both approaches are superficial, while the divergences are profound and fundamental. |
| Keywords: | Financial Instability, Business Cycle, Minsky, Austrian School |
| JEL: | B50 B53 B59 E3 E30 E32 |
| Date: | 2014–12–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:60718&r=hpe |
| By: | Truman, Edwin M. (Peterson Institute for International Economics) |
| Abstract: | This paper traces the evolution of the Federal Reserve and its engagement with the global economy over the last three decades of the 20th century: 1970 to 2000. The paper examines the Federal Reserve’s role in international economic and financial policy and analysis covering four areas: the emergence and taming of the great inflation, developments in US external accounts, foreign exchange analysis and activities, and external financial crises. It concludes that during this period the US central bank emerged to become the closest the world has to a global central bank. |
| Keywords: | Federal Reserve; Federal Open Market Committee; inflation; macroeconomic policies; monetary policy; external balance; exchange rates; exchange market intervention; financial crises; third world debt crises; Mexican crisis; Asian financial crises |
| JEL: | E4 E42 F3 F31 F32 F33 F34 F5 F52 F53 |
| Date: | 2014–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddgw:210&r=hpe |
| By: | Christophe LAVIALLE |
| Keywords: | , Keynes , nationalisme économique , libéralisme , pragmatisme |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:leo:wpaper:1869&r=hpe |
| By: | David P.A. (UNU-MERIT) |
| Abstract: | In most modern economies scientific and technological research activities are conducted in two distinct organizational modes commercially oriented RD 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 RD. 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 centurys 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: | Property Law; Innovation and Invention: Processes and Incentives; |
| JEL: | K11 O31 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2014082&r=hpe |
| By: | Joseph M. Ashley; John V. Pepper; Kirsten L. Rowe; Robert M. Schmidt; Steven Stern |
| Abstract: | This special volume is dedicated to David H. Dean who passed away on August 11th, 2013. This dedication describes David’s impact on the academic research on disability and, most notably, the vital interaction between research and policy. It discusses his influence in shaping perspectives on evaluating the effectiveness of programs to increase employment. Finally, it describes David as a person and why he was influential as a researcher and college professor. |
| Keywords: | Vocational rehabilitation, Disability insurance, David Dean |
| JEL: | I J |
| Date: | 2014–07–21 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:ce607e1b6adc4026a5d39f64737d8eee&r=hpe |
| By: | Joseph Abdou (Centre d'Economie de la Sorbonne - Paris School of Economics); Nikolaos Pnevmatikos (Centre d'Economie de la Sorbonne - Paris School of Economics); Marco Scarsini (Engineering System Design Pillar - Singapore University) |
| Abstract: | We introduce the classes of uniform and non interactive games. We study appropriate projection operators over the space of games, in order to propose a novel canonical direct sum decomposition of an arbitrary game into three components, which we refer to as the uniform with zero constant, the non interactive total sum zero and the constant components. Under a natural inner product, we show that the components are orthogonal and we provide explicit expressions for the closet uniform and non interactive games to a given game. We characterize the set of its approximate equilibria in terms of the uniformly mixed and dominant strategies equilibria profiles of its closest uniform and non interactive games respectively. |
| Keywords: | Decomposition of games, projection operator, dominant strategy equilibrium, uniformly mixed strategy. |
| JEL: | C70 C79 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:14084&r=hpe |
| By: | Amlan Majumder (Dinhata College, West Bengal, India) |
| Abstract: | An ideal state of development, when viewed with fantasy, is nothing but a state or condition where light touches everybody without refraction. The diagonal line of the Lorenz Curve Framework represents such an ideal condition. In the presence of inequality, however, it deviates or refracts from the ideal condition. In this paper, I try to measure economic inequality from the index of refraction. First, I compute such an index for each stratum to evaluate condition in each and then add all to propose an overall measure of economic inequality, which appears to be a standardised measure of the length of the Lorenz Curve relative to that of the diagonal line. The exercise is done utilising data on distribution of income or consumption from the WDI 2014. Results are lively and remarkable. While an index value of less than 1.00 represents an `anomalous refraction' in Optics, such a condition of inequality is true and too common for many of us (60-80\%) in reality. In contrast to that, in some countries, the index of refraction of the richest group exceeds that of Diamond (2.42), where an index value of 1.00 depicts an ideal condition that is enviable. In regard to technicalities, it goes at par Gini Index and beyond. Additionally, it makes analysis of economic inequality more sensible. Presumably, the proposed index could be a good substitute of the Gini Index as it is found perfectly correlated with the latter by quadratic equation with an Adjusted R Square value of 1.00. |
| Keywords: | Gini Index, Inequality, Lorenz Curve, Optics, Refractive Index, Snell's Law. |
| JEL: | D31 D63 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2014-346&r=hpe |