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on History and Philosophy of Economics |
| By: | Wolfgang Hein ; Robert Kappel (GIGA German Institute of Global and Area Studies ) |
| Abstract: | Die Karriere von Andreas Predöhl ist typisch für viele prominente deutsche Wissenschaftler der Nachkriegszeit, die zuvor während der Herrschaft des Nationalsozialismus diesem Regime gedient hatten. Von 1934 bis 1945 war Predöhl Direktor des Kieler Instituts für Weltwirtschaft, von 1949 bis 1960 Ordentlicher Professor in Kiel und Münster und von 1964 bis 1969 der erste Präsident des Deutschen Übersee-Instituts, des heutigen GIGA. Diese Arbeit liefert eine ausführliche kritische Bewertung seines Verhältnisses zum Nationalsozialismus, aber auch seines wissenschaftlichen Beitrages, der vor allem in Untersuchungen zu folgenden Themen besteht: a) zur Entwicklungstheorie, b) zur Theorie der raumbildenden Standortfaktoren vor dem Hintergrund der internationalen Diskussion über die weltwirtschaftlichen Raumstrukturen und c) zu neuen Wachstumskernen in der Weltwirtschaft und zum Spannungsverhältnis zwischen nationalstaatlichen Interessen und Steuerungsmöglichkeiten in der Globalisierung. Die Arbeiten von Predöhl liefern Anknüpfungspunkte für die heutige Forschung zu diesen Themen und damit wichtige Ansätze zum Verständnis der Dynamik einer sich zentrisch entwickelnden Weltwirtschaft. Seine aktive Verstrickung in das Terrorregime des Nationalsozialismus weist aber auch darauf hin, dass der Wissenschaft als Element politischer Praxis eine wichtige Verantwortung zukommt. |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:gig:wpaper:252&r=hpe |
| By: | Gräbner, Claudius |
| Abstract: | This paper is motivated by the observation that (1) socio economic analysis uses significantly less formalisms than mainstream economics, and (2) that there exist numerous situations in which socio economics could benefit from a more formal analysis. This is particularly the case if institutions play an important role in the system to be investigated. Starting with a broad conception of a formalism, this paper introduces and discusses five different formal approaches regarding their adequateness for socio economic analysis: The Social Fabric Matrix Approach, the Institutional Analysis and Development Framework, System Dynamics, (Evolutionary) Game Theory, and Agent Based Computational Modeling. As a formal analysis always comes up with implicit ontological and epistemological tendencies, that have to be reflected if the formalism should contribute to a better understanding of the system under investigation, this paper pays particular attention to these tendencies of the considered formalisms. In the end, antagonisms and possible convergences among the formalisms are discussed. |
| Keywords: | Social Economics, Institutional Economics, Methodology, Epistemology, Ontology, System Dynamics, Social Fabric Matrix, (Evolutionary) Game Theory, Agent-Based Computational Economics, Econometrics. |
| JEL: | B41 B52 C63 C70 |
| Date: | 2015–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:61348&r=hpe |
| By: | John Duffy (Department of Economics, University of California-Irvine ); Dietmar Fehr (WZB Berlin, Germany ) |
| Abstract: | We report on an experiment examining behavior and equilibrium selection in two similar, infinitely repeated games, Stag Hunt and Prisoner's Dilemma under anonymous random matching. We are interested in the role that precedents may play for equilibrium selection between these two stage game forms. We find that a precedent for efficient play in the repeated Stag Hunt game does not carry over to the repeated Prisoner's Dilemma game despite the possibility of efficient play in the latter game. Similarly, a precedent of inefficient play in the Prisoner's Dilemma game does not extend to the repeated Stag Hunt game. We conclude that equilibrium selection between similar repeated games has little to do with historical precedents and is mainly determined by strategic considerations associated with the different payoffs of these similar repeated games. |
| Keywords: | Sentiment; Equilibrium selection; Precedent; Beliefs; Stag hunt; Prisoner's dilemma; Repeated games; Experimental economics. |
| JEL: | C72 C73 C92 D83 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:141505&r=hpe |
| By: | Moulin, Herve ; Ray, Indrajit (Cardiff Business School ); Gupta, Sonali Sen |
| Abstract: | We consider the well-analyzed abatement game (Barrett 1994) and prove that correlation among the players (nations) can strictly improve upon the Nash equilibrium payoffs. As these games are potential games, correlated equilibrium — CE — (Aumann 1974, 1987) cannot improve upon Nash; however we prove that coarse correlated equilibria — CCE — (Moulin and Vial 1978) may do so. We compute the largest feasible total utility and hence the efficiency gain in any CCE in those games: it is achieved by a lottery over only two pure strategy profiles. |
| Keywords: | Abatement game; Coarse correlated equilibrium; Efficiency gain |
| JEL: | C72 Q52 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2014/24&r=hpe |
| By: | Ávalos, Eloy |
| Abstract: | This paper presents an analysis of social welfare under a distributive situation with economic envy and intolerance distribution income. Finally , we propose welfare criteria that account for the paradox of happiness. |
| Keywords: | Inequality, economic envy, tolerance of inequality paradox of happiness. |
| JEL: | D31 I30 |
| Date: | 2014–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:61212&r=hpe |
| By: | Kakarot-Handtke, Egmont |
| Abstract: | The consensus is that orthodox economics is a failure in three dimensions: conceptual, methodological, and empirical. Heterodoxy has meticulously sorted out the multitude of errors, mistakes, and distortions. Yet, this alone does not help out of stagnation. Economists have now to go into constructive mode. The most urgent task is to replace the misleading supply-demandequilibrium representation of the market. The reconstruction of the centerpiece of the market system from scratch paves the way to the new paradigm. Nobody can talk about the market system without a correct idea of how the market works. Heterodox economists must take the innovative lead. |
| Keywords: | new framework of concepts; structure-centric; Law of Supply and Demand; market clearing; budget balancing |
| JEL: | B59 D40 |
| Date: | 2015–01–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:61236&r=hpe |
| By: | Miles S. Kimball |
| Abstract: | Cognitive Economics is the economics of what is in people’s minds. It is a vibrant area of research (much of it within Behavioral Economics, Labor Economics and the Economics of Education) that brings into play novel types of data—especially novel types of survey data. Such data highlight the importance of heterogeneity across individuals and highlight thorny issues for Welfare Economics. A key theme of Cognitive Economics is finite cognition (often misleadingly called “bounded rationality”), which poses theoretical challenges that call for versatile approaches. Cognitive Economics brings a rich toolbox to the task of understanding a complex world. |
| JEL: | B4 D03 D6 G02 J24 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20834&r=hpe |
| By: | Francesco Farina (University of Siena ) |
| Abstract: | This review article presents the evolution of development theory during the XX century, the measurement of poverty, the concept and the indices of multidimensional poverty. A special focus concerns the complex linkages between income inequality, poverty and institutions during the growth process of developing countries. |
| Keywords: | Development theory,Growth,Poverty,Income inequality |
| JEL: | I31 I32 O15 O21 O43 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:mcr:wpaper:wpaper00046&r=hpe |
| By: | Richard S. Grossman ; Hugh Rockoff |
| Abstract: | In this paper we trace the evolution of the lender of last resort doctrine—and its implementation—from the nineteenth century through the panic of 2008. We find that typically the most influential economists “fight the last war”: formulating policy guidelines that would have dealt effectively with the last crisis or in some cases the last two or three. This applies even to the still supreme voice among lender-of-last-resort theorists, Walter Bagehot, who wrestled with the how to deal with the financial crises that hit Britain between the end of the Napoleonic Wars and the panic of 1866. Fighting the last war may leave economists unprepared for meeting effectively the challenge of the next war. |
| JEL: | B0 N2 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20832&r=hpe |
| By: | Giuseppe Conti |
| Abstract: | From the 1930s and 1940s, the main industrial economies explored a "third way" between laissez-faire capitalism and collectivist central planning. In this sense, the "third way" represented a continuum of experiments between two opposite banks: on the one hand macroeconomic regulation of Keynesian type; on the other microeconomic regulation of social market economy (Soziale Marktwirtschaft). The theoretical foundation of social market economy is anti-Keynesian. In this approach, market failures depend on weak competition. In this case, the state intervenes by means of various kinds of incentives with no, or little public expenditure. In Keynesian approaches underemployment equilibria justify state interventions by means of public investments though leaving to the private sector both allocative choices and the related risks. The paper argues, contrary to the premises, that the social market economy, by reintroducing microeconomics solutions based upon bureaucratic rules, violates the main individual liberties, even affecting consumer's choices. The Keynesian welfare state on the contrary follows the liberal tradition of the rule of law, and of the primacy of the civil rights of citizens. The paper discusses the economic and social implications of these two "third ways". |
| Keywords: | Varieties of capitalism, Welfare state, Macro-micro regulation, Social market economy. |
| Date: | 2015–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:pie:dsedps:2015/195&r=hpe |
| By: | Clive L. Spash |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwsre:sre-disc-2015_01&r=hpe |
| By: | Barry Eichengreen |
| Abstract: | Four explanations for secular stagnation are distinguished: a rise in global saving, slow population growth that makes investment less attractive, averse trends in technology and productivity growth, and a decline in the relative price of investment goods. A long view from economic history is most supportive of the last of these four views. |
| JEL: | E00 N1 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20836&r=hpe |
| By: | Femke De Keulenaer ; Jan-Emmanuel De Neve ; Georgios Kavetsos ; Michael I. Norton ; Bert Van Landeghem ; George W. Ward |
| Abstract: | People do not psychologically benefit from economic expansions nearly as much as they suffer from recessions, according to research by JanEmmanuel De Neve and colleagues. |
| Keywords: | Economic growth, business cycles, subjective well-being, loss aversion |
| JEL: | D03 O11 D69 I39 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepcnp:440&r=hpe |
| By: | Alan Beggs |
| Abstract: | This paper studies learning in monotone Bayesian games with one-dimensional types and finitely many actions. Players switch between actions at a set of thresholds. A learning algorithm under which players adjust their strategies in the direction of better ones using payoffs received at similar signals to their current thresholds is examined. Convergence to equilibrium is shown in the case of supermodular games and potential games. |
| Keywords: | bayesian games, monotone strategies, learning, stochastic approximation, supermodular games |
| JEL: | C72 D83 |
| Date: | 2015–01–08 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:737&r=hpe |
| By: | Samuel Haefner ; Georg Nöldeke (University of Basel ) |
| Abstract: | In contest models with symmetric valuations, equilibrium payoffs are positive<br />shares of the value of the prize. In contrast to a bargaining situation, these<br />shares sum to less than one because a share of the value is lost due to rent-dissipation. We ask: can every such division into payoff shares arise as the<br />outcome of the unique pure-strategy Nash equilibrium of a simple asymmetric<br />contest in which contestants dier in the effectiveness of their efforts? For<br />two-player contests the answer is shown to be positive. |
| Keywords: | Contests, Pure-Strategy Equilibrium, Rent-Dissipation |
| JEL: | C72 D72 D74 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:bsl:wpaper:2014/11&r=hpe |
| By: | Takako Fujiwara-Greve Author-Name: Masahiro Okuno-Fujiwara ; Nobue Suzuki |
| Abstract: | Voluntarily Separable Repeated Prisoner's Dilemma (Fujiwara-Greve and Okuno-Fujiwara, 2009) has many kinds of equilibria. Focusing on monomorphic and bimorphic equilibria, we show that a bimorphic equilibrium consisting of cooperators and defectors is most efficient, under a mild payoff condition. This is a striking contrast to ordinary repeated Prisoner's Dilemma, where the symmetric efficient payoff is achieved by the symmetric C-trigger equilibrium. Our result indicates that behavioral diversity can be beneficial for the society, when players are free to escape from personalized punishments. Length: 34 pages |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:tcr:wpaper:e60&r=hpe |
| By: | Takako Fujiwara-Greve ; Masahiro Okuno-Fujiwara |
| Abstract: | In the literature of voluntarily repeated Prisoner's Dilemma, the focus is on how long-term cooperation is established, when newly matched partners cannot know the past actions of each other. In this paper we investigate how non-cooperative and cooperative players co-exist. In many incomplete information versions of a similar model, inherently non-cooperative players are assumed to exist in the society, but their long-run fitness has not been analyzed. In reality and in experiments, we also observe that some people are cooperative, while others never cooperate. We show that a bimorphic equilibrium of the most cooperative strategy and the most myopic strategy exists for sufficiently high survival rate of players, and that it is evolutionarily stable under uncoordinated mutations. For lower survival rates, adding initial periods of defection makes similar bimorphic equilibria. Both types of equilibria confirm persistence of defectors. Length: 48 pages |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:tcr:wpaper:e62&r=hpe |
| By: | Alexia Gaudeul (DFG RTG 1411, Friedrich-Schiller-Universität Jena ); Paolo Crosetto (UMR GAEL INRA, Université Pierre Mendès France, Grenoble ); Gerhard Riener (DICE, Heinrich-Heine-Universität Düsseldorf ) |
| Abstract: | Should people be allowed to leave joint projects freely or should they be deterred from breaking off? This depends on why people stop collaborating and whether they have good reasons to do so. We explore the factors that lead to the breakdown of partnerships by studying a public good game with imperfect public monitoring and an exit option. In our experiment, subjects were assigned a partner with whom they could contribute over several periods to a public good with stochastic outcomes. They could choose in each period between participating in the public project or working on their own. We find there was excessive exit especially because subjects over-estimated the likelihood their partner would leave. Treatments with high barriers to exit generated higher welfare overall as they fostered stability and prevented inefficient breakdowns in relationships. There were differences across treatments in the intensity with which different factors drove the choice to work alone. Differences in expected payoffs between independent and group work were more important as a driver of exit in treatments with low barriers to exit. The intensity of other factors was more constant across treatments, including whether the common project failed in the previous period, the belief that one's partner did not want to maintain the partnership and the belief that he exerted less effort than oneself. |
| Keywords: | barriers to exit, cooperation, outside option, imperfect public monitoring, partnerships, public good game, repeated game, social risk |
| JEL: | C23 C92 H41 |
| Date: | 2015–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2015-001&r=hpe |
| By: | Astrid Matthey (Max Planck Institute of Economics, Jena ); Tobias Regner (Max Planck Institute of Economics, Jena ) |
| Abstract: | We conduct a modified dictator game in order to analyze the role self-image concerns play in other-regarding behavior. While we generally follow Konow (2000), a cognitive dissonance-based model of other-regarding behavior in dictator games, we relax one of its assumptions as we allow for individual heterogeneity among individuals' standards of behavior. Subjects' self-image, their belief regarding the average socially appropriate behavior of others and our proxies for the cognitive dissonance costs are positively correlated with the dictator game choices. We also find that subjects whose choices involve two psychologically inconsistent cognitions indeed report higher levels of experienced conflict and take more time for their decisions (our proxies for cognitive dissonance). |
| Keywords: | social preferences, other-regarding behavior, self-image, cognitive dissonance, social norms |
| JEL: | C72 C91 D03 D80 |
| Date: | 2014–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2014-036&r=hpe |
| By: | Alan J. Auerbach ; Kevin Hassett |
| Abstract: | In his influential book, Capital in the 21st Century, Thomas Piketty argues forcefully that rising wealth and wealth inequality is an inherent characteristic of capitalist economies and calls for strong policy responses, in particular a substantial wealth tax implemented globally. This paper takes issue with the facts, logic, and policy conclusions in Piketty’s book, suggesting that the factors needed to support the inexorable rise in capital’s share and concentration are lacking and that among tax policy reforms aimed at dealing with economic inequality a wealth tax finds little support either in Piketty’s own work or elsewhere in the literature. |
| JEL: | H21 P17 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20871&r=hpe |
| By: | B. Zorina Khan |
| Abstract: | Endogenous growth models raise fundamental questions about the nature of human creativity, and the sorts of resources, skills, and knowledge inputs that shift the frontier of technology and production possibilities. Many argue that the nature of early British industrialization supports the thesis that economic advances depend on specialized scientific training or the acquisition of costly human capital. This paper examines the contributions of different types of knowledge to British industrialization, by assessing the backgrounds, education and inventive activity of the major contributors to technological advances in Britain during the crucial period between 1750 and 1930. The results indicate that scientists, engineers or technicians were not well-represented among the British great inventors until very late in the nineteenth century. Instead, important discoveries and British industrial advances were achieved by individuals who exercised commonplace skills and entrepreneurial abilities to resolve perceived industrial problems. For developing countries today, the implications are that costly investments in specialized human capital resources might be less important than incentives for creativity, flexibility, and the ability to make incremental adjustments that can transform existing technologies into inventions that are appropriate for prevailing domestic conditions. |
| JEL: | J24 N13 O14 O3 O31 O34 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20853&r=hpe |
| By: | Nicholas Crafts (The University of Warwick ) |
| Abstract: | This paper provides an introductory overview of the British Industrial Revolution. The dimensions of growth are discussed as well as notable recent explanations for Britain’s primacy. Obstacles to faster growth are considered as well as advantages that were conducive to stronger TFP growth. In this context, reasons for the long delay before steam power had any significant impact on productivity are highlighted. Some implications of Britain’s early start to modern economic growth for subsequent economic performance are noted. The paper concludes that precocious British industrialization is much easier to explain than the timing of the acceleration of technological progress. |
| Keywords: | industrialization; invention; industrial revolution; TFP growth |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:214&r=hpe |
| By: | Domanski, Dietrich (Bank for International Settlements ); Moessner, Richhild (Bank for International Sentiments ); Nelson, William R. (Board of Governors of the Federal Reserve System (U.S.) ) |
| Abstract: | During the 2007-2010 financial crisis, central banks accumulated a vast amount of experience in acting as lender of last resort. This paper reviews the various ways that central banks provided emergency liquidity assistance (ELA) during the crisis, and discusses issues for the design of ELA arising from that experience. In a number of ways, the emergency liquidity assistance since 2007 has largely adhered to Bagehot's dictums of lending freely against good collateral to solvent institutions at a penalty rate. But there were many exceptions to these rules. Those exceptions illuminate the situations where the lender of last resort role of central banks is most difficult. They also highlight key challenges in designing lender of last resort policies going forward. |
| Keywords: | Banking crisis; central bank liquidity; lender of last resort |
| JEL: | E58 F31 N10 |
| Date: | 2014–05–14 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2014-110&r=hpe |
| By: | Markus P. A. Schneider ; Daniele Tavani |
| Abstract: | Following a methodology proposed by Jantzen and Volpert (2012), we use IRS Adjusted Gross Income (AGI) data for the United States (1921-2012) to estimate two Gini-like indices representing inequality at the bottom and the top of the income distribution. We also calculate the overall Gini index as a function of the parameters underlying the two indices. Our findings can be summarized as follows. First, we find that the increase in the Gini index from the mid 1940s to the late 1970s seems to be mostly explained by an increase in inequality at the bottom of the income distribution, which more than offsets the decrease in inequality at the top. The implication is that middle incomes gained relative to high incomes, but especially relative to low incomes. Conversely, it is rising inequality at the top that appears to drive the rise in the Gini index since 1981. Second, inequality at the top of the income distribution follows a U-shaped trajectory over time, similar to the pattern of the share of top incomes documented by Piketty and Saez (2003, 2006) and Atkinson, Piketty, and Saez (2011). Third, the welfare effects of the different forces behind an increasing Gini index can be evaluated in light of the Lorenz-dominance criterion proposed by Atkinson (1970): both top-driven and bottom-driven increases in the index appear not to imply strict Lorenz dominance by previous income distributions, and therefore are not associated with lower welfare in an absolute sense. In a relative sense, however, once average growth rates over the two periods are taken into account, the top-driven increase in inequality since 1981 appears to have been welfare reducing. |
| Keywords: | Income Distribution; Inequality; Gini Index |
| JEL: | D3 D63 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_826&r=hpe |