nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2017‒05‒14
eight papers chosen by
Erik Thomson
University of Manitoba

  1. Disequilibrium as the origin, originality, and challenges of Clower's microfoundations of monetary theory By Plassard, Romain
  2. Knowledge Properties and Economic Policy: A New Look By Antonelli, Cristiano
  3. A Just Price: Objections and Suggested Solutions By Lukas Maslo
  4. Vigencia de las ideas de Keynes en relación con la crisis financiera By Antonio Torrero Mañas
  5. The City as a Self-Help Book: The Psychology of Urban Promises By Cardoso, Rodrigo V.; Meijers, Evert J.; van Ham, Maarten; Burger, Martijn J.; de Vos, Duco
  6. Rent The Productivity of Nations By Oleg Badunenko; Daniel J. Henderson; Valentin Zelenyuk;
  7. The Payoff Region of a Strategic Game and Its Extreme Points By Yu-Sung Tu; Wei-Torng Juang
  8. Concordian economics and the economic bubble By Gorga, Carmine

  1. By: Plassard, Romain
    Abstract: Robert W. Clower’s article “A Reconsideration of the Microfoundations of Monetary Theory” (1967) deeply influenced the course of modern monetary economics. On the one hand, it questioned Don Patinkin’s (1956) project to integrate monetary and Walrasian value theory. On the other hand, it was the fountainhead of the cash-in-advance models à la Robert J. Lucas (1980), one of the most widely used approaches to monetary theory since the 1980s. Despite this influence, Clower’s (1967) project to integrate monetary and value theory remains an enigma. My paper intends to resolve it. This is a difficult task since Clower never completed the monetary theory outlined in his 1967 article. To overcome this difficulty, I characterize the intellectual context from which Clower’s (1967) contribution emerged and have recourse to a reconstruction of his project. This reconstruction is based on the analysis of published and unpublished materials, written by Clower before and after the 1967 article. It is argued that Clower (1967) sought to elaborate a disequilibrium monetary theory whilst retaining the two pillars of Patinkin’s integration, i.e., the introduction of money into utility functions and the real-balance effect. I trace the origins, account for the originality, and discuss the challenges of this project.
    Keywords: integration of monetary and value theory, microfoundations of macroeconomics, disequilibrium, Clower, Patinkin.
    JEL: B21 D46 D5
    Date: 2017–04
  2. By: Antonelli, Cristiano (University of Turin)
    Abstract: This paper explores the full range of effects of knowledge properties and explains how knowledge properties such as transient appropriability, nonexhaustibility and indivisibility do not only have negative effects, but also positive ones. Knowledge externalities help reduce the cost of knowledge and imitation externalities reduce the revenue and profitability of innovations. Their effects need to be considered jointly in a single analytical framework. An analysis of their combined effects questions the scope of application of the “Arrovian postulate” according to which the limited appropriability of knowledge due to its uncontrolled dissemination reduces invention. This ignores spillovers of outside knowledge, which increase invention. These are the two opposing faces of the limited appropriability of knowledge. Policy implications suggest that along with public interventions designed to support the supply of knowledge and to compensate for missing incentives, much attention should be paid to all interventions that favour the dissemination of knowledge and the knowledge connectivity of the system.
    Date: 2017–03
  3. By: Lukas Maslo (University of Economics, Prague)
    Abstract: This paper examines the concept of a just price not as a historical but as theoretical problem. After a detailed exposition of the scholastic theory of value, price and commutative justice, the author identifies four main subjective-value-based objections to the concept of a just price and settles them one after another. These objections are 1) an apparent self-contradiction consisting in stating a subjective nature of utility and, at the same time, equality of value in exchange; 2) how can a voluntary exchange be unjust; 3) how can a just price be found in an isolated exchange of a unique good; 4) a missing satisfactory definition of a just price. The author suggests to settle the first objection by identifying the ontological status of the objective value. Leaning on a distinction of an objective value in use (virtuositas) and subjective desirability (complacibilitas) made by Saint Bernardino of Sienna and Saint Antonino of Florence, the author asserts that while complacibilitas is a potentiality of subjective desirability resting in an individual, virtuositas is a potentiality of usefulness resting in a thing. On account of this, a following solution is suggested: a particular usefulness is not purely subjective because it does not depend on a subjective perception of an individual; it is a metaphysical accident of a thing, not a metaphysical accident of an individual; a particular usefulness is not purely objective, either, because it is a relation to an individua; thus, equality in exchange means equality of potentiality of usefulness which is not a particular usefulness but a set of all usefulnesses concealed in the potentiality of the thing, even though they have not yet been actuated. The author suggests to settle the second objection by providing a logical proof for the assertion that an exchange in which one party suffers an unjust price is not a voluntary exchange and, on the grounds of this, the author demonstrates that an unjust exchange cannot be a voluntary exchange. Finally, the author suggests a definition of a just price which is applicable to any exchange, whether a competitive price exists or not.
    Keywords: just price, commutative justice, value, potentiality, act, metaphysical accident, virtuositas, complacibilitas
    JEL: A12 B11 D46
    Date: 2017–04
  4. By: Antonio Torrero Mañas
    Abstract: Este año se cumple una década desde el inicio de la crisis financiera actual. Seguimos tratando de comprender las causas de la perturbación y sus consecuencias. En ese proceso han vuelto a considerarse útiles las aportaciones de Keynes, en especial sus observaciones no incluidas en la síntesis neoclásica. En este trabajo el Profesor Torrero revisa la vigencia de esas ideas en relación con la crisis financiera. Concede especial importancia a que en las décadas anteriores a la crisis tuvo lugar un progresivo deslizamiento tratando como riesgo medible situaciones de incertidumbre. Las ideas de Keynes al respecto pueden inspirar la reflexión propia para ayudar a comprender una crisis extraordinariamente importante.
    Keywords: John M. Keynes, crisis financiera, riesgo, incertidumbre, instituciones financieras y regulación
    Date: 2017–05
  5. By: Cardoso, Rodrigo V. (Delft University of Technology); Meijers, Evert J. (Delft University of Technology); van Ham, Maarten (Delft University of Technology); Burger, Martijn J. (Erasmus University Rotterdam); de Vos, Duco (Delft University of Technology)
    Abstract: Despite the many negative aspects of life in cities, urban promises of economic prosperity, freedom and happiness have fuelled the imagination of generations of migrants, who have flocked to cities in search of a better life, invariably exaggerating the opportunities and neglected the potential disadvantages of their choice. This paper uses insights from psychological literature to better understand why people have such strong, positive and apparently overrated expectations about cities. We dwell into concepts of bounded rationality to describe the cognitive biases and heuristics affecting decision-making under uncertainty and apply them to the way individuals perceive and act upon the promises of urban life. By linking this literature to urban theory, we can better understand how individuals make their decisions about moving to and living in cities. We thereby offer an understanding of urbanisation and migration processes departing from economic rationality assumptions and explain the remarkable attractive force of cities throughout human history. Finally, we discuss the ways in which human biases in favour of city narratives and bright urban futures can be exploited by 'triumphalist' accounts of cities in policy and media, which neglect the embedded injustices and structural problems of urban life.
    Keywords: cognitive biases and heuristics, decision-making, urban migration, social mobility, subjective well-being, urban triumphalism
    JEL: O18 R23
    Date: 2017–04
  6. By: Oleg Badunenko (Portsmouth Business School); Daniel J. Henderson (University of Alabama, Tuscaloosa); Valentin Zelenyuk (University of Queensland);
    Abstract: This paper scrutinizes research on the productivity of nations with a particular focus on the preceding 50 years. First, we briefly synopsize ‘classic’ studies on economic growth and convergence of nations. The main criticism of these studies is that they did not account for potential inefficiency of countries. The production frontier literature attempts to deal with this issue and we give a brief introduction to it with a focus on data envelopment analysis. One central point of this review is the analysis of sources of productivity growth before and after 1990, a period of time, which appears to be a point of a structural change in growth patterns around the world. The second thread of this paper concerns the forces behind the transformation of the worldwide productivity distribution from a uni-modal to a bimodal distribution during the 1990s. Finally, we emphasize caveats and outline possible directions for future research.
    Keywords: Convergence, Bi-modality, Catching up, Data Envelopment Analysis, Efficiency, Economic Growth, Human capital, Income Distribution, Penn World Tables, Physical capital, Productivity, Stochastic Frontier Analysis, Technology, TFP
    JEL: D24 C14 C43 O47
    Date: 2017–05–03
  7. By: Yu-Sung Tu; Wei-Torng Juang
    Abstract: The range of a payoff function in an $n$-player finite strategic game is investigated using a novel approach, the notion of extreme points of a non-convex set. A basic structural characteristic of a noncooperative payoff region is that any subregion must be non-strictly convex if it contains a relative neighborhood of a boundary point of the noncooperative payoff region. This can be proved efficiently in terms of its extreme points. Besides, applying the properties of extreme points of noncooperative payoff regions is a simple and efficient way to prove some results about Pareto analysis in game theory.
    Date: 2017–05
  8. By: Gorga, Carmine
    Abstract: In Concordian economics, a bubble is defined as a separation of monetary values from values of real wealth. This separation is effected by the fundamental proposition of Concordian economics: Investment is income minus hoarding. This definition, in turn, allows us to identify a set of crucial relationships that exist in the economic process, namely more hoarding, less investment and less growth; more hoarding, more inflation; more hoarding, more poverty.
    Keywords: A10, B40, B59, C18, D84, E01, E19, G01, K40
    JEL: A10 A19 B40 B59 C18 D84 E1 E19 G01 K40
    Date: 2016–08–15

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