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on History and Philosophy of Economics |
| By: | Thomas Palley |
| Abstract: | Economic theory is prone to hysteresis. Once an idea is adopted, it is difficult to change. In the 1970s, the economics profession abandoned the Keynesian Phillips curve and adopted Milton Friedman's natural rate of unemployment (NRU) hypothesis. The shift was facilitated by a series of lucky breaks. Despite much evidence against the NRU, and much evidence and theoretical argument supportive of the Keynesian Phillips curve, the NRU hypothesis remains ascendant. The hypothesis has had an enormous impact on macroeconomic theory and policy. 2018 is the fiftieth anniversary of Friedman's introduction of the NRU hypothesis. The anniversary offers an opportunity to challenge, rather than celebrate it. |
| Keywords: | Natural rate of unemployment, Keynesian Phillips curve, Friedman, Tobin |
| JEL: | E00 E12 E20 E30 E60 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:imk:fmmpap:26-2018&r=hpe |
| By: | Claude Diebolt; Michael Haupert |
| Abstract: | We look at the evolution of the economic history discipline over the past century and note its growth, decline, and acceptance as a tool, but less so as a separate discipline. We contend that this has not led to the end of the discipline, but its acceptance as a standard part of the lexicon. |
| Keywords: | Economics, Economic History, Cliometrics. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2018-25&r=hpe |
| By: | Guilhem Lecouteux (Université Côte d'Azur; GREDEG CNRS) |
| Abstract: | This editorial presents the main contributions of the theory of team reasoning in game theory, and the issues that remain to be solved before this theory could become a credible alternative to 'orthodox' game theory. I argue in particular that an approach based on collective agency rather than rational choice theory and social preferences offer a scientifically preferable theory of unselfish behaviours, both in terms of parsimony and empirical validation. I review the economic literature on team reasoning, and highlight the contributions of the papers of the present volume to tackle the open issues of the theory of team reasoning. |
| Keywords: | team reasoning, preferences, rationality, cooperation, coordination |
| JEL: | B41 C72 D70 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2018-17&r=hpe |
| By: | Marta Leniec (Uppsala University); Kristoffer Glover (Finance Discipline Group, University of Technology Sydney); Erik Ekström (Uppsala University) |
| Abstract: | We study zero-sum optimal stopping games (Dynkin games) between two players who disagree about the underlying model. In a Markovian setting, a verification result is established showing that if a pair of functions can be found that satisfies some natural conditions then a Nash equilibrium of stopping times is obtained, with the given functions as the corresponding value functions. In general, however, there is no uniqueness of Nash equilibria, and different equilibria give rise to different value functions. As an example, we provide a thorough study of the game version of the American call option under heterogeneous beliefs. Finally, we also study equilibria in randomized stopping times. |
| Keywords: | Dynkin game; heterogeneous belief; multiple Nash equilibria; optimal stopping theory |
| Date: | 2017–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:uts:ppaper:2017-2&r=hpe |
| By: | Aurélien Goutsmedt (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | The article shows that Sargent's view of macroeconomics is in contrast with Lucas' one. According to the latter, assumptions in a model are un-realist, the model do not aim at representing reality. It is rather a simulation tool to enable the evaluation of different economic policies. The Lucasian ideal reflects a belief in a macroeconomist who is an engineer in charge of the production of a "software for economic policies" used by governmental authorities. And he is the one who handles the software to help policy choices on a scientific basis. Concerning Sargent, he believed that in order to replace the Keynesian paradigm, New Classical Economics had to be able to succeed in the same tasks. And one of these tasks was to advise political power by bringing some telescope to read current economic phenomenon and some intuitive ideas to debate on economic policy. Sargent sought to implement what he called the Rational Expectations Theory to some concrete cases (Poincaré Stabilization, German Hyperinflation, Thatcher and Reagan policies) to show the relevance of such a framework to think about current economic issues. |
| Abstract: | L'idée est de montrer que la vision de la macroéconomie de Sargent contraste avec celle de Lucas. Pour Lucas, les hypothèses d'un modèle sont « a-réalistes », le modèle ne vise pas à représenter la réalité. Il est un outil de simulation qui doit permettre de simuler différentes politiques économiques. L'idéal « lucassien » est celui d'un macroéconomiste qui a donc vocation à devenir un ingénieur chargé de fournir un « logiciel de politiques économiques » aux autorités publiques, logiciel qu'il manipule afin d'aiguiller les choix de politiques sur une base scientifique. Sargent, quant à lui, considère que pour suppléer le paradigme keynésien, la nouvelle économie classique doit être capable de remplir les mêmes tâches, et l'une de ces tâches est de conseiller le pouvoir en lui fournissant une grille de lecture des phénomènes économiques et des outils intuitifs pour d&eaute;battre des politiques économiques à mettre en place. Sargent cherche à appliquer ce qu'il nomme la théorie des anticipations rationnelles à un ensemble de cas concrets (stabilisation Poincaré, hyperinflation allemande, politique de Thatcher et Reagan) pour montrer la pertinence de ce cadre d'analyse pour penser les problèmes économiques contemporains. |
| Keywords: | Rational Expectations,New Classical Economics,Macroeconomics History,Histoire de la macroéconomie,Nouvelle Economie Classique,Anticipations rationnelles |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01489232&r=hpe |
| By: | Mongin, Philippe |
| Abstract: | French Abstract: Les économistes ont coutume de distinguer entre une composante positive et une composante normative de leurs travaux, ce qui est une singularité de leur discipline, car cette distinction n'a pas de répondant exact dans les autres sciences sociales. Elle a fortement évolué au cours du temps et les différentes manières de la concevoir aujourd'hui en reflètent l'histoire. On se propose ici d'en retracer les origines et les premières formes, de l'économie politique classique anglaise de la première moitié du XIXe siècle jusqu'à l'apparition de l'économie du bien-être dans la première moitié du XXe siècle. Ce parcours séquentiel vise aussi à identifier les positions les plus représentatives et les arguments invoqués pour les soutenir, en préparant ainsi une discussion qui serait moins historique et plus strictement conceptuelle. English Abstract: Economists are accustomed to distinguishing between a positive and a normative component of their work, a distinction that is peculiar to their field, having no exact counterpart in the other social sciences. The distinction has substantially changed over time, and the different ways of understanding it today are reflective of its history. Our objective is to trace the origins and initial forms of the distinction, from the English classical political economy of the first half of the 19th century to the emergence of welfare economics in the first half of the 20th century. This sequential account will also serve to identify the main representative positions along with the arguments used to support them, and it thus prepares the ground for a discussion that will be less historical and more strictly conceptual. |
| Keywords: | économie positive et économie normative; jugements de valeur; thèse de Hume; objectivité au sens de Weber; économie du bien-être; John Stuart Mill; John Neville Keynes; Lionel Robbins; positive economics and normative economics; value judgments; Humes thesis; objectivity in |
| JEL: | B20 B41 D60 D70 |
| Date: | 2018–01–22 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:1259&r=hpe |
| By: | Simon Schopohl (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, EDEEM - Université Paris 1 - EDEEM - European Doctorate in Economics Erasmus Mundus, Universität Bielefeld (GERMANY), UCL - Université Catholique de Louvain) |
| Abstract: | We analyze a game in which players with unique information are arranged in a hierarchy. In the lowest layer each player can decide in each of several rounds either to pass the information to his successor or to hold. While passing generates an immediate payoff according to the value of information, the player can also get an additional reward if he is the last player to pass. Facing this problem while discounting over time determines the player's behavior. Once a successor has collected all information from his workers he starts to play the same game with his successor. We state conditions for different Subgame Perfect Nash Equilibria and analyse the time it takes each hierarchy to centralize the information. This allows us to compare different structures and state which structure centralizes fastest depending on the information distribution and other parameters. We show that the time the centralization takes is mostly affected by the least informed players. |
| Keywords: | communication network,dynamic network game,hierarchical structure,information transmission |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01491930&r=hpe |
| By: | Dmitry Levando (National Research University Higher School of Economics [Moscow], CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Traditionally social sciences are interested in structuring people in multiple groups based on their individual preferences. This paper suggests an approach to this problem in the framework of a non-cooperative game theory. Definition of a suggested finite game includes a family of nested simultaneous non-cooperative finite games with intra- and inter-coalition externalities. In this family, games differ by the size of maximum coalition, partitions and by coalition structure formation rules. A result of every game consists of partition of players into coalitions and a payoff profile for every player. Every game in the family has an equilibrium in mixed strategies with possibly more than one coalition. The results of the game differ from those conventionally discussed in cooperative game theory, e.g. the Shapley value, strong Nash, coalition-proof equilibrium, core, kernel, nucleolus. We discuss the following applications of the new game: cooperation as an allocation in one coalition, Bayesian games, stochastic games and construction of a non-cooperative criterion of coalition structure stability for studying focal points. |
| Keywords: | Noncooperative games,Nash equilibrium,Shapley value,strong equilibrium,core |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01491935&r=hpe |
| By: | George McMillan III (Aegis Defense Services) |
| Abstract: | This research design overcomes the three problems of coordinating the micro and macro behavioral sciences of Gintis defined as: (1) the identification of an overarching casual theme, (2) the identification of an integrative methodology, and (3) the identification of a series of a series of compatible frameworks. This is achieved by the comparison of the competing Hume-Smith versus Marx-Engels foundational-political-economic philosophical theories in relation to the outcome of the 20th Century Ideological Experiments. This paper contends that the range of valid foundational-political-economic philosophical theories, and the corresponding series of psychological, political, economic theoretical frameworks in the social sciences, can be reduced considerably across the board considerably, and then integrated laterally. |
| Keywords: | Unification of the behavioral sciences; Unified Theory of the Social Sciences |
| JEL: | F59 A12 B00 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:sek:ilppro:6208314&r=hpe |
| By: | Ronald Schettkat |
| Abstract: | Behavioral economics, the analysis of economic decisions, has made enormous progress over the last decades and become accepted as a major field in economics. How is behavioral economics to be compared to the neoclassical model? As a revision of the neoclassical model enhancing the set of variables for motivation such as fairness in the utility function which is then to be maximized? Or is behavioral economics a revolution, a departure from the neoclassical axioms, a new model? This paper argues that many of the findings in behavioral economics are incompatible with the neoclassical model and have paved the way for a revolution in economics. |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:bwu:schdps:sdp18005&r=hpe |
| By: | Orozco, Valérie; Bontemps, Christophe; Maigné, Elise; Piguet, V.; Hofstetter, A.; Lacroix, Anne; Levert, F.; Rousselle, J.M |
| Abstract: | Empirical economics and econometrics (EEE) research now relies primarily on the application of code to datasets. Handling the workflow linking datasets, programs, results and finally manuscript(s) is essential if one wish to reproduce results, which is now increasingly required by journals and institutions. We underline here the importance of “reproducible research” in EEE and suggest three simple principles to follow. We illustrate these principles with good habits and tools, with particular focus on their implementation in most popular software and languages in applied economics. |
| Keywords: | Reproducibility; workflow; replication; literate programming; software |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:32757&r=hpe |
| By: | W.F. Lawless (Paine College, Augusta, GA) |
| Abstract: | Appearances can be misleading, but not in the social sciences. Based on the statistical aggregation of intuitions (observations, self-reports, interviews) about reality across individuals that converge while seeking a 1:1 relation, the primary model of decision making attempts to make intuitions rational. But despite its many claims to the contrary, the social sciences have failed in building a successful predictive theory, including in economics where the results from this failure, re-labeled as irrational, have won Nobel prizes, yet irrational humans in freely organized and competitive teams strangely manage to be extraordinarily innovative. In contrast to traditional social science, the most predictive theory in all of science is the quantum theory, each prediction confirmed by new discoveries leading to new predictions and further discoveries, but the dualist nature of the quantum theory makes it counterintuitive despite more than a century of intense, unflagging debate. By re-introducing dualism into social science with a quantum-like theory of social interdependence, we offer an opportunity to rehabilitate social science by successfully making predictions and new discoveries about human teams that account for the abysmal performance of interdisciplinary science teams; that generalizes to the newly arising problem of how to engineer hybrid teams (arbitrary combinations of autonomous humans, machines and robots); and that explains the counterintuitive prediction that highly interdependent teams do not generate Shannon information, but instead “darken†as a team becomes perfect, meaning, intuitively, that structural information about a team can be gained only under competition. |
| Keywords: | interdependence, convergence, mathematical models |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:smo:ppaper:011&r=hpe |
| By: | Hill, Brian |
| Abstract: | The standard, Bayesian account of rational belief and decision is often argued to be unable to cope properly with severe uncertainty, of the sort ubiquitous in some areas of policy making. This paper tackles the question of what should replace it as a guide for rational decision making. It defends a recent proposal, which reserves a role for the decision maker’s confidence in beliefs. Beyond being able to cope with severe uncertainty, the account has strong normative credentials on the main fronts typically evoked as relevant for rational belief and decision. It fares particularly well, we argue, in comparison to other prominent non-Bayesian models in the literature. |
| Keywords: | Confidence; Decision Under Uncertainty; Belief; Rationality |
| JEL: | D81 H00 |
| Date: | 2017–10–03 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:1258&r=hpe |
| By: | François Facchini (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Deirdre McCloskey a formulé une critique puissante de la rhétorique économique. À l'occasion de la traduction française d'un de ses ouvrages, François Facchini revient sur ses travaux pour éclairer les débats actuels autour de la scientificité de l'économie. La traduction française du petit ouvrage The Secret Sins of Economics, publié en 2002 par Deirdre N. McCloskey, est l'occasion de revenir sur le parcours intellectuel et les positions épistémologiques de cette économiste américaine au savoir éclectique et encyclopédique. Cet ouvrage d'épistémologie économique reprend en effet des thèmes déjà abordés dans des ouvrages précédents (1994a, 1994b) et conduit à s'interroger sur l'apport de l'économétrie au savoir des économistes. Écrit comme une intrigue policière, Les péchés secrets de la science économique participe à la critique des tests de significativité statistique et se propose de remettre à sa juste place une bonne partie de la littérature économique. Le présent article entend ainsi profiter de la parution de ce petit ouvrage pour revenir sur quelques-unes des thèses d'épistémologie économique du Professeur McCloskey et pour proposer à leur lumière une lecture, qui se veut originale, de la controverse suscitée par l'ouvrage de Cahuc et Zylberberg (2016) dans le monde des économistes français. |
| Keywords: | épistémologie, sciences économiques, économétrie, négationnisme en économie |
| Date: | 2017–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01484830&r=hpe |
| By: | Michel De Vroey (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Luca Pensieroso (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)) |
| Abstract: | Depuis quelques années, un vent de contestation souffle dans les facultés d’économie de nombreuses universités européennes. On y voit des étudiants et des étudiantes se plaindre de ce qu’ils considèrent être une absence de pluralisme dans la discipline économique. La plainte peut se résumer en deux propositions. |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvrg:2018137&r=hpe |
| By: | Ginsburgh, Victor; Weber, Shlomo |
| Abstract: | The paper brings together methodological, theoretical, and empirical analysis into the single framework of linguistic diversity. It reflects both historical and contemporary research by economists and other social scientists on the impact of language on economic outcomes and public policies. We examine whether and how language influences human thinking (including emotions) and behavior, analyze the effects of linguistic distances on trade, migrations, financial markets, language learning and its returns. The quantitative foundations of linguistic diversity, which rely on group identification, linguistic distances as well as fractionalization, polarization and disenfranchisement indices are discussed in terms of their empirical challenges and uses. We conclude with an analysis of linguistic policies and shifts of languages and examine their welfare effects and the trade-offs between the development of labor markets and the social costs that they generate in various countries. |
| Keywords: | Diversity Indices. Welfare.; Economic Behavior; Educational Linguistic Policies; Languages; Linguistic Distances |
| JEL: | F13 F22 G11 H11 J15 J3 O10 Z13 Z18 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13002&r=hpe |
| By: | Argenziano, Rossella; Gilboa, Itzhak |
| Abstract: | Relying on a literal interpretation of Weber's law in psychophysics, we show that a simple condition of independence across good categories implies the Cobb-Douglas preferences. |
| Keywords: | Cobb-Douglas; Webers Law; Semi-Order |
| JEL: | D11 |
| Date: | 2017–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:1269&r=hpe |
| By: | Depetris-Chauvin, Emilio (Pontificia Universidad Catolica de Chile); Özak, Ömer (Southern Methodist University) |
| Abstract: | This research explores the historical roots of the division of labor in pre-modern societies. It advances the hypothesis and establishes empirically that intra-ethnic diversity had a positive effect on the division of labor across ethnicities in the pre-modern era. Exploiting a variety of identification strategies and a novel ethnic level dataset combining geocoded ethnographic, linguistic and genetic data, it establishes that higher levels of intra-ethnic diversity were conducive to economic specialization in the pre-modern era. The findings are robust to a host of geographical, institutional, cultural and historical confounders, and suggest that variation in intra-ethnic diversity is the main predictor of the division of labor in pre-modern times. |
| Keywords: | comparative development, division of labor, economic specialization, intra-ethnic diversity, cultural diversity, population diversity, genetic diversity, linguistic diversity |
| JEL: | D74 F10 F14 J24 N10 O10 O11 O12 O40 O43 O44 Z10 Z13 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11554&r=hpe |
| By: | Greitens, Jan |
| JEL: | B31 E42 N13 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ibfpps:1517&r=hpe |
| By: | François Gardes (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics) |
| Abstract: | The Nobel prize which has been awarded to Angus Deaton in 1995 proved his exceptional contribution to applied microeconomics, microeconometric methods and development studies. The four books he published offer a large view on these domains and prove the importance taken by new statistical methods and data in applied micro- and macroeconomics. |
| Abstract: | Le Prix Nobel décerné à Angus Deaton en 2015 a mis en valeur la contribution exceptionnelle de cet économiste appliqué dont l'œuvre a accompagné le développement des études de microéconomie, appliquées en particulier au développement, et des méthodes de la micro-économétrie au cours de quarante dernières années. Les quatre ouvrages qui regroupent une partie de ses études fournissent un panorama étendu de ces trois domaines et montrent l'importance qu'ont prise les méthodes statistiques et les nouveaux types de données dans le renouvellement tant de la microéconomie que de la macroéconomie. |
| Keywords: | consumption,microeconomics,microeconometrics,permanent income,saving,inequality,development,pseudo panel,time-series of cross-sections,consommation,inégalité,microéconomie,micro-économétrie,revenu permanent,épargne,développement,pseudo-panel |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01535155&r=hpe |