nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2021‒06‒14
twenty papers chosen by
Erik Thomson
University of Manitoba

  1. Cordon of Conformity:Why DSGE models Are Not the Future of Macroeconomics By Servaas Storm
  2. Women in economics: A UK Perspective By Sevilla, Almudena; Smith, Sarah
  3. Religion in Economic History: A Survey By Becker, Sascha O.; Rubin, Jared; Woessmann, Ludger
  4. Standing in the Way of Rigor? Economics’ Meeting with the Decolonizing Agenda By Ingrid Harvold Kvangraven; Surbhi Kesar
  5. Fiscal and Monetary Anomie in Argentina: The Legacy of Endemic Populism By Emilio Ocampo
  6. Fifty Years of Debate on Hardin's Tragedy of the Commons – A Reflection By Hasan, Lubna
  7. "Another Bretton Woods Reform Moment: Let Us Look Seriously at the Clearing Union" By Jan Kregel
  8. Values in Welfare economics By Antoinette Baujard
  9. How did they get it so wrong? Mindestlöhne und ihre Bedrohung für die Standardökonomie By Heise, Arne
  10. Theories of Consumption By Drakopoulos, Stavros A.
  11. Self-sacrifice: an analysis of female economic behaviour in less developed countries through the lenses of Amartya Sen’s thought By Erasmo, Valentina
  12. Race-related research in economics and other social sciences By Advani, Arun; Ash, Elliot; Cai, David; Rasul, Imran
  13. Blurred Crystal Ball: investigating the forecasting challenges after a great exogenous shock By Marcelo A. T. Aragão
  14. Liberalismus als Verfassungsphilosophie westlicher Gesellschaften By Pies, Ingo
  15. Development policy based on happiness? A review of concepts, ideas and pitfalls By Renz, Timon
  16. North Korean statistics and research on the North Korean economy By Lee, Suk; Cho, Byungkoo
  17. Harrodians and Kaleckians: a suggested reconciliation and synthesis By Mark Setterfield
  18. Latin America's Income Inequality Under five Political Regimes, 1870-2018 By Giovanni Andrea Cornia
  19. Calamities, Common Interests, Shared Identity: What Shapes Altruism and Reciprocity? By Aksoy, Cevat Giray; Cabrales, Antonio; Dolls, Mathias; Durante, Ruben; Windsteiger, Lisa
  20. Relations: Agriculture – Economyin The Theory of Economics By Kowalczyk, Stanisław; Kwasek, Mariola

  1. By: Servaas Storm (Delft University of Technology)
    Abstract: The Rebuilding Macroeconomic Theory Project, led by David Vines and Samuel Wills (2020), is an important, albeit long overdue, initiative to rethink a failing mainstream macroeconomics. Professors Vines and Wills, who must be congratulated for stepping up to the challenge of trying to make mainstream macroeconomics relevant again, call for a new multiple-equilibrium and diverse (MEADE) paradigm for macroeconomics. Their idea is to start with simple models, ideally two-dimensional sketches, that explain mechanisms that can cause multiple equilibria. These mechanisms should then be incorporated into larger DSGE models in a new, multiple-equilibrium synthesis to see how the fundamental pieces of the economy fit together, subject to it being 'properly micro-founded'. This paper argues that the MEADE paradigm is bound to fail, because it maintains the DSGE model as the unifying framework at the center of macroeconomic analysis. The paper reviews 10 fundamental weaknesses inherent in DSGE models which make these models irreparably useless for macroeconomic policy analysis. Mainstream macroeconomics must put DSGE models, once and for all, in the Museum of Implausible Economic Models – and learn important lessons from non-DSGE macroeconomic approaches.
    Keywords: New Keynesian DSGE models; rational expectations; micro-foundations; loanable funds model; Lucas critique; multiple equilibria; income distribution; demand-led growth; money and monetary production economy.
    JEL: E20 E60 F60 O10 O40
    Date: 2021–02–14
  2. By: Sevilla, Almudena; Smith, Sarah
    Abstract: The status of women in economics in the US has come increasingly under the spotlight. We exploit high quality administrative data to paint the first comprehensive picture of the status of women in UK academic economics departments in research-intensive universities. Our evidence indicates that, as in the US, women in economics are under-represented and are paid less than men. The issues facing women in economics in the UK are similar to other disciplines particularly STEM but have received less national policy attention to date. We conclude with a discussion of interventions that might improve the status of women in academia and we present new evidence that a UK academic diversity programme (Athena Swan) has narrowed the gender pay gap at a senior level.
    Keywords: Academia; Gender; gender wage gap; Women in Economics
    JEL: A14
    Date: 2020–07
  3. By: Becker, Sascha O.; Rubin, Jared; Woessmann, Ludger
    Abstract: This chapter surveys the recent social science literature on religion in economic history, covering both socioeconomic causes and consequences of religion. Following the rapidly growing literature, it focuses on the three main monotheisms-Judaism, Christianity, and Islam-and on the period up to WWII. Works on Judaism address Jewish occupational specialization, human capital, emancipation, and the causes and consequences of Jewish persecution. One set of papers on Christianity studies the role of the Catholic Church in European economic history since the medieval period. Taking advantage of newly digitized data and advanced econometric techniques, the voluminous literature on the Protestant Reformation studies its socioeconomic causes as well as its consequences for human capital, secularization, political change, technology diffusion, and social outcomes. Works on missionaries show that early access to Christian missions still has political, educational, and economic consequences in present-day Africa, Asia, and Latin America. Much of the economics of Islam focuses on the role that Islam and Islamic institutions played in political-economy outcomes and in the "long divergence" between the Middle East and Western Europe. Finally, cross-country analyses seek to understand the broader determinants of religious practice and its various effects across the world. We highlight three general insights that emerge from this literature. First, the monotheistic character of the Abrahamic religions facilitated a close historical interconnection of religion with political power and conflict. Second, human capital often played a leading role in the interconnection between religion and economic history. Third, many socioeconomic factors matter in the historical development of religions.
    Keywords: Christianity; economic history; Education; Finance; Islam; Judaism; persecution; political economy; specialization; Trade
    JEL: I15 I25 J15 N00 Z12
    Date: 2020–06
  4. By: Ingrid Harvold Kvangraven (University of York, UK); Surbhi Kesar (Azim Premji University, India)
    Abstract: This paper critically engages with various aspects of the decolonization movement in economics and its implications for the discipline. We operationalize the insights from this engagement using a survey of 498 economists that explores how faculty across different kinds of departments, disciplines, geographies, and identities perceive the problems of economics teaching, how they think economics pedagogy should be reformed, if at all, and how they relate to decolonial critiques of economics pedagogy. Based on the survey findings, we conclude that the mainstream of the field’s emphasis on technical training and rigor, within a narrow theoretical and methodological framework, likely stands in the way of the very possibility for decolonizing economics, given its strong contrast to key ideas associated with the decolonization agenda, such as positionality, centering power relations, exposing underlying politics of defining theoretical categories, and unpacking the politics of knowledge production. Nonetheless, the survey responses clearly chart out the challenges that the field faces in terms of decolonizing pedagogy, which is a first step towards debate and change.
    Keywords: Economics teaching, economics pedagogy, decolonial theory, postcolonial theory, decolonizing economics
    JEL: A20 B40 B50 F54
    Date: 2021–05
  5. By: Emilio Ocampo
    Abstract: Argentina’s modern economic history offers perhaps the clearest evidence in support of a rules-based fiscal and monetary policy framework. From 1899 until 1914 the country abided by the rules of the gold standard and experienced rapid GDP growth with price stability. After WWI and until 1939, when it was mostly off the gold standard, its inflation rate and fiscal balances remained in line with those of the world’s most developed countries. During the 1930s the Argentine Treasury was able to issue long-term debt in pesos at rates between 3% and 4% per annum. Something fundamental happened after 1945 and its effects proved persistent: since then inflation has averaged 143% a year –with several bouts of extreme inflation and hyperinflation. In the last 50 years, persistent and high fiscal imbalances, low growth and recurrent sovereign debt defaults have become semi-permanent features of the Argentine economy. This paper argues that Argentina suffers from a condition that can be described as fiscal and monetary anomie, the roots of which can be traced back to the establishment of a populist-corporatist economic regime in 1946. It also contends that the failure of the 1990s structural reforms reinforced this condition.
    Keywords: Argentina, Economic History, Fiscal Policy, Monetary Policy, Populism
    JEL: E5 E63 N16 O54
    Date: 2021–05
  6. By: Hasan, Lubna
    Abstract: This paper critically reviews Garrett Hardin’s “The Tragedy of the Commons”. Hardin’s thesis about the impossibility of collective action for achieving mutually beneficial outcomes in a group setting has divided the scholarly community since its publication in 1968, while its most perennial object being the communal management of resources, which was banned on account of being inherently inefficient. This paper argues that much of the criticism against common property regimes stems from incorrect modeling of a common property situation, and misunderstandings about the terms and their wrong usage. Specifically, models of collective action - in particular, Hardin’s tragedy of the Commons, but also Olson’s Logic of Collective Action, and the Prisoner’s Dilemma, which is used as a critique against common property regimes, are not based on an accurate depiction of reality and many of their assumptions are untrue. The purpose is to drive home the point that common property regimes are not inherently inferior types of regimes; and causes of success, and of failures, of these regimes lie elsewhere. Secondly, both public [and also private] management of natural resources has not had universal success. It is time to think out of the usual ‘either public or private’ dichotomy. Combining elements of both public and communal management in a pragmatic way is necessary. It is time to give co-management a serious thought.
    Keywords: Natural Resource Management, Property Institutions, Co-management of Resources.
    JEL: P14 Q2
    Date: 2020–06–08
  7. By: Jan Kregel
    Abstract: This policy brief explores a route to remaking the international financial system that would avoid the contradictions inherent in some of the prevailing reform proposals currently under discussion. Senior Scholar Jan Kregel argues that the willingness of central banks to consider electronic currency provides an opening to reconsider a truly innovative reform of the international financial system, and one that is more appropriate to a digital monetary world: John Maynard Keynes's original clearing union proposal. Kregel investigates whether such a clearing system could be built up from an already-existing initiative that has emerged in the private sector. He analyzes the operations of a private, cross-border payment system that could serve as a real-world blueprint for a more politically palatable equivalent of Keynes's international clearing union.
    Date: 2021–02
  8. By: Antoinette Baujard (Univ Lyon, UJM Saint-Etienne, GATE UMR 5824, 42023 Saint-Etienne, France)
    Abstract: This chapter focuses on the inner rationale and consequences of four different archetypal positions regarding how ethical and political values are tackled in welfare economics. Welfare economics is standardly associated with the welfarist framework, for which social welfare is based on individual utility only. Beyond this, we distinguish the value-neutrality claim – for which ethical values should be and are out of the scope of welfare economics –, the value confinement ideal – for which ethical values are acceptable if they are minimal and consensual–, the transparency requirement – for which any ethical values may be acceptable in the welfare economics framework if explicit and formalized –, and the entanglement claim – which challenges the very possibility of demarcation between facts and values.
    Keywords: Welfare economics, facts and values, value judgement, welfarism, transparency, demarcation, normative and positive, neutrality
    JEL: B41 D60 D63
    Date: 2021
  9. By: Heise, Arne
    Abstract: In der Wirtschaftsgeschichte hat es immer wieder Phänomene gegeben, die als unvereinbar mit der herrschenden Ökonomik erschienen. Wenn dies dennoch bis heute zu keinem Paradigmenwechsel in der Dogmengeschichte der Wirtschaftswissenschaften führte, so zeigt sich hierin die besondere Resilienz des herrschenden Paradigmas. In diesem Artikel geht es darum, mit Hilfe der Wissenschaftstheoretiker Thomas Kuhn, Imre Lakatos und, vor allem, Ludwik Fleck die Hintergründe, aber auch Gefahren dieser Resilienz aufzuzeigen und - unter besonderer Betrachtung der Forschungen zur Arbeitsmarktökonomik des Mindestlohnes - zu untersuchen, ob ein zwingend benötigter 'stilgemäßer Denkzwang' nicht doch unter Umständen zu einer 'Harmonie der Täuschungen' entarten kann und deshalb den empirische Anomalien größere Aufmerksamkeiten eingeräumt werden müsste?
    Keywords: Mindestlohn,Beschäftigung,Arbeitsmarkt,wissenschaftliche Revolution,Paradigma
    JEL: A11 B41 J30 J40 J42
    Date: 2021
  10. By: Drakopoulos, Stavros A.
    Abstract: This chapter explains the role of consumption expenditures in modern economies and their significance for the determination of the level of output and employment in an economy. It starts with a presentation of the theory of intertemporal choice that forms the basis of mainstream consumption functions. Next, it discusses Keynes’s approach to consumption, and particularly his criticism of the standard model of consumer behaviour, his emphasis on the role of consumption for the level of employment, and his analysis of aggregate consumption patterns. It also describes the main mainstream theories of consumption, which are the life cycle income hypothesis, the permanent income hypothesis and the random walk theory of consumption. Finally, the chapter explores the heterodox approaches to consumption, focusing mainly on the relative income hypothesis. Additionally, it shows the consequences of consumption theories for the effectiveness of economic policies towards unemployment and economic downturns.
    Keywords: Consumption expenditure; Fiscal policy; Keynesian consumption function; Life-cycle income hypothesis; Permanent income hypothesis; Relative income Hypothesis
    JEL: B0 B21 E21
    Date: 2021–06
  11. By: Erasmo, Valentina
    Abstract: The paper shows how Sen admitted self-sacrifice, as opposite motive compared to self-interest, for describing female behaviour in less developed countries. During the Nineties, Sen referred specifically to some anthropological studies about women conditions (Kapur, 1999) in less developed countries: when these scholars had asked them whether they felt deprived, they said ‘no’. These women identify themselves with their family, in turn, their privileged economic motive is self-sacrifice at the goal of maximizing family welfare. In those cases only, Sen advocates selfishness as the ideal route for improving women’s well-being. These elements offer a more complex understanding of economic behaviour and an alternative compared to rational choice theory prevailing in those years, considering also those diversities deriving from gender specificities and geographical influences on decision-making. The main result of this paper is to have provided an extended reading of Sen’s analysis of economic behaviour where self-sacrifice and its related maximization of family welfare which might be considered typical female and “eastern” categories. These categories represent rural India’s women behaviour, while are absent in “Western” decision-making where gender specificities and geographic differences are not considered because they are not so stark.
    Keywords: diversity; rational choice theory; self-interest; self-sacrifice; women.
    JEL: B31 B59 D01 D64
    Date: 2021–05–24
  12. By: Advani, Arun (University of Warwick and Institute of Fiscal Studies (IFS)); Ash, Elliot (ETH Zurich); Cai, David (ETH Zurich); Rasul, Imran (University College London and IFS)
    Abstract: How does economics compare to other social sciences in its study of issues related to race and ethnicity? We assess this using a corpus of 500? 000 academic publications in economics, political science, and sociology. Using an algorithmic approach to classify race-related publications, we document that economics lags far behind the other disciplines in the volume and share of race-related research, despite having higher absolute volumes of research output. Since 1960, there have been 13,000 race-related publications in sociology, 4,000 in political science, and 3,000 in economics. Since around 1970, the share of economics publications that are race-related has hovered just below 2% (although the share is higher in top-5 journals) ; in political science the share has been around 4% since the mid-1990s, while in sociology it has been above 6% since the 1960s and risen to over 12% in the last decade. Finally, using survey data collected from the Social Science Prediction Platform, we …nd economists tend to overestimate the amount of race-related research in all disciplines, but especially so in economics JEL Classification: A11 ; Z13
    Date: 2021
  13. By: Marcelo A. T. Aragão
    Abstract: An event like Covid-19 pandemic brings about a deadly human toll and mayhem to the economy. With such a great exogeneous shock, policy makers and forecasters alike face a set of challenges to keep on contributing to the economic response. Many distinguishing researchers came forward with their own assessments of the lasting macroeconomic impacts of the Covid-19 pandemic. Modestly, this paper attempts a different instance: investigating how a practitioner can cope with some pressing forecasting challenges while avoiding naive pitfalls. Without claiming any quantification, it experiments with usual US economy data sources and macroeconomic models to exemplify these challenges and their possible overcoming. Finally, it summarizes some empirical, pragmatical conclusions.
    Date: 2021–05
  14. By: Pies, Ingo
    Abstract: Liberalismus ist die Verfassungsphilosophie westlicher Gesellschaften. Liberale Prinzipien konstitu(tionalis)ieren die Wettbewerbsarenen der modernen Gesellschaft, so dass Konkurrenz für Kooperation in Dienst genommen wird, und zwar in der Wissenschaft, in der Wirtschaft und in der Politik.
    Keywords: Liberalismus,post-malthusianische Gesellschaft,Moralparadoxon der Moderne,Liberalism,post-Malthusian society,moral paradox of modernity
    Date: 2021
  15. By: Renz, Timon
    Abstract: Happiness research, which has been strongly represented in the social sciences for some years, also offers opportunities for application in public policy. Consequently, there are already considerations to evaluate development policy by the yardstick of subjective well-being. This paper aims to provide an overview of the applications of happiness to development issues and to elicit both opportunities and pitfalls of such a policy. As a result, numerous problems associated with happiness research become apparent - conceptually, technically, and even ideologically. It is probably too early to proclaim a new paradigm of a "Happiness Development Policy". Thus, the paper also deals with what might still have to be done for a meaningful application.
    Keywords: Happiness Research,Development Policy
    Date: 2021
  16. By: Lee, Suk; Cho, Byungkoo
    Abstract: For researchers who study the North Korean economy, one of the most unknown and interesting areas is North Korean statistics. There are many questions such as: Do statistics on the North Korean economy even exist? If not, how do overseas researchers conduct their studies? and If so, can we trust them? What statistics are published by the South Korean government and other global institutions? The list goes on, but no one has come up with a conclusive answer. This is why we chose North Korean statistics as the first topic of the new series. Numerous questions were dealt with on the topic and their significance for studies on the North Korean economy. We hope you find this article useful and informative.
    Date: 2021
  17. By: Mark Setterfield (Department of Economics, New School for Social Research)
    Abstract: The Kaleckian and Harrodian approaches to growth frequently arrive at antagonistic positions with respect to key issues in heterodox macrodynamics, including the treatment of the rate of capacity utilization and the very nature of the long-run growth process. Nevertheless, this paper is devoted to exploring the possibilities for reconciling and even synthesizing these traditions. It does so by directly addressing three key areas of dispute: the Keynesian stability condition; Harrodian instability; and the question as to whether long-run growth is best conceived in terms of a stable steady state or `corridor instability'. It is shown that reconciliation and even synthesis is possible - the latter producing a `corridor within a corridor' conception of the growth process in which the economy switches between Kaleckian and Harrodian dynamics depending on the extent to which the rate of capacity utilization departs from its normal rate.
    Keywords: Keynesian stability condition, Harrodian instability, corridor instability, shifting equilibrium, Kaleckian pseudo-instability, normal rate of capacity utilization
    JEL: E11 E12 E22 O41
    Date: 2021–06
  18. By: Giovanni Andrea Cornia
    Abstract: Most analysts of the Latin American economy believe in the unavoidable persistence of high income and wealth inequality in the region due to a continued structural dependence on primary commodities, the lingering effects of colonial policies, and the emergence of a modernized version of the traditional elites. This paper challenges this view on political economic grounds. It argues that the changes observed over the last one hundred and fifty years in the political orientation of governments affected the nature of economic and social policies that, in their turn, influenced the level of income inequality, both upward and downward. In other words, the evolution of inequality has depended to a considerable extent on ideological and political changes that need to be fully understood. This paper tries to explore this circular relation between `political orientation' of governments and `inequality', and between ‘endogenous changes in economic/social conditions' and `changes in the political orientation of governments'.
    Date: 2021
  19. By: Aksoy, Cevat Giray; Cabrales, Antonio; Dolls, Mathias; Durante, Ruben; Windsteiger, Lisa
    Abstract: We conduct a large-scale survey experiment in nine European countries to study how priming a major crisis (COVID-19), common economic interests, and a shared identity influences altruism, reciprocity and trust of EU citizens. We find that priming the COVID-19 pandemic increases altruism and reciprocity towards compatriots, citizens of other EU countries, and non-EU citizens. Priming common European values also boosts altruism and reciprocity but only towards compatriots and fellow Europeans. Priming common economic interests has no tangible impact on behaviour. Trust in others is not affected by any treatment. Our results are consistent with the parochial altruism hypothesis, which asserts that because altruism arises out of inter-group conflict, humans show a tendency to favor members of their own groups.
    Date: 2021–05–24
  20. By: Kowalczyk, Stanisław; Kwasek, Mariola
    Abstract: The paper discusses the position of agriculture in the economy at various levels of economic development and in various schools of economic theory. The complexity of the analyzed area is a consequence of the fact that agriculture is one of the first forms of conscious and organized human activity. Its importance for society and economy results from the main goal of this activity, which is to satisfy the basic human need, the need to satisfy hunger. The study depicts three basic perspectives from which agriculture is presented in economic theory: (i) relations between agriculture and other sectors of the economy, (ii) the main forces shaping the mechanism of changes and the development of agriculture, and (iii) basic directions (paths) taking place in a time of changes in agriculture. In the second part of the paper, one of the three main perspectives illustrating the position of agriculture in the economy and in the theory of economics, i.e., the relations between agriculture and other sectors of the economy, was subject to empirical verification. The assessment was carried out on the example of Polish agriculture and its evolution over time. The analysis covers the changes that occurred after 1950 in areas such as the potential of agriculture in the economy (land, labor, and capital resources), the contribution of agriculture to creating added value (GNI/GDP), agricultural production, participation in foreign trade and changes in food consumption.
    Keywords: Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety
    Date: 2020

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