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on History and Philosophy of Economics |
| By: | Carret, Vincent |
| Abstract: | Ragnar Frisch's famous "rocking horse" model has been the object of much praise and even controversy since its publication in 1933. This paper offers a new simulation of the model to show that there exists cyclical trajectories in the propagation mechanism. By building an analytical solution taking the same form as Frisch's original solution, we can provide new insights into the ideas encapsulated in his model, in particular the fact that the author constructed a model combining cycles and growth. The exploration of Frisch's formal construction of the model leads us to link his statistical work on the decomposition of time series with his economic insights on investment cycles, which both led to the 1933 model. We contrast Frisch’s approach to that of other econometricians who used similar equations, showing that their different mathematical solutions were the product of what they wanted to show with their models. |
| Date: | 2021–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:69nsg&r= |
| By: | Alleman, James |
| Abstract: | Robert Bork's Antitrust Paradox (1978) has been justification for lack of antitrust behavior for over four decades. His test essentially asks if consumers are harmed by the pricing practices of the firm in the market in which they purchase the good or service. Even if these firms are monopoly or oligopolies in their fields with huge economic rents, if they pass this test, no action is taken against them. "Bigness is not bad." This narrow view, inter alia, ignores two- and multisided markets (MSM) where the appearance of "no harm" is addressed to only one side of the market. The correct view is to examine all the markets impacting potential harm to consumers. It illustrates the harm which is "free" to the users, but advertisers pay dearly for the ability to micro-focus on potential consumers of their products. Facebook and Google are used as examples. This advertising cost is added into the sales price of the product, resulting in consumers being harmed by the embedded advertising costs in the products or services purchased. We argue here, using Bork's own criterion - except to expand it to the other side of the market and eliminating producer's surplus - that much needed antitrust action has been ignored by this narrow criterion. This analysis indicates that antitrust action is long overdue after considering two-sided markets. In addition, we argue that his "consumer welfare" criterion is misleading and liable to deceive, thus the hoax. The Bork critique is a hoax in two ways: Bork's analysis does not include the other side of the market. The cost of advertising has to be included in the price of the products being sold in order for the firm to remain in business. So, clearly, the price of goods and services is increased by the cost of advertising, thus reducing consumers' surplus. The second flaw is Bork's definition of "consumer welfare" - it includes the economic rents of the firm - all at a cost to consumers. Enhancing the wealth (profits) of corporations in the name of efficiency was not the purpose of the antitrust laws. We address the Bork Paradox on its own terms by examining the second side of the market which harms consumers indirectly by increasing the price of the products and services they purchase. Using the corrected Bork metric - both sides of the market and no producer's surplus - the estimated loss of consumers' welfare in $60.4 and $43.7 billion respectively from Google and Facebook, respectively. |
| Keywords: | Advertising,Antitrust,Bork,competition,consumers' surplus,digital markets,Information and Communications Technology (ICT),internet,platform economics,monopoly,regulation,two-sided/multisided markets |
| JEL: | D42 D43 K21 L12 L13 L22 L51 L96 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itsb21:238003&r= |
| By: | Theresa Hager (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria); Ines Heck (University of Greenwich, Great Britain); Johanna Rath (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria) |
| Abstract: | We examine parallels and differences in the analyses of societal transition by Karl Polanyi and Joseph A. Schumpeter. We argue that although their understanding of historical processes differs – transformational-political vs. evolutionary-natural – the central mechanism of change they describe is the same. We identify three spheres essential to both authors’ works: the economic, the political and the socio-cultural sphere. Polanyi and Schumpeter describe an expansion of the economic sphere culminating in a subordination of the other parts of society. In capitalism this dominance stems from capitalism’s emergence as well as the concept of competition. The consequence is a profound change in societal relations. Changes in the socio-cultural sphere in turn produce changes in the political sphere that bring about detrimental consequences for democracy. In our paper we carve out the similarities as well as the differences in the respective theories, clarify the role competition plays therein and discuss the consequences for the political process. We adopt an analytical framework that puts the nearly analogous mechanism of change in the centre. This in turn enables us to make use of the complementarity and to gain valuable insights on the interdependence of capitalism and democracy that can inform trends and phenomena that are currently observed. |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:ico:wpaper:128&r= |
| By: | Douglas A. Irwin (Peterson Institute for International Economics) |
| Abstract: | Taiwan was the first developing country to adopt an export-oriented trade strategy after World War II. The factors usually associated with big shifts in policy—a macroeconomic crisis, a change in political power or institutions, lobbying by export interests, pressure from international financial institutions—were not present; it was ideas that were key. In 1954, economist S. C. Tsiang proposed that Taiwan boost export earnings rather than squeeze import spending to deal with its chronic shortage of foreign exchange. He recommended a currency devaluation to establish a realistic exchange rate and a market-based system of foreign exchange allocation to end the inefficient rationing by the government. Four years later, a policymaker, K. Y. Yin, fought for the adoption of Tsiang’s proposal, helping clear the way for Taiwan’s phenomenal growth in trade. |
| Keywords: | trade reform, foreign exchange, flexible exchange rates |
| JEL: | F13 F31 N75 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:iie:wpaper:wp21-13&r= |