Economic Theory Commons^™

Working Paper No. 62, Uses Of Abduction In Economic Science, Daniel Urban

Working Papers in Economics

This inquiry considers the meaning of abduction and its uses in Economic Science. Abductive logic is discussed at some length, in order to clarify how it is used in this inquiry. In addition, abduction is traced from its appearances in the writings of pragmatist philosopher Charles Sanders Peirce and how its meaning is later carried on in Thorstein Veblen’s Institutional Economics. Peirce’s influence proves foundational for Veblen’s contributions, as well as for the writings of John Roger Commons. My research suggests that after Commons, Peirce’s influence in economics wanes. Additionally, the use of retroduction in critical realism provides a contemporary …

Should The Economic Crisis Change Our Assessment Of Markets And Government?, Clifford Winston

Brookings Scholar Lecture Series

Broad Objectives of the Study:
- Base policy debates on empirical counterfactual evidence.
- Begin accumulating evidence and identifying common themes so we don’t have to start from “square one.”
- Provide guidance for policymakers.

From Economic Crisis To Reform: Imf Programs In Latin America And Eastern Europe By Grigore Pop-Eleches (Book Review), Aleksandra Sznajder Lee

Political Science Faculty Publications

Grigore Pop-Eleches’s book on the interaction of international and domestic determinants of IMF-style reforms in developing countries makes a significant contribution to international and comparative political economy literature. His effort to capture the dynamics of the contentious and complex relationship between the IMF and developing countries/emerging markets inLatin AmericaandEastern Europerepresents mid-range theorizing at its best. The author combines insights from international and comparative political economy literatures to pursue complementary questions. From the international effect perspective: what role do economic crises play in the initiation and implementation of IMF-backed economic reform? Is the IMF impartial in its policy and financial support …

Rationality And Humanity: A View From Feminist Economics, Julie A. Nelson

Economics Faculty Publication Series

DOES RATIONAL CHOICE THEORY (RCT) HAVE SOMETHING IMPORTANT to contribute to the humanities? Usually the arguments for answering “yes” to this question go something like the following: The application of RCT has proved to be a powerful tool in economics and the social sciences, leading to clear and rigorous insights unattainable from less precise methods. Therefore, by also harnessing this power, the disciplines in the humanities could advance toward becoming more elegant, rational, and forceful in their explorations of human behavior. As an economist, I’d like to address this argument on its home ground. Has the use of RCT advanced …

The Emerging Global Financial Architecture: Tracing And Evaluating New Patterns Of The Trilemma Configuration, Joshua Aizenman, Menzie David Chinn, Hiro Ito

Economics Faculty Publications and Presentations

This paper investigates how the trilemma policy mix affects economic performance in developing countries. We find that greater monetary independence can dampen output volatility, while greater exchange rate stability is associated with greater output volatility, which can be mitigated by reserve accumulation; greater monetary autonomy is associated with higher inflation, while greater exchange rate stability and greater financial openness is linked with lower inflation; pursuit of exchange rate stability can increase output volatility when financial development is at an intermediate stage. Greater financial openness, when accompanied by a high level of financial development, reduces output volatility.

Post-Structural Logic In Marx's Theory Of Value, David Kristjanson-Gural

Faculty Journal Articles

In this essay I use Louis Althusser’s observation concerning the synchrony and diachrony of Marx’s logic in Capital to detail changes in the meaning of value, defined as socially necessary abstract labor time, throughout the three volumes of Capital. I use this analysis to identify three common types of logical error in reading Marx that result from failing to recognize this aspect of his methodology, and I provide examples to illustrate each of these common errors. I then argue that, by recognizing the synchrony and diachrony of Marx’s method, it is possible to read value theory in a way that …

Inflammation And Infection Do Not Promote Arterial Aging And Cardiovascular Disease Risk Factors Among Lean Horticulturalists, Michael Gurven, Hillard Kaplan, Jeffrey Winking, Daniel Eid Rodriguez, Sarinnapha Vasunilashorn, Jung Ki Kim, Caleb Finch, Eileen M. Crimmins

ESI Publications

Background: Arterial aging is well characterized in industrial populations, but scantly described in populations with little access to modern medicine. Here we characterize health and aging among the Tsimane, Amazonian forager-horticulturalists with short life expectancy, high infectious loads and inflammation, but low adiposity and robust physical fitness. Inflammation has been implicated in all stages of arterial aging, atherogenesis and hypertension, and so we test whether greater inflammation associates with atherosclerosis and CVD risk. In contrast, moderate to vigorous daily activity, minimal obesity, and low fat intake predict minimal CVD risk among older Tsimane.

Methods and Findings: Peripheral arterial …

Implementation With Near Complete Information: The Case Of Subgame Perfection, Takashi Kunimoto, Olivier Tercieux

Research Collection School Of Economics

While monotonicity is a necessary and almost sufficient condition for Nash implementationand often a demanding one, almost any (non-monotonic, for instance) socialchoice rule can be implemented using undominated Nash or subgame perfect equilibrium.By requiring solution concepts to have closed graph in the limit of completeinformation, Chung and Ely (2003) show that only monotonic social choice rules canbe implemented in the closure of the undominated Nash equilibrium correspondence.In this paper, we show that only monotonic social choice rules can be implemented inthe closure of the subgame perfect equilibrium/sequential equilibrium correspondence.Our robustness result helps understand the limits of subgame pefect implementation,which is …

Are Credit Unions In Ecuador Achieving Economies Of Scale?, Nick A. Marchio

Economics Honors Projects

This study tests the assertion that membership growth in credit unions is constrained by their unique structural features, such as their non-profit mission and member-based ownership. Although these features enhance inclusiveness, existing theory suggest that they work against efficiency when membership grows too diffuse. To address this issue, this study uses a model that takes into account existing theory on constrained-optimization in credit unions and theory on the adverse effects of diffuse ownership. Using data on 36 public credit unions in Ecuador, the empirical analysis finds evidence that credit unions can achieve economies of scale despite their problematic structural features. …

Teaching Ecological And Feminist Economics In The Principles Course, Julie A. Nelson, Neva Goodwin

Economics Faculty Publication Series

It can be difficult to incorporate ecological and feminist concerns into introductory courses, when one is also obliged to teach neoclassical analysis. In this essay we briefly describe how one might extend existing “multi-paradigmatic” approaches to feminist and ecological concerns, and then present an new alternative approach that may be more suitable for some students. This “broader questions and bigger toolbox” approach can be applied in both microeconomics and macroeconomics introductory classrooms.

Why Economic Performance Has Differed Between Brazil And China? A Comparative Analysis Of Brazilian And Chinese Macroeconomic Policy, Fernando Ferrari-Filho, Anthony Petros Spanakos

Department of Political Science and Law Faculty Scholarship and Creative Works

This paper addresses a specific question: why has China grown so rapidly and Brazil not? To answer this question, it (i) establishes the basis for comparison between China and Brazil by contextualizing these countries within the BRICs concept, and (ii) presents a comparative analysis of Brazilian and Chinese reforms focusing only on the issue of macroeconomic policy, especially the monetary and exchange rate regimes, and its effect on growth.

Commentary, Dean D. Croushore

Economics Faculty Publications

It is a pleasure to discuss Richard Anderson and Charles Gascon’s (2009) article on their attempt to develop a state-space model to measure potential output growth in the face of data revisions. They use the methodology of Cunningham et al. (2007) applied to real output, to see if they can develop a better measure of potential output than other researchers. Such an approach seems promising, and they develop a unique method to study the data.

A Critique Of Neoclassical Theory Of Health Care Consumption, Xiao Jiang

Electronic Theses and Dissertations

The purpose of this thesis is to display an internal critique of the neoclassical theory of health care consumption with the intention of understanding its true merits and limitations. To avoid arbitrariness, instead of criticizing it directly, this thesis first explores the existing scholarly critiques, as well as the developments of this theory in response to these criticisms. What is interestingly observed is that the neoclassical responses tend to systematically fall into two problematic categories – the trade-off between reality and theoretical determinacy, and free-market behavior resolution. Such observation suggests that there is something fundamentally problematic with this theory, which …

Adaptive Policymaking: Evolving And Applying Emergent Solutions For U.S. Communications Policy, Richard S. Whitt

Federal Communications Law Journal

This Article presents some specific ways that U.S. policymakers should use teachings from the latest thinking in economics to create a conceptual framework in order to grapple with current controversies in communications law and regulation. First, it provides a brief overview of Emergence Economics, with an emphasis on the "rough formula" of emergence and the unique role of technological change in creating and furthering innovation and economic growth. Second, this paper explicates the general concept of "Adaptive Policymaking" by governments and includes some proposed guiding principles, an outline of the public policy design space, and an adaptive toolkit to be …

Technology, Unilateral Commitments And Cumulative Emissions Reduction, Shurojit Chatterji, Sayantan Ghosal

Research Collection School Of Economics

In this article, we argue that weak property rights over transnational pollution and the limited threat of retaliatory punishments blunts the effectiveness of a broad-based multilateral agreement to deliver the emission reductions required to mitigate climate change. Instead, we propose a policy framework that builds on unilateral commitments, endogenous innovation and technology transfer that could lead to cumulative emissions reduction by altering the participation constraints of nations over time.

A Bioeconomic Approach To Marriage And The Sexual Division Of Labor, Michael Gurven, Jeffrey Winking, Hillard Kaplan, Christopher Von Rueden, Lisa Mcallister

ESI Publications

Children may be viewed as public goods whereby both parents receive equal genetic benefits yet one parent often invests more heavily than the other.We introduce a microeconomic framework for understanding household investment decisions to address questions concerning conflicts of interest over types and amount of work effort among married men and women. Although gains and costs of marriage may not be spread equally among marriage partners, marriage is still a favorable, efficient outcome under a wide range of conditions. This bioeconomic framework subsumes both cooperative and conflictive views on the sexual division of labor. We test hypotheses concerning marriage markets, …

Gresham's Law In The 21St Century, Joshua Finnell

E-JASL: Electronic Journal of Academic and Special Librarianship (1999-2009, Volumes 1-10)

Abstract

Research indicates that most people today satisfy their information needs through the Internet. As we move deeper into the information age, librarians must embrace the role of inculcating information literacy skills lest Gresham’s Law of economics becomes a reality in our information economy. This article discusses the probabilistic nature of the Internet against the backdrop of Gresham’s Law.

Tibetan Carpets…Or Are They? An Analysis Of The Carpet Industry In Kathmandu, Nepal, Swetha Ramaswamy

Independent Study Project (ISP) Collection

This project focuses on the Tibetan Carpet Industry started in Nepal during the 1960s with help of the Central Tibetan Administration, His Majesty’s Government of Nepal, and support from the Swiss. By the 1990s, the Industry was central to Nepal’s economy, providing means of employment for many Nepalese, and no longer needed external support. Since the 1990s, however, Tibetan Carpets are struggling to compete on the international market. My objective is to analyze Tibetan Carpets as they exist in Nepal’s capitalist market. Using Karl Marx’s theory of commodity fetishism, I explore the dynamics between capitalist producer, proletariat worker, and consumer …

Two Essays On Earnings Quality And Corporate Decisions, Qian Sun

Theses and Dissertations in Business Administration

This dissertation investigates how earnings quality as an information risk may facilitate our understanding of the choice of payment method in mergers and acquisitions and the value and the level of corporate cash holdings. In a world of asymmetric information and agency problem, Poor earnings quality implies the inadequate supply of relevant and reliable information for investors to monitor and discipline the behavior of firm managers to act in shareholder and stakeholder's best interest.

This study contributes to the literature in three folds. First, I add to the literature by postulating that earnings quality has a significant impact on the …

Tops-Only Domains, Shurojit Chatterji, Arunava Sen

Research Collection School Of Economics

In this paper we consider the standard voting model with a finite set of alternatives A and n voters and address the following question: what are the characteristics of domains D that induce the property that every strategy-proof social choice function f : Dn → A satisfying unanimity, has the tops-only property? We first impose a minimal richness condition which ensures that for every alternative a, there exists an admissible ordering where a is maximal. We identify conditions on D that are sufficient for strategy-proofness and unanimity to imply tops onlyness in the general case of n voters and in …

The Alliance Formation Puzzle And Capacity Constraints, Kai A. Konrad, Dan Kovenock

Economics Faculty Articles and Research

The formation of an alliance in conflict situations is known to suffer from a collective action problem and from the potential of internal conflict. We show that budget constraints of an intermediate size can overcome this strong disadvantage and explain the formation of alliances.

Competition For Fdi With Vintage Investment And Agglomeration Advantages, Kai A. Konrad, Dan Kovenock

Economics Faculty Articles and Research

Countries compete for new FDI investment, whereas stocks of FDI generate agglomeration benefits and are potentially subject to extortionary taxation. We study the interaction between these aspects in a simple vintage capital framework with discrete time and an infinite horizon, focussing on Markov perfect equilibrium. We show that the equilibrium taxation destabilizes agglomeration advantages. The agglomeration advantage is valuable, but is exploited in the short run. The tax revenue in the equilibrium is substantial, and higher on “old” FDI than on “new” FDI, even though countries are not allowed to use discriminatory taxation. If countries can provide fiscal incentives for …

The Strength Of The Veblenian Critique Of Neoclassical Economics, Svetoslav I. Semov

Gettysburg Economic Review

More than one hundred years ago, Thorstein Veblen wrote a powerful critique of neoclassical economics that castigated the discipline for turning the individual into a “lightning calculator of pleasures and pains, who oscillates like a homogeneous globule”, or equivalently, for the individual’s static maximization of utility based on exogenous preferences. His critique is relevant even today, since there are economists who still continue to criticize the assumptions of homo economicus and exogenous preferences, and insist on introducing more realism to economic theory. Furthermore, recent developments in game theory and experimental economics, which stand at the cutting-edge of economics today, are …

The Impact Of Corruption On The Timing And Mode Of Entry By U.S. Firms In China, Jacob Billings

Economics Undergraduate Honors Theses

Since 1979 when China opened its economic borders, it has seen an influx of foreign direct investment that gradually snowballed into enormous annual inflows of capital. Researchers have taken advantage of this event as an incredibly useful testing ground of theories regarding FDI. Using this new data from China, along with data from countries already open to outside investment, many variables, such as GDP, wage, and distance, have been found to consistently correlate in one way or another to particular aspects of FDI inflow, including amount, location, timing, and type.

One such variable that has had some attention is corruption. …

Financial Liberalization And International Capital Flows, Nancy Neiman Auerbach, Yoonmin Kim, Thana Sompornserm

Scripps Faculty Publications and Research

It is interesting that domestic and international financial liberalization are among the most often cited causes of the 1997–98 crisis. Liberalization in the Asian crisis countries took place prior to the crisis as did large capital inflows, many of which reversed during the crisis in the classic pattern of capital flow bonanzas ending in sudden stops (Calvo, Izquierdo, and Mejía 2008; Reinhart and Reinhart 2008; Sula and Willett 2009). Furthermore, China and India, with much less general financial liberalization and a continuing array of capital controls, were little hit by the crisis. Malaysia’s experiment with increasing capital controls during the …

A Correspondence-Theoretic Approach To Dynamic Optimization, C. D. Aliprantis, Gabriele Camera

Economics Faculty Articles and Research

This paper introduces a method of optimization in infinite-horizon economies based on the theory of correspondences. The proposed approach allow us to study time-separable and non-time-separable dynamic economic models without resorting to fixed point theorems or transversality conditions. When our technique is applied to the standard time-separable model it provides an alternative and straightforward way to derive the common recursive formulation of these models by means of Bellman equations.

Public Spending On Education And The Incentives For Student Achievement, William Blankenau, Gabriele Camera

Economics Faculty Articles and Research

We build a model where homogeneous workers can accumulate human capital by investing in education. Schools combine public resources and individual effort to generate productive skills. If skills are imperfectly compensated, then in equilibrium students may under-invest in effort. We examine the effect on human capital accumulation of three basic education finance policies. Increased tuition subsidies may not be beneficial because they increase enrollment but they may lower the incentives for student achievement, hence the skill level. Policies directed at enhancing the productivity of education or making degrees more informative are more successful at improving educational outcomes.

A Neuroeconomic Theory Of The Decision Process, John Dickhaut, Aldo Rustichini, Vernon L. Smith

ESI Publications

We develop a neuronal theory of the choice process (NTCP), which takes a subject from the moment in which two options are presented to the selection of one of the two. The theory is based on an optimal signal detection, which generalizes the signal detection theory by adding the choice of effort as optimal choice for a given informational value of the signal for every effort level and a cost of effort. NTCP predicts the choice made as a stochastic choice: That is, as a probability distribution over two options in a set, the level of effort provided, the error …

Moral Reasoning In Economics, Jonathan B. Wight

Economics Faculty Publications

The Teagle discussion analyzes why economics teachers have become overly narrow in their pedagogical perspectives, thus pulling back from fully supporting the liberal arts agenda. In Chapter 1, Colander and McGoldrick (p. 6) observe that the generalist approach that excites students by asking "big think" questions across disciplinary boundaries fails to generate new knowledge, while the narrow "little think" questions that can be answered often fail to develop the critical thinking skills necessary for liberal education. As one example, the authors cite the decline of moral reasoning in economics, which was once center stage in Adam Smith's analysis of society. …

Basic Is Macro Models, Anwar Shaikh Phd

Archives of Anwar Shaikh

This collection includes:

• Shaikh, A. (n.d.). [Handwritten folder label identifying contents as "Basic IS macro models": (1) Hicks; (2) Keynes/PK; (3) NC; (4) Harrod; (5) Marx; folder tab notation: "Macro IS models comparisons"]. Unpublished manuscript note. New School for Social Research.
• Shaikh, A. (2009, December 03). [Handwritten working notes, 3 pages plus one additional formula page, titled "Basic macro models: IS/LM, PK, NC, Harrod, Marx, 12/3/09": comparative static and dynamic analysis of five macroeconomic frameworks across two cases (exogenous vs. endogenous money, fixed saving rate, u ≠ u_N); Model I (Hicks/IS-LM): exogenous money with fixed saving rate, paradox of thrift, …