Philosophy & Methodology of Economics eJournal最新文献

{"title":"Keynes, and Only J. M. Keynes, Was Responsible for the Logical and Mathematical Development of the Multiplier Concept in 1921(1908) in His a Treatise on Probability (1921) That He Later Used in the General Theory (1936)","authors":"M. E. Brady","doi":"10.2139/ssrn.3282103","DOIUrl":"https://doi.org/10.2139/ssrn.3282103","url":null,"abstract":"J M Keynes had already developed the theory of the Multiplier concept mathematically, logically, and technically in his \"A Treatise on Probability\" (1921). The same analysis can be found in his second Cambridge Fellowship Dissertation of 1908. \u0000 \u0000Samuelson explicitly covered the material, Keynes’s risk (R) formula, presented by Keynes on page 315 of the A Treatise on Probability, in his 1977 article in the Journal of Economic Literature. However, Samuelson overlooked the footnote, footnote 1 on page 315 of the A Treatise on Probability, in which Keynes applies an explicit multiplier analysis to a geometric, declining, infinite series because Keynes left out the intermediate steps of taking the limit of the series as n, the number of terms in the series, approached infinity. Keynes simply gave the final answer one will obtain after he has taken the limit. Samuelson also overlooked Keynes’s generalized risk analysis on page 353 of the A Treatise on Probability ,which extended Keynes’s Risk analysis ,which used Chebyshev’s Inequality to derive a lower bound .This would be an imprecise probability that would become more accurate as more observations were obtained, leading eventually to a precise estimate of probability from the normal distribution if the decision maker could afford to delay action for the period of time needed. \u0000 \u0000R. Kent’s 2007 article in the History of Political Economy leaves completely unresolved the issue of where Richard Kahn got the idea for the use of the multiplier from. Kahn, in 1936, stated, in a note on a paper of Neisser’s that appeared in the Review of Economic Statistics, that “…my own ideas were largely derived from Mr. Keynes.” (Kahn,1936, p.144). \u0000 \u0000Kahn’s contribution originated in private conversations with Keynes, where Keynes showed Kahn his chapter 26 analysis contained in the A treatise on probability on page 315 in footnote 1. Keynes, and no one else in history, was the person who had already originated the mathematical theory of the multiplier, which Keynes in the General Theory called the logical theory of the multiplier. Keynes's discussion of the logical theory of the Multiplier on pp.122-123 of the General Theory is simply a literary description of the mathematical analysis presented by Keynes on page 315 of the A Treatise on Probability. Kent's belief that Keynes had presented a multiplier analysis in 1929 is correct. The issue of whether Keynes made an arithmetic error in adding up the terms of the series is completely irrelevant to the main issue, which is “who is the person who created the theory of the multiplier?”","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132841524","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"What Can Economists Do? Appreciative Theory, Market Design, and Open Systems","authors":"G. Furton, Adam Martin","doi":"10.2139/ssrn.3276897","DOIUrl":"https://doi.org/10.2139/ssrn.3276897","url":null,"abstract":"F.A. Hayek argues that the best that economics can hope for is “explanation of the principle” of complex economic systems, arguing against the feasibility of precise prediction and thus of successful economic planning. However, subsequent work in economics, often under the heading of Market Design, has claimed some ability to design the contours of action situations for success. This essay attempts to resolve this apparent contradiction. We argue that Hayek is essentially correct about the limits of knowledge about broad-scale economic systems, but that local conditions are often close enough to closure to allow for more specific predictions and thus control. The distinction between the open system level and the somewhat closed local level is roughly analogous to the distinction between general equilibrium and partial equilibrium. We then distinguish between economic knowledge that is useful for experts and that which is useful for citizens.","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123377320","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Keynes Versus Robertson in 1936–1937: Robertson’s Mathematical Illiteracy Prevented Him From Understanding Keynes’s Is-Lm(lp) Model in the General Theory","authors":"M. E. Brady","doi":"10.2139/ssrn.3263179","DOIUrl":"https://doi.org/10.2139/ssrn.3263179","url":null,"abstract":"J. M. Keynes versus D. Robertson in 1936-37 pits two opponents, one, J. M. Keynes, a highly skilled, sophisticated, mathematically advanced thinker against another, D. Robertson, who doesn’t have even an elementary background in mathematics at the grammar school level. Basically, the intellectual exchanges that take place are so completely one sided in Keynes’s favor that it is questionable whether anything written by Robertson about Keynes should even be considered worth reading. However, the exchanges do give complete support to Paul Samuelson’s long-range goal of greatly increasing the mathematical sophistication and knowledge of the average economist. Robertson’s performance is simply intellectually horrid. Robertson demonstrates repeatedly in his exchanges with Keynes that he is not able to grasp any type of mathematical analysis involving any mathematical function except a mathematical function with one independent variable and one dependent. Robertson found Keynes’s mathematical analysis to be incomprehensible. He could not understand Keynes’s IS-LM (LP) model because it involved a set of simultaneous mathematical equations in r and Y that he had no capacity to grasp because he was a Marshallian used to using the ceteris paribus assumption at both the micro and macro levels. It was impossible for Robertson to follow Keynes’s theory, even though he constantly sought the mathematical advice and help of first AC Pigou and then Harry Johnson.","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-10-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130135575","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"On Keynes’s Two Simplifications of His Aggregate Supply Curve Analysis in Chapter 21 of the General Theory: O. Lange (1938) Overlooked Chapter 20 and the Two Simplifications on Pages 295–296 of the General Theory in Chapter 21","authors":"M. E. Brady","doi":"10.2139/ssrn.3257209","DOIUrl":"https://doi.org/10.2139/ssrn.3257209","url":null,"abstract":"O Lange’s failure to read chapters 20 and 21 of the General Theory accounts for his failure to use Keynes already worked out simplifications for the case where the Aggregate Supply Curve was infinitely elastic or had a horizontal segment. Chapter 3 of the General Theory only presents an outline of what Keynes actually did later in the General Theory in chapters 20 and 21. No Aggregate Supply Curve was constructed in chapter 3 of the General Theory or even mentioned. Keynes gave general functional relationships for D and Z. Only in chapter 20 and the footnote on pp.55-56 does Keynes define what D and Z actually are, which is that D=pO and Z=P wN, where p is an expected price and P is expected profit. Keynes’s introduction of the aggregate supply curve occurs in chapter 6 on pages 55-56 in footnote two. The chapter in which his aggregate supply curve is fully analyzed is in chapter 20. Keynes then presents two simplifications of his aggregate supply curve in chapter 21. These simplifications specify a horizontal range of his aggregate supply curve that was completely elastic. However, Keynes never assumed that his aggregate supply curve was horizontal. He allowed for various simplifications to be made after he had presented his complete D-Z theory in chapter 20.A number of economists, such as Lawrence Klein and Franco Modigliani, have incorrectly followed Lange’s analysis, who failed to make it clear to the readers of his 1938 Economica article, that what was involved was actually two simplifications made by Keynes to Keynes’s chapter 20 analysis. Keynes never assumed a completely elastic or horizontal aggregate supply curve anywhere in the General Theory or his post General Theory writings.","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-09-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127490385","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Methods Matter: P-Hacking and Causal Inference in Economics","authors":"A. Brodeur, Nikolai Cook, A. Heyes","doi":"10.2139/ssrn.3249910","DOIUrl":"https://doi.org/10.2139/ssrn.3249910","url":null,"abstract":"The economics 'credibility revolution' has promoted the identification of causal relationships using difference-in-differences (DID), instrumental variables (IV), randomized control trials (RCT) and regression discontinuity design (RDD) methods. The extent to which a reader should trust claims about the statistical significance of results proves very sensitive to method. Applying multiple methods to 13,440 hypothesis tests reported in 25 top economics journals in 2015, we show that selective publication and p-hacking is a substantial problem in research employing DID and (in particular) IV. RCT and RDD are much less problematic. Almost 25% of claims of marginally significant results in IV papers are misleading.","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-09-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125614549","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Keynes's Anti Marshallian, General Theory Analysis Against the Marshallians, Robertson and Pigou, in 1937: Pigou' 'Money Wages in Relation to Unemployment'","authors":"M. E. Brady","doi":"10.2139/ssrn.3248897","DOIUrl":"https://doi.org/10.2139/ssrn.3248897","url":null,"abstract":"In August 1937, Keynes discovered that Pigou, with the very explicit and rabid support of Dennis Robertson, was planning on publishing a paper in the Economic Journal which deployed the same type of Marshallian, partial equilibrium,ceteris paribus (constant money income) analysis with functions containing only one independent variable that he had used in his 1933 \"The Theory of Unemployment\". In 1937, Pigou argued that there were two separate theories of interest rate determination. The first was that M=L(r), so that the demand and supply of money alone determined the rate of interest. The second was that M=L(Y), so that only aggregate income determined the rate of interest. Of course, there are no such functions in Aggregate Income-rate of interest (Y,r) space. Keynes correctly pointed out that the missing equation in Pigou’s paper was Keynes’s Liquidity Preference Function M=L(Y,r). Only this function exists in (Y,r) space. A subsidiary point in Pigou’s 1937 paper was that Pigou also argued that the rate of interest was equal to a constant rate of time preference. This, of course, is consistent with the deployment of a Marshallian ceteris paribus assumption about constant money income. Kaldor apparently believed that this was the central issue involved and the more important. Now Keynes knew better,but he,as the referee, allowed Kaldor to proceed because Kaldor correctly deployed Keynes’s IS-LP(LM), although Kaldor believed that it was Hicks’s model, to prove decisively in a diagram relegated to a footnote near the end of the article, that money wage cuts could only work by shifting the LP(LM) curve, which Hicks had renamed the LL curve ,to the right, so that Mw ,money in terms of wage units, would increase Y and lower as LP (LM) shifted to the right. Pigou’s 1938 comment in a note, that “I have not been able to follow the reasoning of Mr. Keynes’s short note, which preceded Mr. Kaldor’s�?, demonstrates that Pigou, and Robertson, were still not able to break away from the Marshallian, partial equilibrium,ceteris paribis type of analysis that was worthless at the macro level. Pigou and Robertson could not deal with a function that had two independent variables. Pigou never mentioned Kaldor’s graphical summary in his 1938 reply because he could not understand what was being done in Keynes’s IS-LP(LM) model. Keynes used the 1937 Kaldor comment on the erroneous assumptions and analysis of Pigou,who was fully supported by D. Robertson (see letter from A. Robinson to Keynes, CWJMK, vol.14,p.239), to set up a test for the Pseudo Keynesians. Keynes offered them publications in the EJ if they would reply to Pigou’s 1938, March article by simply deploying Keynes’s LP function from p.199 of the GT to show that Pigou’s model was completely misspecified. The Pseudo Keynesian response was to reject Keynes’s extraordinarily favorable offer and attempt to sabotage the Keynesian revolution in order to advance their own false, petty, and opportunistic claims.","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-09-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130162459","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"How Using Greenspan’s Continuum Can Bridge the Huge Abyss That Exists Between Orthodox and Heterodox Economists Who Are Dealing With the Concept of Uncertainty","authors":"M. E. Brady","doi":"10.2139/ssrn.3233428","DOIUrl":"https://doi.org/10.2139/ssrn.3233428","url":null,"abstract":"In spite of the detailed work, done by Keynes in 1908 ,1921,and 1936 in his second Fellowship dissertation for Cambridge University, A Treatise on Probability, and the General Theory, respectively ,and by Knight in 1921 in Risk, Uncertainty and Profit ,that argued convincingly that uncertainty was a range that extended from complete ignorance to complete knowledge, economists are completely divided over what uncertainty means and its relevance. Orthodox economists place emphasis on using the extreme outcome of complete knowledge ,since this allows them to assume that all decision makers know the probability distributions, while heterodox economists place emphasis on using the other extreme outcome of complete ignorance, since this allows them to assume that decision makers do not know the probability distributions. Greenspan’s continuum specifies that the entire range or continuum between complete ignorance and complete knowledge is important to consider, not just the extremes. The current polarization of the economics profession could only benefit from agreeing to use Greenspan’s continuum as a planning tool for economic analysis. There are very significant difficulties with the concept of rational expectations as developed by Muth in 1960 regarding the interpretation of probability he is using. Was it subjective or objective? It can't be both.","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-08-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123408239","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"J M Keynes's General, Multiple, Macro Equilibria Approach in 1936 Against the Marshallians (Harrod, Hawtrey, Henderson, Pigou, and Robertson) Ceteris Paribus, Partial Equilibrium, Approach to Macro","authors":"M. E. Brady","doi":"10.2139/ssrn.3231627","DOIUrl":"https://doi.org/10.2139/ssrn.3231627","url":null,"abstract":"J M Keynes’s General Theory (1936) represented the culmination of his anti-Marshallian approach to both economic methodology and formal economic modeling in macroeconomics. Keynes rejected, at the marco economic level, the Marshallians’ emphasis on ceteris paribus analysis that concentrated on using an approach to analysis that relied on analyzing only one independent variable at a time. The Marshallians would then supplemented their one independent variable analysis by a prose or literary discussion, in which other variables, that had been held fixed, were discussed, but not analyzed in a rigorous, technical, mathematical manner. This type of analysis was published by Dennis Robertson, Ralph Hawtrey, A C Pigou, Hubert Henderson, and Roy Harrod in the early and mid 1930’s. This type of Marshallian, partial equilibrium, approach to analysis is on display in the correspondence of Robertson, Hawtrey, Henderson, and Harrod with Keynes over the General Theory as contained in Volumes 13,14, and 29 of the CWJMK. This kind of Marshallian approach reached its highest level, in the opinion of J M Keynes, in Pigou’s 1933 The Theory of Unemployment. All of Pigou’s technical analysis in Part II of The Theory of Unemployment is based on an analysis where only one independent variable is specified mathematically in his macro economic model, which is based directly on the underlying micro model, both of which were functions of only one single variable, the real wage.Pigou supplemented his Part II analysis with a verbal, prose, literary discussion that attempted to discuss other factors that would impact the macro economy. Unfortunately, Pigou had no multiplier function, consumption function, or Liquidity Preference function that would allow him to analyze total output or employment accurately. Neither did Hawtrey, Robertson, or Henderson. Harrod’s Marshallian defense of the neoclassical theory of the rate of interest, made in his August-September, 1935 exchanges with Keynes over Keynes’s new IS-LP(LM) theory, based on a system containing three simultaneous, mathematical equations, which Keynes explicitly specified in sections four of both chapters 15 and 21 of the General Theory, in Volume 13 of the CWJMK, makes no sense because his sets of shifting savings and investment functions can only specify a set of downward sloping IS curves. No Marshallian, especially Robertson, ever grasped that Keynes’s IS-LP(LM) model of chapters 15 and 21 of the General Theory has absolutely nothing to do with Keynes’s initial, introductory discussion using Keynes’s simplified, liquidity preference function in chapter 13 of the General Theory on page 167, where the demand and supply of money alone determined the interest rate. Keynes’s complete, simultaneous, three equation IS-LP(LM) model is provided on pages 298-299 of the General Theory. Keynes’s IS-LP(LM) is superior to the simultaneous three equation models of Hicks (1937), Harrod (1937), and Meade (1937), which have no D-Z mo","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-08-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126179663","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The Basis for Legitimate Entitlement to Profit in Islamic Law","authors":"Necmeddin Guney","doi":"10.2139/ssrn.3263473","DOIUrl":"https://doi.org/10.2139/ssrn.3263473","url":null,"abstract":"This paper is intended to investigate the basis for legitimate profit in Islamic law and compare it to the theories held by modern conventional economics regarding the cause of profit. This study shall use the theoretical framework of the Hanafi concept of dam�?n (guarantee) and apply it to the cases of fixed revenue and profit. Finally, this paper aims at exposing how the Hanafi formulation of dam�?n, along with capital and labor, can be useful in explaining and determining the basis for a legitimate profit in Islamic law.","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-08-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122416355","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Why James Buchanan Kept Frank Knight's Picture on His Wall Despite Fundamental Disagreements on Economics, Ethics, and Politics","authors":"Ross B. Emmett","doi":"10.2139/ssrn.3225242","DOIUrl":"https://doi.org/10.2139/ssrn.3225242","url":null,"abstract":"Jim Buchanan kept pictures of Knut Wicksell and Frank H. Knight on his office wall. Yet a careful look at Buchanan’s work indicates that it ran counter to that of Frank H. Knight. Knight and Buchanan disagreed on the methodological, economic, ethical, and political assumptions that drove their work. Knight rejected methodological individualism, the underlying methodological commitment of Buchanan’s research program. While Knight remained within the standard constrained maximization framework of neoclassical economics, Buchanan adopted a catallactic perspective. Ethically, Knight argued that all ethical judgments must remain open to debate, and also rejected the de gustibus non est disputandum assumption that went hand-in-hand among economists with methodological individualism. And philosophically, Knight’s theory of democratic politics was centered on “democracy as discussion” rather than choice, contract, and constitution. Why, then, did Buchanan keep that picture of Knight on his wall? After a survey of his published criticisms of Knight, the conclusion emerges that engagement with Knight pushed Buchanan toward a more open-ended political economy.","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-08-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115664247","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}