Critical reflections on a realist interpretation of Friedman’s ‘Methodology of Positive Economics’

Uskali Mäki has offered an innovative scientific realist account of Milton Friedman’s 1953 essay, ‘The Methodology of Positive Economics’, which directly challenges the dominant instrumentalist interpretation. This paper offers critical reflections on Mäki’s approach and interpretation. It is argued that Mäki’s method of rereading-rewriting the text is problematic; that an unforced instrumentalist account of unrealistic assumptions can be extracted from the text itself; and that seemingly realist passages can be plausibly read as expressing an instrumentalist stance.     

The effect of a wife’s retirement on her husband’s mental health

This article examines the effect of wives’ retirement on their husband’s mental health in Australia. By exploiting the exogenous variations in women’s retirement induced by the age pension qualifying ages, we find that spousal retirement status has a positive impact on the mental health of older men. This beneficial impact is found to strengthen with wives’ time spent in retirement. We show that wife’s retirement affects the constituents of her husband’s mental well-being in different ways. We also have identified four channels for the positive linkage between older women’s retirement and the mental health of their spouse.     

What Happened to Kapp’s Theory of Social Costs? A Case of Metatheoretical Dispute and Dissent in Economics

In the early 1970s Wilfred Beckerman and K. William Kapp engaged in a serious dispute. Although it focused on social costs, the dispute raised issues about the very foundations of economics. The differences in approach to social costs that this dispute exposed were so deep-rooted as to preclude (or at least hinder) any possibility of constructive dialogue. This article argues that the subsequent ‘conspiracy of silence’ against Kapp should be understood in terms of Kapp’s very different conception of economics as a social science. This issue is relevant to a broader discussion about the boundaries of pluralism in economics—how these boundaries are drawn and the conditions for a constructive dialogue among economists and with other social scientists.     

ICT Investment and Economic Growth in the 1990s: Is the United States a Unique Case?: A Comparative Study of Nine OECD Countries

This paper compares the impact of information and communication technology (ICT) capital accumulation on output growth in Australia, Canada, Finland, France, Germany, Italy, Japan, the United Kingdom, and the United States. Over the past two decades, ICT contributed between 0.2 and 0.5 percentage point per year to economic growth, depending on the country. During the second half of the 1990s, this contribution rose to 0.3 to 0.9 percentage point per year. Despite differences between countries, the United States has not been alone in benefiting from the positive effects of ICT capital investment on economic growth nor was the United States the sole country to experience an acceleration of these effects. ICT diffusion and ICT usage play a key role and depend on the right framework conditions, not necessarily on the existence of a large ICT-producing sector.     

A women’s boom in the boardroom: effects on performance?

This article analyses whether improving gender diversity in boardrooms improves firms’ economic performance. In the context of French CAC40-listed companies between 2008 and 2012, this research uses instrumental variable panel regressions, including production frontier estimates, to arrive at two key results. First, gender diversity in boards depends on firms’ attributes including their previous gender promotion strategies. Second, promoting women in boardrooms has a significant and positive effect on economic performance while accounting for the endogeneity boards’ gender diversity. Gender diversity even reduces corporate inefficiencies and enables firms to come closer to their optimal performance.     

‘Old’ Europe’s wage dynamics and trade imbalances: Is there a link?

No evidence is found that gains in relative labour productivity have had a positive effect on the trade balance/GDP ratio for the ‘old’ EU members (excluding Germany) from 1961 to 2014. Rising relative wage rate is shown to have had strong—and negative—effects on the trade balance/GDP ratio for the EU-14, at least in the longer run. It follows that external rebalancing may be achieved through a sufficiently strong fall in the relative wage rates, without productivity changes having a role to play. This is not to claim that the EU-14 (and its members suffering trade deficits in particular) ought to attempt the devastating policy of ‘internal devaluation’. A constructive alternative would be to achieve the fall in the relative wage rates through faster growth of German nominal wage rates. Whether that alternative is practicable is another matter. But it can be argued that without that alternative being followed the European Union will remain a stagnant area plagued by recurrent crises caused by imbalanced trade among its Member States.