The foundations of trust: macro and micro

This comment on Beugelsdijk's (2006) critique of trust and itsmeasurement argues that it misses the mark, and that there isneither a theoretical nor an empirical foundation for thinkingthat the macro and micro foundations of trust or its measurementare different from each other. Generalised trust is more thana simple illusion hiding behind institutional structures.     

Globalization, intellectual property, and economic prosperity

Innovation and the adoption of new ideas is fundamental to economic progress, and so is free trade of goods and services. Here we examine the underlying economics of the market for ideas and its implications for trade. From a positive perspective, we examine how such markets function and how international trade interact with them. From a normative perspective, we examine the pitfalls of current intellectual property regulations, and how might they be improved. We highlight recent research by ourselves and others challenging the notion that government awards of monopoly through patents and copyright are "the way" to provide appropriate incentives for innovation. JEL Classification: X15, X16 This article is based on the text of the SER Invited Lecture delivered by Michele Boldrin at the 2003 Simposio de Análisis Económico (Seville). We thank National Science Foundation Grants SES 01-14147 and 03-14713 for financial support. Corresponding author: Michele Boldrin     

Micro and macro dynamics: Industry life cycles,inter-sector coordination and aggregate growth

Technological change directly affects economic growth by exploiting and exploring technological opportunities, thus determining productivity growth and income. However, technological change also affects the composition of the economic system, which itself constitutes an important prerequisite for economic growth. The first aim of this paper is to show that the growing variety of the economic system, determined by the emergence of new products and services and leading to new industrial sectors, can allow the long term continuation of economic development, even when the employment creating capacity of individual sectors falls. The second aim is to illustrate the impact of micro variables on the meso-level, that is, on the sectoral composition of an economy, as well as on its macro-economic performance.      

Quantifying economic sustainability: Implications for free-enterprise theory, policy and practice

In a previous paper (Ulanowicz, Goerner, Lietaer, and Gomez, 2009), we combined thermodynamic, network, and information theoretic measures with research on real-life ecosystems to create a generalized, quantitative measure of sustainability for any complex, matter/energy flow system. The current paper explores how this metric and its related concepts can be used to provide a new narrative for long-term economic health and sustainability. Based on a system's ability to maintain a crucial balance between two equally essential, but complementary factors, resilience and efficiency, this generic explanation of the network structure needed to maintain long-term robustness provides the missing theoretical explanation for what constitutes healthy development and the mathematical means to differentiate it quantitatively from mere growth. Matching long-standing observations of sustainable vitality in natural ecosystems and living organisms, the result is a much clearer, more accurate understanding of the conditions needed for free-enterprise networks to produce the kind of sustainable vitality everyone desires, one which enhances and reliably maintains the health and well-being of all levels of global civilization as well as the planet.     

产业融合理论及其经济效果

产业融合是信息化进程中呈现的一种产业新范式，是21世纪产业发展的新趋势。国内外许多学者从各个角度对这一经济现象进行了论述。本文主要阐述了产业融合内涵，介绍了产业融合过程中出现的主要产业融合类型，并分析了产业融合对社会经济发展的影响。     

Agency theory: choice-based foundations of the parametrized distribution formulation

This paper develops choice-theoretic foundations of the principal’s and the agent’s behaviors underlying the parametrized distribution formulation of agency theory. Both the principal and the agent are expected-utility maximizers and their action-dependent subjective probabilities are defined directly on the outcomes. The results are used to evaluate and interpret the common prior assumption. I am grateful to Simon Grant and, in particular, to Peter Wakker for their comments and suggestions, and to the NSF for financial support under grant SES-0314249.     

The Dahrendorf hypothesis and its implications for (the theory of) economic policy-making

The sociologist R. Dahrendorf has recently suggested that thereis no and there ought to be no convergence of economic policiestowards some common ideal model. On the contrary, he statesthat ‘diversity is [...] at the very heart of a worldthat has abandoned the need for closed, encompassing systems’.It is shown in this paper that the Dahrendorf hypothesis isdifficult to reconcile with orthodox economic approaches toeconomic policy-making. A perspective on policy-making thatintroduces either fundamental uncertainty or endogenous policypreferences or both is, however, shown to be consistent withthe Dahrendorf hypothesis.     

A note on the theory and measurement of trust in explaining differences in economic growth

This paper takes issue with the trend to attribute differencesin economic growth rates to differences in interpersonal trust.I discuss the World Values Survey (WVS) measure that is usedto operationalise trust at the macro level. I hypothesise thatthere is a mismatch between the theoretical argument and theempirical operationalisation of trust. Instead of measuringtrust, the WVS measure may instead proxy the well-functioningof institutions. I provide circumstantial evidence for thisthesis by a principal components analysis of trust and institutionsand a robustness test of Zak and Knack's (2001. Trust and growth,Economic Journal, vol. 111, 295–321) seminal study ontrust and economic growth.     

Accounting for economic evolution: Fitness and the population method

The theme of this paper is the general population dynamics of evolutionary processes, and, in particular, a number of accounting concepts that are central to any understanding of evolutionary processes of the variation-cum-selection retention kind. A population perspective, for example, turns out to be crucial to the study of the competitive process in economic systems defined at the level of industries, sectors and markets. Business rivalry, underpinned by differential innovative activity, is the basis of the differential survival and growth of competing economic activities and the strategies deployed to create sustainable differences in competitive selection characteristics are at the core of the capitalist dynamic interpreted as an adaptive, evolutionary process. This kind of evolutionary argument is necessarily concerned with growth rate dynamics and the explanation of the diversity of growth rates across entities in a population. However, the following discussion does not provide any causal explanation of economic evolution in terms of the determinants of growth rate differences, rather it provides a bookkeeping scheme in which different causal theories may be set and compared. Growth dynamics and structural change are the two central features of variation/selection processes within populations and I explore them in terms of three themes: namely, Logistic Growth Accounting; Competition Accounting; and, the Price Theorem. The unifying theme that links all three is their relation to the population method in evolutionary theory.      

Micro and macro elasticities in a life cycle model with taxes

We build a life cycle model of labor supply that incorporates changes along both the intensive and extensive margin and use it to assess the consequences of changes in tax and transfer policies on equilibrium hours of work. We find that changes in taxes have large aggregate effects on hours of work. Moreover, we find that there is no inconsistency between this result and the empirical finding of small labor elasticities for prime age workers. In our model, micro and macro elasticities are effectively unrelated. Our model is also consistent with other cross-country patterns.     

A comparison of aggregation methods for measures of economic freedom

Empiricists have used various editions of an economic freedom index (EFI) initially developed by Gwartney et al. (1996) [Gwartney, J., Lawson, R., Block, W., 1996. Economic Freedom of the World: 1975–1995. Fraser Institute, Vancouver.] to examine the relationship between economic freedom and other socio-economic variables, such as growth or investment. The EFI quantifies the level of particular institutional characteristics thought to promote economic freedom and aggregates them into a single index value. The aggregation procedures utilized by Gwartney and Lawson in developing their index have changed over time and other scholars have promoted alternative methods. We examine several index aggregation procedures and show that each design may have potential methodological flaws that can greatly affect the empirical findings.     

Hegel's theory of economic nationalism: political economy in the Philosophy of Right

The author explores Hegel's theory of economic nationalism in the Philosophy of Right. In that work, Hegel incorporates economics within a systematic theory of the nation-state. Hegel argues that both capitalism and nationalism are the products of the state, which emancipates human capacities by founding and securing individual rights. Capitalism, however, is an inherently self contradictory social phenomenon to which Hegel responds in a sophisticated manner, one eschewing those economic ideologies which subsequently dominated modern economic thought. Moreover, his response differs fundamentally from other supposed defenders of economic nationalism. Unlike the rationalist Fichte, that other great German defender of a national economics, Hegel paves the way to a scientific understanding of the relationship between the modern economy and the nation-state, in other words, a theory of economic nationalism.     

国际碳交易的经济学理论分析

二氧化碳等温室气体的过度排放造成的全球气温上升已经威胁到人类的生存和发展。对国际碳交易的内涵及经济学理论进行了分析,对深入理解、研究国际碳交易理论基础和实践经验具有非常现实的作用和意义。     

On the behavioral and rational foundations of economic dynamics

Existing uncertainties about the correct explanations for economic growth and business cycles cannot be settled by aggregative analysis within the neoclassical framework. Current disputes in theory rest largely on ad hoc, casually empirical, assumptions about departures from perfect rationality under uncertainty. Such disputes can only be settled by painstaking microeconomic empirical study of human decision making and problem solving. Microeconomic research of the kinds that are required can receive powerful guidance from the theories of human thinking that have been developed and tested over the past twenty five years by cognitive psychologists.     

Foreign aid and the quality of economic institutions

Identification of the causal effect that foreign aid has on the quality of institutions in recipient countries has been elusive in the aid effectiveness literature. The main reason is that aid is endogenous with respect to the development of institutions. Our paper examines the impact of foreign aid on economic freedom in the recipient countries at a disaggregated level using an innovative identifying strategy. To do so, we use recently innovated instruments for aid, exploiting the long lags between loan approval and disbursements by official creditors to developing countries. Using plausibly exogenous variations in predicted loan disbursements as instruments for actual aid, we find that foreign aid has a significant positive effect on the quality of economic institutions in recipient countries. The results are robust to alternative specifications and samples. By establishing the existence of a strong link between aid and the quality of economic institutions, we identify the main channel through which aid affects economic growth and development.     

New general theory of economic development: Innovative growth and distribution

Economic development, which refers to the process of progressive transformation of an economy, is a multifaceted term without a universal definition. This article presents the constitutive elements of economic development: growth, distribution, and innovation. Economic development has been ubiquitous with the economic progress of “developing” countries, but the changing economic circumstances of “developed” countries, such as stagnant growth, regional economic disparity within developed countries, and deepening income gaps among citizens of developed countries, have made this term also relevant to address the economic problems of developed countries. The mechanisms of economic development, with respect to both developed and developing countries, are elusive, and the existing theories have not been able to explain these mechanisms of economic development adequately. This article reviews the existing theories and presents a new theoretical framework to explain the process of economic development.     

Sexual economic theory & the human mating market

In this study, we apply economic principles to the heterosexual human mating market using data on the socio-demographics, biology, attractiveness, sexual behaviour, and reproductive history of 3,261 Australian online dating participants. More specifically, by using survey participants attractiveness ratings as a proxy for market value, we are able to quantitatively explore theories of sexual economics (SET), which conceptualizes sexual access as an economic resource supplied by women in the human mating market. Our study tests this theory further by incorporating heterosexual market substitutes (namely, 953 bisexual and pansexual individuals) to more accurately integrate the relevant supply and demand forces impacting market value and the commodity of sexual access. We find not only that bisexual and pansexual women (but not men) enjoy a market premium (7.3% higher; p < 0.001) relative to their heterosexual counterparts, but that, contrary to SET, women’s market value in our sample does not diminish with age. We further find that in line with theory and evidence from evolutionary studies, men with (proxied) resources realize a higher market value (6.1% higher for every increased level of educational attainment; p < 0.001) than those without. In conclusion, SET is just one possible model that seeks to understand the complex multi-dimensionality of modern human sexuality and reproduction through an economics lens. As the internet and online dating now provide a low-cost conduit for human mating market participants, so to can it facilitate further large sample scientific studies of mating market dynamics such as this.     

Schumpeter's theory of economic evolution: a Darwinian interpretation

A general Darwinian framework is employed to arrive at an interpretation of Schumpeter's work that brings out clearly its specific evolutionary aspects. Schumpeter's theory of economic evolution is seen to be still highly relevant to evolutionary economics, because it sheds light on some fundamental issues: the relationship between evolutionary theory and equilibrium analysis, the usefulness of Darwinian theory for economics, and the precise nature of the evolutionary forces at work in economic systems.     

经济常态、经济波动与财政宏观调控

目前学界对当前中国宏观经济形势的判断缺乏理论基础,用于指导政策实践令人担忧。连续和常态是研究宏观经济问题的理论前提和现实基础,而经济波动就是经济运行偏离常态,财政宏观调控的方向是使波动回落常态,由于当前经济处于比较接近常态的水平,因此财政政策就不应当再延续1998年开始的扩张性的政策,而应当逐渐退出。针对经济局部过热的情况和存在全面过热的趋势,应当采取“从紧”的财政政策。     

Public deficits and economic growth

Considering an integrated area, this paper deals with the balance between the positive effects in the degree of economic cohesion resulting from R&D subsidies, temporarily granted from an imitator and less developed country, and the external negative effects arising from the eventual creation of excessive public deficits.We propose and numerically solve a model of a monetary union between two countries, one being innovator and the other imitator. Results suggest the pertinence of allowing for a temporary differentiation of fiscal discipline rules in favour of the less developed country. R&D subsidies granted by this country seem to lead to an easier catching-up without producing important negative external effects, also as not hurting severely the conditions for long-run sustainability of public accounts.