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Abstract Economic-Environmental Models are deeply disaggregated macro-economic systems, which are used in economic environmental studies to explain the emissions of pollutions and the extraction of resources. Concerning the economic base two approaches can be differentiated – the neoclassical and the Keynesian paradigm. Models based on the neoclassical paradigm are depicting equilibrium of perfectly competitive markets, whereas the models based on the Keynesian paradigm have been developed from a critical position vis-a-vis neoclassical theory stressing the importance of market imperfections. The paper at hand shows in its theoretical part that this fundamental difference to a large extent is responsible for differences in modeling results concerning the impact of policy instruments on the economy and the environment. Furthermore the two paradigms prefer different ways of parameterization which has consequences for the empirical validation of the models, the construction of the references and the effects of environmental policy. The paper at hand further shows that the theoretical arguments allow explaining the totally different and partly opposite results of concrete policy simulations in the POLFREE project, where the large scale economic environmental models EXIOMOD (neoclassical) and GINFORS (Keynesian) have been used. [ABSTRACT FROM AUTHOR]

A great deal of recent research has been concerned with the effect of inflation on economic variables such as the interest rate, the premium for risk, and the value of the firm. Many of these articles have argued that, except for depreciation effects, the value of future investments in a world with taxes is unaffected by a change in the rate of inflation. Since it is difficult to discuss in depth the work of many writers, we will zone in on the reasoning of this type employed in only one paper, the recent article by Gandolfi. However, we believe that the discussion presented here has implications formerly other articles as well. As is common in the literature, Gandolfi builds his macromodel in two steps. First, he sets up the investment, consumption and other schedules as functions of simple parameters such as income and the rate of interest. Second, he combines the schedules to determine the equilibrium values of these parameters. This note is only concerned with part of the first step since we merely want to reevaluate the investment schedule. Since we believe that the use by Gandolfi and others of the IS/LM and/or the neo-classical growth model for the second step is correct, we leave it to future research to place our amended investment schedule in the appropriate model. [ABSTRACT FROM AUTHOR]

The purpose of this article is an attempt to systematise and evaluate the achievements of the American Nobel laureate in economic sciences and co-founder of 'neoclassical synthesis' -- P.A. Samuelson. Motivation: This economist greatly developed the methodology and theory of economics. Preferring the mathematical method in scientific inquiry and introducing new graphic solutions, he contributed to the mathematisation of economics. He enriched the theory of consumption by revealed preferences, devised the 45° line to determine the Keynesian short-term equilibrium in the goods market, as well as the consumer demand, investment demand, and savings function curves, and he also defined collective goods. He completed the theory of division with the modified Lorenz curve, presented the problem of the allocation of scarce resources by the curve of production possibilities, and generalised -- together with R.M. Solow -- the Phillips curve. In addition, he created a model of the interdependence of the multiplier and accelerator, and developed the theory of foreign trade by the 'Stolper-Samuelson effect' and the statement of the impact of prices of production factors on the allocation of resources. Results: Caring for affordability of the exposition of basic economic knowledge contained in his textbook Economics, he made a revolution in the teaching of economics. Owing to these achievements, P.A. Samuelson earned his inclusion in the circle of the greatest economists of the twentieth century. [ABSTRACT FROM AUTHOR]

In neoclassical economics, substitution assumptions support equilibrium models in closed systems shunning interdependence. On these grounds an array of frames show outcomes as stable, efficient, unique and determinate. Heterodox economists say equilibrium models sidestep practical knowledge and the rich reality of economic behavior. Rigor or realism, mainstream or radical, ecological, institutional, sociocultural: economics invites a wide diversity of assumptions, once shortterm models of substitution are opened to question. The answers are blurred by applications; there is clarity in a simplicity shielded from mundane detail. This paper addresses the methodological impact of planning horizons, increasing returns and complementarity, and their proper representation in economic constructions. Horizonal economics can be construed as extending orthodox standards into a realm of time, but for its subtler ramifications. Increasing returns make our relations complementary and not substitutional, loosening the tight deductions from mainstream models of choice. The horizonal extension of our received theory of price applies time to cost and demand curves, showing Marshallian scissors (supply and demand) cut outward and downward with expanded horizons. Static conceptions appear in horizonal groups, suggesting complete theories of price should specify agents' horizons, with no further radical impact: the trouble emerges with increasing returns and complementarity. Horizons stem from unbounded causality; if all we do ripples outward forever in nature and society, the relevant field of inquiry for economics is interdependent: this is the case for bounded rationality as an analytical limit to economic conceptions. In turn, interdependence suggests a use of network constructs to frame complex systemic cascades, and networks open a door to complementarity and increasing returns in transport and information exchange. The gaping maw of increasing returns and complementarity opens, swallowing down neat traditions such as stability, equilibrium, marginalism, partial analysis, supply and demand depictions of price, etc. The methodological lesson of this shift to network contexts and dynamic complex systems supersedes some of our favored doctrines and the analyses on which they stand. Without decreasing returns and substitution, neoclassical arguments simply do not work. Heterodox approaches - and their intelligent application - are required in this setting. The paper offers a few guidelines to an unexplored domain of fundamental departures. [ABSTRACT FROM AUTHOR]

The ISLM model, introduced in 1936-37 to provide interpretations of Keynes's General Theory, subsequently emerged in its Hicks-Hansen form as the workhorse and 'trained intuition' of post-war macroeconomists. However, ISLM is an essentially orthodox model based on neoclassical foundations and fails completely as an adequate representation of central elements of Keynes's macroeconomic thought. This article proposes IYLM as a replacement for ISLM, the new model being General Theory-compatible in that it is grounded only on key propositions in that work. Its purpose is to contribute, within the constraints of a two-market framework, to the resuscitation of Keynes's macroeconomics as an alternative to the inadequacies of much current macroeconomics. The first part of the article derives the model and argues that those sympathetic to The General Theory can accept the IYLM framework whilst simultaneously rejecting ISLM. The second part shows that Hicks- Hansen ISLM is based on an income-augmented form of orthodox loanable funds theory. [ABSTRACT FROM AUTHOR]

We present a general equilibrium model of the new neoclassical synthesis that has the same level of generality as the Arrow-Debreu model. This involves a stochastic multi-period economy with a monetary sector and sticky commodity prices. We formulate the notion of a sticky price equilibrium where all agents form rational expectations on prices for commodities and assets, interest rates, and rationing. We present a general result showing that monetary policy imposes no restrictions whatsoever on nominal equilibrium price levels and that the set of sticky price equilibria has a dimension equal to the number of terminal date-events. Stickiness of prices implies that this indeterminacy is real. [ABSTRACT FROM AUTHOR]

In the last four decades there is a renewed interest within the economic theory for the institutional structures. Numerous, multiple and often unpredictable effects of institutions on economic process are differently reflected among the leading schools of economic analysis. Certainly, in this sense, the greatest attention should be given to the stream of economic thought known as institutional economics. This heterogeneous research orientation today is already clearly differentiated on Veblenian and the new institutional economics. The paper will make, in the light of its recorded achievements and the subjects of interest of its main protagonists, a general insight into the new institutional economics. [ABSTRACT FROM AUTHOR]

Aggregate structural macroeconomic analysis (ASMA) is frequently criticised for being ad hoc and justified (if at all) only as a pragmatic expedient. This paper argues instead that ASMA is consistent with the principles of well-established bodies of social theory. Appeal to these principles reveals that ASMA is adequate and likely even necessary for the successful prosecution of macroeconomic inquiry. [ABSTRACT FROM PUBLISHER]

Abstract: Policy prescriptions for sustainable consumption have been dominated by neoclassical economics, which is built around the notions of market equilibrium, utility maximization, and exogenous preferences. There are concerns that neoclassical economics is inadequate to guide policy prescriptions in the presence of evolving preferences and complex dynamics. Evolutionary economics provides a more realistic account of individual behavior underlying economic processes. It offers a framework for studying complex socio-economic interactions and exploring their properties. As a consequence, it may offer a better approach for the analysis of policies aimed at inducing fundamental changes in behaviors, technologies and institutions in the direction of increased sustainability. However, a coherent evolutionary-economic approach to economic policies has been missing so far. In particular, policy criteria for evaluating evolutionary outcomes and processes are ambiguous. The paper discusses the implications of employing the evolutionary-economic approaches to study sustainable consumption and policy from different ethical standpoints. [Copyright &y& Elsevier]

Ignorance and misunderstanding of Schumpeter's writing are the main reasons why the Anglo-American School, as dominant in the context of neoclassical economics, was and still is separate from the German Historical School. However, Schumpeter's arguments are relevant today because the system of general economic equilibrium has no adequate theory able to explain neither endogenous nor structural development proposed by Schumpeter. His theory of economic development can serve as a coherent response to Marxist theory. For Schumpeter, the intra-capitalist competition fully explains the structural changes in the economy. He argues that competition is a dynamic process of diff erences and struggles between companies, and not static competition as proposed by the Walrasian mathematical perfect model. Schumpeter argues that the theory of economic cycles and the growth theory are inseparable. Th e overarching aim of this paper is to through synthesize of theoretical analysis confirms the relevance of Schumpeter's theory in the context of the digital economy. [ABSTRACT FROM AUTHOR]

(Reviewing: Great Thinker in Economics, Series Editor, A. P. Thirlwall, selection consisting of P. Groenewegen, Alfred Marshall, 2007; P. Davidson, John Maynard Keynes, 2007, 2009; G. Fletcher, Dennis Robertson, 2008; A. Roncaglia, Piero Sraffa, 2009; G. C. Harcourt and P. Kerr, Joan Robinson, 2009; J. E. King, Nicholas Kaldor, 2009, Palgrave Macmillan)Six volumes in the Great Thinker in Economics Series were chosen by the Editors for this review, which focuses on The Cambridge School of Economics, so very different from the mainstream theory of general economic equilibrium which gives formal expression to Lionel Robbins’ famous definition of the subject as the allocation of scarce means among alternative uses. In recognition of a distinct Cambridge School, the authors of these volumes present a variety of arguments within which three overlapping themes can be discerned: the relationship between ethics and economics; the role of stocks and flows in economic analysis; and the epistemic problem surrounding the role of creativity, which has eluded the skills of formalists. The once pervasive influence of Alfred Marshall, John Maynard Keynes, Dennis Robertson, Piero Sraffa, Joan Robinson and Nicholas Kaldor can only be recovered with some such set of general themes in mind. [ABSTRACT FROM AUTHOR]

Built on the fictional concept of equilibrium, mainstream economics provides a method of analysis that, when paired with the calculus, enables relatively easy identification of maximum and minimum values. Lacking empirical evidence of its behavioral assumptions, the profession accepts such familiar claims as consumer maximization of utility and business firm maximization of profit or revenue. In place of the relatively static concept of equilibrium, the Veblen-Myrdal notion of circular and cumulative causation (CCC) arguably has greater descriptive capability and more penetrating insight for policy recommendations. This article traces the historical origins of both concepts and argues that CCC offers considerable potential for a broad, dynamic, interdisciplinary, more thorough, and more accurate analytical framework. Specific examples of work that has been done along with suggestions for future applications of this concept are given. [ABSTRACT FROM AUTHOR]

Purpose - Henry George was acclaimed by the general public and disdained by the professional economists, largely for the same reasons. For the general public, progress, and poverty seemed to go to the heart of the matter, treating economics as a question of justice. But for the professionals, George was often regarded as a dangerous radical, even though he reasoned within the tradition of Smith, Ricardo, and Mill. However, he conducted his studies at the precise moment of the marginalized revolution, just as the profession was undergoing a transition from political economy to economics. For the former, economic science was embedded in particular political and cultural systems, while the latter aspired to be a pure science with its own mathematics. While some of the marginalized, such as Walras and Marshall, could maintain a commitment to justice, many others found the whole question superfluous. The purpose of this paper is to argue, however, that without some notion of justice, and especially justice in property relations, a complete description of an economy is impossible. Design/methodology/approach - The paper examines three issues: the relation between. distributive and corrective justice, the relation between normative and positive science, and the. relation between equity and equilibrium. Findings - The paper finds that, without some notion of equity, equilibrium is unattainable. And this relation can be shown to be present in the very starting conditions of neoclassical formulations, which initial conditions are, alas, too often forgotten. Originality/value - The paper provides an intriguing view of the neoclassicists' different stance in regard to justice, pointing out that William Stanley Jevons, for example, explicitly states that "feelings" of justice are "more or less extraneous to a theory of economics," and expands upon this argument. [ABSTRACT FROM AUTHOR]

Summary. In this paper we consider a two-period general equilibrium model with uncertainty and real assets as financial instruments. The novelty of the analysis is that real assets are the stocks of neoclassical firms, so that both returns and yields depend on anticipated spot goods prices (and, of course, the yield matrix may change rank with prices). Assuming that financial markets are potentially complete, we establish generic existence of financial equilibrium and prove that there exists a dense set of economies such that financial equilibria are efficient. [ABSTRACT FROM AUTHOR]

The article focuses on perfect competition and the creativity of the market. Competition is a central idea in economies, its idealization as perfect competition underlies much of traditional analysis. Every effort should he made to preserve its centrality even if that means revising the way one thinks about the concept in light of recent challenges. An important part of the story is an account of the development of perfect competition and the general equilibrium theory with which it is intimately associated. The historical part helps explain how perfect competition acquired its current formulation with the implicit presumption that it could have been otherwise. The article takes as starting point the contributions of economists William S. Jevons, Carl Menger and Lé Walras, which marked the break between classical and neoclassical economics. When compared to classical economist David Ricardo, the common marginalist elements in their work are an instance of simultaneous discovery. However, when viewed on their own, the styles and contents of their contributions are quite different.

This study employs laboratory experiments to test aspects of Ricardian equivalence. An overlapping generations model forms the basis of the experimental design. Whenever Ricardian equivalence predicts a positive bequest, outcomes close to those predicted occur, after allowance for learning. Observed deviations from Ricardian equilibrium are small, but biased in a Keynesian direction: changes in bequests do not fully offset changes in government debt. The imposition of a binding nonnegativity constraint on bequests produces the predicted neoclassical behavior. The cost to the players of deviations from the theoretical equilibrium is apparently an important determinant of the variability of observed deviations. [ABSTRACT FROM AUTHOR]

This article examines a simple idea that under certain conditions, the neoclassical aggregate supply and aggregate demand curves could coincide. This would suggest a continuum of possible macroeconomic equilibrium, resulting in a severe indeterminacy. This result can be viewed as a manifestation of the well-known tendency for multiple equilibrium to crop up in linear rational expectations models. A final implication of this possibility of the coincidence of long-run vertical aggregate supply and demand curves is the revived relevance of the Keynesian-type short-run analysis so scorned by the New Classical.

In this article, the author expresses gratitude for Joanhlio Teixeira and Jorge Araujo's note concerning his paper on Professor Luigi Pasirieni's Cambridge Theorem. They have derived a version of that theorem that again demonstrates the irrelevance of workers' propensity to save, but that also produces a dependence on the government's savings behavior. It might be assumed that the government does not pay indirect taxation on its own expenditure. This is by no means unreasonable, since it is apparent that paying tax to itself is simply adding the same item to both sides of the government's revenue and expenditure table.

Explores the theory of neoclassical equilibrium. Methods for equilibrium analysis; Economic policy formation; Interrelationship among economic variables.

Criticizes the general equilibrium (GE) theory on the rate of return. Result of defining the interest rate as the set of intertemporal price ratio percentages; Absence of capital and time as phenomena in GE econometric models; Parallelism between neoclassical capital theory and neoclassical location theory.

In this paper I present conditions under which the long run stock equilibrium in Patinkin's general equilibrium model exists, is unique and is globally stable. These conditions are basically that all goods are weak gross substitutes and noninferior The model is developed in Patinkin (1965); Archibald and Lipsey (1958) were, I think, the first writers to study its long run properties. The demonstration of the proposition is a straightforward application of Morishima's (1964) generalizations of the Perron-Frobenius theorems.
Actually, the analysis applies to a somewhat wider class of models than Patinkin's, since the properties of his model which we use are those concerning the homogeneity of the demand and excess demand functions. It is clear that these properties will be true of other money models as well.
I make no particular defense of this model against, for example, the criticisms of Hahn (1965) and Clower (1967). However, the properties of it that I use are standard assumptions in expositions of neoclassical monetary theory (see also Friedman, 1969, and Samuelson, 1968). For that reason alone it seems worthwhile to investigate its long run behavior since it is only in the long run that the principal results of that theory hold. [ABSTRACT FROM AUTHOR]

Building on Ricardo's two-sector corn model (Pasinetti, 1960), the paper develops a classical alternative to the standard neoclassical two-by-two general equilibrium model (Jones, 1965; Uzawa, 1961/3). The alternative model has the following characteristics: (1) As against related Neo-Ricardian work, it is fully causal and capable of tracing the economy's traverse from arbitrary initial conditions to a growth steady state (with land-augmenting technical progress); (2) the simultaneous presence of a wage fund and of land makes possible the incorporation of expectations formation and perfect-foresight equilibrium. [ABSTRACT FROM AUTHOR]

Neoclassical theory of economics has two main interpretations of its concept of rationality, internal cognitive consistency and the maximization of self-interest. Self-interest, unlike consistency, is normally an added characterization of an agent who is already formally characterized as choosing in accordance with some ranking. Nevertheless it is implicitly present in much of traditional economic theory. For example, in general equilibrium theory, in establishing the correspondence of equilibrium with Pareto optimality. Self-interest may also be added to formal consistency as a spice of "realism." It is often introduced, not in the formal axiomatization, but by an appeal to intellectual history. Even economist Adam Smith's conception of industrial capital class was based on accumulation of self-interest. A defense of self-interest today must confront present challenges and will take little comfort from a deep study of what Smith actually had written.

Both new-classical and Keynesian macroeconomists usually agree that the price level and real output tend to move in the same direction. By standing on this widely accepted fact the economist can see macroeconomics from an original angle, even though two schools of thought disagree on causes of this pro-cyclicality and on whether activist fiscal and monetary policies are justified. According to some new-classicals, real output and the price level tend to move in the same direction, because producers do not initially know whether an increase in prices they observe in their own market is relative and real, or only a nominal increase. By contrast, the traditional Keynesian theory assumes that, when an economy is depressed, there are prices or wages stuck at disequilibrium levels and thus involuntary unemployment. An increase in aggregate demand tends to correct these inefficiencies and thereby increases welfare as well as real output. There are bottlenecks and other limits to price stickiness, so the price level rises when real output increases.

The article provides a brief introduction to macroeconomics. Economists question the internal consistency of Keynesian models. In contrast, the neoclassical or rational expectations school maintains consistency with the principles of perfect competition and flexible prices. Nearly all economists are extraordinarily prejudiced in favor of models exhibiting rational. In apparent ignorance of the intellectual arguments of the neoclassical school, the economy persists in behaving pretty much as the modern Keynesian models predict. The article presents the role of imperfect information in the labor market and then goes on to solve for general equilibrium in the absence of government intervention. It examines the Keynesian-like behavior of this equilibrium. It also examines the impact on GNP, aggregate labor supply and welfare of balanced-budget government spending. In the absence of active fiscal policy, it is seen that Say's Law fails and the author demonstrate why there is a "fallacy of composition."

The article discusses stability implications of economists Alfred Marshall and Leon Walras's adjustment schemes. In the Keynesian macrosystem, the Marshallian ranking of price and quantity-adjustment speeds is reversed. Thus, in the shortest period, flow quantities are freely variable. However, only one or more prices are given and the admissible range of variation for the rest of prices is thereby limited. Researcher James Tobin has argued that one way to appreciate the importance of this change of dynamic structure is to analyze the stability implications of Marshallian and Walrasian adjustment processes. Tobin argues persuasively that Keynes' achievement was to show that, in a capitalist economy, market forces may be too weak to generate a lull-employment equilibrium. Tobin develops two simple macro models, one reflecting the Walras-Keynes-Phillips (W-K-P) adjustment relation and the other reflecting the Marshallian (M) adjustment relation. It is clear from Tobin's analysis that the speed of adjustment of price and quantity is not the only characteristic distinguishing the Marshallian and Walrasian approaches.

The economics of advertising is marked by the same emotional commitment to conflicting schools of thought that is usually associated with monetary theory and the economics of speculation. To all appearances, the choice of both the axioms used and data to be interpreted has been made in order to justify preexisting conclusions rather than to make an unbiased test between alternative theories. The controversies endure in large part because advertising still remains outside the core of accepted theory. Neither the standard Marshallian partial equilibrium analysis nor the Arrow-Debreu general equilibrium analysis even admits the existence of advertising. Two major explanations of advertising are widely held: one considers advertising as a set of psychological ploys which induce consumers to buy products or brands that they otherwise would not buy; the other treats advertising as a provision of information which allows consumers to make more discriminating choices within the framework of a fixed set of preferences.

In this paper we study the quantitative implications of nominal wage contracts for business cycle fluctuations. We address this issue using a model economy based on the neoclassical growth model supplemented by the assumption that cash is needed to purchase goods. We consider a variation of the standard recursive competitive equilibrium concept that is intended to capture the important features of wage contracting. We use this equilibrium construct to address three issues. First, we consider whether monetary shocks, propagated by nominal contracts, constitute a viable alternative to technology shocks as a source of aggregate fluctuations. Our results suggest that, while monetary shocks and nominal rigidities succeed in causing output volatility of the required magnitude, the resulting data have properties that are inconsistent with several key features of U.S. data. Second, we consider how the behavior of the economy varies with contract length. We find that the volatility induced by both monetary and technology shocks increases sharply with contract length. Finally we consider how much rigidity would be necessary to match the volatility of U.S. output. We find that only a very small amount of rigidity would be necessary to cause output volatility of the magnitude observed. [ABSTRACT FROM AUTHOR]

The two distinct theories of perfect competition, the Marshallian and the Arrow-Debreu-McKenzie (ADM), assume price-taking behavior as a fundamental. During the first half of this century, Marshallian analysis unquestionably dominated the theory of value. Although this probably remains true, a growing number of papers in the applied areas adopt a variant of the ADM framework. Only in this context can they discuss the importance of interactions among markets and the distribution of wealth. This essay explains a new theory of perfect competition, a synthesis of the ADM and Marshallian theories, and summarizes the recent work of many researchers. The new theory enables those economists who work in the world of U-shaped average cost curves and free entry to study intermarket effects and the decentralization and efficiency of perfect competition. The synthetic theory allows both for marginal firms and for the firm to recognize its influence on price; it provides a precise general equilibrium framework for positive analysis and a framework in which to demonstrate the classical theorems of welfare economics.

The article presents a thesis summary which discusses the relationship between the early psychological research and economics of professional economist Alfred Marshall. It mentions the influence of Marshall's research in psychology on his economics which is known for the theory of partial equilibrium. It states that his economics aims to demonstrate the organic growth theory of economy which reflects the progress of the economic society and human nature. It points out the inattention on the significant influence and relation of his psychological research on his economics. It argues that Marshall's analysis of mutual progress of economic society and human nature came from his apprehension on the complementarity of his research findings and economic concerns.