John Eatwell

Allocation, information and markets

Efficient allocation, S.Reiter adverse selection, C.Wilson asymmetric information, A.Postlewaite auctions, V.L.Smith bidding, R.Wilson the coase theorem, R.D.Cooter decentralization, E.Malivaud economic organization and transaction costs, S.NM.S.Cheung exchange, R.Wilson experimental methods in economics, V.L.Smith externalities, J.J.Laffont fraud, E.Karni hidden actions, moral hazard and contract theory, R.Guesnerie implicit contracts, C.Azariadis incentive compatibility, J.O.Ledyard incentive contracts, E.P.Lazear incomplete contracts, O.Hart incomplete markets, C.Wilson market failure, J.O.Ledyard mechanism design, R.B.Myerson moral hazard, Y.Kotowitz natural selection and evolution, S.G.Winter organization theory, T.Marschak perfectly and imperfectly competitive markets, J.Roberts principal and agent, J.E.Stiglitz public goods, A.Sandmo revelation of preferences, J.J.Laffont search theory, P.Diamond signalling J.G.Riley teams, R.Radner.

Utility and probability

Acyclicity, Douglas Blair Allais paradox, Maurice Allais Thomas Bayes, D.V.Lindley Daniel Bernoulli, S.L.Zabell bounded rationality, Herbert A.Simon certainty equivalent, Xavier Freixas contingent commodities, Zvi Safra economic theory and the hypothesis of rationality, Kenneth J.Arrow Francis Ysidro Edgeworth, Peter Newman expected utility and mathematical expectation, David Schmeidler & Peter Wakker expected utility hypothesis, Mark J.Machina Bruno de Finetti, Giancarlo Gandolfo Hermann Heinrich Gossen, Jurg Niehans impatience, Larry G.Epstein induction, Paul W.Humphreys interdependent preferences, Peter C.Fishburn interpersonal utility comparisons, John C.Harsanyi lexicographic orderings, C.Blackorby Myopic decision rules, Mordecai Kurz orderings, C.Blackorby perfect foresight, Margaret Bray preferences, George Henrik von Wright preference reversals, Edi Karni preordering, C.Blackorby probability, Ian Hacking psychology and economics, Charles R.Plott Frank Plumpton Ramsey, Peter Newman rational behaviour, Amartya Sen representation of preferences, Peter C.Fishburn risk, Mark J.Machina and Michael Rothschild Leonard J.Savage, I.Richard Savage state-dependent preferences, Edi Karni state preference approach, H.M.Polemarchakis stochastic dominance, Haim Levy subjective probability, I.J.Good time preference, Wayne Shafer uncertainty, Peter J.Hammond utility, R.D.Collison Black utility theory and decision theory, Peter C.Fishburn.

The Fall and Rise of Keynesian Economics

During the 1970s, when doctrines like monetarism and new classical macroeconomics ushered in an era of neoliberal economic policymaking, Keynesian economics was pushed aside. It was almost forgotten that when Keynesian thinking had dominated economic policymaking in the middle decades of the twentieth century, it had underwritten postwar economic reconstruction in both Europe and Japan, and was largely responsible for the unprecedented prosperity and stable growth of the 1950s and 1960s. The global financial crisis and recession changed all that. Influential voices in progressive economics circles began to remind us how useful Keynesian ways of thinking could be again, especially in assisting us to come to terms with our economic predicaments. When politicians across the globe were confronted with economic crisis, almost by accident they introduced pragmatic and workable measures that bore all the hallmarks of Keynesianism. This book is about this fall and rise of Keynesian economics. Eatwell and Milgate range widely across the landscape that defines their subject matter. They consider how powerful Keynesian ideas can be when applied to our past and present economic problems. They show how helpful these ideas are in explaining why we came to find ourselves in the mess we are in. They examine where and how the analytical and methodological foundations of conventional macroeconomic wisdom went wrong. They set out a blueprint for an alternative that provides a clearer, more consistent, and more applicable approach to understanding how markets work. They also highlight the interpretive shortcomings that have come to characterize Keynes scholarship itself. They do all of this within the context of a provocative reconsideration of some of the most pressing economic problems that confront financial markets and the global economy today. Available in OSO:

Unemployment: national policies in a global economy

Two issues have dominated the recent employment experience of the major industrial countries: first, the common rise in unemployment throughout the OECD; second, the diversity in the scale and content of that rise as between, on the one hand, the core of the European Union and Australia, and, on the other hand, North America. The growth and persistence of unemployment may be the result of the deregulation of global financial markets in the 1970s that has been followed by huge growth in short‐term capital flows. These flows have produced a significant increase in risk aversion in public sector and private sectors. This is the major source of deflationary pressures and persistent unemployment throughout the world. Those pressures could have been substantially mitigated if a key lesson had been drawn from the development of domestic financial markets – liberal markets are only efficient if they are efficiently regulated.

Time series and statistics

Statistical Inference in Time Series P.Whittle - ARIMA Models A.C.Harvey - Autoregressive and Moving Average Time Series Models M.Nerlove & F.X.Diebold - Bayesian Inference A.Zellner - Continuous and Discrete Time Models C.A.Sims - Edgeworth as a Statistician S.M.Stigler - Ergodic Theory W.Parry - Estimation M.Nerlove & F.X.Diebold - Factor Analysis I.Adelman - Ronald Aylmer Fisher A.W.F.Edwards - Forecasting C.W.J.Granger - Heteroskedasticity J.Kmenta - H.Hotelling K.J.Arrow - Hypothesis Testing G.C.Chow - Least Squares H.White - Likelihood A.W.F.Edwards - Martingales A.F.Karr - Maximum Likelihood R.L.Basmann - Meaningfulness and Invariance L.Narens & R.Duncan Luce - Mean Value S.H.Chew - Measurement R.Duncan Luce & L.Narens - Monte Carlo Methods J.G.Cragg - Multivariate Time Series Models C.A.Sims - Non-parametric Statistical Methods J.L.Gastwirth - Outliers W.S.Krasker - Prediction P.Whittle - Principal Components T.Kloek - Randomization J.O.Berger - Random Variables I.R.Savage - Regression and Correlation Analysis D.V.Lindley - Residuals F.J.Anscombe - Semiparametric Estimation S.R.Cosslett - Sequential Analysis J.O.Berger - Eugen Slutsky G.Gandolfo - Spectral Analysis C.W.Granger - Spline Functions D.J.Poirier - Stationary Time Series E.J.Hannan - Statistical Decision Theory J.O.Berger - Statistical Inference D.V.Lindley - Time Series Analysis M.Nerlove & F.X.Diebold - Transformation of Statistical Variables D.R.Cox - Abraham Wald E.R.Weintraub - Weiner Process A.G.Malliaris

A World Financial Authority

Systemic risk is to financial markets what dirty smoke is to the environment. In reckoning cost of production, the factory owner fails to take into account the cost a smoking chimney imposes on the community. The dirty smoke is an externality. This failure introduces a fundamental inefficiency into workings of the market—cost to the firm does not reflect cost to society. The result is pollution. The factory owner produces more smoke than would be the case if all society’s bills were reckoned into the factory’s profit and loss account.

The American Stock-Flow Trap

U.S. economy is about to run into a trap. The jaws of the trap are the growing imbalances between outstanding stocks (or volumes) of financial claims, on the one hand, and flows of interest payments, imports and exports, and consumer spending, on the other. Critical stock-flow ratios are dangerously high. It is impossible to predict just how and when the trap will spring. But it lies ahead, right in the direction the economy is moving. Stock-flow traps are nothing new. Experience all around the world shows that when critical stock/flow ratios become large, players in financial markets first become suspicious and then may very rapidly flee into liquid holdings as they sell off the liabilities of the economy in question. Such flights were at the root of the recent financial crises in Mexico, East Asia, Russia, and Brazil. The fundamental cause of the Mexican crisis was a

The invisible hand

Adam Smith A.S.Skinner - Anarchism G.Woodcock - Claude Fr d ric Bastiat R.F.H bert - Jeremy Bentham R.Harrison - Collective Action M.Olson - Common Law P.S.Atiyah - Constitutional Economics J.M.Buchanan - Economic Freedom A.Peacock - Economic Harmony I.M.Kirzner - Economic Laws S.Zamagni - Equilibrium: Development of the Concept M.Milgate - Adam Ferguson N.Phillipson - William Godwin P.Marshall - Friedrich August von Hayek R.W.Garrison & I.M.Kirzner - Thomas Hobbes C.B.Macpherson - David Hume E.Rotwein - Francis Hutcheson A.S.Skinner - Individualism C.B.Macpherson - Interests A.O.Hirschman - Invisible Hand K.I.Vaughn - Law and Economics D.Friedman - Liberalism R.Dahrendorf - Liberty A.Ryan - John Locke K.I.Vaughn - Bernard de Mandeville N.Rosenberg - John Stuart Mill A.Ryan - John Millar N.Phillipson - Moral Philosophy R.S.Downie - Natural Law N.E.Simmonds - Property A.Ryan - Property Rights A.A.Alchian - Scottish Enlightenment J.Robertson - Self-interest D.H.Monro - Social Cost J.de V.Graaf - Utilitarianism C.Welch - Utopias G.Claeys - Contributors

Economic theory and European society: The influence of J.M. Keynes∗

Abstract The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. 1 1. J.M. Keynes, The General Theory of Employment, Interest and Money (London: Macmillan, 1936), p. 383. We have changed, by insensible degrees, our philosophy of economic life, our notions of what is reasonable and what is tolerable; and we have done this without changing our technique or our copybook maxims. Hence our tears and troubles. 2 2. J.M. Keynes, Essays in Persuasion (London: Macmillan, 1931), pp. 337–338.