Mainstream Economic Models Research Articles

Sustainable production assessment of the 50 US states

Economic production is often accompanied by the depletion of natural resources and amplified environmental concerns. Mainstream economic models usually disregard such socio-environmental consequences of economic production. Therefore, there is more need of interdisciplinary methods to evaluate the sustainable productivity of nations. In this paper, we investigate the sustainable production growth of the 50 US states from 1997 to 2018. The US, as one of the largest economies and emitters of greenhouse gases, has a significant role to play in addressing the global environmental issues. The US has numerous national and international commitments and environmental policies in place, however the role of such policies on sustainable production has mostly been overlooked. We implement Data Envelopment Analysis (DEA) models based on several economic indicators and find that most states have been efficient between 1997 and 2018. We use Slack-Based Measures (SBM) to investigate individual states' capital, labor, energy, and emission performances. According to the results, capital efficiency is high while energy and emissions efficiency is low, which results in states' eco-productivity being greater than their eco-efficiency. This highlights that, while ensuring economic efficiency, many states compromise environmental focus. We further adopt Malmquist Productivity Index (MPI) to evaluate the states' productivity, efficiency, and technological change over 22 years, and document significant adverse impact of the global financial crisis on economic efficiency. Next, we apply econometric models to evaluate the impact of renewable energy and energy efficiency policies on efficiency outcomes. The test results indicate that all policies positively affect the states’ average production efficiencies and KPI measures. Overall, the findings provide valuable insights into the sustainable production growth of the US states and the impact of renewable energy and energy efficiency policies on efficiency outcomes.

Practical Applications of Why Should Asset Management Be Interested in New Economic Thinking?

In <ext-link><bold><italic>Why Should Asset Management Be Interested in New Economic Thinking?</italic></bold></ext-link> from the October 2022 issue of <italic>The Journal of Portfolio Management</italic>, authors <bold>Sergio Focardi</bold> of <bold>Franklin University</bold> and <bold>Frank Fabozzi</bold> of <bold>Johns Hopkins University</bold> explain that mainstream economic theories may be outdated and may lead asset managers to make bad decisions. Modern-day economies are complex, rapidly evolving systems where inflation, money and credit creation, and economic growth are driven by new and different factors. Moreover, modern economies are complex, evolutionary systems that are not adequately described by traditional models. Mainstream economic models failed to warn markets about the 2008 financial crisis because they did not consider the destabilizing effects of money creation and destruction when bank loans are disbursed or repaid. Additionally, the Phillips curve, which posits an inverse relationship between inflation and unemployment, failed to predict low inflation between the financial crisis and the COVID-19 pandemic. Mainstream models also do not include innovation and quality improvements in economic growth. New and emerging theories offer potentially better insights for predicting when markets will become unstable. These theories embrace different views about the drivers of inflation, the effects of money and credit, and the significance of innovation and qualitative growth. These theories can offer insights that allow asset managers to make better investment decisions.

Successful Niche Building by Social Innovation in Social Economy Networks and the Potential for Societal Transformation

As current evolutions make the social economy increasingly visible and important, the paper examines the role of networking in social economy initiatives in strengthening their innovativeness capacities, and, thus, increasing their potential for societal transformation. Our analytical framework reflects the different clusters of networking relations within and outside social economy initiatives, as well as the roles of cognitive frames, skills and capacities, governance, activities, and funding under each of these networking clusters. This analysis is then applied in a particular social economy initiative, Cretamo, a consumers’ cooperative operating a grocery store in Thessaloniki, Greece. The results indicate that Cretamo has developed in the central node of an eco-system of same-minded social enterprises in the agro-food sector, offering an alternative niche to the mainstream economic model. This has changed relations both within the initiative and in its networks, while, at the same time, allows for increased innovativeness capacities. Cretamo has not yet the power to challenge the existing mainstream regime. Yet, it offers a valid alternative niche, which, combined with the socio-economic crisis still experienced in Greece and expected to intensify in the future, creates strong potential for societal transformation.

The Impact of Circular Economy Development on China’s Industrial Management In The Age of Information

Since the 1990s, circular economy has appeared in China and has gradually developed and grown. In recent years, with the development of information and the popularization of big data applications, circular economy has become the mainstream economic growth model China pursued. The concept of circular economy has also had a profound impact on China’s corporate management. This article introduces the history of the development of human economy and the connotation of circular economy as well as the development history and development model of China’s circular economy. It also discusses the impact of circular economy development on the management concepts and management methods of China’s agricultural and industrial enterprises in the age of information.

Two paths forward for Austrian macroeconomics

Twenty years ago, two scholars published important books on the subject of Austrian macroeconomic theory. Each offered a somewhat distinct approach. And, as much as it was the case when these two works were published twenty years ago, Austrian macroeconomists find themselves with two potential paths forward today. On the one hand, they might stress the temporal structure of production, while incorporating insights from finance. On the other, they might take a more general approach to capital specificity, while deviating from more mainstream economic models only insofar as is essential to preserve a uniquely Austrian view.

Rethinking 21st-Century Businesses: An Approach to Fourth Sector SMEs in Their Transition to a Sustainable Model Committed to SDGs

With barely ten years remaining to reach the goals included in the United Nations 2030 Agenda (UN2030A), there is still no agreed-upon universal criterion regarding how businesses can move firmly forward to achieve them. A significant number of laudable initiatives have emerged and been consolidated internationally, highlighting the need to change the outdated mainstream economic model based on continuous growth—whose maximum exponent is the macroeconomic magnitude “Gross Domestic Product” (GDP)—to another sustainable model which considers the ecological "people and planet-centered" oriented limits, prioritizing individual wellbeing and social prosperity, in line with the UN2030A. Facing the prevalent resistance to change, some innovative small and medium-sized enterprises (SMEs) are consciously addressing the transition on their own, but not without difficulties. The purpose of this article was to fill the gap in the social sciences literature by conducting in-depth interviews with Fourth Sector (4S) entrepreneurs, business leaders from purpose-driven companies, and academics, in order to approach and look into their perspective about the role that 4S SMEs are being called to execute to advance toward 2030. The two main contributions of this article are (1) 4S SMEs identify an urgent need to modify the current economic model with metrics aligned with UN2030A and (2) it is essential to assemble and build an “Engagement Ecosystem” through a systemic thinking approach to allow 4S SMEs to make real contributions to the seventeen Sustainable Development Goals (SDGs).

Do intellectual property rights involve a private power to tax

This article criticises the standard approach to intellectual property rights, interpreted as property rights conferring a monopolistic position, by showing that a public good is not a suitable basis for a private monopoly and that the bundle of rights included in an intellectual property right is so different from those enjoyed under a standard monopoly as to suggest that a different mechanism is at work, that is, a private power to tax has been granted. To highlight how this novel approach works, mainstream economic models of economic growth based on research and development, whether protected or not by intellectual property rights, are revisited. The theory of taxation is then recalled to show that taxes involved by intellectual property rights can range from an amount equal to the monopoly profit to Lindahl taxes. Finally, the principles of taxation elaborated by economic theory are examined for clues to improving the design of intellectual property rights.

SIGNIFICANCE OF NEUROMARKETING ON CONSUMER BUYING BEHAVIOR

-In today‟s vibrant business surroundings, it is no longer feasible to keep on practicing the same marketing tools to acquire an edge over the competitors. It is thus necessary to integrate other disciplines along with marketing to take a leap forward to understand consumers better. Neuromarketing is a fairly new discipline that combines behavioural psychology, economics and consumer neuroscience. Neuromarketing is an emerging field that bridges the study of consumer behavior with neuroscience. Neuromarketing has attracted increasing attention, but critical aspects of it remain underexplored, including what exactly it is or includes, and how it is used in practice. Neuromarketing, as currently practiced, is heterogeneous, as companies are offering a variety of technologies. Consumers are complex, diverse in nature and neuromarketing can provide better insights about their purchase intentions. The idea that consumers are rational decision makers, who carefully consider options when making a decision about a certain phenomenon, will soon phase out! Believe it or not. In a bid to better understand the consumer, a myriad of economists still waste their precious time on “not-so-deep” modifications and elaborations of mainstream economic models, some of which are barely “shallow”. Businesses need to fully understand the consumer decision making processes for them to thrive in the current competitive business environment which is now a global village. The main aim of this paper is to highlight the role and importance of neuromarketing research techniques in the evolution of neurosciences and to explain how these techniques are used in market research. One of the most important challenges for companies who offer neuromarketing services is to stick to ethical principles when performing the investigations. This paper also looks at the human brain from a neuromarketing perspective, to shade more light on our quest to better understand the consumer brain. Neuromarketing was born by combining two fields: Consumer behavior and Neuroscience. Thus in beam of such remarkable potentiality of Neuroscience integrated with consumer behaviour, this paper is an attempt to understand the significance of neuromarketing on consumer buying behaviour. This article aims to help in understanding this new mixture of these sciences by explaining tech-niques that are used in this area and showing their application

The Indifferent, the Good Samaritan, the Brave and the Agent in Allais Paradox situation – or How Endowment Effect Influences Our Decision in Case of Allais Paradox?

AbstractBackground and purpose:Mainstream economic models do not take ownership into consideration. Only after the findings of behavioural economists was endowment effect widely observed. Endowment effect means that goods that one owns are valued higher than other goods not held in endowment. At the same time the principal-agent literature is concerned with how the principal (such as employer) can motivate his agent (say the employee), to act in the principal’s interests and also for their holdings. The main problem is that acting in somebody’s else’s interests can influence our values as well. Moreover, the principal as owner suffers from endowment effect. Both situations can be treated as a risky decision. Risk confuses our rationality in a predictable way.Design/Methodology/Approach:Due to this it was observed how foreign students from various cultural backgrounds decided (n=186 answers) in a risky financial situation by focusing on Allais’ classic gambles. I also presented their preferences over certain and uncertain outcomes regarding the owner of the final win; i.e. how they choose for themselves or on behalf of one of their best friends. One famous experiment - which tested the descriptive validity of the axioms’ expected utility theory - was Allais. Allais handled probabilities and outcomes in high hypothetical payoff financial gamble situations; he found that when offering two similar options, the common consequences will not be removed by the actors. I was interested in what happens when the actors take risks on behalf of others. It was used between-subjects technique on an extended multicultural sample. Regarding the two different topics, three hypotheses were tested (1); based on Allais paradox (2); observed ownerships (3); the comparison of two phenomena.Results:The results show that the subjects responded differently when they needed to decide about their own properties rather when their friends’ properties were concerned. When a sure safe outcome was offered to the subjects, they took more risk on behalf of their friends rather than own. Moreover, the subjects do not take into consideration that the same attributes must be ignored, so Allais paradox was verified.Conclusion:The goal of this paper is then twofold. First, it was established a conceptual link between Allais-type behaviour and ownership problem. Second, Allais axiom was used to characterize different roles. Knowing predictable patterns of seemingly irrational heuristics in human behaviour can improve economic theory. At the same time, this knowledge helps us to avoid irrational decisions.

How to promote alternative macroeconomic ideas: are there limits to running with the (mainstream) pack?

The paper discusses the merits and risks of heterodox economists using mainstream economic models, and especially dynamic stochastic general equilibrium (DSGE) models, to promote economic policy conclusions usually found in post-Keynesian economic thought such as large fiscal multipliers, importance of distributional issues for macroeconomic stability, and the role of endogenous money creation for the explanation of economic downturns after a banking crisis. It argues that using these models can help heterodox researchers to communicate with mainstream economists and might help to further one's personal academic career, but that such a strategy comes along with the risk of having to accept other, very questionable policy conclusions and of stabilizing the use of the DSGE models in mainstream economics, hence potentially delaying a Kuhnean-type ‘scientific revolution’ in macroeconomics.

Beyond econophysics (not to mention mainstream economics)

Econophysics has produced innovative and empirically relevant results in at least four areas of research: financial markets, growth and distribution of firms and countries, the distribution of income and wealth, and contagion, robustness and resilience of networks. All these results are inexplicable by the actual mainstream economic model. Yet econophysics requires not only a new economy, but also a “new” physics, which is based on non-ergodicity, on social dynamics whose elementary constituents are heterogeneous interacting social agents linked by networks.

Entry Barriers and Economic Performance of Chinese Monopoly Industries

How to understand the important significance of administrative approval system reform of market access since the 18th CPC National Congress has become the hot topic in current theoretical realm. Different from previous empirical research, this paper models the administrative approval system by employing a mainstream economic model, i.e. dynamic competition innovation model, for the first time, and deeply analyzes the specific economic performance as well as its function mechanism. It comes to the main conclusions as follows:firstly, the life cycles of monopoly industries are longer than the ones of competitive industries, so the elimination of outdated capacity in monopoly industries is a relatively effective industrial policy if the monopoly cannot be abolished; secondly, monopoly industries give rise to much higher prices, and benefit the incumbent firms greatly by bringing more economic profits to them, so price and profit regulation are two essential tools for governments to manage monopoly industries; thirdly, since administrative entry barriers would extrude consumer surplus, the administration supervision departments should impose extra welfare tax on enterprises' monopoly rents, and build a policy system about transfer payments to consumers; fourthly, it is also necessary for supervision departments to implement innovation incentives since the existence of monopoly industries can inhibit technological progress inside the industries.

Can Institutional Reforms Reduce Corruption? Economic Theory and Patron–Client Politics in Developing Countries

ABSTRACTThe ‘anti‐corruption consensus’ of the dominant development paradigm sees corruption as a governance failure and maintains that graft can be reduced or eradicated through appropriate institutional reforms, such as strengthening the judiciary, designing corruption‐proof regulatory regimes, and establishing anti‐corruption agencies. This article aims to cast doubt on the theoretical rationale of this family of anti‐corruption interventions. The neo‐classical paradigm that informs the consensus is based on a set of unsatisfactory idealizations, which undermine the explanatory power of mainstream economic models of corruption. Drawing on insights from economic sociology and anthropology, the article develops an account of the relationship between corruption, cultural norms and patron–client politics in developing countries. This account shows that corruption is embedded in socio‐cultural structures that are endemic to the process of transition to industrial capitalism — a transition that all developing countries are arguably undergoing, however haltingly. This insight clarifies the theoretical limitations of mainstream corruption economics and provides a framework for constructing more empirically adequate explanations of corruption levels in specific countries. It also suggests that substantially reducing, let alone eradicating, corruption in the developing world may not be possible without fundamentally rethinking the existing set of anti‐corruption strategies and techniques.

Life-Cycle Consumption, Asset Allocation, and Pension Design Under Non-Standard Preferences

This paper uses a behavioral life-cycle model to analyze different pension schemes when people display non-standard consumption preferences and income-heterogeneity. Retirement resources depend on public pension benefits and individual savings accumulated over working life. Individual savings crucially depend on the choice between low-risk and high-risk assets, because there is a sizable return gap. Mainstream economic models do not adequately capture peoples’ life-cycle asset allocation patterns, that is, their investment in safe and risky assets. The proposed model makes a better prediction. I investigate whether a transition towards a funded pension scheme is desirable, and whether different income classes could benefit from different pension schemes. The rationale is that a non-funded pension component provides better downward risk protection for the low-income earners, whereas a funded pension component is more appealing to rent-seeking, high-income earners. Simulation results reveal that a funded pension scheme is most promising for all income classes — considering reasonable demographic and financial market projections for Germany.

Buddhist wisdom as a path to a new economic enlightenment

Purpose – The purpose of this paper is to argue that mainstream economic theory leads to a diminishment of human happiness and well-being. Alternatively, Buddhist wisdom, applied to economic decision making, offers the opportunity for a well-lived life of purpose and meaning. Design/methodology/approach – The paper begins with an examination of the foundational elements of Buddhism and economics, then contrasts the paths (or models) constructed from these bases and the associated implications for happiness and well-being. Findings – The assumptions of Buddhism and economics regarding incessant wants, method of analytical inquiry, assignation of primary agency, and promotion of individual freedom, all bear striking similarities. Yet, despite these commonalities, the paths they undertake could not be more different. Specifically, their views and beliefs regarding consumption, work, and self-interest lead to radically different implications for how to live a well-lived life and how to organize economic society. Research limitations/implications – Business leaders should develop alternative business models that incorporate a broader range of values and ideals than those associated with traditional economic modeling. Explicit inclusion of a firm's social responsibilities can be implemented via social accounting procedures and its mission statement. Responding to consumer demand for goods that are produced fairly, humanely, and sustainably will allow firms to do well by doing good. Originality/value – Significant and detrimental consequences arise from the adherence to the mainstream economic model. Buddhist wisdom, on the other hand, provides a path that offers an alternative vision of economic society, one that would likely lead to greater human fulfillment.

New Actors on the Global Stage Environmental Adult Education and Activism Emerging from within Myanmar (Burma)

Having experienced environmental degradation, insecurity and injustice first hand, young adults in Myanmar (Burma) are educating themselves in an effort to strengthen their local communities and build an environmentally aware civil society. Their grass-roots environmental adult education (EAE) includes a critical analysis of prevailing structures, systems, institutions and policies and is aimed at identifying, developing and implementing alternative ecologically sound processes and practices. These are grounded in the ideologies of the new ecotopian social movements – localisation, eco-villages and permaculture – and conflict with mainstream economic, political and social development models proposed for Myanmar. This paper is based on fieldwork at a residential, educational facility established by a community based organisation on an eco-farm in Myanmar. The current political situation in Myanmar is creating a unique space for new actors but they are going to need support.

Crisis, Value, and Hope: Rethinking the Economy

Crisis, value, and hope are three concepts whose intersection and mutual constitution open the door for a rethinking of the nature of economic life away from abstract models divorced from the everyday realities of ordinary people, the inadequacies of which the current world economic crisis has exposed in particularly dramatic fashion. This rethinking seeks to bring to center stage the complex ways in which people attempt to make life worth living for themselves and for future generations, involving not only waged labor but also structures of provisioning, investments in social relations, relations of trust and care, and a multitude of other forms of social action that mainstream economic models generally consider trivial, marginal, and often counterproductive. A holistic understanding of how people organize their economic lives is attentive to both the temporality of value and the relationship between different scales of value. It is attentive to the spatial configuration of economic life in many societies in which the future has become synonymous with geographical mobility. It is attentive to the fact that making a living is about making people in their physical, social, spiritual, affective, and intellectual dimensions.

Plain Old Disrespect: Explorations of Recognition and Motivation in Care Work

Existing mainstream economic models for investigating care work have generated limited insights. In contrast, theory developed outside of mainstream economics, particularly theory that utilises feminist insights, appears contextually relevant to care work but is in a relatively early stage of development for application to empirical analysis. This paper considers appropriate models of care work situations, especially the motives for the performance of care work and the specific role played by ‘recognition’. We outline the experiences and perceptions of mature age Australian women who participated in a small exploratory study. We also report data derived from a subsequent survey of almost 4000 Australian aged care workers. We identify recognition as a factor that, thus far, has not been explicitly considered in the economics literature on the motivation for care work but which has the potential to inform strategies aimed at improving outcomes for care workers and care recipients.

Elsewhere, Ideally Nowhere: Shadow Banking and Offshore Finance

If we were to identify one common thread across the nancial system’s stages of evolution, it is the quest for being located for tax and regulatory purposes elsewhere or, ideally, nowhere. Recognising the limits of mainstream economic models in providing a comprehensive explanation of this phenomenon, we draw on the ideas of orstein Veblen and his theory of business civilisation. A Veblenian analysis suggests that dynamics and behaviour in nance that are commonly associated with human failure (greed, exuberance, fraud, incompetence), and which appear to have become widespread practice, should best be understood as sabotage. Finance is awash with techniques designed to sabotage both clients and the governments who enacted regulations that were supposed to protect clients. ese techniques are legal mechanisms, albeit as Veblen writes, not in the spirit of the law.

Structuring incentives to elicit work effort during the process of industrialization: evidence from Vietnamese businesses

Industrial advancements in developing economies have brought with them the primacy of discretionary tasks over simple tasks in production. Differing characteristics of these separate types of tasks may require distinct incentive mechanisms to elicit work effort from employees. Using the data collected from 954 blue-collar production workers, this study examines changes in incentive mechanisms with industrial advances by testing the relative validity of major motivation models between low- and high-skill industries in Vietnam. Our results indicate that the gift exchange model gains ascendancy over the mainstream economic model as developing economies upgrade their industrial structures.