Neoclassical Theory Research Articles

Conceptualising a research interrogating of management functions in the South African National Defence Force

South African Defence Review 2015 found that the South African National Defence Force (SANDF) is in significant decline and will lose important military capabilities in the long term if nothing is done. In a shrinking defense budget, general rhetoric blames aging equipment and staff for the decline. However, managerial issues in the SANDF may be to blame for the decline. We examined academic and other literature to find the origin of this problem and found that the SANDF does not use any systems management methodology to manage tasks. This peculiarity hinders SANDF management and prevents it from providing credible defense to South Africa. We found that empirical studies on SANDF management are scarce and failed to explain this oddity. To understand why the SANDF's application inherent management functions fail to provide a genuine defense capacity, this paper proposes a cognitive technique to conceptualize an empirical investigation beyond a literature review. We propose a systems management approach based on the Administrative Theory of Management, Neoclassical Theory of Management, and General Systems Theory frameworks in management education. We believe that empirical public and management research may create defence capabilities management understanding. This premise guides our study conceptualization by outlining the research context and then doing a research problem analysis to find the knowledge gap. To examine the literature, we use thematic summative content analysis. The research conceptualisation—problem statement, purpose statement, research questions, strategy, design, process, and methods, and interpretative frameworks—is based on this analysis. On the latter, we expect to write later.

Toward a general neoclassical theory of economic growth

The Harrod-Domar (H-D) growth model assumes a fixed capital-output ratio, signifying absence of substitutability between capital and labor, leading to a “knife-edge” problem wherein balanced growth of capital (fixed warranted rate) and labor (fixed natural rate) occurs only by accident, preventing the attainment of macroeconomic stability with full employment. The neoclassical Solow-Swan (S-S) growth model provides an elegant solution to the H-D problem by endogenizing the warranted rate via the saving-investment relation, wherein capital growth is a function of a fully adjusting income-capital ratio (inverse of the H-D capital-output ratio)— allowing for smooth substitutability between capital and labor while keeping the natural rate exogenously fixed. The S-S model implies a positive, albeit temporary output growth effect of a higher saving rate. The present paper extends the capital-labor ratio’s influence onto the natural rate via effects on labor productivity through a modified Arrow learning by doing framework, and via labor participation through real wage adjustments. Thus, the positive output growth of a higher saving rate, although temporary in the short run as in the S-S model, is permanent in the long run through adjustments in both the warranted and natural rates—a generalization of the Solow-Swan model.

Numerical study of limits of neoclassical theory in the plateau regime in the presence of impurities

AbstractThis paper presents a numerical simulation to test the corrections to the radial electric field in the presence of impurities for tokamak devices whose main ions are in the plateau regime. The effects due to the presence of impurity density variation in a pedestal tokamak are known to generate conditions where conventional neoclassical theory is no longer valid. It is found that for a specific axisymmetric concentric magnetic field, the presence of steep radial gradients for both temperature and density translates in a correction to the radial electric field. We anticipate that comparisons to the Landreman–Fülöp–Guszejnov model display good agreement for both the analytic approximation and numerically solved value of the normalized density when low impurity concentration and atomic charge state cases are considered, coupled with values of the ordering parameter . Higher values of the latter reveal better agreement to the neoclassical Hazeltine–Hinton formula, suggesting a discrepancy with the validity threshold of the model.

Interfuel Substitution and Inflation Dynamics in India

Abstract This paper uses neoclassical microeconomic theory to investigate the demand for energy and interfuel substitution in India at the sectoral level. It makes full use of the relevant economic theory and econometrics and generates inference in terms of Allen and Morishima elasticities of substitution that are internally consistent with the data and nonlinear models used. The results indicate that the interfuel substitution elasticities are consistently below unity in the household and power sectors, revealing the limited ability to substitute between major energy commodities in these two sectors. However, significant substitution relationships are found in the industrial and transportation sectors, suggesting that energy price changes in these sectors will significantly shift the demand for energy and consumption. Based on measured elasticities of substitution, we also discuss implications of energy price shocks on inflation and inflation targeting strategies by the central bank.

Young Children, Growing Children – How Does Their Presence in the Family Affect Time Allocation Decisions for Men and Women?

Abstract Objective This paper attempts to examine the influence of selected characteristics of household members on how they manage their time as an economic resource. Methodology In order to account for the interpenetration of different spheres of people’s activity and preferences regarding their choice, a multiple-equation model, in the form of structural equations, was used. Findings Among the potential determinants of individuals’ time allocation, the following were identified: gender, age, labor force participation, wage rates, the presence of children, education level, and the structure of the household itself, including the presence of a partner. The conclusions, formulated on the basis of the findings, focus on gender inequalities in terms of the time devoted to work and the role of children in shaping the daily activity of adults. Value Added While the presence of a young child primarily results in a decrease in paid-work time and an increase in household work for women, older children tend to help with housework, which mainly results in a reduction in housework for men. It was also observed that taking care of a child by a single person, irrespective of gender, is associated with a significantly greater increase in total domestic work time compared to the situation in households formed by two adults. Recommendations The traditional version of the neoclassical theory describes the demand for market goods and services separately. The new household theory breaks with this dichotomy and shows that consumption decisions cannot be interpreted without also considering the supply of labor, or the time allocation of individuals in general. Work on time allocation is important not only in the context of understanding the determinants of non-market activity and leisure time, but also in research on the valuation of working time. Time use databases combined with monetary budget data are used in analyses of the economics of human resource use and in new methods for estimating consumption among household members. Research on Polish households in this area is the next stage of research work that will be undertaken in the near future.

Conceptual framework and language for sustainability politics

Where do politicians and other actors get their ideas about economics and efficiency? While there are many relevant sources, economics education has a significant role. However, the kind of economics presented in a university context is limited to one paradigm, neoclassical theory. While this paradigm is mainly compatible with the present political-economic system and is therefore legitimate, it is failing to confront the challenges faced by society. One such urgent challenge is global sustainable development. In this article, ecological economics as a conceptual framework and language is presented and compared with the conceptual framework of neoclassical theory and method. This is achieved within a perspective of pluralism where ‘paradigm-coexistence’ is a central element.

On the Relationship between the Money Rate of Interest and Aggregate Investment Spending

Careful observers had already pointed out before the capital theory controversies that an investment demand schedule inversely responsive to the rate of interest is theoretically untenable. This implies that the weak empirical evidence showing the negative relation between aggregate investment spending and the rate of interest cannot be explained via the neoclassical investment theory. Assuming a short-run framework and concentrating on the “Sources and Uses of Funds Account,” it is shown here that the inverse relationship between the two variables derives, not from the investment demand function, but from the ability to finance investment spending. The explanation is valid only in the short run. In the long run, aggregate investment spending may rise, fall, or remain constant in response to a change in the rate of interest. JEL Classification: B51, E11, E22, G31

Research on Theory and Methods of Corporate Valuation

Corporate evaluation has been a long-history research field, mostly in finance. There are traditional methods such as DCF, CAPM and APT, which were the most popular valuation method being used in 20th century. Nevertheless, more neoclassical theories have been brought up recently, from the perspectives of investment, pricing or other qualitative areas. Besides, the specific times in post-pandemic environment provide valuable research samples of how company keep survived during the period of declination in economic. Based on the previous traditional research as well as neoclassical and recent studies on business new valuation model, this article gives a more comprehensive overview and appraisal about corporate valuation theories, ranging from absolute to relative valuation models, and finally to recent neoclassical models such as EVA valuation, along with other elements that need to concern when processing corporate valuation, which might contribute to the practical use of corporation acquisition and other investors decisions in both capital and money market.

Economic education: A qualitative renewal is necessary and possible

The purpose of the article is to substantiate the need and characterize the main directions of a deep reform of economic education in Russia. The existing model of economic education, based on the absolute dominance of neoclassical economic theory, even taking into account the recent partial renovation of the latter, is unable to provide the formation of knowledge and competence, allowing not only to solve standard tasks of rational choice of optimal investment and consumption trajectories, but also to independently analyze and act in a qualitatively changing economy, focusing not only on selfish private interest, but also on solving the problems of national and global development. In a dialogue with the publication of A. Auzan, A. Maltsev and A. Kurdin (Voprosy Ekonomiki, 2023, No. 10), the authors show that the changes proposed are necessary, but not sufficient, only in some part they take into account the results of past discussions and publications. The answer to the challenges facingeducation in the context of qualitative changes in the economy and society necessitates the inclusion in the circle of compulsory disciplines (1) of heterodox economic theory, which reveals the content of existing economic systems, the contradictions and patterns of their transformation, the technological, social, political and cultural context of economic processes; (2) the course “Russian economy”; (3) the history of economy and economic thought with (4) a significant reduction and updating of the content of courses in micro- and macroeconomics, strengthening their social, environmental, and humanistic orientation

The Role of Competition Law in Encouraging Innovation and Competitiveness of Companies in West Java

This study explores the complex relationships that exist between innovation, competitiveness, and competition legislation in West Java, Indonesian businesses. West Java's varied industrial landscape makes it a perfect place to study how competition legislation influences creativity and competitiveness. Using a mixed-method approach, the study combines survey data that is quantitatively collected with qualitative information obtained through interviews. The results show that a sizable majority of West Javan businesses have a favorable opinion of competition legislation and see it as a tool for ensuring openness and fair competition. Notably, a significant fraction of these businesses also devote a notable amount of their resources to research and development (R&D) and actively participate in innovation activities. According to the survey's findings, firms may be encouraged to invest in innovation by competition laws that are properly implemented, which is consistent with neoclassical economic theory. In spite of the favorable attitudes and investments in innovation, there are differences amongst West Javan enterprises in competitiveness metrics like market share and profitability. This highlights the intricate connection—which varies depending on the sector and industry—between company competitiveness and competition legislation. Qualitative insights gleaned from interviews shed light on the dynamics and obstacles unique to the industry, highlighting the necessity of customized strategies for competition law enforcement. The paper also outlines obstacles, including a lack of knowledge about competition law among enterprises, resource limitations that regulatory bodies must deal with, and worries about intellectual property protection in very competitive markets. These results highlight the need of raising awareness and developing capacity among regulatory agencies as well as businesses. The research has consequences for policymaking as well, pointing to the need for programs to raise business understanding, provide funding to regulatory bodies, and create safeguards for intellectual property rights. The study adds to our knowledge of how competition legislation affects corporate behavior and offers insightful information that can guide regulatory strategies in developing nations like West Java.

Foreign Equity Portfolio Investments and Market Returns at the NSE20 Share Index; Kenya

Purpose: Foreign portfolio investments have continued to play an important role in the world today because investors are more interested in investments that will give them higher returns for their investments. The purpose the study was to establish the effect of foreign portfolio investments and market returns in Kenya. The specific variables studied were foreign equity portfolios, foreign bond portfolios, foreign portfolio of treasury bills and foreign portfolio of exchange traded funds and how they affect the market returns at the NSE20 share index in Kenya.
 Methodology: The research methodology applied panel regression for inferential findings and Langrage multiplier test done to determine the pooled effect with the aid of STATA 18 software. Secondary data was sourced from the NSE annual reports, CMA bulletins, CBK websites of the respective companies listed in the index for the period between 2013 to 2022.
 Findings: The study findings indicated a positive and significant relationship of foreign equity portfolios, foreign portfolio of T Bills and foreign portfolio of ETFs with market returns at the NSE20 share index. Conversely, foreign bond portfolio exhibited a negative significant relationship with market returns at the NSE 20 share index.
 Unique Contribution to Theory, Practice and Policy: The study supported Modern Portfolio Theory(MPT) that suggests that for an investor to maximize returns, an investor will choose from a wide array of portfolios that will suit his needs and risk profiles and Neoclassical Theory of Investment that suggests that investors will take advantage of location differences to profit from arbitrage opportunities and Total portfolio theory that suggests that combination of securities posits a higher performance due to significant diversification benefits linked to a basket of securities. The Modern portfolio theory measuring market return seemed to hold in that it will give an investor an understanding of the most efficient portfolio that will give the largest returns at a given level of risk. The theory was suggested for future related research because it will give an investor a strategy for successful portfolio investments.

Firm Characteristics and Financial Distress among Manufacturing Firms Listed at Nairobi Securities Exchange Kenya

Businesses including companies listed on stock markets strive to predict financial distress to ensure they manage the factors that could potentially lead to such distress. It is however not clear how the various factors affect financial distress particularly firm size; firm activity levels; firm financial leverage; and profitability given that these are some of the biggest determinants of the financial condition of a business. The lack of clarity results from the fact that there are numerous models of financial distress with each providing varying factors some often contradicting each other. It is therefore critical to evaluate how these affects financial distress among manufacturing firms listed at Nairobi Security Exchange (NSE). This study aims to evaluate how firm size, turnover, leverage and profitability influence financial distress as measured by the B-Ratio. This census survey with a population of 13 companies covers the period 2013 to 2022. Three companies however did not meet the data criteria and were therefore excluded from the analysis. This left 100 firm-year observations. The study utilized four theories of financial distress that include neoclassical theory of investment; liquidity preference theory; pecking order theory; and Wreckers theory of financial distress. The study used panel regression analysis to test the hypotheses that firm size, turnover, leverage and profitability have no significant influence on financial distress. Hausman model specification test revealed that the fixed effects panel regression model was the most appropriate for analysis and it was subsequently used in arriving at the inferential findings. T-test and p-value at 95% confidence interval were used in hypotheses testing. All the four hypotheses set for the study were rejected and it was concluded that size, activity, leverage and financial performance are significant determinants of financial distress. The findings reveal that whereas firm size (as shown by firm capitalization ratio), firm activity level (as shown by total asset turnover) and firm profitability (as shown by return on equity) all had a negative effect on B-ratio, financial leverage had a direct positive effect on financial distress. The study was limited to the 10 qualifying companies at the NSE and has suggested that similar studies could be expanded to non-listed companies, listed nonmanufacturing companies as well as with the use of different models such as hazard models.

Understanding causal effects of ride-sourcing subsidy: A novel generative adversarial networks approach

Ride-sourcing platforms offer subsidies for drivers to ensure stable supply capacity for on-demand ride services. These subsidies guarantee minimum surges in advance to help drivers plan to drive, thus more efficiently coping with the spatial–temporal imbalance between supply and demand than surge wage. Understanding the causal effects of ride-sourcing subsidy is a prerequisite for precision targeting when deploying driver promotion activities. We propose a novel generative adversarial networks based model GANIRC to estimate the individual treatment effect (ITE) of ride-sourcing subsidy on drivers' online time. It captures counterfactual distributions via adversarial learning and generates individual response curves (IRCs) in the form of neural networks. The generator acts as a metafunction of responses, and the analytical constraints of IRCs are relaxed. Wasserstein distance is adopted to measure the closeness between counterfactual and factual distributions, and improve the stability of the minimax game between the generator and discriminator. In addition to the theoretical proof that our model approximately minimizes the upper bound on the ITE estimation error, the model performance is verified by leveraging ride-sourcing subsidy activity data in four cities with varying scales. Results show that our proposed model can generate accurate counterfactual distributions based on limited observational data. In the case study of the four cities, the drivers with neoclassical behavior, who increase working time with income, dominate in the ride-sourcing market, and inactive drivers respond more positively to subsidies than active drivers. Very few drivers in large cities are identified to have income-targeting behavior, who have income targets and stop working when reaching these targets. Our study reconciles the controversy of whether neoclassical theory or income-targeting theory is appropriate for ride-sourcing drivers, and has practical implications for understanding behavior and optimizing ride-sourcing operations.

Joan Robinson’s intelligible Marxism and The Accumulation of Capital: a generalisation of the two-sector reproduction scheme

Abstract Joan Robinson sought to make Marx’s economics intelligible to both academic colleagues and followers of Marx, in a twofold approach. First, she adopted Kalecki’s antipathy to the labour theory of value and his insights (following Rosa Luxemburg) into realisation problems in the schemes of reproduction; second, following Sraffa’s reading of Ricardo, she recognised the importance of surplus production as an alternative to neoclassical theory: both culminating in a stripped down two-sector scheme her mature work, The Accumulation of Capital. This scheme is recast here as an input–output framework, providing a generalisation that addresses some of its limitations: the need for an interface with the Kahn/Keynes employment multiplier, the absence of circulating capital inputs, and the lack of a systematic treatment of prices. Furthermore, a somewhat surprising result is the derivation of a core role for Marx’s category of surplus value in the employment multiplier derived from Robinson’s system.

Looking up and down and round and round: a theoretical–empirical, individual-level analysis of income comparisons

Abstract Income comparisons imply that individuals care not only about the absolute value of their income but also about its relative value. Such comparisons likely have significant societal consequences while also challenging standard neoclassical economic theory. I argue that a better understanding of income comparisons requires a more systematic, theoretical engagement with three problems: (1) the problem of reference group selection, (2) the problem of orientation, and (3) the problem of functional form. Income comparisons are commonly attributed to interdependent preferences, in particular to envy. I propose an alternative theoretical approach in which comparisons are a rational means for individuals to improve upon imperfect information about their current earning potential. I test the empirical implications of both approaches for reference group selection, orientation, and functional form using individual-level data from the Netherlands. The evidence suggests that imperfect information drives comparisons, but interdependent preferences also play a role.

Against the Streams: Alain Parguez and the Theory of the Monetary Circuit

Alain Parguez, together with Bernard Schmitt and Augusto Graziani, is one of the founders of the modern theory of the monetary circuit. Parguez was making his first forays into monetary circuitism in the 1970s, in the years of my formation, when I came in contact with Augusto Graziani. Graziani’s and Parguez’s reflections were independent, but converging. In the article, I consider the parallels and divergences. I will recall some elements of Alain Parguez’s early version of the theory of the monetary circuit. Like Graziani, Parguez was in stark opposition not only to neoclassical theory and ‘bastard’ Keynesianism, but also with a significant part of the post-Keynesian strand. Parguez’s thinking was against the streams (plural): not only the mainstream, but also much of the so-called alternative approaches. In the late Parguez, an undeniable (but limited) connection with Modern Money Theory was emerging. It might seem that over time Parguez reached conclusions dissenting from Graziani, and his own earlier version of the circuit. I will try to give some arguments for my view that this is only partially true, and that some differences are overstated. I will also address some of Parguez’s views on economic policy.

Marxian Analysis of Capitalism and Crises

ABSTRACT The subject of economics, which was once famous for several views and schools of thought, has been limited to just one school neoclassical: where markets usually find equilibrium, meaning government intervention is not needed, and any such intervention could hinder the economic growth process and smooth functioning of the economy. The neoclassical theory focuses on the behaviour of individual agents, which are assumed to be economic decision-makers. There is an attempt to emphasise the importance of the Marxist approach to analysing capitalist crises logically and historically. The study of economics must stay close and keep unity between different social sciences, especially sociology, political science, and history, which classical economists had established but marginalist economists had tried to undermine. The study concludes that economics is embedded in society and politics, and the mainstream school of thought ignores this. They cannot effectively address the main economic issues of our times, which include combating rising inequality, economic and environmental crises, and biodiversity loss.

Market Orientation as a Comparative Advantage Tool: Ankara Province Research Example

Within the scope of the study, the Comparative Advantage Theory of Competition,theResource Advantage Theory,was explained and compared with the Neoclassical Perfect Competition Theory, which was criticized for not being applicable in today's economic conditions. The theory has been examined at the business level. The basis of the theory is that the solid andinimitable resources of the business give the business a competitive advantage in the market. To emphasize resource superiority, market orientation, a competitive tool, was used to support the theory statistically. Two hundred twenty-onebusinesses operating in Ankara with over twenty employees were selected as the research sample. The effect of market orientation on superior financial performance was analyzed by performing multiple linear regression analyses on the obtained data. As a result of the research, it was confirmed that market orientation is a source of comparative advantage, and the theory was statistically supported.

Impact of labour migration on international business environment

It has been established that international migration contributes to optimizing the distribution of human capital, reducing interregional differences, and improves the functioning of labour markets, the international business environment of host countries and countries of origin. A generalization of the results of previous empirical studies suggests that the positive effect of migration is higher than the negative effects of impact on national markets, while this impact is different for highly and low skilled workers, for firms and employees, and for producers and consumers. In the host countries, migration allows filling job positions in what the indigenous population does not agree to work, contributes to the expansion of production and lowering of the tax burden on the working population. In countries of origin, migration reduces unemployment and makes the national labour market more flexible. Thus, international labour migration opens up new opportunities for the socio-economic development of host EU member states, provoking a large number of problems both at the level of society and the state. The current stage of integration processes in the EU is accompanied by the rapid development of external migration processes, so the unified EU migration policy must be implemented taking into account the problems associated with the mass flows of immigrants to European countries, the consequences of the financial and economic crisis, the current trends in European labour markets, and the real needs of these labour markets. It should be noted that the existence of a direct link between migration and the unemployment rate and difference in income makes it possible to empirically confirm one of the main tenets of the neoclassical macro-level theory that migration arises as a result of the difference in income between regions (countries) and the existence of labour surplus in the region where the migrants come from. Consequently, workers migrate from low-wage and labour surplus regions to high-wage and labour shortage regions. Thus, a migrant's goal is to maximize its income and minimize its costs.

State Policy in the Sphere of Ensuring Economic Security: Management Aspect

"It is shown that the problem of forming the policy of economic security requires study in connection with the need to improve the theory and practice of the formation of state economic policy, as well as the study of certain problems related to the peculiarities of the functioning of the mechanism for ensuring economic security. Modern economic policy, guided in most cases by the provisions of neoclassical economic theory, in particular the monetarist theory of state influence on the economy, is not always effective enough, and state failures are becoming increasingly more frequent when various deviations of the actual conditions of economic development from classical models occur, which is especially obvious at present, with the increasing influence of the factor of geopolitics and geoeconomics on the economic security of states."