Neoclassical Theory Research Articles

Turbulence-driven flow dynamics in general axisymmetric toroidal geometry

This work gives the equations governing the generation of toroidally axisymmetric flows by turbulent Reynolds and Maxwell stresses in finite aspect ratio, general cross section tokamak plasmas. Inclusion of the divergence-free flow constraint in the lowest order changes the timescale for evolution of the poloidal flows driven by turbulence by substantial factors. In the pedestal region for the present-day machines, as compared to earlier cylindrical models, the timescale evaluated using a large aspect ratio circular cross section model can be two orders of magnitude longer, while the present, general geometry result can be about one order of magnitude longer. Inclusion of gyroviscosity in the calculation shows that the only lowest order radial velocity fluctuations that enter the problem are those due to fluctuating E ×B flows. Toroidal and poloidal flow effects on the toroidally axisymmetric flows are inextricably coupled due to the neoclassical poloidal viscosity. Accordingly, the physics is inherently three dimensional and measurements of all three-velocity components are required to obtain the information needed to quantitatively test the theory. The parallel and angular momentum equations for the lowest order, toroidally axisymmetric flows look like radial transport equations when the turbulence is included. The turbulence terms provide the radial transport fluxes. In standard neoclassical theory, the parallel flow equation is local on each flux surface; there is no radial derivative term. However, adding turbulence gives a way, in principle, for radial transport to lead to poloidal flows that deviate from the neoclassical prediction. The inclusion of the Maxwell stress provides a mechanism for MHD fluctuations to alter the toroidally axisymmetric flows.

Ensuring economic security of the territory in the conditions of aging of the population: theoretical-methodological aspect

This article is dedicated to the theoretical-methodological aspects of studying economic security of the territory in the conditions of aging of the population. The author traces the evolution of interpretation of the concept of “economic security”. Analysis is conducted on the conceptual construct of studying economic security of the territory that has established in scientific literature. The polemical character of determination of the object of economic security of the territory is indicated. The author considers the nuances of using the concepts of “national interests” and “state interests”; examines the traditional triad “interests – threats – protection” of studying economic security in the conditions of aging of the population. The theory of economic security is augmented with the provisions of the neoclassical theory of human capital and theoretical models of generational economics that take into account the age structure of the population of the territory. In the conditions of aging of the population, the state interests in the economic sphere and the interests of the senior citizens are considered as the object of economic security. The model for the formation of the effective instrument of protecting state interests in the economic sphere and interests of the senior citizens from the threats caused by socioeconomic consequences of population aging is built from the perspective of the theory of economic security, theory of human capital, and theoretical models of generational economy. The author clarifies the concept of economic security of the territory in the conditions of aging of the population, which implies protection of the objects (state interests in the economic sphere and interests of the senior citizens) from threats caused by socioeconomic consequences of population aging.

Krishna Bharadwaj on the Role of Expectations in Economic Theory

In this article, I discuss the approach favoured by Bharadwaj, in the tradition of classical political economy and of Sraffa, where the focus is on those factors that are observed as opposed to the subjective factors that are neither observable nor measurable. Unlike neoclassical theory, with this approach, there is no room for concepts such as ‘utility’ and the like; insofar as ‘expectations’ are conceived as subjective, non-observable entities, they are not attributed with an explanatory role in the theory of prices and distribution. Moreover, since expectation formation is seen as the effect rather than cause of behaviour, the focus shifts to those social, historical and contingent elements that seem to have a better explanatory force. In this approach, what matters is the persistence of forces leading the system to tend, in the long period, towards a position of rest. JEL Codes: B2, B31

Scarcity in the Theories of Value

Building on Krishna Bharadwaj’s analysis of the differences between neoclassical economics and classical political economy and her careful historical reconstruction of the process that culminated in the birth of the former, this article focuses on the characterisation of neoclassical theories as ‘scarcity’ theories of value. The article intends, in the first place, to analyse the relation that neoclassical theories bear to earlier theoretical developments, particularly the earlier conception of value based on the demand-and-supply interaction, in which the notion of scarcity played a crucial role, a conception entertained both by pre-classical authors and contemporaries of Ricardo. In the second place, it aims to show that the scarcity conception of value is at the root of some basic inconsistencies of the neoclassical approach. Attention will thus be devoted to a particular expression of the latter, the so-called Walras–Cassel system of general equilibrium, and to the discussions that took place in the 1930s on the properties of such system—afterwards culminating in the Vienna debate over the formal properties of the system—in which the limitations of the scarcity conception of value were clearly addressed. JEL Code: B12, B13, D51

CO2 emissions and energy technologies in Western Europe

In this paper, we investigate the path to the green transition in Europe. In so doing, we implement an empirical model of dynamic panel data on a sample of sixteen Western European countries over the period 1980 to 2019. The model is consistent with various features of neoclassical growth theory incorporating energy use. Our focus is on the short-run determinants of carbon emissions within that set of countries. We provide evidence that the relationship between economic activity and CO2 emissions is strong in economies where economic booms depend on energy-intensive sectors. Also, the mitigating role of renewable energy technologies is key when energy intensity rebounds. These circumstances may constitute a challenge for the climate transition goals targeted in the EU’s Recovery Plan, whose main objective at this very moment is to mitigate the economic and social impact of the coronavirus pandemic.

The welfare cost of inflation

This paper uses neoclassical demand theory and applied consumption analysis to calculate the welfare cost of inflation, in the context of the Bailey (1956) approach. We integrate the demand for money with the demands for consumption and leisure, estimate flexible demand functions in a systems context, and show that raising the inflation rate from 2% to 4% in the United States, would impose (on average) a welfare cost equivalent to a loss of 0.30 percent of output when money is measured by our preferred (broad) Divisia M4 monetary aggregate. We also show that the welfare cost of inflation is countercyclical and trends upward over time.

Towards a Theory of Symbiotics: Illuminating Societal Evolution through a Theory of Entangled Political Economy

This paper argues that most neoclassical theory today fails (Boettke 1996) to illuminate ‘unseen phenomena’ in our entangled political economy. Specifically, most economic theory operates using static terms such as efficiency (inefficiency). I argue that by applying such a concept to institutions—which are largely orders not organizations (Hayek 1973)—we not only make logical and ontological errors, but adopt a framework that leads us, as theorists, to miss important phenomena on which much of our analysis depends. To mitigate such errors, I suggest that we heed Buchanan’s (1964) claim to move our study closer to that of symbiotics—the study of relationships among dissimilar organisms. Such a framework would place economics on par with complexity and systems theory and allow us to focus on the spontaneous phenomena that emerge due to praxeological actions and interactions among dissimilar organisms within certain given institutions. I conclude that adopting a framework allows us to examine ‘unseen phenomena’ such as moral orders.

BEŞERİ SERMAYE VE EKONOMİK BÜYÜME İLİŞKİSİ: FARKLI GELİRE SAHİP ÜLKELER GRUBU ÜZERİNE BİR İNCELEME

Neo-klasik teorilerin büyümenin nicelik yönüne ağırlık vererek diğer faktörleri göz ardı etmesi, sürdürülebilir büyümenin olanaksız hale gelmesine sebep olmuştur. 20.yüzyılın ikinci yarısında ortaya çıkan içsel büyüme teorileri, neo-klasik teorinin varsayımlarını değiştirerek “insan” kavramının önemine değinmiş ve sürdürülebilir büyümede “kilit rol” olarak beşeri sermayeyi işaret etmiştir. Bu çalışmanın amacı, beşeri sermayenin ekonomik büyüme üzerindeki etkisini incelemektir. Şüphesiz beşeri sermaye her ülkenin ekonomik kalkınmasına aynı oranda etki etmemektedir. Bu düşünceden yola çıkılarak homojen özellik gösteren ülkeler sınıflandırılmış ve 1990-2018 dönemlerinde verilerine ulaşılabilen üst gelir (41 ülke), orta üst gelir (28 ülke), orta alt gelir (32 ülke) ve alt gelir (16 ülke) grubundaki ülkeler analize dâhil edilmiştir. Ampirik sonuçlara ulaşmak için Gengebach, Urbain ve Westerlund Panel Eşbütünleşme Testi, AMG katsayı tahmincisi ve Dumitrescu-Hurlin panel nedensellik analizi kullanılmıştır Eşbütünleşme testi, seriler arasında eşbütünleşme ilişkisinin bütün ülke gruplarında olduğunu göstermiştir. AMG katsayı tahmincisi sonuçlarına göre beşeri sermaye endeksindeki %1’lik artış; yüksek gelirli ülkelerde büyümeyi %3,13, orta üst gelirli ülkelerde %4,44, orta alt gelirli ülkelerde %2,62 ve alt gelirli ülkelerde %1,87 oranında arttırmaktadır. Dumitrescu-Hurlin panel nedensellik analizi, bütün ülke gruplarında sosyal sermaye ve büyüme arasında çift yönlü nedenselliğin olduğunu ortaya koymuştur. Analiz sonucunda elde edilen ampirik bulgular, ülkelerin ekonomik büyüklüğüne bağlı olmaksızın beşeri sermayenin farklı oranlarda da olsa ekonominin itici gücü olduğunu göstermiştir.

Will Financial Liberalization Help China to Invest More Efficiently? Evidence from China’s Saving and Investment from 1993 to 2017

China has enjoyed high saving and high investment ratios by international standards. However, mainstream economists argue that China suffers from inefficient investment due to excessive state interventions. The mainstream argument is in conflict with the observed high output-capital ratios and rates of return on capital in China before 2008. China’s investment efficiency has deteriorated since 2008 despite the progress of financial liberalization. In this essay, we used provincial-level panel data from 1993 to 2017 and the technique of General Method of Moments to examine how China’s saving and investment respond to output-capital ratio, gross profit share, and real interest rate. We find that output-capital ratio has positive effects on saving and investment in all three periods (1993–2000, 2001–2008, 2009–2017); gross profit share has positive effects on saving; but gross profit share has negative and significant impact on investment for the period 2009–2017. We find that real interest rate has significant and negative impact on China’s saving for the period 1993–2000, a result that is inconsistent with the neoclassical theory of saving. On the other hand, real interest rate has a significant and negative impact on investment and a significant and positive impact on saving for the period 2009–2017, consistent with what should happen in a liberalized financial market according to neoclassical economics. These findings suggest that China’s financial market may have become sufficiently liberalized to induce the “correct” behavior from businesses and households but the “correct” behavior has not yet led to improvement in China’s investment efficiency.

Overview of plasma rotation studies on the TCABR tokamak

An overview of intrinsic plasma rotation studies in Ohmic L-mode discharges carried out in the Tokamak Chauffage Alfvén Brésilien (TCABR) tokamak is presented. Measurements of plasma poloidal and toroidal rotation, and a comparison against neoclassical theory, are presented. The results show that poloidal rotation is in good agreement with neoclassical theory while toroidal rotation is found to be anomalous. A new technique that allows for high temporal resolution measurements of plasma rotation is presented. This technique is used to test two models of intrinsic toroidal rotation: the so-called Helander model (Helander et al 2003 Physics of Plasmas 10 4396) and Rozhansky model (Rozhansky 2013 Perpendicular currents and electric fields in fully and partially ionized magnetized plasma Physics of Plasmas 24 101614). As TCABR is a relatively small device, the influence of the neutrals that form the basis of this model is expected to be enhanced. The results indicate that the mechanism proposed by Helander does not contribute significantly to the intrinsic toroidal rotation in TCABR plasmas. The measurements, however, indicate that the frictional force proposed by Rozhansky might be responsible for part of the intrinsic toroidal rotation observed in TCABR plasmas.

Does clean technology weaken the environmental impact on the financial performance? Insight from global oil and gas companies

AbstractThis study aims to clarify the relationship between environmental performance and financial performance by introducing clean technology as the moderating variable. We contest two major theories, natural resource‐based view theory and neoclassical theory, to reveal a comprehensive understanding of environmental performance's impact on financial performance. The hypotheses are tested on 111 global oil and gas companies using dynamic panel generalized method of moments (GMM). Our analysis reveals three key findings. First, lower environmental performance leads to lower financial performance confirming the natural resource‐based view theory. Second, clean technology has no significant effect on financial performance, arguing the marginal abatement cost. Finally, our results report that clean technology has no impact on increasing financial performance during high waste spills or high emissions. Theoretical and practical implications resulting from the adoption of clean technology to moderate the environmental impact on financial performance are also discussed.

An Integration of Neoclassical Growth Theory and Economic Structural Change with Monopolistic Competition Theory

Wealth accumulation is a deterministic factor mechanism of national economic growth. Neoclassical growth theory is basically concerned with capital and wealth accumulation in perfectly competitive market. Global markets are characterized by a great variety of markets. Nevertheless, there only a few rigorous models of wealth accumulation with other types of markets within neoclassical growth framework. This study attempts to contribute literature of economic growth by introducing monopolistic competition and monopoly into neoclassical growth theory. The model is based on a few well-established economic theories. The model is constructed within framework of the Solow-Uzawa two-sector neoclassical growth model. The description of to monopolistic competition is influenced by the Dixit-Stiglitz model of monopolistic competition. The modelling of monopoly is based on monopoly theory. We model behavior of the household with Zhang’s utility function and concepts of current income and disposable income. The unique contribution of this research is to integrate these theories in a comprehensive framework. We construct the basic model and then analyze properties of the model. The existence of a unique equilibrium point is identified by simulation. The effects of changes in some parameters comparative static analyses in some parameters.

The Failures of Neoliberalism in Argentina

: In the wake of the 1970 crisis, neoliberalism emerged as the dominant approach to economic development throughout the world. As a region faced with particularly difficult economic challenges, even Latin America has not been spared from the pervasiveness and dominance of neoliberal policy. Rooted in neoclassical theory, the arrival of neoliberalism displaced Latin American contributions for development that predominated during the postwar period, which highlighted the importance of the state in directing an industrialization strategy that allows peripheral economies to develop. In the case of Argentina, neoliberalism was supposed to overcome structural heterogeneity and economic unbalances inherited from state-led industrialization through policies oriented to liberalize the economy and downsize the state. However, contrary to these suppositions, neoliberalism tended to reinforce the peripheral positioning of Argentina in the global economy, as well as to deepen social and economic inequality.

Growth and institutional changes: a historical evolution

ABSTRACT This paper highlights the fact that neoclassical theory cannot explain the process of economic change. In an uncertain and ever-changing world, a theory based on static equilibrium models is of little help. Whereas we have placed the institutions at the centre of the understanding of economic systems, since they constitute their incentive structure. Thus, economic change is largely an intentional process created by individuals’ perceptions of the consequences of their actions. These perceptions, coming from the beliefs of individuals, combine with their preferences. In the end, a dynamic theory of economic change will not be built, but an attempt will be made to understand the link between institutions and economic growth, the process of change, and to develop assumptions, within its limits, capable of improving the human environment and economic results.

Empirical Verification of the Occurrence of Lucas Paradox in the Region of Central – Eastern Europe

The purpose of this article is to study the occurrence of the Lucas paradox in the region of Central-Eastern Europe. According to the research conducted by Robert Lucas (1990), the direction of the international capital flows is different than the neoclassical theory suggests. The capital does not flow from the richer, high-income economies to the poorer, but rather stays in those with the higher capital resources or flows to the other ones with similar level of GDP. The paper verifies whether the paradox appears in the region, in the way that it examines the impact of the GDP on the FDI inflows. Additionally, the study implements few basic models with factors that may potentially resolve the puzzle of the capital flows. The study method is based on panel data estimations, initially using pooled OLS, and subsequently using fixed or random effects models as appropriate. The examined economies are the member states of the European Union, from the region of Central-Eastern Europe, and the examined years are 2000-2018. Based on the literature, and the widely emphasized need for differentiating between the types of international capital flows, the article focus is on the foreign direct investment only, as they constitute large part of the whole global capital flows. Results of the research confirm the presence of the paradox in the region in the examined period. Even though the estimation of the additional models helps to remove the effects of the paradox for the region, it does not fully explain under which circumstances the neoclassical theory would be applicable. None of the applied models reverses the sign of the GDP variable to negative, keeping it statistically significant at the same time.

Interpretation and Perception of Military Power by Applying Perspectives of Neoclassical Realism and Military Studies

Although the issues of military studies are increasingly analysed in the framework of political science, the representatives of international relations and military studies use different ways of interpreting military power – one of the key aspects of military studies. With the intention of expanding the possibilities of applying theories of international relations to military studies, this article aims to show the need for a synthesis of theoretical insights into neoclassical realism and military studies for scientific interpretation and research of the military power structure. The inducement of inter-paradigmatic debates by revealing and comparing military power explanation methods reflects a theoretical attempt to expand the possibilities for the application of international relations theories on warfare studies. Although the application of neoclassical realism theory to the explanation of military power is not new, this study explores broader possibilities of the application of this theory. The study substantiates the influence of non-material resources and unit-level variables on the structure of military power while making the assumption that neoclassical realism creates conditions to reveal the process of military power conversion but not the content of military power.

Narrative expectations in financial forecasting

AbstractHow do people form expectations about the future? We use amateur and expert investors' expectations about financial asset prices to study this question. Three experiments contrast the rational expectations assumption from neoclassical economics (investors forecast according to neoclassical financial theory) against two psychological theories of expectation formation—behaviorally informed expectations (investors understand empirical market anomalies and expect these anomalies to occur) and narrative expectations (investors use narrative thinking to predict future prices). Whereas neoclassical financial theory maintains that past public information cannot be used to predict future prices, participants used company performance information revealed before a base price quotation to project future price trends after that quotation (Experiment 1), contradicting rational expectations. Importantly, these projections were stronger when information concerned predictions about a company's future performance rather than actual data about its past performance, suggesting that people not only rely on financially irrelevant (but narratively relevant) information for making predictions but erroneously impose temporal order on that information. These biased predictions had downstream consequences for asset allocation choices (Experiment 2), and these choices were driven in part by affective reactions to the company performance news (Experiment 3). There were some mild effects of expertise, but overall the effects of narrative appear to be consistent across all levels of expertise studied, including professional financial analysts. We conclude by discussing the prospects for a narrative theory of choice that provide new microfoundational insights about economic behavior.

Mergers and acquisitions in Morocco: reality and perspectives

PurposeThe purpose of this article is to address certain gaps and contribute to enriching the literature on mergers and acquisitions (M&A) in Africa; describe the phenomenon taking into account the particularity of the country; address recommendations to public policies and investors and make this article a ground-breaking article on research into the phenomenon of the M&A market in North Africa.Design/methodology/approachWith description and an exploratory intention, the authors develop phenomenon driven research. As appropriate phenomenon driven research, the authors focus on characteristics of Moroccan M&A market. The authors use scientific investigation to provide descriptions and explanations of the phenomena in order to add a new perspective to the M&A literature in North African region. The authors work on the particularity of companies in Morocco, typology of M&A, geographic areas, socio-economic indicators, trade agreements, politics and culture.FindingsUnderstand that the phenomenon of domestic M&A is a phenomenon of big cities and knows the participation of small and medium enterprises. The political variable, the trade agreements and the socio-economic weight of the countries influence the cross-border M&A in to out. Sharing a border and common culture has no impact on cross-border M&A but the history of colonization has an impact.Research limitations/implicationsThe scientific contribution is first an extension of the neoclassical theory on the initiation of M&A operations. Throughout these 29 years of history, the existence of external shocks such as regulations has influenced the activity of M&A operations. Privatization, partial opening of sectors to foreign investment tax incentives have contributed to the realization of M&A operations.Practical implicationsThis paper also has an economic and practical contribution, as it informs about the absence of M&A operation in the agriculture and agri-food sector in Sub-Saharan Africa. This region recognizes a food shortage that will increase by 70–100% between 2010 and 2050 with a strong population growth. The authors also note that regulations, royal directives, influence the activity and geographic choices of M&A. The political variable remains decisive for the cross-border M&A activity between Morocco and Algeria, but encourages acquisitions in countries in West and Central Africa.Originality/valueM&A research in Africa is poor and suffers from several shortcomings; these barriers push researchers to produce fewer papers on this phenomenon. Through data collection, description and explanation, the authors tried to produce a paper focusing on the M&A phenomenon in a country in North Africa. To the authors’ knowledge, no article has dealt with this phenomenon in this country which is known for its strong M&A activity.

On the Precedence of Constraints on Growth: Advocating the Ecological Footprint Perspective

Our goal is to propose the ecological footprint as the first growth restriction that currently faces the Mexican economy. To capture the attention of both orthodox and heterodox economists, we will analyze three restrictions on growth, namely, on the supply, demand, and biocapacity side. Our first recommendation highlights the need for Mexico to fully redesign its public policies in order to substantially improve its results in terms of environmental sustainability hand in hand with a much better distribution of income and wealth. A limitation lies in the review of only the neoclassical and post-Keynesian growth theories, involving a personal selection from the literature. As far as we know, this document represents the first study that incorporates within the theories of economic growth the restriction linked to biocapacity and the ecological footprint in Mexico. The main conclusion constitutes a local echo of world literature −the immediate challenge facing Mexico and other societies is to make any economic-social result compatible with a single earth planet.

Old tractors, new policies and induced technological transformation: agricultural mechanisation, class formation, and market liberalisation in Ghana

ABSTRACT This article examines the recent uptake of tractor ploughing services in northern Ghana. It examines the historical continuities in mechanisation and the emergence of a class of medium-scale commercial farmers. In the light of this, it questions the thesis that the recent uptake of mechanisation and emergence of medium-scale farmers reflects the successes of market liberalisation. It is critical of neoclassical theories of agricultural transformation rooted in theories of induced innovation and argues for a political economy approach that links agricultural transformation to processes of social differentiation and the historical role of the state in promoting agricultural commercialisation.