The concept of bounded rationality has been at the forefront of a recent empiricist program in economics which under the heading of ‘behavioral economics ‘ seeks to broaden the rational choice paradigm in the direction of psychology, to the neglect of a similar broadening in the direction of sociology. While a small but increasing number […]
economic footnotes, left by Matthias Klaes. Main use: infrequent tracking of events, books, and WiP.
Repo rate decisions are central to the communication of monetary policy but they do not constitute the only channel by which such policy is communicated. A more comprehensive analysis of the signaling aspect of monetary policy requires study of all relevant channels, including discursive channels such as meeting minutes, press releases etc. This opens up the scope for signal uncertainty. We introduce a heuristic framework for the study of signal uncertainty, and use this to analyses the signal uncertainty implicit in the communications of the Bank of England’s Monetary Policy Committee (MPC). Our findings suggest that frequencies of key terms expressing signal uncertainty in MPC minutes may either reflect the degree of confidence implicit in MPC deliberations, or offer evidence for the presence of an irreducible kind of signal uncertainty that shows up as white noise, casting doubt on the soundness of the various qualitative uncertainty indices found in the literature.
Working paper: SCEME023_DowKlaesMontagnoli_2008.pdf
Bibliographic details:
Dow, S.; Klaes, M.; Montagnoli, A. 2008. Risk and uncertainty in central bank signals: an analysis of MPC minutes. SCEME Working Paper No. 23.
Event notification: On 7 February 2008, the Stirling Centre for Economic Methodology (SCEME) is organising its 10th seminar of a bi-annual series on economic methodology, on the topic ‘Economics and Politics: Defining Neoliberalism’. Philip E. Mirowski will give the keynote lecture, followed by paper by Steve Farrall, Rolland Munro and Paul Smith. Venue: Keele University. Detailed programme (includes link to registration form).
As a concept, transaction costs are used in numerous ways in economics, from simply referring to the fees charged by a financial broker to a much broader concept encompassing the comparative efficiency of alternative modes of resource allocation and economic coordination.
At the most general level, transaction costs are the costs that arise beyond the point of production of a good to effect its allocation. Beyond this, the literature is fragmented regarding the various facets of the concept. The distinction between production and allocation may not be meaningful in all instances. Transaction costs may or may not include transport costs, may or may not just refer to market exchange, may or may not be reduced to a single alternative category such as information costs or the cost of time. Some authors measure transaction costs in monetary terms, others as departures from first-best outcomes, or just on the basis of qualitative comparative rankings of feasible institutional alternatives. Indeed, whether transaction costs should be regarded as a cost at all has been subject to controversy, too. Hence, the term can be and has been applied in virtually every conceivable economic and social scientific context. Its wide uptake has been attributed to the systematic ambiguity inherent in its unqualified application, and its usefulness for serious analysis has been questioned on these grounds.
Although often used as a catch-all term, thinking in transaction cost terms has nevertheless yielded a rich array of models and analytical frameworks that have helped redefine how economists look at economic exchange and coordination. Circumspect definition specific to the particular context in which one seeks to use the concept should help avoiding semantic pitfalls. Furthermore, not only are systematically ambiguous notions common in economics, they actually serve a distinct and valuable purpose in the coordination of research. A sceptical stance towards the aggregate ambiguity of the transaction cost concept does thus not necessarily amount to a criticism of particular applications of the term, although a certain tendency can be observed outside of what has become known as a ‘new’ institutional economics towards alternative expressions. This paper review the various definitiosn of transaction costs in their historical context.
Preprint: 2008-Klaes-TC-preprint.pdf
This article is taken from the author’s original manuscript and has not been reviewed or edited. The definitive published version of this extract may be found in the complete New Palgrave Dictionary of Economics in print and online, available at www.dictionaryofeconomics.com.
Bibliographic details of definite published version:
Klaes, M. 2008. Transaction Costs, History of. In Steven N. Durlauf and Lawrence E. Blume eds. The New Palgrave Dictionary of Economics, 2nd edition. Basingstoke and New York: Palgrave Macmillan.
Postmodernism is a concept which escapes encyclopaedic definition, to the extent that mischievous commentators have described postmodernists as a club of individuals tacitly colluding in a refusal to collectively define what postmodernism is about. This should strike a cord with economists who have also been accused at one point or another of leaving central notions such as market, firm, competition, or equilibrium ill-defined, with good grounds for doing so (cf. Popper, Open Society II: 18-19).
On the level of economic phenomena, debates have centred on whether or not one can consistently speak of postmodernity as a separate historiographic period. Advocates of postmodernity in this epochal sense assume that profound changes in the constitution of contemporary society have brought an end to the modern period, the close of which has variously been located from the last quarter of the 19th century to the last quarter of the 20th century. On the conceptual level, the work of several prominent economists, including John Maynard Keynes and Gary Becker for example, has been argued to resonate with postmodernist themes. Broader strands of research in economics have begun to display key postmodernist features, most notably as a result of critical examination of the notion of the rationally unified individual. A small self-consciously postmodernist literature draws from economics, literary criticism, and continental philosophical traditions in its analysis of economic phenomena.
Preprint: 2008-Klaes-Pomo-preprint.pdf
This article is taken from the author’s original manuscript and has not been reviewed or edited. The definitive published version of this extract may be found in the complete New Palgrave Dictionary of Economics in print and online, available at www.dictionaryofeconomics.com.
Bibliographic details of definite published version:
Klaes, M. 2008. Postmodernism. In Steven N. Durlauf and Lawrence E. Blume eds. The New Palgrave Dictionary of Economics, 2nd edition. Basingstoke and New York: Palgrave Macmillan.
The use of economic insights to elucidate legal doctrine has become so widespread that ‘law and economics’ is now one of the principal forms of jurisprudence. Most influential in this field has been what has become known as the Chicago school, typically identified with the work of Richard Posner. Though Posner must take the greatest credit for the wide reception of law and economics, it is essential to recognise that there are now many claimants to the use of law and economics beyond, or even in outright opposition to, Posner. This raises the question of why those interested in social economics would want to claim law and economics rather than reject it. For us, the basic answer to this lies in the work of Ronald Coase, who has vigorously distanced himself from Posnerian law and economics. Our contention is that law and economics represented by Posner is not only not exhaustive of law and economics without Chicago but also does not help us to come to terms with what Chicago has produced that is very worthwhile.
Preprint: 2008-CampbellKlaes-LawEcs_preprint.pdf
Bibliographical details of authoritative and final version:
Campbell, D.; Klaes, M. 2008. Law and social economics: A Coasean perspective. In J. B. Davis and W. Dolfsma eds The Elgar Companion to Social Economics. Cheltenham: Elgar, pp. 557-74.
The way in which monetary policy is understood, both in practice and in the theoretical literature, has evolved in significant ways over the last few decades. Most significant, arguably, is an increasing awareness of the importance of the presentation of monetary policy. Central bankers have long been aware of the importance of the signalling effect of interest rate decisions on the one hand, and the care with which official pronouncements should be worded on the other. But it is only recently that there has been public discussion by central banks of the means by which monetary policy decisions are reached. At the same time, the theoretical literature has increased its focus on information, and information asymmetries between the monetary authorities and markets, as a critical element determining the outcome of monetary policy decisions. In particular there has been an increased focus on the transparency of monetary policy decision-making. But analysis of signals in relation to uncertainty qualifies the case for transparency. The purpose of this paper is to reflect on the signalling aspect of monetary policy in terms of an analysis of uncertainty. In particular, we consider how the central bank signals its own uncertainty.
We distinguish uncertainty in the economic system in a global sense, from model uncertainty on the one hand, and signal uncertainty on the other. Given that the signals emanating from the decision-making process of monetary policy are both quantitative and discursive, signal uncertainty finds expression both in quantitative and non-quantitative ways. We are interested here in how model and signal uncertainty are related, and how to analyse non-quantitative signal uncertainty. In particular we discuss the scope for measurement of uncertainty by means of quantitative indicators and by means of discourse analysis. We then suggest an application of our approach to the monetary policy process of the Bank of England.
Preprint: 2007-DowKlaesMontagnoli-preprint.pdf
Bibliographical details of authoritative and final version:
Dow, S. C.; Klaes, M.; Montagnoli, A. 2007. Monetary policy by signal. In D. G. Mayes and J. Toporowski eds. Open Market Operations and Financial Markets. London: Routledge 2007, pp. 264-280.
Robert Skidelsky, author of a key biography of Keynes, notes in this biography that Keynes’s relationship to modernism is crucial to the understanding of his work, yet difficult to grasp historiographically. This may be true if one seeks to uncover influences from modernism as as a socio-cultural movement on the content of Keynes’s economics. It should be realised however that Keynes was not ‘influenced’ by modernists, he was a modernist in that his work displays central hallmarks of literary and artistic high modernism, alongside that of Virginia Woolf and other members of the so called ‘Bloomsbury group’. Keynes regarded himself as an avant-garde writer, and he shared Bloomsbury’s obsession with psychological realism and the fragmented nature of individual identity and experience. Rather than being merely influenced by high modernism, Keynes actually helped shaping this movement from its epicentre, both intellectually and materially, straddling in his mature work the boundary between modernist economics and modernist writing more generally.
Preprint: 2006-Klaes-Keynes-preprint.pdf
Bibliographical details of authoritative and final version:
Klaes, M. 2006. Keynes between modernism and post-modernism. In Roger Backhouse and Bradley Bateman eds The Cambridge Companion to Keynes. Cambridge: Cambridge University Press 2006, pp. 257-70.
The Stirling Centre for Economic Methodology (SCEME) invites proposals for contributions to its seventh seminar (May 2007) in a series on the methodology of economics, with the discussion headed off by Irene van Staveren as guest speaker. Seminar contributions from any perspective shedding light on economics as a moral science are welcome.
Date and venue of seminar: Saturday 19 May 2007, Airthrey Castle, University of Stirling, UK
Deadline for proposals: Friday 16 Feb 2007
More details.
Ethnographers, by and large, regard online ethnographies with a certain amount of scepticism. Do we not have here a technology like any other, so that we should look at the social materiality that embeds virtual spaces such as multi-user online games, chat rooms and the like, rather than emersing ourselves into those spaces as ethnographers of the virtual? What online ethnographies have begun to establish however is the equivalence of ‘the virtual’ and ‘the social’. This workshop is noteworthy in its interdisciplinarity, bringing scholars from the fields of internet studies, anthropology and social studies.
Virtual Ethnography in Contemporary Social Science
Workshop, Amsterdam, 27-29 September 2006
Conceptual precision is often regarded as a scholarly virtue by economists. This paper explores the scope and promise of definitionalism in economics by focusing on concepts that act as founding concepts in economic debate. The semantic properties of these founding concepts are investigated on the basis of a revised Fregean account of meaning, which reinterprets Fregean sense as a social object that determines meaning reflexively in an ethnographically grounded and non-determinist fashion. The resulting 'finitist' account of economic concepts casts doubt on the definitionalist project. What matters for founding concepts is less that they are well-defined, but that differences over their meaning do not prompt controversy.
Preprint: 2006-Klaes-SPE-preprint.pdf
Bibliographical details of final and authoritative version:
Klaes, M. 2006. Founding Economic Concepts. Storia del Pensiero Economico n.s. 3(1): 21-37.