Search results

Keynes' criticisms of Tinbergen's pioneering econometric work are traced back to Keynes' concept of “inductive probability logic”. Induction had already been rejected by Popper as the basis of scientific method. He argued that theories could be corroborated but not proved by the failure of attempts to falsify them by observation and experiment. Economic theory is proto‐theory, which is not fully falsifiable, but which yields falsifiable results if appropriate econometric methods, or a method‐theory is applied to it. A useful method‐theory needs to go beyond description and forecasting to policy optimisation.

This paper is a review essay of Leeson, R. (Ed.), Keynes, Chicago and Friedman (2 volumes), Pickering and Chatto, London, 2003. These volumes contain a comprehensive collection of previously published papers, and also some interesting new materials, relating to the controversy about the accuracy of Milton Friedman's depiction of the “oral tradition” in monetary economics at the University of Chicago in the 1930s and 1940s. As such, the work is a notable addition to the scholarly literature. The broader issue raised by this collection is the precise relationship between Friedman's “monetarism” and the so‐called “Keynesian economics” of the neoclassical synthesis, and specifically, whether there was any real difference between them.

The American agricultural economist Marion Clawson advised the Israeli government during 1953–1955. Clawson, a protégé of John D. Black and Mordecai Ezekiel, criticized the government for ignoring economic considerations, and stated that Israel’s national goals – defense, Negev Desert irrigation, immigrant absorption via new agricultural settlements, and economic independence – were mutually contradictory. His major recommendations were to improve the realism of Israel’s agricultural plan; end expensive Negev irrigation; enlarge irrigated farms eightfold; freeze new settlements until the number of semi-developed settlements falls from 300 to 100; and limit new Negev settlements to 10 over 5–7 years. Thus, Clawson ignored political feasibility and made value judgments. Minister of Finance Levi Eshkol and Minister of Agriculture Peretz Naphtali rejected Clawson’s recommendations because they ignored Israel’s national goals. By September 1954, Clawson shifted towards greater pragmatism: He acknowledged that foreign advisors should not question the national goals or make value judgments, and sought common ground with the Ministry of Agriculture. At his initiative, he wrote Israel Agriculture 1953/54 in collaboration with the Ministry of Agriculture. Israel Agriculture was a consensus document: Clawson eschewed recommendations and accepted that the government might prioritize non-economic goals. In proposing Israel Agriculture, Clawson made a pragmatic decision to relinquish some independence for (potentially) greater influence. Ultimately, Clawson was largely unsuccessful as an advisor. Clawson’s failure was part of a general pattern: Over 1950–1985, the Israeli government always rejected foreign advisors’ recommendations unless it was facing a severe crisis.

The history of science prizes have been awarded to 12 individuals (8 individual authors and 2 sets of coauthors). The history of economics prizes have been awarded to 10 individual authors (no coauthored papers). Seven of the 10 economics prize winners are located in economics departments; the others are in history;⁴ business history (McCraw); and the history of political thought (Hont). Six of the 12 history of science prize winners are located in history of science programs;⁵ four more are in history departments;⁶ one is in a classics department;⁷ and one is in a geography department. Among the prize winners, then, the history of science is almost exclusively practiced by historians of science, whether they are in history of science departments or in history/classics departments, whereas the history of economics is primarily, but not exclusively, practiced by those in economics departments.⁸ Although departmental affiliations can be deceiving and ever-changing, clearly Schabas has not convinced historians of economics to abandon the discipline of economics.

The great stimulus to macroeconomic theory provided by Keynes is well recognised, but much less is said about his views on scientific methodology and his influence there. There is a widespread belief among economists that Keynes was an a priori thinker who dealt with “facts” and empirical material in a cavalier and high‐handed manner. We question the validity of this interpretation and give evidence to show that Keynes' methodology was not hostile to empiricism.

Reviews Milton and Rose D. Friedman’s, Two Lucky People: Memoirs, University of Chicago Press, Chicago, 1998, $35 (£24.95), ISBN 0‐226‐26414‐9. Focuses on how the memoirs illuminate the main contributions Friedman has made to political economy and the economics literature.

Ricardian behavior may increase the variance of consumption: A change in national income will change future tax liabilities endogenously; if consumers are Ricardian, consumption will change for this reason. This paper studies the effects of these changes on the stability of an economy with sticky prices. The analysis indicates that Ricardian tax discounting would tend to reduce macroeconomic stability.