Dictionary of Arguments

Philosophical and Scientific Issues in Dispute

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Disputed term/author/ism	Author	Entry	Reference
Adaption	Gould	I 198 Adaptation/Preadaption/Gould: Definition preadaption: preadaption is derived from the thesis that other functions have been fulfilled in the initial stages, e.g. half a jaw could support the gills. Half a wing may have been used to catch prey, or to control body temperature. Gould: the concept of preadaptation is indispensable, but it is not appropriate to demonstrate continuity in all cases. I 199 For example, in two genera of Biodae (giant snakes) on Mauritius there is a divided maxillary bone (with elastic connection), which is not found in any other vertebrate on earth. Here, a discontinuous transition is preferable because a jaw cannot be half broken. Examples: I 195 For example, fish with jaws are related to their ancestors without jaws. Macroevolution (the larger structural transitions) is nothing but an expanded microevolution (e. g. the change of flies in closed containers). I 196 For example, if black moths replace whites within a century, reptiles can become birds by gently summing up countless changes over a few million years. II 51 Adaptation/Gould: we do not have to choose between limitation and beauty of adaptation, because only both together provides the necessary tension to regulate evolution. Selection/Gould: GouldVs: Gould is directed against the assumption of a consistent selection, or the assumption that there is an effect of selection on each level at the same time, or the theory that every detail that can be found in an organism results from the selection. Behavior/adaptation: each individual behavior may be a wonderful adaptation, but it must be shaped within a prevailing limitation, e. g. breeding behaviour of the gannet. II 52 Behavior/animal/Gould: the sources of organic forms and behaviours are diverse and contain at least three primary categories: a) instantaneous adaptation (the behaviour of the offspring), b) the potential non-adaptive consequences of basic structural designs that act as restrictions on adaptation, and c) adaptations of ancestors now used by the descendants in other ways. II 153 Adaptation/GouldVsAdaptionism/Gould: for example, special characteristics of some abnormal human children cannot be described as adaptation. We do not inhabit a perfect world in which natural selection ruthlessly checks all organic structures and then shapes them for optimal utility. In many cases, evolution reflects more inherited patterns than current environmental demands. II 152 We tend (incorrectly) to view each structure as if it were created for a particular purpose. IV 27 Adaptation/adjustment/Gould: we should not conclude that Darwin's assumed adaptability to a local environment has unrestricted power to generate theoretically optimal designs for all situations. The natural selection can only use existing material. This is the classic dilemma of evolutionary theory. Question: how do the intermediate steps arise? Structuralists (like Geoffroy Saint Hilaire, 1772-1844): thesis: first, the form changes and then finds a function. Functionalists (like Lamarck): thesis: organisms must first adopt a different way of life before the forms develop. DarwinVsStructuralism: the environment does not pass on its requirements for adaptation directly to the organism. Rather indirectly through more survivor's descendants of those who were lucky enough to vary towards a better adaptation to their local environment. IV 28 Lamarck: in fact, it was he who had found the right answer (like Darwin): he merely proposed a false mechanism for transferring information between the environment and the organism. His functionalist solution contains an elegant simplification that is accepted today by almost all evolutionary researchers. It is neither the shape of the body nor the form of its opponents that gives rise to the habits of the animals, but on the contrary, it is the habits and living conditions that have formed the shape of the body over time".⁽¹⁾ Gould: this is considered correct today. >Lamarckism. 1. Lamarck, J.B. (1809/1984). Zoological Philosophy. Chicago: University Press.	Gould I Stephen Jay Gould The Panda’s Thumb. More Reflections in Natural History, New York 1980 German Edition: Der Daumen des Panda Frankfurt 2009 Gould II Stephen Jay Gould Hen’s Teeth and Horse’s Toes. Further Reflections in Natural History, New York 1983 German Edition: Wie das Zebra zu seinen Streifen kommt Frankfurt 1991 Gould III Stephen Jay Gould Full House. The Spread of Excellence from Plato to Darwin, New York 1996 German Edition: Illusion Fortschritt Frankfurt 2004 Gould IV Stephen Jay Gould The Flamingo’s Smile. Reflections in Natural History, New York 1985 German Edition: Das Lächeln des Flamingos Basel 1989
Adolescence	Developmental Psychology	Upton I 112 Adolescence/Developmental psychology/Upton: current evidence suggests that ‘storm and stress’ does not describe the typical experience of an adolescent. Puberty is a period of rapid physical change, involving hormonal and bodily changes. However, it is not a single sudden event, but rather an extended set of changes that take place over time (Dorn et al., 2006)⁽¹⁾. These changes include increases in height and weight, and reaching sexual maturity. The specific changes are different for boys and girls, as are the timings at which such changes occur. In general, girls enter puberty approximately two years before boys. Initial changes are associated with increased height and weight. On average, for girls this growth spurt begins at the age of nine years, while for boys this is closer to 11 years of age. The peak of this growth spurt happens approximately three years later, so girls are growing fastest between 12 and 13 years of age, while boys are growing fastest between the ages of 14 and 15 years. During the growth peak, girls grow by around 9cm a year and boys by 10cm. Upton I 113 The adolescent growth spurt starts on the outside of the body and works inwards, so the hands and feet are the first to expand, followed by arms and legs, which then grow longer. Following this the spine elongates. The last expansion is a broadening of the chest and shoulders in boys, and a widening of the hips and pelvis in girls. Hormonal changes: This growth spurt is triggered by a flood of hormonal changes, which is set off by the hypothalamus and pituitary gland. The main hormones associated with pubertal changes are testosterone and oestrodiol. Both of these chemicals are present in the hormonal make-up of both boys and girls, but testosterone dominates in male pubertal changes and oestrodiol in female pubertal changes. In boys, increases in testosterone are associated with an increase in height, a deepening of the voice and genital development. For girls, increasing levels of oestrodiol are linked to breast, uterine and skeletal development (e.g. widening of the hips). It has been suggested that these same hormones may contribute to psychological develop ment in adolescence (Rapkin et al.. 2006)⁽²⁾. For example, studies have shown links between testosterone levels and perceived social competence in boys (Nottelmann et al., 1987)⁽³⁾, and between oestrodiol levels and the emotional responses of girls (Inoff-Germain et al., 1988)⁽⁴⁾. (…) there is evidence that the link between behaviour and hormones may work in the opposite direction as well, since behaviour and mood have been found to influence hormone levels (Susman. 2006)(5). Indeed, it seems unlikely that hormones alone can account for the psychological changes that occur in adolescence (Rowe et al.. 2004)⁽⁶⁾. In general, (…), it seems that all adolescents show some body dissatisfaction during puberty (Graber and Brooks Gunn, 2001)⁽⁷⁾. The evidence suggests that girls tend to become increasingly dissatisfied as they move through puberty, while boys become increasingly satisfied. (McCabe et al. 2002)⁽⁸⁾. At 11 to 12 years of age, early-maturing girls tend to have greater satisfaction with their body shape than late-maturing girls. However, this changes as girls reach 15 to 16 years of age, when late-maturing girls start to Upton I 114 Report greater satisfaction with their body shape (Simmons and Blyth, 1987)⁽⁹⁾. Early-maturing girls have also been found to be more vulnerable to emotional and be havioural problems, including depression, eating disorders and engaging in risky health be haviours such as smoking, drinking and drug taking, and early sexual behaviours (Wiesner and Ittel. 2002)⁽¹⁰⁾. These girls are also more likely to have lower educational and occupational attainments (Stattin and Magnusson, 1990)⁽¹¹⁾. It seems that girls who physically mature at a younger age spend more time with their older peers and are easily drawn into problem behaviours, because they do not have the emotional maturity to recognise the long-term effects of such behaviours on their development (Sarigiani and Petersen. 2000)⁽¹²⁾. However, there is evidence to suggest that the negative psychosocial consequences of early puberty may not last into later adolescence or adulthood (Blumstein Posner. 2006)⁽¹³⁾. >Self-description/Developmental psychology. Upton I 122 Cognitive skills/adolescence: There is also evidence that changing cognitive skills reflect ongoing structural and functional brain development. Structural MRI (magnetic resonance imaging) studies, for example, have demonstrated that the brain undergoes considerable development during adolescence, particularly in the prefrontal cortex (e.g. Huttenlocher et al.. 1983)⁽¹⁴⁾. It is thought that the production of synapses in the prefrontal cortex continues up until puberty, followed by synaptic pruning during adolescence. This is accompanied by an increase in myelination in this area of the cortex. These structural changes are believed to represent the fine-tuning of this brain circuitry, so increasing the efficiency of the cognitive systems it serves (Blakernore and Choudhury, 2006)⁽¹⁵⁾. There is also some suggestion that functioning in the frontal cortex increases with age (e.g. Rubia et al.. 2000)⁽¹⁶⁾, although this has been challenged by some researchers (e.g. Durston et al., 2006)⁽¹⁷⁾. Upton I 123 (…), the ability to engage in abstract reasoning (…) increases; adolescent thinking is no longer tied to specific concrete examples as it was during late childhood, meaning that they can engage in hypothetical deductive reasoning. >Egocentrism/Psychological theories, >Egocentrism/Elkind, >Self-Consciousness/Developmental psychology, >Risk perception/Developmental psychology, >Morality/Developmental psychology, >Egocentrism/Elkind, >Youth Culture/Developmental psychology, >Self/Developmental psychology, >Friendship/Developmental psychology, >Peer Relationship/Developmental psychology, >Self-Esteem/Developmental psychology, >Identity/Marcia. 1. Dorn. LD. Dahi, RE. Woodward, HR and Biro. F (2006) Defining the boundaries of early adolescence: a user’s guide to assessing pubertal status and pubertal timing in research with adolescents. Applied Developmental Science, 10: 30-56. 2. Rapkin A, Tsao, JC, Turk, N Anderson, M and Zelter, LK (2006) Relationships among self -rated tanner staging, hormones, and psychosocial factors in healthy female adolescents. Journal of Pediatric Adolescent Gynecology, 19: 181-7. 3. Nottelmann, ED, Susman, EJ, Blue,JH, Inoff-Germain, G and Dorn, LD (1987) Gonadal and adrenal hormone correlates of adjustment in early adolescence, in Lerner, RM and Foch, TT (eds) Biological-psychosocial Interactions in Early Adolescence. Hifisdale, NJ: Lawrence Erlbaum. 4. Inoff-Germain, G, Chrousos, G, Arnold, G, Nottelmann, E, and Cutler, G (1988). Relations between hormone levels and observational measures of aggressive behavior of young adolescents in family interactions. Developmental Psychology, 24: 1 29-39. 5. Susman, EJ (2006) Puberty revisited: models, mechanisms and the future. Paper presented at the Society for Research on Adolescence, San Francisco. 6. Rowe, R, Maughan, B, Worthman, C, Costello, E and Angold, A (2004) Testosterone, antisocial behaviour, and social dominance in boys: pubertal development and biosocial interaction. Biological Psychiatry, 55: 546-52. 7. Graber, JA and Brooks-Gunn, J (2001) Body image, in Lerner, RM and Learner, JV (eds.) Adolescence in America. Santa Barbara, CA: ABC-CLIO. 8. McCabe, MR Ricciardelli, LA and Finemore, ¡(2002) The role of puberty, media, and popularity with peers as strategies to increase weight, decrease weight and increase muscle tone among adolescent boys and girls. Journal of Psychosomatic Research, 52: 145-53. 9. Simmons, RG and Blyth, DA(1987)Moving into Adolescence: The impact of pubertal change and school context. New York: Aldine De Gruyter. 10. Wiesner, M and Ittel, A (2002) Relations of pubertal timing and depressive symptoms to substance use in early adolescence. Journal of Early Adolescence, 22: 5-23. 11. Stattin, H and Magnusson, D (1990)Paths Through Life, Vol.2: Pubertal Maturation in Female Development. Hillsdale NJ: Lawrence Erlbaum. 12. Sarigiani, AC and Petersen, PA (2000) Adolescence: puberty and biological maturation, in Kazdin, A (ed.) Encyclopedia of Psychology. Washington, DC, and New York: American Psychological Association/Oxford University Press. 13. Blumstein Posner, R (2006) Early menarche: a review of research on trends in timing, racial differences, etiology and psychosocial consequences. Sex Roles, 5 4(5-6): 315-22. 14. Huttenlocher. PR and Kubicek. L (1983) The source of relatedness effects on naming latency. Journal of Experimental Psychology: Learning, Memory and Cognition, 9(3): 486-96. 15. Blakemore, ST and Choudhury. S (2006) Development of the adolescent brain: implications for executive function and social cognition. Journal of Child Psychology and Psychiatry, 47: 296-312. 16. Rubia, K, Overrnever, S, Taylor, E, Brammer, M, Williams, SC R, Simmons, A, Andrew, C and Bullmore, ET (2000) Functional frontalisation with age: mapping neurodevelopmental trajectories with fMRI. Neuroscience and Biobehavioral Reviews, 24 (1): 13-19. 17. Durston, S, Davidson. MC, Tottenham, N, Galvan, A, Spicer, J, Fossella, JA and Casey, BJ (2006) A shift from diffuse to focal cortical activity with development. Developmental Science, 9(1): 1-8.	Upton I Penney Upton Developmental Psychology 2011
Aggregation	Boudreaux	Boudreaux I 8 Aggregation/economics/Boudreaux: [this kind of thinking] assumed that the interest of the state is identical to that of society. Thus, any policy that strengthened the state was believed to strengthen society. (…) aggregative thinking lumps together a great many individuals into large categories such as “the nation” or “the government” and then treats each of these categories as if it is a unitary thinking, choosing, and acting individual. Keynesianism/Boudreaux: This manner of analysis, the spirit of which was revived by Keynesians, renders unnecessary the kind of economic analysis that was inspired by the work of Adam Smith (1723-1790)⁽¹⁾. Adam Smith: Analysis done in the tradition of Smith examines how multitudes of individuals, all pursuing their own individual interests and possessing only their own unique bits of knowledge, come to have their plans and actions coordinated - chiefly by adjustments in market prices and the resulting profits and losses - in ways that are not only economically orderly and highly productive of material goods and services, but also unplanned and unplannable. Keynesianism/Boudreaux: With aggregative thinking, “the social welfare” is promoted by “the government,” with the latter treated as if it’s an organism possessing a brain, and as if that brain’s main interest lies not in serving itself but, rather, in serving the nation. Overlooked are the processes (…) that lead individuals with diverse interests to undertake actions such as forming governments, becoming government officials, and dealing with government both as citizens who receive benefits from it and who incur costs to sustain it and to affect its activities. BuchananVsAggregative thinking: Buchanan called such aggregative thinking the “organismic” notion of collectives - that is, the collective as organism. Boudreaux I 9 Democracy: In the immediate post-WW II free world, widespread acceptance of the organismic conception of state and society was almost certainly encouraged by the use in those countries of regular elections - a key feature of democracy - as the means of choosing government leaders. The thinking was this: Because in a democracy the People choose government officials (and, thus, ultimately government policies), and because each voter has just as much say as every other voter, governments chosen democratically reflect the will of the People. Such governments, therefore, are good because they embody the general will. >People, >General will, >Government policy, >Nations, >Democracy, >State. 1. Smith, Adam. (1776). An Inquiry Into the Nature and Causes of the Wealth of Nations.	Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014
Aggression	Gender Studies	Slater I 185 Aggression/Gender Studies: Bandura et al. (1961)⁽¹⁾ distinguished between physical and verbal aggression. Researchers today still make that distinction but have also added a distinction between direct aggression and indirect aggression (sometimes called social or relational aggression). Relational aggression has been defined as harming others through purposeful manipulation and damage of their social relationships (Crick & Grotpeter, 1995)⁽²⁾. Relational aggression can take many forms, such as spreading rumors about someone, saying mean things behind someone’s back, and excluding someone from a peer group. >Social groups, >Group behavior, >Social relations, >Resentment, >Social competence, >Social behavior, >Gender. Early work suggested that girls were more likely to engage in relational aggression than boys (Crick & Grotpeter, 1995)⁽²⁾, but more recently, there has been controversy in the literature regarding whether there are gender differences in relational aggression (Delveaux & Daniels, 2000⁽³⁾; Salmivalli & Kaukiainen, 2004⁽⁴⁾; Underwood, Galenand, & Paquette, 2001⁽⁵⁾). 1. Bandura, A., Ross, D., & Ross, S. A. (1961). Transmission of aggression through imitation of aggressive models. Journal of Abnormal and Social Psychology, 63, 575—582. 2. Crick, N. R., & Grotpeter, J. K. (1995). Relational aggression, gender, and social-psychological adjustment. Child Development, 66, 710—722. 3. Delveaux, K. D., & Daniels, T. (2000). Children’s social cognitions: Physically and relationally aggressive strategies and children’s goals in peer conflict situations. Merrill-Palmer Quarterly, 46, 672— 692. 4. Salmivalli, C., & Kaukiainen, A. (2004). “Female aggression” revisited: Variable- and person-centered approaches to studying gender differences in different types of aggression. Aggressive Behavior, 30, 15 8—163. 5. Underwood, M. K., Galenand, B. R, & Paquette, J. A. (2001). Top ten challenges for understanding gender and aggression in children: Why can’t we all just get along? Social Development, 10, 248—266. Jenifer E. Lansford, “Aggression. Beyond Bandura’s Bobo Doll Studies“, in: Alan M. Slater and Paul C. Quinn (eds.) 2012. Developmental Psychology. Revisiting the Classic Studies. London: Sage Publications	Slater I Alan M. Slater Paul C. Quinn Developmental Psychology. Revisiting the Classic Studies London 2012
Aggression	Psychological Theories	Slater I 178 Aggression/imitation/psychological theories: the idea that children learn through imitation is taken for granted and regarded as obvious today. [Anyway] this was by no means the case when the Bobo doll study was published in Bandura (1961)⁽¹⁾. >Bobo doll study/Bandura, >Aggression/Bandura. Notably, even today, several domains have generated fierce debate about whether children learn aggressive behavior through imitative processes. For example, in the case of children viewing violent television programs or playing violent video games, the entertainment industry has tried to argue that there is no evidence that exposure to violent media causes increases in children’s aggressive behavior (see Bushman & Anderson, 2001)⁽²⁾. Slater I 179 While Bandura et al. did not yet have an adequate theory to describe the mechanisms underlying imitative learning, Anderson and Bushman (2001)⁽²⁾ developed a General Aggression Model describes how individuals’ cognition, affect, and arousal are altered through repeated exposure to violent media, thereby contributing to aggressive behavior. According to the model, each exposure to violent media teaches individuals ways to aggress, influences beliefs and attitudes about aggression, primes aggressive perceptions and expectations, desensitizes individuals to aggression, and leads to higher levels of physiological arousal. These mediating variables then lead to more aggressive behavior. Although more aggressive children tend to seek out violent media, there is also convincing empirical evidence that even controlling for initial levels of aggression, exposure to violent media contributes to increases in aggressive behavior (Huesmann, Eron, Berkowitz, & Chafee, 1991)⁽³⁾. >Aggression/Developmental psychology, >Aggression/Moffitt. Slater I 184 Some critics have questioned whether the Bobo doll study constitutes evidence regarding children’s imitation of aggression or merely behaviors the children regarded as play. This argument hinges on how aggression is defined. Contemporary researchers generally define aggression as an act perpetrated by one individual that is intended to cause physical, psychological, or social harm to another (Anderson & Bushman, 2002)⁽⁴⁾. It is plausible that the intention to harm was missing from children’s imitative behaviors toward the Bobo doll, even if by their nature (e.g., kicking, hitting), they seem aggressive. Slater I 185 Forms of aggression: Some (…) advances in understanding aggression since the time of the Bobo doll studies have been in understanding different forms of aggression. Bandura et al. distinguished between physical and verbal aggression. Researchers today still make that distinction but have also added a distinction between direct aggression and indirect aggression (sometimes called social or relational aggression). Relational aggression: has been defined as harming others through purposeful manipulation and damage of their social relationships (Crick & Grotpeter, 1995)⁽⁵⁾. Relational aggression can take many forms, such as spreading rumors about someone, saying mean things behind someone’s back, and excluding someone from a peer group. For differences between the sexes see >Aggression/Gender Studies. Forms of aggression: Researchers today also distinguish between proactive aggression and reactive aggression (Dodge & Coie, 1987)⁽⁶⁾. Proactive aggression: is described as being unprovoked and goal-directed (Crick & Dodge, 1996)⁽⁷⁾, and is predicted by having aggressive role models (Bandura, 1983)⁽⁸⁾, friendships with other proactively aggressive children (Poulin & Boivin, 2000)⁽⁹⁾, and physiological under arousal (Scarpa & Raine, 1997)⁽¹⁰⁾. Reactive aggression: is described as being an angry retaliatory response to perceived provocation (Dodge & Coie, 1987)⁽⁶⁾. Precursors of reactive aggression include a developmental history of physical abuse (Dodge, Lochman, Harnish, Bates, & Pettit, 1997)⁽¹¹⁾, peer rejection (Dodge et al., 1997)⁽¹¹⁾, more reactive temperament (Vitaro, Brendgen, & Tremblay, 2002)⁽¹²⁾, and physiologic overarousal (Scarpa & Raine, 1997)⁽⁹⁾. Proactive aggression is associated with evaluating aggression positively (Smithmyer et al., 2000)⁽¹³⁾ and holding instrumental (e.g., obtaining a toy) rather than relational (e.g., becoming friends) goals in social interactions (Crick & Dodge, 1996)⁽⁷⁾, whereas reactive aggression is associated with making inappropriate hostile attributions in the face of ambiguous or benign social stimuli (Dodge & Coie, 1987)⁽⁶⁾. 1. Bandura, A., Ross, D., & Ross, S. A. (1961). Transmission of aggression through imitation of aggressive models. Journal of Abnormal and Social Psychology, 63, 575—582. 2. Anderson, C. A., & Bushman, B. J. (2001). Effects of violent video games on aggressive behavior, aggressive cognition, aggressive affect, physiological arousal, and prosocial behavior: A meta-analytic review of the scientific literature. Psychological Science, 12, 353—359. 3. Huesmann, L. R., Eron, L. D., Berkowitz, L., & Chafee, S. (1991). The effects of television violence on aggression: A reply to a skeptic. In P. Suedfeld & P. Tetlock (Eds), Psychology and social policy (pp. 19 2—200). New York: Hemisphere. 4. Anderson, C. A., & Bushman, B. J. (2002). Human aggression. Annual Review of Psychology, 53, 27— 51. 5. Crick, N. R., & Grotpeter, J. K. (1995). Relational aggression, gender, and social-psychological adjustment. Child Development, 66, 710—722. 6. Dodge, K. A., & Coie, J. D. (1987). Social information processing factors in reactive and proactive aggression in children’s peer groups .Journal of Personality and Social Psychology, 53, 1146—1158. 7. Crick, N. R., & Dodge, K. A. (1996). Social information-processing mechanisms in reactive and proactive aggression. Chi id Development, 67, 993—1002. 8. Bandura, A. (1983). Psychological mechanisms of aggression. In R. Geen & E. Donnerstein(Eds), Aggression: Theoretical and empirical reviews, Vol. 1. Theoretical and methodological issues (pp. 1—40). New York: Academic Press. 9. Poulin, F., & Boivin, M. (2000). The role of proactive and reactive aggression in the formation and development of boys’ friendships. Developmental Psychology, 36, 233—240. 10. Scarpa, A., & Raine, A. (1997). Psychophysiology of anger and violent behavior. Psychiatric Clinics of North America, 20, 3 75—394. 11. Dodge, K. A., Lochman, J. E., Harnish, J. D., Bates, J. E., & Pettit, G. S. (1997). Reactive and proactive aggression in school children and psychiatrically impaired chronically assaultive youth. Journal of Abnormal Psychology, 106,37—51. 12. Vitaro, F., Brendgen, M., & Tremblay, R. E. (2002). Reactively and proactively aggressive children: Antecedent and subsequent characteristics. Journal of Child Psychology and Psychiatry, 43,495—505. 13. Smithmyer, C. M., Hubbard, J. A., & Simons, R. F. (2000). Proactive and reactive aggression in delinquent adolescents: Relations to aggression outcome expectancies. Journal of Clinical Child Psychology, 29, 86—93. Jenifer E. Lansford, “Aggression. Beyond Bandura’s Bobo Doll Studies“, in: Alan M. Slater and Paul C. Quinn (eds.) 2012. Developmental Psychology. Revisiting the Classic Studies. London: Sage Publications	Slater I Alan M. Slater Paul C. Quinn Developmental Psychology. Revisiting the Classic Studies London 2012
Aggression	Social Psychology	Slater I 182 Aggression/Social psychology: Social information processing theory describes a series of four steps involving cognitive mechanisms that can account for whether an individual behaves aggressively or not in real time. 1) Encoding information from the social environment; individuals who have problems taking in relevant information to be able to understand situations fully are more likely to behave aggressively (Dodge, Bates, & Pettit, 1990)⁽¹⁾. 2) Making attributions for why other people behaved as they did or why an event occurred; individuals who make hostile, as opposed to benign, attributions are more likely to behave aggressively (Dodge, Price, Bachorowski, & Newman, 1990)⁽²⁾. 3) Generating possible responses to a given situation; individuals who generate fewer possible responses overall and who generate more aggressive responses are more likely eventually to behave aggressively (Asarnow & Callan, 1985)⁽³⁾. 4) Evaluating different possible responses; individuals who believe that aggression will lead to desired instrumental and interpersonal outcomes and that it is a good way to behave in a given situation are more likely to behave aggressively (Smithmyer, Hubbard, & Simons, 2000)⁽⁴⁾. >Information processing. 1. Dodge, K. A., Bates, J. E., & Pettit, G. S. (1990). Mechanisms in the cycle of violence. Science, 250, 1678—1683. 2. Dodge, K. A., Price, J. M., Bachorowski, J., & Newman, J. P. (1990). Hostile attributional biases in severely aggressive adolescents. Journal of Abnormal Psychology, 99, 385—392. 3. Asarnow, J. R., & Callan, J. W. (1985). Boys with peer adjustment problems: Social cognitive processes. Journal of Consulting and Clinical Psychology, 53, 80—87. 4. Smithmyer, C. M., Hubbard, J. A., & Simons, R. F. (2000). Proactive and reactive aggression in delinquent adolescents: Relations to aggression outcome expectancies. Journal of Clinical Child Psychology, 29, 86—93. Jenifer E. Lansford, “Aggression. Beyond Bandura’s Bobo Doll Studies“, in: Alan M. Slater and Paul C. Quinn (eds.) 2012. Developmental Psychology. Revisiting the Classic Studies. London: Sage Publications	Slater I Alan M. Slater Paul C. Quinn Developmental Psychology. Revisiting the Classic Studies London 2012
Assets	Neoclassical Economics	Mause I 225 Assets/Neoclassics/Monetarism: Assets are money, bonds, shares as well as existing and newly created real capital up to human assets. In terms of microeconomic theory, the portfolio is in equilibrium if the marginal return of each form of investment is identical. If this situation leads to an expansionary monetary policy, the rate of return on money decreases. Households will transfer their assets into other forms of assets. >Microeconomics, >Neoclassics, >Equilibrium, >Equilibirum theory, >Monetary policy, >Monetarism. The neoclassical and monetarist approaches assume a high interest rate reactivity of all forms of investment and thus also of investment demand. All economic policy interventions are therefore also assessed on the extent to which they influence the overall economic interest rate level. An expansive monetary policy initially causes interest rate cuts (liquidity effect) and thus considerable effects on the goods markets in the form of volume and price adjustments. >Interest rates.	Mause I Karsten Mause Christian Müller Klaus Schubert, Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018
Attachment Theory	Bowlby	Corr I 29 (XXIX) Personality/attachment theory/Bowlby: Bowlby’s insight was that the child’s pattern of relationships with its primary care-giver affected adult personality; secure attachment to the care-giver promoted healthy adjustment in later life. The theory references many of the key themes of this review of personality. Attachment style may be measured by observation or questionnaire; a common distinction is between secure, anxious and avoidant styles (Ainsworth, Blehar, Waters and Wall 1978)⁽¹⁾. It also corresponds to standard traits; for example, secure attachment correlates with Extraversion and Agreeableness (Carver 1997)⁽²⁾. Attachment likely possesses biological aspects (evident in ethological studies of primates), social aspects (evident in data on adult relationships), and cognitive aspects (evident in studies of the mental representations supporting attachment style). >Relationships, >Social relations, >Extraversion, >Affectional bond. 1. Ainsworth, M. D. S., Blehar, M. C., Waters, E. and Wall, S. 1978. Patterns of attachment: a psychological study of the strange situation. Hillsdale, NJ: Lawrence Erlbaum 2. Carver, C. S. 1997. Adult attachment and personality: converging evidence and a new measure, Personality and Social Psychology Bulletin 23: 865–83 Corr I 228 Attachment theory/Bowlby/Shaver/Mikulincer: Bowlby’s attachment theory (Bowlby 1973⁽¹⁾, 1980⁽²⁾, 1982/1969⁽³⁾) was then elaborated and empirically tested by Mary Ainsworth and her colleagues (e.g., Ainsworth, Blehar, Waters and Wall 1978⁽⁴⁾). See also Attachment theory/Ainsworth. Question: why separations from mother early in life causes so much psychological difficulty for children, adolescents and adults later in life (e.g., Bowlby 1951⁽⁵⁾, 1958⁽⁶⁾). 1. Bowlby, J. 1973. Attachment and loss, vol. II, Separation: anxiety and anger. New York: Basic Books 2. Bowlby, J. 1980. Attachment and loss, vol. III, Sadness and depression. New York: Basic Books 3. Bowlby, J. 1982. Attachment and loss, vol. I, Attachment, 2nd edn. New York: Basic Books (original edn 1969) 4. Ainsworth, M. D. S., Blehar, M. C., Waters, E. and Wall, S. 1978. Patterns of attachment: assessed in the Strange Situation and at home. Hillsdale, NJ: Erlbaum 5. Bowlby, J. 1951. Maternal care and mental health. Geneva: World Health Organization 6. Bowlby, J. 1958. The nature of the child’s tie to his mother, International Journal of Psychoanalysis 39: 350–73 Phillip R. Shaver and Mario Mikulincer, “Attachment theory: I. Motivational, individual-differences and structural aspects”, in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge Handbook of Personality Psychology. New York: Cambridge University Press	Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Autonomy	Benn	Gaus I 104 Autonomy/Benn/Gaus: As John Stuart Mill pointed out, it is ‘mere accident’ that decides the traditions into which one is inducted: ‘the same causes which make him a Churchman in London, would have made him a Buddhist or a Confucian (...) (1963a⁽¹⁾: ch. 2, para. 4). Benn: Given that we necessarily come to adulthood with values and commitments that we did not choose, Stanley Benn argues that an autonomous person is one who is engaged in an ongoing process of ‘critical adjustment within a system of beliefs in which it is possible to appraise one sector by canons drawn from another’ (1988⁽²⁾: 32; but cf. Wall, 1998⁽³⁾: 128–9). Gaus: On this view, a person who leads a selfchosen life is not really one who creates herself, but one who continually evaluates all her commitments and values to ensure that they are ones that she can continue to affirm in light of the other things she accepts. She cannot evaluate everything at once, but she can always be prepared to look critically at her values and projects to ask whether they are really things she is prepared to continue to affirm. Thus understood, a person’s life is not a freely chosen, autonomous life, if there are some parts of it she refuses to examine – if she has some commitments that she will not, or cannot, critically reflect upon. >Autonomy/Mill, >Autonomy/Gaus, >Autonomy/Young, >Autonomy/Dworkin, Gerald. Degrees of autonomy: Benn recognizes, though, that this renders personal autonomy a character ideal that can be achieved to various degrees, and that many people fall far short of. Thus, in contrast to most liberal autonomists, Benn refuses to base liberal freedoms on autonomy, seeing it as a personal ideal, but not a foundation for basic liberal justice (1988⁽²⁾: ch. 9). 1. Mill, John Stuart (1963a) On Liberty. In J. M. Robson, ed., The Collected Works of John Stuart Mill. Toronto: University of Toronto Press, vol. XVIII, 213–301. 2. Benn, Stanley I. (1988) A Theory of Freedom. Cambridge: Cambridge University Press. 3. Wall, Steven (1998) Liberalism, Perfectionism and Restraint. Cambridge: Cambridge University Press. Gaus, Gerald F. 2004. „The Diversity of Comprehensive Liberalisms.“ In: Gaus, Gerald F. & Kukathas, Chandran 2004. Handbook of Political Theory. SAGE Publications.	Gaus I Gerald F. Gaus Chandran Kukathas Handbook of Political Theory London 2004
Bandura	Psychological Theories	Slater I 183 Bandura/aggression/Bobo doll study/psychological theories: Bandura’s Bobo doll studies (Bandura 1961⁽¹⁾) (>Aggression/Bandura) have been criticized since for methodological and ethical reasons. 1) Some critiques have questioned whether Bandura’s study would have been approved by a 21st century IRB [Institutional Review Boards] given the explicit modeling of aggression to which the children were exposed as well as the provocation in denying them access to the attractive toys that was meant to elicit the children’s own aggressive responses. 2) Scholars have questioned the generalizability of the findings given that the child participants were all recruited from the Stanford University preschool, and, thereby, more socioeconomically advantaged than the general population. The original study does not provide information about the children’s race, ethnicity, parents’ education, or other sociodemographic variables that are typically reported in the literature today. Subsequent research has documented sociodemographic differences in children’s mean levels of aggression. For example, children with more educated parents (Nagin & Tremblay, 2001)⁽²⁾, from families with fewer stressors (Sanson, Oberklaid, Pedlow, & Prior, 1991)⁽³⁾, and from two-parent households (Vaden-Kiernan, Ialongno, Pearson, & Kellam, 1995)⁽⁴⁾, on average, demonstrate lower levels of aggression than do children with less educated parents, from families with more stressors, and from single parent households, respectively. However, the lack of attention to sociodemographic characteristics of the children in the original study would only pose a problem if these characteristics moderated links between exposure to an aggressive model and one’s own imitative learning of aggression. To date, evidence of this kind of moderation does not exist. >Aggression/Bandura. Slater I 184 Some critics have questioned whether the Bobo doll study constitutes evidence regarding children’s imitation of aggression or merely behaviors the children regarded as play. This argument hinges on how aggression is defined. Contemporary researchers generally define aggression as an act perpetrated by one individual that is intended to cause physical, psychological, or social harm to another (Anderson & Bushman, 2002)⁽⁵⁾. It is plausible that the intention to harm was missing from children’s imitative behaviors toward the Bobo doll, even if by their nature (e.g., kicking, hitting), they seem aggressive. 1. Bandura, A., Ross, D., & Ross, S. A. (1961). Transmission of aggression through imitation of aggressive models. Journal of Abnormal and Social Psychology, 63, 575—582. 2. Nagin, D. S., & Tremblay, R. E. (2001). Parental and early childhood predictors of persistent physical aggression in boys from kindergarten to high school. Archives of General Psychiatry, 58, 389—394. 3. Sanson, A., Oberklaid, F., Pedlow, R., & Prior, M. (1991). Risk indicators: Assessment of infancy predictors of pre-school behavioral maladjustment. Journal of Child Psychology and Psychiatry, 32, 609— 626. 4. Vaden-Kiernan, N., Ialongno, N. S., Pearson, J., & Kellam, S. (1995). Household family structure and children’s aggressive behavior: A longitudinal study of urban elementary school children. Journal of Abnormal Child Psychology, 23, 553—568. 5. Anderson, C. A., & Bushman, B. J. (2002). Human aggression. Annual Review of Psychology,, 53, 27- 51. Jenifer E. Lansford, “Aggression. Beyond Bandura’s Bobo Doll Studies“, in: Alan M. Slater and Paul C. Quinn (eds.) 2012. Developmental Psychology. Revisiting the Classic Studies. London: Sage Publications	Slater I Alan M. Slater Paul C. Quinn Developmental Psychology. Revisiting the Classic Studies London 2012
Business Cycle	Rothbard	Rothbard III 999 Business cycle/Rothbard: Money supply: an increase in the supply of money does Iower the rate of interest when it enters the market as credit expansion, but only temporarily. In the long run (and this long run is not very "long"), the market re-establishes the free-market time-preference interest rate and eliminates the change. In the long run a change in the money stock affects only the value of the monetary unit. Business cycle/Rothbard: This process - by which the market reverts to its preferred interest rate and eliminates the distortion caused by credit expansion - is, moreover, the business cycle! >Credit expansion/Rothbard, >Interest rate/Rothbard, >Time preference/Rothbard, >Money supply/Rothbard. Note the hallmarks of this distortion-reversion process: 1) First, the money supply increases through credit expansion; then businesses are tempted to malinvest - overinvesting in higher-stage and durable production processes. 2) Next, the prices and incomes of original factors increase and consumption increases, and businesses realize that the higher-stage investments have been wasteful and unprofitable. The first stage is the chief landmark of the "boom"; the second stage - the discovery of the wasteful malinvestments - is the "crisis." Crisis: The depression is the next stage, during which malinvested businesses become bankrupt, and original factors must suddenly shift back to the Iower stages of production. The liquidation of unsound businesses, the "idle capacity" of the malinvested plant, and the "frictional" unemployment of original factors that must suddenly and en masse shift to Iower stages of production - these are the chief hallmarks of the depression stage. >Crises/Rothbard. Rothbard III 1004 Business cycles/Rothbard: Secondary effects: (…) the expanding money supply and rising prices are likely to Iower the demand for money. Many people begin to anticipate higher prices and will therefore dishoard. Prices: The Iowered demand for money raises prices further. Since the impetus to expansion comes first in expenditure on capital goods and later in consumption, this "secondary effect" of a Iower demand for money may take hold first in producers'-goods industries. Profit: This Iowers the price-and-profit differentials further and hence widens the distance that the rate of interest will fall below the free-market rate during the boom. Depression: The effect is to aggravate the need for readjustment during the depression. Producer’s goods: The adjustment would cause some fall in the prices of producers' goods anyway, since the essence of the adjustment is to raise price differentials. The extra distortion requires a steeper fall in the prices of producers' goods before recovery is completed. Inflation: (…) the demand for money generally rises at the beginning of an inflation. People are accustomed to thinking of the value of the monetary unit as inviolate and of prices as remaining at some "customary" level. Hence, when prices first begin to rise, most people believe this to be a purely temporary development, With prices soon due to recede. This belief mitigates the extent of the price rise for a time. Credit expansion: Eventually, however, people realize that credit expansion has continued and undoubtedly will continue, and their demand for money dwindles, becoming Iower than the original level. Crisis: After the crisis arrives and the depression begins, various secondary developments often occur. Deflation: In particular (…) the crisis is often marked not only by a halt to credit expansion, but by an actual deflation - a contraction in the supply of money. The deflation causes a further decline in prices. Any increase in the demand for money will speed up adjustment to the Iower prices. >Deflation/Rothbard.	Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Business Cycle	Schumpeter	Sobel I 23 Business cycle/Schumpeter/Sobel/Clemens: „Capitalism is essentially a process of (endogenous) economic change ... The atmosphere of industrial revolutions - of "progress" is the only one in which capitalism can survive ... In this sense stabilized capitalism is a contradiction in terms.“ Joseph A. Schumpeter (1939), Business Cycles⁽¹⁾: 405. „The recurring periods of prosperity of the cyclical movement are the form progress takes in capitalistic society.“ Joseph A. Schumpeter (1927), The Explanation of the Business Cycle⁽²⁾: 30. Sobel/Clemens: As was the case with many of Schumpeter's contemporaries, he showed great interest in understanding the nature and causes of business cycles, that is, the ebb and flow of the economy from expansion and prosperity to recession, and at times, economic crisis and depression. Schumpeter's work in the Theory of Economic Development (TED)⁽³⁾ coupled with his later two-volume masterpiece Business Cycles (BC1)⁽¹⁾ focused on the broad issue of how and why economies progress. One of the many contributions of Schumpeter's work in the field of business cycles was the introduction ofinnovation as a causal explanation. A subtle aspect of his argument, but one that needs to be recognized, is that the business cycle or the fluctuation between expansion and contraction is natural or, as Schumpeter put it "like the beat of the heart" (BC1⁽¹⁾: v). Sobel/Clemens: This evolutionary approach to understanding business cycles and their role in the general upward progress of economies placed Schumpeter in contrast to many of his peers during this time Who believed economic fluctuations could and should be managed by the government. Schumpeter's views also put him at odds with the broad Austrian School of Economics, within which much of his training took place. >Austrian School. To understand Schumpeter's conception of the business cycle, we need to first recall his definition of innovation as given in The Explanation of the Business Cycle (EBC)⁽²⁾: „... primarily changes in methods of production and transportation, or in changes in industrial organization, or in the production of a new article, or in the opening up of new markets or of new sources of material.“ (EBC⁽²⁾: 30) Sobel/Clemens: Schumpeter's explanation for business cycles, which again was rooted in his analysis of economic history and experience, starts with a major innovation by entrepreneurs. The initial innovation and the potential for monopoly profits spurs investment in factories, machinery, equipment, and perhaps additional research. It is critical for Schumpeter, however, that these investments and economic activity will cluster within the Single branch of the economy in which the innovation occurs. (EBC⁽²⁾: 30). In other words, in the first phase of the expansion, the prosperity or economic development does not occur broadly in the economy but rather in one specific sector. >Innovation/Schumpeter, >Competition/Schumpeter, >Investments/Schumpeter. As more and more resources are reallocated to the sector experiencing expansion, the prices for resources, again including raw materials, capital, and labour begin to rise. Schumpeter described it as follows: „the swarm-like appearance of new combinations easily and necessarily explains the fundamental features of periods of boom. It explains why increasing capital investment is the very first symptom of the coming boom, why industries producing means of production are the first to show supernormal stimulation ... It explains the appearance of new purchasing power in bulk, thereby the characteristic rise in prices during booms, which obviously no reference to increased need or increased costs alone can explain.“ (TED⁽³⁾: 230) As the sector with the initial innovation expands and draws resources to it, prices outside the sector also begin to rise. Sobel I 24 Specifically, firms and entrepreneurs begin to invest in the additional sectors experiencing expansion because of the in crease in demand from the sector that initially experienced the innovation breakthrough. These can include, for instance, providers of raw materials and suppliers of intermediate goods and services. As more and more firms, both within the sector initially affected by the innovation as well as those in other sectors of the economy affected by the expansion, bid on resources, including labour, and compete for investment, prices generally start to rise. During this phase, unemployment declines while wages increase, explaining the general prosperity experienced across the economy during expansions. >Creative destruction/Schumpeter. Sobel/Clemens: To summarize, the expansionary phase of the business cycle for Schumpeter starts with an initial innovation that pulls resources, particularly entrepreneurs, into the sector within which the innovation occurs. As resources are pulled into this sector and new firms develop, economic activity in related sectors also begins to expand. Ultimately, the prosperity in these directly and indirectly affected sectors drives economic expansion, Iowering unemployment, increasing wages, and driving investment. As Schumpeter described it: "the release of secondary waves - the spread of prosperity over the whole economic system". (TED⁽³⁾: 230) Recession: As with the expansionary phase, Schumpeter explains the contraction or recessionary stage based on the initial innovation. Economic contractions and recessions were seen by Schumpeter as the economy's reaction and adaptation to the innovation. As noted economist Alvin Hansen put it when assessing Schumpeter's contributions to our understanding ofbusiness cycles, "depression is a process of adaptation to the change conditions ushered in by the boom" (Hansen, 1951⁽⁴⁾: 129). Contraction: The adaptation at the heart of Schumpeter's concept of economic contraction relates to the competition between new and existing firms both within the sector initially affected by the innovation as well as the other sectors of the economy affected by it. Firms are forced to adapt to compete With new products, new processes, new markets, and other innovations. Such adaptation includes firms going out of business or perhaps being absorbed by more effcient firms, layoffs, and massive adjustments to new product and service markets. Sobel I 25 Creative destruction: It is the "creative destruction" of entrepreneurial innovation that Schumpeter saw as the fundamental characteristic of entrepreneurial capitalism. Specifically, „[t]he effect of the appearance of new enterprises en masse upon the old firms and upon the established economic situation, having regard to the fact ... that as a rule the new does not grow out of the old but appears alongside of it and eliminates it competitively, is so to change all the conditions that a special process of adaptation becomes necessary.“ (TED⁽³⁾: 216) Sobel/Clemens: More specifically, Schumpeter observed a number of factors that coalesced to explain the transition from an expansionary phase to contraction.* First, as noted above, many firms fail as their products and services are replaced as a result of the emerging products and services from the innovation. Second, the successes of the boom phase cause increases in prices of raw materials and potentially of labour that dampen profitability expectations and thus investment. Third, the emergence of new firms and more competition in the sector originally affected by the innovation decreases the prices of the new products and services made available by the innovation, which again dampens additional investment. Fourth, Schumpeter observed that entrepreneurs could "overshoot" the opportunities in the sector and thus potentially overinvest. This last point is important as it is often overlooked but Schumpeter did in fact allow for entrepreneurs to make errors. * For a thorough discussion of Schumpeter's concept of the reason for recession, please see Dal-Pont Legrand and Hagemann (2007)⁽⁵⁾. 1. Schumpeter, Joseph A. (1939). Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist Process, Volume 1 [BC1]. McGraw-Hill Book Company. 2. Schumpeter, Joseph A. (1927). The Explanation of the Business Cycle [EBC]. Economica 21: 286-311. Reprinted in Joseph A. Schumpeter (1951/1989), Essays on Entrepreneurs, Innovations, Business Cycles, and the Evolution of Capitalism, Richard V. Clemence, ed. (Transaction): 21-46. 3. Schumpeter, Joseph A. (1934). The Theory of Economic Development [TED]. Harvard University Press. 4. Hansen, Alvin H. (1951). Schumpeter’s Contribution to Business Cycle Theory. Review of Economics and Statistics 33, 2: 129–132. , as of September 4, 2019. 5. Dal-Pont Legrand, Muriel, and Harald Hagemann (2007). Business Cycles in Juglar and Schumpeter. History of Economic Thought 49, 1: 1–18. , as of September 4, 2019.	EconSchum I Joseph A. Schumpeter The Theory of Economic Development An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle, Cambridge/MA 1934 German Edition: Theorie der wirtschaftlichen Entwicklung Leipzig 1912 Sobel I Russell S. Sobel Jason Clemens The Essential Joseph Schumpeter Vancouver 2020
Cap and Trade System	Stavins	Stavins I 157 Cap-and-Trade Systems/Aldy/Stavins: A cap-and-trade system constrains the aggregate emissions of regulated sources by creating a limited number of tradable emission allowances—in sum equal to the overall cap—and requiring those sources to surrender allowances to cover their emissions (Stavins, 2007)⁽¹⁾. Faced with the choice of surrendering an allowance or reducing emissions, firms place a value on an allowance that reflects the cost of the emission reductions that can be avoided by surrendering an allowance. Regardless of the initial allowance distribution, trading can lead allowances to be put to their highest valued use: covering those emissions that are the most costly to reduce and providing the incentive to undertake the least costly reductions (Hahn & Stavins, in press⁽²⁾; Montgomery, 1972)⁽³⁾. Cap-and-trade sets an aggregate quantity, and through trading, yields a price on emissions, and is effectively the dual of a carbon tax that prices emissions and yields a quantity of emissions as firms respond to the tax’s mitigation incentives. VsCap-and-Trade: In an emission trading program, cost uncertainty—unexpectedly high or volatile allowance prices—can undermine political support for climate policy and discourage Stavins I 158 investment in new technologies and research and development. Therefore, attention has turned to incorporating “cost-containment” measures in cap-and-trade systems, including offsets, allowance banking and borrowing, safety valves, and price collars. Increasing certainty about mitigation cost [through the above methods] reduces certainty about the quantity of emissions allowed. 1. VsVsCap-and-Trade: Smoothing allowance prices over time through banking and borrowing reduces the certainty over emissions in any given year, but maintains certainty of aggregate emissions over a longer time period. A cost-effective policy with a mechanism insuring against unexpectedly high costs—either through cap-and-trade or a carbon tax—increases the likelihood that firms will comply with their obligations and can facilitate a country’s participation and compliance in a global climate agreement. In the case of a cap-and-trade regime, the border adjustment would take the form of an import allowance requirement, so that imports would face the same regulatory costs as domestically produced goods. 2. VsCap-and-Trade: However, border measures under a carbon tax or cap-and-trade raise questions about the application of trade sanctions to encourage broader and more extensive emission mitigation actions globally as well as questions about their legality under the World Trade Organization (Brainard & Sorking, 2009⁽⁴⁾; Frankel, 2010⁽⁵⁾). >Carbon Pricing/Stavins. Stavins I 172 Cap-and-Trade Linkages/Carbon Pricing Coordination/Stavins: Because linkage between tradable permit systems (that is, unilateral or bilateral recognition of allowances from one system for use in another) can reduce compliance costs and improve market liquidity, there is great interest in linking cap-and-trade systems with each other. There are not only benefits but also concerns associated with various types of linkages (Jaffe, Ranson, & Stavins, 2010)⁽⁶⁾. A major concern is that when two Stavins I 173 cap-and-trade systems are directly linked (that is, allow bilateral recognition of allowances in the two jurisdictions), key cost-containment mechanisms, such as safety valves, are automatically propagated from one system to the other. Because some jurisdictions (such as the European Union) are opposed to the notion of a safety valve, whereas other jurisdictions (such as the United States) seem very favorably predisposed to the use of a safety valve, challenging harmonization would be required. This problem can be avoided by the use of indirect linkage, whereby two cap-and-trade systems accept offsets from a common emission-reduction-credit system, such as the Clean Development Mechanism. As a result, the allowance prices of the two cap-and-trade systems converge (as long as the ERC market is sufficiently deep), and all the benefits of direct linkage are achieved (lower aggregate cost, reduced market power, decreased price volatility), but without the propagation from one system to another of cost-containment mechanisms. (...) it is important to ask whether a diverse set of heterogeneous national, subnational, or regional climate policy instruments can be linked in productive ways. The basic answer is that such a set of instruments can be linked, but the linkage is considerably more difficult than it is with a set of more homogeneous tradable permit systems (Hahn & Stavins, 1999)⁽⁷⁾. Another form of coordination can be unilateral instruments of economic protection, that is, border adjustments. >Carbon Pricing Coordination/Stavins. 1. Stavins, R. N. (2007). A U.S. cap-and-trade system to address global climate change (The Hamilton Project Discussion Paper 2007-13). Washington, DC: The Brookings Institution. 2. Hahn, R. W., & Stavins, R. N. (in press). The effect of allowance allocations on cap-and-trade system performance. Journal of Law and Economics. 3. Montgomery, D. W. (1972). Markets in licenses and efficient pollution control programs. Journal of Economic Theory, 5, 395-418. 4. Brainard, L., & Sorking, I. (Eds.). (2009). Climate change, trade, and competitiveness: Is a collision inevitable? Washington, DC: Brookings Institution Press. 5. Frankel, J. (2010). Global environment and trade policy. In J. E. Aldy & R. N. Stavins (Eds.), Post-Kyoto international climate policy: Implementing architectures for agreement (pp. 493-529). New York, NY: Cambridge University Press. 6.Jaffe, J., Ranson, M., & Stavins, R. (2010). Linking tradable permit systems: A key element of emerging international climate policy architecture. Ecology Law Quarterly, 36, 789-808. 7. Hahn, R. W., & Stavins, R. N. (1999). What has the Kyoto Protocol wrought? The real architecture of international tradeable permit markets. Washington, DC: The AEI Press. Robert N. Stavins & Joseph E. Aldy, 2012: “The Promise and Problems of Pricing Carbon: Theory and Experience”. In: Journal of Environment & Development, Vol. 21/2, pp. 152–180.	Stavins I Robert N. Stavins Joseph E. Aldy The Promise and Problems of Pricing Carbon: Theory and Experience 2012
Capital Stock	Alessandria	Alessandria I 21 Capital stock/tariffs/Alessandria/Ding/Khan/Mix: There are large differences in the steady state capital stock across the fiscal adjustments. In the permanent trade war case the capital stock falls by 13.8 percent with lump sum redistribution but rises by 6.0 percent with the investment subsidy.* The capital stock also falls by around 11 percent when we use tariff revenue to lower taxes on capital or labor income. The negative effects on capital accumulation even with the cut in capital taxes is owing to the increase in the price of investment goods given the large role of foreign goods in the production of capital goods. In all cases, the price of investment rises by about 9 percent. With the unilateral permanent tariff, the capital stock grows by nearly 23 percent with the investment subsidy. Firms: The value of firms rises by almost five percent with the investment subsidy while falls by -0.1 percent with the lump sum redistribution. Employment: In terms of employment, with a lump sum redistribution employment falls by 1.3 percent but rises by nearly 0.26 percent with the labor tax cut and only falls -0.36 percent with the investment subsidy. >Tariffs, >Trade wars. * George A. Alessandria, Jiaxiaomei Ding, Shafaat Y. Khan, and Carter B. Mix. (2025) The Tariff Tax Cut: Tariffs as Revenue NBER Working Paper No. 33784 May 2025	Alessandria I George A. Alessandria Jiaxiaomei Ding Shafaat Y. Khan, The Tariff Tax Cut: Tariffs as Revenue NBER Working Paper No. 33784 May 2025 Cambridge, MA 2025
Carbon Pricing	Fankhauser	Fankhauser I 1 Carbon Pricing/Carattini/Carvalho/Fankhauser: (…) to keep the rise in global mean temperatures well below 2°C above preindustrial levels (…) requires a variety of policy interventions, including subsidies to support the breakthrough of low-carbon technologies, regulatory standards to drive down the energy use of buildings, cars and appliances, and financing schemes to overcome capital constraints (Bowen & Fankhauser, 2017)⁽¹⁾. However, an effective carbon price is essential to avoid more severe interferences with the climate system (Stiglitz et al., 2018)⁽²⁾. Only if the emitters of greenhouse gases face the full environmental costs of their actions will they manage their carbon emissions effectively. Carbon pricing alters relative prices, leading to an automatic adjustment in behavior by firms and consumers, and creating a continuous incentive for investments in low-carbon technological improvements. It works as a decentralized policy, in that it does not require regulators to have information on marginal abatement costs. Agents react to the carbon price based on their marginal abatement cost. By exploiting heterogeneity in marginal abatement costs, carbon pricing allows reducing the overall abatement cost (Weitzman, 1974)⁽³⁾. Emissions Trading: Until now, emissions trading has been the carbon pricing instrument of choice in most jurisdictions. In the European Union, the EU Emissions Trading System (EU ETS) covers almost half of total greenhouse gas emissions. Carbon is also traded in Canada, China, New Zealand, Switzerland, and the United States, although most of these schemes are limited in their regional or sectoral scope (World Bank, 2016)⁽⁴⁾. >Carbon Taxation/Fankhauser. >Emission permits, >Emission reduction credits, >Emission targets, >Emissions, >Emissions trading, >Climate change, >Climate damage, >Energy policy, >Clean Energy Standards, >Climate data, >Climate history, >Climate justice, >Climate periods, >Climate targets, >Climate impact research, >Carbon price, >Carbon price coordination, >Carbon price strategies, >Carbon tax, >Carbon tax strategies. 1. Bowen, A., & Fankhauser, S. (2017). Good practice in low-carbon policy. In A. Averchenkova, S. Fankhauser, & M. Nachmany (Eds.), Climate change legislation (pp. 123–140). London, England: Edward Elgar. 2. Stiglitz, J. E., Stern, N., Duan, M., Edenhofer, O., Giraud, G., Heal, G., La Rovere, E. L., Morris, A., Moyer, E., Pangestu, M., Shukla, P. R., Sokona, Y., & Winkler, H. (2018). Report of the High-Level Commission on Carbon Prices. Carbon Pricing Leadership Coalition. 3. Weitzman, M. L. (1974). Prices vs. quantities. The Review of Economic Studies, 41(4), 477–491. 4. World Bank. (2016). State and trends of carbon pricing 2016. Washington, DC: Author. Stefano Carattini, Maria Carvalho & Sam Fankhauser, 2018: “Overcoming public resistance to carbon taxes”. In: Stéphane Hallegatte, Mike Hulme (Eds.), WIREs Climate Change, Vol. 9/5, pages 1-26.	Fankhauser I Samuel Fankhauser Stefano Carattini Maria Carvalho, Overcoming public resistance to carbon taxes 2018
Carbon Taxation	Fankhauser	Fankhauser I 1 Carbon Taxation/EU/US/Carattini/Carvalho/Fankhauser: Carbon taxation, in conjunction with other regulatory measures, could be an effective way of closing policy gaps in sectors that are not already covered by a functioning emissions trading system. In the EU, carbon taxes could play a role in reducing Fankhauser I 2 emissions outside the EU ETS [Emissions Trading System], where much of the future policy effort must lie, according to the European Environment Agency (2016)⁽¹⁾. In the United States, senior Republicans have laid out their arguments for a US $40 carbon tax in The Conservative Case for Carbon Dividends (Baker III, Feldstein, Halstead, et al., 2017)⁽²⁾. >Emissions Trading. A carbon tax is a relatively simple instrument to impose on the individual emitters, including the many smaller ones that dominate the non-ETS sectors and are less likely than large emitting facilities or sources to engage in carbon trading. According to the expertise collected by the World Bank, cap-and-trade systems—like the EU ETS—are best suited for industrial actors that have the capacity and skills to engage in the market actively (World Bank, 2016)⁽³⁾. With their high transaction costs, such systems are less appealing for sectors with a large number of small emission sources, such as transportation and buildings (Goulder & Parry, 2008)⁽⁴⁾. Economists advocate the use of carbon taxes because they provide the price incentive to reduce emissions without being technologically prescriptive, are simpler to administer, and do not draw on government budgets (Aldy & Stavins, 2012⁽⁵⁾; Baranzini et al., 2017⁽⁶⁾; Baumol & Oates, 1971⁽⁷⁾; Goulder & Parry, 2008⁽⁴⁾; Mankiw, 2009⁽⁸⁾; Metcalf, 2009⁽⁹⁾; Weitzman, 2015⁽¹⁰⁾). Fankhauser I 4 The required tax level is determined by the environmental objective and more specifically by the marginal costs of meeting a given emissions target (Bowen & Fankhauser, 2017)⁽¹¹⁾. Fankhauser I 2 VsCarbon Taxation/VsCarbon Tax/Objections to Carbon Taxation/Carattini/Carvalho/Fankhauser: Despite these advantages, carbon taxes are one of the least used climate policy instruments. Carbon tax proposals have been undone, sometimes at an advanced political stage, for example in Australia (in 2014), France (in 2000), Switzerland (in 2000 and 2015), and most recently in the United States in Washington State (in 2016). Objections to carbon taxation are often not about the introduction of the tax itself, but about its design (Dresner, Dunne, Clinch, & Beuermann, 2006)⁽¹²⁾ and the way relevant information is shared. Sociopsychological factors—such as perceived coerciveness, equity, and justice—all affect the extent to which voters accept different climate policy instruments (Drews & van den Bergh, 2015)⁽¹³⁾. Factoring them into the design from the outset could make carbon tax legislation easier to pass. Opposition by vested interests has proved to be very effective in limiting public intervention in a wide range of environmental issues (Oates & Portney, 2003)⁽¹⁴⁾, and their lobbying efforts can influence voters' views, preventing the passage, or even revoking the implementation of a carbon tax. Other studies, for instance by Hammar, Löfgren, and Sterner (2004)⁽¹⁵⁾, Van Asselt and Brewer (2010)⁽¹⁶⁾, Dechezleprêtre and Sato (2017)⁽¹⁷⁾, and Neuhoff et al. (2015)⁽¹⁸⁾, provide insights into how vested interests and other political economy aspects have affected the design of carbon pricing in recent times. Fankhauser I 3 Recognizing that there are variations in attitudes and perceptions across individuals, we identify five general reasons for aversion to carbon taxes that have been recurrently emphasized in the literature. 1. VsCarbon Taxation: The personal costs are perceived to be too high. A Swedish survey by Jagers and Hammar (2009)⁽¹⁹⁾ found that people associate carbon taxes with higher personal costs, more than they do with alternative policy instruments. A discrete choice experiment by Alberini, Scasny, and Bigano (2016)⁽²⁰⁾ showed that Italians had a preference, among climate policy instruments, for subsidies over carbon taxes. Participants in a lab experiment by Heres, Kallbekken, and Galarraga (2015)⁽²¹⁾ similarly expected higher payoffs from subsidies than from taxes, especially when there was uncertainty on how tax revenues would be “rebated.” Ex ante, individuals tend to overestimate the cost of an environmental tax, and underestimate its benefits (Carattini et al., 2018⁽²²⁾; Odeck & Bråthen, 2002⁽²³⁾; Schuitema, Steg, & Forward, 2010⁽²⁴⁾). The literature in social psychology also suggests that individuals prefer subsidies because they are perceived as less coercive than taxes. Taxes are “pushed” onto polluters, imposing a mandatory cost, while subsidies are seen as “pull” measures, which supposedly reward climate-friendly behavior (de Groot & Schuitema, 2012⁽²⁵⁾; Rosentrater et al., 2012⁽²⁶⁾; Steg et al., 2006⁽²⁷⁾). 2. VsCarbon Taxation: Carbon taxes can be regressive. [Voters] perceive, rightly, that without counterbalancing measures carbon taxes may have a disproportionate negative impact on low-income households. These counterbalancing measures can, however, offset the adverse distributional effects of carbon taxes, and even make them progressive. Furthermore, it is important to keep in mind that alternative climate policy instruments such as subsidies for renewable energy can also have similar regressive effects and may not generate revenues to counter them (Baranzini et al., 2017)⁽²⁸⁾. 3. VsCarbon Taxation: Carbon taxes could damage the wider economy. This has been illustrated in Switzerland, where, in two different instances more than 10 years apart, concern about the potential competitiveness and employment effects of energy taxes contributed to their rejection in public ballots, even in the context of very limited unemployment (Carattini, Baranzini, Thalmann, Varone, & Vöhringer, 2017⁽²⁹⁾; Thalmann, 2004⁽³⁰⁾). While these concerns are partly justified, voters may tend to overestimate competitiveness and job effects. [This] may also result from specific information campaigns led by energy-intensive companies, as in the case of Australia (cf. Spash & Lo, 2012)⁽³¹⁾. 4. VsCarbon Taxation: Carbon taxes are believed not to discourage high-carbon behavior (…) (Klok, Larsen, Dahl, & Hansen, 2006⁽³²⁾; Steg et al., 2006⁽²⁷⁾). [Individuals] consider low-carbon subsidies to be a more powerful way to reduce greenhouse gas emissions, especially if the cost of switching from consuming high-carbon goods to low-carbon goods is considered high. [They] believe that the price elasticity of demand for carbon-intensive goods is close to zero. The expectation that carbon taxes do not work is one of the main reasons for their rejection by people in surveys and real ballots (Baranzini & Carattini, 2017⁽⁶⁾; Carattini et al., 2017⁽²⁹⁾; Hsu, Walters, & Purgas, 2008⁽³³⁾; Kallbekken & Aasen, 2010⁽³⁴⁾; Kallbekken & Sælen, 2011⁽³⁵⁾). Fankhauser I 4 5. VsCarbon Taxation: Governments may want to tax carbon to increase their revenues. [Individuals] assume—as a direct consequence of concern 4 above—that the purpose of introducing a carbon tax is not to reduce greenhouse gases but to increase government revenues (Klok et al., 2006)⁽³²⁾. Trust issues sometimes concern the specific environmental tax proposal under consideration, but they may also be broader, related to people's general view of tax policy or even to trust in the government itself (Baranzini & Carattini, 2017⁽⁶⁾; Beuermann & Santarius, 2006⁽³⁶⁾; Dietz, Dan, & Shwom, 2007⁽³⁷⁾; Hammar & Jagers, 2006⁽³⁸⁾). VsVs: Some of these perceptions are incorrect. There is evidence that carbon pricing does in fact reduce emissions (J. Andersson, 2015⁽³⁹⁾; Baranzini & Carattini, 2014⁽⁴⁰⁾; Martin, de Preux, & Wagner, 2014⁽⁴¹⁾) and has so far had a minimal impact on the wider economy, in terms of adversely affecting the competitiveness of domestic industry, at least in the presence of adjustments and specific measures tailored to support the most exposed firms (Dechezleprêtre & Sato, 2017)⁽¹⁷⁾. On the other hand, voters are right to suspect that governments would probably welcome the extra revenues. Indeed, its benign fiscal implications are often highlighted as one of the merits of a carbon tax (Bowen & Fankhauser, 2017)⁽¹¹⁾. It is also the case that carbon taxes are often regressive; without counter measures they may affect poor households disproportionately (Gough, Abdallah, Johnson, Ryan Collins, & Smith, 2012⁽⁴²⁾; Metcalf, 2009⁽⁹⁾; Speck, 1999⁽⁴³⁾; Sterner, 2011⁽⁴⁴⁾). (…) the accuracy of public perceptions is less important than the fact that they are widely held and can hinder the adoption of otherwise desirable policies. People's attitudes to carbon taxes appear to be influenced more by the direct personal cost of the measure than by an appreciation of the environmental objective (Kallbekken, Kroll, & Cherry, 2011)⁽⁴⁵⁾. Consequently, the public acceptability of an environmental tax depends heavily on its policy stringency, since the proposed tax rate determines the direct costs to consumers. >Emission permits, >Emission reduction credits, >Emission targets, >Emissions, >Emissions trading, >Climate change, >Climate damage, >Energy policy, >Clean Energy Standards, >Climate data, >Climate history, >Climate justice, >Climate periods, >Climate targets, >Climate impact research, >Carbon price, >Carbon price coordination, >Carbon price strategies, >Carbon tax, >Carbon tax strategies. 1. European Environment Agency (2016). Chapter 1. Overall progress towards the European Union's 20-20-20 climate and energy targets. In Trends and projections in Europe 2016—Tracking progress towards Europe's climate and energy targets (pp. 1–12). Brussels, Belgium: Author. 2. Baker, J. A. III, Feldstein, M., Halstead, T., Mankiw, N. G., Paulson, H. M. Jr., Schultz, G. P., … Walton, R. (2017). The conservative case for carbon dividends. Washington, DC: Climate Leadership Council. 3. World Bank. (2016). State and trends of carbon pricing 2016. Washington, DC: Author. 4. Goulder, L. H., & Parry, I. W. H. (2008). Instrument choice in environmental policy. Review of Environmental Economics and Policy, 2(2), 152–174. 5. Aldy, J. E., & Stavins, R. N. (2012). The promise and problems of pricing carbon: Theory and experience. The Journal of Environment and Development, 21(2), 152–180. 6. Baranzini, A., & Carattini, S. (2017). Effectiveness, earmarking and labeling: Testing the acceptability of carbon taxes with survey data. Environmental Economics and Policy Studies, 19(1), 197–227. 7. Baumol, W. J., & Oates, W. E. (1971). The use of standards and prices for protection of the environment. The Swedish Journal of Economics, 73(1), 42–54. 8. Mankiw, N. G. (2009). Smart taxes: An open invitation to join the Pigou club. Eastern Economic Journal, 35(1), 14–23. 9. Metcalf, G. E. (2009). Designing a carbon tax to reduce U.S. greenhouse gas emissions. Review of Environmental Economics and Policy, 3(1), 63–83. 10. Weitzman, M. L. (2015). Voting on prices vs. voting on quantities in a World Climate Assembly (NBER Working Paper No. 20925). Boston, MA: National Bureau of Economic Research. 11. Bowen, A., & Fankhauser, S. (2017). Good practice in low-carbon policy. In A. Averchenkova, S. Fankhauser, & M. Nachmany (Eds.), Climate change legislation (pp. 123–140). London, England: Edward Elgar. 12. Dresner, S., Dunne, L., Clinch, P., & Beuermann, C. (2006). Social and political responses to ecological tax reform in Europe: An introduction to the special issue. Energy Policy, 34(8), 895–904. 13. Drews, S., & van den Bergh, J. C. J. M. (2015). What explains public support for climate policies: A review of empirical and experimental studies. Climate Policy, 16(7), 1–20. 14. Oates, W. E., & Portney, P. R. (2003). The political economy of environmental policy. In K.-G. Mäler & J. R. Vincent (Eds.), Handbook of environmental economics (pp. 325–354). Elsevier Science B.V. 15. Hammar, H., Löfgren, A., & Sterner, T. (2004). Political economy obstacles to fuel taxation. The Energy Journal, 25(3), 1–17. 16. van Asselt, H., & Brewer, T. (2010). Addressing competitiveness and leakage concerns in climate policy: An analysis of border adjustment measures in the US and the EU. Energy Policy, 38(1), 42–51. 17. Dechezleprêtre, A., & Sato, M. (2017). The impacts of environmental regulations on competitiveness. Review of Environmental Economics and Policy, 11(2), 183–206. 18. Neuhoff, K., Ancygier, A., Ponssardet, J., Quirion, P., Sartor, O., Sato, M., & Schopp, A. (2015). Modernization and innovation in the materials sector: Lessons from steel and cement. Berlin, Germany: Climate Strategies and DIW Berlin. Retrieved from http://climatestrategies.org/publication/modernization-and-innovation-in-thematerials- sector-lessons-from-steel-and-cement/ 19. Jagers, S. C., & Hammar, H. (2009). Environmental taxation for good and for bad: The efficiency and legitimacy of Sweden's carbon tax. Environmental Politics, 18(2), 218–237. 20. Alberini, A., Scasny, M., & Bigano, A. (2016). Policy vs individual heterogeneity in the benefits of climate change mitigation: Evidence from a stated-preference survey (FEEM Working Paper No. 80.2016). Milan, Italy: FEEM 21. Heres, D. R., Kallbekken, S., & Galarraga, I. (2015). The role of budgetary information in the preference for externality-correcting subsidies over taxes: A lab experiment on public support. Environmental and Resource Economics, 66(1), 1–15. 22. Carattini, S., Baranzini, A., & Lalive, R. (2018). Is taxing waste a waste of time? Evidence from a supreme court decision. Ecological Economics, 148, 131–151. 23. Odeck, J., & Bråthen, S. (2002). Toll financing in Norway: The success, the failures and perspectives for the future. Transport Policy, 9(3), 253–260. 24. Schuitema, G., Steg, L., & Forward, S. (2010). Explaining differences in acceptability before and acceptance after the implementation of a congestion charge in Stockholm. Transportation Research Part A: Policy and Practice, 44(2), 99–109. 25. de Groot, J. I. M., & Schuitema, G. (2012). How to make the unpopular popular? Policy characteristics, social norms and the acceptability of environmental policies. Environmental Science and Policy, 19–20, 100–107. 26. Rosentrater, L. D., Sælensminde, I., Ekström, F., Böhm, G., Bostrom, A., Hanss, D., & O'Connor, R. E. (2012). Efficacy trade-offs in individuals' support for climate change policies. Environment and Behavior, 45(8), 935–970. 27. Steg, L., Dreijerink, L., & Abrahamse, W. (2006). Why are energy policies acceptable and effective? Environment and Behavior, 38(1), 92–111. 28. Baranzini, A., van den Bergh, J. C. J. M., Carattini, S., Howarth, R. B., Padilla, E., & Roca, J. (2017). Carbon pricing in climate policy: Seven reasons, complementary instruments, and political economy considerations. WIREs Climate Change, 8(4), 1–17. 29. Carattini, S., Baranzini, A., Thalmann, P., Varone, P., & Vöhringer, F. (2017). Green taxes in a post-Paris world: Are millions of nays inevitable? Environmental and Resource Economics, 68(1), 97–128. 30. Thalmann, P. (2004). The public acceptance of green taxes: 2 million voters express their opinion. Public Choice, 119, 179–217. 31. Spash, C. L., & Lo, A. Y. (2012). Australia's carbon tax: A sheep in wolf's clothing? The Economic and Labour Relations Review, 23(1), 67–86. 32. Klok, J., Larsen, A., Dahl, A., & Hansen, K. (2006). Ecological tax reform in Denmark: History and social acceptability. Energy Policy, 34(8), 905–916. 33. Hsu, S. L., Walters, J., & Purgas, A. (2008). Pollution tax heuristics: An empirical study of willingness to pay higher gasoline taxes. Energy Policy, 36(9), 3612–3619. 34. Kallbekken, S., & Aasen, M. (2010). The demand for earmarking: Results from a focus group study. Ecological Economics, 69(11), 2183–2190. 35. Kallbekken, S., & Sælen, H. (2011). Public acceptance for environmental taxes: Self-interest, environmental and distributional concerns. Energy Policy, 39(5), 2966–2973. 36. Beuermann, C., & Santarius, T. (2006). Ecological tax reform in Germany: Handling two hot potatoes at the same time. Energy Policy, 34(8), 917–929. 37. Dietz, T., Dan, A., & Shwom, R. (2007). Support for climate change policy: Social psychological and social structural influences. Rural Sociology, 72(2), 185–214. Doda, B. (2016). How to price carbon in good times ... and bad! WIREs Climate Change, 7(1), 135–144. 38. Hammar, H., & Jagers, S. C. (2006). Can trust in politicians explain individuals' support for climate policy? The case of CO2 tax. Climate Policy, 5(6), 613–625. 39. Andersson, J. (2015). Cars, carbon taxes and CO2 emissions (Grantham Research Institute on Climate Change and the Environment Working Paper 212/Centre for Climate Change Economics and Policy Working Paper 238). London, England: London School of Economics and Political Science. 40. Baranzini, A., & Carattini, S. (2014). Taxation of emissions of greenhouse gases: The environmental impacts of carbon taxes. In B. Freedman (Ed.), Global environmental change (pp. 543–560). Heidelberg, Germany and New York, NY: Springer. 41. Martin, R., de Preux, L. B., & Wagner, U. J. (2014). The impact of a carbon tax on manufacturing: Evidence from microdata. Journal of Public Economics, 117, 1–14. 42. Gough, I., Abdallah, S., Johnson, V., Ryan Collins, J., & Smith, C. (2012). The distribution of total greenhouse gas emissions by households in the UK, and some implications for social policy. London, England: Centre for Analysis of Social Exclusion. 43. Speck, S. (1999). Energy and carbon taxes and their distributional implications. Energy Policy, 27(11), 659–667. 44. Sterner, T. (Ed.). (2011). Fuel taxes and the poor: The distributional effects of gasoline taxation and their implications for climate policy. Abingdon, England: Routledge. 45. Kallbekken, S., Kroll, S., & Cherry, T. L. (2011). Do you not like Pigou, or do you not understand him? Tax aversion and revenue recycling in the lab. Journal of Environmental Economics and Management, 62(1), 53–64. Stefano Carattini, Maria Carvalho & Sam Fankhauser, 2018: “Overcoming public resistance to carbon taxes”. In: Stéphane Hallegatte, Mike Hulme (Eds.), WIREs Climate Change, Vol. 9/5, pages 1-26.	Fankhauser I Samuel Fankhauser Stefano Carattini Maria Carvalho, Overcoming public resistance to carbon taxes 2018
Carbon Taxation Strategies	Geroe	Geroe I 18 Carbon Taxation Strategies/Business Tax/Investment Incentives/Geroe: Adjustments to business taxes to mitigate the commercial impacts of a carbon tax could be implemented so as to maximize emissions reductions. Rather than an across-the-board approach under which all liable entities received a fixed reduction in specified other taxes, a tiered approach could be adopted. For example, power generators could earn reductions in other taxes on the basis of percentage of certified reductions in emissions under a coal-fired generation baseline. So, potentially, a solar power station could obtain close to a 100% tax exemption, a hybrid solar-natural gas station say a 30% reduction, or a coalfired power station with carbon geosequestration 5% to 80% reduction based on the actual proportion of emissions verifiably sequestered. This approach could support emissions reductions at significantly lower levels of carbon taxation/prices than would otherwise be the case. It would also enable financing of currently expensive clean energy technologies at a significantly reduced rate of subsidy, FIT [federal income tax], or other state-based support. This approach is comparable with the Clean Energy Target design recommended by the Finkel report on energy security for the Australian government, under which certificates would be based on percentage reductions below an emissions intensity baseline (Finkel, Moses, Effeney, & O’Kane, 2017)⁽¹⁾. Various tax incentives have been used to incentivize low-carbon investments more generally, such as energy efficiency projects. In terms of both social equity and political feasibility, this tax reduction approach is superior to taxing low-carbon projects at a rate equal to high-polluting industries and passing on higher costs for clean energy (under RPS, FIT, and carbon pricing policies) to consumers. In addition, trade-exposed (and other) industries could receive enhanced tax write-offs for energy efficiency expenditures, as an alternative either to exemption from scheme coverage, receipt of free permits (‘‘grandfathering’’) under an ETS, or to mitigate compensation requirements. This approach would maintain the incentive to invest in low-emissions technology Geroe I 19 inherent in a price on carbon while also mitigating carbon leakage and loss of international competitiveness. >Carbon Taxation Strategies/Fankhauser. >Emission permits, >Emission reduction credits, >Emission targets, >Emissions, >Emissions trading, >Climate change, >Climate damage, >Energy policy, >Clean Energy Standards, >Climate data, >Climate history, >Climate justice, >Climate periods, >Climate targets, >Climate impact research, >Carbon price, >Carbon price coordination, >Carbon price strategies, >Carbon tax, >Carbon tax strategies. 1. Finkel, A., Moses, K., Effeney, T., & O’Kane, M. (2017). Independent review into the future security of the national electricity market (Report for the Australian Commonwealth Government). Retrieved from https://www.energy.gov.au/government-priorities/energy-markets/independent-review-future-security-national-electricity-market. Steven Geroe, 2019: “Addressing Climate Change Through a Low-Cost, High-Impact Carbon Tax”. In: Journal of Environment & Development, Vol. 28/1, pp. 3-27.	Geroe I Steven Geroe Addressing Climate Change Through a Low-Cost, High-Impact Carbon Tax 2019
Central Bank	Taylor	Taylor III Inflation targeting/interest rates/central banking/Wages/Economics/TaylorVsSummers/TaylorVsStansbury/Lance Taylor: Regarding inflation, both central banks and [Summers and Stansbury] ignore the facts that inflation is a cumulative process driven by conflicting claims to income and wealth and that for the past five decades profits have captured almost all the claims. >Inflation targeting/Summers. Consider the real “product wage,” the nominal or money wage divided by a producer price index (PPI) to correct for cost inflation confronting business. A little algebra (…) shows that the labor or wage share of output, which equals real “unit labor cost,” is equal to the real wage divided by productivity or the output/labor ratio. The profit share equals one minus the wage share. (…) the profit share and growth rates of real wages and productivity have varied over time (…). The growth rate of nominal unit labor cost is the difference between rates of wage and productivity growth. As with the other labor market indicators, cost growth slowed after 2000. To unravel the dynamics, we need a theory of inflation. Around the turn of the 20th century the Swedish economist Knut Wicksell pointed out that inflation is a “cumulative process” involving feedback between price and wage inflation rates. Even after their long decline [it] shows that labor payments still make up 55% of production costs and have to enter inflation accounting. The “real balance effect” (or the “inflation tax” in a dynamic version) says that a jump in the price level will reduce the real value of assets with prices fixed in nominal terms – money is the usual example. Wealth is eroded and households are supposed to save more as a consequence. Along with a wage lag, the real balance effect is the key adjustment mechanism in Milton Friedman’s (1968) “inflation” model which still underlies contemporary monetary policy. “Forced saving” happens when a price jump against a constant money wage reduces real payments to wage-earners. If their capacity to borrow is limited, they have to cut consumption, sliding the demand curve downward. If an expansionary package does drive up the price level, middle class and low income households who rely on wages would be the ones to suffer. Conflict arises because price increases are controlled by business while the money wage is subject to bargaining between business and labor. Both sides seek to manipulate the labor share as a key distributional indicator. In an overall inflationary environment, business can respond immediately to increases in the wage share or output by pushing up the rate of price increase in Phillips curve fashion along the “Inflation” schedule (…). Money wages on the other hand are not immediately indexed to price inflation so that they will follow with a lag. Labor will push for faster wage inflation when the wage share is low. Suppose that there is an initial inflation equilibrium (…). The [Summers and Stansbury] proposal to use fiscal policy to stimulate aggregate demand would shift the inflation locus upward (…) with more rapid inflation and a somewhat lower wage share in macro equilibrium (…) along the stable share schedule. In light of the vanishing NAIRU [Non Accelerating Inflation Rate of Unemployment] over the past two decades, it is not clear how strong this upward shift could be. The way that expansionary policy could pay off in terms of inequality and (possibly) faster inflation would be though an upward movement in the stable share schedule if the labor market tightens, leading to greater bargaining power for labor. The new Keynesian inventors are now the ruling elders of macroeconomics, unlikely to change their minds. (…) [Summers and Stansbury] might remember with Max Planck that science advances one funeral at a time. They are certainly correct in saying that “the role of particular frictions and rigidities in underpinning economic fluctuations should be de-emphasized relative to a more fundamental lack of aggregate demand.” (…) many of the correct observations that [Summers and Stansbury] make about the likely ineffectiveness of interest rate changes were raised almost 90 years ago by Keynes’s colleague Piero Sraffa (1932a⁽¹⁾, 1932b⁽²⁾) in a controversy with Friedrich von Hayek. Sraffa’s main emphasis was on the inapplicability of a “natural rate” of interest, a point amplified by Keynes in the General Theory. The natural rate, nevertheless, remains a topic of great interest to left-leaning new Keynesians. How they reconcile that idea with the fiscalist Keynesian perspective adoped by [Summers and Stansbury] remains to be seen. >Central banking/Summers. 1. Sraffa, Piero (1932a) “Dr. Hayek on Money and Capital,” Economic Journal, 42: 42-53. 2. Sraffa, Piero (1932b) “Money and Capital: A Rejoinder,” Economic Journal, 42: 249-25. Taylor, Lance: Central Bankers, Inflation, and the Next Recession, in: Institute for New Economic Thinking (03/09/19), URL: http://www.ineteconomics.org/perspectives/blog/central-bankers-inflation-and-the-next-recession	EconTayl I John Brian Taylor Discretion Versus Policy Rules in Practice 1993 Taylor III Lance Taylor Central Bankers, Inflation, and the Next Recession, in: Institute for New Economic Thinking (03/09/19), URL: http://www.ineteconomics.org/perspectives/blog/central-bankers-inflation-and-the-next-recession 9/3/2019 TaylorB II Barry Taylor "States of Affairs" In Truth and Meaning, G. Evans/J. McDowell Oxford 1976 TaylorCh I Charles Taylor The Language Animal: The Full Shape of the Human Linguistic Capacity Cambridge 2016
Climate Data	Edwards	I 56 Climate data/Edwards: For long-term climate analyses - particularly climate change analyses - to be accurate, the climate data used must be homogeneous. A homogeneous climate time series is defined as one where variations are caused only by variations in weather and climate. Unfortunately, most long-term climatological time series have been affected by a number of non-climatic factors that make these data unrepresentative of the actual climate variation occurring over time. These factors include changes in: instruments, observing practices, station locations, formulae used to calculate means, and station environment.⁽¹⁾ Edwards: to decide whether you are seeing homogeneous data or “non-climatic factors,” you need to examine the history of the infrastructure station by station, year by year, and data point by data point, all in the context of changing standards, institutions, and communication techniques. >Infrastructure/Edwards. Since the 1950s, standardization and automation have helped to reduce the effect of “non-climatic factors” on data collection, and modeling techniques I 57 have allowed climatologists to generate relatively homogeneous data sets from heterogeneous sources.⁽²⁾ But it is impossible to eliminate confounding factors completely. I 58 (…) only about ten percent of the data used by global weather prediction models originate in actual instrument readings. The remaining ninety percent are synthesized by another computer model: the analysis or “4-dimensional data assimilation” model, which creates values for all the points on a high-resolution, three-dimensional global grid. >Reanalysis/Climatology. I 356 Data globalization: (…) making data global is an ex post facto mode of standardization, dealing with deviation and inconsistency by containing the entire standardization process in a single place—a “center of calculation,” in Bruno Latour’s words.⁽³⁾ >Weather forecasting/Edwards. I 381 Time/assimilation: Analysis produced through 4-D data assimilation thus represented an extremely complex model of data, far removed from the raw observations. With many millions of gridpoint values anchored to fewer than 100,000 observations, one could barely even call the analysis “based” on observations I 382 in any ordinary sense. As the data assimilation expert Andrew Lorenc put it, “assimilation is the process of finding the model representation which is most consistent with the observations.” >Weather forecasting/Edwards, >Homogenization/climatology, >Model bias/climatology. Cf. >Emission permits, >Emission reduction credits, >Emission targets, >Emissions, >Emissions trading, >Climate change, >Climate damage, >Energy policy, >Clean Energy Standards, >Climate data, >Climate history, >Climate justice, >Climate periods, >Climate targets, >Climate impact research, >Carbon price, >Carbon price coordination, >Carbon price strategies, >Carbon tax, >Carbon tax strategies. 1. T. C. Peterson et al., “Homogeneity Adjustments of In Situ Atmospheric Climate Data: A Review,” International Journal of Climatology 18 (1998): 1493– 2. D. R. Easterling et al., “On the Development and Use of Homogenized Climate Datasets,” Journal of Climate 9, no. 6 (1996): 1429–; T. Karl et al., “Long-Term Climate Monitoring by the Global Climate Observing System (GCOS),” Climatic Change 31 (1995): 135–; Peterson et al., “Homogeneity Adjustments”; R. G. Quayle et al., “Effects of Recent Thermometer Changes in the Cooperative Station Network,” Bulletin of the American Meteorological Society 72, no. 11 (1991): 1718–. 3. B. Latour. 1987. Science in Action. Cambridge: Harvard University Press 4. Lorenc A.C. (2002) Atmospheric Data Assimilation and Quality Control. In: Pinardi N., Woods J. (eds) Ocean Forecasting. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-22648-3_5.	Edwards I Paul N. Edwards A Vast Machine: Computer Models, Climate Data, and the Politics of Global Warming Cambridge 2013
Corporate Law	Economic Theories	Parisi I 50 Corporate Law/Economic theories/Gelbach/Klick: One area of law and economics where empirical work has been slow to adopt the modern quasi-experimental approach is corporate law and economics. In this area, the standard approach to empirical inquiry involves the use of event studies to deduce the effect of various public policies or internal corporate governance mechanisms on firm value.* Event studies/model: Event studies in this literature generally follow a fairly simple recipe. A researcher identifies the timing of the event of interest and assumes that the effect of this event will be capitalized into the value of the asset in question, Parisi I 51 appealing to the assumption of semi-strong market efficiency. The researcher then estimates a time series model of the asset’s returns based upon the historical relationship between the asset’s returns and other covariates, usually including some proxy for the market return. Based upon this model, the researcher predicts the asset’s return at the time of the event. The researcher then calculates the excess return for the event date, which is the difference between the actual return at the time of the event and the predicted counterfactual return. This excess return is then standardized to account for the volatility of the asset (i.e., the excess return is normalized by dividing by some measure of volatility of the asset’s return such as the standard deviation of non-event day excess returns), and statistical inferences are made. (see Bhaghat and Romano 2002)⁽³⁾, (see Gelbach, Helland, and Klick, 2013)⁽⁴⁾. Event studies: Expressed this way, it is easy to see that event studies are functionally equivalent to estimating a simple before-and-after time series model with no comparison group. Manne’s hypothesis/hostile takeover: It has also been used by Jonathan Klick and Robert Sitkoff to study Henry Manne’s market-for-corporate-control hypothesis (Klick and Sitkoff, 2008)⁽⁵⁾. This hypothesis states that for publicly held firms, the possibility of a hostile takeover will discipline a firm’s managers, forcing them to maximize firm value even if the firm’s board is less than perfect in its monitoring. Klick and Sitkoff exploit the political economy dynamics that surrounded an attempt to sell the controlling interest in the Hershey Company in 2002. Parisi I 52 Results from Klick and Sitkoff’s study offer credible support for the Manne hypothesis, even though they amount to standard before-and-after analysis, because the events in question did not appear to be confounded by any other systematic changes. Literature: As Vladimir Atanasov and Bernard Black discuss in a recent literature review, it is rare for empirical research in corporate finance, including research done by law and economics scholars, to focus on the kinds of natural experiments (...). (Atanasov and Black, 2014)⁽⁶⁾. >Economic models/Gelbach/Klick. Comparison: While comparison groups are sometimes used indirectly for so-called falsification tests, or as general control variables, it is rare that they are used to generate difference in differences estimates. One notable exception is provided by Michael Greenstone, Paul Oyer, and Annette Vissing-Jorgensen (2006)⁽⁷⁾, who re-examine the issue of mandatory disclosure that had previously been studied at least as far back as George Stigler’s famous 1964 study (Stigler, 1964)⁽⁸⁾. Contrary to findings in much of the previous literature that had not employed counterfactual comparison groups, these authors found that mandatory disclosure had significant effects on the returns of the affected firms. * Fama et al. (1969)⁽¹⁾ is often credited as the first event study. However, as noted by Newhard (2014), Armen Alchian had performed one in 1954 while he was working at Rand to deduce the fusion fuel being used in the newly developed hydrogen bomb using stock prices of firms providing the candidate fuels. This paper was never published since it was deemed a threat to national security. 1. Fama, Eugene, Lawrence Fisher, Michael C. Jensen, and Richard Roll (1969). “The Adjustment of Stock Prices to New Information.” International Economic Review 10(1): 1–21. 2. Newhard, Joseph Michael (2014). “The Stock Market Speaks: How Dr. Alchian Learned to Build the Bomb.” Journal of Corporate Finance 27: 116–132. 3. Bhagat, Sanjai and Robert Romano (2002). “Event Studies and the Law: Part I: Technique and Corporate Litigation.” American Law and Economics Review 4(1): 141–168. 4. Gelbach, Jonah, Eric Helland, and Jonathan Klick (2013). “Valid Inference in Single-Firm Single-Event Studies.” American Law and Economics Review 15(2): 495–541. 5. Klick, Jonathan and Robert Sitkoff (2008). “Agency Costs, Charitable Trusts, and Corporate Control: Evidence from Hershey’s Kiss-Off.” Columbia Law Review 108(4): 749–838. 6. Atanasov, Vladimir and Bernard Black (2014). “Shock-Based Causal Inference in Corporate Finance Research.” Northwestern Law and Economics Research Paper 11-08. 7. Greenstone, Michael, Paul Oyer, and Annette Vissing-Jorgenson (2006). “Mandated Disclosure, Stock Returns, and the 1964 Securities Acts Amendments.” Quarterly Journal of Economics 121(2): 399–460. 8. Stigler, George J. (1964). “Public Regulation of the Securities Markets.” Journal of Business 37(2): 117–142. Gelbach, Jonah B. and Jonathan Klick „Empirical Law and Economics“. In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University Press.	Parisi I Francesco Parisi (Ed) The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017
Correspondence Theory	James	Diaz-Bone I 88 PragmatismVsCorrespondence theory: Conformity in James, the dichotomy true/false is softened. (> realization,> adjustment). --- Horwich I 22 Correspondence/accordance/pragmatism/James: only here does he begin to distinguish himself from "intellectualism": Accordance/James: accordance means first "to copy", but e.g. our word for clock is not a copy, but a symbol, which can replace a representation image very well. Symbol/James: for many things there are no "copies" at all, only symbols: e.g. "past", "force", "spontaneity", etc. Correspondence: can only mean proper guidance here. Namely, practically as well as intellectually. Horwich I 23 It leads to consistency, stability and fluid human communication. ⁽¹⁾ 1. William James (1907) "Pragmatisms Conception of Truth“ (Journal of Philosophy, Psychology and Scientific Methods, 4 p. 141-55 and 396-406) in: Paul Horwich (Ed.) Theories of Truth, Aldershot 1994	James I R. Diaz-Bone/K. Schubert William James zur Einführung Hamburg 1996 Horwich I P. Horwich (Ed.) Theories of Truth Aldershot 1994
Currency Boards	Congressional Research Service (CRS)	CRS I 1 Currency Boards/Marc Labonte/CRS: A political advantage of a currency board or currency union in a country with a profligate past is that it “ties the hands” of the monetary and fiscal authorities, making it harder to finance budget deficits by printing money. Recent experience with economic crisis in Mexico, East Asia, Russia, Brazil, and Turkey suggests that fixed exchange rates can be prone to currency crises that can spill over into wider economic crises. This is a factor not considered in the earlier exchange rate literature, in part because international capital mobility plays a greater role today than it did in the past. These experiences suggest that unless a country has substantial economic interdependence with a neighbor to which it can fix its exchange rate, floating exchange rates may be a better way to promote macroeconomic stability, provided the country is willing to use its monetary and fiscal policy in a disciplined fashion. The collapse of Argentina’s currency board in 2002 suggests that such arrangements do not get around the problems with fixed exchange rates, as their proponents claimed. This report does not track legislation and will be updated as events warrant. >Currency policy, >Fixed exchange rates, >Floating exchange rates. CRS I 5 Currency boards/Marc Labonte/CRS: A currency board is a monetary arrangement where a country keeps its own currency, but the central bank cedes all of its power to alter interest rates, and monetary policy is tied to the policy of a foreign country. For example, Hong Kong has a currency board linked to the U.S. dollar. Argentina had a similar arrangement which it abandoned in 2002, during its economic crisis. In Argentina, for every peso of currency in circulation the Argentine currency board held one dollar-denominated asset, and was forbidden from buying and selling domestic assets. Thus, the amount of pesos in circulation could only increase if there was a balance of payment surplus. In effect, the exchange rate at which Argentina competed with foreign goods was set by the United States. Because exchange rate adjustment was not possible, adjustment had to come through prices (i.e., inflation or deflation) instead. Domestically, because the central bank could no longer alter the money supply to change interest rates, the economy could only recover from peaks and valleys of the business cycle through gradual price adjustment. >Hard pegs, >Soft pegs, >Fixed exchange rates, >Floating exchange rates, >Currency Unions. Congressional Research Service of the Library of congress (CRS) Fixed Exchange Rates and Floating Exchange Rates: What Have We Learned? RL31204 (2007) https://www.congress.gov/crs-product/RL31204	CRS I Congressional Research Service (CRS) Marc Labonte Fixed Exchange Rates and Floating Exchange Rates: What Have We Learned? Washington: Congressional Research Service of the Library of Congress 2007 CRS II Congressional Research Service (CRS) Paul Tierno Marc Labonte, Banking and Cryptocurrency: Policy Issues. CRS Congressional research Service Report R48430. Washington, DC. 2025 CRS III Congressional Research Service (CRS) Corrie E. Clark Heather L. Greenley, Bitcoin, Blockchain, and the Energy Sector. Washington, DC. 2019 CRS IV Congressional Reserch Service (CRS) Paul Tierno Cryptocurrency: Selected Policy Issues Congressional Reserch Service CRS Report R47425 Washington, DC. 2023
Currency Depreciation	Benguria	Benguria I 1 Currency Appreciation/depreciation/tariffs/Benguria/Saffie: We find* that a one percentage point higher tariff is associated with a statistically significant 0.23%decline in stock prices. Further, we find no evidence of a dollar appreciation; if anything, higher tariffs are associated with a dollar depreciation, driven by countries with a floating regime. We show this is consistent with a model that allows for trade reallocation and in which exports to the US are invoiced in dollars while exports to the rest of the world are partly invoiced in producer currency. Benguria I 2 Across several specifications with various controls, we find a bilateral depreciation of the dollar. This is driven by countries with a floating exchange rate regime, and is statistically significant only in some of our regressions. This goes against what we would expect from existing theory, which indicates that US tariffs would reduce demand for foreign currencies, leading to a dollar appreciation. If US imports are invoiced in US dollars, we would expect no or small response in the exchange rate. We find that these results are robust to including in our regressions a component capturing the product exclusions in the tariff announcement. >Currency, >Share prices, >Stock prices, >Elasticity. Benguria I 13 Tariffs/currency depreciation/Benguria/Saffie: In the standard model of trade and exchange rates, a US tariff would reduce demand for foreign currencies, leading to a dollar appreciation. We develop a simple model* which departs from the standard model by changing its assumptions about invoicing currencies and about trade reallocation in response to tariffs. In both regards, our assumptions are guided by well-established empirical facts. This simple variation delivers the opposite result: a US tariff leads to a dollar depreciation. The assumption about invoicing patterns is the following. Exports to the US are invoiced in US dollars. Exports to the rest of the world are invoiced partly in dollars and partly in the currency of the exporting country (producer currency, using the terminology in the literature). This assumption is consistent with the evidence in the literature on invoice currencies in trade [Boz et al., 2022⁽¹⁾, Gopinath and Rigobon, 2008⁽²⁾]. Benguria I 14 The assumption about export reallocation is that US tariffs lead to a decline in exports to the US but an increase in exports to the rest of the world. This reallocation can be microfounded by assuming an increasing marginal cost. This mechanism is featured in Benguria and Saffie [2024](3) and Almunia et al. [2021](4). Further, Benguria and Saffie [2024](3) show that in there is a substantial amount of trade reallocation in response to trade war tariffs. Combining both assumptions, a tariff imposed by the US on a given country leads to a decrease in exports to the US and an increase in exports to the rest of the world. Because only exports to the rest of the world are invoiced in producer currency, this leads to a higher relative demand for producer currency. This implies an appreciation of the producer currency (i.e., a depreciation of the US dollar). We now provide a mathematical overview. In Appendix Section A.4, we provide the microfoundations for this model by assuming an increasing marginal cost. For this purpose, we extend the model in Benguria and Saffie [2024]⁽³⁾ by including assumptions about invoice currencies. Benguria I 15 Stock prices: This model also predicts a decline in stock prices in response to a US tariff. *Felipe Benguria Felipe Saffie . (2025) Rounding up the Effect of Tariffs on Financial Markets: Evidence from April 2, 2025. NBER Working Paper 34036 http://www.nber.org/papers/ 1050. 1. E. Boz, C. Casas, G. Georgiadis, G. Gopinath, H. Le Mezo, A. Mehl, and T. Nguyen. Patterns of invoicing currency in global trade: New evidence. Journal of International Economics, 136:103604, 2022. 2. G. Gopinath and R. Rigobon. Sticky borders. The Quarterly Journal of Economics, 123(2):531–575, 2008. 3. F. Benguria and F. Saffie. Escaping the trade war: Finance and relational supply chains in the adjustment to trade policy shocks. Journal of International Economics, 152:103987, 2024. 4. M. Almunia, P. Antras, D. Lopez-Rodriguez, and E. Morales. Venting out: Exports during a domestic slump. American Economic Review, 111(11):3611–62, 2021.	Benguria I Felipe Benguria Felipe Saffie Rounding up the Effect of Tariffs on Financial Markets: Evidence from April 2, 2025. NBER Working Paper 34036 http://www.nber.org/papers/ 1050. Cambridge, MA 2025
Death	Developmental Psychology	Upton I 159 Death/Developmental psychology/Upton: There are enormous differences in children’s understanding of loss and how they cope with bereavement. This has often been understood in terms of the children’s cognitive development. Most researchers believe that infants have no understanding of death, but as infants develop an attachment to a carer they can experience loss or separation. Between the ages of three and five, children have little idea of what death is. They may confuse death and sleep, and believe that the dead can be brought back to life. In middle to late childhood, understanding about death becomes more realistic. However, research suggests that it is not until nine years and over that children really understand the finality of death (Cuddy-Casey and Orvaschel. 1997)⁽¹⁾. Kastenbaum (2000)⁽²⁾ suggests that the confusion and misunderstanding about death that has been observed in children simply reflects their attempts to try to come to terms with and fully understand what death is and what it means. It has also been observed that children begin to develop a more logical understanding of what death is through experience - for example, when a grandparent or even a much-loved pet dies (Hayslip and Hansson, 2003)⁽³⁾. If this is true, Kellehear (2005)⁽⁴⁾ is right to be concerned about the distancing of death and dying from the family and community (…). >Dying. 1. Cuddy-Casey, M and Orvaschel, H (1997) Children’s understanding of death in relation to child suicidality and homicidality. Clinical Psychology Review, 17: 33-45. 2. Kastenbaum, R (2000) The Psychology of Death. New York: Springer Link. 3. Hayslip, B and Hansson, RO (2003) Death awareness and adjustment across the life span, in Bryant, CD (ed.) Handbook of Death and Dying. Thousand Oaks, CA: Sage. 4. Kellehear, A. (2005) Compassionate Cities: Public health and end of life care. Milton Park: Routledge.	Upton I Penney Upton Developmental Psychology 2011
Deflation	Rothbard	Rothbard II 205 Deflation/Rothbard: (…) any inflationary boom, especially that of a lengthy and major war, will collapse at war's end into depression and deflation. Much of the deflation [at the beginning of the 19th century] was the result of the postwar depression and bankruptcies, for the initial postwar deflation occurred years before the actual return to gold or even the passage of the Resumption Act. The postwar depression was the market's way of readjusting the economy to the enormous distortions of production and investment brought about by the skewed demands of wartime and the inflationary credit boom. In Short, the postwar depression was the painful but necessary process of liquidating the distortions of the wartime inflation and of returning to a healthy peacetime economy effciently serving the consumers. Another cause of the deflation was industrial and economic progress. The end of the war liberated England to launch one of the greatest periods of economic growth in its history. The Industrial Revolution could at last develop freely and raise the standard of living of the mass of Englishmen -something it could not do when the industrial engine had been diverted to the unproductive waste of war. As a result of the great increase ofproduction, prices kept falling in Britain throughout the 1820s - long past the time when this welcome drop in the cost of living, this 'deflation', could plausibly be blamed on the return to gold in 1821. The anti-deflation hysteria and the desire to keep inflating delayed the return to gold for five years after 1816. When it became clear that there would be no immediate resumption, the pound began to depreciate again, the price of silver bullion rising from 2 per cent above par in 1816 to 12 per cent premium on 1818. Similarly, the foreign exchange rate at Hamburg rose from par to 5 per cent above. And domestic prices rose from 135 in 1816 to 150 two years later. The weakening of the pound by disappointed expectations ofimmediate resumption was also greatly compounded by an expansion of bank advances and note issues. >Deflation/Copleston. Rothbard III 1005 Deflation/Rothbard: (…) when deflation takes place first on the Ioan market, i.e., as credit contraction by the banks - and this is almost always the case - this will have the beneficial effect of speeding up the depression-adjustment process. Credit contraction/rate of interest: For credit contraction creates higher price differentials. And the essence of the required adjustment is to return to higher price differentials, i.e., a higher "natural" rate of interest. Gains and losses/calculation: Furthermore, deflation will hasten adjustment in yet another way: for the accounting error of inflation is here reversed, and businessmen will think their losses are more, and profits less, than they really are. Hence, they will save more than they would have With correct accounting, and the increased saving will speed adjustment by supplying some of the needed deficiency of savings. Equilibrium: It may well be true that the deflationary process will overshoot the free-market equilibrium point and raise price differentials and the interest rate above it. But if so, no harm will be done, since a credit contraction can create no malinvestments and therefore does not generate another boom-bust cycle.⁽¹⁾ And the market will correct the error rapidly. Income: When there is such excessive contraction, and consumption is too high in relation to savings, the money income of businessmen is reduced, and their spending on factors declines - especially in the higher orders. Factors of production: Owners of original factors, receiving Iower incomes, will spend less on consumption, price differentials and the interest rate will again be Iowered, and the free-market consumption/investment ratios will be speedily restored. Visibility/measuring: Just as inflation is generally popular for its narcotic effect, deflation is always highly unpopular for the opposite reason. The contraction of money is visible; the benefits to those whose buying prices fall first and who lose money last remain hidden. And the illusory accounting losses of deflation make businesses believe that their losses are greater, or profits smaller, than they actually are, and this will aggravate business pessimism. Rothbard III 1006 Unemployment: Some may object that deflation "causes" unemployment. RothbardVs: However (…) deflation can lead to continuing unemployment only if the government or the unions keep wage rates above the discounted marginal value products of labor. Wages: If wage rates are allowed to fall freely, no continuing unemployment will occur. >Credit expansion/Rothbard. 1. If some readers are tempted to ask why credit contraction will not lead to the opposite type of malinvestment to that of the boom - overinvestment in Iower-order capital goods and underinvestment in higher-order goods - the answer is that there is no arbitrary choice open of investing in higher-order or Iower-order goods. Increased investment must be made in the higher-order goods - in lengthening the structure of production. A decreased amount of investment simply cuts down on higher-order investment. There will thus be no excess of investment in the Iower orders, but simply a shorter structure than would otherwise be the case. Contraction, unlike expansion, does not create positive malinvestments.	Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Demand for Money	Keynesianism	Rothbard III 789 Speculative demand/interest/Keynesianism/Rothbard: Admitting (…) that time preference determines the proportions of consumption and investment and that the demand for money determines the proportion of income hoarded, does the demand for money play a role in determining the interest rate? >Time preference/Rothbard, >Demand for money/Rothbard. The Keynesians assert that there is a relation between the rate of interest and a "speculative" demand for cash. Should the schedule of the latter rise, the former rises also. RothbardVsKeynesianism: But this is not necessarily true. A greater proportion of funds hoarded can be drawn from three alternative sources: (a) from funds that formerly went into consumption, (b) from funds that went into investment, and (c) from a mixture of both that leaves the old consumption-investment proportion unchanged. Condition (a) will bring about a fall in the rate of interest; condition (b) a rise in the rate of interest, and condition (c) will leave the rate of interest unchanged. Thus hoarding may reflect either a rise, a fall, or no change in the rate of interest, depending on whether time preferences have concomitantly risen, fallen, or remained the same. >Hoarding. Keynesianism: The Keynesians contend that the speculative demand for cash depends upon and determines the rate of interest in this way: if people expect that the rate of interest will rise in the near future, then their liquidity preference increases to await this rise. Equilibirum theory/Keynes/RothbardVsKeynes: This, however, can hardly be a part of a long-run equilibrium theory, such as Keynes is trying to establish. Speculation: Speculation, by its very nature, disappears in the ERE (Evenly Rotating Economy), and hence no fundamental causal theory can be based upon it. >Evenly Rotating Economy/Rothbard. Interest: Furthermore, what is an interest rate? One grave and fundamental Keynesian error is to persist in regarding the interest rate as a contract rate on Ioans, instead of the price spreads between stages of production. >Production structure/Rothbard. The former (…) is only the reflection of the latter. A strong expectation of a rapid rise in interest rate means a strong expectation of an increase in the price spreads, or rate of net return. Speculation: A fall in prices means that entrepreneurs generally expect that factor prices will fall further in the near future than their selling prices. >Factors of Production, >Factor market, >Structure of production/Rothbard. But it requires no Keynesian labyrinth to explain this phenomenon; all we are confronted with is a situation in which entrepreneurs, expecting that factor prices will soon fall, cease investing and wait for this happy event so that their return will be greater. This is not "liquidity preference," but speculation on price changes. >Liquidity preference/Keynesianism, >Speculation/Rothbard, >Investments/Rothbard, >Demand for money/Keynesianism. Rothbard III 790 Demand for money/Keynesianism/Rothbard: … The final Keynesian bogey is that people may acquire an unlimited demand for money, so that hoards will indefinitely increase. This is termed an "infinite" liquidity preference. >Liquidity preference/Keynesianism. Vs „Infinite“ money demand see >Demand for Money/Rothbard. And this is the only case in which neo-Keynesians such as Modigliani believe that involuntary unemployment can be compatible with price and wage freedom. >Modigliani. The Keynesian worry is that people will hoard instead of buying bonds for fear of a fall in the price of securities. >Hoarding/Rotbhard. RothbardVsKeynesianism: Translating this into more important "natural" terms, this would mean, (…) not investing because of expectation of imminent increases in the natural interest rate. Rather than act as a blockade, however, this expectation speeds the ensuing adjustment. Furthermore, the demand for money could not be infinite since people must always continue consuming, whatever their expectations. Of necessity, therefore, the demand for money could never be infinite. The existing level of consumption, in turn, will require a certain level of investment. As long as productive activities are continuing, there is no need or possibility of lasting unemployment, regardless of the degree of hoarding.⁽¹⁾ >Unemployment/Rothbard. Uncertainty: A demand for money to hold stems from the general uncertainty of the market. Keynesianism: Keynesians, however, attribute liquidity preference, not to general uncertainty, but to the specific uncertainty of future bond prices. RothbardVs: Surely this is a highly superficial and limiting view. In the first place, this cause of liquidity preference could occur only on a highly imperfect securities market. >Risks/Rothbard. LachmannVsKeynes: As Lachmann pointed out years ago in a neglected article, Keynes' causal pattern - "bearishness" causing "liquidity preference" (demand for cash) and high interest rates - could take place only in the absence of an organized forward orfutures market for securities. If such a market existed, both bears and bulls on the bond market „could express their expectations by forward transactions which do not require any cash. Where the market for securities is fully organized over time, the owner of 4% bonds who fears a rise in the rate of interest has no incentive to exchange them for cash, for he can always "hedge" by selling them forward.“⁽²⁾ Rothbard III 792 Rothbard: Bearishness would cause a fall in forward bond prices, followed immediately by a fall in spot prices. Thus, speculative bearishness would, of course, cause at least a temporary rise in the rate of interest, but accompanied by no increase in the demand for cash. Hence, any attempted connection between liquidity preference, or demand for cash, and the rate of interest, falls to the ground. >Interest rates/Keynesianism, >Interest rates/Rothbard. 1. As Hutt points out, if we can conceive of a situation of infinitely elastic liquidity preference (and no such situation has ever existed), then "we can conceive of prices falling rapidly, keeping pace with expectations of price changes, but never reaching zero, with full utilization of resources persisting all the Way." Ibid., p. 398. 2. L.M. Lachmann, "Uncertainty and Liquidity Preference," Economica, August, 1937, p. 301.	Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Demand for Money	Tobin	Mause I 225 Demand for Money/Keynesianism/Tobin: The Keynesian theory of money demand in the tradition of James Tobin⁽¹⁾ largely takes up the considerations of monetarist theory. (Economic policy/Monetarism: Thesis: All economic policy interventions are (...) assessed on the extent to which they influence the overall economic interest rate level. An expansive monetary policy initially causes interest rate cuts (liquidity effect) and thus considerable effects on the goods markets in the form of volume and price adjustments.) Tobin: Thesis: Market participants have a wealth of different investment opportunities for their assets. However, the portfolio theoretical transmission process calls into question the high substitutability between the individual asset classes. (...) This restricts the effectiveness of monetary policy. >Monetary policy, >Stock market, >Markets. 1. James Tobin, “The Interest Elasticity of the Transactions Demand for Cash”. Review of Economics and Statistics. 38 (3), 1956, S. 241– 247.	EconTobin I James Tobin The Interest Elasticity of the Transactions Demand for Cash 1956 Mause I Karsten Mause Christian Müller Klaus Schubert, Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018
Depression	Rothbard	Rothbard III 1000 Depression/Rothbard: (…) the depression phase is actually the recovery phase. Most People would be happy to keep the boom period, where the inflationary gains are visible and the losses hidden and obscure. This boom euphoria is heightened by the capital consumption that inflation promotes through illusory accounting profits. The stages that people complain about are the crisis and depression. But the latter periods, it should be clear, do not cause the trouble. The trouble occurs during the boom, when malinvestments and distortions take place; the crisis-depression phase is the curative period, after people have been forced to recognize the malinvestments that have occurred. The depression period, therefore, is the necessary recovery period; it is the time when bad investments are liquidated and mistaken entrepreneurs leave the market - the time when "consumer sovereignty" and the free market reassert themselves and establish once again an economy that benefits every participant to the maximum degree. The depression period ends when the free-market equilibrium has been restored and expansionary distortion eliminated. >Business cycle/Rothbard, >Crises/Rothbard. Rothbard III 1001 Government policy: It should be Clear that any governmental interference with the depression process can only prolong it, thus making things worse from almost everyone's point of view. Wages: (…) if the government keeps wage rates up, it brings about permanent unemployment. Prices: If it keeps prices up, it brings about unsold surplus. Credit expansion: And if it spurs credit expansion again, then new malinvestment and later depressions are spawned. Underconsumption/RothbardVsTradition: One obvious conclusion from our analysis is the absurdity of the "underconsumptionist" remedies for depression - the idea that the crisis is caused by underconsumption and that the way to cure the depression is to stimulate consumption expenditures. Rothbard: The reverse is clearly the truth. What has brought about the crisis is precisely the fact that entrepreneurial investment erroneously anticipated greater savings, and that this error is revealed by consumers' re-establishing their desired proportion of consumption. "Overconsumption" or "undersaving" has brought about the crisis, although it is hardly fair to pin the guilt on the consumer, who is simply trying to restore his preferences after the market has been distorted by bank credit. Solutionsaving/investment//Rothbard: The only way to hasten the curative process of the depression is for people to save and invest more and consume less, thereby finally justifying some of the malinvestments and mitigating the adjustments that have to be made. >Boom/Rothbard, >Business cycle/Rothbard.	Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Description Levels	Quine	IX 188 Predicate Calculus 2nd order: this predicate calculus compromises individuals and classees of individuals. V 33 Similarity/Perception/Ontology/Quine: the transition from perception to perception similarity brings ontological clarity. Perception (the result of the act of perception) is omitted. >Perception/Quine. V 34 Similarity/Quine: Perceptual similarity differs from reception similarity. The latter is purely physical similarity. Three digit relation: Episode a resembles b more than episode c. Perceptual similarity: on the other hand, is a bundle of behavioral dispositions of the 2nd order (to react). The contrast can be eliminated by using the reception similarity, but not only speaking of individual episodes a, b, c, but more generally of episodes that have a reception similarity with these. VI 71 Levels of Uncertainty: the uncertainty of the reference is not identical to the uncertainty of the translation, nor is it as serious. Translation indeterminacy is more serious because it is holophrastic (it refers to whole sentences): it can produce divergent interpretations that remain unexplored even at the level of whole sentences. VI 72 The uncertainty of the reference can be illustrated by examples of compensating adjustment manoeuvres within a sentence. X 20 QuineVsEquivalence of Sentences/Sentence Equivalence: the equivalence relation has no objective sense at the level of sentences.	Quine I W.V.O. Quine Word and Object, Cambridge/MA 1960 German Edition: Wort und Gegenstand Stuttgart 1980 Quine II W.V.O. Quine Theories and Things, Cambridge/MA 1986 German Edition: Theorien und Dinge Frankfurt 1985 Quine III W.V.O. Quine Methods of Logic, 4th edition Cambridge/MA 1982 German Edition: Grundzüge der Logik Frankfurt 1978 Quine V W.V.O. Quine The Roots of Reference, La Salle/Illinois 1974 German Edition: Die Wurzeln der Referenz Frankfurt 1989 Quine VI W.V.O. Quine Pursuit of Truth, Cambridge/MA 1992 German Edition: Unterwegs zur Wahrheit Paderborn 1995 Quine VII W.V.O. Quine From a logical point of view Cambridge, Mass. 1953 Quine VII (a) W. V. A. Quine On what there is In From a Logical Point of View, Cambridge, MA 1953 Quine VII (b) W. V. A. Quine Two dogmas of empiricism In From a Logical Point of View, Cambridge, MA 1953 Quine VII (c) W. V. A. Quine The problem of meaning in linguistics In From a Logical Point of View, Cambridge, MA 1953 Quine VII (d) W. V. A. Quine Identity, ostension and hypostasis In From a Logical Point of View, Cambridge, MA 1953 Quine VII (e) W. V. A. Quine New foundations for mathematical logic In From a Logical Point of View, Cambridge, MA 1953 Quine VII (f) W. V. A. Quine Logic and the reification of universals In From a Logical Point of View, Cambridge, MA 1953 Quine VII (g) W. V. A. Quine Notes on the theory of reference In From a Logical Point of View, Cambridge, MA 1953 Quine VII (h) W. V. A. Quine Reference and modality In From a Logical Point of View, Cambridge, MA 1953 Quine VII (i) W. V. A. Quine Meaning and existential inference In From a Logical Point of View, Cambridge, MA 1953 Quine VIII W.V.O. Quine Designation and Existence, in: The Journal of Philosophy 36 (1939) German Edition: Bezeichnung und Referenz In Zur Philosophie der idealen Sprache, J. Sinnreich (Hg) München 1982 Quine IX W.V.O. Quine Set Theory and its Logic, Cambridge/MA 1963 German Edition: Mengenlehre und ihre Logik Wiesbaden 1967 Quine X W.V.O. Quine The Philosophy of Logic, Cambridge/MA 1970, 1986 German Edition: Philosophie der Logik Bamberg 2005 Quine XII W.V.O. Quine Ontological Relativity and Other Essays, New York 1969 German Edition: Ontologische Relativität Frankfurt 2003 Quine XIII Willard Van Orman Quine Quiddities Cambridge/London 1987
Desire	Appraisal Theory	Corr I 62 Desires/appraisal theory/psychological theories/Reisenzein/Weber: At the top of the motive hierarchy are presumably a set of basic desires which constitute the ultimate sources of human motivation (e.g., Reiss 2000)⁽¹⁾. These assumptions entail that the emotional reaction to a concrete event should be influenced by the degree to which superordinate desires are affected by this event, as well as the strength of these desires. >Motives, >Motivation. A number of tests of this assumption have been made. For example, Sheldon, Elliot, Kim and Kasser (2001)⁽²⁾ asked participants to recall the single most satisfying event experienced during the last month and to rate the extent to which this event satisfied each of ten candidate basic desires (e.g., the desire for competence, security, relatedness, popularity and personal autonomy). Other research has focused on an intermediate level of the motive hierarchy, where the top-level desires (e.g., the achievement motive) are concretized to more specific desires that represent what the person wants to attain in her current life situation (e.g., getting good grades; see Brunstein, Schultheiss and Grässmann 1998)⁽³⁾. For example, Emmons (1986)⁽⁴⁾ related these intermediate-level desires, called personal strivings, to emotions using an experiencing-sampling method… (for additional information, see Emmons 1996⁽⁵⁾; Brunstein, Schultheiss and Maier 1999⁽⁶⁾. Corr I 63 Beyond relating positive and negative emotions to desire fulfilment and desire frustration, respectively, appraisal theorists have linked particular emotions to particular kinds of desires (e.g., Lazarus 1991⁽⁷⁾; Ortony, Clore and Collins 1988⁽⁸⁾; Roseman 1979)⁽⁹⁾. An important distinction in this context is that between wanting versus diswanting a state of affairs (Roseman 1979(9)), or between having an approach goal versus an avoidance goal. Several theorists (e.g., Gray 1994⁽¹⁰⁾; see Carver 2006⁽¹¹⁾ for a review) proposed (a) that the pursuit of approach versus avoidance goals activates one of two different, basic motivational systems, a behavioural approach system (BAS) or a behavioural inhibition (BIS) system; and (b) that people differ in central parameters of these systems, specifically in the relative strength of their general approach and avoidance motivation. Carver (2004)⁽¹²⁾ found that a measure of inter-individual differences in general approach motivation (BAS sensitivity) predicted the intensity of sadness and anger in response to frustration (the non-occurrence of an expected positive event). >Reinforcement sensivity, >Jeffrey A. Gray. 1. Reiss, S. 2000. Who am I: the 16 basic desires that motivate our actions and define our personality. New York: Tarcher Putnam 2. Sheldon, K. M., Elliot, A. J., Kim, Y. and Kasser, T. 2001. What is satisfying about satisfying events? Testing 10 candidate psychological needs, Journal of Personality and Social Psychology 80: 325–39 3. Brunstein, J. C., Schultheiss, O. C. and Grässmann, R. 1998. Personal goals and emotional well-being: the moderating role of motive dispositions, Journal of Personality and Social Psychology 75: 494–508 4. Emmons, R. A. 1986. Personal strivings: an approach to personality and subjective well-being, Journal of Personality and Social Psychology 51: 1058–68 5. Emmons, R. A. 1996. Striving and feeling: personal goals and subjective well-being, in P. M. Gollwitzer and J. A. Bargh (eds.), The psychology of action: linking cognition and motivation to behaviour, pp. 313–37. New York: Guilford Press 6. Brunstein, J. C., Schultheiss, O. C. and Maier, G. W. 1999. The pursuit of personal goals: a motivational approach to well-being and life adjustment, in J. Brandtstädter and R. M. Lerner (eds.), Action and self-development: theory and research through the life span, pp. 169–96. New York: Sage 7. Lazarus, R. S. 1991. Emotion and adaptation. New York: Oxford University Press 8. Ortony, A., Clore, G. L. and Collins, A. 1988. The cognitive structure of emotions. New York: Cambridge University Press 9. Roseman, I. J. 1979. Cognitive aspects of emotions and emotional behaviour. Paper presented at the 87th Annual Convention of the APA, New York City, September 1979 10. Gray, J. A. 1994. Three fundamental emotion systems, in P. Ekman and R. J. Davidson (eds.), The nature of emotion, pp. 243–8. Oxford University Press 11. Carver, C. S. 2006. Approach, avoidance, and the self-regulation of affect and action, Motivation and Emotion 30: 105–10 12. Carver, C. S. 2004. Negative affects deriving from the behavioural approach system, Emotion 4: 3–22 Rainer Reisenzein & Hannelore Weber, “Personality and emotion”, in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge Handbook of Personality Psychology. New York: Cambridge University Press	Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Discrimination	Pariser	I 137 Discrimination/Software/Pariser: Problem: a software that, for example, examines a company's hiring practices and randomly picks out nine white persons could specify that this company is not interested in hiring persons of color and filter them out from the outset. ⁽¹⁾ This problem is called "over-adjustment" among programmers. I 139 Over-adjustment/Pariser: becomes a central and irreducible problem of the filter bubble, because over-adjustment and stereotyping are synonymous here. I 140 Such stereotypes can cause your creditworthiness to be downgraded because your friends do not pay their debts on time. 1. Dalton Conley, Elsewhere, U. S. A.: How We Got from the Company Man, Family Dinners, and the Affluent Society to the Home Office, BlackBerry Moms, and Economic Anxiety, New York: Pantheon, 2008, S. 164.	Pariser I Eli Pariser The Filter Bubble: How the New Personalized Web Is Changing What We Read and How We Think London 2012
Drives	Allport	Corr I 95 Stimuli/behavior/Allport/Deary: Allport emphasized that it was the trait and not the stimulus that was the driving force behind behaviour that expresses personality. >Personality traits, >Behavior. This idea was recast by Matthews, Deary and Whiteman (2003⁽¹⁾) when they articulated the key assumptions of the ‘inner locus’ and ‘causal precedence’ of personality traits. Allport suggested the definitions ‘derived drives’ or ‘derived motives’ for traits and summed up that (Allport 1931⁽²⁾, p. 369): Whatever they are called they may be regarded as playing a motivating role in each act, thus endowing the separate adjustments of the individual to specific stimuli with that adverbial quality that is the very essence of personality. Adverbs/adjectives/description/theory/Deary: Today’s trait researchers are keener on adjectives than adverbs. >Lexical hypothesis. 1.Matthews, G., Deary, I. J. and Whiteman, M. C. 2003. Personality traits, 2nd edn. Cambridge University Press 2. Allport, G. W. 1931. What is a trait of personality?, Journal of Abnormal and Social Psychology 25: 368–72 Ian J. Deary, “The trait approach to personality”, in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge Handbook of Personality Psychology. New York: Cambridge University Press	Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Economic Boom	Rothbard	Rothbard III 1002 Boom/Rothbard: (…) the only way to avert the onset of the depression-adjustment process is to continue inflating money and credit. For only continual doses of new money on the credit market will keep the boom going and the new stages profitable. Furthermore, only ever increasing doses can step up the boom, can Iower interest rates further, and expand the production structure, for as the prices rise, more and more money will be needed to perform the same amount of work. Credit expansion/equilibirum: : Once the credit expansion stops, the market ratios are re-established, and the seemingly glorious new investments turn out to be malinvestments, built on a foundation of sand. (…) prolonging the boom by ever larger doses of credit expansion will have only one result: to make the inevitably ensuing depression longer and more grueling. The larger the scope of malinvestment and error in the boom, the greater and longer the task of readjustment in the depression. Solution/Rothbard: The way to prevent a depression, then, is simple: avoid starting a boom. And to avoid starting a boom all that is necessary is to pursue a truly free-market policy in money, i.e., a policy of 100-percent specie reserves for banks and governments. >Bank reserve/Rothbard, >Credit expansion/Rothbard.	Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Economic Cycle	Hayek	Boudreaux II 60 Economic cycles/demand/ Hayek/Boudreaux: Business people know that their profits rise and fall with rises and falls in the demand for the products they sell. If more paying customers are streaming through the doors, times are good. Fewer customers, in contrast, mean worsening times - and, for many firms, even bankruptcy. Likewise for workers. They understand that the greater the demand for their employers' outputs, the greater the demand for their labour services. When business is booming, their jobs are more secure and their wages rise. When business is bad, jobs are less secure and wages stagnate. Demand: This understanding by business people and workers of the importance of high demand in their industries and firms is correct. Problem: But (…) our roles as producers ((s) workers, wage earners) can mislead us into making mistaken conclusions about the larger economy. One such mistaken conclusion about the larger economy is that economic downturns – recessions - are caused by too little overall demand. A follow-up mistaken conclusion is that the appropriate cure for recessions is a set of government policies that increase demand. Recession: Because an economy-wide recession affects nearly all firms and industries and not just a few, the demand that is said to be too Iow during recessions is called "aggregate demand." Aggregate demand is the overall demand in an economy for all goods and services. >Recession, >Demand/Keynes. Boudreaux II 64 Economic cycles/Hayek/Boudreaux: Production: (…) producers will have incentives to “listen” to (…) [relative] prices. The reason is that producers earn higher profits by expanding production of outputs whose prices are rising. Likewise, producers avoid losses by producing fewer of those outputs whose prices are falling. >Relative prices/Hayek, >Knowledge/Hayek, >Price, >Price theory. Boudreaux II 66 Economic cycles: adjustments in production activities (…), are not instantaneous. They take time. Unemployment: Unemployment rises during the time it takes for these adjustments to be made. Workers in industries with unsold inventories are laid off, and time is required for them to find employment elsewhere. Even industries that expand in response to more accurate prices typically require some time to rearrange their production plans and facilities in order to make profitable the hiring of new workers. The time it takes for the firms to adjust away from the production plans they made when prices were inaccurate is time during which unusually large numbers of workers are unemployed.	Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014
Economic Cycle	Mises	Rothbard IV 21 Economic cycles/business cycles/Mises/Rothbard: Tradition: Economists had attempted many explanations, but even the best of them suffered from one fundamental flaw: none of them attempted to integrate the explanation of the business cycle with the general analysis of the economic system, with the “micro” theory of prices and production. >Microeconomics. Equilibirum: In fact, it was difficult to do so, because general economic analysis shows the market economy to be tending toward “equilibrium,” with full employment, minimal errors of forecasting, etc. Whence, then, the continuing series of booms or busts? Solution/Mises: Ludwig von Mises saw that, since the market economy could not itself lead to a continuing round of booms and busts, the explanation must then lie outside the market: in some external intervention. He built his great business cycle theory on three previously unconnected elements. 1) One was the Ricardian demonstration of the way in which government and the banking system habitually expand money and credit, driving prices up (the boom) and causing an outflow of gold and a subsequent contraction of money and prices (the bust). Mises realized that this was an excellent preliminary model, but that it did not explain how the production system was deeply affected by the boom or why a depression should then be made inevitable. >Ricardian theory, >David Ricardo. 2) Another element was the Böhm-Bawerkian analysis of capital and the structure of production. >Capital/Böhm-Bawerk, >Production/Böhm-Bawerk. 3) A third was the Swedish “Austrian” Knut Wicksells’ demonstration of the importance to the productive system and to prices of a gap between the “natural” rate of interest (the rate of interest without the interference of bank credit expansion) and the rate as actually affected by bank loans. >Knut Wicksell. Mises: From these three important but scattered theories, Mises(1) constructed his great theory of the business cycle. Into the smoothly functioning and harmonious market economy comes the expansion of bank credit and bank money, encouraged and promoted by the government and its central bank. >Central Bank, >Money supply/Mises. As the banks expand the supply of money (notes or deposits) and lend the new money to business, they push the rate of interest below the “natural” or time-preference rate, i.e., the free-market rate which reflects the voluntary proportions of consumption and investment by the public. As the interest rate is artificially lowered, the businesses take the new money and expand the structure of production, adding to capital investment, especially in the “remote” processes of production: in lengthy projects, machinery, industrial raw materials, and so on. The new money is used to bid up wages and other costs and to transfer resources into these earlier or “higher” orders of investment. Then, when the workers and other producers receive the new money, their time preferences having remained unchanged, they spend it in the old proportions. But this means that the public will not be saving enough to purchase the new high-order investments, and a collapse of those businesses and investments becomes inevitable. >Time preference/Böhm-Bawerk. Rothbard IV 22 Depression: The recession or depression is then seen as an inevitable re-adjustment of the production system, by which the market liquidates the unsound “over-investments” of the inflationary boom and returns to the consumption/investment proportion preferred by the consumers. Microeconomics: Mises thus for the first time integrated the explanation of the business cycle with general “micro-economic” analysis. The inflationary expansion of money by the governmentally-run banking system creates over-investment in the capital goods industries and underinvestment in consumer goods, and the “recession” or “depression” is the necessary process by which the market liquidates the distortions of the boom and returns to the free-market system of production organized to serve the consumers. Recovery arrives when this adjustment process is completed. MisesVsKeynes/MisesVsKeynesianism/Rothbard: The policy conclusions implied by the Misesian theory are the diametric opposite of the current fashion, whether “Keynesian” or “post-Keynesian.” If the government and its banking system are inflating credit, the Misesian prescription is (a) to stop inflating posthaste, and (b) not to interfere with the recession-adjustment, not prop up wage rates, prices, consumption or unsound investments, so as to allow the necessary liquidating process to do its work as quickly and smoothly as possible. The prescription is precisely the same if the economy is already in a recession. Rothbard IV 63 Interventions/Government/Central Banks/Mises: (…) in contrast to interventionists and statists who believe that the government must intervene to combat the recession process caused by the inner workings of free-market capitalism, Mises demonstrated precisely the opposite: that the government must keep its hands off the recession, so that the recession process can quickly eliminate the distortions imposed by the government-created inflationary boom. >Credit/Mises, >Inflation/Mises, >Central Banks/Mises. 1. Ludwig von Mises. 1912. The Theory of Money and Credit (Theorie des Geldes und der Umlaufsmittel, Translated by H.E. Batson in 1934; reprinted with “Monetary Reconstruction» (New Haven, Conn.: Yale University Press, 1953). Reprinted by the Foundation for Economic Education, 1971; reprinted with an Introduction by Murray N. Rothbard, Liberty Press Liberty Classics, 1989.	EconMises I Ludwig von Mises Die Gemeinwirtschaft Jena 1922 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Economic Cycle	Neoclassical Economics	Mause I 226 Economy/Neoclassical Theory: Economic fluctuations can (...) in the sense of neo-classical theory or in the theory of real business cycles (Real Business Cycle or RBC-theory; Stadler 1994 ⁽¹⁾) also occur on the supply side of the goods markets if it comes to fluctuations in the provision of production factors. Neoclassical theory: for them, what is happening on the labour markets ((s) for economic development) is important in the medium term. NeoclassicsVsKeynesianism/NeoclassicismVsKeynesianism: Neoclassical models ((s) unlike Keynesianism, which looks at the behaviour of private households) regard the state as primarily responsible for the occurrence of economic cycles, while implying inherent stability in the private sector. An unsystematic monetary or fiscal policy leads to uncertainty and adjustment reactions of market participants, which are reflected in economic fluctuations. (See Hayek "presumption of reason", "pretense of knowledge"). >Economic Cycle/Public Choice . 1. Stadler, George W., Real business cycles. Journal of Economic Literature 32, (4) 1994, S. 1750– 1783.	Mause I Karsten Mause Christian Müller Klaus Schubert, Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018
Economic Policies	Monetarism	Mause I 57f Economic Policies/Monetarism/MonetarismVsKeynesianism/MonetarismVsKeynes: In contrast to the Keynesians, the monetarists (...) assume the fundamental stability of the private sector and therefore deny the need for an active stabilization policy. Instead, a stability policy in the form of reliable framework conditions and economic policy restraint on the part of the state is called for. (See also >Economic Policies/Friedman). Mause I 225 Economic Policy/Monetarism: all economic policy interventions are (...) assessed on the extent to which they influence the overall economic interest rate level. An expansive monetary policy initially causes interest rate cuts (liquidity effect) and thus considerable effects on the goods markets in the form of volume and price adjustments. See Assets/Neoclassics, See Demand for money/Tobin.	Mause I Karsten Mause Christian Müller Klaus Schubert, Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018
Emotions	Pinker	I 457 Emotions/Pinker: Thesis: feelings are adjustments, software modules - with their help copies of the genes should be reproduced, which they have caused. >Mind, >Perception, >Thinking, >Psychology, >Causality, >Nature, >Sensation, >Emotion system. I 499 Feelings/explanation/Trivers: strategies in retaliation game: affection: aimed at those who are apparently ready for a return favor. Anger: protects from being betrayed. Gratitude: calculates costs and benefits of the first act. Compassion: should bring us gratitude. >Compassion. Shame: should maintain a relationship. I 500 Simultaneous evolution of incentive, faking feelings. - It follows the evolution of discernment - Emotions do not help anyone, but they have helped his ancestors. - (s) Separation of situation and feeling. I 510 Emotions/PinkerVsTradition: feelings are no relic of an animal past, no fountain of creativity, not an enemy of the intellect. The intellect transmits control to the emotions, as soon as the situation is such that they can act as a guarantor for its offers, function as promises and threats. >Psychologcial theories on situations. I 522 Cognitive Dissonance/Pinker: one decreases them by inventing a new opinion to resolve an inner contradiction. E.g. so a boring job becomes retroactively interesting. - A feeling of uncertainty stemming from conflicting beliefs. I 523 PinkerVs: that is not true, there is no contradiction between "The work is boring" and "I was forced to lie". Aronson: it is about the contradiction with the statement: "I am nice and have everything under control". >Aronson, Joshua M., >Aronson, Eliot.	Pi I St. Pinker How the Mind Works, New York 1997 German Edition: Wie das Denken im Kopf entsteht München 1998
Entrepreneurship	Say	Rothbard II 25 Entrepreneurship/Say/Rothbard: For Say, the entrepreneur, the linchpin of the economy, takes on himself the responsibility, the conduct, and the risk of running his firm. He almost always owns some of the firm's capital, Say being familiar with the fact that the dominant entrepreneur and risk-taker in the economy is the one who is also a capitalist, an owner of capital. The owner of capital or land or personal service hires these services out to the ‘renter’ or entrepreneur. In return for fixed payments to these factors, the entrepreneur takes upon himself the speculative risk of gaining profit or suffering loss. ‘It is a sort of speculative bargain, wherein the renter takes the risk of profit and loss, according to the revenue he may realize, or the product obtained by the agency transferred, shall exceed or fall short of the rent or hire he is to pay’.⁽¹⁾ Rothbard II 26 The entrepreneur, Say adds, acts as a broker between sellers and buyers, applying productive factors proportionate to the demand for the products. SayVsSmith: Say was critical of Smith and the Smithians for failing to distinguish the category of entrepreneurial profit from the profit of capital, both of which are mixed together in the profits of real world enterprises. Say also appreciated entrepreneurship as the driving force of the allocations and adjustments of the market economy. SchumpeterVsSay/HébertVsSay: Schumpeter and Hébert are critical of Say as having a view of the entrepreneur as a static manager and organizer rather than as a dynamic bearer of risk and uncertainty. We cannot share that view. It seems to us that Say is instead foursquare in the Cantillon-Turgot tradition of the entrepreneur as forecaster and risk-bearer. 1. Say, Jean-Baptiste. Traité d’Economie Politique, Paris 1803.	EconSay I Jean-Baptiste Say Traité d’ Economie Politique Paris 1803 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Environment	Gould	IV 43 Environment/adjustment/selection/Darwinism/Gould: according to the traditional point of view Darwinism is first and foremost a theory of natural selection. >Darwinism, >Selection. Gould: that is certainly true, but in reference to power and scope of selection we have become overzealous when we try to attribute every conceivable form and behaviour to their direct influence. Another often forgotten principle prevents any optimal adaptation: the strange and yet compelling paths of history! Organisms are subject to the constraints of inherited forms that slow down their evolution! They cannot be reshaped every time their environment changes. IV 44 History/Gould: a world that would be optimally adapted to its current environment would be a world without history, such a world could have been created as we find it now. >Evolution.	Gould I Stephen Jay Gould The Panda’s Thumb. More Reflections in Natural History, New York 1980 German Edition: Der Daumen des Panda Frankfurt 2009 Gould II Stephen Jay Gould Hen’s Teeth and Horse’s Toes. Further Reflections in Natural History, New York 1983 German Edition: Wie das Zebra zu seinen Streifen kommt Frankfurt 1991 Gould III Stephen Jay Gould Full House. The Spread of Excellence from Plato to Darwin, New York 1996 German Edition: Illusion Fortschritt Frankfurt 2004 Gould IV Stephen Jay Gould The Flamingo’s Smile. Reflections in Natural History, New York 1985 German Edition: Das Lächeln des Flamingos Basel 1989
Exchange Rates	Dornbusch	Feldstein I 441 Exchange Rates/Dornbusch/Rogoff: If officials’ plans for monetary policy were hard to predict-and during the 1970s, they were hard to predict-then there was no way of ruling out sustained large divergences in countries’ price levels. Even a very loose interpretation of the doctrine of “purchasing power parity” suggests that price level instability is incompatible with exchange rate stability. The theoretical case against the hapless monetary authorities was greatly strengthened by Rüdiger Dornbusch’s (1976)⁽¹⁾ celebrated “overshooting” model. The theoretical case against the hapless monetary authorities was greatly strengthened by Rudiger Dornbusch’s (1976) celebrated “overshooting” model. By introducing forward-looking “rational” expectations into the canonical Keynesian model of open economy macroeconomics (due to Mundell and Fleming), Dornbusch showed that monetary policy shifts can easily lead to disproportionately large movements in exchange rates. Under certain plausible assumptions, the sluggishness of wages and prices means that the exchange rate must bear a disproportionate burden of the adjustment to monetary shocks, at least in the short run. Ergo, a little monetary instability can lead to a lot of exchange rate instability; a lot of monetary instability can lead to near chaospretty much the situation in the 1970s, at least in comparison with the 1950s and 1960s. RogoffVsDornbusch: [Dornbusch’s] theory seemed to fit the facts, and it was intrinsically very elegant to boot (a big selling point in any science). Rogoff: Unfortunately today, as inflation con- Feldstein I 442 tinues to subside, it is becoming increasingly clear that monetary instability is at most a piece of the exchange rate volatility puzzle. It certainly cannot carry the full burden-or the blame-attributed to it by monetary models of the 1970s (or 1980s, for that matter). Inflation: One may well ask, has the conquest of inflation brought any drop at all in major-currency exchange rate volatility? >Exchange rates/Rogoff. 1. Dornbusch, Rudiger. 1976. Expectations and exchange rate dynamics. Journal of Political Economy 84 (December): 1161-76. Kenneth Rogoff. „Perspectives on Exchange Rate Volatility.“In: Martin Feldstein (ed). International Capital Flows. Chicago: University of Chicago Press. 1999.	Dornbusch I Rüdiger Dornbusch Expectations and exchange rate dynamics 1976 Feldstein I Martin Feldstein (ed.) International Capital Flows. Chicago: University of Chicago Press. 1999. Chicago 1999
Fiscal Policy	Congressional Research Service (CRS)	CRS I 2 Fiscal policy/Marc Labonte/CRS: Fiscal policy refers to increasing or decreasing the government’s budget surplus (or deficit) in order to increase or decrease the amount of aggregate spending in the economy.⁽¹⁾ Monetary policy refers to increasing or decreasing short-term interest rates through manipulation of the money supply in order to decrease or increase the amount of aggregate spending in the economy.⁽²⁾ Interest rates: For example, other things being equal, lower interest rates lead to more investment spending, one component of aggregate spending. Furthermore, fiscal and monetary policy influence interest rates differently, and interest rates are the key determinant of the exchange rate. Expansionary fiscal policy is likely to raise interest rates and “crowd out” private investment while expansionary monetary policy, or reducing short-term interest rates, is likely to temporarily lower interest rates. Fixed exchange rates: Maintaining a fixed exchange rate requires continuous policy adjustment. Although perhaps theoretically feasible, it would be impossible in practice to operate a timely or precise enough fiscal policy to maintain a fixed exchange rate as long as fiscal policy must be legislated. Thus, maintaining a fixed exchange rate has been delegated to the monetary authority in practice. Intervening in foreign exchange markets directly is equivalent to changing monetary policy if the intervention is “unsterilized.” When a central bank sells foreign currency to boost the exchange rate, it takes the domestic currency it receives in exchange out of circulation, decreasing the money supply. Often, it prints new money to replace the domestic currency that has been removed from circulation—referred to as sterilization—but economic theory suggests that when it does so, it negates the intervention’s effect on the exchange rate.⁽³⁾ CRS I 3 Monetary and fiscal policy are not regularly or systematically used to influence the exchange rate.⁽⁴⁾ CRS I 4 Floating exchange rates: The maintenance of a floating exchange rate does not require support from monetary and fiscal policy. This frees the government to focus monetary and fiscal policy on stabilizing the economy in response to domestic changes in supply and demand. Fiscal and monetary policy usually can be focused on domestic goals, such as maintaining price and output stability, without being constrained by the policy’s effect on the exchange rate. >Currency crises, >Capital controls, >Fixed exchange rates, >Floating exchange rates, >International trade, >Currency. 1. For more information, see CRS Report RL31235, The Economics of the Federal Budget Deficit, by Brian W. Cashell. 2. For more information, see CRS Report RL30354, Monetary Policy and the Federal Reserve: Current Policy and Conditions, by Gail E. Makinen and Marc Labonte. 3. Similarly, if exchange rate intervention was undertaken by a government’s treasury, theory suggests it would have no lasting effect on the exchange rate because the treasury cannot alter the money supply. 4. From time to time, governments and central banks in countries with floating exchange rates may enter the foreign exchange market in an attempt to influence the exchange rate value. This is known as “managed floating” or “dirty floating.” Historically, such interventions have had patchy success. When they have failed, it has frequently been due to the fact that intervention was not coupled with a change in monetary policy. Managed floating is very different from a fixed exchange rate regime, where monetary policy is devoted to maintaining the exchange rate value on a continual basis as its primary goal. Congressional Research Service of the Library of congress (CRS) Fixed Exchange Rates and Floating Exchange Rates: What Have We Learned? RL31204 (2007) https://www.congress.gov/crs-product/RL31204	CRS I Congressional Research Service (CRS) Marc Labonte Fixed Exchange Rates and Floating Exchange Rates: What Have We Learned? Washington: Congressional Research Service of the Library of Congress 2007 CRS II Congressional Research Service (CRS) Paul Tierno Marc Labonte, Banking and Cryptocurrency: Policy Issues. CRS Congressional research Service Report R48430. Washington, DC. 2025 CRS III Congressional Research Service (CRS) Corrie E. Clark Heather L. Greenley, Bitcoin, Blockchain, and the Energy Sector. Washington, DC. 2019 CRS IV Congressional Reserch Service (CRS) Paul Tierno Cryptocurrency: Selected Policy Issues Congressional Reserch Service CRS Report R47425 Washington, DC. 2023
Floating Exchange Rates	Congressional Research Service (CRS)	CRS I 0 Floating Exchange Rates/ Marc Labonte/CRS: Floating exchange rate regimes are market determined; values fluctuate with market conditions. The main economic advantages of floating exchange rates are that they leave the monetary and fiscal authorities free to pursue internal goals - such as full employment, stable growth, and price stability - and exchange rate adjustment often works as an automatic stabilizer to promote those goals. >Fixed Exchange rates, >Exchange rates, >Markets, >International trade, >Currency. The merits of floating compared to fixed exchange rates for any given country depends on how interdependent that country is with its neighbors. If a country’s economy is highly reliant on its neighbors for trade and investment and experiences economic shocks similar to its neighbors’, there is little benefit to monetary and fiscal independence, and the country is better off with a fixed exchange rate. If a country experiences unique economic shocks and is economically independent of its neighbors, a floating exchange rate can be a valuable way to promote macroeconomic stability. >Currency crises, >Currency policy. If a country’s economy is highly reliant on its neighbors for trade and investment and experiences economic shocks similar to its neighbors’, there is little benefit to monetary and fiscal independence, and the country is better off with a fixed exchange rate. If a country experiences unique economic shocks and is economically independent of its neighbors, a floating exchange rate can be a valuable way to promote macroeconomic stability. >Fiscal policy, >Monetary policy. CRS I 3 Because floating exchange rates allow for automatic adjustment, they buffer the domestic economy from external changes in international supply and demand. >Supply, >Demand. A floating exchange rate also becomes another automatic outlet for internal adjustment. CRS I 4 If the economy is growing too rapidly the exchange rate is likely to appreciate, which helps slow aggregate spending by slowing export growth. >Economic growth, >Inflation. The maintenance of a floating exchange rate does not require support from monetary and fiscal policy. This frees the government to focus monetary and fiscal policy on stabilizing the economy in response to domestic changes in supply and demand. Fiscal and monetary policy usually can be focused on domestic goals, such as maintaining price and output stability, without being constrained by the policy’s effect on the exchange rate. CRS I 15 Floating exchange rates/Marc Labonte/CRS: Costs: Floating and fixed exchange rates both impose costs on economies. Floating exchange rates impose a cost by discouraging trade and investment. Fixed exchange rates impose a cost by limiting policymakers’ ability to pursue domestic stabilization, thereby making the economy less stable. CRS I 16 But there is a fundamental difference in the types of costs they impose. In most countries, the cost of floating exchange rates is internalized and can be managed through the market in the form of hedging.⁽¹⁾ 1. If floating exchange rates do fluctuate irrationally as some economists have posited, this imposes another cost on an economy, a cost that can be eliminated with no sacrifice by a fixed exchange rate. Congressional Research Service of the Library of congress (CRS) Fixed Exchange Rates and Floating Exchange Rates: What Have We Learned? RL31204 (2007) https://www.congress.gov/crs-product/RL31204	CRS I Congressional Research Service (CRS) Marc Labonte Fixed Exchange Rates and Floating Exchange Rates: What Have We Learned? Washington: Congressional Research Service of the Library of Congress 2007 CRS II Congressional Research Service (CRS) Paul Tierno Marc Labonte, Banking and Cryptocurrency: Policy Issues. CRS Congressional research Service Report R48430. Washington, DC. 2025 CRS III Congressional Research Service (CRS) Corrie E. Clark Heather L. Greenley, Bitcoin, Blockchain, and the Energy Sector. Washington, DC. 2019 CRS IV Congressional Reserch Service (CRS) Paul Tierno Cryptocurrency: Selected Policy Issues Congressional Reserch Service CRS Report R47425 Washington, DC. 2023
Free Lunch	Demsetz	Henderson I 54 Free Lunch Fallacy/DemsetzVsArrow/Demsetz/Henderson/Globerman: Risks/inventions/Arrow: Arrow⁽¹⁾ argued that for private enterprise to yield optimal invention, there must be "commodity-options" so that inventors can redirect risk to other people who are willing to bear it.* Arrow wrote that a commodity-option is a contract "in which buyers pay an agreed sum and sellers agree to deliver prescribed quantities of a given commodity if a certain state of nature prevails and nothing if that state of nature does not occur". Arrow argued that "the real economic system does not possess markets for commodity-options" (1962⁽¹⁾: 610-611). DemsetzVsArrow: Demsetz took issue, noting that commodity-options did exist. Imagine how much stronger Demsetz's empirical case would have been if he had written it in 1974, just after the Chicago Board Options Exchange had come into existence in 1973: commodity options are traded on that exchange. But Demsetz noted an important reason that they didn't exist as fully as Arrow would have liked: the cost of creating them. Free lunch/DemsetzVsArrow: „Arrow here has slipped into the fallacy of the free lunch. The word "nonoptimal" is misleading and ambiguous. Does it mean that free enterprise can be improved upon? Henderson I 55 Let me suppose that the cost of marketing commodity options exceeds the gain from adjustment to risk. This would account for their presumed absence. Can it be said that free enterprise results in a nonoptimal adjustment to risk? To make this assertion is to deny that scarcity is relevant to optimality, a strange position for an economist. In suggesting that free enterprise generates incomplete adjustments to risk, the nirvana approach, by comparing these adjustments with the ideal, is led further to equate incomplete to nonoptimal. This would be correct only if commodity-options or other ways of adjusting to risk are free. In this way, the nirvana approach relies on an implicit assumption of nonscarcity, but since risk shifting or risk reduction cannot generally be accomplished freely the demonstration of nonoptimality is false. (1969⁽²⁾: 3-4) >Nirvana fallacy/Demsetz. In short, the fact that many commodity-options do not exist is, far from being a market failure, a market success. Markets weed out goods and services whose costs exceed their value. Arrow: Even if there were commodity-options, argued Arrow, the free market would still underinvest in information. Arrow gave two reasons: risk aversion and moral hazard. >Risk aversion, >Moral hazard, >Free-rider problem. DemsetzVsArrrow: Demsetz pointed out the “people could be different” fallacy in each. ((s) i.e., this a is a pure assumption and not a proof.) >Risk aversion/Demsetz, >Moral hazard/Demsetz. 1. Arrow, Kenneth (1962). Economic Welfare and the Allocation of Resources for Innovation. In The Rate and Direction of Inventive Activity: Economic and Social Factors, National Bureau Committee for Economic Research (Princeton University Press). 2. Demsetz, Harold (1969). Information and Efficiency: Another Viewpoint. Journal of Law and Economics 12, 1 (April): 1-22.	EconDems I Harold Demsetz Toward a theory of property rights 1967 Henderson I David R. Henderson Steven Globerman The Essential UCLA School of Economics Vancouver: Fraser Institute. 2019
Free Trade	IMF Working Papers	Ostry I 3 Tariffs/Free trade/Furceri/Hannan/Ostry/Rose: More than on any other issue, there is agreement amongst economists that international trade should be free.(1) This view dates back to (at least) Adam Smith and is supported by much reasoning. In general, economists believe that freely-functioning markets best allocate resources, at least absent some distortion, externality or other market failure; competitive markets tend to maximize output by directing resources to their most productive uses. >Market failure, >Markets, >Free markets, >Trade, >International trade, >Competition. Of course, there are market imperfections, but tariffs - taxes on imports - are almost never the optimal solution to such problems. Tariffs encourage the deflection of trade to inefficient producers, and smuggling to evade tariffs; such distortions reduce welfare. >Welfare, >Imperfect competition, cf. >Perfect competition. Consumption: Further, consumers lose more from a tariff than producers gain, so there is “deadweight loss”. The redistributions associated with tariffs tend to create vested interests, so harms tend to persist. Broad-based protectionism can also provoke retaliation which adds further costs in other markets. All these losses to output are exacerbated if inputs are protected, since this adds to production costs. >Production, >Production costs, >Protectionism, >Consumption, >Market Imperfections. Ostry I 4 (…) there are strong theoretical reasons that economists abhor the use of protectionism as a macroeconomic policy; for instance, the broad imposition of tariffs may lead to offsetting changes in exchange rates (Dornbusch, 1974⁽²⁾; Edwards, 1989⁽³⁾). And while the imposition of a tariff could reduce the flow of imports, it is unlikely to change the trade balance unless it fundamentally alters the balance of saving and investment. Further, economists think that protectionist policies helped precipitate the collapse of international trade in the early 1930s, and this trade shrinkage was a plausible seed of World War II. So, while protectionism has not been much used in practice as a macroeconomic policy (especially in advanced countries), most economists also agree that it should not be used as a macroeconomic policy. Times change. Some economies have recently begun to use commercial policy, seemingly for macroeconomic objectives. So it seems an appropriate time to study what, if any, the macroeconomic consequences of tariffs have actually been in practice. Most of the predisposition of the economics profession against protectionism is based on evidence that is either a) theoretical, b) micro, or c) aggregate and dated. 1. For example, see the survey on free trade in Initiative on Global Markets (University of Chicago Booth School of Business): http://www.igmchicago.org/surveys/free-trade. 2. Dornbusch, Rudiger, 1974, “Tariffs and Nontraded Goods,” Journal of International Economics, vol. 4(2), pp. 177-85. 3. Edwards, Sebastian, 1989, Real Exchange Rates, Devaluation, and Adjustment (Cambridge, Massachusetts: MIT Press). Rieth I 3 Free trade/Boer/Rieth: (…) we estimate* and compare the macroeconomic effects of the many shifts in US trade policy since the 1960s. Historical decompositions show that the Nixon and Ford tariff shocks in 1971 and 1975 left only small and short scars on GDP. Against this, the swing from protection in the 1980s (vis-`a-vis Japan) to free trade in the 1990s (NAFTA, GATT/WTO) had large and long-lasting positive effects: quarterly output-to-trend increased by 1-3 log points for twenty years. The modest cost was a widening of the trade deficit by 0.5 percentage points of GDP per quarter over this period. 2016 reversed the swing. Protectionism: We find that the return to protectionism narrowed the trade deficit at the expense of depressing GDP. The estimated output costs for 2018/19 are 2%. Going forward, a structural scenario analysis suggests that reducing tariffs and uncertainty to their pre-2016 levels would unlock a cumulative output gain of 4% over three years. Overall, the results imply that the gains of stable free trade relations can be higher than suggested by partial equilibrium or static general equilibrium trade models once the dynamic general equilibrium effects are accounted for. >Trade models, >Economic models, >Free market. Rieth I 4 Trade policy: Moreover, the disaggregated results indicate that the capability of trade policy to reallocate economic activity or employment across sectors or space within a country is limited. Tariffs: Finally, the findings also inform policy makers and researcher that they need to be more concerned about the level of tariffs than about the uncertainty surrounding these. >Market uncertainty, >Tariffs, >Trade policy, >Tariff history, >Economic uncertainty. * Lukas Boer and Malte Rieth (2024). The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty. IMF Working Paper 24/13. International Monetary Fund.	Ostry I Jonathan D. Ostry Davide Furceri Andrew K. Rose, Macroeconomic Consequences of Tariffs. IMF Working Paper. WP/19/9.International Monetary Fund. Washington, D.C. 2019 Rieth I Malte Rieth Lukas Boer The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty. IMF Working Paper 24/13. International Monetary Fund. Washington, D.C. 2024
Free Trade	Ostry	Ostry I 3 Tariffs/Free trade/Furceri/Hannan/Ostry/Rose: More than on any other issue, there is agreement amongst economists that international trade should be free.(1) This view dates back to (at least) Adam Smith and is supported by much reasoning. In general, economists believe that freely-functioning markets best allocate resources, at least absent some distortion, externality or other market failure; competitive markets tend to maximize output by directing resources to their most productive uses. >Market failure, >Markets, >Free markets, >Trade, >International trade, >Competition. Of course, there are market imperfections, but tariffs - taxes on imports - are almost never the optimal solution to such problems. Tariffs encourage the deflection of trade to inefficient producers, and smuggling to evade tariffs; such distortions reduce welfare. >Welfare, >Imperfect competition, cf. >Perfect competition. Consumption: Further, consumers lose more from a tariff than producers gain, so there is “deadweight loss”. The redistributions associated with tariffs tend to create vested interests, so harms tend to persist. Broad-based protectionism can also provoke retaliation which adds further costs in other markets. All these losses to output are exacerbated if inputs are protected, since this adds to production costs. >Production, >Production costs, >Protectionism, >Consumption, >Market Imperfections. Ostry I 4 (…) there are strong theoretical reasons that economists abhor the use of protectionism as a macroeconomic policy; for instance, the broad imposition of tariffs may lead to offsetting changes in exchange rates (Dornbusch, 1974⁽²⁾; Edwards, 1989⁽³⁾). And while the imposition of a tariff could reduce the flow of imports, it is unlikely to change the trade balance unless it fundamentally alters the balance of saving and investment. Further, economists think that protectionist policies helped precipitate the collapse of international trade in the early 1930s, and this trade shrinkage was a plausible seed of World War II. So, while protectionism has not been much used in practice as a macroeconomic policy (especially in advanced countries), most economists also agree that it should not be used as a macroeconomic policy. Times change. Some economies have recently begun to use commercial policy, seemingly for macroeconomic objectives. So it seems an appropriate time to study what, if any, the macroeconomic consequences of tariffs have actually been in practice. Most of the predisposition of the economics profession against protectionism is based on evidence that is either a) theoretical, b) micro, or c) aggregate and dated. 1. For example, see the survey on free trade in Initiative on Global Markets (University of Chicago Booth School of Business): http://www.igmchicago.org/surveys/free-trade. 2. Dornbusch, Rudiger, 1974, “Tariffs and Nontraded Goods,” Journal of International Economics, vol. 4(2), pp. 177-85. 3. Edwards, Sebastian, 1989, Real Exchange Rates, Devaluation, and Adjustment (Cambridge, Massachusetts: MIT Press).	Ostry I Jonathan D. Ostry Davide Furceri Andrew K. Rose, Macroeconomic Consequences of Tariffs. IMF Working Paper. WP/19/9.International Monetary Fund. Washington, D.C. 2019
Friendship	Developmental Psychology	Upton I 105 Friendship/Developmental psychology/Upton: Middle childhood brings clear changes in the understanding of friendship. Early childhood: here, friendships are transient in nature and are often related to the availability of the other person. A friend is defined as someone you play with or with whom you share some other activity. In middle childhood, children’s relationships still tend to be with others who are similar to themselves; this is partly because children are more likely to come into proximity because of similarities in age, socio-economic status, ethnicity, etc. However, there is also evidence that children also become increasingly similar to their friends as they interact (Hartup, 1996)⁽¹⁾. >Stages of development. Middle childhood: children begin to identify the special features of friendship that supersede mere proximity. During this period of development, children begin to recognise that friendships provide companionship, help, protection and support (Azmitia et aL, 1998)⁽²⁾, are reciprocal (Selman, 1980)⁽³⁾, demand trust and loyalty (Bigelow, 1977)⁽⁴⁾ and last over time (Parker and Seal. 1996)⁽⁵⁾. >Social relations, >Relationships. That is not to say that friendships made in middle childhood endure for long periods. School-age children often have what have been called ‘fair-weather friends’, because friendships at this age are often unable to survive periods of conflict or disagreement (Rubin et al.. 1998)⁽⁶⁾. Upton I 106 Gender differences: There also appear to be gender differences in the time it takes to mend broken friendships. Azmitia et al. (1998)(2) observed that, following friendship conflict, boys would typically work it through and renew the friendship in one day, whereas girls would take about two weeks. This may be because triads are more common in the friendships of school-age girls than in those of boys, causing one member of the group to feel left out. By the end of middle childhood, friendships are becoming intimate, and are characterised by an enduring sense of trust in each other. The ability to engage in mutual role-taking and collaborative negotiation develops throughout this period, leading to greater loyalty, trust and social support. For example, Azmitia et al. (1998)⁽²⁾ found that girls’ expectations that friends would keep secrets rose from 25 per cent in eight to nine year olds, to 72 per cent in 11 to 12 year olds. However, this expectation developed slightly later in boys. Thus, the ability to form close, intimate friendships becomes increasingly important as children move towards early adolescence (Buhrmester, 1990)⁽⁷⁾. 1. Hartup. WW (1996) The company they keep: friendships and their developmental signifi cance. Child Development, 67: 1-13. 2. Azmitia, M, Kamprath, N and Linnet, J (1998) Intimacy and conflict: on the dynamics of boys’ and gir1s friendships during middle childhood and adolescence, in Meyer, L, Grenot-Scheyer, M, Harry, B, Park, H and Schwartz, I (eds) Understanding the Social Lives of Children and Youth. Baltimore, MD: PH Brookes. 3. Selman, RL (1980) The Growth of Interpersonal Understanding. New York: Academic Press. 4. Bigelow, BJ (1977) Children’s friendship expectations: a cognitive-developmental study. Child Development, 48: 246-53. 5. Parker, JG and Seal, J (1996) Forming, losing, renewing and replacing friendships: applying temporal parameters to the assessment of children’s friendship experiences. Child Development, 67(5): 2248-68. 6. Rubin, KH, Bukowski, W and Parker, JG (1998) Peer interactions, relationships, and groups, in Eisenberg, N (ed.) Handbook of Child Psychology, Vol. 3: Social, emotional, and personality development (6th edn). New York: Wiley. 7. Buhrmester, D (1990) Intimacy of friendship, interpersonal competence, and adjustment During preadolescence and adolescence. Child Development, 61: 1101-11. Upton I 120 Friendship/adolescence/Developmental psychology/Upton: Friendships are (…) gradually becoming more stable during [adolescence] (Epstein, 1986)⁽¹⁾, although they may be disrupted by transitions such as changing class or school (Wargo Aikins et al., 2005)⁽²⁾. >Peer relationships/Developmental psychology. Upton I 121 However, high-quality friendships, which are marked by intimacy, openness and warmth, are more likely to be maintained despite such transitions (Wargo Aikins et al., 2005)⁽²⁾. Indeed, there is an increased emphasis on intimacy and self-disclosure throughout adolescence (Zarbatany et al., 2000)⁽³⁾, although there is some evidence to suggest that greater levels of intimacy are reported by girls than by boys (Buhrmester, 1996)⁽⁴⁾. This increasing intimacy and self-disclosure has been suggested to be fundamentally important for the adolescent’s developing sense of self, as well as for the understanding of relationships (Parker and Gottman, 1989)⁽⁵⁾. >Self/Developmental psychology, >Youth culture/Developmental psychology. 1. Epstein, JL (1986) Friendship selection: developmental and environmental influences, in Meuller, E and Cooper, C (eds) Process and Outcome in Peer Relationship. New York: Academic Press. 2. Wargo Aitkins, J, Bierman, K and Parker, JG (2005) Navigating the transition to junior high school: the influence of pre-transition friendship and self-system characteristics. Social Development, 14:42-60. 3. Zarbatany, L, McDougall, P and Hymel, S (2000) Gender-differentiated experience in the peer culture: links to intimacy in preadolescence. Social Development, 9(1): 6 2-79. 4. Buhrmester, D (1996) Need fulfillment, interpersonal competence, and the developmental contexts of early adolescent friendship, in Bukowski, W, Newcomb, A and Hartup, W (eds) The Company They Keep. New York: Cambridge University Press. 5. Parker, J and Gottman, 1(1989) Social and emotional development in a relational context, in Bernat, T and Ladd, G (eds) Peer Relationships in Child Development. New York: Wiley and Sons.	Upton I Penney Upton Developmental Psychology 2011
Gain and Loss	Rothbard	Rothbard III 511 Gain and Loss/Rothbard: A grave error is made by a host of writers and economists in considering only profits in the economy. Almost no account is taken of losses. The economy should not be characterized as a “profit economy,” but as a “profit and loss economy.”⁽¹⁾ Losses: A loss occurs when an entrepreneur has made a poor estimate of his future selling prices and revenues. He bought factors, say, for 1,000 ounces, developed them into a product, and then sold it for 900 ounces. >Entrepreneurship/Rothbard. Speculation: He erred in not realizing that the factors were overpriced and overcapitalized on the market in relation to their discounted marginal value products, i.e., to the prices of his output. >Production factors/Rothbard. Profit: Every entrepreneur, therefore, invests in a process because he expects to make a profit, i.e., because he believes that the market has underpriced and undercapitalized the factors in relation to their future rents. If his belief is justified, he makes a profit. If his belief is unjustified, and the market, for example, has really overpriced the factors, he will suffer losses. The nature of loss has to be carefully defined. Suppose an entrepreneur, the market rate of interest being 5 percent, buys factors at 1,000 and sells their product for 1,020 one year later. Has he suffered a “loss” or made a “profit”? Rothbard III 512 At first, it might seem that he has not taken a loss. After all, he gained back the principal plus an extra 20 ounces, for a 2-percent net return or gain. However, closer inspection reveals that he could have made a 5-percent net return anywhere on his capital, since this is the going interest return. >Interest rate. He could have made it, say, investing in any other enterprise or in lending money to consumer-borrowers. In this venture he did not even earn the interest gain. Costs: The “cost” of his investment, therefore, was not simply his expenses on factors—1,000—but also his forgone opportunity of earning interest at 5 percent, i.e., an additional 50. He therefore suffered a loss of 30 ounces. Rothbard III 514 Def profit/Rothbard: (…) profits are an index that maladjustments are being met and combatted by the profit-making entrepreneurs. These maladjustments are the inevitable concomitants of the real world of change. Entrepreneur: A man earns profits only if he has, by superior foresight and judgment, uncovered a maladjustment - specifically an undervaluation of certain factors by the market. By stepping into this situation and gaining the profit, he calls everyone’s attention to that maladjustment and sets forces into motion that eventually eliminate it. If we must condemn anyone, it should not be the profit-making entrepreneur, but the one that has suffered losses. For losses are a sign that he has added further to a maladjustment (…) Rothbard III 515 Market: The market is no respecter of past laurels, however large. Moreover, the size of a man’s investment is no guarantee whatever of a large profit or against grievous losses. Capital does not “beget” profit. >Entrepreneurship/Mises. Rothbard III 812 Gains and losses/Rothbard: When a change in the money relation causes prices to rise, the man whose selling price rises before his buying prices gains, and the man whose buying prices rise first, loses. The one who gains the most from the transition period is the one whose selling price rises first and buying prices last. Conversely, when prices fall, the man whose buying prices fall before his selling price gains, and the man whose selling price falls before his buying prices, loses. >Money market/Rothbard, >Money supply/Rothbard, >Demand for money/Rothbard. Causation/gains and losses: (…) there is nothing about rising prices that causes gains or about falling prices that causes losses. In either situation, some people gain and some people lose from the change, the gainers being the ones with the greatest and lengthiest positive differential between their selling and their buying prices, and the losers the ones with the greatest and longest negative differential in these movements. Which people gain and which lose from any given change is an empirical question, dependent on the location of changes in elements of the money relation, institutional conditions, anticipations, speeds of reaction, etc. >Buying price/Rothbard, >Selling price/Rothbard, >Price/Rothbard, >Purchasing power/Rothbard. 1. “One thing I miss . . . in discussion generally in the field, is any use of words recognizing that profit means profit or loss and is in fact as likely to be a loss as a gain.” Frank H. Knight, “An Appraisal of Economic Change: Discussion,” American Economic Review, Papers and Proceedings, May, 1954, p. 63. Professor Knight’s great contributions to profit theory are in sharp contrast to his errors in capital and interest theory. See his famous work, Risk, Uncertainty, and Profit (3rd ed.; London: London School of Economics, 1940). Perhaps the best presentation presentation of profit theory is in Ludwig von Mises, “Profit and Loss” in Planning for Freedom (South Holland, Ill.: Libertarian Press, 1952), pp. 108–51.	Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Goals	Thomas Aquinas	Dennett I 85 Purpose/Thomas Aquinas: Thomas assumed that rain drops, volcanoes, planets behaved as if they were striving for an aim to "achieve the best result". The adjustment of the means to the purpose requires an intention: God. >God, cf. >Purposive action.	Dennett I D. Dennett Darwin’s Dangerous Idea, New York 1995 German Edition: Darwins gefährliches Erbe Hamburg 1997 Dennett II D. Dennett Kinds of Minds, New York 1996 German Edition: Spielarten des Geistes Gütersloh 1999 Dennett III Daniel Dennett "COG: Steps towards consciousness in robots" In Bewusstein, Thomas Metzinger Paderborn/München/Wien/Zürich 1996 Dennett IV Daniel Dennett "Animal Consciousness. What Matters and Why?", in: D. C. Dennett, Brainchildren. Essays on Designing Minds, Cambridge/MA 1998, pp. 337-350 In Der Geist der Tiere, D Perler/M. Wild Frankfurt/M. 2005
Gold Standard	Eichengreen	Mause I 95 Goldstandard/Eichengreen: The gold standard was a rigid system of fixed exchange rates that severely limited the economic autonomy of the nation states and tended to have a procyclical effect: if a country got into economic difficulties and suffered a corresponding outflow of foreign exchange, the balance could only be restored through deflation - an adjustment path that entailed considerable social costs, especially in the form of unemployment. The international economic order based on the gold standard was only possible as long as the working class remained essentially politically excluded. ⁽¹⁾ The gold standard ensured that social policy regulation was largely a matter for the nation states, while the international economic order (despite moderately rising tariffs) remained liberal. The attempt to revive the gold standard after 1932 failed, not only for political reasons, but also because the classic neoclassical economic ideas underlying this system were increasingly challenged by approaches that suggested that the state could and had to intervene in the economic cycle in a regulatory manner. KeynesVsGold Standard, see Golla ⁽²⁾. >J.M. Keynes, >Keynesianism, >Interventions, >Neoclassical economics, >Monetary policy, >Monetarism. 1. Cf. B. Eichengreen, Marc Flandreau, Hrsg. The gold standard in theory and history, Bd. 2. London 1997. 2. G. Golla, Nachfrageseitige Konzeptionen zur Zeit der Weltwirtschaftskrise in Deutschland: Keynesianer vor Keynes? Köln 1996.	EconEich I Barry J. Eichengreen Marc Flandreau The gold standard in theory and history London 1997 Mause I Karsten Mause Christian Müller Klaus Schubert, Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018
Goods	Hayek	Boudreaux II 21 Goods/specialization/knowledge/Hayek/Boudreaux: […] goods exist not because some great and ingenious human plan called them into being. Instead, they exist because of a social institution that encourages people to specialize in learning different skills, as well as to learn different slices of knowledge and gather different bits of information about the real world. This social institution also sends out signals to these hundreds of millions of specialist producers, informing each of them how best to use his or her special skills and knowledge so that the resulting outputs of the economy will satisfy genuine consumer demands—and do so at costs that are as low as possible. Production: [e.g., ink and paper] if these signals are reasonably accurate, the loggers’ activities are coordinated well with those of the paper mill: neither too few nor too many trees are cut down. And the paper-mill’s activities are coordinated well with those of the printer: neither too little nor too much paper of the sort that you hold in your hands now is produced. Boudreaux II 24 One of the most notable facts of life in modern market economies is that each and every one of the things that we enjoy as consumers is something that no person knows in full how to produce. There is conscious planning and adjustment going on at the level of each individual and each firm and each distinct organization. But there is no overarching - no “central” - plan for the whole. >Spontaneous order.	Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014
Grief	Psychological Theories	Upton I 157 Grief/Psychological theories/Upton: According to Archer (1999)⁽¹⁾, a widely held belief is that grief follows an orderly series of stages or phases with distinct features. Traditional models have one main commonality - the need for grief work - which is described as an effortful process that we must go through entailing confrontation of the reality of loss and gradual acceptance of the world without the loved one (Stroebe, 1998)⁽²⁾. All models emphasize the need to experience all of these stages in order to reach an acceptance of the loss that has been experienced. Grief work models can be applied to the grief process that either adults or children will go through before reaching acceptance, although, as the next section shows, age will impact on how grief is displayed. Parkes’s (1972⁽³⁾, 1986⁽⁴⁾) four-stage model describes the phases of bereavement and, in turn, the grief work that an individual). According to this model, an individual has to work through the stages of grief in order to reach acceptance and move forward in life. Phase One: Initial reaction: shock, numbness or disbelief Phase Two: Pangs of grief, searching, anger, guilt, sadness and fear Phase Three: Despair Phase Four: Acceptance/adjustment; gaining a new identity. >Death/Developmental psychology, >Dying/Kübler-Ross. Upton I 163 Sometimes a distinction is made between grief and mourning; grief is seen as a subjective state - a set of feelings that arise spontaneously after a significant death, whereas mourning describes the way in which grief is displayed. Mourning is often constrained by the rituals or behaviours prescribed by a culture. The Western approach to bereavement is not universal and displays of grief and mourning take different forms across the world. >Grief/Cultural psychology. 1. Archer,J (1999) The Nature of Grief: The evolution and psychology of reactions to loss. New York: Routledge. 2. Stroebe, MS (1998) New directions in bereavement research: exploration of gender differences. Palliative Medicine, 12(1): 5-12. 3. Parkes, CM (1972) Bereavement: Studies of grief in adult life. Harmondsworth: Penguin. 4. Parkes, CM (1986) Bereavement: Studies of grief life (2nd edn). London: Tavistock.	Upton I Penney Upton Developmental Psychology 2011
Homogenization	Storch	Norgaard I 116 Homogenization/Parameterization/von Storch: The climate system has different ‘compartments’ (…). (…) due to the unavoidable discrete description of the system, turbulence cannot be described in mathematical accuracy, and the equations need to be ‘closed’—the effect of friction, in particular at the boundaries between land, atmosphere, and ocean, need to be ‘parameterized’ (e.g. Washington and Parkinson 2005)⁽¹⁾. Norgaard I 117 The basic idea is that there is a set of ‘state variables’ {Ψ} (among them the temperature field at a certain time t at certain discrete positions on the globe), which describe the system, and which dynamics is given by a differential equation d{Ψ}/dt = F({Ψ}). [An] aspect of parameterizations is their strong dependence on the spatial resolution. When the model is changed to run on a higher resolution, the parameterizations need to be reformulated or respecified. There is no rule how to do that, when the spatial resolution is increased—which means that the difference equations do not converge towards a pre‐specified set of differential equations, or, in other words: there is nothing like a set of differential equations describing the climate system per se, as is the case in most physical disciplines. >Parameterization. Norgaard I 120 [Another aspect is that] the ‘instrumental’ data usually suffer from ‘inhomogeneities’ (e.g. Jones 1995⁽²⁾; Karl et al. 1993⁽³⁾). Before using such data in climate analysis, the series have to be ‘homogenized’ (e.g. Peterson et al. 1998)⁽⁴⁾. 1. Washington, W. M., and Parkinson, C. L. 2005. An Introduction to Three‐Dimensional Climate Modelling. 2nd edn., Sausalito, CA: University Science Books. 2. Jones, P. D. 1995. The instrumental data record: Its accuracy and use in attempts to identify the ‘CO2 Signal’. Pp. 53–76 in H. von Storch and A. Navarra (eds.), Analysis of Climate Variability: Applications of Statistical Techniques. Berlin: Springer Verlag. 3. Karl, T. R., Quayle, R. G., and Groisman, P. Y. 1993. Detecting climate variations and change: New challenges for observing and data management systems. J. Climate 6: 1481–94. 4. Peterson, T. C., Easterling, D. R., Karl, T. R., Groisman, P., Nicholls, N., Plummer, N., Torok, S., Auer, I., Boehm, R., Gullett, D., Vincent, L., Heino, R., Tuomenvirta, H., Mestre, O., Szentimrey, T., Saliner, J., Førland, E., Hanssen‐Bauer, I., Alexandersson, H., Jones, P., and Parker, D. 1998. Homogeneity adjustments of in situ atmospheric climate data: A review. Intern. J. Climatol. 18: 1493–517. Hans von Storch, Armin Bunde, and Nico Stehr, „Methodical Challenges of the Physics of Climate”, in: John S. Dryzek, Richard B. Norgaard, David Schlosberg (eds.) (2011): The Oxford Handbook of Climate Change and Society. Oxford: Oxford University Press.	Norgaard I Richard Norgaard John S. Dryzek The Oxford Handbook of Climate Change and Society Oxford 2011
Ignorance	Acemoglu	Acemoglu I 63 Ignorance/inequalities/economy/poorness/Acemoglu/Robinson: The ignorance hypothesis maintains that poor countries are poor because they have a lot of market failures and because economists and policymakers do not know how to get rid of them and have heeded the wrong advice in the past. Acemoglu I 64 AcemogluVsIgorance hypothesis: neither Ghana’s disappointing performance after independence nor the countless other cases of apparent economic mismanagement can simply be blamed on ignorance. After all, if ignorance were the problem, well-meaning leaders would quickly learn what types of policies increased their citizens’ incomes and welfare, and would gravitate toward those policies. Corruption instead of ignorance: It wasn’t differences in knowledge or intentions between John Smith and Cortés that laid the seeds of divergence during the colonial period, and it wasn’t differences in knowledge between later U.S. presidents, such as Teddy Roosevelt or Woodrow Wilson, and Porfirio Díaz that made Mexico choose economic institutions that enriched elites at the expense of the rest of society at the end of the nineteenth and beginning of the twentieth centuries while Roosevelt and Wilson did the opposite. Rather, it was the differences in the institutional constraints the countries’ presidents and elites were facing. Similarly, leaders of African nations that have languished over the last half century under insecure property rights and economic institutions, impoverishing much of their populations, did not allow this to happen because they thought it was good economics; they did so because they could get away with it and enrich themselves (...). Acemogu I 66 The ignorance hypothesis differs from the geography and culture hypotheses in that it comes readily with a suggestion about how to “solve” the problem of poverty: if ignorance got us here, enlightened and informed rulers and policymakers can get us out and we should be able to “engineer” prosperity around the world by providing the right advice and by convincing politicians of what is good economics. [But] (...) the main obstacle to the adoption of policies that would reduce market failures and encourage economic growth is not the ignorance of politicians but the incentives and constraints Acemoglu I 67 constraints they face from the political and economic institutions in their societies. >Economic policies/Acemoglu, >Institutions/Acemoglu. The idea that ignorance explains comparative development is implicit in most economic analyses of economic development and policy reform: for example, Williamson (1990)⁽¹⁾; Perkins, Radelet, and Lindauer (2006)⁽²⁾; and Aghion and Howitt (2009)⁽³⁾. A recent, forceful version of this view is developed in Banerjee and Duflo (2011)⁽⁴⁾. 1.Williamson, John (1990). Latin American Adjustment: How Much Has Happened? Washington, D.C.: Institute of International Economics. 2.Perkins, Dwight H., Steven Radelet, and David L. Lindauer (2006). Development Economics. 6th ed. New York: W. W. Norton and Co. 3.Aghion, Philippe, and Peter Howitt (2009). The Economics of Growth. Cambridge, Mass.: MIT Press. 4.Banerjee, Abhijit V., Esther Duflo, and Rachel Glennerster (2008). “Putting a Band-Aid on a Corpse: Incentives for Nurses in the Indian Public Health Care System.” System.” Journal of the European Economic Association 7: 487–500.	Acemoglu II James A. Acemoglu James A. Robinson Economic origins of dictatorship and democracy Cambridge 2006 Acemoglu I James A. Acemoglu James A. Robinson Why nations fail. The origins of power, prosperity, and poverty New York 2012
Import Substitution	Alessandria	Alessandria I 6 Import Substitution/Alessandria/Ding/Khan/Mix: [We]* focus on substitution between imports and domestic production. Both approaches show a one year import response to tariffs that is between 3 and 4 while a long-run response is considerably higher, perhaps as high as 20 times the tariff change. Alessandria I 7 The median tariff on imports from China rises from about 3 percent to 25 percent, while the trade weighted tariff from China rises to about 12 percent. The median and trade-weighted tariffs from the ROW (rest of the world) are fairly stable. The higher tariffs on China increased the aggregate trade-weighted tariff, but it has drifted back somewhat. The increase in tariffs on Chinese goods has gradually reduced imports from China. Prior to the increase in tariffs, Chinese imports were about 21 percent of US imports. That has fallen to about 12.5 percent at the end of 2024. Owing to relatively high tariffs on Chinese imports, the share of total US tariff revenue that comes from Chinese imports exceeds the import share. It was about 40 percent prior to the imposition of tariffs. It rose to almost 70 percent and has now drifted down to about 60 percent as agents have substituted away from China. >Tariffs, >International trade, >Tariff history, >Trade wars. Alessandria I 8 Macro level: In many dynamic models, and the data, the number of firms and the import price responds endogenously to changes in the tariff over time through changes in the number and quality of importers. And these decisions depend on changes to the entire path of tariffs. Since Feenstra (1994)⁽¹⁾ it is understood that price indices do not include these variety effects Consistent with the evidence from changes in tariffs on China, we* find a short-run response to a tariff change that is relatively low, say 3 to 4 in a year, while the long-run response is considerably higher. Including these dynamic adjustment terms substantially improves the fit of the empirical model. Alessandria I 9 Beyond differences owing** to the anticipation and persistence of the reforms, one reason for the stronger longrun response is the tendency of applied tariffs to be considerably lower than statutory tariffs. >Capital stock/Alessandria. * George A. Alessandria, Jiaxiaomei Ding, Shafaat Y. Khan, and Carter B. Mix. (2025) The Tariff Tax Cut: Tariffs as Revenue NBER Working Paper No. 33784 May 2025 ** Alessandria et al. (2025c)⁽²⁾ argue that the dynamics of substitution are influenced by changes in expectations of the permanence of the reform. Alessandria et al. (2025a)⁽³⁾ show that these reduced form estimates of the trade response to a change in tariffs are biased downwards by the stochastic nature of trade policy. 1. Feenstra, Robert C., “New Product Varieties and the Measurement of International Prices,” The American Economic Review, 1994, 84 (1), 157–177. 2. George A. Alessandria, Shafaat Khan, and Armen Khederlarian, “Inventories, Integration, Productivity and Welfare,” AEA Papers and Proceedings, May 2025, 115. 3. George A. Alessandria, Shafaat Yar Khan, Armen Khederlarian, Kim J Ruhl, and Joseph B Steinberg, “Recovering Credible Trade Elasticities from Incredible Trade Reforms,” Working Paper 33568, National Bureau of Economic Research March 2025.	Alessandria I George A. Alessandria Jiaxiaomei Ding Shafaat Y. Khan, The Tariff Tax Cut: Tariffs as Revenue NBER Working Paper No. 33784 May 2025 Cambridge, MA 2025
Induction	Goodman	I 23 Defi Induction/Goodman: induction requires that some classes are seen as relevant classes by excluding others. >Relevance. --- II 82 The sharpest criticism VsHume/Goodman: Hume's analysis relates at best to the origin of predictions, not to their entitlement. II 88 The problem of induction is not a problem of proof, but a problem of definition of the difference between justified and unjustified predictions. >Justification, >Prediction. II 89 There is mutual adjustment between definition and language use. II 101f Grue/Goodman: problem: the same data supports contrasting predictions. Question: in what essential property must hypotheses be the same > law: are not in connection with e.g. an object in my pocket. "Grue" does not work as a conventional non-law-like hypotheses (it is limited in space or time) - one can reverse the derivation: red and green from gred and reen. II 109 Law-like or resumable hypotheses are not to be characterized purely syntactically. II 95 What confirms certain data, is not what is obtained by generalization of separate individual cases, but that which is obtained by generalization of the entire body of data material.	G IV N. Goodman Catherine Z. Elgin Reconceptions in Philosophy and Other Arts and Sciences, Indianapolis 1988 German Edition: Revisionen Frankfurt 1989 Goodman I N. Goodman Ways of Worldmaking, Indianapolis/Cambridge 1978 German Edition: Weisen der Welterzeugung Frankfurt 1984 Goodman II N. Goodman Fact, Fiction and Forecast, New York 1982 German Edition: Tatsache Fiktion Voraussage Frankfurt 1988 Goodman III N. Goodman Languages of Art. An Approach to a Theory of Symbols, Indianapolis 1976 German Edition: Sprachen der Kunst Frankfurt 1997
Inflation	Friedman	Landsburg I 16 Inflation/Friedman/Landsburg: Inflation is always caused by people trying to get rid of money, not all at once, but steadily over a substantial period of time. This is the analysis that led to Milton Friedman's famous declaration that "inflation is always and everywhere a monetary phenomenon." Tradition: Prior to Friedman, this was controversial. In those dark days, one frequently heard talk of "cost-push inflation," in which, say, increasing wage demands from workers lead to rising prices for consumer goods, leading to increasing wage demands from workers, and so on around the vicious circle. FriedmanVsTradition: Friedman insisted - and successfully convinced most economists - that this superficially plausible story makes no sense. One way or another, the quantity of money demanded has to equal the quantity of money supplied. Equilibrium/solution/Friedman: Prices must adjust until that equilibrium is reached. This leaves no room for anything else to affect the price level. The next obvious question is: Why should we care about the price level and inflation in the first place, and what outcomes should the monetary authorities be aiming for?* >Price level, >Equilibrium, >Price. Landsburg I 20 If Bob knows he lives in a world where prices sometimes jump, he can always insist on Ioan contracts with automatic adjustment clauses, so that Alice is always required to repay enough dollars to buy two hamburgers, whatever that number of dollars might be. Price level: And even if Bob's foresight fails him, so that he fails to include that clause and takes a big loss when the price level doubles, it's not the kind of loss economists usually worry too much about. That's because Bob's loss is Alice's gain, so that overall the populace (which includes both Alice and Bob) is no better or worse off than before. So a one-time jump in the price level is, at least to a very good approximation, nothing to worry about. Inflation: You might be tempted to conclude that inflation is nothing to worry about either. After all, inflation is just an ongoing series ofjumps in the price level, right? Not so! >Inflation/Rothbard, >Inflation/Mises. Let's think this through from the beginning again. On Monday morning, Alice the average citizen is holding 10 weeks' income in her purse and her checking account. a) On Monday at noon, the money supply doubles, and now Alice holds 20 weeks' income. But she only wants to hold 10 weeks' income, and therefore tries to get rid of money by buying things. Eventually prices are bid up to twice this morning's level, and Alice now happily holds her share ofthe new money, which is equal to 10 weeks' income - her goal all along. b) Now tweak the story: On Monday at noon, the government doubles the money supply and announces plans to double it again every day at noon. As a result, Alice decides that, going forward, she wants to hold only 8 weeks' income, not 10. Why? Because she now expects an ongo- ing inflation - which means she expects the money in her pocket and her checking account to lose value overnight. That prospect makes holding money less attractive. So on Monday afternoon, Alice (along with many others) tries to get rid of money by buying things. Eventually, prices get bid up to twice this morning's level, leaving Alice holding 10 weeks' income, which is still more than she wants. Therefore she continues trying to buy things, driving prices up still further. Landsburg I 21 Money supply: if the money supply doubles on Monday, with further increases expected to follow on Tuesday, Wednesday, Thursday and Friday, then the price level must more than double on Monday. Price level/inflation: At some point during the onset ofan inflation, the price level must risefaster than the money supply. Friedman called this phenomenon overshooting, which might have been an unfortunate vocabulary choice because it seems to suggest that someone has made a mistake or missed a target. Problem: Nothing of the sort is true; Alice wants to reduce the real value of her money holdings - the number of hamburgers her pocket change can buy and the number of home repairs her checking account balance can cover - and by the end of the day she's done exactly that. *SolowVsFriedman: Robert Solow's remark contrasting Milton Friedman's obsessions with his own appears in his contribution to a book of essays called Guidelines, Informal Controls, and the Marketplace, edited by George Shultz and Robert Aliber, and published by the University of Chicago Press in 1966. ⁽¹⁾ Demand for Money/Money supply/Friedman: Friedman's analysis of the demand and supply for money, together with the conclusion that "inflation is always and everywhere a monetary phenomenon" and the implications for monetary policy, is spread out over many of Friedman's articles and essays, many of which are collected in a volume called The Optimum Quantity of Money and Other Essays, published in 1969 by Aldine⁽²⁾. Many of these essays are fairly technical, but Friedman provided a good and largely non-technical overview in a 14-page essay titled The Counter-Revolution in Monetary Theory, published in 1970 by the Institute for Economic Affairs.⁽²⁾ 1. Solow, R. (1966). In: Guidelines, Informal Controls, and the Marketplace. George Shultz and Robert Aliber (eds). University of Chicago Press. 2. Friedman, M. (1969). The Optimum Quantity of Money and Other Essays. Aldine. 3. Friedman, M. (1970). The Counter-Revolution in Monetary Theory. Institute for Economic Affairs.	Econ Fried I Milton Friedman The role of monetary policy 1968 Landsburg I Steven E. Landsburg The Essential Milton Friedman Vancouver: Fraser Institute 2019
Inflation Targeting	Taylor	Taylor III Inflation targeting/interest rates/central banking/Wages/Economics/TaylorVsSummers/TaylorVsStansbury/Lance Taylor: Regarding inflation, both central banks and [Summers and Stansbury] ignore the facts that inflation is a cumulative process driven by conflicting claims to income and wealth and that for the past five decades profits have captured almost all the claims. >Inflation targeting/Summers. Consider the real “product wage,” the nominal or money wage divided by a producer price index (PPI) to correct for cost inflation confronting business. A little algebra (…) shows that the labor or wage share of output, which equals real “unit labor cost,” is equal to the real wage divided by productivity or the output/labor ratio. The profit share equals one minus the wage share. (…) the profit share and growth rates of real wages and productivity have varied over time (…). The growth rate of nominal unit labor cost is the difference between rates of wage and productivity growth. As with the other labor market indicators, cost growth slowed after 2000. To unravel the dynamics, we need a theory of inflation. Around the turn of the 20th century the Swedish economist Knut Wicksell pointed out that inflation is a “cumulative process” involving feedback between price and wage inflation rates. Even after their long decline [it] shows that labor payments still make up 55% of production costs and have to enter inflation accounting. The “real balance effect” (or the “inflation tax” in a dynamic version) says that a jump in the price level will reduce the real value of assets with prices fixed in nominal terms – money is the usual example. Wealth is eroded and households are supposed to save more as a consequence. Along with a wage lag, the real balance effect is the key adjustment mechanism in Milton Friedman’s (1968) “inflation” model which still underlies contemporary monetary policy. “Forced saving” happens when a price jump against a constant money wage reduces real payments to wage-earners. If their capacity to borrow is limited, they have to cut consumption, sliding the demand curve downward. If an expansionary package does drive up the price level, middle class and low income households who rely on wages would be the ones to suffer. Conflict arises because price increases are controlled by business while the money wage is subject to bargaining between business and labor. Both sides seek to manipulate the labor share as a key distributional indicator. In an overall inflationary environment, business can respond immediately to increases in the wage share or output by pushing up the rate of price increase in Phillips curve fashion along the “Inflation” schedule (…). Money wages on the other hand are not immediately indexed to price inflation so that they will follow with a lag. Labor will push for faster wage inflation when the wage share is low. Suppose that there is an initial inflation equilibrium (…). The [Summers and Stansbury] proposal to use fiscal policy to stimulate aggregate demand would shift the inflation locus upward (…) with more rapid inflation and a somewhat lower wage share in macro equilibrium (…) along the stable share schedule. In light of the vanishing NAIRU [Non Accelerating Inflation Rate of Unemployment] over the past two decades, it is not clear how strong this upward shift could be. The way that expansionary policy could pay off in terms of inequality and (possibly) faster inflation would be though an upward movement in the stable share schedule if the labor market tightens, leading to greater bargaining power for labor. The new Keynesian inventors are now the ruling elders of macroeconomics, unlikely to change their minds. (…) [Summers and Stansbury] might remember with Max Planck that science advances one funeral at a time. They are certainly correct in saying that “the role of particular frictions and rigidities in underpinning economic fluctuations should be de-emphasized relative to a more fundamental lack of aggregate demand.” (…) many of the correct observations that [Summers and Stansbury] make about the likely ineffectiveness of interest rate changes were raised almost 90 years ago by Keynes’s colleague Piero Sraffa (1932a (1), 1932b (2)) in a controversy with Friedrich von Hayek. Sraffa’s main emphasis was on the inapplicability of a “natural rate” of interest, a point amplified by Keynes in the General Theory. The natural rate, nevertheless, remains a topic of great interest to left-leaning new Keynesians. How they reconcile that idea with the fiscalist Keynesian perspective adoped by [Summers and Stansbury] remains to be seen. >Central banking/Summers. 1. Sraffa, Piero (1932a) “Dr. Hayek on Money and Capital,” Economic Journal, 42: 42-53. 2. Sraffa, Piero (1932b) “Money and Capital: A Rejoinder,” Economic Journal, 42: 249-25. Taylor, Lance: Central Bankers, Inflation, and the Next Recession, in: Institute for New Economic Thinking (03/09/19), URL: http://www.ineteconomics.org/perspectives/blog/central-bankers-inflation-and-the-next-recession	EconTayl I John Brian Taylor Discretion Versus Policy Rules in Practice 1993 Taylor III Lance Taylor Central Bankers, Inflation, and the Next Recession, in: Institute for New Economic Thinking (03/09/19), URL: http://www.ineteconomics.org/perspectives/blog/central-bankers-inflation-and-the-next-recession 9/3/2019 TaylorB II Barry Taylor "States of Affairs" In Truth and Meaning, G. Evans/J. McDowell Oxford 1976 TaylorCh I Charles Taylor The Language Animal: The Full Shape of the Human Linguistic Capacity Cambridge 2016
Information	Hayek	Boudreaux II 66 Information/price/economic cycle/Hayek/Boudreaux: Economic cycles: adjustments in production activities (…) are not instantaneous. They take time. >Relative prices, >Price, >Economic cycle, >Recession, >Depression. Unemployment: Unemployment rises during the time it takes for these adjustments to be made. Workers in industries with unsold inventories are laid off, and time is required for them to find employment elsewhere. Even industries that expand in response to more accurate prices typically require some time to rearrange their production plans and facilities in order to make profitable the hiring of new workers. The time it takes for the firms to adjust away from the production plans they made when prices were inaccurate is time during which unusually large numbers of workers are unemployed. Unemployment: Such unemployment is not caused by too little aggregate demand. Therefore, such unemployment cannot be cured by more government spending or other efforts to raise aggregate demand. Instead, such unemployment is caused by the widespread failure of individual prices to convey accurate information to entrepreneurs and investors about what specific products they should produce and about how best to produce these products. The only way to cure this malinvestment is to allow prices to adjust so that they better reflect consumer desires and the realities of resource availabilities. This cure, again, requires time - time for prices to adjust and for workers to find and move to jobs that are more economically sustainable. >Monetary policy/Hayek. Sunstein I 14 Information/prices/markets/Hayek/Sunstein: a pricing system, as suggested by Friedrich August von Hayek, can help in solving the problem of how (implicit) pressure is exerted in group discussions to withhold potentially crucial information. This has a pronounced effect on the gathering of information. Markets/Hayek: Markets create prices for goods in a way that processes scattered information distributed among very different people. In markets, participants have an extreme incentive to be right. Some information may remain "hidden", but when it comes to making a profit, this information will not be hidden for customers and investors for long. For this reason, market prices reflect a high degree of information.⁽¹⁾ Sunstein: You could say that markets create something like a "Daily Us" see Filter bubbles/Sunstein. SunsteinVsHayek: However, his argumentation had a blind spot. Markets can also process false information. Styles can lead to inflationary prices. This can also affect land and real estate prices. >Markets/Sunstein, Markets/Hayek. I 132 Prediction markets/forecast markets/Sunstein: Examples where information markets are efficient: For example, to recognize tendencies of air pollution, to observe deficits in public budgets ⁽²⁾. For example, tracking outbreaks of diseases and predicting their spread or monitoring the solvency of institutions.⁽³⁾ I 137 Manipulation: Candidate Pat Buchanan's supporters bought large quantities of shares in the IEM (Iowa Electronic Market, a prediction market for elections) in 2000 to manipulate the prediction. However, better informed investors subsequently took advantage of this. 1. Friedrich Hayek, Law, Legislation, and Liberty, vol. 1: Rules and Order (Chicago: University of Chicago Press, 1973) p. 13. 2. See Abramowicz, “Prediction Markets, Administrative Decisionmaking, and Predictive Cost-Benefit Analysis,” pp. 990–92. 3. ibid. pp. 987-90.	Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014 Sunstein I Cass R. Sunstein Infotopia: How Many Minds Produce Knowledge Oxford 2008 Sunstein II Cass R. Sunstein #Republic: Divided Democracy in the Age of Social Media Princeton 2017
Information	Wiener	II 83 Information/Language/Wiener: it is theoretically possible to develop the statistics of semantic and behavioural language in such a way that we obtain a good measure of the amount of information in each system. >Language, >Meaning, >Semantics, >Language behavior. In any case, we can generally show that phonetic language contains less overall information in relation to the input of data... II 84 or in any case it does not contain more than the transmission system leading to the ear and that semantic and behavioural language contains even less information. This fact is a form of the second principle of thermodynamics and is only valid if we consider the transferred information at each stage as maximum information that could be transmitted with an appropriately encrypted receiving system. >Second law of thermodynamics. II 121 The right of ownership of information suffers from the necessary disadvantage that information intended to contribute to the general state of the Community's information must say something substantially different from the community's previous general possession of information. >Innovation, >Message, >Communication. II 122 The idea that information can be stacked in a changing world without noticeably reducing its value is wrong. >Change, >Knowledge. II 123 Information is more of a dynamic matter than a stacking affair. II 124 The time factor is essential in all assessments of the information value. Brockman I 155 Information/Wiener/Kaiser: [Wiener borrowed Shannon’s insight]: if information was like entropy, then it could not be conserved – or contained. >Information/Shannon, >Entropy. Conclusion/Wiener: it was folly for military leaders to try to stockpile the “Scientific know-how of the nation in static libraries and laboratories.”⁽¹⁾ Brockman I 156 Since “information and entropy are not conserved,” they are “equally unsuited to being commodities.”⁽²⁾ Brockman I 157 KaiserVsWiener: what Wiener had in mind, was not what Shannon meant with “information”. Wiener’s treatment of “information” sounded more like Matthew Arnold in 1869⁽³⁾ than Claude Shannon in 1948—more “body and spirit” than “bit.” >Body, >Mind. Brockman I 158 [Today] [i]n many ways, Wiener has been proved right. His vision of networked feedback loops driven by machine-to-machine communication has become a mundane feature of everyday life. >Machine learning, >Human machine communication, >Robots, >Artificial intelligence. 1. Wiener, N. (1950) The Human Use of Human Beings. Boston: Houghton Mifflin. 2. ibid. 3. Matthew Arnold, Culture and Anarchy, ed. Jane Garnett (Oxford, UK: Oxford University Press, 2006). Kaiser, David “”Information” for Wiener, for Shannon, and for Us” in: Brockman, John (ed.) 2019. Twenty-Five Ways of Looking at AI. New York: Penguin Press. Brockman I 179 Information/Wiener/Hillis: “Information is a name for the content of what is exchanged with the outer world as we adjust to it, and make our Brockman I 179 adjustment felt upon it.” In his words, information is what we use to “live effectively within that environment.”⁽¹⁾ For Wiener, information is a way for the weak to effectively cope with the strong. >Outer world, >Inner world, >Behavior, >Adaptation, >Niches. 1. Wiener, N. (1950) The Human Use of Human Beings. Boston: Houghton Mifflin. 17-18. Hillis, D. W. “The First Machine Intelligences” in: Brockman, John (ed.) 2019. Twenty-Five Ways of Looking at AI. New York: Penguin Press.	WienerN I Norbert Wiener Cybernetics, Second Edition: or the Control and Communication in the Animal and the Machine Cambridge, MA 1965 WienerN II N. Wiener The Human Use of Human Beings (Cybernetics and Society), Boston 1952 German Edition: Mensch und Menschmaschine Frankfurt/M. 1952 Brockman I John Brockman Possible Minds: Twenty-Five Ways of Looking at AI New York 2019
Infrastructure	Edwards	I 40 Infrastructure/Star/Ruhleder/Edwards: Infrastructure thus exhibits the following features, (…) summarized by Susan Leigh Star and Karen Ruhleder: -Embeddedness. Infrastructure is sunk into, inside of, other structures, social arrangements, and technologies. -Transparency. Infrastructure does not have to be reinvented each time or assembled for each task, but invisibly supports those tasks. -Reach or scope beyond a single event or a local practice. -Learned as part of membership. The taken-for-grantedness of artifacts and organizational arrangements is a sine qua non of membership in a community of practice. Strangers and outsiders encounter infrastructure as a target object to be learned about. New participants acquire a naturalized familiarity with its objects as they become members. I 41 - Links with conventions of practice. Infrastructure both shapes and is shaped by the conventions of a community of practice. - Embodiment of standards. Infrastructure takes on transparency by plugging into other infrastructures and tools in a standardized fashion. - Built on an installed base. Infrastructure wrestles with the inertia of the installed base and inherits strengths and limitations from that base. - Becomes visible upon breakdown. The normally invisible quality of working infrastructure becomes visible when it breaks: the server is down, the bridge washes out, there is a power blackout. -Is fixed in modular increments, not all at once or globally. Because infrastructure is big, layered, and complex, and because it means different things locally, it is never changed from above. Changes require time, negotiation, and adjustment with other aspects of the systems involved. Adapted from S. L. Star and K. Ruhleder, “Steps Toward an Ecology of Infrastructure: Design and Access for Large Information Spaces,” Information Systems Research 7, no. 1 (1996): 111–.	Edwards I Paul N. Edwards A Vast Machine: Computer Models, Climate Data, and the Politics of Global Warming Cambridge 2013
Innovation	Schumpeter	Rothbard III 856 Innovation/Schumpeter/Rothbard : [In his theory of business cycles] Schumpeter turned to a fourth element, which for him was the generator of all growth as well as of business cycles - innovation in productive techniques. >Business cylcles/Schumpeter. Innovations/RothbardVsSchumpeter: (…) innovations cannot be considered the prime mover of the economy, since innovations can work their effects only through saving and investment and since there are always a great many investments that could improve techniques within the corpus of existing knowledge, but which are not made for lack of adequate savings. This consideration alone is enough to invalidate Schumpeter's business-cycle theory. >Innovations/Rothbard. Clusters of innovation: Finally, Schumpeter's explanation of innovations as the trigger for the business cycle necessarily assumes that there is a recurrent cluster of innovations that takes Place in each boom period. Why should there be such a cluster of innovations? Why are innovations not more or less continuous, as we would expect? Schumpeter cannot answer this question satisfactorily. The fact that a bold few begin innovating and that they are followed by imitators does not yield a cluster, for this process could be continuous, with new innovators arriving on the scene. Schumpeter offers two explanations for the slackening of innovatory activity toward the end of the boom (a slackening essential to his theory). On the one hand, the release of new products yielded by the new investments creates diffculties for old producers and leads to a period of uncertainty and need for „rest“. Hansen stagnation thesis: Schumpeter's second explanation is that innovations cluster in only one or a few industries and that these innovation opportunities are therefore limited. After a while they become exhausted, and the cluster of innovations ceases. This is obviously related to the Hansen stagnation thesis, in the sense that there are alleged to be a certain limited number of "investment opportunities" - here innovation opportunities - at any time, and that once these are exhausted there is temporarily no further room for investments or innovations. Opportunity/RothbardVsSchumpeter: The whole concept of "opportunity" in this connection, however, is meaningless. There is no limit on "opportunity" as long as wants remain unfulfilled. The only other limit on investment or innovation is saved capital available to embark on the projects. But this has nothing to do with vaguely available opportunities which become "exhausted"; the existence of saved capital is a continuing factor. As for innovations, there is no reason why innovations cannot be continuous or take Place in many industries, or Why the innovatory pace has to slacken. KuznetsVsSchumpeter: As Kuznets has shown, a cluster of innovation must assume a cluster of entrepreneurial ability as well, and this is clearly unwarranted. VsVs: Clemence and Doody, Schumpeterian disciples, countered that entrepreneurial ability is exhausted in the act of founding a new firm.⁽¹⁾ But to View entrepreneurship as simply the founding of new firms is completely invalid. Entrepreneurship is not just the founding of new firms, it is not merely innovation; it is adjustment: adjustment to the uncertain, changing conditions of the future.⁽²⁾ This adjustment takes Place, perforce, all the time and is not exhausted in any ssingle act of investment. 1. S.S. Kuznets, "Schumpeter's Business Cycles," American Economic Review, June, 1940, pp. 262- 63; and Richard V. Clemence and Francis S. Doody, The Schumpeterian System (Cambridge: Addison-Wesley Press, 1950), pp. 52 ff 2. In so far as innovation is a regularized business procedure of research and development, rents from innovations will accrue to the research and development workers in firms, rather than to entrepreneurial profits. Cf. Carolyn Shaw Solo, "Innovation in the Capitalist Process: A Critique of the Schumpeterian Theory," Quarterly Journal of Economics, August, 1951, pp. 417-28. Sobel I 9 Invention/Innovation/Schumpeter/Sobel/Clemens: While invention is the creation or discovery of a new product or process, innovation is the successful introduction and adoption of a new product or process in the commercial marketplace. Innovation is basically the economic application of inventions. while Henry Ford did not invent the automobile, his innovation was the use of the assembly line and large-scale manufacturing that brought the price of the automobile within reach of the average family. In each of these cases, the innovator is different from the inventor, and it is the innovator’s role with which Schumpeter is concerned. Perhaps an even more important factor in distinguishing invention from innovation is that most inventions never turn into innovations - that is, not all inventions are profitable business ideas. Incentives/Schumpeter: According to Schumpeter in his later, and perhaps most famous, book Capitalism, Socialism, and Democracy (CSD)⁽¹⁾, “[i]n some cases, however, it is so successful as to yield profits far above what is necessary in order to induce the corresponding investment. These cases then provide the baits that lure capital on to untried trails” (CSD⁽¹⁾: 90). That is, the lure of profits is the incentive for entrepreneurial discovery and capital investment. This is one reason that government policies that reduce the rewards from innovation can be harmful to economic growth and prosperity. Taxation/innovation/Schumpeter: When regulations or taxes reduce the potential profitability of future innovations, fewer attempts are made to discover them. As Schumpeter notes in his book The Economics of Sociology and Capitalism (ESC)⁽²⁾: Entrepreneurial profit proper … arises in the capitalist economy wherever a new method of production, a new commercial combination, or a new form or organization is successfully introduced. It is the premium which capitalism attaches to innovation … If this profit were taxed away, that element of the economic process would be lacking which at present is by far the most important individual motive for work toward industrial progress. Sobel I 10 Even if taxation merely reduced this profit substantially, industrial development would process considerably more slowly, as the fate of Austria plainly shows … there is a limit to the taxation of entrepreneurial profit beyond which tax pressure cannot go without first damaging and then destroying the tax object. (ESC⁽²⁾: 113–114) Sobel I 11 Innovation/economicy/Sobel/Clemens: A growing, vibrant economy depends not only on entrepreneurs discovering, evaluating, and exploiting opportunities to create new goods and services, but also on the speed at which ideas are labeled as successes or failures by the profit-and-loss system. >Business failure/Schumpeter. Innovation/Schumpeter: „Yet innovations in the economic system do not as a rule take place in such a way that first new wants arise spontaneously in consumers and then the productive apparatus swings round through their pressure. We do not deny the presence of this nexus. It is, however, the producer who as a rule initiates economic change, and consumers are educated by him if necessary; they are, as it were, taught to want new things, or things which differ in some respect or other from those which they have been in the habit of using.“ (TED⁽³⁾: 65) „To produce means to combine material and forces within our reach … To produce other things, or the same things by a different method, means to combine these materials and forces differently. In so far as the “new combination” may in time grow out of the old by continuous adjustment in small steps, there is certainly change, possibly growth, by neither a new phenomenon nor development in our sense. In so far as this is not the case, and the new combinations appear discontinuously, then the phenomenon characterizing development emerges. For reasons of expository convenience, henceforth, we shall only mean the latter case when we speak of new combinations of productive means. Development in our sense is then defined by the carrying out of new combinations.“ (TED⁽³⁾: 65–66) 1. Schumpeter, Joseph A. (1942). Capitalism, Socialism, and Democracy [CSD]. Harper & Brothers. 2. Schumpeter, Joseph A. (1991). The Economics of Sociology and Capitalism [ECS]. Edited by Richard Swedberg. Princeton University Press. 3. Schumpeter, Joseph A. (1934). The Theory of Economic Development [TED]. Harvard University Press.	EconSchum I Joseph A. Schumpeter The Theory of Economic Development An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle, Cambridge/MA 1934 German Edition: Theorie der wirtschaftlichen Entwicklung Leipzig 1912 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 Sobel I Russell S. Sobel Jason Clemens The Essential Joseph Schumpeter Vancouver 2020
Interaction	Rutter	Slater I 208 Interaction/resilience/Rutter: Rutter (1987)⁽¹⁾ interaction effects play an important role in question of psychological resilience (>Resilience/Rutter, >Resilience/psychological theories) of interaction effects. Rutter drew on data from the work of other investigators, such as Hetherington and colleagues on divorce (Hetherington, Cox, & Cox, 1982⁽²⁾, 1985⁽³⁾), (…)[and] highlighted the moderating roles of individual differences in gender, cognitive skills, temperament, parenting quality, positive marriages, and positive school experiences, for example, with numerous figures illustrating interaction effects. 1. Rutter, M. (1987). Psychosocial resilience and protective mechanisms. American journal of Orthopsychiatry, 57, 316—331. 2. Hetherington, E. M., Cox, M., & Cox, R. (1982). Effects of divorce on parents and children. In M. E. Lamb (Ed.), Nontraditional families: Parenting and child development (pp. 233—288). Hilisdale, NJ: Lawrence Erlbaum. 3. Hetherington, E. M., Cox, M., & Cox, R. (1985). Long-term effects of divorce and remarriage on the adjustment of children. Journal of the American Academy of Child Psychiatry, 24, 518—530. Ann S. Masten, “Resilience in Children. Vintage Rutter and Beyond”, in: Alan M. Slater and Paul C. Quinn (eds.) 2012. Developmental Psychology. Revisiting the Classic Studies. London: Sage Publications	Slater I Alan M. Slater Paul C. Quinn Developmental Psychology. Revisiting the Classic Studies London 2012
Interest Rates	Keynes	Rothbard III 790 Interest rates/speculation/Keynes/Rothbard: Uncertainty: A demand for money to hold stems from the general uncertainty of the market. Keynesianism: Keynesians, however, attribute liquidity preference, not to general uncertainty, but to the specific uncertainty of future bond prices. RothbardVs: Surely this is a highly superficial and limiting view. In the first place, this cause of liquidity preference could occur only on a highly imperfect securities market. >Risks/Rothbard. LachmannVsKeynes: As Lachmann pointed out years ago in a neglected article, Keynes' causal pattern - "bearishness" causing "liquidity preference" (demand for cash) and high interest rates - could take place only in the absence of an organized forward orfutures market for securities. If such a market existed, both bears and bulls on the bond market „could express their expectations by forward transactions which do not require any cash. Where the market for securities is fully organized over time, the owner of 4% bonds who fears a rise in the rate of interest has no incentive to exchange them for cash, for he can always "hedge" by selling them forward.“⁽¹⁾ Rothbard III 792 Rothbard: Bearishness would cause a fall in forward bond prices, followed immediately by a fall in spot prices. Thus, speculative bearishness would, of course, cause at least a temporary rise in the rate of interest, but accompanied by no increase in the demand for cash. Hence, any attempted connection between liquidity preference, or demand for cash, and the rate of interest, falls to the ground. >Bonds/Rothbard. Security/interest/RothbardVsKeynes: The fact that such a securities market has not been organized indicates that traders are not nearly as worried about rising interest rates as Keynes believes. Ifthey were and this fear loomed as an important phenomenon, then surely a futures market would have developed in securities. Loans/Rothbard: Furthermore (…) interest rates on Ioans are merely a reflection of price spreads, so that a prediction of higher interest rates really means the expectation of Iower prices and, especially, Iower costs, resulting in a greater demand for money. And all speculation, on the free market, is self-correcting and speeds adjustment, rather than a cause of economic trouble. >Loans/Rothbard. 1. L.M. Lachmann, "Uncertainty and Liquidity Preference," Economica, August, 1937, p. 301. Mause I 56 Interest Rates/Keynes: According to his liquidity preference theory, interest is a monetary phenomenon, not a real one as in Neoclassicism. >Neoclassical economics. Interest rates are therefore mainly determined by money supply and demand - less by real factors such as capital supply and demand. >Money supply, >Demand for money. For this reason, monetary policy can influence real variables (such as the level of investment) via the level of interest rates. On the other hand, as a result of nominal wage rigidity, the money supply and price levels have an impact on the level of real wages and thus on the level of employment. Unlike neoclassicism, Keynes' system cannot see real and monetary aspects of economic activity independently.⁽¹⁾ >Monetary policy, >Keynesianism. 1. Cf. .J. M. Keynes, The general theory of employment, interest and money. London 1936.	EconKeyn I John Maynard Keynes The Economic Consequences of the Peace New York 1920 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 Mause I Karsten Mause Christian Müller Klaus Schubert, Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018
Interest Rates	Taylor	Taylor III Inflation targeting/interest rates/central banking/Wages/Economics/TaylorVsSummers/TaylorVsStansbury/Lance Taylor: Regarding inflation, both central banks and [Summers and Stansbury] ignore the facts that inflation is a cumulative process driven by conflicting claims to income and wealth and that for the past five decades profits have captured almost all the claims. >Inflation targeting/Summers. Consider the real “product wage,” the nominal or money wage divided by a producer price index (PPI) to correct for cost inflation confronting business. A little algebra (…) shows that the labor or wage share of output, which equals real “unit labor cost,” is equal to the real wage divided by productivity or the output/labor ratio. The profit share equals one minus the wage share. (…) the profit share and growth rates of real wages and productivity have varied over time (…). The growth rate of nominal unit labor cost is the difference between rates of wage and productivity growth. As with the other labor market indicators, cost growth slowed after 2000. To unravel the dynamics, we need a theory of inflation. Around the turn of the 20th century the Swedish economist Knut Wicksell pointed out that inflation is a “cumulative process” involving feedback between price and wage inflation rates. Even after their long decline [it] shows that labor payments still make up 55% of production costs and have to enter inflation accounting. The “real balance effect” (or the “inflation tax” in a dynamic version) says that a jump in the price level will reduce the real value of assets with prices fixed in nominal terms – money is the usual example. Wealth is eroded and households are supposed to save more as a consequence. Along with a wage lag, the real balance effect is the key adjustment mechanism in Milton Friedman’s (1968) “inflation” model which still underlies contemporary monetary policy. “Forced saving” happens when a price jump against a constant money wage reduces real payments to wage-earners. If their capacity to borrow is limited, they have to cut consumption, sliding the demand curve downward. If an expansionary package does drive up the price level, middle class and low income households who rely on wages would be the ones to suffer. Conflict arises because price increases are controlled by business while the money wage is subject to bargaining between business and labor. Both sides seek to manipulate the labor share as a key distributional indicator. In an overall inflationary environment, business can respond immediately to increases in the wage share or output by pushing up the rate of price increase in Phillips curve fashion along the “Inflation” schedule (…). Money wages on the other hand are not immediately indexed to price inflation so that they will follow with a lag. Labor will push for faster wage inflation when the wage share is low. Suppose that there is an initial inflation equilibrium (…). The [Summers and Stansbury] proposal to use fiscal policy to stimulate aggregate demand would shift the inflation locus upward (…) with more rapid inflation and a somewhat lower wage share in macro equilibrium (…) along the stable share schedule. In light of the vanishing NAIRU [Non Accelerating Inflation Rate of Unemployment] over the past two decades, it is not clear how strong this upward shift could be. The way that expansionary policy could pay off in terms of inequality and (possibly) faster inflation would be though an upward movement in the stable share schedule if the labor market tightens, leading to greater bargaining power for labor. The new Keynesian inventors are now the ruling elders of macroeconomics, unlikely to change their minds. (…) [Summers and Stansbury] might remember with Max Planck that science advances one funeral at a time. They are certainly correct in saying that “the role of particular frictions and rigidities in underpinning economic fluctuations should be de-emphasized relative to a more fundamental lack of aggregate demand.” (…) many of the correct observations that [Summers and Stansbury] make about the likely ineffectiveness of interest rate changes were raised almost 90 years ago by Keynes’s colleague Piero Sraffa (1932a⁽¹⁾, 1932b⁽²⁾) in a controversy with Friedrich von Hayek. Sraffa’s main emphasis was on the inapplicability of a “natural rate” of interest, a point amplified by Keynes in the General Theory. The natural rate, nevertheless, remains a topic of great interest to left-leaning new Keynesians. How they reconcile that idea with the fiscalist Keynesian perspective adoped by [Summers and Stansbury] remains to be seen. >Central banking/Summers. 1. Sraffa, Piero (1932a) “Dr. Hayek on Money and Capital,” Economic Journal, 42: 42-53. 2. Sraffa, Piero (1932b) “Money and Capital: A Rejoinder,” Economic Journal, 42: 249-25. Taylor, Lance: Central Bankers, Inflation, and the Next Recession, in: Institute for New Economic Thinking (03/09/19), URL: http://www.ineteconomics.org/perspectives/blog/central-bankers-inflation-and-the-next-recession	EconTayl I John Brian Taylor Discretion Versus Policy Rules in Practice 1993 Taylor III Lance Taylor Central Bankers, Inflation, and the Next Recession, in: Institute for New Economic Thinking (03/09/19), URL: http://www.ineteconomics.org/perspectives/blog/central-bankers-inflation-and-the-next-recession 9/3/2019 TaylorB II Barry Taylor "States of Affairs" In Truth and Meaning, G. Evans/J. McDowell Oxford 1976 TaylorCh I Charles Taylor The Language Animal: The Full Shape of the Human Linguistic Capacity Cambridge 2016
International Trade	Feenstra	Feenstra I 6-1 International trade/Feenstra: (…) we suggested that trade brings gains to a country, but at the same time, there are both winners and losers. The Stolper-Samuelson theorem made that especially clear. >Stolper-Samuelson theorem. Heckscher-Ohlin model: In the Heckscher-Ohlin model the abundant factor gains from trade (through the rise in the relative export price increasing the real return to that factor, used intensively in exports), while the scarce factor loses from trade (through the fall in the relative import price lowering the real return to that factor). Can we be sure that the gains always exceed the losses? >Heckscher-Ohlin model, >Factors of production. Feenstra I 6-43 The idea that countries gain from trade is as old as the idea of comparative advantage itself - Ricardo wrote his model of trade between England and Portugal to demonstrate both claims. >Comparative advantage. But gains “for a country” does not have a well-defined meaning unless we specify what this implies for the many different individuals located there. (…) we have taken the heterogeneity of individuals seriously, and identified conditions under which all agents can gain from trade, i.e. Pareto gains are achieved. >Pareto optimum. Feenstra I 6-44 Lump sum transfers: The lump sum transfers (…) require too much information to be implemented in practice, but are still valuable because they allow us to show that Pareto gains are in principle possible. Taxation/subsidies: The commodity tax/subsidies introduced by Dixit and Norman (1980)⁽¹⁾ are an alternative means of achieving Pareto gains. In the presence of mobility costs, however, these may need to be supplemented with some form of trade adjustment assistance. Our results for Pareto gains within a country can be extended to cover the comparison of any two trading situations, and also to cover multiple countries, as with customs unions and free trade areas. >Free trade, >Tariffs. Regional trade agreements: Suppose that trade in differentiated products occurs under monopolistic competition, subject to “iceberg” transportation costs (…). Furthermore, suppose that the countries forming a regional agreement do not aim to keep welfare in the rest of world unchanged; on the contrary, these countries adjust the tariffs applied to the rest of the world to their own optimal advantage. Finally, suppose that the world splits up into a number of such regional areas, each of them equally sized. Then how does the formation of these areas impact world welfare? This question has been addressed by Krugman (1991a⁽²⁾, 1991b⁽³⁾), with two quite distinct answers. First, ignoring transportation costs, Krugman (1991a⁽²⁾) argues that with the world divided into a number of equally-sized regional trading areas, the worst number of such areas is three. The logic of this proposition is that with just one area, encompassing all countries, we have the highest level of world welfare (i.e. global free trade). Feenstra I 6-45 Conversely, with many equal sized areas, each group of countries will have little influence in changing their terms of trade, so tariffs are low and we are again close to free trade. But at some intermediate number of areas, tariffs will be higher and world welfare lower. Stylized calculations suggests that world welfare is minimized with three areas, which is a depressing result in view of the possible formation of three trading regions in reality: the Americas, Europe and Asia. But this view of the world ignores the fact that actual trading regions are often between geographically close countries (e.g. the EEC and NAFTA), so the “natural” trading advantages of these countries are just enhanced by the regional agreement. To see how this affects the argument, suppose now that there are three continents (America, Europe and Asia) with multiple countries in each. As in Krugman (1991b)⁽³⁾, take an extreme case where transportation costs are infinite for trade between the continents, but zero within each continent. In the absence of any regional agreements, the countries in each continent will be applying optimal tariffs against each other. But with a regional free trade agreement on each continent, then tariffs are eliminated, and world welfare would be maximized: the fact that outside countries are excluded from each regional agreement is irrelevant, since transportation costs between the continents are so high. So in this case, three regional trading areas maximize world welfare! These two starkly different results suggest that the pattern and level of transportation costs between countries is crucial to determining the welfare effects of regional agreements. Obviously, we need to go beyond the two extreme cases of Krugman (1991a⁽²⁾,b⁽³⁾), and this is done by Frankel (1997)⁽⁴⁾. Continuing with Krugman’s example of a world divided into continents, each of which is divided into multiple countries, Frankel explores the welfare impact of regional agreements within or across continents. An agreement within a continent (where transportation costs are low) is called “natural,” while an agreement across continents (where transportation costs are high) is called “unnatural.” Feenstra I 6-46 Frankel confirms that “natural” trading areas are more likely to lead to world welfare gains than “unnatural” areas.* However, it turns out that having regional agreements within continents is not always welfare improving, and the case where these “natural” areas fail to lead to world gains is called “supernatural.” * In a test of this proposition, Krishna (2002)⁽⁵⁾ provides empirical evidence that raises doubts on the link between “natural” trading areas (between close countries) and welfare gains. 1. Dixit, Avinash and Victor Norman, 1980, Theory of International Trade. Cambridge University Press. 2. Krugman, Paul R., 1991a, “Is Bilateralism Bad?” in Elhanan Helpman and Assaf Razin, eds., International Trade and Trade Policy, Cambridge: MIT Press. 3. Krugman, Paul R., 1991b, “The Move Towards Free Trade Zones,” in Policy Implications of Trade and Currency Zones. Federal Reserve Bank of Kansas City, 7-43. 4. Frankel, Jeffrey A., 1997, Regional Trade Blocs in the World Economic System. Washington, D.C.: Institute for International Economics. 5. Krishna, Pravin, 2002, “Are Regional Trading Partners ‘Natural’,” Journal of Political Economy, forthcoming.	Feenstra I Robert C. Feenstra Advanced International Trade University of California, Davis and National Bureau of Economic Research 2002
Interpretation of Dreams	Ricoeur	I 17 Interpretation of dreams/Freud/Ricoeur: (...) it is not only because of its cultural interpretation that psychoanalysis stands within the great contemporary debate on the Language. By making the dream not only the main object of his research, but a model in a sense, (...) of all the hidden, substituted and fictitious expressions of the human desire, Freud challenges us to seek in the dream itself the entanglement of desire and language, in many different ways: first of all, it is not the dreamed dream that can be interpreted, but only the text of the dream narrative; this is the text that the analysis wants to replace with another text, which, as it were I 18 would be the original language of desire; the analysis moves from one sense to another sense. It is not the desire as such that is the focus of the analysis, but its language. >Sense/Freud/Ricoeur, >Dream/Ricoeur. I 27 The analyst... replaces [the narrative of the waking] with another text which, in his eyes, is the thought of the wish, what the wish would say in a prosopoe without compulsion; one must acknowledge (...) that the dream itself is close to language, since it can be told, analysed, interpreted. I 103 Dream interpretation/Freud/Ricoeur: To find the dream "thoughts" again means indeed to take a certain retrograde path, which - beyond the actual body impressions and emotions, beyond the awake memory or the remains of the day, beyond the actual desire for sleep - discovers the unconscious, that is, the oldest desires. It is our childhood that gets on the surface, with all its forgotten, suppressed, repressed urges, and with our childhood that of humanity, which is repeated in the individual's childhood, in a way abbreviated. The dream provides access to a fundamental phenomenon, (...) : [the] phenomenon of regression, whose aspects are not only temporal but also topical and dynamic. >Regression/Ricoeur. I 104 The interpretation, which is not yet identified with the deciphering work corresponding to the dream work and which is linked more to the psychological content than to the mechanism, nevertheless gradually acquires its own structure; and this structure is a mixed structure. A) On the one hand, interpretation, within the framework of meaning, is a movement from the manifest to the latent; to interpret means to shift the origin of meaning to another place. But already on this first level it is no longer possible to take interpretation for a simple relation between coded and decoded speech; one can no longer be satisfied with the proposition that the unconscious is another speech, an incomprehensible speech. The disguise, which pursues the interpretation from manifest content to latent content, reveals another disguise, namely that of desire in pictures, to which Freud dedicates Chapter IV. To use an expression from metapsychological essays: the dream is already a "drive fate" (Triebschicksal). B) Dream work: This second task requires, even more clearly than the first, the assembling of two worlds of speech, the speech of meaning and the speech of power. To say that the dream is the fulfilment of a repressed desire is to bring together two concepts that belong to two different realms: 1. fulfillment, which belongs to the speech of sense (as the relationship with Husserl testifies), and 2. repression, which belongs to the speech of power; the concept of disguise, which unites both, expresses the fusion of the two concepts, since disguise is a kind of revelation and at the same time the disguise that distorts this revelation, the violence done to the sense. The relationship of the hidden to the shown, as given in the disguise, thus demands a deformation that I 105 can only be formulated as a compromise of forces. To this mixed speech also belongs the concept of "censorship", which corresponds to that of adjustment: adjustment is the effect, censorship the cause. >Censorship/Freud/Ricoeur, >Symbol/Freud.	Ricoeur I Paul Ricoeur De L’interprétation. Essai sur Sigmund Freud German Edition: Die Interpretation. Ein Versuch über Freud Frankfurt/M. 1999 Ricoeur II Paul Ricoeur Interpretation theory: discourse and the surplus of meaning Fort Worth 1976
Inventions	Schumpeter	Sobel I 9 Invention/Innovation/Schumpeter/Sobel/Clemens: While invention is the creation or discovery of a new product or process, innovation is the successful introduction and adoption of a new product or process in the commercial marketplace. Innovation is basically the economic application of inventions. while Henry Ford did not invent the automobile, his innovation was the use of the assembly line and large-scale manufacturing that brought the price of the automobile within reach of the average family. In each of these cases, the innovator is different from the inventor, and it is the innovator’s role with which Schumpeter is concerned. Perhaps an even more important factor in distinguishing invention from innovation is that most inventions never turn into innovations - that is, not all inventions are profitable business ideas. Incentives/Schumpeter: According to Schumpeter in his later, and perhaps most famous, book Capitalism, Socialism, and Democracy (CSD)⁽¹⁾, “[i]n some cases, however, it is so successful as to yield profits far above what is necessary in order to induce the corresponding investment. These cases then provide the baits that lure capital on to untried trails” (CSD⁽¹⁾: 90). That is, the lure of profits is the incentive for entrepreneurial discovery and capital investment. This is one reason that government policies that reduce the rewards from innovation can be harmful to economic growth and prosperity. Taxation/innovation/Schumpeter: When regulations or taxes reduce the potential profitability of future innovations, fewer attempts are made to discover them. As Schumpeter notes in his book The Economics of Sociology and Capitalism (ESC)⁽²⁾: Entrepreneurial profit proper … arises in the capitalist economy wherever a new method of production, a new commercial combination, or a new form or organization is successfully introduced. It is the premium which capitalism attaches to innovation … If this profit were taxed away, that element of the economic process would be lacking which at present is by far the most important individual motive for work toward industrial progress. Sobel I 10 Even if taxation merely reduced this profit substantially, industrial development would process considerably more slowly, as the fate of Austria plainly shows … there is a limit to the taxation of entrepreneurial profit beyond which tax pressure cannot go without first damaging and then destroying the tax object. (ESC⁽²⁾: 113–114) Sobel I 11 Innovation/economicy/Sobel/Clemens: A growing, vibrant economy depends not only on entrepreneurs discovering, evaluating, and exploiting opportunities to create new goods and services, but also on the speed at which ideas are labeled as successes or failures by the profit-and-loss system. >Business failure/Schumpeter. Innovation/Schumpeter: „Yet innovations in the economic system do not as a rule take place in such a way that first new wants arise spontaneously in consumers and then the productive apparatus swings round through their pressure. We do not deny the presence of this nexus. It is, however, the producer who as a rule initiates economic change, and consumers are educated by him if necessary; they are, as it were, taught to want new things, or things which differ in some respect or other from those which they have been in the habit of using.“ (TED⁽³⁾: 65) „To produce means to combine material and forces within our reach … To produce other things, or the same things by a different method, means to combine these materials and forces differently. In so far as the “new combination” may in time grow out of the old by continuous adjustment in small steps, there is certainly change, possibly growth, by neither a new phenomenon nor development in our sense. In so far as this is not the case, and the new combinations appear discontinuously, then the phenomenon characterizing development emerges. For reasons of expository convenience, henceforth, we shall only mean the latter case when we speak of new combinations of productive means. Development in our sense is then defined by the carrying out of new combinations.“ (TED⁽³⁾: 65–66) 1. Schumpeter, Joseph A. (1942). Capitalism, Socialism, and Democracy [CSD]. Harper & Brothers. 2. Schumpeter, Joseph A. (1991). The Economics of Sociology and Capitalism [ECS]. Edited by Richard Swedberg. Princeton University Press. 3. Schumpeter, Joseph A. (1934). The Theory of Economic Development [TED]. Harvard University Press.	EconSchum I Joseph A. Schumpeter The Theory of Economic Development An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle, Cambridge/MA 1934 German Edition: Theorie der wirtschaftlichen Entwicklung Leipzig 1912 Sobel I Russell S. Sobel Jason Clemens The Essential Joseph Schumpeter Vancouver 2020
Investments	Alessandria	Alessandria I 2 Investments/tariffs/tariff responsivity/Alessandria/Ding/Khan/Mix: As is typical of trade models, these domestic producers are monopolists in an intermediate variety, earning a flow of profits. Following Hopenhayn (1992)⁽¹⁾ and Atkeson and Kehoe (2005)⁽²⁾, these domestic producers are created with an upfront investment and then subject to idiosyncratic shocks. The idiosyncratic shocks lead some firms to make investments in market access to export their products. The structure of fixed export costs makes exporting a dynamic decision in the spirit of Baldwin and Krugman (1989)⁽³⁾; Das et al. (2007)⁽⁴⁾; Alessandria and Choi (2014b)⁽⁵⁾; Ruhl and Willis (2017)⁽⁶⁾; Alessandria et al. (2021)⁽⁷⁾. The decision to export is strongly influenced by current and expected future tariffs. Importantly, these features imply that capital income combines the returns from physical capital and the profits of intermediate good producers, which are returns to investment in firm creation and export market access. Additionally, the dynamic nature of the export decision implies that the substitution away from imports and toward domestically produced goods induced by a tariff change depends on the horizon and persistence of the policy as well as the accompanying fiscal adjustment. >Decision-making processes. 1. Hopenhayn, Hugo A., “Entry, Exit, and firm Dynamics in Long Run Equilibrium,” Econometrica, 1992, 60 (5), 1127–1150. 2. Atkeson, Andrew and Patrick J. Kehoe, “Modeling and Measuring Organization Capital,” Journal of Political Economy, 2005, 113 (5), 1026–1053. 3. Baldwin, Richard and Paul Krugman, “Persistent Trade Effects of Large Exchange Rate Shocks,” The Quarterly Journal of Economics, 1989, 104 (4), 635–654. 4. Das, Sanghamitra, Mark J. Roberts, and James R. Tybout, “Market Entry Costs, Producer Heterogeneity, and Export Dynamics,” Econometrica, 2007, 75 (3), 837–873. 5. Alessandria, George and Horag Choi, “Do sunk costs of exporting matter for net export dynamics?,” The Quarterly Journal of Economics, 2007, pp. 289–336. 6. Ruhl, Kim J. and Jonathan L. Willis, “New Exporter Dynamics,” International Economic Review, 2017, 58 (3), 703–726. 7. Alessandria, George and Horag Choi, and Kim J. Ruhl, “Trade Adjustment Dynamics and the Welfare Gains from Trade,” Journal of International Economics, 2021, 131, Article 103458.	Alessandria I George A. Alessandria Jiaxiaomei Ding Shafaat Y. Khan, The Tariff Tax Cut: Tariffs as Revenue NBER Working Paper No. 33784 May 2025 Cambridge, MA 2025
Judgments	Smith	Otteson I 15 Judgment/Adam Smith/Otteson: [The] process of mutual adjustment results in the gradual development of shared habits, and then rules, of behavior and judgment about matters ranging from etiquette to moral duty. This process also gives rise, Smith argues, to an ultimate standard of moral judgment, what he calls the “impartial spectator,” whose imagined perspective we use to judge both our own and others’ conduct. Ideal observer: The “impartial spectator” is not, according to Smith, a mysterious entity: it is the amalgamation of our lifetime of experiences of judgment. >Sympathy/Adam Smith. When we see how people judge other’s behavior and our own, when we see how we ourselves judge others’ behavior and our own, this is data on the basis of which we slowly develop our judgment. Over time we construct a set of principles upon which we rely to judge both ourselves and others. >Principles. As we mature, this set of principles gradually coalesces into an increasingly coherent picture of virtue and vice, of propriety and impropriety. It becomes the standard against which we judge human behavior. >Developmental stages, >Behavior, >Community. When we use it to judge our own conduct, it constitutes what we call our conscience. >Ideal observer/Smith, >Impartiality, >Stages of Development/Adam Smith.	EconSmith I Adam Smith The Theory of Moral Sentiments London 2010 EconSmithV I Vernon L. Smith Rationality in Economics: Constructivist and Ecological Forms Cambridge 2009 Otteson I James R. Otteson The Essential Adam Smith Vancouver: Fraser Institute. 2018
Knowledge	Economic Theories	Mause I 415 Knowledge/Economic Theories: Knowledge of the first kind: knowledge of functional and cause-effect relationships. Second type of knowledge: is subject to market-endogenous processes of individual knowledge generation. For example, environmental policy: The state actors have only limited knowledge of environmental policy management, although it is largely unknown on the part of the state how the management addressees (companies, private households) react to environmental policy measures in view of the subjective adjustment possibilities available to them. For this reason, the state's knowledge of environmental policy must always be renewed over time if missteering is to be avoided. In addition, the state must examine on a case-by-case basis to what extent cooperation with environmental policy stakeholders is an appropriate means of providing the state with information that cannot otherwise be obtained. ⁽¹⁾⁽²⁾ 1. Thomas Döring & Thilo Pahl. Kooperative Lösungen in der Umweltpolitik – eine ökonomische Sicht. In Kooperative Umweltpolitik, Hrsg. Bernd Hansjürgens, Wolfgang Köck und Georg Kneer, S.98. Baden-Baden 2003. 2. Annette E. Töller, Warum kooperiert der Staat? Kooperative Umweltpolitik im Schatten der Hierarchie. Baden-Baden 2012.	Mause I Karsten Mause Christian Müller Klaus Schubert, Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018
Knowledge	Hayek	Sunstein I 118 Knowledge/Friedrich Hayek/Sunstein: In his essay "The Use of Knowledge in Society" Hayek writes that the great advantage of prices is that they reflect both information and people's tastes, which is much more than planning or planned economy could achieve. According to Hayek, the information is distributed to individuals in the form of incomplete and often contradictory fragments of knowledge.⁽¹⁾ >Price, >Markets, >Information economics, >Economy, >Planning. Sunstein: the knowledge of course includes facts about the product, but also about customer preferences. Sunstein I 119 Knowledge/Hayek: the knowledge contained in the prices exceeds that of the best experts. Prices/Hayek: in this context, Hayek underlines the importance of prices being in motion. Small movements produce the complete economic picture, which is overlooked by many economists according to Hayek. Sunstein I 120 In particular, prices react to new information. >Information/Hayek. 1. Friedrich Hayek, “The Use of Knowledge in Society,” American Economic Review 35 (1945): 519, reprinted in The Essence of Hayek, ed. Chiaki Nishiyama and Kurt Leube (Stanford: Hoover, 1984), 211. A superb treatment of Hayek’s thought is Bruce Caldwell, Hayek’s Challenge: An Intellectual Biography of F. A. Hayek (Chicago: University of Chicago Press, 2004). Boudreaux II 20 Knowledge/Hayek/Boudreaux: „Most of the advantages of social life, especially in its more advanced forms which we call “civilization,” rest on the fact that the individual benefits from more knowledge than he is aware of.“(1) Boudreaux II 21 Goods/specialization/knowledge/Hayek/Boudreaux: […] goods exist not because some great and ingenious human plan called them into being. Instead, they exist because of a social institution that encourages people to specialize in learning different skills, as well as to learn different slices of knowledge and gather different bits of information about the real world. This social institution also sends out signals to these hundreds of millions of specialist producers, informing each of them how best to use his or her special skills and knowledge so that the resulting outputs of the economy will satisfy genuine consumer demands - and do so at costs that are as low as possible. Production: [e.g., ink and paper] if these signals are reasonably accurate, the loggers’ activities are coordinated well with those of the paper mill: neither too few nor too many trees are cut down. And the paper-mill’s activities are coordinated well with those of the printer: neither too little nor too much paper (…) is produced. Boudreaux II 24 One of the most notable facts of life in modern market economies is that each and every one of the things that we enjoy as consumers is something that no person knows in full how to produce. There is conscious planning and adjustment going on at the level of each individual and each firm and each distinct organization. But there is no overarching - no “central” - plan for the whole. >Spontaneous order. 1. Friedrich Hayek (1960). The Constitution of Liberty. In Ronald Hamowy (ed.), The Constitution of Liberty, XVII (Liberty Fund Library, 2011): 73.	Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 Sunstein I Cass R. Sunstein Infotopia: How Many Minds Produce Knowledge Oxford 2008 Sunstein II Cass R. Sunstein #Republic: Divided Democracy in the Age of Social Media Princeton 2017 Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014
Land (Economics)	George	Rothbard III 569 Land/Henry George/Rothbard: (…) let us consider a great bugaboo of the Henry Georgists - speculation in land that withholds productive land from use. Speculation/Henry George: According to the Georgists, a whole host of economic evils, including the depressions of the business cycle, stem from speculative withholding of ground land from use, causing an artificial scarcity and high rents for the sites in use. RothbardVsGeorge, Henry: (…) speculation in consumers’ goods (and the same will also apply to capital goods) performs the highly useful function of speeding adjustment to the best satisfaction of consumer demand. Yet, curiously, speculation in land is far less likely to occur and is far less important than in the case of any other economic good. For consumers’ or capital goods, being nonpermanent, can be used either now or at some later date. >Consumer goods, >Factors of production. Rothbard III 570 Rothbard: Land, however, is a permanent resource (…). It can be used all the time, both in the present and in the future. Therefore, any withholding of land from use by the owner is simply silly; it means merely that he is refusing monetary rents unnecessarily. Rent: The fact that a landowner may anticipate that his land value will increase (because of increases in future rents) in a few years furnishes no reason whatever for the owner to refuse to acquire rents in the meanwhile. Therefore, a site will remain unused simply because it would earn zero rent in production. Production: In many cases, however, a land site, once committed to a certain line of production, could not easily or without substantial cost be shifted to another line. Where the landowner anticipates that a better line of use will soon become available or is in doubt on the best commitment for the land, he will withhold the land site from use if his saving in “change-over cost” will be greater than his opportunity cost of waiting and of foregoing presently obtainable rents. The speculative site-owner is, then, performing a great service to consumers and to the market in not committing the land to a poorer productive use. By waiting to place the land in a superior productive use, he is allocating the land to the uses most desired by the consumers. >Speculation/Rothbard, >Land/Rothbard. Rothbard: What probably confuses the Georgists is the fact that many sites lie unused and yet command a capital price on the market. The capital price of the site might even increase while the site continues to remain idle. This does not mean, however, that some sort of villainy is afoot. It simply means that no rents on the site are expected for the first few years, although it will earn positive rents thereafter. The capital value of ground land (…), sums up the discounted total of all future rents, and these rental sums may exert a tangible influence from a considerable distance in the future, depending on the rate of interest. There is therefore no mystery in the fact of a capital value for an idle site, or in its rise. The site is not being villainously withheld from production.⁽¹⁾ 1. In the free society (…) the site could not originally become the property of anyone ntil it had been "used" in some way, such as being cleared, cultivated, etc. There need be no subsequent use, however, until rents can be obtained.	George I Henry George Progress and Poverty: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth; The Remedy 1879, 2017 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Language	Peacocke	II 166 Psychologizing of language/Peacocke: Problem: there may be an infinite number of types of situations that are specified psychologically, in which a given semantic predicate is applicable, and which have nothing in common, that is specifiable with psychological vocabulary. >Situations, >Behavior, >Vocabulary. ((s) Question: can you identify these infinitely psychological predicates as psychologically?) PeacockeVsVs: it is not about reduction - the fine propositional adjustments do not have to be attributed before translation. Vgl. >Reduction, >Reductionism. II 168 Interpreted language/Peacocke: we get an interpreted language by using the T-scheme T(s) ↔ p plus performance relation 'sats' (uninterpreted itself) between rows of objects, and sentences. >Interpretation, >Disquotational scheme, >Satisfaction. II 171 Variant: a variant of this is an ordered pair whose first component is an interpreted language in the sense of the previous section and whose second component is a function of sentences of the first components to propositional adjustments. Then the listener takes the utterence as prima facie evidence. >Prima facie, >Evidence. II 168 Language/Community/Peacocke: we get a language community by the convention that the speaker only utters the sentence when he intends to (Schiffer ditto). >Language community, >Language behavior, >Intention, >Meaning/intending, >Language/Schiffer. Problem: the attribution of a criterion presupposes already a theory by the speaker. II 175 Language/Community/Convention/Peacocke: Problem: 'common knowledge': E.g. assuming English : as English, except that the truth conditions are changed for an easy conjunction: T (Susan is blond and Jane is small) ↔ Susan is blond. >Truth conditions, >Conjunction. Problem: if English is the actual language, then also English would be the actual language at the same time - because it could be common knowledge that each member that believes p & q therefore believes also p. >Conventions.	Peacocke I Chr. R. Peacocke Sense and Content Oxford 1983 Peacocke II Christopher Peacocke "Truth Definitions and Actual Languges" In Truth and Meaning, G. Evans/J. McDowell Oxford 1976
Lerner Symmetry Theorem	Itskhoki	Itskhoki I 15 Lerner Symmetry Theorem/Itskhoki/Ribakova: A seminal result in international economics is Lerner (1936) symmetry – namely, theequivalence between an import tariff and an export tax. The implication of this result is that import and export sanctions of a similar magnitude result in the same equilibrium allocation and welfare consequences.* Note that this does not imply that import and export sanctions are substitutes - in contrast, their effects cumulate until trade is reduced to zero. Only if import sanctions are so severeas to exclude the possibility of buying any foreign goods, now and in the future, then such import sanctions make export sanctions redundant. Lerner symmetry logic relies on the long-run trade balance and is ensured by the general equilibrium adjustment in relative prices that support it. For example, an import tariff reduces imports on impact and shifts demand towards domestic goods. However, this must be accommodated with an increase in the local costs of producing goods (e.g., wages), which in turn reduces exports and rebalances international trade. Itskhoki I 16 Conversely, an export tax reduces foreign demand for domestic goods and consequently must lower the costs of production (wages) to achieve the same balanced trade outcome, and hence equivalence follows. Often such adjustment happens by means of an exchange rate appreciation or depreciation, which support the same allocation under import and export sanctions, respectively. Thus, an equilibrium exchange rate appreciation is consistent with the situation where import sanctions have a greater impact than export restrictions (Itskhoki and Mukhin 2022)⁽³⁾. Despite this differential exchange rate movement, the terms of trade of the country under sanctions deteriorate by the same amount and are the conduit of welfare losses from either policy. Lerner symmetry is a general equivalence result that extends to individual budget constraints. For example, if the purpose of sanctions is to tighten the government budget constraint, it still can be achieved with sanctioning export revenues or imports of goods, irrespectively of who carries out trade (i.e., a government company exporting commodities or a household buying imported goods). Of course, this concerns only the equivalence of equilibrium economic allocations, and not the political feasibility of certain policies which may differ substantially across different policy options. Sanctions: In the context of European policy, sanctioning Russian imports waspolitically more feasible than limiting or taxing Russian energy exports, and the symmetry logicabove was used in part to justify the lacking export restrictions. This logic fails when the sanctions policy is not (perceived as) permanent (…). >Sanctions, >Sanctions consequences, >Sanctions debate, >Payment systems, >Sanctions effectiveness, >Sanctions evasion, >Sanctions policies, >Sanctions history, >Sanctions theory, >Trade sanctions, >Financial sanctions. Itskhoki I 19 Violation of Lerner** symmetry: Lerner symmetry between import and export sanctions does not apply when sanctions policy is not uniform over time, that is when sanctions are not deemed permanent and/or when there are significant gross foreign asset positions not subject to sanctions (see Itskhoki and Mukhin 2023a)(3). Import sanctions have two distinct effects relative to export restrictions. First, if they are not deemed permanent, they create incentives to delay import purchases, thus limiting the need to borrow to pay for imports in the current period. In other words, they relax the need for austerity as they delay required expenses. Second, import sanctions, whether temporary or permanent, result in the currency appreciation. As discussed above, exchange rate appreciation is the mechanism that supports the adjustment towards trade balance when import flows are restricted resulting in a surplus of foreign exchange from exports. The appreciation is not allocative per se when sanctions are uniform over time and when there is no foreign currency debt. However, this is not the case when the sanctioned country either has net foreign debt or relies on foreign-currency financing at home. Exchange rate depreciation increases debt overhang, while appreciation does the opposite, relaxing the financial constraints on the economy. As a result, import sanctions can backfire by offsetting some of the effects of financial sanctions and helping avoid the financial crisis. >Financial Crises. * Formally, a uniform import tariff on all traded goods is equivalent to a uniform export tax of the same magnitude. In macroeconomic context, uniform must apply not only to all traded goods and services, but also to all time periods – present, future, and past (i.e., an export tax must be combined with a tax on accumulated net foreign assets; see Farhi et al 2014⁽¹⁾ and Barbiero et al. 2019)⁽²⁾. ** This obvious point requires emphasis given the number of misleading arguments made in the policy debate about the sufficiency of import sanctions early on in 2022, and given that import sanctions were politically cheaper to impose than export sanctions. 1. Farhi, Emmanuel, Gita Gopinath, and Oleg Itskhoki. 2014. “Fiscal Devaluations.” The Review of Economic Studies 81 (2): 725–60. https://doi.org/10.1093/restud/rdt036. 2. Barbiero, Omar, Emmanuel Farhi, Gita Gopinath, and Oleg Itskhoki. 2019. “The Macroeconomics of Border Taxes.” NBER Macroeconomics Annual 33 (January):395–457. https://doi.org/10.1086/700897. 3. Itskhoki, Oleg, and Dmitry Mukhin. 2022. “Sanctions and the Exchange Rate.” Working Paper. NBER Working Paper 30009. National Bureau of Economic Research. https://doi.org/10.3386/w30009. 4.Lerner, A. P. 1936. “The Symmetry between Import and Export Taxes.” Economica 3 (11): 306–13. https://doi.org/10.2307/2549223.	Itskhoki I Oleg Itskhoki Elina Ribakova The Economics of Sanctions: From Theory Into Practice. Brookings Papers on Economic Activity, Fall 2024. The Brookings Institution 2024
Lerner Symmetry Theorem	Ribakova	Itskhoki I 15 Lerner Symmetry Theorem/Itskhoki/Ribakova: A seminal result in international economics is Lerner (1936) symmetry – namely, theequivalence between an import tariff and an export tax. The implication of this result is that import and export sanctions of a similar magnitude result in the same equilibrium allocation and welfare consequences.* Note that this does not imply that import and export sanctions are substitutes - in contrast, their effects cumulate until trade is reduced to zero. Only if import sanctions are so severeas to exclude the possibility of buying any foreign goods, now and in the future, then such import sanctions make export sanctions redundant. Lerner symmetry logic relies on the long-run trade balance and is ensured by the general equilibrium adjustment in relative prices that support it. For example, an import tariff reduces imports on impact and shifts demand towards domestic goods. However, this must be accommodated with an increase in the local costs of producing goods (e.g., wages), which in turn reduces exports and rebalances international trade. Itskhoki I 16 Conversely, an export tax reduces foreign demand for domestic goods and consequently must lower the costs of production (wages) to achieve the same balanced trade outcome, and hence equivalence follows. Often such adjustment happens by means of an exchange rate appreciation or depreciation, which support the same allocation under import and export sanctions, respectively. Thus, an equilibrium exchange rate appreciation is consistent with the situation where import sanctions have a greater impact than export restrictions (Itskhoki and Mukhin 2022)⁽³⁾. Despite this differential exchange rate movement, the terms of trade of the country under sanctions deteriorate by the same amount and are the conduit of welfare losses from either policy. Lerner symmetry is a general equivalence result that extends to individual budget constraints. For example, if the purpose of sanctions is to tighten the government budget constraint, it still can be achieved with sanctioning export revenues or imports of goods, irrespectively of who carries out trade (i.e., a government company exporting commodities or a household buying imported goods). Of course, this concerns only the equivalence of equilibrium economic allocations, and not the political feasibility of certain policies which may differ substantially across different policy options. Sanctions: In the context of European policy, sanctioning Russian imports waspolitically more feasible than limiting or taxing Russian energy exports, and the symmetry logicabove was used in part to justify the lacking export restrictions. This logic fails when the sanctions policy is not (perceived as) permanent (…). >Sanctions, >Sanctions consequences, >Sanctions debate, >Payment systems, >Sanctions effectiveness, >Sanctions evasion, >Sanctions history, >Sanctions policies, >Sanctions theory, >Trade sanctions, >Financial sanctions. Itskhoki I 19 Violation of Lerner** symmetry: Lerner symmetry between import and export sanctions does not apply when sanctions policy is not uniform over time, that is when sanctions are not deemed permanent and/or when there are significant gross foreign asset positions not subject to sanctions (see Itskhoki and Mukhin 2023a)(3). Import sanctions have two distinct effects relative to export restrictions. First, if they are not deemed permanent, they create incentives to delay import purchases, thus limiting the need to borrow to pay for imports in the current period. In other words, they relax the need for austerity as they delay required expenses. Second, import sanctions, whether temporary or permanent, result in the currency appreciation. As discussed above, exchange rate appreciation is the mechanism that supports the adjustment towards trade balance when import flows are restricted resulting in a surplus of foreign exchange from exports. The appreciation is not allocative per se when sanctions are uniform over time and when there is no foreign currency debt. However, this is not the case when the sanctioned country either has net foreign debt or relies on foreign-currency financing at home. Exchange rate depreciation increases debt overhang, while appreciation does the opposite, relaxing the financial constraints on the economy. As a result, import sanctions can backfire by offsetting some of the effects of financial sanctions and helping avoid the financial crisis. >Financial Crises. * Formally, a uniform import tariff on all traded goods is equivalent to a uniform export tax of the same magnitude. In macroeconomic context, uniform must apply not only to all traded goods and services, but also to all time periods – present, future, and past (i.e., an export tax must be combined with a tax on accumulated net foreign assets; see Farhi et al 2014⁽¹⁾ and Barbiero et al. 2019)⁽²⁾. ** This obvious point requires emphasis given the number of misleading arguments made in the policy debate about the sufficiency of import sanctions early on in 2022, and given that import sanctions were politically cheaper to impose than export sanctions. 1. Farhi, Emmanuel, Gita Gopinath, and Oleg Itskhoki. 2014. “Fiscal Devaluations.” The Review of Economic Studies 81 (2): 725–60. https://doi.org/10.1093/restud/rdt036. 2. Barbiero, Omar, Emmanuel Farhi, Gita Gopinath, and Oleg Itskhoki. 2019. “The Macroeconomics of Border Taxes.” NBER Macroeconomics Annual 33 (January):395–457. https://doi.org/10.1086/700897. 3. Itskhoki, Oleg, and Dmitry Mukhin. 2022. “Sanctions and the Exchange Rate.” Working Paper. NBER Working Paper 30009. National Bureau of Economic Research. https://doi.org/10.3386/w30009. 4.Lerner, A. P. 1936. “The Symmetry between Import and Export Taxes.” Economica 3 (11): 306–13. https://doi.org/10.2307/2549223.	Itskhoki I Oleg Itskhoki Elina Ribakova The Economics of Sanctions: From Theory Into Practice. Brookings Papers on Economic Activity, Fall 2024. The Brookings Institution 2024
Marginal Product	Economic Theories	Rothbard III 476 Marginal product/Economic theories/Rothbard: Critics of the marginal productivity analysis have contended that in the “modern complex world” all factors co-operate in producing a product, and therefore it is impossible to establish any sort of imputation of part of the product to various co-operating factors. Hence, they assert, “distribution” of product to factors is separable from production and takes place arbitrarily according to bargaining theory. RothbardVsVs: To be sure, no one denies that many factors do co-operate in producing goods. But the fact that most factors (and all labor factors) are nonspecific, and that there is very rarely more than one purely specific factor in a production process, enables the market to isolate value productivity and to tend to pay each factor in accordance with this marginal product. On the free market, therefore, the price of each factor is not determined by “arbitrary” bargaining, but tends to be set strictly in accordance with its discounted marginal value product. >Marginal product/Rothbard, >Returns to scale/Rothbard, >Factors of production/Rothbard, >Factor market/Rothbard. Rothbard III 477 The importance of this market process becomes greater as the economy becomes more specialized and complex and the adjustments more delicate. The more uses develop for a factor, and the more types of factors arise, the more important is this market “imputation” process as compared to simple bargaining. For it is this process that causes the effective allocation of factors and the flow of production in accordance with the most urgent demands of the consumers (including the nonmonetary desires of the producers themselves).	Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Marginal Product of Labour	Economic Theories	Harcourt I 106 Marginal Product of Labour/Economic theories/Harcourt: [A one-commodity model] allows both a complete bypass of the distinction between short run and long run, as raised, for example, by D. H. Robertson [1949]⁽¹⁾ in 'Wage Grumbles', and the merging into one of the process of investment and the use of capital in production, see Robinson [1970a]⁽²⁾, pp. 311-13. >Economic models, >One-commodity model. Harcourt: It could be noted here that, for exactly the same reasons as Joan Robinson's, Hicks [1932]⁽³⁾, p. 20, rejected the notion of a short-run marginal product of labour which was equal to the real wage, but went on to argue for a full long-run equilibrium equality for reasons that are vulnerable to criticisms that stem from both Salter's analysis and the points made above. RobertsonVsMarshall: D. H. Robertson's 'grumbles' related to the question: What in fact is held constant when employment is changed in Marshall's description of the marginal product of labour and its relationship to the real wage? Is it a mysterious general concept of capital, so that nine shovels become ten slightly inferior ones, or is it the existing equipment, in which case what does the tenth man work with? Marshall: In the long run, Marshall supposed that suitable adjustments were made so that the wage was equal to the net marginal product of labour. >A. Marshall. Harcourt: This, however, introduces a joint production puzzle and leaves unexplained the level of the normal rate of profits that is earned on the adjusted stock of capital. Moreover, long-period comparisons are only comparisons since each point is an equilibrium position with its own (realized) past, as far as the values of r and w are concerned, and its own confidently expected future. To attempt a transition from one point to another could both rupture one equilibrium and not allow the economy to enter another. Harcourt I 107 Time may only run at right angles, as it were, through each point. >One-commodity Model. 1. Robertson, D. H. [1949] 'Wage Grumbles', Readings in the Theory of Income Distribution (American Economic Association), pp. 221-36. 2. Robinson, Joan, [1970b] 'Review of C. E. Ferguson, The Neoclassical Theory of Production and Distribution, 1969', Economic Journal, LXXX, pp. 336-9. 3. Hicks, J. R. [1932] The Theory of Wages (London: Macmillan).	Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972
Market Imperfections	Ostry	Ostry I 3 Market Imperfections/Furceri/Hannan/Ostry/Rose: Discussions of market imperfections and the like are naturally microeconomic in nature. Accordingly, most analysis of trade barriers is microeconomic in nature, focusing on individual industries (see Grossman and Rogoff (1995)⁽¹⁾ and references therein). This makes sense. Artificial barriers to international trade have gradually fallen for most countries over the decades since the end of World War II. >Free trade, >International trade. The exceptions to this trend tend to be concentrated in individual industries, often associated with agriculture or apparel. International commercial policy tends not to be used as a macroeconomic tool, probably because of the availability of superior alternatives such as monetary and fiscal policy. >Protectionism, >Fiscal policy, >Monetary policy, >Tariffs. Ostry I 4 In addition, there are strong theoretical reasons that economists abhor the use of protectionism as a macroeconomic policy; for instance, the broad imposition of tariffs may lead to offsetting changes in exchange rates (Dornbusch, 1974⁽²⁾; Edwards, 1989⁽³⁾). And while the imposition of a tariff could reduce the flow of imports, it is unlikely to change the trade balance unless it fundamentally alters the balance of saving and investment. Further, economists think that protectionist policies helped precipitate the collapse of international trade in the early 1930s, and this trade shrinkage was a plausible seed of World War II. So, while protectionism has not been much used in practice as a macroeconomic policy (especially in advanced countries), most economists also agree that it should not be used as a macroeconomic policy. Times change. Some economies have recently begun to use commercial policy, seemingly for macroeconomic objectives. So it seems an appropriate time to study what, if any, the macroeconomic consequences of tariffs have actually been in practice. Most of the predisposition of the economics profession against protectionism is based on evidence that is either a) theoretical, b) micro, or c) aggregate and dated. >Method/Ostry. 1. Grossman, Gene M., and Kenneth Rogoff, 1995, Handbook of International Economics, Volume III (Amsterdam: Elsevier Science Publishers B.V.). 2. Dornbusch, Rudiger, 1974, “Tariffs and Nontraded Goods,” Journal of International Economics, vol. 4(2), pp. 177-85. 3. Edwards, Sebastian, 1989, Real Exchange Rates, Devaluation, and Adjustment (Cambridge, Massachusetts: MIT Press).	Ostry I Jonathan D. Ostry Davide Furceri Andrew K. Rose, Macroeconomic Consequences of Tariffs. IMF Working Paper. WP/19/9.International Monetary Fund. Washington, D.C. 2019
Memory	Forensic Psychology	Slater I 107 Memory/suggestibility/forensic psychology: Most of the child witness research on memory and suggestibility about stressful events involves non-maltreated children. Although findings on children’s memory for stressful events remain inconsistent, research examining non-maltreated children’s memory for stressful events has uncovered several predictors of children’s suggestibility. See Goodman, Quas, Batterman-Faunce, Riddlesberger, and Kuhn (1994)⁽¹⁾. Children’s lack of understanding of the event and lack of parental communication, in addition to children’s emotional reactions, were predictive of more inaccurate and more suggestible memory reports. >Suggestibility. Research conducted with participants with maltreatment histories suggests that despite association with cognitive delays in several domains, as reflected on language and intelligence tests, maltreatment history per se does not adversely affect memory ability or increase children’s suggestibility. Children with maltreatment histories have been found to be hypervigilant to negative stimuli (Pollak, Vardi, Bechner, & Curtin, 2005)⁽²⁾. >Intelligence tests, >Performance. Once engaged by such stimuli, maltreated children have a more difficult time than non-maltreated children in disengaging their attention (Maughan & Cicchetti, 2002)⁽³⁾. This focus on negative information may positively influence maltreated children’s legally relevant memory reports. Eisen, Goodman, Qin, Davis, and Crayton (2007)⁽⁴⁾ examined maltreated children’s memory for both an anogential exam and a venipuncture and found that, overall, maltreated children performed as well as non-maltreated children in a memory interview that tapped suggestibility. 1. Goodman, G. S., Quas, J. A., Batterman-Faunce, J. M., Riddlesberger, M. M., & Kuhn, J. (1994). Predictors of accurate and inaccurate memories of traumatic events experienced in childhood. Consciousness and Cognition, 3, 269–294. 2. Pollak, S. D., Vardi, S., Bechner, A. M., & Curtin, J. J. (2005). Physically abused children’s regulation of attention in response to hostility. Child Development, 76, 968–977. 3. Maughan, A., & Cicchetti, D. (2002). Impact of child maltreatment and interadult violence on children’s emotion regulation abilities and socioemotional adjustment. Child Development, 73, 1525–1542. 4. Eisen, M. L., Goodman, G. S., Qin, J., Davis, S., & Crayton, J. (2007). Maltreated children’s memory: Accuracy, suggestibility, and psychopathology. Developmental Psychology, 43, 1275–1294. Kelly McWilliams, Daniel Bederian-Gardner, Sue D. Hobbs, Sarah Bakanosky, and Gail S. Goodman, „Children’s Eyewitness Memory and Suggestibility. Revisiting Ceci and Bruck’s (1993) Review“, in: Alan M. Slater & Paul C. Quinn (eds.) 2012. Developmental Psychology. Revisiting the Classic Studies. London: Sage Publications	Slater I Alan M. Slater Paul C. Quinn Developmental Psychology. Revisiting the Classic Studies London 2012
Mergers	Rothbard	Rothbard III 643 Mergers/Rothbard: Mergers have been denounced as "monopolistic," but not nearly as vehemently as have cartels. ers have been denounced as "monopolistic," but not nearly as vehemently as have cartels. Merging firms pool their capital assets, and the owners of the individual firms now become part owners of the Single merged firm. They will agree on rules for the exchange ratios of the shares of the different companies. If the merging firms encompass the entire industry, then a merger is simply a permanent form of cartel. >Cartels/Rothbard, >Monopolies. Yet clearly the only difference between a merger and the original forming of a single corporation is that the merger pools existing capital goods assets, while the original birth of a corporation pools money assets. It is clear that, economically, there is little difference between the two. A merger is the action of individuals with a certain quantity of already produced capital goods, adjusting themselves to their present and expected future conditions by cooperative pooling of assets. The formation of a new company is an adjustment to expected future conditions (before any specific investment has been made in capital goods) by cooperative pooling of assets. The essential similarity lies in the voluntary pooling of assets in a more centralized organization for the purpose of increasing monetary income. The theorists who attack cartels and monopolies do not recognize the identity of the two actions. >Corporations/Rothbard. Rothbard III 644 Merger/cartel/Rothbard: Yet an industry-wide merger is, in effect, a permanent cartel, a permanent combination and fusion. On the other hand, a cartel that maintains by voluntary agreement the separate identity of each firm is by nature a highly transitory and ephemeral arrangement and (…) generally tends to break up on the market. In fact, in many cases, a cartel can be considered as simply a tentative step in the direction of permanent merger. And a merger and the original formation of a corporation do not (…) essentially differ. The former is an adaptation of the size and number of firms in an industry to new conditions or is the correction of a previous error in forecasting. The latter is a de novo attempt to adapt to present and future market conditions.	Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Method	Meehl	Corr I 15 Methods/Psychology/Meehl: Personality psychology has many concepts that cannot, themselves, be directly observed. Called hypothetical constructs in a classic theoretical description by MacCorquodale and Meehl (1948)⁽¹⁾, these theoretical terms can be inferred indirectly but are not themselves directly observable. Personality psychologists use terms like ‘adjustment’ and ‘extraversion’ and ‘self-esteem’ but cannot observe any of them directly, only indirectly through observations and measurements that are imperfect. The constructs are inferred by a network of correlations with various observations. Converging evidence affirms the reality, or at least the usefulness, of a construct. Consider ‘extraversion’: if the same people are found to be extraverted when measured by self-report, by peer-report, and by behavioural measures, then the construct of ‘extraversion’ is supported. If not, the construct may be invalid, or perhaps there is a problem with the measurement. Thus theorists propose a nomological net of associations among constructs and observables that can guide research (Cronbach and Meehl 1955)⁽²⁾. >Theoretical terms, >Theories, >Unobservables. 1. MacCorquodale, K. and Meehl, P. E. 1948. On a distinction between hypothetical constructs and intervening variables, Psychological Review 55: 95–107 2. Cronbach, L. J. and Meehl, P. E. 1955. Construct validity in psychological tests, Psychological Bulletin 52: 281–302 Susan Cloninger, “Conceptual issues in personality theory”, in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge Handbook of Personality Psychology. New York: Cambridge University Press.	Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Models	De Raad	Corr I 127 Model/theory/psychology/personality/De Raad: A model of personality may represent its characteristic traits, its mechanisms, its internal processes, at different levels of abstraction, and from different domains of interest (social, biological, cognitive, etc.). However, while the expression ‘structural models of personality’ connotes intended features on the one hand, it may, on the other hand, also evoke unintended references. One such unintended reference could be an emphasis on procedures to test a model, and on the statistics involved, as in structural equation modelling. In personality research, the standard recipe to arrive at structure typically involves the use of factor analytic techniques. Models of personality: Five-Factor Model see >Five-Factor Model. Corr I 128 Cattell/De Raad: Cattell’s original set of 35 trait variables was the result of a process of condensing a list of 171 trait descriptive items considered by Cattell (1943)⁽¹⁾ to summarize the complete ‘personality sphere’. That condensation took place on the basis of correlations of ratings from 100 subjects. The reduction to thirty-five variables was, in Cattell’s (1945⁽²⁾, p. 70) words, ‘a matter of unhappy necessity’. Cattell (1950)⁽³⁾ distinguished trait-elements (single trait words), surface traits (traits tending to cluster together in a person), and source traits (trait-factors), essentially forming a hierarchy of traits. The concept of hierarchy was extended in Cattell’s emphasis on the distinction between primary factors and higher order factors. Corr I 129 Costa/McCrae: Costa and McCrae (1976)⁽⁴⁾ clustered 16 PF scales on the basis of data from three different age groups, resulting into two consistent age-group independent clusters, called Adjustment-Anxiety and Introversion-Extraversion, and a third inconsistent age-group dependent cluster, which was conceptualized as an Experiential Style dimension. The three clusters formed the starting point for the development of the three-factorial NEO-PI (Costa and McCrae 1985)⁽⁵⁾. Corr I 130 Three factor model/Eysenck: In defining his structural conception of personality, Eysenck (1947)⁽⁶⁾ distinguished four levels of behaviour-organization that were hierarchically organized, namely single observable behavioural acts, habitual responses (recurrent acts under specified circumstances), traits (based on intercorrelations of different habitual responses), and types of traits (based on correlations between various traits). On the basis of ratings on this ‘intentionally heterogeneous’ item list, Eysenck concluded as to two factors, a general ‘neuroticism’ factor and a factor contrasting ‘affective, dysthymic, inhibited’ symptoms and traits and ‘hysterical and asocial’ symptoms and traits. Eysenck suggested this second factor to be related to Jung’s Introversion-Extraversion distinction. >Personality traits/Eysenck, (EysenckVsCattell). 1. Cattell, R. B. 1943. The description of personality: basic traits resolved into clusters, Journal of Abnormal and Social Psychology 38: 476–507 2. Cattell, R. B. 1945. The description of personality: principles and findings in a factor analysis, American Journal of Psychology 58: 69–90 3. Cattell, R. B. 1950. Personality: a systematic theoretical and factual study, New York: McGraw-Hill 4. Costa, P. T., Jr and McCrae, R. R. 1976. Age differences in personality structure: a cluster analytic approach, Journal of Gerontology 31: 564–70 5. Costa, P. T., Jr and McCrae, R. R. 1985. The NEO Personality Inventory manual. Odessa, FL: Psychological Assessment Resources 6. Eysenck, H. J. 1947. Dimensions of Personality. London: Kegan Paul Boele De Raad, “Structural models of personality”, in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge Handbook of Personality Psychology. New York: Cambridge University Press	Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Monetary Policy	Hayek	Boudreaux II 66 Monetary policy/Hayek/Boudreaux: Economic cycles: adjustments in production activities (…) are not instantaneous. They take time. Unemployment: Unemployment rises during the time it takes for these adjustments to be made. Such unemployment is not caused by too little aggregate demand. Therefore, such unemployment cannot be cured by more government spending or other efforts to raise aggregate demand. Instead, such unemployment is caused by the widespread failure of individual prices to convey accurate information to entrepreneurs and investors about what specific products they should produce and about how best to produce these products. >Information/Hayek, >Economic cycles/Hayek. Boudreaux II 67 Monetary policy: What might cause such a widespread failure of prices to convey reasonably accurate information? The most likely culprit in reality is poor monetary policy. a) f the money supply is stable - that is, if the money supply is not expanding or shrinking Arbitrarily - the pattern of prices is likely to be mostly correct. There's no good reason to suppose that in an economy in which markets are reasonably competitive and well-working that, suddenly, prices generally will become so out of whack that significant amounts of labour and resources are drawn into industries where they don't belong. b) But if the money supply itself is changed, the pattern of prices might well become grossly distorted. >Relative prices/Hayek, >Prices, >Information/Hayek. If the monetary authority (in most countries, a central bank with the power and authority to raise of lower the supply of money) injects streams of new money into the economy, significant distortions can occur. The reason is that new money enters the economy in particular places - specifically, through commercial banks making Ioans. >Banks, >Loans, >Credit. Money supply: This new money then spreads out to the rest of the economy from those places of entry. The people who are the first to get the newly created money spend it on particular goods and services. Example: (…) let's assume that the new money is spent first on purchases of new automobiles (by bank customers who use their borrowed money to finance such purchases). The injection into the economy of strearns of newly created money will thus cause the price of automobiles to rise relative to the prices of all other goods and services. These higher automobile prices tell an economic lie to people throughout the economy. Problem: Entrepreneurs and investors, seeing automobile prices rise relative to the prices of (…) every other good and service, are misled into the false conclusion that there is a genuine increase in the demand for automobiles relative to the demands for other goods and services. Boudreaux II 68 Money supply/prices: In fact, however, the higher prices of automobiles reflect only the fact that automobile buyers include lots of people who are lucky enough to be the first to spend the newly created money. Demand: This additional demand for automobiles isn't "real." This additional demand doesn't reflect people producing more output in order to earn more income to spend on new cars. Nor does this additional demand for automobiles come from these people decreasing their purchases in other markets in order to increase their purchases of automobiles. In short, this higher demand for automobiles reflects only the fact that new money was created and spent, as it entered the economy, first on automobiles. Production/investments: Once the stream of new money entering the economy stops flowing and these people no longer have this newly created money to spend, they will resume spending as they did before they got the new money. Demand for automobiles will fall back to its previous level (that is, demand for automobiles will fall to its level before being artificially driven up by the spending of the new money). But if enough new money is created and continually injected into the economy for a long-enough period of time, the prices of automobiles will rise by enough - and stay artificially high for long enough - to cause entrepreneurs and investors to shift some resources out of other industries and into automobile production. Boudreaux II 69 Beginning inflation: Automobile producers will be the next in line to spend the newly created money. If automobile producers spend all of the additional money they get on, say, clothing, the prices of clothing will be the next to rise. Clothing sellers will, in turn, spend the new money that they get in some particular ways- say, on children's toys and kitchen appliances. The prices of children's toys and kitchen appliances will then rise. Eventually, the newly created money works its way throughout the whole economy. This new money is ultimately spread out evenly across all markets. The final result is that the overall price level - that is, the average of all prices - is higher, but all individual prices relative to each other are unchanged from what they were before the new money was injected into the economy. >Relative prices/Hayek, >Interest rates/Hayek, >Inflation. Boudreaux II 79 Monetary policy/Problem: The bad effects of more inflation today won't materialize until sometime in the future, when many of today's officials will be out of office. So officials in office today can, by keeping the money supply growing, make the economy appear to be healthier than it really is, while the costs of creating this illusion will be borne only in the future by mostly different officials. Solutions: This political bias in favour of inflation is the chief reason justifying arrangements that strictly regulate changes in the supply of money. Returning to the gold standard is one option. >Gold standard. Milton Friedman: Alternatively, the economist Milton Friedman (1912-2006) famously proposed a "monetary rule" that would prohibit central banks from expanding the money supply beyond some very small amount (say, by no more than three percent annually). >Central banks. Boudreaux II 80 Hayek: Hayek himself came to favour denationalization of money - that is, getting government completely out of the business of issuing money and controlling the money supply. Competitive market forces would instead be responsible for supplying sound money. Central banks/Friedman: Friedman himself, just before he died, became so skeptical of central banks that he argued that government be stripped of any power and responsibility to regulate the supply of money.	Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014
Money	Hayek	Coyne I 33 Money/Hayek/Coyne/Boettke: Building upon Mises's earlier work (The Theory of Money and Credit, 1912)⁽¹⁾, which served as the foundation for the Austrian theory of the trade cycle, Hayek worked to refine both the technical understanding of capital coordination and the institutional details of credit policy. He published two books (Monetary Theory and the Trade Cycle, 1929(2); and Prices and Production, 1931⁽³⁾), which analyzed the effects of credit expansion on the economy's capital structure. Hayek presented this work in a series of lectures at the London School of Economics, where he was received with great acclaim and appointed, in 1932, as the Tooke Professor of Economics Science and Statistics. Hayek's arrival in London sparked the most fundamental debate in monetary policy in the twentieth century - the Hayek-Keynes debate. John Maynard Keynes had published A Treatise on Money in 1930⁽⁴⁾, of which Hayek wrote a lengthy and critical two-part review. HayekVsKeynes: The main problem with Keynes's position, Hayek argued, was his failure to understand the role that the interest rate plays in coordinating plans and the capital structure, through time, in a market society. >Interest rates. Business cycle: The Mises-Hayek theory of the trade cycle offered an alternative by rendering intelligible the "cluster of errors" that occurs during the bust by focusing on the distortions in relative prices and in the capital structure created by government-induced credit expansions. >Credit expansion, >Business cycle/Mises. In this regard, the Mises-Hayek theory of the business cycle is one illustration of the dynamics of interventionism whereby an initial government intervention into the market sets off a chain ofunintended and undesirable consequences. Oney/Hayek/Mises: At the core of the Mises-Hayek theory is the idea that money is not neutral. Money would be neutral if a monetary expansion had no effect on real prices. For example, it would be neutral if a doubling of the money supply led to an automatic doubling of all prices and wages such that real wealth would be left unchanged. >Money/Mises, >Price/Mises. People's bank accounts would double and so too would prices such that their real purchasing power remained the same. The notion that money is not neutral, in contrast, emphasizes that monetary expansion does not raise all prices and wages instantaneously and in unison. Instead, money works its way through the economic system starting at the point of injection and causing changes in relative prices as it filters through the system. This process benefits the early recipients of the newly printed money at the expense of those later in line. Purchasing power: Those who receive the new money prior to the full adjustment of prices benefit through increased purchasing power that enables them to bid resources away from others who lack the improved purchasing power. >Purchasing power. Those who are the last to receive the new money suffer from reduced purchasing power because prices have already adjusted upward. The relative price changes caused by the credit expansion influence the process of exchange and production as entrepreneurs respond to the signals sent by prices as they make and revise their production plans. >Relative prices. Production: These production plans, in turn, are what determine the capital structure and, ultimately, what consumer goods are produced. >Business cycle, >F. A: Hayek, >Production. 1. Ludwig von Mises. 1912. The Theory of Money and Credit (Theorie des Geldes und der Umlaufsmittel, Translated by H.E. Batson in 1934; reprinted with “Monetary Reconstruction» (New Haven, Conn.: Yale University Press, 1953). Reprinted by the Foundation for Economic Education, 1971; reprinted with an Introduction by Murray N. Rothbard, Liberty Press Liberty Classics, 1989. 2. F. A. Hayek. 1933.Monetary Theory and the Trade Cycle. New York: Harcourt Brace & Co. 3. F. A. Hayek, Prices and Production. 2nd ed. London: Routledge and Kegan Paul, 1935. Reprinted by Augustus M. Kelley, 1967. 4. John Maynard Keynes. 1930. A Treatis on Money, London: Macmillan	Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 Coyne I Christopher J. Coyne Peter J. Boettke The Essential Austrian Economics Vancouver 2020
Money Supply	Friedman	Landsburg I 14 Money supply/Friedman/Landsburg: (...) let's imagine a simple world where, as of a particular Monday morning, the populace collectively holds a total of $ 1 million. The government, which has been planning all along to buy $ 1 million worth of paper clips on Monday afternoon, makes the decision to pay for those paper clips with newly printed money (as opposed to using, say, tax revenue or borrowed funds). What should we expect to happen? As of Monday afternoon, the people who sell paper clips are holding more money than they held this morning. In fact, the total money supply has doubled, so if we average this over the entire population, the average person (call her Alice) is now holding twice as much as she held this morning. But that's more than she wants. If she wanted this much money, she would have arranged for it in the first Place (perhaps by depositing a bit more of her paycheque into her chequing account instead of her retirement account). Landsburg I 15 Problem: how is she going to get rid of this excess money? Discarding it seems like an exceptionally bad idea. Maybe she turns to her neighbour Bob and talks him into borrowing one of her dollars. But then Bob has an extra dollar to get rid of. Maybe she goes to the bank and buys a certificate of deposit. But then her banker, Carol, has more money than she wants in her vault. No matter where the money goes, the average person still has twice as much money as he or she did this morning and is still trying to get rid ofit. The other way to get rid of money is to spend it. So sooner or later, Alice (or someone) decides to buy an extra hamburger or an extra haircut or a more expensive sweater - or maybe she schedules a gutter repair she'd been planning to put off till next year. Prices: This bids up the prices of hamburgers, haircuts, sweaters, and home maintenance by, say, 10 percent. Because prices are higher, people are now willing to hold 10 percent more money than they held this morning. Unfortunately, the amount of money floating around has gone up not by 10 percent but by 100 percent. So the process continues until prices are bid up by fully 100 percent. Now people want to hold all the excess money and the process comes to a halt.* The bottom line: - If you double (or triple or quadruple) the money supply, prices will double (or triple or quadruple). The process might take a while, and some interesting stuff can happen along the way. A little reflection reveals a somewhat deeper moral: - A jump in the general level of prices (as opposed to an increase in the price of one specific good or another) is always caused by people trying to get rid of money. >Price level. Landsburg I 16 Why might people want to get rid of money? We've listed some reasons already - a wider acceptance of credit cards, an increase in street crime, a rise in the interest rate, or an increase in the supply of money, leaving people with more than they want to hold. >Inflation/Friedman. Landsburg I 22 Money Supply/Friedman/Landsburg: (…) like many things, inflation in small doses is a little bit bad and inflation in higher doses is extremely bad. But why put up with any badness you don't have to put up with? It seems like the best scenario is no inflation at all - and the recipe to accomplish that scenario is zero growth in the money supply. Landsburg I 23 Question: (…) why not go even further? If Alice enjoys holding 10 weeks' income in the form of money, perhaps she'd be even happier holding 12 weeks' income. Maybe she could use a little nudge in that direction! We could provide that nudge with a negative inflation rate (also called deflation), which causes the money in Alice's pocket to grow over time in value, thus encouraging her to hold more of it. >Inflation, >Inflation/Friedman, >Deflation. Problem: If holding a little extra money makes Alice a little happier, why does she need a nudge? >Nudging. The answer is that when Alice chooses to hold more money—and hence to spend less money- she's helping to keep the price level down, which benefits not just her but (…) countless others. And if they in turn hold more money, then Alice shares in the benefits. As a result, everyone can be better off if everyone gets a little nudge. Negative Inflation/Friedman: So Friedman was led to contemplate a negative inflation rate, driven by a steady reduction in the money supply. (The government could, for example, collect some taxes in cash and burn 10 percent of the proceeds.) Problem: On the other hand, money supply growth has some advantages. Money supply growth/taxation: If the government pays for paper clips with newly minted money, then it doesn't have to pay for paper clips by taxing (say) coffee, and that's good for everyone who buys or sells coffee. Solution/Taxation/Friedman: After weighing this and other factors, Friedman in the end endorsed a small but positive inflation rate on the order of about 2 percent a year, but, believing that 2 percent a year was likely to be politically infeasible, declared himself perfectly willing to settle for as much as 5 percent. Problem: (…) in the short run, the price adjustments take place in fits and starts, which can have important consequences. >Quantity theory. * (…) People try to get rid of money by buying things, which drives up prices until people are willing to hold the extra money after all. You might wonder why we can't tell a different story: Maybe people try to get rid of money by lending it, which drives down interest rates until people are willing to hold the extra money after all. (Remember that when the interest rate is Iow, alternatives to money - like certificates of deposit - are less attractive.) The problem with that story is that it runs afoul of economic theory, which tells us that the interest rate must be fully determined by the supply and demand for current and future goods and services, leaving no room for it to be affected by changes in the supply and demand for money. Brocker I 397 Money Supply/FriedmanVsKeynesianism/Economic Crisis/Friedman: thesis: after the economic crisis of the early 1930s, central banks had not tried hard enough to prevent the collapse of banks. Solution/Friedman: a policy of steady money supply growth as a necessary and sufficient condition of macroeconomic stability, i.e. above all to preserve the value of money. >Monetarism. Peter Spahn, „Milton Friedman, Kapitalismus und Freiheit“, in: Manfred Brocker (Hg.) Geschichte des politischen Denkens. Das 20. Jahrhundert. Frankfurt/M. 2018	Econ Fried I Milton Friedman The role of monetary policy 1968 Landsburg I Steven E. Landsburg The Essential Milton Friedman Vancouver: Fraser Institute 2019 Brocker I Manfred Brocker Geschichte des politischen Denkens. Das 20. Jahrhundert Frankfurt/M. 2018
Money Supply	Thornton	Rothbard II 173 Money supply/Thornton/Rothbard: [Thornton] conceded the theoretical possibility that increased money supply could bring about higher prices: as to the assertion that the increased issue of Bank paper was the cause of the dearness of provisions, he [Thornton] would not deny that it might have some foundation; but he would contend that its effect was far from being as great as was being alleged... Rothbard: Henry Thornton's book on Paper Credit⁽¹⁾ was a considerable expansion of his parliamentary speeches, and it was Paper Credit that took its place as not only the leading work on behalf of anti-bullionism, but also the most influential on either side of the debate. The timing was right, since the restriction was in particular need of defence in 1802. Rothbard II 174 In fact, Thornton acknowledged that the fall in price and the depression brought about by monetary deflation would be 'unusual' and 'temporary'. But he anticipated Keynes in focusing on allegedly sticky wage rates, for a fall [of prices] arising from temporary distress will be attended probably with no correspondent fall in the rate of wages; for the fall of price, and the distress, will be understood to be temporary, and the rate of wages, we know, is not so variable as the price of goods. There is reason, therefore, to fear that the unnatural and extraordinarily Iow price arising from the sort of distress of which we now speak, would occasion much discouragement of the fabrication of manufactures. RothbardVsThornton: There are two problems here. First, while the economic distress, due to faulty forecasting and excess bidding up of wage rates and other costs, will indeed be temporary, there is no reason Why the fall in prices should not be permanent. Prices had previously been artificially raised by monetary and credit expansion; their decline simply reflects the contraction of credit down to more realistic levels. The knowledge that the decline is permanent should greatly speed up the adjustment mechanism. Second, if workers persist in keeping their wage demands higher than the market, they have only themselves to blame for their unemployment. Keeping any price, including a wage rate, higher than market equilibrium will always lead to an unsold surplus of the good or service: in the case of labour, unsold labour time, or unemployment. Iflabourers wish to change their unemployed status, they need only Iower their wage demands to clear the market and allow themselves to be hired. Rothbard II 175 RothbardVsThornton: Thornton's work has been excessively hailed by von Hayek and other historians as being theoretically excellent if unfortunate in its political anti-bullionist conclusions. >Bullionism/Rothbard. But his theoretical weakness did not only consist of his excessive horror of deflation and his stress on the alleged empirical dominance of real factors in his analysis of inflation and depreciation. For this stress itself reflected a grave if subtle theoretical flaw in Thornton's entire monetary and balance of payments analysis. His entire analysis lingered disproportionately on the real and short-term factors, to the almost complete neglect of the tendency of the economy towards long-run equilibrium. To sum up: the correct analysis of complete bullionism (such as presented by Boyd and later by Lord King) stresses monetary factors leading to monetary equilibrium, while showing that real factors can only have temporary effects. The analysis of real factors is integrated with, and at all times subordinated to, the monetary factors, and short-run and long-run monetary processes are integrated as well. In Thornton's moderate anti-bullionist position (often miscalled 'moderate bullionist'), however, both real and monetary causal factors and processes are presented as separate and independent of each Other, With real factors presented as empirically more important. Time/price/circulation: Short-run factors are similarly stressed, to the neglect of long-run forces. Henry Thornton has been extravagantly praised by Schumpeter and other historians for adding velocity of circulation to the quantity of money as a determinant of overall prices. But, in the first place, we have seen that ever since the scholastics, the demand for money - the inverse of the 'velocity' - had always been integrated with the supply of money in analysing the determination of general prices. It is true that Thornton analysed the different influences on, and different variabilities of, velocity in considerable and pioneering detail: e.g. frequency of payments, development of clearing systems, confidence in the money, and variations of the same stock of money over time. But unfortunately, Thornton ruined this contribution by not realizing that velocity of circulation is simply the inverse of the demand for money and by treating the velocity as somehow different, and independent of, demand in helping determine the money relation of supply, demand and price. >Currency. 1. Henry Thornton. 1802. An Enquiry into the Nature and Effects of the Paper Credit of Great Britain. London: J. Hatchard and Messrs. F. and C. Rivington.	Thornton I Henry Thornton An Enquiry into the Nature and Effects of the Paper Credit of Great Britain London 1802, 1939 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Motivation	Bowlby	Corr I 228 Motivation/Bowlby/Shaver/Mikulincer: BowlbyVsFreud: In explaining the motivational bases of personality development, Bowlby (1982/1969)⁽¹⁾ rejected Freudian and object relations versions of psychoanalytic theory that conceptualize human motivation in terms of ‘drives’ and view the mind as powered by ‘psychic energy’. Instead, he created a ‘behavioural systems’ model of motivation, borrowed from ethology and cybernetic control theory, according to which human behaviour is organized and guided by species-universal, innate neural programmes. >behavioural systems. These attachment, care-giving, exploration and sexual systems facilitate the satisfaction of fundamental human needs and thereby increase the likelihood of survival, adjustment and reproduction. Motivation: Bowlby (1982/1969)⁽¹⁾ viewed the systems as ‘goal directed’ and ‘goal corrected’ (i.e., corrected by changing sub-goals based on feedback about goal non-attainment). Each system was conceptualized as a servomechanism that could be turned on, or ‘activated’, by certain stimuli or situations and ‘deactivated’ or ‘terminated’ by other stimuli and situations (basically, by the attainment of what Bowlby called ‘set-goals’, which in the case of the attachment system include escape from and avoidance of threats and dangers). Corr I 229 BowlbyVsFreud: This new conception of motivation rendered the Freudian notion of general drives (e.g., libido) unnecessary. Goal directed and goal corrected behaviours are activated not by an accumulation of psychic energy or a desire to reduce drive intensity, but by conditions within a person or the person’s environment that activated behaviour intended to achieve a certain goal state or to avoid threats and dangers. >Affectional bond, >Attachment theory. 1. Bowlby, J. 1982. Attachment and loss, vol. I, Attachment, 2nd edn. New York: Basic Books (original edn 1969) Phillip R. Shaver and Mario Mikulincer, “Attachment theory: I. Motivational, individual-differences and structural aspects”, in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge Handbook of Personality Psychology. New York: Cambridge University Press	Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Natural Rate of Interest	Rothbard	Rothbard III 440 Def Natural Rate of Interest/Rothbard: In many cases it is convenient to designate by different terms the rate of interest on contractual loan markets and the rate of interest in the form of earnings on investments as a result of price spreads. The former we may call the contractual rate of interest (where the interest is fixed at the time of making the contract), and the latter the natural rate of interest (i.e., the interest comes “naturally” via investments in production processes, rather than being officially included in an exchange contract). Rothbard III 445 Producer’s loans: A difficulty seems to arise, however, in the case of long-term producers’ loans. Here is an apparently clear-cut rigid element in the system, and one which can conform to the natural rate of interest in investments only after a great lag. Rothbard III 449 The absurdity of separating the long-run and the short-run interest rates becomes evident when we realize that the basic interest rate is the natural rate of interest on investments, not interest on the producers’ loan market. >Interest rate/Rothbard, >Loans/Rothbard, >Credit/Rothbard, >Production/Rothbard, >Investments/Rothbard. Rothbard III 794 Natural rate of interest/Rothbard: Let us consider the interest rate in terms of natural interest. Then, suppose 100 ounces are paid for factors that will be transformed in one year into a product that sells for 105 gold ounces, for an interest gain of five and an interest return of 5 percent. Now a general expectation arises of a general halving of prices one year from now. The selling price of the product will be 53 ounces in a year's time. What happens now? Will entrepreneurs buy factors for 100 and sell at 53 merely because their real interest rate is preserved? Certainly not. They will do so only if they do not at all anticipate the change in purchasing power. But to the extent that it is anticipated, they will hold money rather than buy factors. This will immediately Iower factor prices to their expected future levels, say from 100 to 50. Cf. >Market interest rate/Fisher. Loan rate/Rothbard: What happens to the Ioan rate is analytically quite trivial. It is simply a reflection of the natural rate and depends on how the expectations and judgment of the people on the Ioan market compare with those on the stock and other markets. >Loans/Rothbard. Free market/Rothbard: For the free economy, there is no point in separately analyzing the Ioan market. Analysis of the Fisher problem - the relation of the interest rate to price changes - should concentrate on the natural rate of interest. >Rate of return/Rothbard. Rothbard III 795 Purchasing power: In these examples, the natural interest rate on the market has contained a purchasing-power component, which corrects for real rates, positively in money terms during a general expansion, and negatively during a general contraction. Loan rate: The Ioan rate will be simply a reflection ofwhat has been happening in the natural rate. So far, the discussion is similar to Fisher's, except that these are the effects of actual, not anticipated, changes and the Fisher thesis cannot take account of the negative interest rate case. >Fisher, Irving, >Market interest rate/Fisher. Rothbard: We have seen that rather than take a monetary loss, even though their real return will be the same, entrepreneurs will hold back their purchases of factors until factor prices fall immediately to their future Iow level. >Factor market. Prices: But this process of anticipatory price movement does not occur only in the extreme case of a prospective "negative" return. >Rate of return. lt happens whenever a price change is anticipated. Thus, suppose all entrepreneurs generally anticipate that prices will double in two years. The fact of an anticipated rise will lead to an increase in the price level now and an approach immediately toward a doubled price level. An anticipated fall will lead to an immediate fall in factor prices. If all changes were anticipated by everyone, there would be no room for a purchasing-power component to develop. Prices would simply fall immediately to their future level. Purchasing power: The purchasing-power component, then, is not the reflection, as has been thought, of expectations of changes in purchasing power. It is the reflection of the change itself;(…). Rothbard III 796 Componets of the natural interest rate (all reflected in the loan interest rate): a) (…) the pure rate of interest - the result of individual time preferences, tending to be uniform throughout the economy. b) (…) the specific entrepreneurial rates of interest. These differ from firm to firm and so are not uniform. They are anticipated in advance, and they are the rates that an investor will have to anticipate receiving before he enters the field. A particularly "risky" venture, if successful at all, will therefore tend to earn more in net return than what is generally anticipated to be a "safe" venture. c) (…) the purchasing-power component, correcting for general PPM (purchasing power of monetary unit) changes because of the inevitable time lags in production. This will be positive in an expansion and negative in a contraction, but will be ephemeral. The more that changes in the PPM are anticipated, the less important will be the purchasing-power component and the more rapid will be the adjustment in the PPM itself. d) There is still a fourth component: This exists to the extent that money changes are not neutral (and they never are). Sometimes product prices rise and fall faster than factor prices, sometimes they rise and fall more slowly, and sometimes their behavior is mixed, with some factor prices and some product prices rising more rapidly. >Factor market. Whenever there is a general divergence in rates of movement between the prices of the product and of original factors, a terms-of-trade component emerges in the natural rate of interest. >Terms of trade/Rothbard.	Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Neo-Fisher Effect	Uribe	Uribe I 4 Def Fisher-Effect/Uribe: A large body of empirical and theoretical studies argue that a transitory positive disturbance in the nominal interest rate causes a transitory increase in the real interest rate, which in turn depresses aggregate demand and inflation (…) (see, for example, I 5 Christiano, Eichenbaum, and Evans, 2005)(1). Similarly, a property of virtually all modern models studied in monetary economics is that a transitory increase in the nominal interest rate has no effect on inflation in the long run. By contrast, if the increase in the nominal interest rate is permanent, sooner or later, inflation will have to increase by roughly the same magnitude, if the real interest rate, given by the difference between the nominal rate and expected inflation, is not determined by nominal factors in the long run (...). This one-to-one long-run relationship between nominal rates and inflation is known as the Fisher effect. Def Neo-Fisher Effect/Uribe: The neo-Fisher effect says that a permanent increase in the nominal interest rate causes an increase in inflation not only in the long run but also in the short run. I 6 The Fisher effect, however, does not provide a prediction of when inflation should be I 8 expected to catch up with a permanent increase in the nominal interest rate. It only states that it must eventually do so. Uribe I 8 Neo-Fisher Effect/Empirical Model/New-Keynesian Model/Inflation/Interest/Uribe: Empirical model: The empirical model aims to capture the dynamics of three macroeconomic indicators (…): the logarithm of real output per capita (…), the inflation rate (…), expressed in percent per year, and the nominal interest rate (…), expressed in percent per year. [Uribe] assume[s] that [the three indicators above] are driven by four exogenous shocks: a nonstationary (or permanent) monetary shock (…), a stationary (or transitory) monetary shock (…), a nonstationary nonmonetary shock (…) and a stationary nonmonetary shock (…). I 16 [Uribe] estimate[s] the empirical model on quarterly U.S. data spanning the period 1954:Q3 to 2018:Q2. I 18 The main result [from the empirical model] is that the adjustment of inflation to its higher long-run level takes place in the short run. In fact, inflation increases by 1 percent on impact and remains around that level thereafter. On the real side of the economy, the permanent increase in the nominal interest rate does not cause a contraction in aggregate activity. Indeed, output exhibits a transitory expansion. This effect could be the consequence of low real interest rates resulting from the swift reflation of the economy following the permanent interest-rate shock. Because of the faster response of inflation relative to that of the nominal interest rate, the real interest rate falls by almost 1 percent on impact and converges to its steady-state level from below, implying that the entire adjustment to a permanent interest-rate shock takes place in the context of low real interest rates. I 22 How important are nonstationary monetary shocks? The relevance of the neo-Fisher effect depends not only on whether it can be identified in actual data, (…) but also on whether permanent monetary shocks play a significant role in explaining short-run movements in the inflation rate. I 23 [T]he empirical model assigns a significant role to this type of monetary disturbance [the nonstationary monetary shock], especially in explaining movements in nominal variables. In comparison, the stationary monetary shock explains a relatively small fraction of movements in the three macroeconomic indicators included in the model. I 25 [To summarize] the estimated empirical model predicts that a permanent increase in the nominal interest rate causes an immediate increase in inflation and transitional dynamics characterized by low real interest rates, and no output loss. >Terminology/Uribe. New-Keynesian Model: In this section the presence of a neo-Fisher effect in the context of an estimated standard optimizing model in the neo-Keynesian tradition [is investigated]. [The model] is driven by six shocks: permanent and transitory interest-rate shocks, permanent and transitory productivity shocks, a preference shock, and a labor-supply shock. I 37 [Q]ualitatively, the responses implied by the New-Keynesian model concur with those implied by the empirical model (…). An increase in the nominal interest rate that is understood to be permanent by private agents (…) causes an increase in inflation in the short run, without loss of aggregate activity. By contrast, an increase in the nominal interest rate that is interpreted I 39 to be transitory (…) causes a fall in inflation and a contraction in aggregate activity. [I]n response to a permanent increase in the nominal interest rate inflation not only begins to increase immediately, but does so at a rate faster than the nominal interest rate. As a result, the real interest rate falls. By contrast, a temporary increase in the nominal interest rate causes a fall in inflation and an increase in the real interest rate. A natural question is why inflation moves faster than the interest rate in the short run when the monetary shock is expected to be permanent. The answer has to do with the presence of nominal rigidities and with the way the central bank conducts monetary policy. In response to a permanent I 40 monetary shock that increases the nominal interest rate by one percent in the long run, the central bank raises the short-run policy rate quickly but gradually. At the same time, firms know that, by the Fisher effect, the price level will increase by one percent in the long run, and that they too will have to increase their own price in the same proportion in the long run, to avoid making losses. Since firms face quadratic costs of adjusting prices, they find it optimal to begin increasing the price immediately. Since all firms do the same, inflation itself begins to increase as soon as the shock is announced. 1. Christiano, Lawrence J., Martin Eichenbaum, and Charles L. Evans, “Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy,” Journal of Political Economy 113, 2005, 1-45. Martín Uribe (2019): The Neo-Fisher Effect: Econometric Evidence from Empirical and Optimizing Models. In: NBER Working Paper No. 25089.	Uribe I Martin Uribe The Neo-Fisher Effect: Econometric Evidence from Empirical and Optimizing Models. NBER Working Paper No. 25089 2019
Optimism Bias	Experimental Psychology	Parisi I 104 Optimism/Experimental psychology/Ryan-Wilkinson: (...) the well-known finding that humans are overly optimistic or overconfident on various dimensions (e.g., Weinstein 1980⁽¹⁾, 1989⁽²⁾) (...) is a true cognitive error, in the sense that we know that people are getting certain answers objectively wrong. For example, in Fischhoff, Slovic, and Lichtenstein (1977)⁽³⁾, participants gave estimates and answers to difficult Parisi I 105 questions and had to quantify their confidence; they were, objectively speaking, much too sure that they had answered correctly. What makes this an interesting question from a normative standpoint, though, is that even in the case of a clear bias, a phenomenon that results in wrong answers, there is extensive evidence that the bias is overall helpful and quite adaptive. Positive illusions are associated with better adjustment and coping skills (e.g., Taylor and Armor, 1996)⁽⁴⁾; indeed, failure to show this bias has been associated with clinical depression (e.g., Allan, Siegel, and Hannah, 2007)⁽⁵⁾. >Cognitive biases, >Problem solving. 1. Weinstein, Neil D. (1980). “Unrealistic Optimism About Future Life Events.” Journal of Personality and Social Psychology 39: 806–820. 2. Weinstein, Neil D. (1989). “Optimistic Biases About Personal Risks.” Science 246: 1232–1233. 3. Fischhoff, Baruch, Paul Slovic, and Sarah Lichtenstein (1977). “Knowing with Certainty: The Appropriateness of Extreme Confidence.” Journal of Experimental Psychology 3: 552–564. 4. Taylor, Shelley E. and David A. Armor (1996). “Positive Illusions and Coping with Adversity.” Journal of Personality 64: 873–898. 5. Allan, Lorraine G., Shepard Siegel, and Samuel Hannah (2007). “The Sad Truth About Depressive Realism.” Quarterly Journal of Experimental Psychology 60: 482–495. Wilkinson-Ryan, Tess. „Experimental Psychology and the Law“. In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University Press.	Parisi I Francesco Parisi (Ed) The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017
Parameterization	Meteorology	Edwards I 393 Parameterization/meteorology/climatology/Edwards: far from expressing pure theory, analysis models are data-laden.⁽¹⁾ And the same can also be said of all forecast models and general circulation models. Stephen Schneider writes: . . . even our most sophisticated ‘first principles’ models contain ‘empirical statistical’ elements within the model structure. . . .We can describe the known physical laws mathematically, at least in principle. In practice, however, solving these equations in full, explicit detail is impossible. First, the possible scales of motion in the atmospheric and oceanic components range from the submolecular to the global. Second are the interactions of energy transfers among the different scales of motion. Finally, many scales of disturbance are inherently unstable; small disturbances, for example, grow rapidly in size if conditions are favorable.⁽²⁾ Edwards: Hence the necessity of parameterization, much of which can be described as the integration of observationally derived approximations into the “model physics.” Schneider and others sometimes refer to parameters as “semi-empirical,” an apt description that highlights their fuzzy relationship with observational data. For the foreseeable future, all analysis models, forecast models, and climate models will contain many “semi-empirical” elements. >Wheather forecasting/Edwards, >Models/meteorology, cf. >Homogenization/climatology, >Reanalysis/climatology. Edwards I 465 Parameter: (…) the term is often used to distinguish, from dependent variables, quantities that may be more or less arbitrarily assigned values for purposes of the problem at hand” (emphasis added). So a parameter is a kind of proxy - a stand-in for something that cannot be modeled directly but can still be estimated, or at least guessed. Parameterization illustrates the interaction of computational friction with the limits of human knowledge. In an ideal climate model, the only fixed conditions would be the distribution and the altitude of continental surfaces. Virtually all other variables - sea-surface temperature, land-surface albedo (reflectance), cloud formation, etc. - would be generated internally by the model itself from the lower-level physical properties of air, water, and other basic elements of the climate system. Instead, most physical processes operating in the atmosphere require some degree of parameterization; these parameterized processes are known as the “model physics.” >Models/climatology. Parameter: (…) parameters represent a variable physical process rather than a fixed quantity. Edwards I 466 Parameterization/Example: A major parameterization in all climate models is radiative transfer. The atmosphere contains both gases (CO2, methane, nitrogen, ozone, oxygen, water vapor, etc.) and solids (particulate aerosols, ice clouds, etc.). Each one of these materials absorbs solar energy at particular frequencies. Each also emits radiation at other frequencies. Those emissions are then absorbed and re-radiated by other gases and solids. These radiative transfers play a huge role in governing the atmosphere’s temperature. Thus, models must somehow estimate how much radiation the atmosphere in a given grid box absorbs, reflects, and transmits, at every level and horizontal location. “Line-by-line models,” which combine databases of spectrographic measurements for the various gases with physical models, can carry out this summing.⁽³⁾ Edwards I 469 Ad hoc parameter/example: An example of an ad hoc parameter is “flux adjustment” in coupled atmosphere-ocean circulation models (AOGCMs). The interface between the atmospheric model and the ocean model must represent exchanges of heat, momentum (wind and surface resistance), and water (precipitation, evaporation) between the atmosphere and the ocean. These fluxes - flows of energy and matter between atmosphere and ocean—are very difficult to measure empirically. Yet they profoundly affect model behavior. Modelers spoke of flux adjustments as “non-physical” parameterizations - i.e., ones not based on physical theory—but also sometimes characterized them as “empirically determined.”⁽⁴⁾ Any given GCM’s model physics contains hundreds or even thousands of parameterizations. Edwards I 470 An entire subfield—climate model diagnosis - works out ways to isolate the origin of particular problems to specific parameterizations and their interactions. Tuning: “Tuning” means adjusting the values of coefficients and even, sometimes, reconstructing equations in order to produce a better overall model result. “Better” may mean that the result agrees more closely with observations, or that it corresponds more closely to the modeler’s expert judgment about what one modeler I interviewed called the “physical plausibility” of the change. >Models/climatology. 1. P. N. Edwards, “Global Climate Science, Uncertainty and Politics: Data-Laden Models, Model-Filtered Data,” Science as Culture 8, no. 4 (1999): 437–. 2. S. H. Schneider, “Introduction to Climate Modeling,” in Climate System Modeling, ed. K. E. Trenberth (Cambridge University Press, 1992). 3. J. T. Kiehl, “Atmospheric General Circulation Modeling,” in Climate System Modeling, ed. K. E. Trenberth (Cambridge University Press, 1992), 338. 4. 8. J. T. Houghton et al., Climate Change 1995: The Science of Climate Change (Cambridge University Press, 1996).	Edwards I Paul N. Edwards A Vast Machine: Computer Models, Climate Data, and the Politics of Global Warming Cambridge 2013
Permanent Income Hypothesis	Friedman	Landsburg I 8 Permanent Income Hypothesis/Friedman/Landsburg: Friedman hypothesized that: A) When your permanent income rises by, say, $ 100 a year, you'll typically increase your annual spending by something very close to $ 100.* B) When your non-permanent income rises or falls by $ 100 in a given year (because of an unexpected bonus at work, a lost wallet, a winning scratch-off ticket, or an illness) then you'll typically make only a small adjustment in your current spending. If Alice out-earns Bob by $ 100 a year, then (for an average Alice and an average Bob) it's usually because her permanent income exceeds his by about $ 90 and her non-permanent income exceeds his by $ 10. Therefore, since only her permanent income affects her spending, she outspends him by about $90. Landsburg I 9 Problem/FriedmanVsKeynes: Therefore it's very easy for an economist to notice that when Alice out-earns Bob by $ 100, She outspends him by $ 90 -while remaining entirely oblivious to what lies behind the numbers. In particular, that economist can easily make the mistake of believing that a $ 100 increase in non-permanent income can lead to a $90 increase in spending. But that inference, which underlies the entire theory of the Keynesian multiplier, is wrong. Cf. >Investment multiplier/Keynes. Permanent/income vs. absolute income: The permanent income hypothesis also settles a nagging riddle that had been troubling economists for a long time. Example: a) If Alice earns $ 20,000 more than her neighbour Bob, she typically outspends him by about $ 18,000. b) But if Alice earns $ 20,000 more than her grandfather did at her age, she typically outspends him by almost the full $ 20,000. (We see this in real-world data.) Whence the discrepancy? Solution: When Alice out-earns Bob, it's often partly because she's having an unusually good Year. Unusually good years don't generally repeat themselves. So if she out-earns Bob by $ 20,000, she might expect to out-earn him by only about $ 18,000 going forward, and increases her spending by almost that amount. But when Alice out-earns her grandfather, it's likely to be because times have changed. That's a permanent condition. She expects to continue out-earning him by about the same amount forever, and spends accordingly. Landburg I 10 Confirmations of the hypothesis: Friedman proposed several tests. For example: farmers' income is heavily dependent on market and weather conditions (this was especially true in Friedman's time, when farmers didn't routinely hedge their bets through futures markets). Factory workers' income is far more predictable. So an upward spike in Frank the farmer's income is likely to be mostly temporary, whereas an upward spike in Mary the machinist's income is likely to be mostly permanent (maybe she got promoted!). Therefore we should (on average of course) see machinists with income spikes increasing their spending by more than farmers with income spikes. Real world data confirm this prediction. Friedman carried out a great many such tests, comparing not just farmers versus machinists, but Swedes versus Englishmen, black Americans versus white Americans, young people versus old people, and more. The results in each case are consistent With the permanent income hypothesis. *Exactly how close depends on a variety of factors including the interest rate and how much you've already got in the bank.	Econ Fried I Milton Friedman The role of monetary policy 1968 Landsburg I Steven E. Landsburg The Essential Milton Friedman Vancouver: Fraser Institute 2019
Personality	Allport	Corr I 4 Personality/Allport: Gordon Allport (1937)⁽¹⁾ defined personality as ‘the dynamic organization within the individual of those psychophysical systems that determine his unique adjustments to the environment’ (Allport 1937,p.48). I 5 McAdamsVsAllport/PalsVsAllport: A definition that gives a modern twist to this personological integration is offered by McAdams and Pals (2006)⁽²⁾, who define personality as ‘an individual’s unique variation on the general evolutionary design for human nature, expressed as a developing pattern of dispositional traits, characteristic adaptations, and integrative life stories complexly and differentially situated in culture’ (McAdams and Pals 2006⁽²⁾, p. 212). The emphasis on dynamics and development in these two personological definitions reminds us that some theories emphasize function and change, in contrast to the typically more static trait emphasis on description. >Environment, >Situations, >Culture, >Cultural psychology, >Personality traits. 1. Allport, G. W. 1937. Personality: a psychological interpretation. New York: Holt, p. 48. 2. McAdams, D. P. and Pals, J. L. 2006. A new Big Five: fundamental principles for an integrative science of personality, American Psychologist 61: 204–17 Susan Cloninger, “Conceptual issues in personality theory”, in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge Handbook of Personality Psychology. New York: Cambridge University Press. Corr I 43 Personality/Allport/AsendorpfVsAllport: Allport (1937) owed most of his ideas to Stern (1911)⁽¹⁾. >W. Stern. 1. Stern, W. 1911. Die Differentielle Psychologie in ihren methodischen Grundlagen [Methodological foundations of differential psychology]. Leipzig: Johann Ambrosius Barth Jens B. Asendorpf, “Personality: Traits and situations”, in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge Handbook of Personality Psychology. New York: Cambridge University Press. Corr I 380 Personality/Allport/Saucier: Allport (1937)⁽¹⁾: ‘personality is the dynamic organization within the individual of those psychophysical systems that determine his unique adjustments to his environment’ (1937, p. 48). Saucier: Allport called this a ‘biophysical’ conception. It focused on ‘what an individual is regardless of the manner in which other people perceive his qualities or evaluate them’ (1937, p. 40). Phrasings like ‘within the individual’ and ‘systems that determine’ reveal an emphasis on the underlying mechanisms behind behaviour. 1. Allport, G. W. 1937. Personality: a psychological interpretation. New York: Holt Gerard Saucier, „Semantic and linguistic aspects of personality“, in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge handbook of Personality Psychology. New York: Cambridge University Press	Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Personality Traits	Allport	Corr II 29 Trait-names/personality traits/lexicon/study background/ Allport/Odbert/Saucier: The essence of [Allport’s and Odbert’s article ‘Trait-names: A psycho-lexical study’] was a classification of (…) English ‘trait-name’ words (terms distinguishing the behavior of one human being from another) into four categories. (…) from a scientific standpoint, some of the most basic personality attributes might be discovered from studying conceptions implicit in use of the natural language. If a distinction is highly represented in the lexicon – and found in any dictionary – it can be presumed to have practical importance. This is because the degree of representation of an attribute in language has some correspondence with the general importance of the attribute in real-world transactions. Therefore, when a scientist identifies personality attributes that are strongly represented in the natural language, that scientist is simultaneously identifying what may be the most important attributes. >H.S. Odbert, >G. Allport. II 30 Study Design/Allport/Odbert: Allport and Odbert turned to Webster’s New International Dictionary (1925)⁽¹⁾, a compendium of approximately 400,000 separate terms. Combining judgments of three investigators (themselves plus a person designated only as ‘AL’, (…)), they built a list of 17,953 trait-names in the English language that drew on the following criterion for inclusion: ‘the capacity of any term to distinguish the behavior of one human being from that of another’ (p. 24) (1). Allport and Odbert went further and differentiated terms into four categories or columns. The (…) terms in Column I were ‘neutral terms designating possible II 31 personal traits’ (p. 38)⁽¹⁾, more specifically defined as ‘generalized and personalized determining tendencies – consistent and stable modes of an individual’s adjustment’ to his/her environment (p. 26)⁽¹⁾. The (…) terms in Column II were ‘terms primarily descriptive of temporary moods or activities’ (…). The (…) terms in Column III were ‘weighted terms conveying social and characterial judgments of personal conduct, or designated influence on others’ (p. 27)⁽¹⁾ (…).The other (…) terms fell into the miscellaneous category in Column IV, labeled as ‘metaphorical and doubtful terms’ (p. 38)⁽¹⁾. This last grab-bag category included terms describing physical characteristics and various abilities (…). II 33 Findings/Allport/Odbert: 1. Allport and Odbert cogently argue that, basically, normal human life cannot proceed without some reference to personality dispositions. There is no better argument than their trenchant words from the monograph: “Even the psychologist who inveighs against traits, and denies that their symbolic existence conforms to ‘real existence’ will nevertheless write a convincing letter of recommendation to prove that one of his favorite students is ‘trustworthy, self-reliant, and keenly critical’” (pp. 4–5)⁽¹⁾. 2. Allport and Odbert indicate that the dispositions to which trait-names refer are more than conversational artifact, a form of everyday error (though in part they may be that). They are to some degree useful for understanding and prediction, as confirmed by later research (Roberts et al., 2007)⁽³⁾. [The follow-on assertion constitutes that] the degree of representation of an attribute in language has some correspondence with the general importance of the attribute in real-world transactions. II 34 3. (…) science can lean on and build on the body of commonsense concepts in language. Rather than relying exclusively on the top-down gambits of theorists, there is opportunity for a generative bottom-up approach. II 35 4. (…) Allport and Odbert recognized a difficulty inherent in personality language: trait-names mean different things to different people. To a degree, these meanings are contingent on one’s ‘habits of thought’ (p. 4)⁽¹⁾. One reason builds on the polysemy (multiple distinct meanings) that many words have. 5. Within science, the difficulty might be even further resolved by explicit communication and consensus. For Allport and Odbert, this meant naming traits in a careful and logical way, and not merely codifying but also ‘purifying’ natural-language terminology (p. vi)⁽¹⁾. II 36 6. Allport and Odbert’s prime interest was in tendencies that are ‘consistent and stable modes of an individual’s adjustment to his environment’ rather than ‘merely temporary and specific behavior’ (p. 26)⁽¹⁾. 7. (…) trait-names reflect a combination of the biophysical influences and something more cultural (perhaps historically varying). (…) characterizations of human qualities are determined partly by ‘standards and interests peculiar to the times’ (p. 2)⁽¹⁾ in a particular social epoch. [In this way] culture, trait-names are partly ‘invented in accordance with cultural demands’ (p. 3)⁽¹⁾. II 37 VsAllport/VsOdbert: 1. (…) they ignore and give short-shrift to culture, both with regard to issues of cross-cultural generalizability and of how traits themselves may reflect culture-relevant contents. 2. According to their distinctive ‘trait hypothesis’ (p. 12), no two persons ‘possess precisely the same trait’ (p. 14)⁽¹⁾ and each ‘individual differs in every one of his traits from every other individual’ (p. 18)⁽¹⁾. The problem is not that individualism is wrong; rather, it may be ethnocentric to impose an individualistic filter throughout personality psychology, and in fact such idiothetic approaches are outside the mainstream of current and recent personality psychology. II 38 3. Another aspect of the thinking (…) that might appear odd, in retrospect, is the notion of a single, cardinal trait that provides determining tendencies in an individual life. (…) a particular attribute becomes so pervasive in a person that it becomes a distinct focus of organization. Seventy years later, there seems still to be a lack of evidence for cardinal traits that perform a more or less hostile take-over, coming to determine and structure the remainder of the personality system. II 39 4. Allport and Odbert argue for the desirability of neutral terminology in science. Unfortunately, it appears that they extend the desire for unweighted emotion-free vocabulary into the very attribute-contents evident in the trait-names in language, with confusing consequences. On this view, the trait-names in language that are judgmental and ‘emotionally toned’ (p. v)⁽¹⁾, having affective polarity, are suspect and less worthy of study than the neutral ones. But affectively toned concepts like evil and virtue are particularly worthy of study particularly because of their extreme affective tone (…). II 40 5. (…) the numerically largest category of trait-names was social evaluation. However, they offer no account for why the third column – reflecting social judgments likely unconnected with biophysical traits – would be the biggest component in person perception. 6. (…) the notion that censorial and moral terms – and virtues, II 41 vices, whatever is associated with blame or praise, not to mention social effects – have no use for a psychologist seems now obsolete. 7. To accept at face value the particular Allport and Odbert classification of trait-names into four categories is to take on the assumptions of a specialized theory of traits, whose main propositions can be construed based on the classification itself. (…) attention to emotions and morality would distract us from the central aspects of personality which reflect enduring consistencies operating intrinsically in the person, and outside the influence of society (…). 1. Webster’s new international dictionary of the English language (1925). Springfield, MA: Merriam. 2. Allport, G. W., & Odbert, H. S. (1936). Trait-names: A psycho-lexical study. Psychological Monographs, 47 (1, Whole No. 211). 3. Roberts, B. W., Kuncel, N. R., Shiner, R., Caspi, A., & Goldberg, L. R. (2007). The power of personality: The comparative validity of personality traits, socioeconomic status, and cognitive ability for predicting important life outcomes. Perspectives on Psychological Science, 2, 313–345. Saucier, Gerard: “Classification of Trait-Names Revisiting Allport and Odbert (1936)”, In: Philip Corr (Ed.), 2018. Personality and Individual Differences. Revisiting the classical studies. Singapore, Washington DC, Melbourne: Sage, pp. 29-45.	Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Personality Traits	Attachment Theory	Corr I 236 Personality traits/attachment theory/Shaver/Mikulincer: Studies using self-report measures of adult attachment style have found them to be coherently related to relationship quality, mental health, social adjustment, ways of coping, emotion regulation, self-esteem, interpersonal behaviour and social cognitions (see Mikulincer and Shaver 2003⁽¹⁾, 2007⁽²⁾, for reviews). >Emotion, >Regulation, >Self-regulation. Importantly, these attachment-style variations are usually not well explained by less specific, more global personality traits such as Extraversion, Neuroticism or self-esteem (see Mikulincer and Shaver 2007⁽²⁾, for a review), although there are predictable and meaningful associations between attachment orientations and personality traits (e.g., Carver 1997⁽³⁾; Noftle and Shaver 2006⁽⁴⁾). >About the Attachment theory. 1. Mikulincer, M. and Shaver, P. R. 2003. The attachment behavioural system in adulthood: activation, psychodynamics, and interpersonal processes, in M. P. Zanna (ed.), Advances in experimental social psychology, vol. XXXV, pp. 53–152. New York: Academic Press 2. Mikulincer, M. and Shaver, P. R. 2007. Attachment in adulthood: structure, dynamics, and change. New York: Guilford Press 3. Carver, C. S. 1997. Adult attachment and personality: converging evidence and a new measure, Personality and Social Psychology Bulletin 23: 865–83 4. Noftle, E. E. and Shaver, P. R. 2006. Attachment dimensions and the Big Five personality traits: associations and comparative ability to predict relationship quality, Journal of Research in Personality 40: 179–208 Phillip R. Shaver and Mario Mikulincer, “Attachment theory: I. Motivational, individual-differences and structural aspects”, in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge Handbook of Personality Psychology. New York: Cambridge University Press	Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Personality Traits	Costa	Corr I 129 Personality traits/Costa/McCrae: Costa and McCrae (1976)⁽¹⁾ clustered 16 PF scales on the basis of data from three different age groups, resulting into two consistent age-group independent clusters, called Adjustment-Anxiety and Introversion-Extraversion, and a third inconsistent age-group dependent cluster, which was conceptualized as an Experiential Style dimension. The three clusters formed the starting point for the development of the three-factorial NEO-PI (Costa and McCrae 1985)⁽²⁾. >Extraversion, >Introversion, >Anxiety, >Agreeableness, >Dimensional approach. 1. Costa, P. T., Jr and McCrae, R. R. 1976. Age differences in personality structure: a cluster analytic approach, Journal of Gerontology 31: 564–70 2. Costa, P. T., Jr and McCrae, R. R. 1985. The NEO Personality Inventory manual. Odessa, FL: Psychological Assessment Resources Boele De Raad, “Structural models of personality”, in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge Handbook of Personality Psychology. New York: Cambridge University Press	Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Personality Traits	McCrae	Corr I 103 Personality traits/McCrae/Deary: When McCrae asserted that ‘traits are not cognitive fictions, but real psychological structures’ (McCrae 2004⁽¹⁾, p. 4) the supporting evidence included consensual validation, prediction of life outcomes, longitudinal stability and heritability. Almost as a provocative challenge McCrae suggests that personality traits are unaffected by the environment, and totally caused by biological factors…. McCrae’s very strong commitment to the biological underpinnings of traits is argued on the basis of substantial heritability, virtually zero contribution from shared environment, and the fact that even the residual in the ‘non-shared’ environment probably contains variance that is actually attributable to genetic and other biological variance, ‘such as intrauterine environment, disease, and aging’ (McCrae 2004⁽¹⁾, p. 6). The stability of personality traits over the lifespan is also cited as evidence of the strong claims made for ‘Five-Factor Theory’. >Five-Factor Model, >Environment, >Heritability, >Nature versus nurture. 1. McCrae, R. R. 2004. Human nature and culture: a trait perspective, Journal Journal of Research in Personality 38: 3–14 Ian J. Deary, “The trait approach to personality”, in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge Handbook of Personality Psychology. New York: Cambridge University Press Corr I 129 Personality traits/Costa/McCrae: Costa and McCrae (1976)⁽¹⁾ clustered 16 PF scales on the basis of data from three different age groups, resulting into two consistent age-group independent clusters, called Adjustment-Anxiety and Introversion-Extraversion, and a third inconsistent age-group dependent cluster, which was conceptualized as an Experiential Style dimension. The three clusters formed the starting point for the development of the three-factorial NEO-PI (Costa and McCrae 1985)⁽²⁾. 1. Costa, P. T., Jr and McCrae, R. R. 1976. Age differences in personality structure: a cluster analytic approach, Journal of Gerontology 31: 564–70 2. Costa, P. T., Jr and McCrae, R. R. 1985. The NEO Personality Inventory manual. Odessa, FL: Psychological Assessment Resources Boele De Raad, “Structural models of personality”, in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge Handbook of Personality Psychology. New York: Cambridge University Press	Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Personality Traits	Odbert	Corr II 29 Trait-names/personality traits/lexicon/study background/ Allport/Odbert/Saucier: The essence of [Allport’s and Odbert’s article ‘Trait-names: A psycho-lexical study’] was a classification of (…) English ‘trait-name’ words (terms distinguishing the behavior of one human being from another) into four categories. >Lexical hypothesis, >Lexical studies. (…) from a scientific standpoint, some of the most basic personality attributes might be discovered from studying conceptions implicit in use of the natural language. >Everyday language, >Concepts, >Language use, >Personality. If a distinction is highly represented in the lexicon – and found in any dictionary – it can be presumed to have practical importance. This is because the degree of representation of an attribute in language has some correspondence with the general importance of the attribute in real-world transactions. Therefore, when a scientist identifies personality attributes that are strongly represented in the natural language, that scientist is simultaneously identifying what may be the most important attributes. >Relevance. II 30 Study Design/Allport/Odbert: Allport and Odbert turned to Webster’s New International Dictionary (1925)⁽¹⁾, a compendium of approximately 400,000 separate terms. Combining judgments of three investigators (themselves plus a person designated only as ‘AL’, (…)), they built a list of 17,953 trait-names in the English language that drew on the following criterion for inclusion: ‘the capacity of any term to distinguish the behavior of one human being from that of another’ (p. 24) (1). Allport and Odbert went further and differentiated terms into four categories or columns. The (…) terms in Column I were ‘neutral terms designating possible II 31 personal traits’ (p. 38)⁽¹⁾, more specifically defined as ‘generalized and personalized determining tendencies – consistent and stable modes of an individual’s adjustment’ to his/her environment (p. 26)⁽¹⁾. The (…) terms in Column II were ‘terms primarily descriptive of temporary moods or activities’ (…). The (…) terms in Column III were ‘weighted terms conveying social and characterial judgments of personal conduct, or designated influence on others’ (p. 27)⁽¹⁾ (…).The other (…) terms fell into the miscellaneous category in Column IV, labeled as ‘metaphorical and doubtful terms’ (p. 38)⁽¹⁾. This last grab-bag category included terms describing physical characteristics and various abilities (…). II 33 Findings/Allport/Odbert: 1. Allport and Odbert cogently argue that, basically, normal human life cannot proceed without some reference to personality dispositions. There is no better argument than their trenchant words from the monograph: “Even the psychologist who inveighs against traits, and denies that their symbolic existence conforms to ‘real existence’ will nevertheless write a convincing letter of recommendation to prove that one of his favorite students is ‘trustworthy, self-reliant, and keenly critical’” (pp. 4–5)⁽¹⁾. 2. Allport and Odbert indicate that the dispositions to which trait-names refer are more than conversational artifact, a form of everyday error (though in part they may be that). They are to some degree useful for understanding and prediction, as confirmed by later research (Roberts et al., 2007)⁽³⁾. [The follow-on assertion constitutes that] the degree of representation of an attribute in language has some correspondence with the general importance of the attribute in real-world transactions. >Dispositions, >Representation. II 34 3. (…) science can lean on and build on the body of commonsense concepts in language. Rather than relying exclusively on the top-down gambits of theorists, there is opportunity for a generative bottom-up approach. II 35 4. (…) Allport and Odbert recognized a difficulty inherent in personality language: trait-names mean different things to different people. To a degree, these meanings are contingent on one’s ‘habits of thought’ (p. 4)⁽¹⁾. One reason builds on the polysemy (multiple distinct meanings) that many words have. >Conventions, >Meaning, >Reference. 5. Within science, the difficulty might be even further resolved by explicit communication and consensus. For Allport and Odbert, this meant naming traits in a careful and logical way, and not merely codifying but also ‘purifying’ natural-language terminology (p. vi)⁽¹⁾. II 36 6. Allport and Odbert’s prime interest was in tendencies that are ‘consistent and stable modes of an individual’s adjustment to his environment’ rather than ‘merely temporary and specific behavior’ (p. 26)⁽¹⁾. 7. (…) trait-names reflect a combination of the biophysical influences and something more cultural (perhaps historically varying). (…) characterizations of human qualities are determined partly by ‘standards and interests peculiar to the times’ (p. 2)⁽¹⁾ in a particular social epoch. [In this way] culture, trait-names are partly ‘invented in accordance with cultural demands’ (p. 3)⁽¹⁾. II 37 VsAllport/VsOdbert: 1. (…) they ignore and give short-shrift to culture, both with regard to issues of cross-cultural generalizability and of how traits themselves may reflect culture-relevant contents. 2. According to their distinctive ‘trait hypothesis’ (p. 12), no two persons ‘possess precisely the same trait’ (p. 14)⁽¹⁾ and each ‘individual differs in every one of his traits from every other individual’ (p. 18)⁽¹⁾. The problem is not that individualism is wrong; rather, it may be ethnocentric to impose an individualistic filter throughout personality psychology, and in fact such idiothetic approaches are outside the mainstream of current and recent personality psychology. II 38 3. Another aspect of the thinking (…) that might appear odd, in retrospect, is the notion of a single, cardinal trait that provides determining tendencies in an individual life. (…) a particular attribute becomes so pervasive in a person that it becomes a distinct focus of organization. Seventy years later, there seems still to be a lack of evidence for cardinal traits that perform a more or less hostile take-over, coming to determine and structure the remainder of the personality system. II 39 4. Allport and Odbert argue for the desirability of neutral terminology in science. Unfortunately, it appears that they extend the desire for unweighted emotion-free vocabulary into the very attribute-contents evident in the trait-names in language, with confusing consequences. On this view, the trait-names in language that are judgmental and ‘emotionally toned’ (p. v)⁽¹⁾, having affective polarity, are suspect and less worthy of study than the neutral ones. But affectively toned concepts like evil and virtue are particularly worthy of study particularly because of their extreme affective tone (…). II 40 5. (…) the numerically largest category of trait-names was social evaluation. However, they offer no account for why the third column – reflecting social judgments likely unconnected with biophysical traits – would be the biggest component in person perception. 6. (…) the notion that censorial and moral terms – and virtues, II 41 vices, whatever is associated with blame or praise, not to mention social effects – have no use for a psychologist seems now obsolete. 7. To accept at face value the particular Allport and Odbert classification of trait-names into four categories is to take on the assumptions of a specialized theory of traits, whose main propositions can be construed based on the classification itself. (…) attention to emotions and morality would distract us from the central aspects of personality which reflect enduring consistencies operating intrinsically in the person, and outside the influence of society (…). 1. Webster’s new international dictionary of the English language (1925). Springfield, MA: Merriam. 2. Allport, G. W., & Odbert, H. S. (1936). Trait-names: A psycho-lexical study. Psychological Monographs, 47 (1, Whole No. 211). 3. Roberts, B. W., Kuncel, N. R., Shiner, R., Caspi, A., & Goldberg, L. R. (2007). The power of personality: The comparative validity of personality traits, socioeconomic status, and cognitive ability for predicting important life outcomes. Perspectives on Psychological Science, 2, 313–345. Saucier, Gerard: “Classification of Trait-Names Revisiting Allport and Odbert (1936)”, In: Philip Corr (Ed.), 2018. Personality and Individual Differences. Revisiting the classical studies. Singapore, Washington DC, Melbourne: Sage, pp. 29-45.	Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Planned Economy	Soviet Union	Coyne I 12 Planned Economy/Soviet Union/Coyne/Boettke: MisesVsSocialism: Abolishing prices - through the joint abolition of property rights and mone - would mean that planners would be unable to determine whether platinum or some other good should be used to construct railroad tracks. The result would be economic chaos in contrast to the rational order promised by proponents of the socialist system. >Socialism/Mises, >Calculation, >Price/Mises, >Planned economy/Mises. SocialsmVsVs: The socialists took Mises's critique seriously and revised their vision. The result was a model of "market socialism," offered by Oskar Lange and Abba Lerner, which sought to maintain the desirable features of the socialist system while addressing the critiques raised by Mises. Solution: The market socialist model included the use of money and allowed for a free market in final consumer goods and in labour markets. The means of production would still be nationalized. A Central Planning Board would be responsible for providing provisional ("shadow") prices for inputs to firms. Based on these provisional prices, firms would be instructed to select the combination of inputs that minimized the cost ofproducing the level of outputs that maximized profits. Problem: But how were firms to know this level of output? Solution: The Central Planning Board would instruct firms to follow the dictates of the perfectly competitive model by setting their prices equal to the marginal costs of production and to produce those levels of output that minimize average costs. Coyne I 13 The market socialists were aware that the Central Planning Board might select the incorrect provisional prices - that is, prices that did not reflect the true underlying scarcity. They argued, however, that this would not pose a problem because adjustments could be made on a trial-and-error basis based on inventories that would be observable to the planning board. Just as markets tended to correct for surpluses by putting downward pressure on prices, so too could the Central Planning Board by adjusting prices in the face of excess inventories. Similarly, just as markets respond to shortages with increases in prices, so too would planners who would dictate higher prices in the face of a lack of inventory. According to the market socialists, this process would mimic, if not exceed, the effciency of markets while maintaining the economic, social, and political goals of socialism. Socialism/HayekVsSocialism: It is here that F.A. Hayek entered the debate. The market socialists, Hayek argued, were preoccupied with a static notion of equilibrium where all relevant economic knowledge was given, known, and frozen. >Socialism/Hayek.	Coyne I Christopher J. Coyne Peter J. Boettke The Essential Austrian Economics Vancouver 2020
Pragmatism	James	Diaz-Bone I 68 Pragmatism/James: the term pragmatism is used for the first time by James 1898. He, however, refers to Peirce, 1878. Signs/Peirce/VsKant: VsConstruction of the transcendental subject: Pragmatism is the method that enables successful linguistic and intellectual communication and clear ideas. For Peirce every thought is a sign. I 70 Pragmatism/Peirce: pragmatism is a voluntary action theory. Definition Voluntarism: Will as the basic principle of being. I 76 Pragmatism: pragmatism is like a corridor in the middle of many rooms, it belongs to all who use it. Concept/Pragmatism: He considers all concepts hypotheses. Use is always a personal decision. I 78 We do not live to think, but we think to live. 79 Science/James: Science, comon sense and individual consciousness have one thing in common: they should increase the human adaptability. I 88 PragmatismVsCorrespondence theory: Conformity in James, the dichotomy true/false is softened. (> Realization, >adjustment). I 102 VsPragmatism: that James confuses truth with certainty: it can never be ascertained whether an observation is properly translated. (> Basic sentence problem).	James I R. Diaz-Bone/K. Schubert William James zur Einführung Hamburg 1996
Price	Hayek	Rothbard III 516 Production/price/Hayek/Rothbard: Whether the structure of production remains the same depends entirely upon whether entrepreneurs find it profitable to reinvest the usual proportion of the return from the sale of the product in turning out intermediate goods of the same sort. Whether this is profitable, again, depends upon the prices obtained for the product of this particular stage of production on the one hand and on the prices paid for the original means of production and for the intermediate products taken from the preceding stage of production on the other. The continuance of the existing degree of capitalistic organization depends, accordingly, on the prices paid and obtained for the product of each stage of production, and these prices are, therefore, a very real and important factor in determining the direction of production.⁽¹⁾ Rothbard: (…) how can a reduced consumption profitably support an increased volume of expenditures on producers’ goods? The latter has aptly been termed by Hayek the “paradox of saving,” i.e., that saving is the necessary and sufficient condition for increased production, and yet that such investment seems to contain within itself the seeds of financial disaster for the investors.⁽²⁾ Rothbard III 512 Prices/production/Hayek/Rothbard: The increased investment expenditure in the higher levels raises the prices of the factors in these stages. >Production structure/Rothbard. It is as if the impact of lower consumer demand tends to die out in the higher stages and is more and more counteracted by the increase and shift in investment funds. The process of readjustment to lower price spreads caused by increased gross saving has been lucidly described by Hayek. As he states: „The final effect will be that, through the fall of prices in the later stages of production and the rise of prices in the earlier stages of production, price margins between the different stages of production will have decreased all round.“⁽³⁾ 1. F. A. Hayek, Prices and Production. 2nd ed. London: Routledge and Kegan Paul, 1935. Reprinted by Augustus M. Kelley, 1967. pp. 48-49 2. See Hayek, “The ‘Paradox’ of Saving” in Profits, Interest, and Investment, pp. 199–263. 3 F. A. Hayek, Prices and Production pp. 75-76. Boudreaux II 26 Price/information/Hayek/Boudreaux:“ We must look at the price system as such a mechanism for communicating information if we want to understand its real function … The most significant fact about this system is the economy with which it operates, or how little the individual participants need to know in order to be able to take the right action.“⁽¹⁾ >Information, >Knowledge/Hayek. Boudreaux II 32 Individual action/Hayek/Boudreaux: Each owner of private property has incentives to use his or her property in ways that produce the greatest return (…). Spontaneous order/Hayek: Likewise for the individual worker who owns only his own labour services. He will combine his labour with the labour and assets ofthose other private-property owners who promise him the largest return on his work effort - that is, who promise him the highest pay. With each private-property owner seeking only the highest returns on the use of his or her property, an overall economic order is brought about as each owner directs his property toward those uses that pay the highest prices. Similarly, consumers seeking only to get as much satisfaction as they can from spending their income avoid ineffcient suppliers (whose prices are relatively high) and patronize effcient suppliers (whose prices are relatively Iow). Efficiency: Ineffcient suppliers either increase their effciency or switch to other lines of production. Effciency is improved and a complex pattern of productive uses of resources emerges (as Hayek said) spontaneously. This order - this overall outcome - is intended by no one. It is spontaneous. Boudreaux II 32 Prices/Hayek/Boudreaux: One of Hayek's deepest insights is that the signals received by private-property owners on how best to use their property come chiefly in the form of prices - the prices of some options relative to the prices of others. Wages/market: A worker offered $ 30 per hour for his labour time by factory X and $ 25 per hour by factory Y will likely choose to work for factory X because factory X pays relatively more than does factory Y. >Spontaneous order/Hayek, >Knowledge/Hayek. Consumption: Similarly, customers who offer to pay $ 50 per unit for the output of the factory are more likely to acquire that output than are customers who offer only $45. Responding to prices (…) does encourage millions of people to interact peacefully with each other in ways that are mutually beneficial. Planning/free market: No person, no council, no committee, no congress, no parliament plans this successful overall economic outcome. And that's a beautiful picture, one that shows that we can have economic prosperity without giving enormous power to government offcials - offcials who, being human, will always be tempted to abuse such power. >Individualism/Hayek, >Planning, >Spontaneous order. 1. Friedrich Hayek (1945). The Use of Knowledge in Society. In Bruce Caldwell (ed.), The Market and Other Orders, XV (Liberty Fund Library, 2014): 100.	Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014
Price Control	Rothbard	Rothbard III 891 Price control/Rothbard: A triangular intervention occurs when an intervener either compels a pair ofpeople to make an exchange or prohibits them from making an exchange. The coercion may be imposed on the terms of the exchange or on the nature of one or both of the products being exchanged or on the people doing the exchanging. The former type of triangular intervention is called a price control, because it deals specifically with the terms, i.e., the price, at which the exchange is made; Product control: the latter may be called product control, as dealing specifically with the nature of the product or of the producer. Rothbard III 892 Price control: An example of price control is a decree by the government that no one may buy or sell a certain product at more (or, alternatively, less) than X gold ounces per pound; Product control: an example of product control is the prohibition of the sale of this product or prohibition of the sale by any but certain persons selected by the government. Rothbard: Clearly both forms of control have various repercussions on both the price and the nature of the product. Efficiency: A price control may be effective or ineffective. It will be ineffective ifthe regulation has no influence on the market price.⁽¹⁾ (…) should a customer wish to order an unusual custom-built automobile for which the seller would charge over [the normal price], then the regulation now becomes effective and changes transactions from what they would have been on the free market. There are two types of effective price control: a maximum price control that prohibits all exchanges of a good above a certain price, with the controlled price being below the market equilibrium price; and a minimum price control prohibiting exchanges below a certain price, this fixed price being above market equilibrium. Rothbard III 892 Maximum price/Rothbard: In any shortage, consumers rush to buy goods which are not available at the price. Some must do without, others must patronize the market, revived as illegal or "black," paying a premium for the risk of punishment that sellers now undergo. The chief charac- teristic of a price maximum is the queue, the endless "lining up" for goods that are not suffcient to supply the People at the rear of the line. All sorts of subterfuges are invented by People desperately seeking to arrive at the clearance of supply and demand once provided by the market. "Under-the-table" deals, bribes, favoritism for older customers, etc., are inevitable features of a market shackled by the price maximum.⁽²⁾ >Interventions/Rothbard. Elasticity: (…) even if the stock of a good is frozen for the foreseeable future and the supply line is vertical, this artificial shortage will still develop and all these consequences ensue. The more "elastic" the supply, i.e., the more resources shift out of production, the more aggravated, ceteris paribus, the shortage will be. The firms that leave production are the ones nearest the margin. Selective price control: If the price control is "selective," i.e., is imposed on one or a few products, the economy will not be as universally dislocated as under general maxima, but the artificial shortage created in the particular line will be even more pronounced, since entrepreneurs and factors can shift to the production and sale of other products (preferably substitutes). Substitutes: The prices of the substitutes will go up as the "excess" demand is channeled off in their direction. RothbardvsPrice control: In the light of this fact, the typical governmental reason for selective price control - "We must impose controls on this necessary product so long as it continues in short supply" - is revealed to be an almost ludicrous error. For the truth is the reverse: price control creates an artificial shortage of the product, which continues as long as the control is in existence - in fact, becomes ever worse as resources have time to shift to other products. Rothbard III 894 Minimum price control: (…) while the effect of a maximum price is to create an artificial shortage, a minimum price creates an artificial unsold surplus (…). The unsold surplus exists (…) but a more elastic supply will, ceteris paribus, aggravate the surplus. Once again, the market is not cleared. The artificially high price at first attracts resources into the field, while, at the same time, discouraging buyer demand. Rothbard III 895 Selective price control: Under selective price control, resources will leave other fields where they benefit themselves and consumers better, and transfer to this field, where they overproduce and suffer losses as a result. >Overproduction. Entrepreneurship: This offers an interesting example of intervention tampering with the market and causing entrepreneurial losses. Entrepreneurs operate on the basis of certain criteria: prices, interest rate, etc., established by the free market. EntrepreneursVsInterventions: Interventionary tampering with these signals destroys the continual market tendency to adjustment and brings about losses and misallocation of resources in satisfying consumer wants. Economy/price maxima: General, overall price maxima dislocate the entire economy and deny consumers the enjoyment of substitutes. Inflation: General price maxima are usually imposed for the announced purpose of "preventing inflation" - invariably while the government is inflating the money supply by a large amount. Overall price maxima are equivalent to imposing a minimum on the PPM (purchasing power of the monetary unit). >Inflation. Rothbard III 896 The principles of maximum and minimum price control apply to any prices, whatever they may be: of consumers' goods, capital goods, land or labor services, or, (…) the "price" of money in terms of other goods. Minimum wage: They apply, for example, to minimum wage laws. When a minimum wage law is effective, i.e., where it imposes a wage above the market value of a grade of labor (above the laborer's discounted marginal value product), the supply of labor services exceeds the demand, and the "unsold surplus" of labor services means involuntary mass unemployment. Selective, as opposed to general, minimum wage rates, create unemployment in particular industries and tend to perpetuate these pockets by attracting labor to the higher rates. Labor is eventually forced to enter less remunerative, less value-productive lines. This analysis applies whether the minimum wage is imposed by the State or by a labor union. >Trade Unions/Rothbard, >Wages/Rothbard, >Minimum wage/Rothbard, >Unemployment/Rothbard. Rothbard III 897 Relative prices: Our analysis of the effects of price control applies also, as Mises has brilliantly shown, to control over the price ("exchange rate") of one money in terms of another.⁽³⁾ This was partially seen in Gresham's Law, one of the first economic laws to be discovered. Few have realized that this law is merely a specific instance of the general consequences of price controls. Perhaps this failure is due to the misleading formulation of Gresham's Law. >Gresham's Law/Rothbard. Rothbard III 899 Bimetallism: suppose that a country used gold and silver as moneys, and the government set the ratio between them at 16 ounces of silver : 1 ounce of gold. The market price, perhaps 16:1 at the time of the price control, then changes to 15:1. What is the result? Silver is now being arbitrarily undervalued by the government and gold arbitrarily overvalued. In other words, silver is fixed cheaper than it really is in terms of gold on the market, and gold is forced to be more expensive than it really is in terms of silver. The government has imposed a price maximum on silver and a price minimum on gold, in terms of each other. The same consequences now follow as from any effective price control. With a price maximum on silver, the gold demand for silver in exchange now exceeds the silver demand for gold (conversely, With a price minimum on gold, the silver demand for gold is less than the gold demand for silver). Problem: Gresham’s Law: Gold goes begging for silver in unsold surplus, while silver becomes scarce and disappears from circulation. Silver disappears to another country or area where it can be exchanged at the free-market price, and gold, in turn, flows into the country. World: If the bimetallism is worldwide, then silver disappears into the "black market," and offcial or open exchanges are made only with gold. VsBimetallism: No country, therefore, can maintain a bimetallic system in practice, since one money will always be undervalued or overvalued in terms of the other. The overvalued always displaces the other from circulation, the latter being scarce. >Bimetallism. Rothbard III 900 Consequences of price controls: (…) the price controls inevitably distort the production and allocation of resources and factors in the economy, thereby injuring again the bulk of consumers. Bureaucracy: And we must not overlook the army of bureaucrats who must be financed by the binary intervention of taxation and who must administer and enforce the myriad of regulations. This army, in itself, withdraws a mass of workers from productive labor and saddles them onto the remaining producers - thereby benefiting the bureaucrats, but injuring the rest of the people. 1. Of course, even a completely ineffective triangular control is likely to increase the government bureaucracy dealing With the matter and therefore increase the total amount of binary intervention over the taxpayer. 2. A "bribe" is only payment of the market price by a buyer. 3. Mises, Human Action, New Haven, Conn.: Yale University Press, 1949. Reprinted by the Ludwig von Mises Institute, 1998. pp. 432 n., 447, 469, 776.	Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Price Level	Friedman	Landsburg I 15 Price level/Friedman/Landsburg: - If you double (or triple or quadruple) the money supply, prices will double (or triple or quadruple). The process might take a while, and some interesting stuff can happen along the way. A little reflection reveals a somewhat deeper moral: - A jump in the general level of prices (as opposed to an increase in the price of one specific good or another) is always caused by people trying to get rid of money. Landsburg I 16 Why might people want to get rid of money? We've listed some reasons already - a wider acceptance of credit cards, an increase in street crime, a rise in the interest rate, or an increase in the supply of money, leaving people with more than they want to hold. >Inflation/Friedman, >Monetary policy/Friedman. Landsburg I 20 (…) [why] should [we] care about the price level in the first place[?] If the money supply doubles, and all prices (including wages) double in response, has anything important really changed? Probably not. Problem: Instead of costing $ 5, a hamburger now costs $ 10. Alice has to work just as many hours to earn that $ 10 hamburger today as She worked to earn a $ 5 hamburger yesterday. Instead of carrying $ 2 5 in her pocket (enough to buy five hamburgers), she'll carry $ 50 .- still enough to buy five hamburgers. Instead ofkeeping $ 1.OOO in her chequing account, she'll keep $ same fraction ofher income that she's always kept. Debts: You might worry about the effect on borrowers and lenders: If Alice initially owes Bob $ 10 (the price of two hamburgers), then after the price level doubles, she gets to pay him back with a debased $ 10 that buys only one hamburger. That makes her richer and him poorer. But that's an issue only if Alice and Bob fail to anticipate the price change. Solution: If Bob knows he lives in a world where prices sometimes jump, he can always insist on Ioan contracts with automatic adjustment clauses, so that Alice is always required to repay enough dollars to buy two hamburgers, whatever that number of dollars might be. Price level: And even if Bob's foresight fails him, so that he fails to include that clause and takes a big loss when the price level doubles, it's not the kind of loss economists usually worry too much about. That's because Bob's loss is Alice's gain, so that overall the populace (which includes both Alice and Bob) is no better or worse off than before. So a one-time jump in the price level is, at least to a very good approximation, nothing to worry about. Inflation: You might be tempted to conclude that inflation is nothing to worry about either. After all, inflation is just an ongoing series of jumps in the price level, right? Not so! >Inflation/Rothbard, >Inflation/Mises, >Inflation/Friedman. Let's think this through from the beginning again. On Monday morning, Alice the average citizen is holding 10 weeks' income in her purse and her checking account. a) On Monday at noon, the money supply doubles, and now Alice holds 20 weeks' income. But she only wants to hold 10 weeks' income, and therefore tries to get rid of money by buying things. Eventually prices are bid up to twice this morning's level, and Alice now happily holds her share ofthe new money, which is equal to 10 weeks' income - her goal all along. b) Now tweak the story: On Monday at noon, the government doubles the money supply and announces plans to double it again every day at noon. As a result, Alice decides that, going forward, she wants to hold only 8 weeks' income, not 10. Why? Because she now expects an ongoing inflation - which means she expects the money in her pocket and her checking account to lose value overnight. That prospect makes holding money less attractive. So on Monday afternoon, Alice (along with many others) tries to get rid of money by buying things. Eventually, prices get bid up to twice this morning's level, leaving Alice holding 10 weeks' income, which is still more than she wants. Therefore she continues trying to buy things,driving prices up still further. Landsburg I 21 Money supply: if the money supply doubles on Monday, with further increases expected to follow on Tuesday, Wednesday, Thursday and Friday, then the price level must more than double on Monday. Price level/inflation: At some point during the onset ofan inflation, the price level must rise faster than the money supply. Friedman called this phenomenon overshooting, which might have been an unfortunate vocabulary choice because it seems to suggest that someone has made a mistake or missed a target. Problem: Nothing of the sort is true; Alice wants to reduce the real value of her money holdings - the number of hamburgers her pocket change can buy and the number of home repairs her checking account balance can cover - and by the end of the day she's done exactly that. >Inflation. Problem: Instead of having enough cash in her pocket to buy five hamburgers, [Alice has] got enough to buy four, (…) That loss to Alice is not offset by any gain to anyone else - and that's the kind of loss economists care about. Bob, who runs a small shop, notices that in these new inflationary times, the cash in his register is Iosing value as it sits idle, so instead of keeping 20 hamburgers' worth of cash in the register as he's always done, he now keeps only (say) 16 hamburgers' worth. Now he runs Iow on change a little more often, aggravating a few extra customers. Landsburg I 22 Question: So, like many things, inflation in small doses is a little bit bad and inflation in higher doses is extremely bad. But why put up with any badness you don't have to put up with? It seems like the best scenario is no inflation at all - and the recipe to accomplish that scenario is zero growth in the money supply. >Money supply/Friedman.	Econ Fried I Milton Friedman The role of monetary policy 1968 Landsburg I Steven E. Landsburg The Essential Milton Friedman Vancouver: Fraser Institute 2019
Production	Hayek	Rothbard III 516 Production/price/Hayek/Rothbard: Whether the structure of production remains the same depends entirely upon whether entrepreneurs find it profitable to reinvest the usual proportion of the return from the sale of the product in turning out intermediate goods of the same sort. Whether this is profitable, again, depends upon the prices obtained for the product of this particular stage of production on the one hand and on the prices paid for the original means of production and for the intermediate products taken from the preceding stage of production on the other. The continuance of the existing degree of capitalistic organization depends, accordingly, on the prices paid and obtained for the product of each stage of production, and these prices are, therefore, a very real and important factor in determining the direction of production.⁽¹⁾ Rothbard: (…) how can a reduced consumption profitably support an increased volume of expenditures on producers’ goods? The latter has aptly been termed by Hayek the “paradox of saving,” i.e., that saving is the necessary and sufficient condition for increased production, and yet that such investment seems to contain within itself the seeds of financial disaster for the investors.⁽²⁾ Rothbard III 512 Prices/production/Hayek/Rothbard: The increased investment expenditure in the higher levels raises the prices of the factors in these stages. >Production structure/Rothbard. It is as if the impact of lower consumer demand tends to die out in the higher stages and is more and more counteracted by the increase and shift in investment funds. The process of readjustment to lower price spreads caused by increased gross saving has been lucidly described by Hayek. As he states: „The final effect will be that, through the fall of prices in the later stages of production and the rise of prices in the earlier stages of production, price margins between the different stages of production will have decreased all round.“⁽³⁾ 1. F. A. Hayek, Prices and Production. 2nd ed. London: Routledge and Kegan Paul, 1935. Reprinted by Augustus M. Kelley, 1967. pp. 48-49 2. See Hayek, “The ‘Paradox’ of Saving” in Profits, Interest, and Investment, pp. 199–263. 3 F. A. Hayek, Prices and Production pp. 75-76.	Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Production Structure	Rothbard	Rothbard III 392 Production structure/Rothbard: the capitalists who are producing consumers’ goods, whom we might call “first-stage capitalists,” engage in time transactions in making their investments. >Production/Rothbard, >Capital goods, >Consumer goods, >Interest rates/Rothbard. The components of this particular subdivision of the time market, then, are: Supply of Present Goods: Capitalists1 Supply of Future Goods: Landowners, Laborers, Capitalists2 (Demand for Present Goods) Capitalists1 are the first-stage capitalists who produce consumers’ goods. They purchase capital goods from the producer-owners - the second-stage capitalists, or Capitalists2. Rothbard III 393 At the next stage, the Capitalists2 have to purchase services of factors of production. They supply present goods and purchase future goods, goods which are even more distantly in the future than the product that they will produce.(1) These future goods are supplied by landowners, laborers, and Capitalists3. To sum up, at the second stage: Supply of Present Goods: Capitalists2 Supply of Future Goods: Landowners, Laborers, Capitalists3. >Time/Rothbard, >Time preference/Rothbard. Rothbard III 400 Interest rats/time: The aggregate time-market schedules (determined by time preferences) determine the aggregate social proportions between (gross) savings and consumption. It is clear that the higher the time-preference schedules are, the greater will be the proportion of consumption to savings, while lower time-preference schedules will lower this proportion. At the same time (…) higher time-preference schedules in the economy lead to higher rates of interest, and lower schedules lead to lower rates of interest. >Saving, >Loans. From this it becomes clear that the time preferences of the individuals on the market determine simultaneously and by themselves both the market equilibrium interest rate and the proportions between consumption and savings (individual and aggregate). >Interest rates/Rothbard, >Consumption/Rothbard. Rothbard III 403 It is this rate of interest that induces capitalists to save and invest present goods in productive factors. The rate of interest (…) is set by the configurations of the time preferences of individuals in the society. It is not the total quantity of money spent on consumption that is relevant to capitalists’ returns, but the margins, the spreads, between the product prices and the sum of factor prices at the various stages - spreads which tend to be proportionately equal throughout the economy. There is, in fact, never any need to worry about the maintenance of consumer spending. The proportion spent on capital in its various stages and in toto gives a clue to the important consideration - the real output of consumers’ goods in the economy. >Production/Rothbard, >Investments/Rothbard, >Capital/Rothbard, >Capitalism/Rothbard. Money: The total amount of money spent, however, gives no clue at all. Rothbard III 404 The important consideration, therefore, is time preferences and the resultant proportion between expenditure on consumers’ and producers’ goods (investment). >Time preference/Rothbard. Rothbard III 407 Every capitalist at every stage (…) demands goods that are more distantly future than the product that he supplies, and he supplies present goods for the duration of the production stage until this product is formed. He is therefore a net supplier of present goods, and a net demander of future goods. Rothbard III 518 Structure of production/saving/Rothbard: (…) it is clear that the volume of money incomes to Capitalists1 will be drastically reduced. Capitalists1 will receive a total of 80 instead of 100 ounces. The amount that they have to apportion to original factors and to Capitalists2 is therefore also considerably decreased. Thus, from the side of final consumers’ spending, an impetus toward declining money incomes and prices is sent along the production structure. In the meanwhile, however, another force has concurrently come into play. The 20 ounces have not been lost to the system. They are in the process of being invested in the economy, their owners ranging throughout the economy looking for maximum interest returns on their investment. The new savings have changed the ratio of gross investment to consumption (…). A „narrower“ consumption base must support a larger amount of producers’ spending. How can this happen, especially since the lower-rank capitalists must also receive a lower aggregate income? The answer is: in only one way - by shifting investment further up the ladder to the higher-order production stages. (…) the only way that so much investment can be shifted from the lower to the higher stages, while preserving uniform (lowered) interest differentials (cumulative price spreads) at each stage, is to increase the number of productive stages in the economy, i.e., to lengthen the structure of production. >Saving/Rothbard, >Saving/Hayek, >Production/Hayek, cf. >Natural rate of interest. Rothbard III 512 Prices/production/Hayek/Rothbard: The increased investment expenditure in the higher levels raises the prices of the factors in these stages. It is as if the impact of lower consumer demand tends to die out in the higher stages and is more and more counteracted by the increase and shift in investment funds. The process of readjustment to lower price spreads caused by increased gross saving has been lucidly described by Hayek. As he states: „The final effect will be that, through the fall of prices in the later stages of production and the rise of prices in the earlier stages of production, price margins between the different stages of production will have decreased all round.“⁽²⁾ Rothbard III 995 Production structure/inflation/Rothbard: The owners of the original factors, with their increased money income, naturally hasten to spend their new money. They allocate this spending between consumption and investment in accordance with their time preferences. Let us assume that the time-preference schedules of the people remain unchanged. This is a proper assumption, since there is no reason to assume that they have changed because of the inflation. Production now no longer reflects voluntary time preferences. Business has been led by credit expansion to invest in higher stages, as ifmore savings were available. Since they are not, business has overinvested in the higher stages and underinvested in the Iower. Consumers act promptly to re-establish their time preferences – their preferred investment/consumption proportions and price differentials. The differentials will be re-established at the old, higher amount, i.e., the rate of interest will return to its free-market magnitude. As a result, the prices at the higher stages of production will fall drastically, the prices at the Iower stages will rise again, and the entire new investment at the higher stages will have to be abandoned or sacrificed. >Inflation/Rothbard. 1. No important complication arises from the greater degree of futurity of the higher-order factors. (…) a more distantly future good will simply be discounted by the market by a greater amount, though at the same rate per annum. The interest rate, i.e., the discount rate of future goods per unit of time, remains the same regardless of the degree of futurity of the good. This fact serves to resolve one problem (…) [the] vertical integration by firms over one or more stages. If the equilibrium rate of interest is 5 percent per year, then a one-stage producer will earn 5 percent on his investment, while a producer who advances present goods over three stages or three years - will earn 15 percent, i.e., 5 percent per annum. 2. F. A. Hayek, Prices and Production. 2nd ed. London: Routledge and Kegan Paul, 1935. Reprinted by Augustus M. Kelley, 1967. pp. 75-76.	Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Profit	Rothbard	Rothbard III 514 Profit/Rothbard: Do profits have a social function? Many critics point to the ERE, where there are no profits (or losses) and then attack entrepreneurs earning profits in the real world as if they were doing something mischievous or at best unnecessary. >Evenly Rotating Economy (ERE)/Rothbard. Are not profits an index of something wrong, of some maladjustment in the economy? The answer is: Yes, profits are an index of maladjustment, but in a sense precisely opposed to that usually meant. Def profit/Rothbard: (…) profits are an index that maladjustments are being met and combatted by the profit-making entrepreneurs. These maladjustments are the inevitable concomitants of the real world of change. A man earns profits only if he has, by superior foresight and judgment, uncovered a maladjustment - specifically an undervaluation of certain factors by the market. By stepping into this situation and gaining the profit, he calls everyone’s attention to that maladjustment and sets forces into motion that eventually eliminate it. If we must condemn anyone, it should not be the profit-making entrepreneur, but the one that has suffered losses. For losses are a sign that he has added further to a maladjustment (…) >Gain and Loss/Rothbard, >Rate of Profit/Rothbard.	Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Psychopathy	Paulhus	Corr II 247 Psychopathy/Dark Triad Traits/Personality Traits/Paulhus/Williams/Zeigler-Hill/Marcus: Psychopathy is considered the most malevolent of the Dark Triad traits (Furnham, Richards, & Paulhus, 2013⁽¹⁾; Muris, Merckelbach, Otgaar, & Meijer, 2017⁽²⁾). Although there is controversy regarding the nature and essential components of psychopathy, there is general agreement that psychopathy includes ‘certain key affective (e.g. remorselessness), interpersonal (e.g. superficial charm), and behavioral (e.g. irresponsibility) features, oftentimes in conjunction with considerable antisocial conduct’ (Edens & McDermott, 2010, p.32⁽³⁾). >Personality/Traits, >Dark Triad Traits. II 248 There are various difficulties associated with the measurement of psychopathy because individuals with high levels of psychopathy are deceitful, may have an incentive to misrepresent their psychopathic traits, and often lack insight into their own personalities (Lilienfeld & Fowler, 2006⁽⁴⁾). In response to these challenges, Hare developed the Psychopathy Checklist (PCL; Hare, 1980⁽⁵⁾) and the Psychopathy Checklist-Revised (PCL-R; Hare, 2003⁽⁶⁾). The PCL and the PCL-R are clinician-rating scales that are scored based on a semi-structured interview that is performed in conjunction with a file review. [However, this checklist] did not include the items that focused on positive adjustment. [Moreover] the PCL-R is not ideal for studying subclinical manifestations of psychopathy, which are the focus of most studies concerning the Dark Triad. Instead, Dark Triad researchers have often used the Self-Report Psychopathy Scale-Ill (SRP-III; Paulhus, Hemphill, & Hare, 2009⁽⁷⁾), which is based on the PCL-R. [O]ne of the most influential recent approaches to understanding psychopathy [is a] triarchic conceptualization of [a trait] (Patrick, Fowles, & Krueger, 2009⁽⁸⁾). This model posits that prototypical psychopathy consists of a combination of disinhibition, meanness and boldness. >Method. 1. Furnham, A., Richards, S. C., & Paulhus, D. L. (2013). The Dark Triad of personality: A 10 year review. Social and Personality Psychology Compass, 7, 199—2 16. 2. Muris, P., Merckelbach, H., Otgaar, H., & Meijer, E. (2017). The malevolent side of human nature: A meta-analysis and critical review of the literature on the Dark Triad (narcissism, Machiavellianism, and psychopathy). Perspectives on Psychological Science, 12, 183—204. 3. Edens, J. F., & McDermott, B. E. (2010). Examining the construct validity of the Psychopathic Personality Inventory-Revised: Preferential correlates of fearless dominance and self-centered impulsivity. Psychological Assessment, 22, 3 2—42. 4. Lilienfeld, S. O., & Fowler, K. A. (2006). The self-report assessment of psychopathy: Problems, pitfalls, and promises. In C.J. Patrick (Ed.), Handbook of psychopathy. New York: Guilford Press. 5. Hare, R. D. (1980). A research scale for the assessment of psychopathy in criminal populations. Personality and Individual Differences, 1, 111—117. 6. Hare, R. D. (2003). Manual for the Revised Psychopathy Checklist (2nd ed.). Toronto, ON: Multi-Health Systems. 7. Pauthus, D. L., Hemphill, J. F., & Hare, R. D. (2009). Self-report psychopathy scale (SRP-III). Toronto, ON: Multi-Health Systems. 8. Patrick, C. J., Fowles, D. C., & Krueger, R. F. (2009). Triarchic conceptualization of psychopathy: Developmental origins of disinhibition, boldness, and meanness. Development and Psychopathology, 21, 9 13—938. Zeigler-Hill, Virgil; Marcus, David K.: “The Dark Side of Personality Revisiting Paulhus and Williams (2002)”, In: Philip J. Corr (Ed.) 2018. Personality and Individual Differences. Revisiting the classical studies. Singapore, Washington DC, Melbourne: Sage, pp. 245-262.	Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Psychopathy	Williams	Corr II 247 Psychopathy/Dark Triad Traits/Personality Traits/Paulhus/Williams/Zeigler-Hill/Marcus: Psychopathy is considered the most malevolent of the Dark Triad traits (Furnham, Richards, & Paulhus, 2013⁽¹⁾; Muris, Merckelbach, Otgaar, & Meijer, 2017⁽²⁾). Although there is controversy regarding the nature and essential components of psychopathy, there is general agreement that psychopathy includes ‘certain key affective (e.g. remorselessness), interpersonal (e.g. superficial charm), and behavioral (e.g. irresponsibility) features, oftentimes in conjunction with considerable antisocial conduct’ (Edens & McDermott, 2010, p.32⁽³⁾). II 248 There are various difficulties associated with the measurement of psychopathy because individuals with high levels of psychopathy are deceitful, may have an incentive to misrepresent their psychopathic traits, and often lack insight into their own personalities (Lilienfeld & Fowler, 2006⁽⁴⁾). In response to these challenges, Hare developed the Psychopathy Checklist (PCL; Hare, 1980⁽⁵⁾) and the Psychopathy Checklist-Revised (PCL-R; Hare, 2003⁽⁶⁾). The PCL and the PCL-R are clinician-rating scales that are scored based on a semi-structured interview that is performed in conjunction with a file review. [However, this checklist] did not include the items that focused on positive adjustment. [Moreover] the PCL-R is not ideal for studying subclinical manifestations of psychopathy, which are the focus of most studies concerning the Dark Triad. Instead, Dark Triad researchers have often used the Self-Report Psychopathy Scale-Ill (SRP-III; Paulhus, Hemphill, & Hare, 2009⁽⁷⁾), which is based on the PCL-R. [O]ne of the most influential recent approaches to understanding psychopathy [is a] triarchic conceptualization of [a trait] (Patrick, Fowles, & Krueger, 2009⁽⁸⁾). This model posits that prototypical psychopathy consists of a combination of disinhibition, meanness and boldness. >Personality/Traits. 1. Furnham, A., Richards, S. C., & Paulhus, D. L. (2013). The Dark Triad of personality: A 10 year review. Social and Personality Psychology Compass, 7, 199—2 16. 2. Muris, P., Merckelbach, H., Otgaar, H., & Meijer, E. (2017). The malevolent side of human nature: A meta-analysis and critical review of the literature on the Dark Triad (narcissism, Machiavellianism, and psychopathy). Perspectives on Psychological Science, 12, 183—204. 3. Edens, J. F., & McDermott, B. E. (2010). Examining the construct validity of the Psychopathic Personality Inventory-Revised: Preferential correlates of fearless dominance and self-centered impulsivity. Psychological Assessment, 22, 3 2—42. 4. Lilienfeld, S. O., & Fowler, K. A. (2006). The self-report assessment of psychopathy: Problems, pitfalls, and promises. In C.J. Patrick (Ed.), Handbook of psychopathy. New York: Guilford Press. 5. Hare, R. D. (1980). A research scale for the assessment of psychopathy in criminal populations. Personality and Individual Differences, 1, 111—117. 6. Hare, R. D. (2003). Manual for the Revised Psychopathy Checklist (2nd ed.). Toronto, ON: Multi-Health Systems. 7. Pauthus, D. L., Hemphill, J. F., & Hare, R. D. (2009). Self-report psychopathy scale (SRP-III). Toronto, ON: Multi-Health Systems. 8. Patrick, C. J., Fowles, D. C., & Krueger, R. F. (2009). Triarchic conceptualization of psychopathy: Developmental origins of disinhibition, boldness, and meanness. Development and Psychopathology, 21, 9 13—938. Zeigler-Hill, Virgil; Marcus, David K.: “The Dark Side of Personality Revisiting Paulhus and Williams (2002)”, In: Philip J. Corr (Ed.) 2018. Personality and Individual Differences. Revisiting the classical studies. Singapore, Washington DC, Melbourne: Sage, pp. 245-262.	EconWilliams I Walter E. Williams Race & Economics: How Much Can Be Blamed on Discrimination? (Hoover Institution Press Publication) Stanford, CA: Hoover Institution Press 2011 WilliamsB I Bernard Williams Ethics and the Limits of Philosophy London 2011 WilliamsM I Michael Williams Problems of Knowledge: A Critical Introduction to Epistemology Oxford 2001 WilliamsM II Michael Williams "Do We (Epistemologists) Need A Theory of Truth?", Philosophical Topics, 14 (1986) pp. 223-42 In Theories of Truth, Paul Horwich Aldershot 1994 Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Punishment	Social Psychology	Parisi I 139 Punishment/Social Psychology/Nadler/Mueller: In the absence of compelling evidence to prove guilt, juries sometimes use the fact of the defendant's prior criminal record as a reason to convict (T. Eisenberg and Hans, 2009⁽¹⁾). This is especially true when Parisi I 140 the prior crimes are similar to the current accusation (Greene and Dodge, 1995⁽²⁾; Lloyd-Bostock, 2000⁽³⁾; Wissler and Saks, 1985⁽⁴⁾). Perception: When perceiving persons, we immediately decide whether their intentions toward us are good, and how competent they are to carry out their intentions (Fiske, Cuddy, and Glick, 2007)⁽⁵⁾. We also use that information to make decisions about how blameworthy an actor is. Inferences about character drive judgments of responsibility, blame, and even causation (Alicke, 1992⁽⁶⁾, 2000⁽⁷⁾; Alicke and Yurak 1995⁽⁸⁾. Nadler, 2012⁽⁹⁾; Nadler and McDonnell, 2012⁽¹⁰⁾). Personality traits: Bad motives are one source of inferring bad character, but they are not necessary. Even mildly negative personality traits spur inferences about character that influence blame judgments. For example, a woman who carelessly fails to supervise her unruly dogs is blamed more for an ensuing death if she is asocial and has an unhealthy lifestyle, compared to if she is highly social and has a healthy lifestyle (Nadler and McDonnell, 2012)⁽¹⁰⁾. Victims: The moral character of victims can also influence blame judgments. Harm to innocent victims induces more blame than harm to dangerous criminals, or victims perceived as tainted in other ways. Thus, for example, a person who shoots a stranger in his house is blamed more when the victim turns out to be his daughter's boyfriend than when the victim is a burglar, even when holding constant the shooter's perceptions of danger (Alicke, Davis, and Pezzo, 1994)⁽¹¹⁾. Moral character: A woman's allegedly questionable moral character (e.g. drinking, drug use, premarital sex, respectability) disadvantages her throughout the justice process and leads to more victim blaming as well as lighter punishment (Burt and Albin, 1981⁽¹²⁾; C. Jones and Aronson, 1973⁽¹³⁾). If they question a woman's moral character, prosecutors are less likely to file charges in the first place (Spohn et al., 2001)⁽¹⁴⁾. Additionally, convictions are less likely and sentences are shorter when a woman's sexual history is mentioned, even if she is relatively inexperienced (L'Armand and Pepiton, 1982)⁽¹⁵⁾. >Apologies/Social Psychology, >Attractiveness/Social Psychology, >Retribution/deterrence/Social Psychology. Parisi I 141 Rules/social status: Expressive theories of punishment posit that punishment communicates rules and social norms (Duff, 2011⁽¹⁶⁾; Durkheim, 2014⁽¹⁷⁾), and sends a message to victims, offenders, and third parties alike, which announces and corrects the wrong that was committed. Thus, criminal punishment involving identifiable victims can function as a device that communicates how valued and respected the victim is (Hampton, 1988⁽¹⁸⁾; 1994⁽¹⁹⁾). Punishment can serve to reset the status quo by expressing that the victim is valuable enough to justify the spending of resources to detect, prosecute, and punish the offender who has harmed her (Bilz, 2014). Bilz (2014) has shown experimentally that both victims and third parties perceive punishment as raising the victim's social standing, and failure to punish as lowering it. 1. Eisenberg, T. and V. Hans (2009). "Taking a Stand on Taking the Stand: The Effect of a Prior Criminal Record on the Decision to Testify and on Trial Outcomes." Cornell Law Review 94: 1353. 2. Greene, E. and M. Dodge (1995). "The Influence of Prior Record Evidence on Juror Decision Making." Law and Human Behavior doi:10.1007/BF01499073. 3. Lloyd-Bostock, S. (2000). " The Effects on Juries of Hearing about the Defendant's Previous Criminal Record: A Simulation Study." Criminal Law Review 1:734-755. 4. Wissler, R. L. and M. J. Saks (1985). "On the Ineffcacy of Limiting Instructions: When Jurors Use Prior Conviction Evidence to Decide on Guilt." Law and Human Behavior 9(1): 37-48. doi:10.1007/BF01044288. 5. Fiske, S. T., A. J. C. Cuddy, and P. Glick (2007). "Universal Dimensions of Social Cognition: Warmth and Competence." Trends in Cognitive Sciences 1 1 (2):77—83. doi:16/ j.tics.2006.11.005. 6. Alicke, M. D. (1992). "Culpable Causation." Journal of Personality and Social Psychology 63(3): 368-378. doi:10.1037/0022-3514.63.3.368. 7. Alicke, M. D. (2000). "Culpable Control and the Psychology Of Blame." Psychological Bulletin 126(4): 556-574. doi:10.1037/0033-2909.126.4.556. 8. Alicke, M. D. and T. J. Yurak (1995). "Perpetrator Personality and Judgments of Acquaintance Rape“.Journal of Applied Social Psychology 25(21):1900-1921. 9. Nadler, J. (2012). "Blaming as a Social Process: The Influence of Character and Moral Emo- tion on Blame." Law and Contemporary Problems 75: 1. 10. Nadler, J. and M.-H. McDonnell (2012). "Moral Character, Motive, and the Psychology of Blame." Cornell Law Review 97:255. 11. Alicke, M. D., T. L. Davis, and M. V. Pezzo (1994). "A Posteriori Adjustment of A Priori Decision Criteria." Social Cognition 12(4):281-308. 12. Burt, M. R. and R. S. Albin (1981). "Rape Myths, Rape Definitions, and Probability of Conviction.“ Journal of Applied Social Psychology 11(3):212-230. 13. Jones, C. and E. Aronson (1973). "Attribution of Fault to a Rape Victim as a Function of Respectability of the Victim." Journal of Personality and Social Psychology 26(3): 415-419. doi:10.1037/h0034463. 14. Spohn, C., D. Beichner, E. D. Frenzel, and D. Holleran (2001). Prosecutors' Charging Decisions in Sexual Assault Cases: A Multi-Site Study, Final Report (No. 197048). National Institute of Justice. 15. L'Armand, K. and A. Pepitone (1982). "Judgments of Rape A Study of Victim-Rapist Relationship and Victim Sexual History." Personality and Social Psychology Bulletin 8(1): 134-139. doi:10.1177/014616728281021. 16. Duff, A. (2011). "Retrieving Retributivism," in M. D. White, ed., Retributivism: Essays on Theory and Policy, 3-24. New York: Oxford University Press. 17. Durkheim, E. (2014). The Division of Labor in society. New York: Simon and Schuster. 18. Hampton, Jean (1988). "Punishment as Defeat," in Jeffrie G. Murphy and Jean Hampton, eds., Forgiveness and Mercy, 124—132. Cambridge: Cambridge University Press, Cam- bridge. 19. Hampton, Jean (1994). "Retribution and the Liberal State." J. Contemp. Legal Issues 5: 117. Nadler, Janice and Pam A. Mueller. „Social Psychology and the Law“. In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University Press	Parisi I Francesco Parisi (Ed) The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017
Reflective Equilibrium	Schurz	I 26 Reflexive equilibrium/reflexive reasoning equilibrium/Schurz: (Rawls 1979(1), 38,68 71), Goodman 1955/75(2), 85 89): Similar to rational reconstruction: reflexive equilibrium however purely coherence-theoretic: mutual adjustment of methodological rules and intuitions. >Rational Reconstruction. 1.Goodman, N. (1955). Fact, Fiction and Forecast. London, England: University of London. 2. Rawls, J. (1971). A Theory of Justice. Belknap Press.	Schu I G. Schurz Einführung in die Wissenschaftstheorie Darmstadt 2006
Relations of Production	Marx	Rothbard II 375 Relations of production/Marx/RothbardVsMarx/Rothbard: (…) if technology determines social production relations, what is the mysterious force that delays the change in those relations? It couldn't be human stubbornness or habit or culture, since we have already been informed by Marx that modes of production impel men to enter into social relations apart from their mere wills. As [John] Plamenatz⁽¹⁾ points out, we are merely told that the relations of production become fetters on the productive forces. Marx merely asserts this point, and never even attempts to offer a cause, material or otherwise. Relations of production/Plamenatz: (…) part of the deep confusion is both generated, and camouflaged, by Marx's failure to define 'relations of production' adequately. This concept apparently includes legal property relations. But if legal property relations were at fault in this dialectical delay in adjustment, thus setting up the 'fetters', then Marx would be conceding that the problem is really legal or political rather than economic. But he wanted the determining base to be purely economic; the political and the ideological had to be merely part of the determined superstructure. So 'social relations ofproduction', allegedly economic, were the fetters; but this can only makes sense if this means the property rights or legal system. And so Marx got out of his dilemma by being so fuzzy and ambivalent about the 'relations ofproduction' that these relations could be taken either as including the property structure, as identical With that structure, or else the two might be totally separate entities. Rothbard II 376 In particular, Marx accomplished his obscurantist purpose by asserting that the property rights system was part of the 'legal expression of the 'relations of production' - thus somehow being able to be part of the superstructure (Überbau) and yet of the economic 'relations of production' at the same time. 'Legal expression', needless to say, was not defined either.⁽²⁾ Rothbard: Yet in all this there is no way that the concept of 'relations of production' can make economic determinism intelligible, and there is no way by which these relations can either be determined by the modes ofproduction or can in themselves determine the property rights system. Solution/Rothbard: The only possible coherent chain of causation, in contrast, is the other way round: from ideas to property rights systems to the fostering or crippling the growth of saving and investment, and of technological development.⁽³⁾ >Historical Materialism, >Class conflict/Marx. 1. John Plamenatz, German Marxism and Russian Communism (New York: Longmans, Green & Co., 1954), p. 29. 2. Ibid. p. 27. 3. For a defence of technological monocausality as a key to Marxism by the founder of Russian Marxism, George V. Plekhanov (1857-1918), see Plekhanov, The Development of the Monist View of History (New York: International Publishers, 1973). Cf. David Gordon, Critics of Marxism (New Brunswick, MJ: Transaction Books, 1986), p. 22. For a critique of Marxism-Plekhanovism, see Leszek Kolakowski, Main Currents of Marxism (Oxford: Oxford, University Press, 1981), pp. 340-2.	Marx I Karl Marx Das Kapital, Kritik der politische Ökonomie Berlin 1957 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977
Relative Price	Hayek	Boudreaux II 62 Relative prices/Hayek/Boudreaux: The challenge, (...) is to get the economic details right so that produc-ers have both the knowledge and the incentive to produce the "right" mix of outputs. Relative prices are the main source of both this knowledge and these incentives. Knowldge/production: Relative prices are the main source of both this knowledge and these incentives. Def Relative prices: Relative prices are the prices of some goods and services relative to the prices of other goods and services. Examples are the price of a Toyota automobile relative to the prices of a Ford automobile and of a Honda automobile, or the price of a bushel of wheat relative to the prices of a bushel of rye and of a bushel of rice. Production/demand/costs/market: Relative prices are the most important "directors" of economic activity. If the pattern of relative prices accurately reflects the many different demands of consumers as well as the costs of the inputs that can be used to satisfy these demands, then entrepreneurs, investors, and consumers will be led by these prices to act in ways that result in all of the economy's "pieces" being fitted together into a productive whole. The economy at large will work pretty smoothly. Demand: If, for example, consumers come to like oranges more than they had in the past, then the price of oranges will rise relative to the price of grapefruits. Farmers will soon produce more oranges and relatively fewer grapefruits. Or if supplies of iron ore fall, the price of Steel will rise relative to the price of aluminum. Manufacturers will shift their production so that they use less Steel and more aluminum to produce their products. Boudreaux II 63 Interest rates: If interest rates fall, businesses will increase their investments in activities such as factory expansion, worker training, and research and development. >Microeconomics, >Macroeconomics. Boudreaux II 64 Production: And producers will have incentives to “listen” to these prices. The reason is that producers earn higher profits by expanding production of outputs whose prices are rising. Likewise, producers avoid losses by producing fewer of those outputs whose prices are falling. >Knowledge/Hayek, >Price, >Price theory. Boudreaux II 66 Economic cycles: adjustments in production activities (…) , are not instantaneous. They take time. Unemployment: Unemployment rises during the time it takes for these adjustments to be made. Workers in industries with unsold inventories are laid off, and time is required for them to find employment elsewhere. Even industries that expand in response to more accurate prices typically require some time to rearrange their production plans and facilities in order to make profitable the hiring of new workers. The time it takes for the firms to adjust away from the production plans they made when prices were inaccurate is time during which unusually large numbers of workers are unemployed.	Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014
Retirement	Developmental Psychology	Upton I 145 Retirement/Developmental psychology/Upton: It has been suggested that adults progress through a series of phases as they make the transition from worker to retiree (Atchley, 1976)⁽¹⁾. An important part of this process includes information gathering and planning for the future (Ekerdt et al.,2000)⁽²⁾. Retirement is thought to include a number of different phases as it develops. Initially, the retiree enjoys their new freedom (…), this may be followed by a disenchantment phase (…), Upton I 146 (…) individuals with positive expectations are more likely to be well adjusted in retirement (van Solinge and Henkens, 2005)⁽³⁾. Cf. >Midlife crisis/Psychological theories. 1. Atchley, R. C. (1976). The sociology of retirement. Cambridge: Schenkman. 2. Ekerdt, DJ, Kosloski, K and Deviney, S (2000) The normative anticipation of retirement by older workers. Research on Aging, 22: 3-22. 3. van Solinge, H and Henkens, K (2005) Couples’ adjustment to retirement: a multi-actor panel study. Journal of Gerontology: Psychological Sciences, 60(1): 511-520. Further Reading: Breeze, E, Fletcher, A, Leon, D, Marmot, M, Clarke, R and Shipley, M(2001) Do socioeconomic the advantages persist into old age? American Journal of Public Health, 91(2): 277—83. http:// ajph .aphapublications .org/cgi/reprintl 9 1 / 2 / 277 .pdf	Upton I Penney Upton Developmental Psychology 2011
Review	Lakatos	Schurz I 196 Theory revision/Lakatos/Schurz: (Lakatos 1974⁽¹⁾, 129ff) Methodology of scientific research programs: two assumptions: 1. "immunization": it is always possible to save the core of a theory in case of conflict with experience by making adjustments at the periphery. I 197 2. protective belt": every (physical ) theory needs auxiliary hypotheses (exclusive ceteris paribus hypotheses) to make empirical predictions. These are stored like a protective belt in the outer periphery around center and core. Conflicts with experience can then be eliminated by replacing or dropping an auxiliary hypothesis. Def Anomaly/Lakatos: an observable that contradicts the entire theory (core + periphery). Solution: Def ad-hoc hypothesis: assumes more complicated system conditions in which unknown confounding factors are postulated. Vs: problem: this does not explain the divergent date. I.e. it remains an anomaly even after the ad hoc hypothesis is introduced! ad hoc/Lakatos: such adjustments are legitimate at all only if they are scientifically progressive. They must have new empirical content. Schurz I 198 Falsification/LakatosVsPopper: A theory version is falsified only if there is a progressive new version (with new empirical content). I.e. there is no "instant rationality" (instant decision) which theory is better. That only becomes apparent in the historical development. Def research program/Lakatos: hard core of theory together with a negative and a positive heuristic. Def negative heuristic/Lakatos: adjustments are not made in the core but only at the periphery, However, in the course of a degenerative development the modus tollens hits can turn on against the core. Def positive heuristic/Lakatos: Program according to which increasingly complex theoretical models or system conditions for the core can cope with recalcitrant data. I 199 Theory version/Schurz: core plus periphery. I 200 Def Falsification/Schurz: A theory version is falsified, gdw. some phenomena deductively following from it were falsified by actual observation sets. (s) Schurz always speaks of propositions instead of observations. 1. Lakatos, I. (1974). "Falsifikation und die Methodologie wissenschaftlicher Forschungsprogramme". In: Lakatos, I. und Musgrave, A., Kritik und Erkenntnisfortschritt. Braunschweig: Vieweg.	Laka I I. Lakatos The Methodology of Scientific Research Programmes: Volume 1: Philosophical Papers (Philosophical Papers (Cambridge)) Cambridge 1980 Schu I G. Schurz Einführung in die Wissenschaftstheorie Darmstadt 2006
Sanctions Evasion	Itskhoki	Itskhoki I 3 Sanctions Evasion/Itskhoki/Ribakova: It is important to clearly distinguish between sanctions "in theory" and sanctions "in practice," with enforcement being the key difference. While sanctions may exist on paper, weak enforcement renders them ineffective. Moreover, "black knights" (Timofeev 2023)⁽¹⁾ have been aiding Russia in circumventing these sanctions, further highlighting the gap between theoretical measures and their practical impact. >Sanctions, >Sanctions consequences, >Sanctions debate, >Sanctions effectiveness, >Sanctions evasion, >Sanctions history, >Sanctions policies, >Sanctions theory, >Trade sanctions, >Financial sanctions. Itskhoki I 13 (…) substitution across external trade partners that leave trade shares unchanged (assuming ε > 1)(), do not change welfare or allocations. Therefore, it is the aggregate trade share, not bilateral trade shares with specific trade partners, that is generally (but not always) most informative. The ability to substitute goods and input sourcing away from sanctioning coalition to allied and third-world countries grossly limits the effectiveness of sanctions. >Trade sanctions/Itskhoki. Itskhoki I 16 [There* is a] role of elasticity of substitution in evaluating the effects of sanctions. >Elasticity. Conventional wisdom and available estimates suggest that this elasticity is much lower in the short run than in the long run (see Ruhl 2008(2), Boehm et al 2023(3)). This is the basis for arguing that sanctions have the largest bite in the short run, especially when they are unanticipated. Pre-announced or anticipated sanctions have smaller bite, offering an opportunity for an early adjustment. Furthermore, in cases where pre-announced sanctions on future commodity exports have an immediate effect to raise current commodity prices, the policy can backfire altogether. Itskhoki I 17 This was, arguably,** in part true in 2022 when the anticipation of sanctions on the Russian energy sector was a contributing factor to the record-high levels of world oil prices, even though the Russian oil supply to the world market never ceased. The experience in 2022 also suggests that a lot of adjustment can happen swiftly, if the sanctions shock is large and significantly moves relative prices. This was true for the adjustment of the Russian economy, that by the end of the year has largely relocated the bulk of its energy supply to China and entirely new customers in India and Turkey, as well as relocated its international import sourcing towards China, as well as via Turkey and former Soviet countries. But it was equally true for the European economy and its substitution away from Russian energy sources that was largely completed by the end of 2022, with Europe bracing for a major recession in 2022 that did not materialize (see Bachmann et al. 2024⁽⁴⁾ and the heated debate that surrounded its circulation in 2022 summarized in Moll et al. 2023⁽⁵⁾). In the formula (1): Gain from trade for country i = 1 − λ_ii 1/ε , (1) where λii is the expenditure share on domestic goods, hence 1−λ_ii is the expenditure share on imports, and ε is the trade elasticity. * The direct impact of sanctions is further complicated by the ability of countries to trade intertemporally, and in particular by creating stockpiles of most vulnerable inputs. Even sharp but temporary disruptions to trade flows may have little impact if they can be effectively smoothed out over time. This is particularly relevant for certain industries like military production which are the main target of sanctions. 1. Timofeev, Ivan. 2023. “Does Russia Have ‘Black Knights’?” Russian International Affairs Council (blog). March 31, 2023. https://russiancouncil.ru/en/analytics-andcomments/analytics/does-russia-have-black-knights/. 2. Ruhl, Kim J. 2008. “The International Elasticity Puzzle.” New York University Working Papers 08-30. 3. Boehm, Christoph E., Andrei A. Levchenko, and Nitya Pandalai-Nayar. 2023. “The Long and Short (Run) of Trade Elasticities.” American Economic Review 113 (4): 861–905. https://doi.org/10.1257/aer.20210225. 4. Bachmann, Rüdiger, David Baqaee, Christian Bayer, Moritz Kuhn, Andreas Löschel, Benjamin Moll, Andreas Peichl, Karen Pittel, and Moritz Schularick. 2024. “What If? The Macroeconomic and Distributional Effects for Germany of a Stop of Energy Imports from Russia.” Economica 91 (364): 1157–1200. https://doi.org/10.1111/ecca.12546. 5. Moll, Benjamin, Moritz Schularick, and Georg Zachmann. 2023. “The Power of Substitution: The Great German Gas Debate in Retrospect.” Brookings Papers on Economic Activity Fall:395–455.	Itskhoki I Oleg Itskhoki Elina Ribakova The Economics of Sanctions: From Theory Into Practice. Brookings Papers on Economic Activity, Fall 2024. The Brookings Institution 2024
Say’s Law	Say	Rothbard II 27 Say’s Law of markets/Say/Rothbard: ‘Overproduction’ means production in excess of consumption: that is, production is too great in general compared to consumption, and hence products cannot be sold in the market. If production is too large in relation to consumption, then obviously this is a problem of what is now called ‘market failure’, a failure which must be compensated by the intervention of government. Intervention would have to take one or both of the following forms: reduce production, or artificially stimulate consumption. The American New Deal in the 1930s did both, with no success in relieving the alleged problem. Production can be reduced, as in the case of the New Deal, by the government's organizing compulsory cartels of business to force a cut in their output. >Interventions. Say understandably reacted in horror to this analysis and to the prescription.14 In the first place, he pointed out, the wants of man are unlimited, and will continue to be until we achieve genuine general superabundance - a world marked by the prices of all goods and services falling to zero. But at that point there would be no problem of finding consumer demand, or, indeed, Rothbard II 28 any economic problem at all. There would be no need to produce, to work, or to worry about accumulating capital, and we would all be in the Garden of Eden. Thus Say postulates a situation where all costs of production are at last reduced to zero: ‘in which case, it is evident there can no longer be rent for land, interest upon capital, or wages on labour, and consequently, no longer any revenue to the productive classes’.(1) What will happen then? But if there can be no general overproduction short of the Garden of Eden, then why do businessmen and observers so often complain about a general glut? In one sense, a surplus of one or more commodities simply means that Rothbard II 29 too little has been produced of other commodities for which they might exchange. Looked at in another way, since we know that an increased supply of any product lowers its price, then if any unsold surplus of one or more goods exists, this price should fall, thereby stimulating demand so that the full amount will be purchased. There can never be any problem of ‘overproduction’ or ‘underconsumption’ on the free market because prices can always fall until the markets are cleared. Rothbard II 30 Costs/SayRothbard: A rise of factor productivity means a lowering of cost. But this means that an increase in output will not only lower selling price; it will also lower costs, so there is no reason to assume grievous losses or even a lessening of profit if prices fall. Rothbard II 33 Say’s Law/KeynesVsSay/Rothbard: Keynes made a denunciation of Say's law the centrepiece of his system. In stating it, Keynes badly vulgarized and distorted the law, leaving out the central role of price adjustments, and had the law saying simply that total spending on output will equal total incomes received in production. By leaving out three important sentences in his quotation from John Stuart Mill's summary of Say's law, Keynes omits any hint of the price system as equilibrating force. John Maynard Keynes, The General Theory of Employment, Interest, and Money (New York: Harcourt, Brace, 1936), p. 18. On this point, see Hazlitt, op. cit., note 14, p. 23. 18. Keynes also summed up Say's law as holding that ‘supply creates its own demand’ – a formulation followed by virtually all economists since Keynes, including Schumpeter, Mark Blaug, Thomas Sowell and Axel Leijonhufvud. As Professor Hutt writes, in correcting this distortion: ‘But the supply of plums does not create the demand for plums. And the word “creates” is injudicious. What the law really asserts is that the supply of plums constitutes demand for whatever the supplier is destined to acquire in exchange for the plums under barter, or with the money proceeds in a money economy’. W.H. Hutt, A Rehabilitation of Say's Law (Athens, Ohio: Ohio University Press, 1974), p. 3 and 3n. 1. Say, Jean-Baptiste. Traité d’Economie Politique, Paris 1803. Mause I 41 Say's Law/Jean-Baptiste Say:** Say became known above all by "Say's Law" that was named after him.⁽¹⁾ Say thesis: Supply and demand inevitably balance each other out: In particular, there can be no oversupply, as each supply creates its own demand through the income generated by production. Any imbalances within individual sectors would be quickly compensated by the pressure of competition and did not pose a fundamental problem. Above all, this "law" served for more than one hundred years to justify the abstinence from economic theory and economic policy. >Supply, >Demand, >Equilibrium, >Markets, >Economic cycle, >Interventions. 1. Say, Jean-Baptiste. Traité d’Economie Politique, Paris 1803, S. 153.	EconSay I Jean-Baptiste Say Traité d’ Economie Politique Paris 1803 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 Mause I Karsten Mause Christian Müller Klaus Schubert, Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018
Science	Kuhn	I 25 Definition Normal Science/Kuhn: Research that is firmly based on one or more scientific achievements of the past. I 47 Science/Kuhn: problems: Three classes of problems: - 1st determining important facts - 2nd mutual adjustment of facts and theory - 3rd articulation of theory. >Theories/Kuhn. I 182 Target/Science/Kuhn: Science does not move towards a "goal". - There must be no such destination at least. I 193 Community/Science/Kuhn: Typical for group formation: shared use of symbols - e.g. mathematical formulas. >Paradigms/Kuhn.	Kuhn I Th. Kuhn The Structure of Scientific Revolutions, Chicago 1962 German Edition: Die Struktur wissenschaftlicher Revolutionen Frankfurt 1973
Self-Regulation (Psychology)	Carver	Corr I 427 Self-regulation/Carver/Scheier: the term self-regulation (Carver and Scheier 1981⁽¹⁾, 1998(2)) has different connotations in different contexts. When we use it, we intend to convey the sense of purposive processes, involving self-corrective adjustments as needed, and that the adjustments originate within the person. This view is not an approach to personality but a way of talking about how personality becomes expressed in behaviour. . >Feedback/Carver/Scheier, >Control processes/Carver/Scheier, >Affect/Carver/Scheier, >Goals/Carver/Scheier. Corr I 431 The argument that affect reflects the error signal from a comparison in a feedback loop (>Affect/Carver/Scheier) has a very counter-intuitive implication concerning positive affect (Carver2003)⁽⁴⁾. As noted, if affect reflects the error signal in a feedback loop, affect is a signal to adjust rate of progress. What about positive feelings? Here prediction is less intuitive. (…) The feelings still reflect a discrepancy (>Criteria/Carver/Scheier), and discrepancy reducing loops minimize discrepancies. Thus, such a system ‘wants’ to see neither negative nor positive affect. (…) People who exceed the criterion rate of progress (and thus have positive feelings) will automatically tend to reduce subsequent effort in this domain. They will ‘coast’ a little (cf. Frijda 1994⁽³⁾, p. 113); not necessarily stop, but ease back, such that subsequent rate of progress returns to the criterion. The impact on subjective affect would be that the positive feeling itself is not sustained for very long. It begins to fade. Generally (…) the system acts to prevent great amounts of pleasure as well as great amounts of pain (Carver 2003⁽⁴⁾; Carver and Scheier 1998⁽²⁾). Corr I 432 Why would a process be built in that limits positive feelings–indeed, dampens them? After all, people seek pleasure and avoid pain. We believe the adaptive value of a tendency to coast derives from the fact that people have multiple simultaneous goals (Carver 2003(4); Carver and Scheier 1998⁽²⁾; Frijda 1994⁽³⁾). Given multiple goals, people generally do not optimize on any one goal, but rather ‘satisfice’ (Simon 1953)⁽⁵⁾. >Goals/Carver/Scheier. 1. Carver, C. S. and Scheier, M. F. 1981. Attention and self-regulation: a control-theory approach to human behaviour. New York: Springer Verlag 2. Carver, C. S. and Scheier, M. F. 1998. On the self-regulation of behaviour. New York: Cambridge University Press 3. Frijda, N. H. 1994. Emotions are functional, most of the time, in P. Ekman and R. J. Davidson (eds.), The nature of emotion: fundamental questions, pp. 112–26. New York: Oxford University Press 4. Carver, C. S. 2003. Three human strengths, in L.G. Aspinwall and U.M. Staudinger (eds.),A psychology of human strengths: fundamental questions and future directions for a positive psychology, pp.87–102. Washington, DC: American Psychological Association 2008. 5. Simon, H. A. 1953. Models of man. New York: Wiley1967. Motivational and emotional controls of cognition, Psychological Review 74: 29–39 Charles S. Carver and Michael F. Scheier, “Self-regulation and controlling personality functioning” in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge Handbook of Personality Psychology. New York: Cambridge University Press	Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Self-Regulation (Psychology)	Scheier	Corr I 427 Self-regulation/Carver/Scheier: the term self-regulation (Carver and Scheier 1981⁽¹⁾, 1998(2)) has different connotations in different contexts. When we use it, we intend to convey the sense of purposive processes, involving self-corrective adjustments as needed, and that the adjustments originate within the person. This view is not an approach to personality but a way of talking about how personality becomes expressed in behaviour. >Feedback/Carver/Scheier, >Control processes/Carver/Scheier, >Affect/Carver/Scheier, >Goals/Carver/Scheier. Corr I 431 The argument that affect reflects the error signal from a comparison in a feedback loop (>Affect/Carver/Scheier) has a very counter-intuitive implication concerning positive affect (Carver2003)⁽⁴⁾. As noted, if affect reflects the error signal in a feedback loop, affect is a signal to adjust rate of progress. What about positive feelings? Here prediction is less intuitive. (…) The feelings still reflect a discrepancy (>Criteria/Carver/Scheier), and discrepancy reducing loops minimize discrepancies. Thus, such a system ‘wants’ to see neither negative nor positive affect. (…) People who exceed the criterion rate of progress (and thus have positive feelings) will automatically tend to reduce subsequent effort in this domain. They will ‘coast’ a little (cf. Frijda 1994⁽³⁾, p. 113); not necessarily stop, but ease back, such that subsequent rate of progress returns to the criterion. The impact on subjective affect would be that the positive feeling itself is not sustained for very long. It begins to fade. Generally (…) the system acts to prevent great amounts of pleasure as well as great amounts of pain (Carver 2003⁽⁴⁾; Carver and Scheier 1998⁽²⁾). Corr I 432 Why would a process be built in that limits positive feelings–indeed, dampens them? After all, people seek pleasure and avoid pain. We believe the adaptive value of a tendency to coast derives from the fact that people have multiple simultaneous goals (Carver 2003(4); Carver and Scheier 1998⁽²⁾; Frijda 1994⁽³⁾). Given multiple goals, people generally do not optimize on any one goal, but rather ‘satisfice’ (Simon 1953)⁽⁵⁾. >Goals/Carver/Scheier. 1. Carver, C. S. and Scheier, M. F. 1981. Attention and self-regulation: a control-theory approach to human behaviour. New York: Springer Verlag 2. Carver, C. S. and Scheier, M. F. 1998. On the self-regulation of behaviour. New York: Cambridge University Press 3. Frijda, N. H. 1994. Emotions are functional, most of the time, in P. Ekman and R. J. Davidson (eds.), The nature of emotion: fundamental questions, pp. 112–26. New York: Oxford University Press 4. Carver, C. S. 2003. Three human strengths, in L.G. Aspinwall and U.M. Staudinger (eds.),A psychology of human strengths: fundamental questions and future directions for a positive psychology, pp.87–102. Washington, DC: American Psychological Association 2008. 5. Simon, H. A. 1953. Models of man. New York: Wiley1967. Motivational and emotional controls of cognition, Psychological Review 74: 29–39 Charles S. Carver and Michael F. Scheier, “Self-regulation and controlling personality functioning” in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge Handbook of Personality Psychology. New York: Cambridge University Press	Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Social Skills	Developmental Psychology	Corr I 181 Social Skills/social competence/developmental psychology/Rothbart: Early forms of what will later be called Extraversion or Surgency are present in the smiling and laughter and rapid approach of infants to a novel object by six months, and measures of approach tendencies and smiling and laughter at this early age predict children’s extraverted tendencies at seven years (Rothbart, Derryberry and Hershey 2000)⁽¹⁾. Throughout early development, children who are more extraverted also appear to express greater anger and frustration, and are more prone to externalizing disorders (Rothbart and Bates 2006⁽²⁾; Rothbart and Posner 2006)⁽³⁾. Lengua, Wolchik, Sandler and West (2000)⁽⁴⁾ found that low positivity and high impulsivity in children, as well as high rejection and inconsistency in parenting, predicted conduct problems. children who are more sociable may attract warmth and responsiveness from adults, thereby protecting them from the effects of poor parenting (Werner 1985). Better social skills have also been shown for children whose temperament matched parental expectations and desires, who were more persistent, and whose parents were higher on warmth (Paterson and Sanson 1999)⁽⁵⁾. When infants are four months of age, their distress and body movement to laboratory-presented stimulation predict later fear and behavioural inhibition. >Fear/developmental psychology, >Social learning, >Social behaviour, >Socialization, >Stages of development. 1. Rothbart, M. K., Derryberry, D. and Hershey, K. 2000. Stability of temperament in childhood: laboratory infant assessment to parent report at seven years, in V. J. Molfese and D. L. Molfese (eds.), Temperament and personality development across the life span, pp. 85–119. Hillsdale, NJ: Erlbaum 2. Rothbart, M. K., and Bates, J. E. 2006. Temperament in children’s development, in W. Damon and R. Lerner (Series eds.) and N. Eisenberg (Vol. ed.), Handbook of child psychology, vol. III, Social, emotional, and personality development, 6th edn, pp. 99–166. Hoboken, NJ: Wiley 3. Rothbart, M. K. and Posner, M. I. 2006. Temperament, attention, and developmental psychopathology, in D. Cicchetti and D. Cohen eds., Developmental psychopathology, vol. II, Developmental neuroscience, 2nd edn, pp. 465–501. Hoboken, NJ: Wiley 4. Lengua, L. J., Wolchik, S. A., Sandler, I. N. and West, S. G. 2000. The additive and interactive effects of parenting and temperament in predicting adjustment problems of children of divorce, Journal of Clinical Child Psychology 29: 232–44 5. Paterson, G. and Sanson, A. 1999. The association of behavioural adjustment to temperament, parenting and family characteristics among 5-year-old children, Social Development 8: 293–309 Mary K. Rothbart, Brad E. Sheese and Elisabeth D. Conradt, “Childhood temperament” in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge Handbook of Personality Psychology. New York: Cambridge University Press	Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Spontaneous Order	Hayek	Boudreaux II 24 Spontaneous order/Hayek/Boudreaux: One of the most notable facts of life in modern market economies is that each and every one of the things that we enjoy as consumers is something that no person knows in full how to produce. There is conscious planning and adjustment going on at the level of each individual and each firm and each distinct organization. But there is no overarching - no “central” - plan for the whole. What exactly is this social institution that coordinates the choices and actions of so many people, each with different slices of knowledge and information, into an overall pattern of activities (…)? Solution: The answer is voluntary exchange, or markets that are based on private property rights and freedom of contract. Boudreaux II 25 Prices: (…) the prices that emerge on these markets through thousands, even millions of exchanges, are the crucial signals that guide us every day to make those economic choices that result in the complex and highly productive economy that we too often take for granted. Market prices, (…) guide each of us to act as if we know about - and as if we care about - the preferences and well-being of millions of strangers. Boudreaux II 32 Spontaneous order/Hayek/Boudreaux: Each owner of private property has incentives to use his or her property in ways that produce the greatest return (…). Likewise for the individual worker who owns only his own labour services. He will combine his labour with the labour and assets ofthose other private-property owners who promise him the largest return on his work effort - that is, who promise him the highest pay. With each private-property owner seeking only the highest returns on the use of his or her property, an overall economic order is brought about as each owner directs his property toward those uses that pay the highest prices. Similarly, consumers seeking only to get as much satisfaction as they can from spending their income avoid ineffcient suppliers (whose prices are relatively high) and patronize effcient suppliers (whose prices are relatively Iow). Efficiency: Ineffcient suppliers either increase their effciency or switch to other lines of production. Effciency is improved and a complex pattern of productive uses of resources emerges (as Hayek said) spontaneously. This order - this overall outcome - is intended by no one. It is spontaneous. And because this unintended, spontaneous outcome emerges from the self-interested actions of owners of private property, each of these owners is made better off. No one is forced to do business With those whom he'd prefer to avoid, and—being free to take advantage of any and all existing opportunities - each person chooses those available opportunities that improve his lot in life by the greatest degree.	Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014
Stimuli	Allport	Corr I 95 Stimuli/behavior/Allport/Deary: Allport emphasized that it was the trait and not the stimulus that was the driving force behind behaviour that expresses personality. >Behavior, >Personality traits. This idea was recast by Matthews, Deary and Whiteman (2003⁽¹⁾) when they articulated the key assumptions of the ‘inner locus’ and ‘causal precedence’ of personality traits. Allport suggested the definitions ‘derived drives’ or ‘derived motives’ for traits and summed up that (Allport 1931⁽²⁾, p. 369): Whatever they are called they may be regarded as playing a motivating role in each act, thus endowing the separate adjustments of the individual to specific stimuli with that adverbial quality that is the very essence of personality. Adverbs/adjectives/description/theory/Deary: Today’s trait researchers are keener on adjectives than adverbs. >Lexical hypothesis. 1.Matthews, G., Deary, I. J. and Whiteman, M. C. 2003. Personality traits, 2nd edn. Cambridge University Press 2. Allport, G. W. 1931. What is a trait of personality?, Journal of Abnormal and Social Psychology 25: 368–72 Ian J. Deary, “The trait approach to personality”, in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge Handbook of Personality Psychology. New York: Cambridge University Press	Corr I Philip J. Corr Gerald Matthews The Cambridge Handbook of Personality Psychology New York 2009 Corr II Philip J. Corr (Ed.) Personality and Individual Differences - Revisiting the classical studies Singapore, Washington DC, Melbourne 2018
Tariff History	Rieth	Rieth I 20 Tariff history/Boer/Rieth: The first major trade policy event in the sample* is the sixth round of multilateral trade negotiations by the members of the General Agreement on Tariffs and Trade (GATT), known as the Kennedy Round, which was concluded in 1967. As a consequence, US average tariffs on dutiable imports decreased from 14% in 1967 to about 6% by 1975 (Irwin, 2017)⁽¹⁾. The cumulative shock series shows consecutive drops until the mid-1970s. From 1980 to 1984 the share of imports that was covered by some type of trade restrictions increased from 12% to 21% (Irwin, 2017)(1) and the shock series rises in the early 1980s. The US increased, for instance, tariffs on Japanese trucks in August 1980 and on motorcycles in 1983 (Feenstra, 1989)⁽²⁾. Moreover, quotas in various industries like steel and textiles constituted a major element of US trade policy during this period. Another increase in tariffs was enacted in 1987 when the US imposed tariffs on computers, televisions, and power tools from Japan (Irwin, 2017)⁽¹⁾; the series displays another notable uptick. In the 1990s trade policy became less restrictive. In 1993 the North American Free Trade Agreement (NAFTA) was approved by Congress and the GATT Uruguay Round established the WTO. >GATT, >NAFTA. Rieth I 27 Tariff shocks: Since** the mid-1980s, tariff shocks are an important driver of output and trade. First, the trade tensions with Japan, among others, lowered GDP and raised the trade balance until the mid-1990s. Thereafter, the trade liberalization of NAFTA in 1993, the creation of the WTO in 1995, and the accession of China to the WTO in 2001 generated a long boom. The estimates suggest that the shift to lower tariffs raised the output gap by up to 3 log points for nearly 20 years. This historic support only came to an end with the return to protectionism since 2016. The estimates paint a more favorable picture of the implications of China’s WTO accession for the US than the influential work of Autor et al. (2013⁽³⁾, 2016⁽⁴⁾). The authors find that following this event wages and employment fell significantly in local US labor markets that are most exposed to import competition from China. We confirm* their results with general equilibrium estimates. Rieth I 28 A flip side of the free trade shocks and the increased capital demand is a persistent widening of the trade balance since the mid-1990s. Tariff shocks account for about one fourth of the deficit during the last 10 years. Alessandria and Choi (2021)⁽⁶⁾ obtain a similar fraction in a calibrated two-country general equilibrium model with firm dynamics. Trade policy uncertainty shocks explain little of the output gap but are relevant for the trade balance. The back and forth of the trade relations with Japan in the 1980s and the NAFTA/GATT negotiations increased uncertainty and, hence, the trade balance. The completion of the agreements in the mid-1990s and China joining the WTO resolved a large part of that uncertainty, which raised US capital imports and trade deficits. >US Import Tariffs. * Lukas Boer and Malte Rieth (2024). The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty. IMF Working Paper 24/13. International Monetary Fund. ** Prior to the Kennedy Round, the 25% ‘chicken tax’ on trucks imported from Europe and imposed by President Johnson in 1964 is a tariff that is still active today (Lawrence, 2009)⁽⁵⁾. 1. Irwin, D. A. (2017). Clashing over Commerce: A History of US Trade Policy. Markets and Governments in Economic History. University of Chicago Press, 1 edition. 2. Feenstra, R. (1989). Symmetric pass-through of tariffs and exchange rates under imperfect competition: An empirical test. Journal of International Economics, 27(1-2):25–45. 3. Autor, D. H., Dorn, D., and Hanson, G. H. (2013). The china syndrome: Local labor market effects of import competition in the united states. American economic review, 103(6):2121–2168. 4. Autor, D. H., Dorn, D., and Hanson, G. H. (2016). The china shock: Learning from labor-market adjustment to large changes in trade. Annual review of economics, 8:205–240. 5. Lawrence, R. (2009). The chickens have come home to roost. Accessed on September 7, 2021. 6.Alessandria, G. and Choi, H. (2021). The dynamics of the U.S. trade balance and real exchange rate: The J curve and trade costs? Journal of International Economics, 132:103511.	Rieth I Malte Rieth Lukas Boer The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty. IMF Working Paper 24/13. International Monetary Fund. Washington, D.C. 2024
Tariff Responsivity	Alessandria	Alessandria I 0 Tariff responsivity/tariffs/Alessandria/Ding/Khan/Mix: We evaluate the aggregate effects of a change in tariffs on the US and world economies when tariff revenue is used to enact fiscal reform. Our model combines a standard international model of fiscal policy with taxes and a dynamic model of trade participation and tariffs that allows for uncertainty and transitions. We consider effects of permanent and temporary tariffs - with and without retaliation - when tariff revenue is used to reduce taxes on capital or labor or to subsidize investment. Revenues: Compared to a lump sum redistribution, using tariff revenue for these reforms always boosts economic activity. Long run/short run: Key to our analysis is the effect of trade dynamics on import substitution, such that tariff revenue after an increase in tariffs is higher in the short run than in the long run. >Long run/short run. GDP: When increasing the tariff by 20 percentage points, the revenue raised is largest when tariffs are temporary, unilateral, and used to subsidize investment, increasing by about 2 percent of GDP. Trade balance: This case also yields a large temporary increase in the trade balance. Welfare: We find the welfare-maximizing unilateral tariff is close to 18 percent when tariff revenue is used to subsidize investment compared to 0 percent under a lump sum redistribution. Capital taxes: We also find cutting capital taxes does not generate as much growth as introducing an investment subsidy since tariffs raise the price of investment substantially. >Taxation. Alessandria I 1 Welfare: The welfare-maximizing tariff depends on the dynamics of tariff revenue and the tariff Laffer curve. >Laffer curve, >Tariffs, >Welfare. Our finding that a country, and the world as a whole, may increase welfare by raising tariffs to generate revenue rather than relying solely on distortionary capital and labor taxes is consistent with the theory of the second best (Lipsey and Lancaster, 1956)⁽¹⁾. >Second-best theory. Taxes: Our main contribution is in our quantitative evaluation of the tradeoff between tariff revenue and other taxes in a dynamic general equilibrium model that nests the key features used in tax analysis (Auerbach and Kotlikoff, 1987⁽²⁾; Mendoza and Tesar, 1998⁽³⁾; House and Shapiro, 2006⁽⁴⁾; Trabandt and Uhlig, 2011)⁽⁵⁾ and dynamic trade analysis (Alessandria and Choi, 2014b⁽⁶⁾; Alessandria et al., 2021⁽⁷⁾; Mix, 2023)⁽⁸⁾. Welfare: For our baseline case, we find that a permanent unilateral increase in the US import tariff to 18 percent from 4 percent maximizes welfare if that revenue is directed to subsidize investment in physical capital. In contrast, if the tariff revenue is just rebated lump sum, as is typically assumed in trade analyses with tariffs, then we find it is unilaterally optimal to lower tariffs or even subsidize imports. These stark differences imply that the estimates of the benefits (or costs) of increasing tariffs ignoring fiscal tradeoffs will be underestimated (exaggerated) in a framework with only lump sum reimbursement of tariff revenues. Moreover, we find the welfare-maximizing unilateral tariff is largely invariant to the features of the economy that takes it away from an efficient allocation provided the tariff revenue is used to offset some other tax. The welfare-maximizing tariff depends on the dynamics of tariff revenue, which is mostly determined by long-run import substitution. Owing to the dynamics of this substitution, the tariff that maximizes the present-value of revenue is about one-half of the tariff that maximizes short-run revenue. >Investments/Alessandria. Alessandria I 25 For simplicity we* only consider the effect of the permanent unilateral tariff that is used to subsidize investment. We find important differences related to the trade elasticity. Likewise, if we use a trade model without trade dynamics or producer creation margins we find substantial differences in the dynamics of the economy. We find that introducing initial trade deficits through asset positions have minor effects on our results. Likewise changing country sizes through differences in productivity, labor, or capital intensity yield similar results. Alessandria I 25 The lower Armington elasticity⁽⁹⁾ lowers the short-run and long-run trade elasticities, leading to less substitution away from imports, more tariff revenue, and a bigger tax cut. >Elasticity, >Long run/short run. There is a slightly smaller depreciation after the tariff is imposed. Investment and thus consumption grow more in the long run. The lower elasticity yields slightly different short-run dynamics. There is a slightly stronger consumption and leisure on impact owing to the standard wealth channel. These have modest effects on the trade balance, but the real exchange rate appreciates a little more in impact. * George A. Alessandria, Jiaxiaomei Ding, Shafaat Y. Khan, and Carter B. Mix. (2025) The Tariff Tax Cut: Tariffs as Revenue NBER Working Paper No. 33784 May 2025 1. Lipsey, R. G. and Kelvin Lancaster, “The General Theory of Second Best,” The Review of Economic Studies, 1956, 24 (1), 11-32. 2. Auerbach, Alan J. and Laurence J. Kotlikoff, Dynamic Fiscal Policy, Cambridge University Press, 1987. 3. Mendoza, Enrique G. and Linda L. Tesar, “The International Ramifications of Tax Reforms: SupplySide Economics in a Global Economy,” The American Economic Review, 1998, 88 (1), 226-245. 4. House, Christopher L. and Matthew D. Shapiro, “Phased-In Tax Cuts and Economic Activity,” American Economic Review, December 2006, 96 (5), 1835-1849. 5. Trabandt, Mathias and Harald Uhlig, “The Laffer curve revisited,” Journal of Monetary Economics,2011, 58 (4), 305-327. 6. Alessandria, George and Horag Choi, “Establishment heterogeneity, exporter dynamics, and the effects of trade liberalization,” Journal of International Economics, 2014, 94 (2), 207-223. 7. Alessandria, George and Horag Choi, and Kim J. Ruhl, “Trade Adjustment Dynamics and the Welfare Gains from Trade,” Journal of International Economics, 2021, 131, Article 103458. 8. Mix, Carter, “The dynamic effects of multilateral trade policy with export churning,” International Economic Review, 2023, 64 (2), 653–689. 9. Gallaway, Michael P., Christine A. McDaniel, and Sandra A. Rivera, “Short-run and Long-run Industry level Estimates of U.S. Armington Elasticities,” The North American Journal of Economics and Finance, 2003, 14(1), 49-68.	Alessandria I George A. Alessandria Jiaxiaomei Ding Shafaat Y. Khan, The Tariff Tax Cut: Tariffs as Revenue NBER Working Paper No. 33784 May 2025 Cambridge, MA 2025
Tariff Responsivity	Economic Theories	Benguria I 2 Tariff Responsivity/Economic theories/Benguria/Saffie: A growing literature has documented the effects of tariffs spurred by the changes to US and global trade policy since 2018 [Amiti et al., 2019⁽¹⁾, Fajgelbaum et al., 2020⁽²⁾, Flaaen et al., 2020⁽³⁾, Cavallo et al., 2021⁽⁴⁾, Benguria et al., 2022⁽⁵⁾, Benguria and Saffie, 2024⁽⁶⁾, Blanchard et al., 2024⁽⁷⁾, Bonadio et al., 2024⁽⁸⁾, Chor and Li, 2024⁽⁹⁾, Fajgelbaum et al., 2024⁽¹⁰⁾, Freund et al., 2024⁽¹¹⁾, Hankins et al., 2024⁽¹²⁾, Benguria and Saffie, 2025⁽¹³⁾, Gopinath et al., 2025⁽¹⁴⁾, Handley et al., 2025⁽¹⁵⁾. Recent work has begun to analyze the consequences of changes to US trade policy in 2025, including the April 2 tariffs we focus on in this paper. Ignatenko et al. [2025]⁽¹⁶⁾ develop a quantitative model to analyze the long-run effects of these tariffs and the possible retaliatory response of US trading partners. Rodriguez-Clare et al. [2025]⁽¹⁷⁾ provide an analysis of recent US tariffs on Canada, Mexico, China and of April 2 tariffs using a model with downward nominal wage rigidity and allocating the impacts across US states and foreign countries. Cavallo et al. [2025]⁽¹⁸⁾ measure the response of retail prices to the various trade policy actions of 2025. Felipe Benguria Felipe Saffie. (2025). Rounding up the Effect of Tariffs on Financial Markets: Evidence from April 2, 2025. NBER Working Paper 34036 http://www.nber.org/papers/ 1050. Cambridge, MA 02138 July 2025 1. M. Amiti, S. J. Redding, and D. Weinstein. The impact of the 2018 trade war on US prices and welfare. Journal of Economic Perspectives, 33(4):187–210, 2019. 2. P. D. Fajgelbaum, P. K. Goldberg, P. J. Kennedy, and A. K. Khandelwal. The return to protectionism. The Quarterly Journal of Economics, 135(1):1–55, 2020. 3. A. Flaaen, A. Hortac¸su, and F. Tintelnot. The production relocation and price effects of US trade policy: The case of washing machines. American Economic Review, 110(7):2103–27, 2020. 4. A. Cavallo, G. Gopinath, B. Neiman, and J. Tang. Tariff pass-through at the border and at the store: Evidence from US trade policy. American Economic Review: Insights, 3(1):19–34, 2021. 5. F. Benguria, J. Choi, D. L. Swenson, and M. J. Xu. Anxiety or pain? The impact of tariffs and uncertainty on Chinese firms in the trade war. Journal of International Economics, 137:103608, 2022. 6. F. Benguria and F. Saffie. Escaping the trade war: Finance and relational supply chains in the adjustment to trade policy shocks. Journal of International Economics, 152:103987, 2024. 7. E. J. Blanchard, C. P. Bown, and D. Chor. Did Trump’s trade war impact the 2018 election? Journal of International Economics, 148:103891, 2024. 8. B. Bonadio, Z. Huo, E. Kang, A. A. Levchenko, N. Pandalai-Nayar, H. Toma, and P. Topalova. Playing with blocs: Quantifying decoupling. Working Paper, 2024. 9. D. Chor and B. Li. Illuminating the effects of the US-China tariff war on China’s economy. Journal of International Economics, 150:103926, 2024. 10. P. Fajgelbaum, P. Goldberg, P. Kennedy, A. Khandelwal, and D. Taglioni. The US-China trade war and global reallocations. American Economic Review: Insights, 6(2):295–312, 2024. 11. C. Freund, A. Mattoo, A. Mulabdic, and M. Ruta. Is US trade policy reshaping global supply chains? Journal of International Economics, 152:104011, 2024. 12. K. W. Hankins, M. Momeni, and D. Sovich. Consumer credit and the incidence of tariffs: Evidence from the auto industry. 2024. 13. F. Benguria and F. Saffie. Beyond tariffs: How did China’s state-owned enterprises shape the US-China trade war? 2025. 14. G. Gopinath, P.-O. Gourinchas, A. F. Presbitero, and P. Topalova. Changing global linkages: A new cold war? Journal of International Economics, 153:104042, 2025. 15. K. Handley, F. Kamal, and R. Monarch. Rising import tariffs, falling exports: When modern supply chains meet old-style protectionism. American Economic Journal: Applied Economics, 17(1):208–238, 2025. 16. A. Ignatenko, A. Lashkaripour, L. Macedoni, and I. Simonovska. Making America great again? The economic impacts of Liberation Day tariffs. NBER Working Paper, 2025. 17. A. Rodriguez-Clare, M. Ulate, and J. P. Vasquez. The 2025 trade war: Dynamic impacts across US states and the global economy. NBER Working Paper, 2025. 18. A. Cavallo, P. Llamas, and F. Vazquez. Tracking the short-run price impact of US tariffs. Working Paper, 2025.	Benguria I Felipe Benguria Felipe Saffie Rounding up the Effect of Tariffs on Financial Markets: Evidence from April 2, 2025. NBER Working Paper 34036 http://www.nber.org/papers/ 1050. Cambridge, MA 2025
Tariff Revenue	Alessandria	Alessandria I 2 Tariff Revenue/Alessandria/Ding/Khan/Mix: We* consider four ways to use tariff tax revenue. We let tariff revenue: 1) be rebated lump sum 2) reduce the labor income tax, 3) reduce the capital income tax, or 4) be used to subsidize investment in physical capital. While the first three policies are natural, we believe there are several reasons to consider this last policy. >Tariffs, >Tariff responsivity, >Taxation, >Income tax, First, owing to the sources of capital income, firm profits and rents on capital, this last case relates most closely to fiscal policy work that argues for low capital taxes to stimulate capital accumulation. Second, because of the high import share of capital goods, an increase in the tariff will raise the price of investment, deterring capital accumulation. But the investment subsidy will more than offset this effect. To the extent that these policies are aimed at boosting the capital stock, this is a more effective approach than cutting the capital income tax. And finally, along the transition this type of subsidy generates the strongest output response since it encourages investment, whereas the capital income tax is mainly a windfall for capital owners. We find it is always better to use tariff tax revenue to cut some other distortion rather than rebate it lump sum and the welfare differences can be large. >Welfare/Alessandria. Alessandria I 4 The dynamics of tariff revenue (…) are largely determined by the trade elasticity - the change in trade from a change in tariffs - and the change in tariffs. >Elasticity. The revenue that can be raised by tariffs depends on the path of substitution between imports and domestic goods (or across sources with and without tariffs) and the demand for final goods produced intensively with imported goods. There is much disagreement about the magnitude of substitution across horizons. Recent papers by Alessandria et al. (2025a,c)^(1,2) on US-China imports and trade policy over a long horizon, find a trade elasticity of about 3 in the first year that rises to twelve or more over a longer horizon. More closely related is evidence from the recent US China trade war, Hoang and Mix (2023)⁽³⁾ and Alessandria et al. (2025d)⁽⁴⁾ find a trade elasticity of about 3 on impact, which has almost doubled five years later. They argue that this substitution has been slowed by the possible reversal of the tariffs leading firms to slowly exit the export market. Our model* contains a short-run elasticity of about 3.75 that rises to about 7 from a permanent tariff change. We show that abstracting from the margins leading to these adjustments would overstate revenue gains and lead to very different transition dynamics. In line with these trade dynamics, our model implies that tariffs raise more revenue initially than in the long run as domestic households substitute away from imported goods. The speed of this adjustment is affected by the expected persistence of the tariff. Expectations: When tariffs are perceived as permanent, revenue falls more quickly, as exporting firms in the tariffed country exit the market, causing prices to rise and trade to adjust quickly. By contrast, when tariffs are perceived as temporary, these same firms are more hesitant to leave the market, keeping prices lower and slowing the trade adjustment. Thus, tariff revenue falls more slowly. Alessandria I 23 Similar to the trade war, using tariff revenue to reduce taxes on capital and investment yields larger and more persistent revenue increases. This allows for more tax relief in the US economy, with the investment subsidy around 19 percent and a reduction of the capital income tax to about five percent ((s) In the model). >Trade wars/Alessandria. George A. Alessandria, Jiaxiaomei Ding, Shafaat Y. Khan, and Carter B. Mix. (2025) The Tariff Tax Cut: Tariffs as Revenue NBER Working Paper No. 33784 May 2025 1. George A. Alessandria, Shafaat Yar Khan, Armen Khederlarian, Kim J Ruhl, and Joseph B Steinberg, “Recovering Credible Trade Elasticities from Incredible Trade Reforms,” Working Paper 33568, National Bureau of Economic Research March 2025. 2. George A. Alessandria, Shafaat Khan, and Armen Khederlarian, “Inventories, Integration, Productivity and Welfare,” AEA Papers and Proceedings, May 2025, 115. 3. Hoang, Trang and Carter B. Mix, “Trade Wars and Rumors of Trade Wars: The Dynamic Effects of the U.S.–China Tariff Hikes,” 2023. Mimeo. 4. George A. Alessandria, Kim J. Ruhl, and Joseph B. Steinberg, “Trade Policy Dynamics: Evidence from 60 Years of US-China Trade,” Journal of Political Economy, 2025, 133 (3), 713–749.	Alessandria I George A. Alessandria Jiaxiaomei Ding Shafaat Y. Khan, The Tariff Tax Cut: Tariffs as Revenue NBER Working Paper No. 33784 May 2025 Cambridge, MA 2025
Tariffs	Alessandria	Alessandria I 0 Tariff responsivity/tariffs/Alessandria/Ding/Khan/Mix: We evaluate the aggregate effects of a change in tariffs on the US and world economies when tariff revenue is used to enact fiscal reform. Our model combines a standard international model of fiscal policy with taxes and a dynamic model of trade participation and tariffs that allows for uncertainty and transitions. We consider effects of permanent and temporary tariffs - with and without retaliation - when tariff revenue is used to reduce taxes on capital or labor or to subsidize investment. Revenues: Compared to a lump sum redistribution, using tariff revenue for these reforms always boosts economic activity. Long run/short run: Key to our analysis is the effect of trade dynamics on import substitution, such that tariff revenue after an increase in tariffs is higher in the short run than in the long run. >Long run/short run. GDP: When increasing the tariff by 20 percentage points, the revenue raised is largest when tariffs are temporary, unilateral, and used to subsidize investment, increasing by about 2 percent of GDP. Trade balance: This case also yields a large temporary increase in the trade balance. Welfare: We find the welfare-maximizing unilateral tariff is close to 18 percent when tariff revenue is used to subsidize investment compared to 0 percent under a lump sum redistribution. Capital taxes: We also find cutting capital taxes does not generate as much growth as introducing an investment subsidy since tariffs raise the price of investment substantially. >Taxation. Alessandria I 1 Welfare: The welfare-maximizing tariff depends on the dynamics of tariff revenue and the tariff Laffer curve. >Laffer curve, >Tariffs, >Welfare. Our finding that a country, and the world as a whole, may increase welfare by raising tariffs to generate revenue rather than relying solely on distortionary capital and labor taxes is consistent with the theory of the second best (Lipsey and Lancaster, 1956)⁽¹⁾. >Second-best theory. Taxes: Our main contribution is in our quantitative evaluation of the tradeoff between tariff revenue and other taxes in a dynamic general equilibrium model that nests the key features used in tax analysis (Auerbach and Kotlikoff, 1987⁽²⁾; Mendoza and Tesar, 1998⁽³⁾; House and Shapiro, 2006⁽⁴⁾; Trabandt and Uhlig, 2011)⁽⁵⁾ and dynamic trade analysis (Alessandria and Choi, 2014b⁽⁶⁾; Alessandria et al., 2021⁽⁷⁾; Mix, 2023)⁽⁸⁾. Welfare: For our baseline case, we find that a permanent unilateral increase in the US import tariff to 18 percent from 4 percent maximizes welfare if that revenue is directed to subsidize investment in physical capital. In contrast, if the tariff revenue is just rebated lump sum, as is typically assumed in trade analyses with tariffs, then we find it is unilaterally optimal to lower tariffs or even subsidize imports. These stark differences imply that the estimates of the benefits (or costs) of increasing tariffs ignoring fiscal tradeoffs will be underestimated (exaggerated) in a framework with only lump sum reimbursement of tariff revenues. Moreover, we find the welfare-maximizing unilateral tariff is largely invariant to the features of the economy that takes it away from an efficient allocation provided the tariff revenue is used to offset some other tax. The welfare-maximizing tariff depends on the dynamics of tariff revenue, which is mostly determined by long-run import substitution. Owing to the dynamics of this substitution, the tariff that maximizes the present-value of revenue is about one-half of the tariff that maximizes short-run revenue. >Investments/Alessandria. Alessandria I 25 For simplicity we* only consider the effect of the permanent unilateral tariff that is used to subsidize investment. We find important differences related to the trade elasticity. Likewise, if we use a trade model without trade dynamics or producer creation margins we find substantial differences in the dynamics of the economy. We find that introducing initial trade deficits through asset positions have minor effects on our results. Likewise changing country sizes through differences in productivity, labor, or capital intensity yield similar results. Alessandria I 25 The lower Armington elasticity⁽⁹⁾ lowers the short-run and long-run trade elasticities, leading to less substitution away from imports, more tariff revenue, and a bigger tax cut. >Elasticity, >Long run/short run. There is a slightly smaller depreciation after the tariff is imposed. Investment and thus consumption grow more in the long run. The lower elasticity yields slightly different short-run dynamics. There is a slightly stronger consumption and leisure on impact owing to the standard wealth channel. These have modest effects on the trade balance, but the real exchange rate appreciates a little more in impact. Alessandria I 31 Tariffs/Alessandria/Ding/Khan/Mix: Using a dynamic heterogeneous firm model, we study the aggregate effects of changes in tariffs when the revenue from those tariffs are used to offset other distortionary taxes. Our model combines key elements from the analysis of fiscal and trade policy, including a realistic composition of trade across different types of goods and firm-level trade frictions that lead to firm and aggregate trade dynamics. We find that the aggregate effects of increasing tariffs depend on (1) the persistence of the policy, (2) the extent of foreign retaliation, and (3) the use of tariff revenue. Key to the aggregate response is the dynamics of tariff revenue, which depend on household and firm expectations of persistence and revenue use, which determine how quickly and how much agents substitute away from imports toward domestic goods. A temporary tariff is shown to generate the greatest revenue as agents are slow to substitute, but it can be strongly recessionary without labor tax cuts or investment subsidies. Consistent with a large literature on optimal tariffs, we find that in the absence of foreign retaliation, there can be long-run benefits to raising tariffs, particularly if the revenue is used to offset labor taxes or subsidize investment. >Optimal tariffs, >Trade wars, >International trade, >Investments, >Tariff revenue. In the presence of distortionary taxes, tariffs accompanied by tariff revenue-funded fiscal reform always improves welfare outcomes, sometimes substantially. Even with retaliation, tariff revenue-funded fiscal reforms can greatly mitigate the costs of raising tariffs. Among all reforms, subsidizing investment generally yields the best welfare outcomes. This finding relates to the nature of trade. Given the high use of imported inputs in investment, the price of capital rises in response to tariffs, discouraging capital accumulation even with cuts to the capital tax. An investment subsidy directly offsets the increased price of investment, making it more effective than a cut to capital income taxes. Labor tax cuts are also more effective than capital tax cuts at boosting economic activity in our model given the important role of labor in the creation of new products. We abstract from several key international asymmetries related to net foreign asset positions, capital intensity, and several margins that are likely to influence our quantitative results but can easily be incorporated into our analysis. Preliminary work suggests these margins have small effects holding tariff policy changes constant. However, we do find the welfare-maximizing tariff may differ substantially. Likewise we have focused on a broad and simple tariff. Heterogeneity in import tariffs across trading partner will matter for the aggregate effects and individual countries, but we expect the effects of the distribution of tariffs across trading partners on the US to be relatively small. Our model also ignores how the effects of the tariffs and their incidence are spread across heterogeneous households. Alessandria I 32 (…) our finding that lump sum rebates of tariff revenue always lead to worse outcomes than tax reform suggests existing results may need to be revisited. Indeed, we find the optimal tariff is quite stable to the structure of the model when tariff revenue is used for a tax cut. This envelope condition does not extend to analysis with lump sum redistribution of tariffs. >Tariff history. * George A. Alessandria, Jiaxiaomei Ding, Shafaat Y. Khan, and Carter B. Mix. (2025) The Tariff Tax Cut: Tariffs as Revenue NBER Working Paper No. 33784 May 2025 1. Lipsey, R. G. and Kelvin Lancaster, “The General Theory of Second Best,” The Review of Economic Studies, 1956, 24 (1), 11-32. 2. Auerbach, Alan J. and Laurence J. Kotlikoff, Dynamic Fiscal Policy, Cambridge University Press, 1987. 3. Mendoza, Enrique G. and Linda L. Tesar, “The International Ramifications of Tax Reforms: SupplySide Economics in a Global Economy,” The American Economic Review, 1998, 88 (1), 226-245. 4. House, Christopher L. and Matthew D. Shapiro, “Phased-In Tax Cuts and Economic Activity,” American Economic Review, December 2006, 96 (5), 1835-1849. 5. Trabandt, Mathias and Harald Uhlig, “The Laffer curve revisited,” Journal of Monetary Economics,2011, 58 (4), 305-327. 6. Alessandria, George and Horag Choi, “Establishment heterogeneity, exporter dynamics, and the effects of trade liberalization,” Journal of International Economics, 2014, 94 (2), 207-223. 7. Alessandria, George and Horag Choi, and Kim J. Ruhl, “Trade Adjustment Dynamics and the Welfare Gains from Trade,” Journal of International Economics, 2021, 131, Article 103458. 8. Mix, Carter, “The dynamic effects of multilateral trade policy with export churning,” International Economic Review, 2023, 64 (2), 653–689. 9. Gallaway, Michael P., Christine A. McDaniel, and Sandra A. Rivera, “Short-run and Long-run Industry level Estimates of U.S. Armington Elasticities,” The North American Journal of Economics and Finance, 2003, 14(1), 49-68.	Alessandria I George A. Alessandria Jiaxiaomei Ding Shafaat Y. Khan, The Tariff Tax Cut: Tariffs as Revenue NBER Working Paper No. 33784 May 2025 Cambridge, MA 2025
Tariffs	Benguria	Benguria I 1 Currency Appreciation/depreciation/tariffs/Benguria/Saffie: We find* that a one percentage point higher tariff is associated with a statistically significant 0.23%decline in stock prices. Further, we find no evidence of a dollar appreciation; if anything, higher tariffs are associated with a dollar depreciation, driven by countries with a floating regime. We show this is consistent with a model that allows for trade reallocation and in which exports to the US are invoiced in dollars while exports to the rest of the world are partly invoiced in producer currency. Benguria I 2 Across several specifications with various controls, we find a bilateral depreciation of the dollar. This is driven by countries with a floating exchange rate regime, and is statistically significant only in some of our regressions. This goes against what we would expect from existing theory, which indicates that US tariffs would reduce demand for foreign currencies, leading to a dollar appreciation. If US imports are invoiced in US dollars, we would expect no or small response in the exchange rate. We find that these results are robust to including in our regressions a component capturing the product exclusions in the tariff announcement. >Currency, >Share prices, >Stock prices, >Elasticity. Benguria I 1 Stock prices/tariffs/Benguria/Saffie: We find* that a one percentage point higher tariff is associated with a statistically significant 0.23%decline in stock prices. Further, we find no evidence of a dollar appreciation; if anything, higher tariffs are associated with a dollar depreciation, driven by countries with a floating regime. We show this is consistent with a model that allows for trade reallocation and in which exports to the US are invoiced in dollars while exports to the rest of the world are partly invoiced in producer currency. Benguria I 3 There is (…) recent work that focuses on the link between trade policy and stock prices, in the context of the US-China trade war [Amiti et al.⁽¹⁾, 2024, Huang et al., 2023]⁽²⁾ (…). >International trade, >Trade policy, >Trade wars. * Felipe Benguria Felipe Saffie. (2025) Rounding up the Effect of Tariffs on Financial Markets: Evidence from April 2, 2025. NBER Working Paper 34036 http://www.nber.org/papers/ 1050. Cambridge, MA 02138 July 2025 1. M. Amiti, M. Gomez, S. H. Kong, and D. E. Weinstein. Trade protection, stock-market returns, and welfare. NBER Working Paper No. 28758, 2024. 2. Y. Huang, C. Lin, S. Liu, and H. Tang. Trade networks and firm value: Evidence from the US-China trade war. Journal of International Economics, 145:103811, 2023. Benguria I 13 Tariffs/currency depreciation/Benguria/Saffie: In the standard model of trade and exchange rates, a US tariff would reduce demand for foreign currencies, leading to a dollar appreciation. We develop a simple model* which departs from the standard model by changing its assumptions about invoicing currencies and about trade reallocation in response to tariffs. In both regards, our assumptions are guided by well-established empirical facts. This simple variation delivers the opposite result: a US tariff leads to a dollar depreciation. The assumption about invoicing patterns is the following. Exports to the US are invoiced in US dollars. Exports to the rest of the world are invoiced partly in dollars and partly in the currency of the exporting country (producer currency, using the terminology in the literature). This assumption is consistent with the evidence in the literature on invoice currencies in trade [Boz et al., 2022⁽¹⁾, Gopinath and Rigobon, 2008⁽²⁾]. Benguria I 14 The assumption about export reallocation is that US tariffs lead to a decline in exports to the US but an increase in exports to the rest of the world. This reallocation can be microfounded by assuming an increasing marginal cost. This mechanism is featured in Benguria and Saffie [2024]⁽³⁾ and Almunia et al. [2021](4). Further, Benguria and Saffie [2024]⁽³⁾ show that in there is a substantial amount of trade reallocation in response to trade war tariffs. Combining both assumptions, a tariff imposed by the US on a given country leads to a decrease in exports to the US and an increase in exports to the rest of the world. Because only exports to the rest of the world are invoiced in producer currency, this leads to a higher relative demand for producer currency. This implies an appreciation of the producer currency (i.e., a depreciation of the US dollar). We now provide a mathematical overview. In Appendix Section A.4, we provide the microfoundations for this model by assuming an increasing marginal cost. For this purpose, we extend the model in Benguria and Saffie [2024]⁽³⁾ by including assumptions about invoice currencies. Benguria I 15 Stock prices: This model also predicts a decline in stock prices in response to a US tariff. >US Import tariffs. *Felipe Benguria Felipe Saffie. (2025). Rounding up the Effect of Tariffs on Financial Markets: Evidence from April 2, 2025. NBER Working Paper 34036 http://www.nber.org/papers/ 1050. 1. E. Boz, C. Casas, G. Georgiadis, G. Gopinath, H. Le Mezo, A. Mehl, and T. Nguyen. Patterns of invoicing currency in global trade: New evidence. Journal of International Economics, 136:103604, 2022. 2. G. Gopinath and R. Rigobon. Sticky borders. The Quarterly Journal of Economics, 123(2):531–575, 2008. 3. F. Benguria and F. Saffie. Escaping the trade war: Finance and relational supply chains in the adjustment to trade policy shocks. Journal of International Economics, 152:103987, 2024. 4. M. Almunia, P. Antras, D. Lopez-Rodriguez, and E. Morales. Venting out: Exports during a domestic slump. American Economic Review, 111(11):3611–62, 2021.	Benguria I Felipe Benguria Felipe Saffie Rounding up the Effect of Tariffs on Financial Markets: Evidence from April 2, 2025. NBER Working Paper 34036 http://www.nber.org/papers/ 1050. Cambridge, MA 2025
Tariffs	Ostry	Ostry I 3 Tariffs/Free trade/Furceri/Hannan/Ostry/Rose: More than on any other issue, there is agreement amongst economists that international trade should be free.(1) This view dates back to (at least) Adam Smith and is supported by much reasoning. In general, economists believe that freely-functioning markets best allocate resources, at least absent some distortion, externality or other market failure; competitive markets tend to maximize output by directing resources to their most productive uses. >Market failure, >Markets, >Free markets, >Trade, >International trade, >Competition. Of course, there are market imperfections, but tariffs - taxes on imports - are almost never the optimal solution to such problems. Tariffs encourage the deflection of trade to inefficient producers, and smuggling to evade tariffs; such distortions reduce welfare. >Welfare, >Imperfect competition, cf. >Perfect competition. Consumption: Further, consumers lose more from a tariff than producers gain, so there is “deadweight loss”. The redistributions associated with tariffs tend to create vested interests, so harms tend to persist. Broad-based protectionism can also provoke retaliation which adds further costs in other markets. All these losses to output are exacerbated if inputs are protected, since this adds to production costs. >Production, >Production costs, >Protectionism, >Consumption, >Market Imperfections. Ostry I 4 (…) there are strong theoretical reasons that economists abhor the use of protectionism as a macroeconomic policy; for instance, the broad imposition of tariffs may lead to offsetting changes in exchange rates (Dornbusch, 1974⁽²⁾; Edwards, 1989⁽³⁾). And while the imposition of a tariff could reduce the flow of imports, it is unlikely to change the trade balance unless it fundamentally alters the balance of saving and investment. Further, economists think that protectionist policies helped precipitate the collapse of international trade in the early 1930s, and this trade shrinkage was a plausible seed of World War II. So, while protectionism has not been much used in practice as a macroeconomic policy (especially in advanced countries), most economists also agree that it should not be used as a macroeconomic policy. Times change. Some economies have recently begun to use commercial policy, seemingly for macroeconomic objectives. So it seems an appropriate time to study what, if any, the macroeconomic consequences of tariffs have actually been in practice. Most of the predisposition of the economics profession against protectionism is based on evidence that is either a) theoretical, b) micro, or c) aggregate and dated. 1. For example, see the survey on free trade in Initiative on Global Markets (University of Chicago Booth School of Business): http://www.igmchicago.org/surveys/free-trade. 2. Dornbusch, Rudiger, 1974, “Tariffs and Nontraded Goods,” Journal of International Economics, vol. 4(2), pp. 177-85. 3. Edwards, Sebastian, 1989, Real Exchange Rates, Devaluation, and Adjustment (Cambridge, Massachusetts: MIT Press).	Ostry I Jonathan D. Ostry Davide Furceri Andrew K. Rose, Macroeconomic Consequences of Tariffs. IMF Working Paper. WP/19/9.International Monetary Fund. Washington, D.C. 2019
Tariffs	Trump Administration	Benguria I 1 Currency Appreciation/depreciation/tariffs/Benguria/Saffie: We find* that a one percentage point higher tariff is associated with a statistically significant 0.23%decline in stock prices. Further, we find no evidence of a dollar appreciation; if anything, higher tariffs are associated with a dollar depreciation, driven by countries with a floating regime. We show this is consistent with a model that allows for trade reallocation and in which exports to the US are invoiced in dollars while exports to the rest of the world are partly invoiced in producer currency. Benguria I 2 Across several specifications with various controls, we find a bilateral depreciation of the dollar. This is driven by countries with a floating exchange rate regime, and is statistically significant only in some of our regressions. This goes against what we would expect from existing theory, which indicates that US tariffs would reduce demand for foreign currencies, leading to a dollar appreciation. If US imports are invoiced in US dollars, we would expect no or small response in the exchange rate. We find that these results are robust to including in our regressions a component capturing the product exclusions in the tariff announcement. >Currency, >Share prices, >Stock prices, >Elasticity. Benguria I 1 Stock prices/tariffs/Benguria/Saffie: We find* that a one percentage point higher tariff is associated with a statistically significant 0.23%decline in stock prices. Further, we find no evidence of a dollar appreciation; if anything, higher tariffs are associated with a dollar depreciation, driven by countries with a floating regime. We show this is consistent with a model that allows for trade reallocation and in which exports to the US are invoiced in dollars while exports to the rest of the world are partly invoiced in producer currency. Benguria I 3 There is (…) recent work that focuses on the link between trade policy and stock prices, in the context of the US-China trade war [Amiti et al.⁽¹⁾, 2024, Huang et al., 2023]⁽²⁾ (…). >International trade, >Trade policy, >Trade wars. * Felipe Benguria Felipe Saffie. (2025) Rounding up the Effect of Tariffs on Financial Markets: Evidence from April 2, 2025. NBER Working Paper 34036 http://www.nber.org/papers/ 1050. Cambridge, MA 02138 July 2025 1. M. Amiti, M. Gomez, S. H. Kong, and D. E. Weinstein. Trade protection, stock-market returns, and welfare. NBER Working Paper No. 28758, 2024. 2. Y. Huang, C. Lin, S. Liu, and H. Tang. Trade networks and firm value: Evidence from the US-China trade war. Journal of International Economics, 145:103811, 2023. Benguria I 13 Tariffs/currency depreciation/Benguria/Saffie: In the standard model of trade and exchange rates, a US tariff would reduce demand for foreign currencies, leading to a dollar appreciation. We develop a simple model* which departs from the standard model by changing its assumptions about invoicing currencies and about trade reallocation in response to tariffs. In both regards, our assumptions are guided by well-established empirical facts. This simple variation delivers the opposite result: a US tariff leads to a dollar depreciation. The assumption about invoicing patterns is the following. Exports to the US are invoiced in US dollars. Exports to the rest of the world are invoiced partly in dollars and partly in the currency of the exporting country (producer currency, using the terminology in the literature). This assumption is consistent with the evidence in the literature on invoice currencies in trade [Boz et al., 2022⁽¹⁾, Gopinath and Rigobon, 2008⁽²⁾]. Benguria I 14 The assumption about export reallocation is that US tariffs lead to a decline in exports to the US but an increase in exports to the rest of the world. This reallocation can be microfounded by assuming an increasing marginal cost. This mechanism is featured in Benguria and Saffie [2024]⁽³⁾ and Almunia et al. [2021](4). Further, Benguria and Saffie [2024]⁽³⁾ show that in there is a substantial amount of trade reallocation in response to trade war tariffs. Combining both assumptions, a tariff imposed by the US on a given country leads to a decrease in exports to the US and an increase in exports to the rest of the world. Because only exports to the rest of the world are invoiced in producer currency, this leads to a higher relative demand for producer currency. This implies an appreciation of the producer currency (i.e., a depreciation of the US dollar). We now provide a mathematical overview. In Appendix Section A.4, we provide the microfoundations for this model by assuming an increasing marginal cost. For this purpose, we extend the model in Benguria and Saffie [2024]⁽³⁾ by including assumptions about invoice currencies. Benguria I 15 Stock prices: This model also predicts a decline in stock prices in response to a US tariff. >US Import tariffs. Felipe Benguria Felipe Saffie. (2025). Rounding up the Effect of Tariffs on Financial Markets: Evidence from April 2, 2025. NBER Working Paper 34036 http://www.nber.org/papers/ 1050. 1. E. Boz, C. Casas, G. Georgiadis, G. Gopinath, H. Le Mezo, A. Mehl, and T. Nguyen. Patterns of invoicing currency in global trade: New evidence. Journal of International Economics, 136:103604, 2022. 2. G. Gopinath and R. Rigobon. Sticky borders. The Quarterly Journal of Economics, 123(2):531–575, 2008. 3. F. Benguria and F. Saffie. Escaping the trade war: Finance and relational supply chains in the adjustment to trade policy shocks. Journal of International Economics, 152:103987, 2024. 4. M. Almunia, P. Antras, D. Lopez-Rodriguez, and E. Morales. Venting out: Exports during a domestic slump. American Economic Review, 111(11):3611–62, 2021. Auray I 1 Tariffs/Neo-Keynesianism/Auray/Devereux/Eyquem:* We quantify the macroeconomic effects of the tariff measures announced (but not entirely implemented yet) on Liberation Day (April 2nd, 2025) through the lens of a New-Keynesian two-country model* calibrated to the US and the rest of the world. We study both a unilateral 10pp tariff increase and a global trade war scenario with retalia- tory tariffs of a similar magnitude. In either case, tariffs are always sharply contractionary for US GDP, increasing inflation and widening the trade deficit. Measured in welfare terms a unilateral tariff generates gains for the US due to a large terms of trade appreciation, but these US welfare gains vanish with global retaliation. Three features of the model are critical in the evaluation of the tariff impact - the asymmetry in size and openness between the US and the rest of the world, - the endogenous response of monetary policy to the inflationary effects of tariffs, and - the importance of trade in intermediate goods for the scale of the global response to a tariff shock. Auray I 2 Retaliatory measures taken by trading partners can significantly amplify these effects. Reciprocal tariff hikes raise the cost of traded goods globally, reducing welfare and employment. Recent studies suggest that retaliatory tariffs may entirely offset any initial terms-of-trade gains for the US, leading to welfare losses of up to 1% and a decline in global employment of around 0.5% (Ignatenko et al. (2025)⁽¹⁾; Piermartini and Teh (2005)⁽²⁾). Import tax: Tariffs are taxes on imports. They drive a wedge between pre- and post-tariff prices, reducing demand for imports and depressing prices for exporters in partner countries. At the same time, tariffs increase demand for domestically produced goods, raising their prices. As a result, the terms of trade - defined as the relative price of domestic to foreign goods - improve, potentially benefiting local consumers. Whether this benefit outweighs the cost of tariffs depends on several factors. Welfare gain: If tariff revenues are returned to households - either through lump-sum transfers or lower taxes - there may be a net welfare gain from unilateral tariffs. The extent of this gain critically depends on the price elasticity of imports. >Elasticity, >Welfare gain, >Welfare, >Taxation. While this mechanism applies to trade in final goods, trade in intermediate goods - where firms import inputs for production - operates in a similar fashion. However, the resulting effects now bear directly on production costs rather than consumption. Beyond these demand-side considerations, broader general equilibrium effects must be taken into account. First, retaliation by trade partners may negate the initial terms-of-trade improvement, leaving both sides paying more for traded goods and experiencing a negative income effect.⁽³⁾ >Trade wars. Auray I 3 Second, household responses to tariffs, particularly in terms of labor supply, can affect the overall supply of goods, influencing prices and quantities in equilibrium. Finally, tariff-induced inflationary pressures may lead to monetary tightening, lowering aggregate demand and amplifying the contraction in economic activity.** * Stéphane Auray, Michael B. Devereux, and Aurélien Eyquem. (2025). Tariffs and Retaliation: A Brief Macroeconomic Analysis NBER Working Paper No. 33739 May 2025 See Bergin and Corsetti (2023)⁽⁴⁾, Bianchi and Coulibaly (2025)⁽⁵⁾ for discussions regarding the optimal monetary response to tariff shocks, Bandera et al. (2023)⁽⁶⁾ for a discussion of how monetary policy should respond to supply shocks. 1. Ignatenko, Anna, Ahmad Lashkaripour, Luca Macedoni, and Ina Simonovska. 2025. “Making America Great Again? The Economic Impacts of Liberation Day Tariffs.” Manuscript. 2. Piermartini, Roberta and Robert Teh. 2005. “Demystifying Modelling Methods for Trade Policy.” WTO Discussion Paper 10. 3. Auray, Stéphane, Michael B. Devereux, and Aurélien Eyquem. 2024. “Trade Wars, Nominal Rigidities and Monetary Policy.” Review of Economic Studies Accepted. 4. Bergin, Paul R. and Giancarlo Corsetti. 2023. “The Macroeconomic Stabilization of Tariff Shocks: What is the Optimal Monetary Response?” Journal of International Economics :103758. 5. Bianchi, Javier and Louphou Coulibaly. 2025. “The Optimal Monetary Policy Response to Tariffs.” NBER Working Paper 33560. 6. Bandera, Nicolò, Lauren Barnes, Matthieu Chavaz, Silvana Tenreyro, and Lukas von dem Berge.2023. “Monetary Policy in the Face of Supply Shocks: The Role of Expectations.” ECB Forum conference paper. Aguiar I 2 Tariffs/Economic theories/Aguiar/Amador/Fitzgerald: Prompted** by the recent policy events, there are several new papers on the interactions between tariffs and trade deficits. Pujolas and Rossbach (2024)⁽¹⁾ study the welfare effects of trade wars in an Armington model with trade imbalances, where countries have exogenous international net (but not gross) positions. >Trade wars. Ignatenko et al. (2025)⁽²⁾ quantify the welfare effects of tariffs in a model with trade imbalances where net foreign asset positions are given but trade deficits endogenously respond to policy. Costinot and Werning (2025)⁽³⁾ analyze a dynamic model with fixed terms-of-trade and study the effects of a permanent increase in tariffs on the trade deficit by affecting the incentives of domestic households to save and consume. In a very related and contemporaneous paper, Itskhoki and Mukhin (2025)⁽⁴⁾ argue that absent valuation effects, tariffs do not affect the long-run trade deficit. 1. Pujolas, Pau and Jack Rossbach (Nov. 2024). Trade Wars with Trade Deficits. en. SSRN Scholarly Paper. Rochester, NY. 2. Ignatenko, Anna et al. (2025). “Making America Great Again? The Economic Impacts of Liberation Day Tariffs”. 3. Costinot, Arnaud and Ivan Werning (Apr. 2025). ´ How Tariffs Affect Trade Deficits. Working Paper. 4. Itskhoki, Oleg and Dmitry Mukhin (2025). “Can a tariff be used to close a long-run trade deficit?” Kehoe, Timothy J (1998). “Uniqueness and Stability”. Elements of General Equilibrium Analysis. Ed. by Alan P Kirman. Basil Blackwell, pp. 38–87.	Benguria I Felipe Benguria Felipe Saffie Rounding up the Effect of Tariffs on Financial Markets: Evidence from April 2, 2025. NBER Working Paper 34036 http://www.nber.org/papers/ 1050. Cambridge, MA 2025 Devereux I Stéphane Auray Michael B. Devereux Aurélien Eyquem, Tariffs and Retaliation: A Brief Macroeconomic Analysis NBER Working Paper No. 33739 May 2025 Cambridge, MA 2025 Aguiar I Mark A. Aguiar Amador Doireann Fitzgerald, Tariff Wars and Net Foreign Assets. NBER Working paper 33743.Doi 10.3386/w33743. May 2025. Cambridge, MA 2025
Tax Substitution	Economic Theories	Parisi I 323 Tax evasion/tax substitution/Economic theories: The literature on optimal redistributional instruments - both in law and economics and in public finance - is dominated by the tax substitution argument. The tax substitution argument shows that any redistribution effected outside the labor earnings tax system can be better accomplished by making appropriate adjustments to labor earnings taxation. >Tax systems. The implication is that the government should pursue distributional goals exclusively through the labor earnings tax system, while setting other policies without regard to their distributional impact. Both proponents and detractors of the tax substitution argument recognize that, like any argument, it requires assumptions. Controversy surrounds the nature of these assumptions. Proponents of the tax substitution argument refer to its key assumption as a “qualification” (Kaplow and Shavell, 2000⁽¹⁾, p. 822). Adopting the assumption is said to generate the “natural model” (Kaplow and Shavell, 2000⁽¹⁾, p. 821). Conversely, prescriptions of the model sans assumption are viewed as “exotic” (Bankman and Weisbach, 2007⁽²⁾, p. 793), or as “theoretical curiosities” (Kaplow and Shavell, 2000⁽¹⁾, p. 822). Vs: Critics of the tax substitution argument regard its key assumption as result-driving, empirically ungrounded, and indeed facially implausible once clearly revealed (Sanchirico, 1997⁽³⁾; 2000⁽⁴⁾, p. 813; 2001⁽⁵⁾, p. 1058; 2010a⁽⁶⁾, pp. 874–875, 940; 2011a⁽⁷⁾). 1. Kaplow, Louis and Steven M. Shavell (2001). “Fairness Versus Welfare.” Harvard Law Review 114: 961–1388. 2. Bankman, Joseph and David A. Weisbach (2006). “The Superiority of an Ideal Consumption Tax over an Ideal Income Tax.” Stanford Law Review 58: 1413–1456. 3. Sanchirico, Chris William (1997). “Taxes Versus Legal Rules as Instruments for Equity: A More Equitable View.” Discussion Paper No. 9798-04, Columbia Economics Department, available at . 4. Sanchirico, Chris William (2000). “Taxes Versus Legal Rules as Instruments for Equity: A More Equitable View.” Journal of Legal Studies 29: 797–820. 5. Sanchirico, Chris William (2001). “Deconstructing the New Efficiency Rationale.” Cornell Law Review 86: 1003–1089. 6. Sanchirico, Chris William (2010a). “A Critical Look at the Economic Argument for Taxing Only Labor Income.” Tax Law Review 63: 867–956. Web appendix available at . 7. Sanchirico, Chris William (2011a). “Tax Eclecticism.” Tax Law Review 64: 149–228. Web appendix available at . Chris William Sanchirico. “Optimal Redistributional Instruments in Law and Economics”. In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University.	Parisi I Francesco Parisi (Ed) The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017
Technical Progress	Harcourt	Harcourt I 63 Technical Progress/capital-labour ratio/Harcourt: With the embodied view of technical progress, whereby gross investment is the medium for transmitting both technical change and capital-labour substitution to the capital stock, so bringing about productivity growth, the capital stock consists at any moment of time of layers of fossils, or vintages. For “embodied view” see >Terminology/Harcourt. >Capital structure, >Production, >Production function. Harcourt I 64 Technology/investments: Each layer represents the amount of gross investment in the technique that was chosen under the pull of expected relative factor prices, technical advances and demand conditions at the time when the investments were made. Ex ante/ex post: There are, on this view, ex ante substitution possibilities - when making investment decisions businessmen have to decide where on the f(i) function they wish to be - but not necessarily ex post possibilities. Even if the initial substitution possibilities remain open ex post, one variant of the vintage approach assumes that nevertheless these possibilities are unaffected by later technical advances. For “vintage approach” see >Terminology/Harcourt. Investments: The amount of new investment which is done and the total amount and number of vintages that are in use, at any moment of time, are determined, at the industry level, by demand and supply conditions, and by the condition that only vintages with positive to zero quasi-rents are to be kept working. Harcourt I 65 Output expands until the price of the product is such that only the normal rate of profits is expected to be earned on new vintages. Labour: Labour requirements per unit of output rise as the age of the vintage increases. The real-wage level (which is rising over time) therefore determines the scrapping margin in each industry and in the economy as a whole: see Salter [1960⁽¹⁾, 1965⁽²⁾], Sargent [1968]⁽³⁾. In this way, technical progress, productivity changes and distributive shares may be analysed as historical processes without there being any need to measure capital stocks as such: see, for example, Salter [1965]⁽²⁾. Historical processes/Marshall/Harcourt: This procedure is an extremely neat solution of the conundrum associated with the application of Marshallian long-period analysis to actual historical processes. >Alfred Marshall. Clearly, it is impossible to suppose that other things will be equal, i.e. stand still long enough to allow the economy (or even an industry) to establish, overall, the optimum capital-labour and capital-output ratios implied by expectations concerning prices, costs and levels of sales at any moment of time, i.e. we cannot expect ex ante and ex post production functions ever fully to coincide one with another. >Economic models, >Idealization. Price/output: Therefore the notion that both actual prices and outputs could be at levels which offer only the normal rate of profits on the entire capital stock seems to be a non-starter; indeed, it is difficult, if not impossible to conceive of any uniform or stable link between conceptual normal values and the values of the movements of actual economic series over time, with the exception of prices and provided that we take the not implausible view that expectations almost always turn out to be falsified, often by large margins. However, if we assume that 'other things' have to stand still only long enough to allow suitable adjustments to be made at the margins of the capital stocks, while the bulk of production is done by existing vintages which must take whatever quasi-rents they can get (even if they are disappointing in relation to the high hopes that were held when the machines concerned were first installed), we may salvage Marshall's insight and add a new dimension of realism - and relevance - to his brand of period analysis. The time-period involved has shrunk greatly and provided that innovations do not roll over us in great waves, crowding in on one another, we may generate values of key theoretical variables -gross investment, output, productivity, wages, profits, as well as priceswhich reasonably may be said to have as their empirical counterparts the trend values of the statistics available on them. >Expectations/Harcourt. Harcourt I 66 Terminology/Harcourt: (…) [we distinguish between] the malleable capital world in which technical progress is disembodied and the vintage world where it is embodied (…). >Economic models. 1. Salter, W. E. G. [1960] Productivity and Technical Change (Cambridge: Cambridge University Press). 2. Salter, W. E. G. [1965] 'Productivity Growth and Accumulation as Historical Processes', Problems in Economic Development, ed. by E. A. G. Robinson (London: Macmillan), pp. 266-91. 3. Sargent, J. R. [1968] 'Recent Growth Experience in the Economy of the United Kingdom', Economic Journal, Lxxvin, pp. 19-42.	Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972
Technical Progress	Jorgenson	Harcourt I 83 Technical progress/productivity/Jorgenson/Griliches/Harcourt: (…) Jorgenson and Griliches [1966⁽¹⁾ 1967⁽²⁾] on overall factor productivity and technical change: Though neoclassical to their finger tips - they assume perfect competition and constant returns to scale, factors are paid their marginal products and price ratios of commodities equal marginal rates of transformation - they argue that the finding that the bulk of the rise in output per man is due to 'technical progress' results from the faulty measurement of input services in the aggregate production function. (VsSolow). >Aggregate production function, >Neoclassical economics. Harcourt: Correcting for this they advance the (refutable) hypothesis that the rise in total output is largely explained by the growth of total inputs and not by improvements in them (or, rather, that the improvements are subsumed within the inputs by correct measurement). Their measure of the rate of growth of total factor productivity (which on their hypothesis should be approximately - nil) is a quantum index of growth in outputs, each weighted by ist value share in total output, less a similar index of the rates of growth of input services, weighted in a similar fashion. Aggregate production function: A shift in the aggregate production function occurs if this rate of growth is greater than zero, otherwise all growth is due to movements along a given production function (in n-dimensional space). The wheel has turned 360°: an implication of Solow's findings in 1957⁽³⁾ was that the traditional economic factors, capital accumulation and deepening, had bit parts only in the growth saga. The backlash, foreseen and partly cheered on by Hicks [1960]⁽⁴⁾, has come, first, through embodied technical progress and, now, through the Jorgenson-Griliches script. The traditional economic factors and neoclassical processes are again the stars and the other factors have been left with virtually no role at all - they have been written out of the script. A comment by Smithies [1962]⁽⁵⁾ on Solow's [1962b]⁽⁶⁾ paper on investment and the rate of economic growth seems relevant here: „Perhaps the whole problem is too complicated for adequate reflection in a formal model. In that event, we could do worse than re-read Adam Smith (or possibly read him for the first time). In Book I, he said that the division of labour was the mainspring of economic progress; and in Book II, that accumulation was a necessary condition for increased division of labour. How far have we got beyond that?“ (p. 92.) Harcourt: The essence of the approach of Jorgenson and Griliches is the hypothesis that all observed relative product and factor prices may be interpreted as pairs of marginal rates of transformation, such as would be thrown up by the workings of competitive markets containing utility-maximizing consumers and profit-maximizing, cost-minimizing businessmen. Harcourt I 84 If this identification of observed with theoretical variables is accepted, we may use the quantum index of the growth in total output and total inputs (or their 'dual', the indexes of their respective total prices) to test the hypothesis that the growth is nil. It must be stressed that this is a refutable hypothesis and not, as Denison [1966](7), p. 76, argued, a consequence of national-accounting identities. His confusion arose because he viewed the change in the inputs (and the outputs) as the sum of the increases in both prices and quantities whereas the essence of Jorgenson and Griliches's definition is that either the (changes in) quantities or (those in) prices {but not both together) are combined into aggregate indexes and compared one with another. It is therefore possible to start with the national-accounting identity, total output (in value terms) equals total input (similarly measured), and yet end with a refutable hypothesis, one which reflects moreover Jorgenson and Griliches's views as to how the values of the observed prices arose in the first place. Harcourt I 85 VsGriliches/VsJorgenson/Harcourt: The estimates of the capital services (which, in principle, should be, say, machine hours) have to be done by chains of inference and the use of assumptions, the most dubious of which are that competitive producer equilibrium conditions were in fact satisfied and that all machines worked to the same proportion of their capacities, as given by the power industries' performance. (The latter assumption is devastatingly criticized by Denison [1966]⁽⁷⁾, who gets his own back with interest.) The price of the capital service of each good is the price of each investment good multiplied by the rate of return on all capital plus the rate of depreciation and an adjustment for any capital gains on each capital good. The rate of return on all capital is the non-wage share of value added inclusive of capital gains divided by the value of the accumulated capital stocks; the whole procedure is a statistical reflection of the neoclassical procedure as outlined by Champernowne [1953-4⁽⁸⁾] and Swan [1956]⁽⁹⁾. >D. G. Champernowne, >T. W. Swan. This approach makes explicit the important point that flows of services, not stocks of factors, actually produce output, a point with which no one would disagree (but the practical significance of which is much reduced by' the assumption of uniform capacity working). Whether they would accept the method of aggregation of the services is another matter. 1. Griliches, Z. and Jorgenson, D. W. [1966] 'Sources of Measured Productivity Change: Capital Input', American Economic Review, Papers and Proceedings, LVI, 2. Jorgenson, D. W. and Griliches, Z. [1967] 'The Explanation of Productivity Change', Review of Economic Studies, xxxiv, pp. 249-83. 3. Solow, R. M. [1957] 'Technical Change and the Aggregate Production Function', Review of economics and Statistics, xxxix, pp. 312-20. 4. Hicks, J. R. [1960] 'Thoughts on the Theory of Capital-The Corfu Conference', Oxford Economic Papers, xn, pp. 123-32. 5. Smithies, A. [1962] 'Comment on Solow', American Economic Review, Papers and Proceedings, LII, pp. 91-2. 6. Solow, R. M. [1962b] 'Technical Progress, Capital Formation and Economic Growth', American Economic Review, Papers and Proceedings, LII, pp. 76-86. 7. Denison, E. F. [1966] 'Capital Theory: A Discussion', American Economic Review, Papers and Proceedings, LVI, pp. 76-8. 8. Champernowne, D. G. [1953-4] 'The Production Function and the Theory of Capital: A Comment', Review of Economic Studies, xxi, pp. 112-35 9. Swan, T. W. [1956] 'Economic Growth and Capital Accumulation', Economic Record, xxxn, pp. 334-61.	Jorgenson I Dale Jorgenson Productivity, Volume 1: Postwar U.S. Economic Growth (The MIT Press) Cambridge, MA 2008 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972
Temperament	Developmental Psychology	Corr 181 Temperament/Developmental Psychology/Rothbart: Developmental research to date indicates that the reactive systems of emotion and orienting are in place before the development of executive effortful attention (Posner and Rothbart 2007⁽¹⁾; Rothbart and Bates 2006)⁽²⁾. Early forms of what will later be called Extraversion or Surgency are present in the smiling and laughter and rapid approach of infants to a novel object by six months, and measures of approach tendencies and smiling and laughter at this early age predict children’s extraverted tendencies at seven years (Rothbart, Derryberry and Hershey 2000)⁽³⁾. >Extraversion, >Introversion, >Personality types. Throughout early development, children who are more extraverted also appear to express greater anger and frustration, and are more prone to externalizing disorders (Rothbart and Bates 2006⁽²⁾; Rothbart and Posner 2006)⁽⁴⁾. Lengua, Wolchik, Sandler and West (2000)⁽⁵⁾ found that low positivity and high impulsivity in children, as well as high rejection and inconsistency in parenting, predicted conduct problems. High negative emotionality and low positive emotionality in children and rejection and inconsistency in parenting predicted child depression. Inconsistent discipline had a stronger association with conduct problems and depression for children who were high in impulsivity than children who were lower in impulsivity. 1. Posner, M. I. and Rothbart, M. K. 2007. Educating the human brain. Washington, DC: American Psychological Association 2. Rothbart, M. K., and Bates, J. E. 2006. Temperament in children’s development, in W. Damon and R. Lerner (Series eds.) and N. Eisenberg (Vol. ed.), Handbook of child psychology, vol. III, Social, emotional, and personality development, 6th edn, pp. 99–166. Hoboken, NJ: Wiley 3. Rothbart, M. K., Derryberry, D. and Hershey, K. 2000. Stability of temperament in childhood: laboratory infant assessment to parent report at seven years, in V. J. Molfese and D. L. Molfese (eds.), Temperament and personality development across the life span, pp. 85–119. Hillsdale, NJ: Erlbaum 4. Rothbart, M. K. and Posner, M. I. 2006. Temperament, attention, and developmental psychopathology, in D. Cicchetti and D. Cohen eds., Developmental psychopathology, vol. II, Developmental neuroscience, 2nd edn, pp. 465–501. Hoboken, NJ: Wiley 5.Lengua, L. J., Wolchik, S. A., Sandler, I. N. and West, S. G. 2000. The additive and interactive effects of parenting and temperament in predicting adjustment problems of children of divorce, Journal of Clinical Child Psychology 29: 232–44 Mary K. Rothbart, Brad E. Sheese and Elisabeth D. Conradt, “Childhood temperament” in: Corr, Ph. J. & Matthews, G. (eds.) 2009. The Cambridge Handbook of Personality Psychology. New York: Cambridge University Press	Link to abbreviations/authors
Theories	Feyerabend	I 35 Theory/Feyerabend: there is no one single interesting theory that corresponds with all known facts in its field. I 39 Theory/Feyerabend: any theory that contradicts another outside of the observations is supported by exactly the same observations and therefore also acceptable. I 84 Theory/Hume/Feyerabend: theories cannot be derived from facts. If we are to demand that only theories be admitted that follow from the facts, no theory remains at all. I 86 Theory/Feyerabend: a theory may not be incompatible with the data, because it is not correct, but because the data are contaminated! They could contain, and analyzed, perceptions, which correspond only partially to external processes, or be clad in old conceptions, or judged by backward auxiliary sciences. I 87 Theory/Observation Language/Feyerabend: even the most thorough examination of an observation sentence does not disturb the concepts by which it is expressed or the structure of the perception image. How can we examine something that is constantly used and presupposed in every statement? I 121 Lakatos: pro ad-hoc theories. Theory/Popper: new theories have - and this must be so - excess content, which - and this should not be so - is gradually infected by ad-hoc adjustments. Theory/Lakatos: new theories are - necessarily - ad-hoc. Excess content is created bit by bit by gradually extending the theories to new facts and areas. >Content, >Meaning change, >Method, >Facts, >Observation, >Incommensurability.	Feyerabend I Paul Feyerabend Against Method. Outline of an Anarchistic Theory of Knowledge, London/New York 1971 German Edition: Wider den Methodenzwang Frankfurt 1997 Feyerabend II P. Feyerabend Science in a Free Society, London/New York 1982 German Edition: Erkenntnis für freie Menschen Frankfurt 1979
Theories	Lakatos	Feyerabend I 238 Lakatos/Feyerabend: also Lakatos' insightful attempt to establish a methodology that takes the historical reality of the sciences seriously, but which nevertheless subjects them to a control on the basis of regularities discovered in itself, is not excluded from this conclusion: 1. There are not the regularities to which Lakatos refers to, he idealizes the sciences just as his predecessors. 2. If the regularities were regularities of the sciences, and therefore useless to the "objective" judgment. 3. Lakatos' regularities are only a finery behind which an anarchic process is basically concealed. >Regularity, >Objectivity/Lakatos. I 239 Falsification/LakatosVsPopper/Feyerabend: some of the most famous falsifications were anything but that. And, moreover, completely irrational. >Falsification. I 240 Lakatos/Feyerabend: Thesis: one should grant theories a "breathing space": in the evaluation counts the development of theories over a long period of time and not the current form. Moreover, methodological standards are not beyond criticism. --- Hacking I 206 Theories/Knowledge/HackingVsLakatos: Instead of increase of knowledge, it should mean: increase of theories! Feyerabend/VsLakatos: his "methodology" is of no use when one needs advice on current research. Schurz I 196 Theory revision/Lakatos/Schurz: (Lakatos 1974, 129ff) Methodology of scientific research programs: two assumptions: 1. "Immunization": it is always possible to save the core of a theory in the event of a conflict with the experience by making adjustments to the periphery. I 197 2. "Protective Belt": every (physical) theory needs auxiliary hypotheses (excluding ceteris paribus hypotheses) to provide empirical predictions. These lie like a protective belt in the outer periphery around the center and core. Conflicts with experience can then be eliminated by replacing or dropping an auxiliary hypothesis. Definition Anomaly/Lakatos: an observation date which contradicts the entire theory (core + periphery). Solution: Definition ad hoc hypothesis: assumes more complex system conditions in which unknown disturbing factors are postulated. >Hypotheses, >Additional hypotheses. Vs: Problem: this does not explain the different date. That is, it remains an anomaly even after the introduction of the ad hoc hypothesis! Ad hoc/Lakatos: such adjustments are only legitimate if they are scientifically progressive. They must have new empirical content. I 198 Falsification/LakatosVsPopper: a theory version is only falsified when there is a progressive new version (with new empirical content). That is, there is no "immediate rationality" (instant decision) which theory is better. This can only be seen in historical development. Definition Research Program/Lakatos: hard theoretical core along with a negative and a positive heuristics. Definition negative heuristics/Lakatos: Adaptations are not made in the core, but only at the periphery. However, in the course of a degenerative development the modus tollens hits can also be directed against the core. Definition positive heuristics/Lakatos: a program that allows more and more complex theoretical models or system conditions for the core to deal with unruly data. I 199 Theory version/Schurz: core plus periphery. I 200 Definition Falsification/Schurz: a theory version is falsified, iff. some of the phenomena derived deductively from it were falsified by actual observational sentences. ((s) Schurz always speaks of sentences instead of observations.) I 202 Verisimilitude/SchurzVs/Failure/Success/Theory: the concept of failure has the advantage that it is not the epistemological-conflicted consequences of the theory that are understood, but the phenomena. The concept of truth is based only on the consequences. I 206 Definition tacking paradox/Lakatos/Schurz: the possibility to increase the empirical content of a theory version by the mere conjunctive addition of some empirically unchecked assertion. Solution/Lakatos: the connection of an auxiliary hypothesis creating a new empirical content with the previous theory must be more intimate than that of a mere conjunction. I 207 Solution: the theory T must be homogeneous with respect to the empirical content: Definition Homogeneity/Theory/Schurz: a factorization ((s) division) of T with respect to E (T) is not possible. Logical form: subdivision of T and E(T) into two disjoint subsets T1UT2 = T and E1UE2 = E (T) so that T1 implies all phenomena in E1 and T2 implies all phenomena in E2. If this is possible, the theory is heterogeneous. Any theory obtained by irrelevant amplification can be factored in this sense. A connection of the theory T with this gain H is empirically not creative.	Laka I I. Lakatos The Methodology of Scientific Research Programmes: Volume 1: Philosophical Papers (Philosophical Papers (Cambridge)) Cambridge 1980 Feyerabend I Paul Feyerabend Against Method. Outline of an Anarchistic Theory of Knowledge, London/New York 1971 German Edition: Wider den Methodenzwang Frankfurt 1997 Feyerabend II P. Feyerabend Science in a Free Society, London/New York 1982 German Edition: Erkenntnis für freie Menschen Frankfurt 1979 Hacking I I. Hacking Representing and Intervening. Introductory Topics in the Philosophy of Natural Science, Cambridge/New York/Oakleigh 1983 German Edition: Einführung in die Philosophie der Naturwissenschaften Stuttgart 1996 Schu I G. Schurz Einführung in die Wissenschaftstheorie Darmstadt 2006
Trade Sanctions	Itskhoki	Itskhoki I 11 Trade Sanctions/Itskhoki/Ribakova: It is natural to assume that a country in full economic autarky is entirely insensitive to international economic sanctions. The most immediate departure from autarky is balanced international trade with a closed capital account. In recent history, even the most rogue regimes did not come close to full economic autarky, and essentially every country in the world participates in some form of international trade, even when shielded from international financial markets. This is sufficient for international economic sanctions to have a clear and measurable impact according to standard trade theory. We start the analysis from the following key principles of international trade (see, for example, the discussion in Helpman 2011)⁽¹⁾: 1. Trade results in overall welfare gains for both trade partners. This proposition emerges robustly across a variety of modeling frameworks, and the departures from this are generally of a pathological nature. Itskhoki I 12 2. Despite aggregate gains, trade generally results in a distributional conflict. That is, there are winners and losers from trade in each country, but the surplus of winners is usually sufficient to compensate the losers provided income transfers are feasible. 3. Adjustment to trade shocks, whether positive (like trade liberalizations) or negative (like trade wars and sanctions), is associated with a period of costly transition in which a part of the gains from trade is dissipated or losses are amplified. Trade sanctions operate via mechanisms #1 and #3, and “smart” trade sanctions are meant to also engage mechanism #2 (see Fajgelbaum et al. 2020)⁽²⁾. >Sanctions, >Sanctions consequences, >Sanctions debate, >Sanctions effectiveness, >Sanctions evasion, >Sanctions history, >Sanctions policies, >Sanctions theory, >Trade sanctions, >Financial sanctions. Welfare costs of sanctions under balanced trade: Arkolakis et al. (2012⁽³⁾; henceforth ACR) propose a simple way to quantify welfare gains from trade as: (1) Gain from trade for country i = 1 − λ_ii 1/ε where λii is the expenditure share on domestic goods, hence 1−λ_iiis the expenditure share on imports, and ε is the trade elasticity. >Elasticity. Formula (1) applies across a number of widely-used models of international trade that give rise to a gravity structure of international trade flows, for which there is substantial empirical evidence.* Intuitively, formula (1) emphasizes two main forces – how much the country trades, 1−λ_ii, and how easy it is to substitute the imported goods for domestically produced goods, . The effect of a trade shock can be judged by how much it affects the expenditure share on imports: (2) Change in welfare of country i = − 1 ε d log λ_ii Note how the assumption of trade balance results in the import share being a sufficient statistic for welfare without conditioning on the effect on exports. Also note that formula (2) characterizes simultaneously the effect on welfare, real consumption and real GDP of the country, which may or may not be the main objective of sanctions. Itskhoki I 13 Given balanced trade, changes in real consumption also corresponds to the changes in the real purchasing power of income. Hence, if monetary policy stabilizes the local nominal wages, then it also corresponds to the inverse of consumer price inflation. Formulas (1) and (2) can be extended to multiple-sector economies and economies with complex input-output linkages (see Costinot and Rodríguez-Clare 2014⁽⁴⁾ and Baqaee and Farhi 2024⁽⁵⁾), emphasizing the ability to substitute various foreign goods and inputs with the domestic ones. The easier it is to substitute to domestic production, the smaller are the gains from trade, or equivalently the smaller are the losses from trade sanctions. >Sanctions evasion. Conversely, the presence of certain bottle-neck goods or industries, which are nearly impossible to substitute away from and which are centrally used in the production of other goods, may result in extreme losses from fragmentation (Ossa 2015)⁽⁶⁾. Measurements: Another important insight is that the change in the aggregate (or sectoral) trade share is largely a sufficient statistic to evaluate the impact of a given trade policy on aggregate welfare (sectoral output). This makes it easy to immediately evaluate the impact of policies from trade data (provided estimates of trade elasticities), which is generally easier to procure than macro data. Sanctions evasion: Furthermore, substitution across external trade partners that leave trade shares unchanged (assuming ε > 1), do not change welfare or allocations. Therefore, it is the aggregate trade share, not bilateral trade shares with specific trade partners, that is generally (but not always) most informative. The ability to substitute goods and input sourcing away from sanctioning coalition to allied and third-world countries grossly limits the effectiveness of sanctions. Itskhoki I 14 Size of countries The baseline result (1) has a clear implication about the role of the size of countries, both imposing and receiving sanctions. Historically, a reasonable assumption is that a country under sanctions is small, and hence there are no costs to sender. In general, however, formula (1) clarifies that the costs are two-way and inversely proportional to country size. >Lerner Symmetry Theorem. Gravity equation in international trade predicts that larger countries are connected by larger trade flows and trade flows dissipate with distance between countries. Formally, ACR show that ε corresponds to the trade cost elasticity (which are conventionally linked to the geographical distance and other trade barriers) in the gravity equation after controlling for other economic determinants of trade (such as the size of countries and their trade network). See Head and Mayer (2014⁽⁷⁾) and Costinot and Rodriguez-Clare (2014)⁽⁴⁾. * Noteworthy, Russia immediately classified many sources of internal macroeconomic and trade data. Nonetheless, it was still possible to assess international trade with Russia using the data of its trade partners. 1. Helpman, Elhanan. 2011. Understanding Global Trade. Harvard University Press. https://doi.org/10.2307/j.ctt24hhh9. 2. Fajgelbaum, Pablo D, Pinelopi K Goldberg, Patrick J Kennedy, and Amit K Khandelwal. 2020. “The Return to Protectionism.” The Quarterly Journal of Economics 135 (1): 1–55. https://doi.org/10.1093/qje/qjz036. 3. Arkolakis, Costas, Arnaud Costinot, and Andrés Rodríguez-Clare. 2012. “New Trade Models, Same Old Gains?” American Economic Review 102 (1): 94–130. https://doi.org/10.1257/aer.102.1.94. 4. Costinot, Arnaud, and Andrés Rodríguez-Clare. 2014. “Chapter 4 - Trade Theory with Numbers: Quantifying the Consequences of Globalization.” In Handbook of International Economics, edited by Gita Gopinath, Elhanan Helpman, and Kenneth Rogoff, 4:197–261. 5. Baqaee, David Rezza, and Emmanuel Farhi. 2024. “Networks, Barriers, and Trade.” Econometrica 92 (2): 505–41. https://doi.org/10.3982/ECTA17513. 6. Ossa, Ralph. 2015. “Why Trade Matters after All.” Journal of International Economics 97 (2): 266–77. https://doi.org/10.1016/j.jinteco.2015.07.002. 7. Head, Keith, and Thierry Mayer. 2014. “Chapter 3 - Gravity Equations: Workhorse,Toolkit, and Cookbook.” In Handbook of International Economics, edited by Gita Gopinath, Elhanan Helpman, and Kenneth Rogoff, 4:131–95. Handbook of International Economics. Elsevier. https://doi.org/10.1016/B978-0-444-54314-1.00003-3.	Itskhoki I Oleg Itskhoki Elina Ribakova The Economics of Sanctions: From Theory Into Practice. Brookings Papers on Economic Activity, Fall 2024. The Brookings Institution 2024
Trade Sanctions	Ribakova	Itskhoki I 11 Trade Sanctions/Itskhoki/Ribakova: It is natural to assume that a country in full economic autarky is entirely insensitive to international economic sanctions. The most immediate departure from autarky is balanced international trade with a closed capital account. In recent history, even the most rogue regimes did not come close to full economic autarky, and essentially every country in the world participates in some form of international trade, even when shielded from international financial markets. This is sufficient for international economic sanctions to have a clear and measurable impact according to standard trade theory. We start the analysis from the following key principles of international trade (see, for example, the discussion in Helpman 2011)⁽¹⁾: 1. Trade results in overall welfare gains for both trade partners. This proposition emerges robustly across a variety of modeling frameworks, and the departures from this are generally of a pathological nature. Itskhoki I 12 2. Despite aggregate gains, trade generally results in a distributional conflict. That is, there are winners and losers from trade in each country, but the surplus of winners is usually sufficient to compensate the losers provided income transfers are feasible. 3. Adjustment to trade shocks, whether positive (like trade liberalizations) or negative (like trade wars and sanctions), is associated with a period of costly transition in which a part of the gains from trade is dissipated or losses are amplified. Trade sanctions operate via mechanisms #1 and #3, and “smart” trade sanctions are meant to also engage mechanism #2 (see Fajgelbaum et al. 2020)⁽²⁾. >Sanctions, >Sanctions consequences, >Sanctions debate, >Sanctions effectiveness, >Sanctions evasion, >Sanctions history, >Sanctions policies, >Sanctions theory, >Trade sanctions, >Financial sanctions. Welfare costs of sanctions under balanced trade: Arkolakis et al. (2012⁽³⁾; henceforth ACR) propose a simple way to quantify welfare gains from trade as: (1) Gain from trade for country i = 1 − λ_ii 1/ε where λii is the expenditure share on domestic goods, hence 1−λ_iiis the expenditure share on imports, and ε is the trade elasticity. >Elasticity. Formula (1) applies across a number of widely-used models of international trade that give rise to a gravity structure of international trade flows, for which there is substantial empirical evidence.* Intuitively, formula (1) emphasizes two main forces – how much the country trades, 1−λii, and how easy it is to substitute the imported goods for domestically produced goods, . The effect of a trade shock can be judged by how much it affects the expenditure share on imports: (2) Change in welfare of country i = − 1 ε d log λ_ii Note how the assumption of trade balance results in the import share being a sufficient statistic for welfare without conditioning on the effect on exports. Also note that formula (2) characterizes simultaneously the effect on welfare, real consumption and real GDP of the country, which may or may not be the main objective of sanctions. Itskhoki I 13 Given balanced trade, changes in real consumption also corresponds to the changes in the real purchasing power of income. Hence, if monetary policy stabilizes the local nominal wages, then it also corresponds to the inverse of consumer price inflation. Formulas (1) and (2) can be extended to multiple-sector economies and economies with complex input-output linkages (see Costinot and Rodríguez-Clare 2014⁽⁴⁾ and Baqaee and Farhi 2024⁽⁵⁾), emphasizing the ability to substitute various foreign goods and inputs with the domestic ones. The easier it is to substitute to domestic production, the smaller are the gains from trade, or equivalently the smaller are the losses from trade sanctions. >Sanctions evasion. Conversely, the presence of certain bottle-neck goods or industries, which are nearly impossible to substitute away from and which are centrally used in the production of other goods, may result in extreme losses from fragmentation (Ossa 2015)⁽⁶⁾. Measurements: Another important insight is that the change in the aggregate (or sectoral) trade share is largely a sufficient statistic to evaluate the impact of a given trade policy on aggregate welfare (sectoral output). This makes it easy to immediately evaluate the impact of policies from trade data (provided estimates of trade elasticities), which is generally easier to procure than macro data. Sanctions evasion: Furthermore, substitution across external trade partners that leave trade shares unchanged (assuming ε > 1), do not change welfare or allocations. Therefore, it is the aggregate trade share, not bilateral trade shares with specific trade partners, that is generally (but not always) most informative. The ability to substitute goods and input sourcing away from sanctioning coalition to allied and third-world countries grossly limits the effectiveness of sanctions. Itskhoki I 14 Size of countries The baseline result (1) has a clear implication about the role of the size of countries, both imposing and receiving sanctions. Historically, a reasonable assumption is that a country under sanctions is small, and hence there are no costs to sender. In general, however, formula (1) clarifies that the costs are two-way and inversely proportional to country size. >Lerner Symmetry Theorem. Gravity equation in international trade predicts that larger countries are connected by larger trade flows and trade flows dissipate with distance between countries. Formally, ACR show that ε corresponds to the trade cost elasticity (which are conventionally linked to the geographical distance and other trade barriers) in the gravity equation after controlling for other economic determinants of trade (such as the size of countries and their trade network). See Head and Mayer (2014⁽⁷⁾) and Costinot and Rodriguez-Clare (2014)⁽⁴⁾. * Noteworthy, Russia immediately classified many sources of internal macroeconomic and trade data. Nonetheless, it was still possible to assess international trade with Russia using the data of its trade partners. 1. Helpman, Elhanan. 2011. Understanding Global Trade. Harvard University Press. https://doi.org/10.2307/j.ctt24hhh9. 2. Fajgelbaum, Pablo D, Pinelopi K Goldberg, Patrick J Kennedy, and Amit K Khandelwal. 2020. “The Return to Protectionism.” The Quarterly Journal of Economics 135 (1): 1–55. https://doi.org/10.1093/qje/qjz036. 3. Arkolakis, Costas, Arnaud Costinot, and Andrés Rodríguez-Clare. 2012. “New Trade Models, Same Old Gains?” American Economic Review 102 (1): 94–130. https://doi.org/10.1257/aer.102.1.94. 4. Costinot, Arnaud, and Andrés Rodríguez-Clare. 2014. “Chapter 4 - Trade Theory with Numbers: Quantifying the Consequences of Globalization.” In Handbook of International Economics, edited by Gita Gopinath, Elhanan Helpman, and Kenneth Rogoff, 4:197–261. 5. Baqaee, David Rezza, and Emmanuel Farhi. 2024. “Networks, Barriers, and Trade.” Econometrica 92 (2): 505–41. https://doi.org/10.3982/ECTA17513. 6. Ossa, Ralph. 2015. “Why Trade Matters after All.” Journal of International Economics 97 (2): 266–77. https://doi.org/10.1016/j.jinteco.2015.07.002. 7. Head, Keith, and Thierry Mayer. 2014. “Chapter 3 - Gravity Equations: Workhorse,Toolkit, and Cookbook.” In Handbook of International Economics, edited by Gita Gopinath, Elhanan Helpman, and Kenneth Rogoff, 4:131–95. Handbook of International Economics. Elsevier. https://doi.org/10.1016/B978-0-444-54314-1.00003-3.	Itskhoki I Oleg Itskhoki Elina Ribakova The Economics of Sanctions: From Theory Into Practice. Brookings Papers on Economic Activity, Fall 2024. The Brookings Institution 2024
Trade Wars	Aguiar	Aguiar I 1 Trade wars/Aguiar/Amador/Fitzgerald: Using a bilateral trade model, we exploit insights from the classic literature on the Transfer Problem to characterize when gross asset or liability positions and tariff policies generate an endogenous terms-of-trade effect that ensures the value of assets and liabilities balance. As long as gross positions denominated in different goods differ in sign, there exists a continuum of bilateral tariff policies that ensure balanced trade and that satisfy the contractual financial obligations. >Tariffs, >International trade, >Terms of trade. If the new terms-of-trade do not reverse the initial direction of trade, balanced trade is consistent with non-zero exports and imports. In general, high enough bilateral tariffs lead to an autarkic outcome where no trade occurs and the net foreign asset positions rebalance to zero. In April 2025, the Trump administration proposed a set of tariffs that had the purported goal of balancing trade for the United States, not only in the aggregate but bilaterally. The US has a large negative net foreign asset position, which is a combination of large gross positions denominated in different currencies (or goods for real assets such as equities). Most countries also have large gross and net positions (Lane and Milesi-Ferretti, 2001⁽¹⁾; Gourinchas and Rey, 2014⁽²⁾). This raises the question of how such contracted international net liabilities can be paid if trade is balanced. >Terms of trade/Aguiar. Mark A. Aguiar, Manuel Amador, and Doireann Fitzgerald. (2025). Tariff Wars and Net Foreign Assets. NBER Working paper 33743.Doi 10.3386/w33743. May 2025. 1. Lane, Philip R. and Gian Maria Milesi-Ferretti (Dec. 2001). “The external wealth of nations: measures of foreign assets and liabilities for industrial and developing countries”. Journal of International Economics 55.2, pp. 263–294. 2. Gourinchas, Pierre-Olivier and Helene Rey (2014). “External Adjustment, Global Imbalances, Valuation Effects”. Handbook of International Economics. Vol. 4. Elsevier, pp. 585–645. isbn: 978-0-444-54314-1.	Aguiar I Mark A. Aguiar Amador Doireann Fitzgerald, Tariff Wars and Net Foreign Assets. NBER Working paper 33743.Doi 10.3386/w33743. May 2025. Cambridge, MA 2025
Trade Wars	Alessandria	Alessandria I 21 Trade war/tariffs/model/Alessandria/Ding/ Khan/Mix: [In our model]* [a]gents have perfect foresight about the permanence of the tariffs, retaliation, and the use of tariff revenue for fiscal adjustment once the tariffs are implemented. We also include the new tax rate or investment subsidy rate, as well as trade and tariff revenue as a fraction of GDP. Trade: The effects of tariffs on trade, exporting, firm creation and tariff revenue are quite similar across all fiscal strategies. >International trade. Tariffs: The tariffs immediately shift expenditures towards domestic goods. Over time, exporters exit the market and new domestic firms enter, so that there is continued gradual substitution that ultimately increases domestic expenditures by a little over five percentage points. >Tariffs. Tariff revenue: In all cases, tariff revenue jumps sharply with implementation of the tariffs to at least 2 percent of GDP, much larger than it has been for at least the past several decades. Very quickly thereafter, however, tariff revenue as a fraction of GDP falls sharply, despite a deepening contraction in GDP. >Tariff revenue. Substitution: This decline in revenue reflects ongoing substitution of domestic firms and households away from more expensive imported goods. >Import substitution. Long run: In the long run, tariff revenue as a fraction of GDP settles around 1.3 percent, about double its initial level. Long-run tariff revenue is highest when it used to subsidize investment or reduce capital taxes, as these uses both partially offset the higher costs of imported capital goods, weakening the degree to which households and firms substitute away from imports. Alessandria I 22 Demand: Since trade is capital-intensive, the subsidies induce a smaller effect on trade given the changing composition of final demand. The falling tariff revenue implies that tax or subsidy rates need to be adjusted over time. In the long run, tariff revenue can support a 12 percent investment subsidy, a five percent drop in the capital income tax, or a two percent drop in the labor income tax. Rebate: Among the four uses of tariff revenue considered, a lump sum rebate reduces employment and GDP the most. Taxation: By reducing taxes or subsidizing investment, revenue can be used to reduce distortions in the economy elsewhere or encourage additional investment. Thus, GDP, consumption, investment, and labor, all fall less when tariffs are rebated to reduce taxes or subsidize investment. >Taxation. Tax reduction: That said, the various tax reductions and subsidies all have unique aspects of their affects on the economy. Reducing capital taxes or subsidizing investment both have strong positive effects on GDP after the tariff is implemented before GDP falls again. This brief boost comes from the relatively high values of tariff revenue in the short run relative to the long run. As tariff revenue falls, there is less funds available for tax cuts or subsidies, and GDP continues to fall. Market entry: In the long run, however, entry of new firms boosts domestic capacity, so that we see the overshooting in GDP that is common in these models with dynamics trade adjustment and firm entry. >Market entry. Both investment subsidies and capital stock reductions generate a strong burst in investment. The investment boom crowds out consumption, which dips sharply on impact. That said, long-run consumption is highest with investment subsidies, as the larger capital stock expands the capacity of the economy. Wages: Wages are also higher in the long run with investment subsidies, as the complementarity between capital and labor production increases labor demand. >Wages, >Labour. Reducing labor taxes weakens the usual substitution effects arising from a tariff. Tariffs are a tax on goods, so the substitution effect generally entices households to shift toward enjoying more leisure. But, when labor taxes fall, workers keep more of their wages, so leisure becomes more costly. Thus, while the labor effect in the lump sum scenario is about neutral on impact, labor jumps almost 5% with a labor tax reduction. Again, the effect of the tax reduction is largest on impact when tariff revenue is at its highest, though labor still remains higher in the long run than for any other revenue destination. Subsidizing labor also reduces the cost of firm entry, so that reducing labor taxes yields the highest growth in the number of firms in the economy. Higher labor and a greater number of firms contribute to a stronger long-run GDP response than in the lump sum rebate economy. >Tariff revenue. Alessandria I 24 Temporary trade war: We assume* that tariffs are applied for four years and that all agents know the path of tariffs with perfect foresight. We assume both countries use the revenue in the same way. GDP: The response of tariff revenue as a fraction of GDP on impact is very similar to the permanent trade war. Indeed, the short-run tariff elasticity in this model is simply γ, so that we would expect similar responses in both models. Tariff revenue: Over time, however, we see that tariff revenue holds up better when the tariffs are expected to be temporary. This finding relates to the dynamics of trade adjustment, which happens more slowly and less than in the permanent trade war. The reason for this slow adjustment is that exporters have less incentive to give up their export fixed cost advantage by leaving the market when they expect tariffs to be repealed soon. Alessandria I 25 While the temporary tariffs yield a more gradual response in tariff revenue and trade, they yield much sharper movements in other aggregate variables. If revenue is not used to subsidize investment, then investment falls very sharply for the duration of the tariffs. Capital goods: Because trade is intensive in capital goods, the price of investment goods is more affected by tariffs. When agents expect that the tariffs will be reversed soon and that the price of investment will reverse in turn, they optimize intertemporally by delaying capital investment. Investments: The one exception is when tariffs are used to subsidize investment. Then, the revenue offsets the increase in the price of investment and induces agents to increase investment sharply for the duration of the tariffs. For many variables, including GDP, consumption, investment, and trade, the only revenue use that seems to be substantially different from the lump sum rebate is subsidies for investment. Labour: An exception to this is labor, where reduction in labor taxes boost labor sharply for the duration of the tariffs. Most of this labor seems to be used in the entry of new firms, which peaks at 4 percent above the steady state level, much higher than the peak for the lump sum rebate. * George A. Alessandria, Jiaxiaomei Ding, Shafaat Y. Khan, and Carter B. Mix. (2025) The Tariff Tax Cut: Tariffs as Revenue NBER Working Paper No. 33784 May 2025	Alessandria I George A. Alessandria Jiaxiaomei Ding Shafaat Y. Khan, The Tariff Tax Cut: Tariffs as Revenue NBER Working Paper No. 33784 May 2025 Cambridge, MA 2025
Understanding	Gadamer	I 270 Understanding/Hermeneutics/Heidegger/Gadamer: Heidegger only addressed the problem of historical hermeneutics and critique in order to unfold from there in ontological intention the preliminary structure of understanding⁽¹⁾. Gadamer: Conversely, we pursue the question of how hermeneutics, once freed from the ontological inhibitions of the objectivity concept of science, is able to do justice to the historicity of understanding. Understanding/Heidegger: [One will be allowed] to ask about the consequences that Heidegger's fundamental derivation of the circular structure of understanding from the temporality of >Dasein has for hermeneutics in the humanities. These consequences (...) could (...) consist (...) in the fact that the self-understanding of understanding, which is always practiced, would be corrected and cleansed of inappropriate adjustments - a process that would at most indirectly benefit the art of understanding. >Hermeneutic Circle/Heidegger, >Expectations/Gadamer. I 273 How should a text be protected from misunderstanding in advance? If you look more closely, you will see (...) that even opinions cannot be understood arbitrarily. As little as we can constantly misunderstand a use of language without the meaning of the whole being disturbed, as little can we blindly stick to our own pre-opinion on the matter when we understand the opinion of another. It is not as if, when we listen to someone or start to read something, we have to forget all our pre-opinions about the content and all of our own opinions. Only openness to the opinion of the other or the text is required. Such openness, however, always implies that one puts the other opinion in relation to the whole of one's own opinions or is in relation to it. Therefore, a hermeneutically trained awareness of the otherness of the text must be receptive from the outset. But such receptiveness requires I 274 neither factual nor even self-extinction, but includes the detached appropriation of one's own prejudices and preconceptions. It is important to be aware of one's own bias so that the test presents itself in its otherness and thus has the opportunity to play off its factual truth against one's own pre-opinion. I 295 Understanding/Gadamer: Understanding itself is not so much to be thought of as an act of subjectivity, but rather as an engagement with an event of tradition in which past and present are constantly communicated. I 304 Understanding/Gadamer: The first thing that understanding begins with is (...) that something appeals to us. This is the highest of all hermeneutical conditions. We now know what is required: a fundamental suspension of one's own prejudices. All suspension of judgements, however, and therefore even more so that of prejudices, has, logically seen, the structure of the question. I 311 Merging of horizons: There is as little a contemporary horizon for itself as there are historical horizons to be gained. Rather, understanding is always the process of merging such supposedly separate horizons. >Horizon/Gadamer. I 316 It is quite absurd to base the possibility of understanding texts on the premise of "congeniality" that should unite the creator and interpreter of a work. If that were really the case, the humanities would have a bad outlook. The miracle of understanding consists rather in the fact that it does not require congeniality to recognize what is truly significant and what is originally meaningful in the tradition. Rather, we are able to open ourselves to the superior claim of the text and understand the meaning in which it speaks to us. >Legal Hermeneutics, >Theological Hermeneutics. I 346 Understandig/Application/Gadamer: Application is not a subsequent application of some given generality, which would first be understood in itself, to a concrete case, but is only the real understanding of the general itself, which the given text is for us. Understanding proves to be a way of effect and knows itself as such effect. >History of Effect/Gadamer. I 399 Understanding/Gadamer: Not only is the preferred object of understanding, the tradition, of linguistic nature - understanding itself has a fundamental relationship to linguistics. We were based on the proposition that understanding is already interpreting, because it forms the hermeneutical >horizon in which the opinion of a text is expressed. But in order to be able to express the opinion of a text in its factual content, we have to translate it into our language, i.e. we put it in relation to the whole of possible opinions in which we are speaking and are ready to express ourselves. 1. Heideger, Sein und Zeit, 312ff	Gadamer I Hans-Georg Gadamer Wahrheit und Methode. Grundzüge einer philosophischen Hermeneutik 7. durchgesehene Auflage Tübingen 1960/2010 Gadamer II H. G. Gadamer The Relevance of the Beautiful, London 1986 German Edition: Die Aktualität des Schönen: Kunst als Spiel, Symbol und Fest Stuttgart 1977
US Import Tariffs	Economic Theories	Rieth I 5 US Import Tariffs/Economic theories/Boer/Rieth: (…) [a]strand of (…) literature focuses on the US-China trade relations and in particular the trade war since 2016. Amiti et al. (2019)⁽¹⁾ find that the 2018 tariffs imposed by the US have reduced imports and increased prices significantly. Fajgelbaum et al. (2019)⁽⁵⁾ reach a similar conclusion. They find complete pass-through of tariffs on US consumer prices and estimate welfare costs for US consumers of 0.3% of GDP. Cavallo et al. (2021)⁽²⁾ document complete pass-through at the border but not to retail prices, suggesting that domestic markups have fallen. Flaaen et al. (2020)⁽³⁾ provide evidence that US import tariffs on washers raised consumer prices more than one-to-one. We* complement these insights with estimates of the average pass-through of US tariff shifts since the 1960s and with estimates of the macroeconomic consequences of two specific shifts. We find a mean degree of pass-through to import prices of 0.5, suggesting that the US has been able to affect world prices in previous trade conflicts. Furthermore, our historical decompositions suggest a more positive assessment of the WTO than Autor et al. (2013)⁽⁴⁾, who document that China’s accession led to many job losses in the US. Rieth I 6 While we confirm their findings with macroeconomic data, showing that the employment effects were predominantly negative, we find a sustained investment and output boom in the US in the 2000s due to a long sequence of free trade shocks. Consistent with the larger gains from free trade, our model yields larger estimates of the costs of the 2018/19 trade war. They are an order of magnitude larger than those of Fajgelbaum et al. (2019)⁽⁵⁾, suggesting that it is important to take into account the short run adjustment costs to shifts in trade policy that comparative statics neglect. >Tariffs, >Tariff impacts, >Tariff responsivity, >International trade, >Tariff history. * Lukas Boer and Malte Rieth (2024). The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty. IMF Working Paper 24/13. International Monetary Fund. 1. Amiti, M., Redding, S. J., and Weinstein, D. E. (2019). The impact of the 2018 tariffs on prices and welfare. Journal of Economic Perspectives, 33(4):187–210. 2. Cavallo, A., Gopinath, G., Neiman, B., and Tang, J. (2021). Tariff pass-through at the border and at the store: Evidence from us trade policy. American Economic Review: Insights, 3(1):19–34. 3. Flaaen, A., Horta¸csu, A., and Tintelnot, F. (2020). The production relocation and price effects of us trade policy: the case of washing machines. American Economic Review, 110(7):2103–2127. 4. Autor, D. H., Dorn, D., and Hanson, G. H. (2013). The china syndrome: Local labor market effects of import competition in the united states. American economic review, 103(6):2121–2168. 5. Fajgelbaum, P. D., Goldberg, P. K., Kennedy, P. J., and Khandelwal, A. K. (2019). The return to protectionism*. The Quarterly Journal of Economics, 135(1):1–55.	Rieth I Malte Rieth Lukas Boer The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty. IMF Working Paper 24/13. International Monetary Fund. Washington, D.C. 2024
Voting	Buchanan	Boudreaux I 67 Voting/Buchanan/Boudreaux/Holcombe: 1) One difference between choosing by voting versus choosing in the market is that, in the market, each individual actually gets what he or she chooses. In voting, by contrast, those on the winning side generally get what they voted for, while those on the losing side have to take what those who win at the voting booth prefer. 2) Another important difference is that people who make market choices get what they chose immediately, whereas in voting even those who voted for the winning side only get a promise that they will eventually get what they voted for. Politics: Voters choose what they hope to get in the future rather than what they will get in the present. Therefore, in politics, even those on the winning side might not ever actually get what they voted for. One only need think of recent candidates for political office who have run on platforms promising balanced government budgets. >Political elections, >Electoral systems, >Democracy, >Parliamentary system. Economy/economic policies: Voters can vote for a balanced budget, but even if the candidate supporting that option wins, there is no guarantee that voters will actually see the budget being balanced. >Politics, >Economy, >Markets. 3) Yet another difference is that when individuals vote, they are expressing preferences for social outcomes to be applied to everyone. In contrast, when individuals engage in market transactions, they are making choices only for themselves. And an individual’s social preferences might differ from his or her personal preferences. Example: Buchanan offers a somewhat dated example by noting that a person might vote for alcohol prohibition but at the same time buy alcoholic beverages for personal consumption. Such behaviour is not necessarily inconsistent, Buchanan points out, because people’s preferences for rules that apply to everyone might legitimately differ from their personal consumption preferences. >Preferences, >Rational choice, >Public choice. Boudreaux I 68 Other differences between politics and markets arise because, except when the number of voters is tiny, the likelihood that any individual voter will cast a decisive vote is vanishingly small. First, individuals have less of an incentive to vote than they do to make market choices. (…) regardless of the quality of the choice the voter makes, he or she is served whatever public policies follow from the outcome of the election. Market/Elections: In the market, people are free to choose a variety of goods, and can make adjustments by taking a little more of some goods in exchange for a little less of others. But in voting, people choose between alternatives that are more or less mutually exclusive. Voting for one candidate’s platform means voting for everything in it, rather than voting for everything in a competing candidate’s platform. Boudreaux I 69 Political elections/Buchanan: One unfortunate result of what we might call “the bundling effect” is that no candidate really knows just why he or she won the election - or why other candidates lost the election. The difference is between having a bundle of goods that individuals choose themselves, as in the market, or a bundle of goods chosen by someone else. Even with this fact in sight, voting looks better than it really is. Voters can see the goods at the top of the basket, but there might be goods lower down in the cart that voters do not see and do not want. Individualism/politics/Buchanan: Buchanan offers many reasons why people are better off with institutions that allow them to make their own individual choices rather than having to accept outcomes that are collectively chosen. Yet he also sees that in some cases it is necessary to have collective choices to further individual welfare through the protective and productive state. Thus, when political decision-making is necessary, he calls for institutions to be designed so that they resemble as closely as possible the desirable characteristics of market institutions.	EconBuchan I James M. Buchanan Politics as Public Choice Carmel, IN 2000 Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014
Welfare	Alessandria	Alessandria I 3 Welfare/tariffs/Alessandria/Ding/Khan/Mix: We* (…) find that welfare calculations understate the long-run changes in the economy as is common in models with capital accumulation and trade dynamics (Alessandria and Choi, 2014b⁽¹⁾; Ravikumar et al., 2019⁽²⁾; Mix, 2023)⁽³⁾. >Long run/short run. For instance, we find that a unilateral increase in import tariffs of 20 percent will boost US welfare by nearly 1.5 percent when paired with an investment subsidy funded by both existing and new tariff revenue. But the same policy will boost steady state consumption by 3.55 percent and the capital stock by over 20 percent. Clearly, evaluating these policies based on their impact on the steady state will not accurately reflect the aggregate effects of these reforms. Importantly, we find large differences in the effects of the reforms on the economy that offset other taxes. For a range of policies under consideration, global and unilateral, welfare is always higher with a fiscal adjustment, and can be as much as 2.5 percentage points higher. Alessandreia I 20 Welfare gains: (…) welfare gains understate the long-run changes in consumption induced by these fiscal adjustments. While welfare is about 2 to 2.5 percentage points higher with an investment subsidy compared to the lump sum rebate, steady state consumption is 3.6 to 5.5 percentage points higher.* * George A. Alessandria, Jiaxiaomei Ding, Shafaat Y. Khan, and Carter B. Mix. (2025) The Tariff Tax Cut: Tariffs as Revenue NBER Working Paper No. 33784 May 2025 JEL No. E6, F10, F4 1. Alessandria, George and Horag Choi, and Kim J. Ruhl, “Trade Adjustment Dynamics and the Welfare Gains from Trade,” Journal of International Economics, 2021, 131, Article 103458. 2. Ravikumar, B., Ana Maria Santacreu, and Michael Sposi, “Capital accumulation and dynamic gains from trade,” Journal of International Economics, 2019, 119, 93–110. 3. Mix, Carter, “The dynamic effects of multilateral trade policy with export churning,” International Economic Review, 2023, 64 (2), 653–689.	Alessandria I George A. Alessandria Jiaxiaomei Ding Shafaat Y. Khan, The Tariff Tax Cut: Tariffs as Revenue NBER Working Paper No. 33784 May 2025 Cambridge, MA 2025
Wiener	Hillis	Brockman I 178 Wiener/Hillis: Wiener chose to view the world from the vantage point and scale of the individual human. As a cyberneticist, he took the perspective of the weak protagonist embedded within a strong system, trying to make the best of limited powers. He incorporated this perspective in his very definition of information. “Information,” he said, “is a name for the content of what is exchanged with the outer world as we adjust to it, and make our Brockman I 179 adjustment felt upon it.” In his words, information is what we use to “live effectively within that environment.”⁽¹⁾ For Wiener, information is a way for the weak to effectively cope with the strong. 1. Wiener, N. The Human Use of Human Beings (Boston: Houghton Mifflin, 1954), 17—18. Hillis, D. W. “The First Machine Intelligences” in: Brockman, John (ed.) 2019. Twenty-Five Ways of Looking at AI. New York: Penguin Press.	Brockman I John Brockman Possible Minds: Twenty-Five Ways of Looking at AI New York 2019

The author or concept searched is found in the following 6 controversies.

Disputed term/author/ism	Author Vs Author	Entry	Reference
Correspondence Theory	James Vs Correspondence Theory	Diaz-Bone I 88 Pragmatism Vs correspondence theory: a match for James softens the dichotomy true/false. (> achievement, adjustment). Truth/James: analogy to money: Credit: belief can turn out to be wrong. I 89 Wrong: something that turns out to be false after an investigation - has it always been wrong? James: Assumptions can have been real (some sort of "true"). They had a truth value that was a guide for action.	James I R. Diaz-Bone/K. Schubert William James zur Einführung Hamburg 1996
Evolution Theory	Verschiedene Vs Evolution Theory	Vollmer I 258 VsEvolution: the theory of evolution is circular: you can only "unroll" things that are already there. VollmerVsVs: the meaning of a term is never determined by etymology, but by definition, use, context. The term does not have the meaning that the Romans gave it when they coined it. >Change of concept. I 276 VsEvolution Theory: "Every adaptation requires a recognition of that to which it is to be adapted. Then the recognition of fitting is a circle." VollmerVsVs: it is not true at all that every adjustment requires recognition. VsEvolution Theory: not predictable VollmerVsVsVs: there is no compelling reason at all to use forecasting capability as a benchmark for the science of a theory. Vollmer: The goal of science is not prognoses, but explanations! I 277 VsEvolution Theory: "It is not falsifiable". For example, if one finds life on Mars, it is explained in evolutionary theory, if none is found, its absence or disappearance is also explained in evolutionary theory. (PopperVsEvolution Theory!) (s)Vs: For example, the not-being-damaged of a fallen cup can also be explained with the help of physics.) I 278 VsEvolution Theory: from the existence of characteristics one can only conclude that they allow and possibly enable life, but not that they promote it! Therefore, one cannot necessarily accept adaptation! (Roth, 1984). Especially one cannot claim that our previous survival proves the correctness of our view of the world! I 279 VollmerVsVsVs: that there are selection-neutral and even survival-damaging characteristics makes it probably an empirical question whether functionality is present in individual cases, but does not impair the fertility of that panselection maxim. The question "What for?" is always allowed in biology, even if it does not always find an answer. I 279 VsEvolution Theory: 1. The transfer of selection theory to the development of cognitive abilities can only succeed if there is objective truth and if knowledge is more useful than error. (Simmel, 1895). 2. Moreover, cognitive fits could also come about other than through self-adaptation, for example by the environment changing and itself adapting (by chance). 3. Correct mapping of the outside world obviously does not play a role in selection! Because there are so many species with "worse knowledge": plants are not "falsified" by the eye, the primordial eye not by the eagle eye, etc. I 282 VsEvolution Theory: can success guarantee truth? Truth/Simmel: actually goes the way of equating success with probation and probation with truth. >Pragmatism. Evolutionary EpistemologyVsSimmel: it does not adopt this pragmatic approach. It makes a strict distinction between truth definition and truth criterion. Truth/Vollmer: Success is neither necessary nor sufficient, but is always indicative. Fitting can be determined without any recourse to selection or evolution. I 284 But one can also proceed the other way round: one finds that the contribution of the subject to knowledge is at least partly genetically determined. (Interaction). I 285 Reference/VsEvolution Theory: (e.g. Putnam): it is not clear which reference physical terms have at all!	Vollmer I G. Vollmer Was können wir wissen? Bd. I Die Natur der Erkenntnis. Beiträge zur Evolutionären Erkenntnistheorie Stuttgart 1988 Vollmer II G. Vollmer Was können wir wissen? Bd II Die Erkenntnis der Natur. Beiträge zur modernen Naturphilosophie Stuttgart 1988
Gould, St. J.	Dennett Vs Gould, St. J.	I 371 Arch Spandrels/DennettVsGould: Gould: Thesis: the spandrels are so refined that the whole cathedral stands for their sake. GouldVs "pervasive adaptation" DennettVsGould: not so clever and not so often. I 388 Dennett: false juxtaposition of adaptionism with architectural necessity. Minimum surface limits expensive mosaic stones. Exaptation/Gould: thumb of the panda not really a thumb, but it does a good job! " Exaptation/Dennett: according to orthodox Darwinism any adjustment is some form of exaptation. This is trivial, because no function is preserved forever. Strand: GouldVsGradualism: "punctuated equilibrium". Jumps possible Long periods of stability, periods of abrupt changes. But no theory of macromutation. Broken Balance/DennettVsGould: Figure I 392: it depends on how the diagram is drawn: with sloping or horizontal branches (standing and jumping). DennettVsGould: it is known that changes can only be evaluated retrospectively in evolution. Nothing that happens during the sideways movement distinguishes an anagenetical from a kladogenetical process. I 405 DennettVsGould: but the fact that a currently existing group will be the founder of a new species, cannot be important for the intensity of a development. I 409 DennettVsGould: Gould would certainly not regard such a local imperceptible (but fast) transition from mouse to elephant (a few throusand years) as a violation of gradualism, but then he has no evidence in the form of fossil finds for his counter-position to gradualism. I 423 Has Neo-Darwinism ever claimed that evolution is proceeding at a constant speed? DennettVsGould: actually presumes (wrongly) that the majority of the contest of evolution was a lottery! His only clue: he cannot imagine why some of the amazingly bizarre creatures (Burgess) should be better designed than others. I 424 Chance/Evidence/Dennett: E.g. a geyser suddenly erupts on average every 65 minutes. The form of the suddenness is no evidence of the randomness. I 426 Cambrian explosion/DennettVsGould: Equally, the suddenness here is no evidence for the randomness. Evolution/DennettVsGould: he is quite right: the paths are continuous, unbroken lineages (to us), but they are not lines of global progress. So what? There are local improvements. Münch III 379 Adaptionism/Dennett: the more complex the condition, the less likely appears a rational reason. But the truth of a non-adaptionist story does not require the falsehood of all adaptationist stories. We should accept Pangloss’ assumption.⁽¹⁾ 1. Daniel Dennett, “Intentional Systems in Cognitive Ethology: The ‘Panglossian Paradigm’ defended”, The Behavioral and Brain Sciences 6 (1983), 343-355	Dennett I D. Dennett Darwin’s Dangerous Idea, New York 1995 German Edition: Darwins gefährliches Erbe Hamburg 1997 Dennett II D. Dennett Kinds of Minds, New York 1996 German Edition: Spielarten des Geistes Gütersloh 1999 Dennett III Daniel Dennett "COG: Steps towards consciousness in robots" In Bewusstein, Thomas Metzinger Paderborn/München/Wien/Zürich 1996 Dennett IV Daniel Dennett "Animal Consciousness. What Matters and Why?", in: D. C. Dennett, Brainchildren. Essays on Designing Minds, Cambridge/MA 1998, pp. 337-350 In Der Geist der Tiere, D Perler/M. Wild Frankfurt/M. 2005 Mü III D. Münch (Hrsg.) Kognitionswissenschaft Frankfurt 1992
Gould, St. J.	Verschiedene Vs Gould, St. J.	Dennett I 383 Helena CroninVsGould: flaw: he asks, how exclusive the selection as a driver of change is. Do you have to look at all the properties of living organisms as adaptations? Cronin: the selection may be the only thing that really brings forth adjustments, without that it must therefore have caused all properties.	Dennett I D. Dennett Darwin’s Dangerous Idea, New York 1995 German Edition: Darwins gefährliches Erbe Hamburg 1997 Dennett IV Daniel Dennett "Animal Consciousness. What Matters and Why?", in: D. C. Dennett, Brainchildren. Essays on Designing Minds, Cambridge/MA 1998, pp. 337-350 In Der Geist der Tiere, D Perler/M. Wild Frankfurt/M. 2005
Popper, K.	Lakatos Vs Popper, K.	Feyerabend I 239 Falsification/LakatosVsPopper: some of the most famous falsifications were anything but such. And beyond that totally irrational. Hacking I 199 "Protective belts"/Lakatos: you only make a selection of problems you are dealing with. Further objections are then ignored. LakatosVsPopper: so verification still has a place! The researchers choose a few problems, refutations can then be completely uninteresting! Hacking I 286 Observation/LakatosVsPopper: Falsificationism cannot be right because it presupposes the distinction between theory and observation. The simple rule according to which the human thinks and directs nature is not tenable. Two false assumptions: 1. there is a psychological boundary between speculative and observational sentences 2. assuming that observational evidence could be proven by facts. Schurz I 196 Theory Revision/Lakatos/Schurz: (Lakatos 1974, 129ff) Methodology of scientific research programs: two assumptions: 1. "Immunization": it is always possible to save the core of a theory in the event of a conflict with experience by making adjustments at the periphery. I 197 2. "Protective belt": every (physical) theory needs auxiliary hypotheses (exclusive ceteris paribus hypotheses) to establish empirical prognoses. These are located like a protective belt in the outer periphery around center and core. Conflicts with experience can then be resolved by replacing or dropping an auxiliary hypothesis. Def Anomaly/Lakatos: an observation date that contradicts the whole theory (core + periphery). Solution: Def ad hoc hypothesis: assumes more complicated system conditions in which unknown interfering factors are postulated. Vs: Problem: this does not explain the different date. I.e. it remains an anomaly even after the introduction of the ad hoc hypothesis! Ad hoc/Lakatos: such adjustments are only legitimate if they are scientifically progressive. They must have new empirical content. I 198 Falsification/LakatosVsPopper: a theory version is falsified only when there is a progressive new version (with new empirical content). I.e. there is no "immediate rationality" (immediate decision) which theory is better. This only becomes apparent in the historical development. Def Research Program/Lakatos: hard theory core together with a negative and a positive heuristic. Def Negative Heuristics/Lakatos: adjustments are not made in the core but only on the periphery. However, in the course of a degenerative development the modus tollens hits can be directed against the core. Def Positive Heuristics/Lakatos: Program according to which increasingly complex theoretical models or system conditions for the core can be handled with recalcitrant data. I 199 Theoretical version/Schurz: Core plus periphery.	Laka I I. Lakatos The Methodology of Scientific Research Programmes: Volume 1: Philosophical Papers (Philosophical Papers (Cambridge)) Cambridge 1980 Feyerabend I Paul Feyerabend Against Method. Outline of an Anarchistic Theory of Knowledge, London/New York 1971 German Edition: Wider den Methodenzwang Frankfurt 1997 Feyerabend II P. Feyerabend Science in a Free Society, London/New York 1982 German Edition: Erkenntnis für freie Menschen Frankfurt 1979 Hacking I I. Hacking Representing and Intervening. Introductory Topics in the Philosophy of Natural Science, Cambridge/New York/Oakleigh 1983 German Edition: Einführung in die Philosophie der Naturwissenschaften Stuttgart 1996 Schu I G. Schurz Einführung in die Wissenschaftstheorie Darmstadt 2006
Structuralism	Jakobson Vs Structuralism	Saussure I 42 JakobsonVsStructuralism: bad structuralism: exclusive adjustment to invariant, i.e. timeless elements. Requirement: one should understand both invariance and variations as mutual and reciprocal structures.	Jakobson I Roman Jakobson Fundamentals of Language 2011

The author or concept searched is found in the following theses of an allied field of specialization.

Disputed term/author/ism	Author	Entry	Reference
Vs Adaptionism.	Gould, St. J.	Dennett I 370 Gould: The vault of St. Mark’s Basilica and the" Pangloss "principle: VsAdaptionism thesis: Adjustment is pervasive. Def "gusset" / Gould: all those biological characteristics which are not adjustments.	Dennett I D. Dennett Darwin’s Dangerous Idea, New York 1995 German Edition: Darwins gefährliches Erbe Hamburg 1997 Dennett IV Daniel Dennett "Animal Consciousness. What Matters and Why?", in: D. C. Dennett, Brainchildren. Essays on Designing Minds, Cambridge/MA 1998, pp. 337-350 In Der Geist der Tiere, D Perler/M. Wild Frankfurt/M. 2005