How are prices determined? This is a very basic economic question that many economists have sought to answer. The short explanation from neoclassical economics is that firms, seeking to maximize profits, produce until their marginal revenue equals their marginal cost, thereby generating a supply of goods and services. Consumer demand for these products arises from income-constrained utility max...

The “new development economics” (also called behavioral economics) consists of microeconomic experimentation based on economics and randomized controlled trials. This approach would illuminate the close relationships between preferences, culture, institutions point to new political opportunities. paper describes analyzes economics’s main components argues that is just like old in terms its cent...

Neoclassical theory postulates that preferences between two goods are independent of the consumer’s current entitlements. Several experimental studies have recently provided strong evidence that this basic independence assumption, which is used in most theoretical and applied economic models to assess the operation of markets, is rarely appropriate. These results, which clearly contradict close...

interpretations, and conclusions expressed in this paper are entirely those of the author. They do not necessarily represent the views of the World Bank, its Executive Directors, or the countries they represent. Abstract Neoclassical economics maintains that a legal system is required to foster anonymous exchange and hence efficiency. In contrast, social scientists from other disciplines emphas...

Recently, Jones (2002} and Barro and Sala−í−Martin (2004) pointed out that the neoclassical growth model with a Cobb−Douglas technology has a closed−form solution. This note makes a similar remark for the Malthusian model: I develop and characterize a closed−form solution. Moreover, I emphasize structural similarities between the Malthusian and the neoclassical model if the dynamic behavior is ...

This chapter reviews models of intertemporal choice consumption demand and labour supply. We discuss optimal decisions by individuals at the microeconomic level and the implications for the aggregate economy. The chapter describes the equilibrium in a market-clearing neoclassical model and analyses effects of productivity and government sector shocks on optimal decisions by consumers and worker...

One third of a century ago, Paul Samuelson [1959, 1629] argued that American economists "present a united front tbat reflects too little basic disagreement on fundamentals." Samuelson's point was confirmed in a 1976 survey of economists by J. R. Kearl et al. [1979; hereafter "Kearl"]. Kearl concluded that, among economists, there was much agreement and very little disagreement on both theoretic...

Many of us decided to study economics because we were interested in issues such as economic growth, unemployment, poverty, discrimination and social exclusion. And for much of the history of the discipline, economists grappled with explaining such phenomena and, hopefully, helped to improve the development of economic policy. But now the discipline is increasingly dominated by other concerns, s...