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Economic orthodoxy discourages the study of collective behavior
Hendrik van den Berg

[Keywords: Culture, neoclassical economics, orthodoxy, pluralism, sociology ; JEL: B00, B13, B15]

Economic thought evolved over the past two centuries to focus on individual behavior as the basis for all economic activity. Some heterodox economists have pointed to the importance of group behavior and the influence of organizations on economic activity, but the neoclassical paradigm, with the rational isolated individual as its main actor, prevails in mainstream economics. This paper presents a “sociology of economics” to explain why the prevailing paradigm of economics does not allow seeing and studying group behavior. Drawing on the work of Pierre Bourdieu, the paper details the habitus, the system of beliefs and the symbolic violence against those who question them. Also, it highlights the support of commercial and financial interests to the dominant culture.


The Revolution of the New Classics: networks, influence and methodology
Boris Salazar y Daniel Otero

[Keywords:New Classical Economics, revolution, Lucas, citation networks, intellectual influence; JEL: B22, E65, B41, D85]

The New Classical Revolution has been told as the story of a sudden and unstoppable assault on the Keynesian paradigm that attained immediate unanimity among macroeconomists due to its irresistible scientific method. After following the citation network of the seven articles on macroeconomic policy chosen by Lucas and Sargent, plus Lucas (1976) and Lucas & Sargent (1978), we found that the lines of fracture, associated to Keynesianism and the Northeastern-Midwest divide of Economics departments, stood between 1976 and 2013. Those who cited Lucas hardly cited Fischer (1977), and vice versa. The network was always divided into two, three, and more components, occupying changing fractions of the total structure, and reflecting separate influences and divergent citation patterns and generations. The Revolution happened first in Chicago, Minnesota and Carnegie-Mellon, expanding thereafter to other countries via disciples, but never attaining a total dominance over the profession at large.


Global Income Distribution From the Fall of the Berlin Wall to the Great Recession
Christoph Lakner y Branko Milanovic

[Key words: Income distribution, globalization, higher incomes; JEL: D31]

The paper presents a newly compiled and improved database of national household surveys between 1988 and 2008. In 2008, the global Gini index is at 70.5 percent having declined by approximately 2 Gini points over this twenty year period. When it is adjusted for the likely under-reporting of higher? incomes in surveys by using the gap between national accounts consumption and survey means in combination with a Pareto-type imputation of the upper tail, the estimate is a much higher global Gini of almost 76 percent. With such an adjustment the downward trend in the Gini almost disappears. Tracking the evolution of individual country- deciles shows the underlying elements that drive the changes in the global distribution: China left the bottom ranks, modifying the overall shape of the global income distribution in the process and creating an important global “median” class that transformed a twin-peaked 1988 global distribution into a single-peaked one. The “winners” were country-deciles which in 1988 stood at the median of the global income distribution, 90 percent of which are from Asia in terms of population. The “losers” were the country-deciles in 1988 were around the 85th percentile of the global income distribution, almost 90 percent of which are from mature economies in terms of population.


The political economy of progressive tax reform in Chile
Tasha Fairfield [pdf]

[Key words: Chile, tax reform, democratization; JEL: E00, E51, E62, H00]

This article describes the Chilean tax system and analyzes the political context prevented regressive reforms to transform the system established during the dictatorship. Examines the formulation of tax policy after democratization and the strategies employed by the governments of the center-left coalition for the passage of incremental reforms. Finally, it shows that the political atmosphere changed after the student protests of 2011 and 2012, which made possible the adoption of more progressive tax reform proposed by President Bachelet in 2014.


A choice model of tax measures. The Latin America case
Víctor Mauricio Castañeda Rodríguez [pdf]

[Key words: tax structure, tax policy, rational politicians, collective decision, Latin America; JEL:D78, H20, H29]

This paper develops a model that assumes politicians´ rationality when fixing tax rates applied on revenue and consumption of each taxpayer. The paper also suggests some factors to consider are political mobility of voters and economic expectations, which can explain regressive tax reforms adopted in Latin America since the economic crises of the 80s. Additionally, it contrasts the model with an unbalanced data panel (18 countries from 1980 to 2010).


Drug trafficking networks and their interactions: a theoretical model
Leonardo Raffo López y José Luis Segura [pdf][Appendix]

[Key words: drug trafficking, delinquent networks, illegal markets, game theory, social network theory, law enforcement; JEL: C72, C73, K42, L14]

This paper proposes a new theoretical model to unerstand how defence and corruption networks associated to drug trafficking operate. Based on game theory and social network theory strategic interactions between drug dealers and their agents are analyzed. The model shows that network density is a main determinant of the survival probability of drug dealers and of wages paid to their security agents; and that the efficacy of law enforcement policies depends on network density.


The 1949 World Bank Mission to Colombia, and the competing visions of Lauchlin Currie (1902-93) and Albert Hirschman (1915-2012)
Roger Sandilands [pdf]

[Keywords: World Bank, Lauchlin Currie, Albert Hirschman ; JEL:F43, O11, O43]

The 1949 World Bank mission headed by Lauchlin Currie recommended an integral attack on the interlocking vicious circles of underdevelopment through a widening of domestic and international markets and a reform of macroeconomic policy formulation. In 1950 Currie was invited by the Colombian Government to return as adviser to a new national planning board. In 1952 Albert Hirschman was also hired as an adviser to this board. This paper discusses the heated disagreements between these two distinguished economists, their influence on the theory and practice of economic development in Colombia and of the World Bank, and in particular their focus on planning based on an integral program versus individual project approaches to planning.


Is there a housing bubble in Bogota? A market segment study
Vanessa Cediel Sánchez y Carlos Velásquez Vega [pdf]

[Keywords:Housing bubbles, Bogotá, unit root test; JEL: C22, O18, R31]

In 2014 Bogota’s housing prices surpassed the historic average and the highest price registered to date. This raises the question of the existence of a possible housing bubble. In this article a univariate test of explosive growth for nine zones of the city was applied, in order to identify if the increasing housing prices are explained by speculation. This study found evidence of exuberant growth in most of the zones, although it showed differing dynamics within the city. In the most expensive districts part of the behaviour of prices is due to speculation. In contrast, in lower value zones prices are explained by demand pressures and earning improvements as well as government aids reflected on housing interest rate reduction for these segments of the population.


Securitization in Colombia: Twenty years of regulation, 1993-2013
Constanza Blanco Barón [pdf]

[Keywords: institutional change, securitization, mortgage securitization; JEL: A12, E44, G14, G21,K22]

The analysis of innovative processes such as securitization leads to asking if the behavior of economic agents is a response to the institutional changes with specific objectives, or if the changes in the regulatory regime are the result of market behaviour or needs of the economy. The objective of this paper is to apply the theory of institutional change of North (agent, source, process and way of change) to examine the Colombian market in the period 1993-2013 in order to explore the main events which had an influence on the performance of securitization in general, and mortgage securitization in particular.


Characteristics and identification of working poor in Colombia, 2002-2012
Roberto Mauricio Sánchez Torres [pdf]

[Keywords: poverty, labor insertion; labor market; JEL: I39, O10]

This paper is an approach to the study of the working poor in Colombia. The purpose is to analyze poverty linked to types of labor insertion, Using data from the Continuous Household Survey and the Large Integrated Household Survey, it analyses main poverty indicators for the workers, and poverty decomposition by geographical area between 2002 and 2012. In addition, it offers a socio-demographic and occupational characterization of the working poor, concluding that the composition of the labor market and the type of labor insertion are determinants of low income.


Sme networks: a view from theories of club and team
María Verónica Alderete [pdf]

[Keywords: teams, theory of clubs, cooperation, small and medium sized enterprises, Argentina, Brazil; JEL:D2, D7, L2]

Cooperation among firms can be analyzed from different theoretical perspectives. The objective of this paper is to analyze firm networks from the perspective of team theory and club theory. Even though these theories are not recent in economics, using them as a theoretical framework for the characterization of firm networks could be a novel contribution. We can infer that aspects of both theories could be combined to explain cases of cooperation.



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