Mises on the Nation and the State

This article discusses the distinction Mises (1919) draws between the nation and the state as well as the relation of this distinction with the role of the state in the free society. A previous version of this article received the 1st Prize of the European Center of Austrian Economics Foundation’s 2007 Vernon Smith Essay Contest.nation; state; Mises; institutions

Arrovian juntas

This article explicitly constructs and classifies all arrovian voting systems on three or more alternatives. If we demand orderings to be complete, we have, of course, Arrow's classical dictator theorem, and a closer look reveals the classification of all such voting systems as dictatorial hierarchies. If we leave the traditional realm of complete orderings, the picture changes. Here we consider the more general setting where alternatives may be incomparable, that is, we allow orderings that are reflexive and transitive but not necessarily complete. Instead of a dictator we exhibit a junta whose internal hierarchy or coalition structure can be surprisingly rich. We give an explicit description of all such voting systems, generalizing and unifying various previous results.Comment: 22 pages, 1 figur

Is the exchange rate politically manipulated around elections? The evidence from Uruguay

In a small open economy, the exchange rate is a key variable from the perspective of the political economy of macro policy. It is, indeed, one of the most powerful instruments that governments can use to achieve their goals. Recent theories of political macroeconomics stress that maximization of social welfare may be just one, and perhaps not the most relevant, of such goals. Others include politicians’ own permanence in power and serving the interests of specific constituencies. This paper seeks to determine the pertinence for the Uruguayan economy of the recent literature on the political economy of exchange rate management. The predictions of various theoretical models are summarized, along with the stylized facts identified in a series of recent empirical studies. After a brief discussion on the advantages of alternative specifications to test for political cycles in the exchange rate, the theoretical predictions and stylized facts are confronted with the evidence for Uruguay since 1920. The analysis shows empirical regularities consistent with political manipulation of the exchange rate around elections.political cycles, exchange rate policy, time series models.

Individual Decisions and Household Demand for Consumption And Leisure

The standard microeconomic assumption of a household utility function raises two theoretical problems: it contradicts methodological individualism and it ignores economic phenomena like income and consumption sharing, division of labour, externalities and altruism within a household. This paper reviews two approaches, aggregation theory and more recent non-unitary models, to compare the different properties that household consumption and leisure demands have to satisfy in the two basic contexts. The paper also discusses some recent empirical evidence which seems to encourage further investigation in the non-unitary framework.consumption, labour supply, intra- household allocation

On the Relevance of Alternatives in Bargaining: Average Alternative Solutions

We compare bargaining solutions in terms of the relevance of alternatives. We show that most well-known bargaining solutions do not use all the alternatives, but there are numerous bargaining solutions that do. We introduce a new class of bargaining solutions called ``average alternative solutions'', characterize them, and show that the Nash solution and the Kalai-Smorodinsky solution are limits of average alternative solutions. We also provide alternative characterizations for the Nash solution and the Kalai-Smorodinsky solution.bargaining, solutions, axioms, relevance of alternatives, average alternative solutions, monotonic bounds

Manipulation in Elections with Uncertain Preferences

A decision scheme (Gibbard (1977)) is a function mapping profiles of strict preferences over a set of social alternatives to lotteries over the social alternatives. Motivated by conditions typically prevailing in elections with many voters, we say that a decision scheme is weakly strategy-proof if it is never possible for a voter to increase expected utility (for some vNM utility function consistent with her true preferences) by misrepresenting her preferences when her belief about the preferences of other voters is generated by a model in which the other voters are i.i.d. draws from a distribution over possible preferences. We show that if there are at least three alternatives, a decision scheme is necessarily a random dictatorship if it is weakly strategy-proof, never assigns positive probability to Pareto dominated alternatives, and is anonymous in the sense of being unaffected by permutations of the components of the profile. This result is established in two settings- a) a model with a fixed set of voters; b) the Poisson voting model of Meyerson (1998a,b, 2000, 2002).

Is a Liberal Justice, Totalitarian?

In Social Choice Theory, Pareto-Unanimity is an important rule which is applied to compensation tests and therefore in justice. But, deductive logics show that Pareto- Unanimity implies dictatorship and therefore, Pareto-Unanimity is contradictory with non dictatorship. In the case of compensation, citizens are free and accountable for their own behaviour; the Pareto-unanimity implies perfect information on benefactors. Liberty implies dictatorship and then Pareto-Unanimity. compensation exigencies lead to a totalitarian society, as forwarded by the novel of George Orwell (1984).Dictatorship, Pareto-Unanimity, Compensation, Responsibility, Private Information

The determination of wages in socialist economies : some microfoundations

The authors address the issue of how wages are determined in socialist economies. They distinguish between different types of economic regimes, in terms of how much decentralization is permitted and how extensive are market-based features orrules. Wages are commonly assumed to be exogenously given in socialist systems, regardless of regime. They show that this assumption is not warranted, given the use of incentive-based systems in these economies. Both the classical planned economy and the partially reformed regime face the problem of motivating workers in the absence of monitoring and of such conventional penalties as unemployment. The authors show that in cooperative settings the outcome can be lower productivity than desired and that in noncooperative settings the outcome can be higher wages than warranted. They interpret the partially reformed socialist economy as an attmept to refine the motivational structure by introducing a manager between the planner and the workers. They also present a preliminary treatment of an economic regime such as the one that existed in Poland after January 1990, where market-based rules almost fully predominate. Their objective is to provide coherent foundations for wage equations that can be tested empirically. The authors show wages to be strongly associated with prices and rather less strongly associated with productivity.Economic Theory&Research,Environmental Economics&Policies,Banks&Banking Reform,Access to Markets,Markets and Market Access

A Discursive Narrative On Planning For Urban Heritage Conservation In Contemporary World Heritage Cities In Portugal

This article analyses the structure of heritage conservation in the national context of Portugal. It assesses the political context in which planning operates, and the place of conservation and heritage planning within the planning system. By exploring how heritage conservation discourses developed within the national planning framework it is possible to understand the emergence of conservation practices and to consider recommendations for improved efficiency. The World Heritage cities in Portugal inform this research, as its designation should stand for best historic practices, internationally recognized and thus also compliant to an internationally coherent approach towards conservation policies. The narrative unveils a regulatory legislative framework exposed in general considerations rhetorically formulated as policy, usually setting out objectives and requirements, but saying ‘very little about the methodologies to be followed in the preparation of the plans’ (Rosa Pires 2001, p. 185). The resulting overlapping and sometimes conflicting competences, aims and objectives, all at play in the management of the historic city, thus call for concerted strategies underpinned by appropriate organizational and institutional structures and consistent policy making, where inclusive participation of all key stakeholders involved is critical