F.Y. Edgeworth’s Treatise on Probabilities

Probability theory has a central role in Edgeworth’s thought; this paper examines the philosophical foundation of the theory. Starting from a frequentist position, Edgeworth introduced some innovations on the definition of primitive probabilities. He distinguished between primitive probabilities based on experience of statistical evidence, and primitive a priori probabilities based on a more general and less precise kind of experience, inherited by the human race through evolution. Given primitive probabilities, no other devices than the rules of calculus are necessary to infer complex probabilities, as the ones defined by Bayes’s theorem –an enlargement of the frequentist tradition as defined by Venn. The notion of probability is objective; the passage from this objective sphere to the epistemic one requires rules external to the theory of probability. Edgeworth distinguishes between two notions: credibility which is the direct translation of probability into the epistemic sphere, and obeys the same rules of the latter; and belief having a weak relation with probability, based as it it not only on experiential knowledge, but also on “instinct and sentiment”. According to a Nineteenth century tradition, belief is the base of human action; Edgeworth concludes therefore that probability is not useful for the theory of decision. We propose to classify Edgeworth’s theory of probability as precursor of modern eclectic or pluralistic tradition on probability, and according to which probability has an irreducible dualistic nature.F.Y. Edgeworth, Philosophy of probability, Frequentist probability, Bayes’s theorem

Italian economic journals. A network-based ranking and an exploratory analysis of their influence on setting international professional standards

An exploratory analysis of the crossed presence (interlocking editorship) of the same scholars in the editorial boards of Italian and international economic journals is developed. The position and the degree of integration of Italian journals in the worldwide network of economic journals is studied with network analysis techniques and a ranking of Italian journals, based on a measure of centrality, is proposed. Then relatively compact groups of international journals are individuated, representing different specialized sub-field or different methodological approaches to the study of economics. The analysis of the relative position of Italian journals in those groups suggests that Italian journals are not connected to the cores of the various schools operating at an international level, with the only exception of the history of economic thoughtEconomic journals; Italian economic journals; ranking of journals; editorial boards

Francis Ysidro Edgeworth on the regularity of law and the impartiality of chance

This paper proposes a general interpretation of Edgworth’s thought based on the recognition of a unitary philosophical project in his contributions to ethics, economics, probability and statistics. This project consists in the search for a common epistemological foundation for the social sciences. The point is illustrated in reference to the coexistence in Edgworthian scientific programme of the ‘regularity of law’ with the ‘impartiality of chance’. The interpretation here proposed challenges the traditional stereotypes according to which Edgeworth was a crass utilitarian, and an ingenuous advocate of a rather primitive neoclassical economics. His plea for the use of mathematics, and his choice of deterministic models for the description of the economic behaviour, appear more innovative when the role of probability is considered

Democratization, New Leaders, and the Need for Economic Reform: Can Preferential Trading Agreements Help?

Can international institutions help leaders commit economic reform? In this article, we examine how leaders use preferential trading agreements with major powers (European Union and the United States) to promote liberal economic policies. We argue that under democratization, new leaders benefit the most from credible commitment. Using original data on treaty negotiations, our empirical analysis shows that under democratization, leader change greatly increases the probability that the government of a developing country begins treaty negotiations. We also demonstrate that preferential trading agreements are accompanied by liberalization in different sectors of the economy, and this effect is most pronounced if it follows a leader change. These findings support the notion that international institutions enable credible commitment to economic reform

Edgeworth on the Foundations of Ethics and Probability

This paper analyses the foundation of utilitarian ethics and theory of probability in the works of Francis Y. Edgeworth. We argue that he pursued an unitary philosophical project, the search for a common epistemological foundation for the social sciences. The common root of the disciplines is the notion of “hereditary experience” derived from Herbert Spencer’s work. We suggest that this reconstruction can modify the overall interpretation of Edgeworth’s thought.F.Y. Edgeworth, Probability, Utilitarianism

Easing the Pain of Adjustment? Preferential Trading Agreements, Foreign Aid, and Credible Commitment to Economic Reform

In this article, we propose that wealthy donors give foreign aid to developing countries to facilitate political adjustment, such as compensation for losers and side payments to influential elite constituencies, towards mutually profitable economic reform. Only democratic developing countries can credibly commit to using fungible revenue in ways that benefit the donor, so the adjustment effect only applies to democracies. A quantitative test against data on preferential trading agreements lends strong support to the theory. Strikingly, fully democratic developing countries that form a preferential trading agreement obtain a threefold increase in foreign aid in the short run. Additional tests show that this increase is not driven by macroeconomic difficulties and that the beneficial effect on foreign aid is temporary. Both findings are consistent with the theory. An important implication of these results is that if foreign aid facilitates economic reform through preferential trading agreements, previous research could have underestimated the benefits thereof

Investment Discrimination and the Proliferation of Preferential Trade Agreements

The proliferation of bilateral and regional trade agreements has arguably been the main change to the international trading system since the end of the Uruguay Round in the mid- 1990s. We argue that investment discrimination plays a major role in this development. Preferential trade agreements can lead to investment discrimination because of tariff differentials on intermediary products and as result of provisions that relax investment rules for the parties to the agreement. Excluded countries are sensitive to the costs that this investment discrimination imposes on domestic firms and react by signing a trade agreement that aims at leveling the playing field. We test our argument using a spatial econometric model and a newly compiled dataset that includes 166 countries and covers a period of 18 years (1990-2007). Our findings strongly support the argument that investment discrimination is a major driver of the proliferation of trade agreements

Institutions, Information, and Trade Policy in Times of Crisis

The paper examines the role of international institutions in preventing the rise of protectionism in times of times of crisis. Economic crisis exacerbates uncertainty in the conduct of commercial relations and thus makes it more likely for countries to resort to "beggar-thy-neighbor" trade policies. The historical record of the Great Depression supports this argument, where global trade suffered a downward spiral as governments pursued protectionist trade policies as a response to domestic pressures. This paper argues that the current era of globalization is distinguishable from its earlier counterparts by the presence of an extensive network of international institutions, which serve as conveyors of information that help to mitigate the information problem that prevails in prisoner‘s dilemma settings. Specifically, international institutions such as the WTO, preferential trade agreements (PTAs) and other international economic organizations increase the flow of information among countries. In doing so, they alleviate coordination problems as well as facilitate the detection of violations in commitments to maintaining a liberal trade regime. We suggest that this mechanism may explain why the current crisis is not replicating the pattern of the Great Depression. Moreover, we explore the combined effect of membership in international organization and political variables, the latter including democracy, veto players, partisanship of government, and government effectiveness. We test this argument using a newly-compiled dataset of trade policies during the current economic crisis and membership in international organizations. The paper finds strong support for the informational role of international institutions as a key factor preventing the rise of protectionism in times of crisis. Conversely, there is mixed evidence that the combining effect of international organizations and domestic political variables matters in explaining protectionism during this crisis

Interlocking Editorship. A Network Analysis of the Links Between Economic Journals

The exploratory analysis developed in this paper relies on the hypothesis that each editor possesses some power in the definition of the editorial policy of her journal. Consequently if the same scholar sits on the board of editors of two journals, those journals could have some common elements in their editorial policies. The proximity of the editorial policies of two scientific journals can be assessed by the number of common editors sitting on their boards. A database of all editors of ECONLIT journals is used. The structure of the network generated by interlocking editorship is explored by applying the instruments of network analysis. Evidences have been found of a compact network containing different components. This is interpreted as the result of a plurality of perspectives about the appropriate methods for the investigation of problems and the construction of theories within the domain of economicsNetworks; Economic journals; Editorial boards; Interlocking editorship

Is technological change really skill biased? Evidence from the introduction of ICTs on the textile sector (1980-2000)

This paper investigates the effects of the introduction of information and communication technologies (ICTs) on the skills of a workforce. Using micro-data collected from workers in the textile sector, we analyse whether the introduction of ICTs has modified workers’ tasks, so that higher skills and longer training periods than before are necessary. Our survey has shown that ICTs i) have replaced unskilled labour in some cases and skilled labour in others; ii) have changed workers’ tasks in some cases but not in others; and finally, iii) have brought about an increase in skills for only a small number of occupations. This empirical evidence does not confirm the hypothesis that technological change, and in particular change introduced by ICTs, is necessarily skill biasedTechnological change, skill bias, textile industry