Our paper Capability accumulation and product innovation: an agent-based perspective has now been published in the Journal of Evolutionary Economics. In this paper we study the implications of different degrees of product relatedness on innovation dynamics. More precisely, a population of firms invests into various measures of capability accumulation (as identified in this paper) and thereby learn to produce new - and potentially more complex - products that can then be sold on a market with exogeneous demand. The models shows that different structures of relatedness, which we formalize via artificial product spaces, have imporant implications on the overall dynamics, just as the distribution of complexity values within the product space and the structure of the product space as such. This is highly relevant for future modeling exercises since models often implicitly assume a complete product space, where each innovation can happen at any moment, or randomly distributed complexity values. Our model shows, however, that these implicit assumptions are very specific special cases and that any deviation from these special cases comes with important implications for the overall dynamics.
I am happy that out paper "Theory and Empirics of Capability Accumulation: Implications for Macroeconomic Modelling" has now been publised in the journal Research Policy. The paper is concerned with mechanisms underlying the accumulation of technological capabilities on the firm and aggregated level. It begins with a methodological discussion about the actual carriers of such capabilities, which we propose to be firms rather than individuals. We then conduct an extensive literature review of the empirical literature in economics, management science and organization studies to delineate the major determinants of capability accumulation. After comparing these empirical insights with the operationalization of such determinants in existing micro and macroeconomic models we delineate some fruitful avenues of how these mechanisms can be modelled more directly. The motivation for this paper came, inter alia, from our previous research on the role of collective knowledge accumulation for polarization processes in the European Union (see here, here and here). I am also happy that another paper in which I and Anna Hornykewycz formalized one of the key mechanisms suggested in our review, the principle of relatedness, has also been accepted for publication, but this is not yet available (there is an older working paper version but we have revised the model considerable during the review process).
Birte Strunk and I wrote a blog that is based on our recent paper Pluralism in economics: its critiques and their lessons for Developingeconomics.org. Just as the paper, the blog is meant as a contructive contribution to the debate about pluralism in economics. Its main message is that many critiques of pluralism are misguided or address a strawman, but that there are two essential challenges for any pluralist research program: the quality challenge and the communication challenge, which can analytically be traced back to a fundamental epistemological trade-off between plurality and consensus. We would be glad for any feedback, either via comments on the blog directly, or via direct messages.
Together with my colleaques I finalized some more final drafts a.k.a. working papers. Two of them originate from the SPACE project and, consequently, deal with the concept of competition on a more theoretical and interdisciplinary level: the first, entitled "Theorizing competition: an interdisciplinary approach to a contested concept" we sketch the history of how the concept has been dealt with in different disciplines and focus the change in reference systems and the normative connotation of competition in economics, sociology and anthropolgy. The second, "Theorizing competition: an interdisciplinary framework", is more conceptual and delineates an analytical frameowork that allows one to make implicit meta-theoretical assumptions explicit and, thereby, to facilitate an interdisciplinary investigation of competitive processes. More precisely, we identify three common challenges for the interdisciplinary analysis of competition (the challenge of scope, methodology and normativity) and hope that our meta-framework helps addressing these challenges.
The third working paper, "Do the “smart kids” catch up? Technological capabilities, globalisation and economic growth", is an empirical paper in which we study the relevance of technological capabilities as a central conditioning factor for economic convergence within a growth regression framework.
Our results show that convergence is conditional on technological capabilities and that this finding is robust to controlling for economic globalisation, resource dependence, institutional qualityand other confounding factors.Finally, in the paper "The evolution of debtor-creditor relationships within a monetary union" we introduce a stock-flowconsistent model of a Monetary Union that features three regions - North, South, and the Rest of the Worl - and that we use to study the endogeneous emergende of Minsky-type boom-bust cycles in the context of the simultaneous presence of investment booms, declining export performanceand mercantilist policies. The model shows how fiscal policy can linder the symptoms, but not address the root causes for these unfavorable dynamics. Any feedback on any of the papers is, of course, highly appreciated.
I have written a blog post in German to summarize our recent paper Pluralism in economics: its critiques and their lessons and to explain why the topic of pluralism in economics deserves our attention. The piece is meant as a contructive contribution to the debate and I am very much looking forward to receive comments (e.g. via this contact form). The blog has been published on Oekonomenstimme.
The paper Pluralism in economics: its critiques and their lessons has now been published (open access) in the Journal of Economic Methodology. In the paper, Birte Strunk and myself discuss a number of common critiques of pluralism - the claim that the discipline is already pluralist, that if there were a need for pluralism, it would emerge on its own and that pluralism means ‘anything goes’, and is thus unscientific - and provide responses to these claims. The paper is, however, not only meant as a mere refutation of critiques, but as a constructive engagement. And we indeed find some good reasons to take serious the claim that pluralism comes with challenges of communication across scholars and the control of quality. We trace these challenges to an epistemological trade-off between diversity and consensus and sketch some potential reactions to this trade-off, including a transformation of scientific institutions. We would be very happy about feedback on this article and hope that it helps advancing the important debate about pluralism in economics.
I am very proud for having received the EAEPE Kapp prize for the best published paper in 2019. Me and my co-authors won the award for our paper Structural change in times of increasing openness: assessing path dependency in European economic integration, in which we studied the effect of economic openness on development trajectories in the European Union. We found that because of the unequal distribution of technological capabilities and the different growth models followed by the member states, increasing economic integration has led to a divergence in several important socio-economic dimensions.
When working on topics related to globalization and economic openness, one is quickly confronted with a considerable number of different measures for economic openness. Thus, we wrote a review entitled Measuring Economic Openness: A review of existing measures and empirical practices in which we present, discuss and compare various measures for openness. We provide for a taxonomy of such measures and show with a practical example that the choice of the measure is very important for the outcome of any quantitative analysis of economic openness. We also developed an R package that facilitates the gathering of the measures for researchers who want to work with them. I hope you find this useful!
The paper Pandemic pushes polarisation: The Corona crisis and macroeconomic divergence in the Eurozone has now been published online in the Journal of Industrial and Business Economics. In the paper we show that the macroeconomic impact of the Corona crisis is likely to be more severe in Southern Eurozone countries than in Northern Eurozone countries and that the underlying polarisation process can be traced back to existing differences in production structures and uneven vulnerabilities of the underlying growth models (see also our related papers here and here). We make some policy suggestions that are actually concretisations of our broader policy proposal elaborated in the study Economic Polarisation in Europe: Cause an Options for-Action (German original: Wirtschaftliche Polarisierung n Europa).
The paper Trust and Social Control: Sources of Cooperation, Performance, and Stability in Informal Value Transfer Systems has been published in the journal Computational Economics. Based on game theoretic reasoning we introduce the first agent-based model of informal value transfer systems and not only propose a rigorous definition of the central institutionalist concepts of 'trust' and 'social control', but also study their relevance for the stability and the success of informal value transfer systems such as Hawala.
In the paper Pandemic pushes polarisation: The Corona crisis and macroeconomic divergence in the Eurozone we discuss how the macroeconomic fallout from the coronavirus reinforces polarization trends in the Eurozone. We show that the macroeconomic impact of the Corona crisis is likely to be more severe in Southern Eurozone countries than in Northern Eurozone countries and that the underlying polarisation process can be traced back to existing differences in production structures and uneven vulnerabilities of the underlying growth models (see also our related papers here and here). We make some policy suggestions that are actually concretisations of our broader policy proposal elaborated in the study Economic Polarisation in Europe: Cause an Options for-Action (German original: Wirtschaftliche Polarisierung n Europa).
One important avenue for socio-economic development is collective learning. That the collective knowledge in a society is an important determinant of the standard of living (and probably also of their level of inequality) has been demonstrated by numerous empirical studies. However, the mechanisms through which individuals learn collectively are still poorly understood. To pave the way for further work in this area we wrote a literature review entitled Theory and Empirics of Capability Accumulation: Implications for Macroeconomic Modelling, in which we cover work from organization studies, economics, sociology, and management sciences. Our aim is to distill results that can help us to consider processes of collective learning more adequately in macroeconomic modeling. The motivation for this comes, inter alia, from our previous research on the role of collective knowledge accumulation for polarization processes in the European Union (see here, here and here). In another working paper, Capability accumulation and product innovation: an agent-based perspective, we take a first step towards the integration of the corresponding innovation studies in macroeconomic agent-based models by developing a module of product innovation. Later, this module should be part of a larger model that captures the processes of capability accumulation in more detail and that could be used to develop policy measures that foster convergence in Europa, and, later, on a global scale. All this work is part of my project funded by Rebuilding Macroeconomics.
This semester I taught a course on agent-based modeling and economic methodology at the Cusanus Hochschule in Germany. The idea of the course was to combine learning the techniques necessary to build ABM in the programming language Python and acquiring the philosophical tools and language to discuss the adequacy of models and their alternatives. The course material, which exists only in German, is available here.
The paper Is the Eurozone disintegrating? Macroeconomic divergence, structural polarisation, trade and fragility, which is joint work with Jakob Kapeller, Philipp Heimberger and Bernhard Schütz, has been published in the Cambridge Journal of Economics It is openly available and investigates the mechanisms underlying structural divergence among European countries.
The paper The heterogeneous relationship between income and inequality: a panel co-integration approach, which has been joint work with Svenja Flechtner, is now published open access in the journal Economics Bulletin. In the paper we quantify the long-term relationship between income inequality and GDP per capita using panel co-integration techniques. We provide some new empirical insights, the most important of which are: first, the relationship depends on whether market-based or disposable-income-based measures for inequality are used, and, second, the relationship is not uniform around the world: some countries experience a positive, others a negative relationship. The take-away is that using panel estimators that average across countries can be highly misleading and shallow the heterogeneous development trajectories.
The paper Structural change in times of increasing openness: assessing path dependency in European economic integration, which is joint work with Jakob Kapeller, Philipp Heimberger and Bernhard Schütz, has been published in the Journal of Evolutionary Economics. It is openly available and studies how an increase in economic openness in Europe has impacted on convergence and divergence dynamics among European countries.
We just completed a research project for the Friedrich-Ebert Foundation, in which we study polarization patterns in Europe, and provide some suggestions for adequate policy responses. The study alongside additional material can be found here. An English translation will be available soon.
I have produced a number of new working papers on which any feedback is highly welcome. Two of the papers are empirical: In the first one, The heterogeneous relationship between income and inequality: a panel co-integration approach, we quantify the long-term relationship between inequality and GDP per capita using panel co-integration techniques. We provide some new empirical insights, the most important of which are: first, the relationship depends on whether market-based or disposable-income-based measures for inequality are used, and, second, the relationship is not uniform around the world: some countries experience a positive, others a negative relationship. This delineates a number of interesting avenues for future research. The second short empirical paper, Export performance, price comeptitiveness and technology: Revisiting the Kaldor paradox, asks whether the Kaldor paradox, according to which higher relative labor costs and less favorable terms of trade are associated with higher export shares, is still observable and how it can be rationalized.
The other two working papers are theoretical: in Defining institutions - A review and a synthesis we develop a taxonomy of definitions that distinguishes between model-based and non-model-based definitions. Against this backdrop we review existing definitions of economic institutions and identify a shared idea of most definitions, according to which institutions are "codifiable systems of social structures(in particular norms and rules) that lead to inclinations for people to act in specific ways". The second theoretical paper, Unrealistic models and how to identify them: on accounts of model realisticness, is concerned with the question: How can we classify a model as being realistic or unrealistic? This seemingly straightforward question is philosophically interesting since it touches on a number of contested areas, such as the concept of representation, the nature of model-world comparisons and the ontology of models.
I am happy to receive the Herbert Simon Award for the best paper by a young scholar, awarded by the European Association for Evolutionary Political Economy (EAEPE), for my working paper Pluralism in Economics: Its critiques and their lessons, which I have co-authored with Birte Strunk and for which any feedback is still very welcome. Here is also a nice note in the Heterodox Economics newsletter, along with additional information on the EAEPE conference in Nice. I really enjoyed the conference and will certainly attent the conference next year in Warsaw as well.
When working on topics related to globalization and economic openness, one is quickly confronted with a considerable number of different measures for economic openness. Thus, we wrote a review entitled Measuring Economic Openness: A review of existing measures and empirical practices in which we present, discuss and compare various measures for openness. We provide for a taxonomy of such measures and show with a practical example that the choice of the measure is very important for the outcome of any quantitative analysis of economic openness. Any feedback is very welcome!
I have launched this video-based introduction to ABM in Python. It consists of scripts, and videos explaining hands-on the content of the scripts. The course aims to teach people without previous experience in programming both the basics in the programming language Python as well as the basics of agent-based modelling using Python. For now, the videos are only available in German, but the scripts are also available in English (see the English course homepage). For any video block there is a feedback form, and I greatly value your feedback on this course. This feedback will not only help me to improve the course in the future, but also build a good English version of the course.
I was invited to give talk during this great symposium on theory development with agent-based models. My presentation is about how economists construct theory, and what lessons one can learn from this process - in the positive as well as in the negative sense. The slides are available here (some pictures were removed to avoid potential copyright issues). Who is interested in these kind of questions might also have a look at my new paper on model validation and verification in JASSS. As always, any feedback is highly appreciated.