Working Papers
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Conference paper
Meritocracy Is a Good Thing
Apr 2013
Political meritocracy is the idea that a political system is designed with the aim of selecting political leaders with above average ability to make morally informed political judgments. That is, political meritocracy has two key components: (1) the political leaders have above average ability and virtue and (2) the selection mechanism is designed to choose such leaders.
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Conference paper
Irreducible Uncertainty and its Implications: A Narrative Action Theory for Economics.
Apr 2013
At the heart of economics is a theory of action. It reflects views about how human beings make economic decisions and leads to an analysis of aggregate consequences.
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Conference paper
A Keynes-IKE Model of Currency Risk: A CVAR Investigation
Apr 2013
A core puzzle in Önancial economics is the inability of standard risk-premium models to account for excess returns in currency and other asset markets.
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Conference paper
Market Psychology, Animal Spirits and Reflexivity
Apr 2013
Neoclassical economics has abolished the role of psychology in decision making by assuming that all individuals are rational optimizers with rational expectations about future events.
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Conference paper
The Law-Finance Paradox
Apr 2013
The global financial crisis led to the rediscovery of ‘fundamental uncertainty’. Incorporating uncertainty into the analysis of financial markets alters our understanding of how these markets operate and expose the two-faced role of law in finance.
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Conference paper
Rationality and the Meese and Rogoff Exchange-Rate-Disconnect Puzzle: Learning vs. Contingent Knowledge
Apr 2013
There is much anecdotal evidence in the popular media, backed up by survey research, that participants in currency markets pay close attention to fundamental economic variables in forming their forecasts of future exchange rates.
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Conference paper
The Contingent Expectations Hypothesis: Rationality and Contingent Knowledge in Macroeconomics and Finance Theory
Apr 2013
For macroeconomists, an individual is rational if she uses her understanding of the way the economy works in making decisions that do not conflict with her objectives.
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Conference paper
Rationality in the Present-Value Model of Stock Prices: Fundamentals, Psychology, and Structural Change
Apr 2013
The present-value model of stock prices is a workhorse in financial economics. The model relates today’s price of a stock (or a basket of stocks) to the market’s forecasts of next-period’s price and dividend, appropriately discounted.
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Conference paper
Forward-Rate Bias, Contingent Knowledge, and Risk: Evidence from Developed and Developing Countries
Apr 2013
In this paper, we examine one of the core puzzles in International Macroeconomics, the so-called “forward-discount anomaly.”
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Conference paper
The Econometrics of Imperfect Knowledge Economics
Apr 2013
A core premise of contemporary economic models is that researchers can adequately specify in probabilistic terms how individuals alter the way they make decisions and how the processes underpinning market outcomes unfold over time.
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Conference paper
Expectational coordination failures and Market outcomes’ volatility
Apr 2013
The first part of this text comes back on the standard economic viewpoint on expectational coordination, a viewpoint that the recent events have challenged.
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Conference paper
The State, the Market and the Rule of Law
Apr 2013
State and market are often depicted as distinct, even antagonistic. Markets appear as natural products of spontaneous ordering; states as leviathans that if left untamed will distort, if not destroy markets’ natural state.
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Conference paper
Endogenising Uncertainty
Apr 2013
Uncertainty is an unavoidable feature of economic life, although we may cope with it sometimes by ignoring it. Institutions, conventions and behaviour are all conditioned by uncertainty, and they in turn condition uncertainty in a reflexive manner.
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Conference paper
Addressing the Crisis in the Euro Zone System
Apr 2013
The reason why the Euro zone crisis has dragged on for so long is that Europe’s leaders have focused too much on short-term measures to patch up the emergency of the moment, rather than formulating a comprehensive plan.
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Conference paper
Towards a New Monetary Constitution in Europe: The Proposal of the German Council of Economic Experts (GCEE)
Apr 2013
After the announcement of Mario Draghi, the ECB president, to do “whatever it takes” to preserve the integrity of the European Monetary Union (EMU) in July 2012 and the establishment of the Outright Monetary Transactions (OMT) program in September 2012, the crisis of EMU is far from being resolved.