Applied economics – Wikipedia

lotion of economic theory and econometrics
Applied economics is the application of economic hypothesis and econometrics in particular settings. As one of the two sets of fields of economics ( the other set being the core ), [ 1 ] it is typically characterized by the lotion of the core, i.e. economic theory and econometrics to address practical issues in a scope of fields including demographic economics, labor economics, clientele economics, industrial arrangement, agrarian economics, exploitation economics, education economics, technology economics, fiscal economics, health economics, monetary economics, public economics, and economic history. From the perspective of economic development, the aim of apply economics is to enhance the timbre of commercial enterprise practices and home policy make. [ 2 ] The process often involves a reduction in the grade of abstraction of this congress of racial equality theory. There are a kind of approaches including not alone empiric estimate using econometrics, input-output analysis or simulations but besides font studies, historic analogy and alleged common smell or the “ common ”. [ 3 ] This range of approaches is indicative of what Roger Backhouse and Jeff Biddle argue is the ambiguous nature of the concept of apply economics. It is a concept with multiple meanings. [ 4 ] Among broad methodological distinctions, one reference places it in neither plus nor prescriptive economics but the art of economics, glossed as “ what most economists do ”. [ 5 ]

Origins of the term [edit ]

The beginning and meanings of practice economics have a long history going back to the compose of Say and Mill. Say wrote about “ applying ” the “ general principles of political economy ” to “ ascertain the rule of carry through of any combination of circumstances presented to us ”. The full title of Mill ‘s ( 1848 ) work is Principles of political Economy with Some of Their Applications to Social Philosophy. [ 4 ]

J.N. Keynes discussion [edit ]

John Neville Keynes was possibly the first base to use the idiom “ applied economics ”. He noted that the “ english School ” ( John Stuart Mill, John Elliott Cairnes, and Nassau William Senior ) [ 6 ] [ 7 ] believed that political economy was a incontrovertible, outline, deductive skill ; and that this educate made a clear eminence “ between political economy itself and its applications to rehearse ” ( 1917, 12 ). This school thought that a general body of theory could be established through abstract reasoning – not relying on a wide cognition of economic facts. From this distributor point of view applying this theory involved making allowances for some of the factors ignored in building the abstract theories. Keynes wrote about applying the political economies hypothetical laws to interpreting and explaining of “ concrete industrial facts ”. The issue of conceptual eminence between political economy as a science ( involving formulating laws which govern the production and distribution of wealth ) and political economy as an art ( using the laws to tackle practical problems ). [ 8 ] Whilst noting the rival view of the historic economists, who believed that the goals being pursued by policy makers and the means to pursue them were an integral separate of the skill of economics, J.N Keynes believed in the desirability of the “ english School ‘s ” eminence between the discovery of principles and their application ( 1917, 54 ). [ 8 ] indeed, it was he who proposed using the phrase “ applied economics ” rather of “ the artwork of political economy ”. Keynes farther discussed the uses of the phrases applied political economy and use economics noting three different uses : [ 8 ]

  1. in the sense suggested in the text [in association with the art of political economy];
  2. to designate the application of economic theory to the interpretation and explanation of particular economic phenomena, without any necessary reference however, to the solution of practical questions;
  3. to mark off the more concrete and specialized portions of economic doctrine from those more abstract doctrines that are held to pervade all economic reasoning. (1917, 58–59) and applying theories of economy on what we have in reality to get a healthy enterprise and business prosperity.

other 19th and early twentieth century economists ’ consumption of the condition [edit ]

Léon Walras, for model, planned to organize his independent ferment into volumes on “ pure, ” “ applied, ” and “ social ” economics. Jaffé ( 1983 ) describes Walras ‘s design as involving making a differentiation between that which is true, is useful, and is equitable. In using the term true, Walras referred to propositions that inevitably followed from the nature of things. Pure economics then involves pure logic. Applied economics involves examining ways to achieve hardheaded goals and requires the make judgments about whether or not the logic of pure economics was relevant to the real earth. social economics besides presumed pure economics, but dealt with a different range of questions than did applied economics. [ 9 ] Vilfredo Pareto ( [ 1906 ] 1971, 104 ) follows as like custom suggesting economics might begin by eliminating that which is inessential to examine problems as reduced to their principal and essentials. He distinguishes between “ pure economics ” from “ use economics ” with saturated economics containing only the star lines of controversy and apply economics involving supplying the details. [ 10 ] Joseph Schumpeter ( 1954, 23 ) referred to some applied fields in economics the repeat of which might help highlight some of the issues involved in what defining put on economics involves. He discussed the surveil fields : [ 11 ]

  1. those that are typically thought of as part of economics but which also looked at individually to allow greater attention to detail – e.g. money and banking, trade, cycles, and location
  2. those that are independent of economics but study of them is needed for economics. These include subjects such as accounting, actuarial science, and insurance
  3. those that are areas of public policy: agriculture, labour, transportation, utility industries, control of industry, and public finance
  4. comparative economic systems
  5. demography
  6. area studies

More modern views [edit ]

Mainstream horizon [edit ]

Modern mainstream economics holds the opinion that there is a consistency of abstract economic hypothesis – the “ core ” – and give economics involves the practitioner in the lowering some elements of the abstractedness of this to examine particular issues. This turn down of the floor of abstraction may involve : [ 4 ]

  • relabeling variables as more specific, concrete concepts;
  • providing some structure to allow the drawing of more detailed conclusions;
  • producing numerical estimates for some of the parameters;
  • using the analysis to interpret the real world phenomena which are interpreted as examples of some more general class of events that the core theory might be used to examine.

Economics as a science [edit ]

Pesaran and Harcourt ( 2000 ) describe Stone ‘s attempt to face the challenge of making economics into a science by combining theory and measurement within a cohesive framework. They report Stone ‘s proposal for the establishment of the now celebrated Department of Applied Economics at Cambridge. [ 12 ] Stone argued that :

“The ultimate aim of applied economics is to increase human welfare by the investigation and analysis of economic problems of the real world. It is the view of the Department that this can best be achieved by the synthesis of three types of study which now tend to be pursued in isolation. The Department will concentrate simultaneously on the work of observations, i.e. the discovery and preparation of data; the theoretical appraisal of problems, i.e. the framing of hypotheses in a form suitable for quantitative testing; and the development of statistical methods appropriate to the special problems of economic information. The special character of the Department’s approach to problems of the real world will lie in this attempt at systematic synthesis.” (Stone in Pesaran and Harcourt (2000) pp. 149–150)[12]

early views [edit ]

The basis for equal approaches tends to be the denial that sound hypothesis can be made without some concrete connect with its area of application. Both the nineteenth century Historical School and the twentieth Century Institutionalists argue in this manner. Mitchell ( 1936 ) noted that those working in “ specialize fields ” had small use for kind of qualitative theory postulated by Marshall and Jevons. Mitchell suggested that cognition of “ real markets, ” would cause the complexion and content of economic theory ( Mitchell 1937, 26–28 ). Friedman shared this position that theoretical concepts might or preferably should arise out of the analysis of real world data. For both Mitchell and Friedman economics should involve an interaction between examining data and invent hypotheses. [ 13 ] Another issue which is related to the McCloskey review. This is economists do not necessarily practice what they preach. In this context that is the claim to be an “ practice economist, ” is equitable shorthand for saying they are looking at the real economy. What is being applied need not be “ economic hypothesis ”, as conventionally defined preferably something more basic. Eli Devons made a distinction between three different kinds of “ things ”, any of which might be being applied : [ 14 ]

  • theoretical models;
  • commonsense axioms, and
  • theoretical concepts.

Journals [edit ]

The Journal of Applied Economics [edit ]

The Journal of Applied Economics publishes original contributions on apply issues in micro and macroeconomics. The elementary criteria for selecting papers are quality and importance for the field. Papers based on a well motivated research problem that make a concrete contribution to empirical economics or applied hypothesis are particularly encouraged .

Applied Economics

[edit ]

Applied Economics is a journal that interprets its subject sphere as “ the application of economic analysis to specific problems in both the public and private sectors ” and seeks to publish “ quantitative studies, the results of which are of practice in the practical field ” and thus may help “ bring economic theory near to reality ” ; Applied Economics is a leading peer-reviewed journal in economics and its practical applications. [ 15 ]

American Economic Journal: Applied Economics [edit ]

This quarterly journal which began publication in 2009 is from the American Economic Association. It publishes papers on a range of topics in enforce economics, particularly empiric microeconomic issues, such as in undertaking economics, development microeconomics, health, education, demography, empiric corporate finance, empiric studies of trade wind, and empirical behavioral economics. [ 16 ]

American Journal of Agricultural Economics [edit ]

These journals are published by the Agricultural & Applied Economics Association. The American Journal of Agricultural Economics has been produced since 1919, and publishes research in the “ economics of department of agriculture and food, natural resources and the environment, and rural and community development throughout the earth ”. [ 17 ]

Applied Economics Perspectives and Policy [edit ]

Applied Economic Perspectives and Policy ( AEPP ) is the leading peer-reviewed journal of put on economics and policy. Published four times per year by Oxford University Press, it is the one of two journals published by the Agricultural & Applied Economics Association ( AAEA ), along with the american english Journal of Agricultural Economics ( AJAE ). today is the leading journal in ‘applied economics ‘ with a 2011 affect factor of 1.552. The purpose of AEPP is to analyze areas of current enforce economic research in an campaign to inform the policy-makers and decision makers ; and to generate connections between sub-fields of agricultural and put on economics in holy order to focus future research and increase cognition of those in the field about the impact of populace policy. [ 18 ]

review [edit ]

Backhouse and Biddle argue that the mainstream view, that there is an take “ theoretical core ” and that this can be applied in a range of areas, relies on this core having specific characteristics – namely, that it has a wide telescope and can be developed independently of individual applications. But they note that as with the definition of put on economics itself, there are within the economics profession differing views as to what belongs in the congress of racial equality – where one draws the cable between research that is contributing to the congress of racial equality and research that is applying the effect, and the relative importance or significance of research on topics in the core versus applied economics inquiry. [ 4 ] Some examples of the problems of use economics from versatile fields and issues :

  • Examples of problems of applied economics: Macroeconomics

One model of this is macroeconomics. In the 1960s and 1970s, macroeconomics was a part of the core of the subject. Why ? Because macroeconomics was not only sufficiently authoritative to be part of any economist ‘s train, but besides embodied a specify of concepts and principles not found in microeconomic theory. however the refilling of keynesian border on to macroeconomics with fresh authoritative macroeconomics and its successors, macroeconomics might now be regarded by the mainstream as merely an application of microeconomic theory. [ 4 ]

  • Examples of problems of applied economics: Development Economics

Another example is the situation within Development Economics. Throughout the 1950s and 1960s most development economist regarded the application of standard “ kernel ” microeconomic theory to their sphere as being wholly inappropriate. An option set of models provided their core. This might be good described as the structuralist approach. More recently development economics texts have provided applications of mainstream core hypothesis. [ 4 ]

  • Examples of problems of applied economics: Economic Growth Theory

Comim uses the history of the economics of growth in order to illustrate the diachronic nature of the concept of enforce economics. He first discusses the perspective of the theorists ’ views of the give dimension of their work and examines each from the position of the work carried out at the Department of Applied Economics ( DAE ) at Cambridge University. He emphasizes the divergences concerning economists ’ reason of the proper consumption of economic theory, divergences that might ultimately reveal the charm of clear-cut practices a far as applied economics is concerned and the character of institutional environments. [ 19 ]

  • Examples of problems of applied economics: the Minimum-wage controversy

Leonard notes one area of disagreement amongst applied economists which became celebrated in the US. That was the minimum-wage controversy. He notes that the ferocity of this controversy was curious because the probable effects were small and that several apparently more crucial policy issues such as ( entitlement reform, health policy, CPI calculation ) generated nothing like the storm. His explanation is that while this controversy was not specially significant to the economy, it was very authoritative to economics and economics as a policy skill. His explanation for this is that minimum engage research came to be seen as a test of the utility of applying neoclassic price theory to the wages and use. In other words, it was not barely a technical quarrel over such things as the sign and size of wage-elasticity but quite an installment in a long run methodological quarrel over whether neoclassic price theory is in reality of any habit. [ 20 ]

  • A critique of the dominance of econometrics

Swann ( 2006 ) queries the dominance of such econometric techniques within Applied Economics and suggests what he describes as the “ common of the casual practice of economics ” should be taken badly. Swann points out that econometrics ‘s privileged situation has not been supported by its disappointing results and preferably suggests other apply techniques, the slang, are besides desirable of retainer. These approaches to apply economics, include simulation, technology economics, case studies and common smell. [ 3 ]

See besides [edit ]

Notes [edit ]

References [edit ]

  • Begg, I and S. G. B. Henry (1998). Applied Economics and Public Policy, Cambridge University Press. Description.
  • Campbell, M. (1989). “Sources of Controversy in Applied Economics.” In Controversy in Applied Economics, edited by M. Campbell, M. Hardy, and N. Healey. New York: Wheatsheaf.
  • Department of Applied Economics (1948). “First Report: Activities in the Years 1946–1948.” Cambridge: University of Cambridge, .
  • Dow, S. (1987). “The Scottish Political Economy Tradition. Scottish Journal of Political Economy, 34(4), pp. 335–48.
  • Harcourt, G. C., and M. Kitson (1993). “Fifty Years of Measurement: A Cambridge View”. Review of Income and Wealth, ser. 39, no. 4, December, 435–47.
  • History of Political Economy (2000). Toward a History of Applied Economics. Annual Supplement, Volume 32. Durham, NC and London: Duke University Press Table of Contents.
  • Robinson, J. ([1974] 1979). “History versus Equilibrium.” In vol. 5 of Collected Economic Papers. Oxford: Basil Blackwell.
  • Schabas, M. (2001). “Economics, History of,” sect. 3 Applied Economics, International Encyclopedia of the Social & Behavioral Sciences, pp. 4152–4158. Abstract.
  • Swann, G. M. P. (2006). Putting Econometrics in Its Place: A New Direction in Applied Economics, Edward Elgar Description.

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