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Famous Figures and Diagrams in Economics
This is a unique account of the role played by 58 figures and diagrams commonly used in economic theory. These cover a large part of mainstream economic analysis, both microeconomics and macroeconomics and also general equilibrium theory.
More Information
Critical Acclaim
Contributors
Contents
More Information
This is a unique account of the role played by 58 figures and diagrams commonly used in economic theory. These cover a large part of mainstream economic analysis, both microeconomics and macroeconomics and also general equilibrium theory.
The authoritative contributors have produced a well-considered and definitive selection including some from empirical research such as the Phillips curve, the Kuznets curve and the Lorenz curve. Almost all of them are still found in contemporary textbooks and research. Each entry presents an accurate and concise record of the history of the figure or diagram, including later developments and any controversy that arose in its development. As a whole, the book highlights how the use of geometric methods has played a central part in the development of economic theory and analysis; as a method of discovery, more commonly as a method of exposition and occasionally as a method of proof of propositions in economic theory and analysis.
This highly anticipated book will appeal to theorists in microeconomics or macroeconomics, scholars of economic theory and analysis, as well as students in microeconomics, general equilibrium theory or macroeconomics at the advanced undergraduate or graduate level who want a definitive account of some figure or diagram. Historians of economic thought and methodologists will also find this book an invaluable resource.
The authoritative contributors have produced a well-considered and definitive selection including some from empirical research such as the Phillips curve, the Kuznets curve and the Lorenz curve. Almost all of them are still found in contemporary textbooks and research. Each entry presents an accurate and concise record of the history of the figure or diagram, including later developments and any controversy that arose in its development. As a whole, the book highlights how the use of geometric methods has played a central part in the development of economic theory and analysis; as a method of discovery, more commonly as a method of exposition and occasionally as a method of proof of propositions in economic theory and analysis.
This highly anticipated book will appeal to theorists in microeconomics or macroeconomics, scholars of economic theory and analysis, as well as students in microeconomics, general equilibrium theory or macroeconomics at the advanced undergraduate or graduate level who want a definitive account of some figure or diagram. Historians of economic thought and methodologists will also find this book an invaluable resource.
Critical Acclaim
‘. . . the book is a marvellous achievement and a major contribution to the history of economic thought. . . The book provides a genuinely interesting perspective on the development of modern economics. Each diagram illustrates a single analytical point, but there is a cumulative logic to the exposition of the various diagrams that reproduce the main turns in the development of modern economic theory. So reading the book cover-to-cover is an excellent way of working through the logic of the discipline. . . Famous Figures and Diagrams in Economics is a major contribution to the history of economic thought and repays close study by anyone who wants to have a better understanding of how economists reason.’
– Daniel Little, Journal of Economic Methodology
‘. . . there is much of interest in this volume. . . The study under review makes for enjoyable reading for those who either have drawn economic diagrams on the blackboard as part of their teaching, or, for that matter, for those who as students recall painful inability to understand the point of the diagram, so carefully constructed on the blackboard by one of their teachers.’
– Peter Groenewegen, History of Economics Review
‘A picture is said to be worth a thousand words. A picture can easily be worth two or three equations, and it is certainly more memorable. I can draw and use an Edgeworth box more quickly than I can write down its formulas. There is a vast amount of economics packed into the 58 diagrams and expert commentaries in this unique book. Take it with you to your favourite desert island. All you need is a sandy beach and a pointed stick.’
– Robert Solow, Massachusetts Institute of Technology, US
‘This book is a goldmine of information and interpretation for historians of economics, and thoughtful economists of all kinds. The origin and evolution of important figures and diagrams in economics will now be instantly at their fingertips. The authors of the entries are a galaxy of distinguished economists and historians whose accounts can be trusted. One must ask why no one has put together such a collection before.’
– Craufurd Goodwin, Duke University, US
‘Economics relies on verbal reasoning, geometry and formal mathematics. Advances and insights in the subject come in all these ways. This splendid book shows the power of geometric analysis, which I have favoured in my own work, drawing on several famous diagrams that have made their way into the literature. It is a book to be savoured and learnt from.’
– Jagdish Bhagwati, Columbia University, US
‘Here is a feast of diagrams, presented by many expert authors in a context of history of thought. It will be very useful for researchers, students and textbook writers.’
– Max Corden, University of Melbourne, Australia
‘Francis Collins oversaw the human genome project. Mark Blaug and Peter Lloyd have done the same for economics, demonstrating that figures and diagrams are the DNA building blocks of the discipline. This book has them all: backward-bending labor supply, cobweb diagram, circular flow, production possibility frontier, Stolper-Samuelson box, IS/LM, the Phillips curve and many more. Each is portrayed, its importance explained, its origin revealed, and the reader often encounters Stigler’s Law of Eponymy (No scientific discovery is named after its original discoverer).’
– Kenneth G. Elzinga, University of Virginia, US
‘Both students and professors will welcome this original and unique collection. Analytically tighter and more complete expositions than much existing literature should be very welcome in graduate theory courses. Authors of history of economic thought texts will have to clarify and correct the historical record regarding who said what and when, and both reconfigure the assignment of credit and question use of the term “precursor”: early users did more than hint at the full development; often creating tools.’
– Warren Samuels, Michigan State University, US
– Daniel Little, Journal of Economic Methodology
‘. . . there is much of interest in this volume. . . The study under review makes for enjoyable reading for those who either have drawn economic diagrams on the blackboard as part of their teaching, or, for that matter, for those who as students recall painful inability to understand the point of the diagram, so carefully constructed on the blackboard by one of their teachers.’
– Peter Groenewegen, History of Economics Review
‘A picture is said to be worth a thousand words. A picture can easily be worth two or three equations, and it is certainly more memorable. I can draw and use an Edgeworth box more quickly than I can write down its formulas. There is a vast amount of economics packed into the 58 diagrams and expert commentaries in this unique book. Take it with you to your favourite desert island. All you need is a sandy beach and a pointed stick.’
– Robert Solow, Massachusetts Institute of Technology, US
‘This book is a goldmine of information and interpretation for historians of economics, and thoughtful economists of all kinds. The origin and evolution of important figures and diagrams in economics will now be instantly at their fingertips. The authors of the entries are a galaxy of distinguished economists and historians whose accounts can be trusted. One must ask why no one has put together such a collection before.’
– Craufurd Goodwin, Duke University, US
‘Economics relies on verbal reasoning, geometry and formal mathematics. Advances and insights in the subject come in all these ways. This splendid book shows the power of geometric analysis, which I have favoured in my own work, drawing on several famous diagrams that have made their way into the literature. It is a book to be savoured and learnt from.’
– Jagdish Bhagwati, Columbia University, US
‘Here is a feast of diagrams, presented by many expert authors in a context of history of thought. It will be very useful for researchers, students and textbook writers.’
– Max Corden, University of Melbourne, Australia
‘Francis Collins oversaw the human genome project. Mark Blaug and Peter Lloyd have done the same for economics, demonstrating that figures and diagrams are the DNA building blocks of the discipline. This book has them all: backward-bending labor supply, cobweb diagram, circular flow, production possibility frontier, Stolper-Samuelson box, IS/LM, the Phillips curve and many more. Each is portrayed, its importance explained, its origin revealed, and the reader often encounters Stigler’s Law of Eponymy (No scientific discovery is named after its original discoverer).’
– Kenneth G. Elzinga, University of Virginia, US
‘Both students and professors will welcome this original and unique collection. Analytically tighter and more complete expositions than much existing literature should be very welcome in graduate theory courses. Authors of history of economic thought texts will have to clarify and correct the historical record regarding who said what and when, and both reconfigure the assignment of credit and question use of the term “precursor”: early users did more than hint at the full development; often creating tools.’
– Warren Samuels, Michigan State University, US
Contributors
Contributors: S. Ashok, R.E. Backhouse, W.J. Baumol, M. Blaug, R. Boyer, L. Cameron, J.S. Chipman, A.J. Cohen, J.S. Cramer, J. Creedy, A.V. Deardorff, R.W. Dimand, A. Dixit, R. Dixon, B.C. Eaton, J. Eichberger, N. Erkal, R. Färe, L. Gangadharan, N. Giocoli, Y. Giraud, S. Grosskopf, H. Haller, D.W. Hands, G.C. Harcourt, T.M. Humphrey, R.W. Jones, N. Kakwani, M. Kemp, J.E. King, A.O. Krueger, D. Laidler, C. Lee, R.G. Lipsey, P. Lloyd, F. Maclachlan, R. Middleton, M. Nerlove, Y.-K. Ng, A. Panagariya, P. Rodenburg, R. Rothschild, M. Schneider, H.-l. Shi, A. Skinner, B.J. Spencer, H. Thompson, J. Whalley, R. Williams, W.C. Woo, A.D. Woodland, W. Young
Contents
Contents:
Introduction
Mark Blaug and Peter Lloyd
PART I: SINGLE MARKET ANALYSIS (PARTIAL EQUILIBRIUM)
Basic Tools of Demand and Supply Curve Analysis
1. Marshallian Cross Diagrams
Thomas M. Humphrey
2. The Stability of Equilibrium
Mark Blaug
3. Indifference Curves and Isoquants
Mark Blaug and Peter Lloyd
4. The Elasticity of Substitution
Robert Dixon
5. Substitution and Income Effects
Hans Haller
6. Engel Curves
Ross Williams
7. Homothetic Production and Utility Functions
Rolf Färe and Shawna Grosskopf
8. Long-run and Short-run Cost Curves
Fiona Maclachlan
9. The Product Exhaustion Theorem
Cassey Lee
10. Classification of Technical Change
Robert Dixon
11. Nash Equilibrium
Jürgen Eichberger
Welfare Economics
12. Consumer Surplus
Yew-Kwang Ng
13. The Harberger Triangle
Yew-Kwang Ng
14. Community Indifference Curves and the Scitovsky ‘Paradox’
Richard G. Lipsey
15. The Taxation of External Costs
Yew-Kwang Ng
16. Monopoly and Price Discrimination
William J. Baumol
17. Duopoly Reaction Curves
Nicola Giocoli
18. Monopolistic Competition
Andrew Skinner
19. Kinked Demand Curves
R. Rothschild
Special Markets and Topics
20. Backward-bending Labour Supply Curves
John E. King
21. Location Theory: The Contributions of von Thünen and Lösch
B. Curtis Eaton and Richard G. Lipsey
22. Hotelling’s Model of Spatial Competition
Nisvan Erkal
23. Cobweb Diagrams
Marc Nerlove
24. Reswitching and Reversing in Capital Theory
Avi J. Cohen and Geoffrey C. Harcourt
25. The Markowitz Mean-variance Diagram
Fiona Maclachlan
26. Rent-seeking Diagrams
Anne O. Krueger
27. The Logistic Growth Curve
J.S. Cramer
28. Graph Theory and Networks
Cassey Lee
PART II: GENERAL EQUILIBRIUM ANALYSIS
Basic Tools of General Equilibrium Analysis
29. Circular Flow Diagrams
Roger E. Backhouse and Yann Giraud
30. The Unit Simplex
John Whalley
31. The Edgeworth Box
John Creedy
32. The Role of Numbers in Competition
John Creedy
33. Production Possibility Frontiers
Ronald W. Jones
34. The Utility-Possibility Frontier
John S. Chipman
35. The Factor Price Frontier
Alan D. Woodland
36. Pareto Efficiency
Peter Lloyd
37. The Phase Diagram Technique for Analyzing the Stability of Multiple-market Equilibrium
D. Wade Hands
38. The Theory of Second Best and Third Best
Wai Chiu Woo
Open Economies
39. The Offer Curve
Murray Kemp
40. The Stolper-Samuelson Box
Henry Thompson
41. The Lerner Diagram
Alan V. Deardorff
42. The Trade Theory Diagram
Peter Lloyd
43. The Four-quadrant Diagram for the Two-sector Heckscher-Ohlin Model
Arvind Panagariya
44. The Integrated World Equilibrium Diagram
Avinash Dixit
45. The Optimal Tariff
Murray Kemp
PART III: MACROECONOMICS
Macroeconomic Analysis and Stabilisation
46. Keynesian Income Determination Diagrams
Michael Schneider
47. The IS-LM Diagram
Warren Young
48. The Fleming-Mundell Diagram
Russell Boyer and Warren Young
49. The Aggregate Demand Aggregate Supply Diagram
Richard G. Lipsey
50. The Phillips Curve
Richard G. Lipsey
51. The UV or Beveridge Curve
Peter Rodenburg
52. The Demand Curve for Money
David Laidler
53. Non-neutrality of Money
He-ling Shi
54. The Laffer Curve
Roger Middleton
Growth, Income Distribution and Other Topics
55. Intertemporal Utility Maximization – the Fisher Diagram
Thomas M. Humphrey
56. The Diagrams of the Solow-Swan Growth Model
Barbara J. Spencer and Robert W. Dimand
57. The Lorenz Curve
Nanak Kakwani
58. Kuznets Curves
Lisa Cameron, Lata Gangadharan and Sowmiya Ashok
Index
Introduction
Mark Blaug and Peter Lloyd
PART I: SINGLE MARKET ANALYSIS (PARTIAL EQUILIBRIUM)
Basic Tools of Demand and Supply Curve Analysis
1. Marshallian Cross Diagrams
Thomas M. Humphrey
2. The Stability of Equilibrium
Mark Blaug
3. Indifference Curves and Isoquants
Mark Blaug and Peter Lloyd
4. The Elasticity of Substitution
Robert Dixon
5. Substitution and Income Effects
Hans Haller
6. Engel Curves
Ross Williams
7. Homothetic Production and Utility Functions
Rolf Färe and Shawna Grosskopf
8. Long-run and Short-run Cost Curves
Fiona Maclachlan
9. The Product Exhaustion Theorem
Cassey Lee
10. Classification of Technical Change
Robert Dixon
11. Nash Equilibrium
Jürgen Eichberger
Welfare Economics
12. Consumer Surplus
Yew-Kwang Ng
13. The Harberger Triangle
Yew-Kwang Ng
14. Community Indifference Curves and the Scitovsky ‘Paradox’
Richard G. Lipsey
15. The Taxation of External Costs
Yew-Kwang Ng
16. Monopoly and Price Discrimination
William J. Baumol
17. Duopoly Reaction Curves
Nicola Giocoli
18. Monopolistic Competition
Andrew Skinner
19. Kinked Demand Curves
R. Rothschild
Special Markets and Topics
20. Backward-bending Labour Supply Curves
John E. King
21. Location Theory: The Contributions of von Thünen and Lösch
B. Curtis Eaton and Richard G. Lipsey
22. Hotelling’s Model of Spatial Competition
Nisvan Erkal
23. Cobweb Diagrams
Marc Nerlove
24. Reswitching and Reversing in Capital Theory
Avi J. Cohen and Geoffrey C. Harcourt
25. The Markowitz Mean-variance Diagram
Fiona Maclachlan
26. Rent-seeking Diagrams
Anne O. Krueger
27. The Logistic Growth Curve
J.S. Cramer
28. Graph Theory and Networks
Cassey Lee
PART II: GENERAL EQUILIBRIUM ANALYSIS
Basic Tools of General Equilibrium Analysis
29. Circular Flow Diagrams
Roger E. Backhouse and Yann Giraud
30. The Unit Simplex
John Whalley
31. The Edgeworth Box
John Creedy
32. The Role of Numbers in Competition
John Creedy
33. Production Possibility Frontiers
Ronald W. Jones
34. The Utility-Possibility Frontier
John S. Chipman
35. The Factor Price Frontier
Alan D. Woodland
36. Pareto Efficiency
Peter Lloyd
37. The Phase Diagram Technique for Analyzing the Stability of Multiple-market Equilibrium
D. Wade Hands
38. The Theory of Second Best and Third Best
Wai Chiu Woo
Open Economies
39. The Offer Curve
Murray Kemp
40. The Stolper-Samuelson Box
Henry Thompson
41. The Lerner Diagram
Alan V. Deardorff
42. The Trade Theory Diagram
Peter Lloyd
43. The Four-quadrant Diagram for the Two-sector Heckscher-Ohlin Model
Arvind Panagariya
44. The Integrated World Equilibrium Diagram
Avinash Dixit
45. The Optimal Tariff
Murray Kemp
PART III: MACROECONOMICS
Macroeconomic Analysis and Stabilisation
46. Keynesian Income Determination Diagrams
Michael Schneider
47. The IS-LM Diagram
Warren Young
48. The Fleming-Mundell Diagram
Russell Boyer and Warren Young
49. The Aggregate Demand Aggregate Supply Diagram
Richard G. Lipsey
50. The Phillips Curve
Richard G. Lipsey
51. The UV or Beveridge Curve
Peter Rodenburg
52. The Demand Curve for Money
David Laidler
53. Non-neutrality of Money
He-ling Shi
54. The Laffer Curve
Roger Middleton
Growth, Income Distribution and Other Topics
55. Intertemporal Utility Maximization – the Fisher Diagram
Thomas M. Humphrey
56. The Diagrams of the Solow-Swan Growth Model
Barbara J. Spencer and Robert W. Dimand
57. The Lorenz Curve
Nanak Kakwani
58. Kuznets Curves
Lisa Cameron, Lata Gangadharan and Sowmiya Ashok
Index
