Study Notes for HBE 2206: History of Economic Thought II

CoPearto Welfare Economics

• Definition: Pareto efficiency occurs when resources cannot be reallocated without making someone worse off.

• Conditions for Efficiency: Identical marginal rates of substitution and transformation in consumption/production.

• Market Failures: Failure to achieve efficiency due to monopolies, externalities, and imperfect information.

Monetary Economics Development

• Key Contributors: Wicksell, Keynes, Friedman.

  • Wicksell emphasized money supply's effect on prices.

  • Keynes argued for demand-driven models and the indirect effect of money on prices.

  • Friedman focused on maintaining price stability through controlled money supply.

Economic Development Theories

• Stages of Economic Growth (Rostow):

  • Traditional Society, Preconditions to Take-off, Take-off, Drive to Maturity, Age of High Mass Consumption.

  • Critiques include linearity and neglect of unique country contexts.

Summary of Neoclassical vs. Classical Economics

• Classical Economics: Focus on production costs determining value.

• Neoclassical Economics: Value determined by consumer demand and preferences.

Key Authors and References

• **Textbooks: ** Hunt & Lauzenheiser, Warren & Biddle, Lionel R. Roncaglia, Nicola, Mills.

• Journals: Journal of Economics, Journal of Finance and Economics, Journal of the History of Economic Thought.