TheMarketForIdeas

Alexandru-Ștefan Goghie
Alexandru-Ștefan Goghie
Independent researcher, interested in the philosophy of economics
The Evolving Identity of the Firm. Cognitive Peculiarities and Idiosyncratic Perceptions

The Evolving Identity of the Firm. Cognitive Peculiarities and Idiosyncratic Perceptions

Alexandru-Ștefan Goghie

Research into the theory of the firm began with the publication of “The Nature of the Firm” (Coase, 1937), which led to the appearance of four essential questions about the nature of the firm. Why do firms exist? Why are these organized the way they are? Why are there firm boundaries? Why are firms heterogeneous? These questions led to the emergence of many research programs starting with the 1970s, in the seminal works of Alchian & Demsetz (1972), Jensen & Meckling (1976), in transaction-cost economics (Williamson, 1981), in behavioral theory (Cyert & March, 1963), a theory that considers that firms create value by compensating for individual cognitive limitations, and so on. But the effort to integrate firm theory and entrepreneurship is relatively young, especially when we emphasize that modern firm theory was based on the “production function view” (Langlois & Foss, 1999), assuming a predetermined set of production possibilities, starting from a homogeneous interpretation of the firm, in a binary input-output relationship. The firm begins to become dynamic with the emergence of the heterodox Austrian perspective, suggesting that firms create value through their ability to combine the judgments of numerous individuals (Penrose, 1959).  More


Zombified Finance and the Walking Dead Economy

Zombified Finance and the Walking Dead Economy

Alexandru-Ștefan Goghie

The financial crisis of 2007 was the result of a constant accumulation of risks facilitated by the gradual lowering of interest rates. This decrease allowed the emergence of an allocation of resources incongruous with the economic reality, decisively affecting the complementarity of production processes. As a viable example, the Federal Reserve, led at the time by Alan Greenspan, decided that between December 2000 and June 2003, the federal funds rate would be reduced from 6.5% to 1%. Immediately after that, in June 2004, the federal rate was increased by 0.25%, to curb the rise in inflation in the real estate market. But a constant decrease in the interest rate was reflected in specific, interest-sensitive sectors, such as real estate. This increase in investment appetite in the real estate sector was also due to legislative provisions, such as the Housing and Urban Development Act, which obliges GSEs such as Fannie Mae and Freddie Mac to have at least 30% of their loan purchases directly linked to affordable housing, which would stimulate mortgage lending in communities with limited resources. This phenomenon was also precipitated by the appearance of the Community Reinvestment Act, all of which facilitated a loosening of lending standards. At the same time, to support these mortgage practices, mortgage-backed assets appeared and implicitly the development of the shadow banking system. As these investments were interest-sensitive, with the increase in inflation in the real estate sector, a tightening of monetary policy affected the profitability of these investments and hence the ability to repay, effects that have also translated into the shadow banking system, repo markets and, finally, international markets. The detailed processes that led to the outbreak of the financial crisis are not the subject of this article, but their brief presentation was necessary to continue the presentation of the phenomenon of economic zombification.  More


Communicative Action, Subjective Perception and the Hermeneutics of Capital Structure

Communicative Action, Subjective Perception and the Hermeneutics of Capital Structure

Alexandru-Ștefan Goghie

This article highlights the implications of the subjective communication and interaction between economic agents in the process of expanding individual and implicitly social knowledge. Each economic actor goes through a set of unique experiences, which facilitates the emergence of unique expectations and perceptions. As such, these perceptions will lead to a distinct allocation of resources. Therefore, I try to emphasize the importance of expanding knowledge in socio-economic evolution, as a mechanism of exchanging unique experiences.  More


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FOUNDATIONS
The Market For Ideas Association

The Romanian-American Foundation for the Promotion of Education and Culture (RAFPEC)
THE NETWORK
WISEWIDEWEB
OEconomica

Amfiteatru Economic