This work on index-number construction focuses on production indexes, including output and input deflators that can be used for constructing real output and real input. Fisher and Shell treat separately the different production units: the firm, the industry, and the economy, as well as the different forms of industrial organization: monopoly, monopsony, and competition. Only in the simplest cases is the appropriate theory isomorphic to that of the cost-of-living index because of the interlinkages among the various production units. A firm (...) cannot always assume that the behavior of its competitors, suppliers, and customers will be unaffected by price changes and only in special cases can an industry take supply and demand conditions as given. (shrink)

The views of some historians and philosophers of history as to the possibility of fruitful historical generalization seem at odds with the underlying methodology of the other social sciences. A formal model of the world historical process is here presented within which this apparent contradiction is seen to be resolvable in terms of modern theories of probability and stochastic processes. This is done by giving rigorous form to procedures and statements in the social sciences. A formal treatment of the dependence (...) of an investigation in one discipline on previous studies both in that area and in other social and natural sciences then follows naturally. (shrink)

In Marshall's Tendencies (Sutton, 2000), John Sutton poses some fairly deep questions for economists, especially for empirical work. In particular, when (if ever) is it safe to behave as though the applies? In that paradigm, we are attempting to extract and estimate the model from the data and are only kept from doing so because, while economic analysis captures the main , there are many small influences that we cannot exactly take into account. That paradigm, which Sutton traces to an (...) analogy of Marshall's likening economic predictions to predictions of the tides, leads to the econometric estimation of economic relationships, taking statistical account of the unincluded small influences by placing them in a random disturbance term. Sutton states (p. 5),. (shrink)