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on Post Keynesian Economics |
| By: | Amal Sanyal |
| Abstract: | Keynes’ General Theory provides an interesting metaphor for asset markets: they are like newspaper competitions where contestants have to pick up the six prettiest faces from a hundred photographs, and the prize would go to one whose choice is closest to the average preferences. Keynes did not explicitly formalise the metaphor but his observations about the bond market and the speculative demand for money are closely related to this vision of asset markets. Our paper develops a class of decision rules from the suggestions in the General Theory and Keynes' QJE(1937) paper, and introduces a concept of ‘equilibrium guess’ which was not explicit in the newspaper competition idea. Using them we model a bond market which shows that the ‘newspaper competition’ amounts to endogenous determination of asset quality, and is capable of producing familiar Keynesian features: (i) demand for money develops infinite elasticity as interest rate approaches a low critical value; (ii) a shock to expected interest rate when the current rate is small, can lead to mass flight into money; and (iii) the more unanimous the market opinion, the more unstable the market, and the more difficult it is for monetary policy to be effective. |
| Keywords: | Keynes, endogenous quality, stability, liquidity trap, speculative demand. |
| JEL: | B22 E12 E41 |
| Date: | 2005–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpma:0501015&r=pke |
| By: | Prof John Foster (School of Economics, The University of Queensland) |
| Abstract: | The applicability of complex systems theory in economics is evaluated and compared with standard approaches to economic theorizing based upon constrained optimization. A complex system is defined in the economic context and differentiated from complex systems in physio-chemical and biological settings. It is explained why it is necessary to approach economic analysis from a network, rather than a production and utility function perspective, when we are dealing with complex systems. It is argued that much of heterodox thought, particularly in neo-Schumpeterian and neo-Austrian evolutionary economics, can be placed within a complex systems perspective upon the economy. The challenge is to replace prevailing 'simplistic' theories, based in constrained optimization, with 'simple' theories, derived from network representations in which value is created through the establishment of new connections between elements. |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uq2004:335&r=pke |
| By: | Eckhard Hein (WSI in der Hans Böckler Stiftung) |
| Abstract: | Starting from Schumpeter’s important distinction between „real analysis“ and „monetary analysis“, in this paper it is shown that major elements of Marx’s economic theory fall in the camp of monetary analysis and the implications for Marx’s theory of capital accumulation are derived. First, Marx’s theory of labour value has to be considered a „monetary theory of value“ because „abstract labour“ as the social substance of value cannot be measured without a social standard of value. Money as a social representative of value, therefore, is introduced at the very beginning of Marx’s microeconomics. Marx’s rejection of Ricardo’s interpretation of Say’s Law requires that money as a means of circulation and as a means of payment is non-reproducible and therefore cannot be a commodity. Second, in the schemes of reproduction it becomes clear, that the realisation of profits for the capitalist class as a whole requires money advances, which have to increase by means of rising credit in a growing economy. Third, the rate of interest in Marx’s economics is conceived of as a monetary category determined by relative powers of financial and industrial capitalists. Therefore, similar to post-Keynesian theories of distribution and growth, the rate of capital accumulation is determined by the expected rate of profit and the exogenous rate of interest. From this it follows, that any “real theory” of crisis and stagnation, as the falling rate of profit theory of crisis, cannot be sustained within Marx’s monetary analysis. |
| Keywords: | Money, interest, capital accumulation, Marx’s economics |
| JEL: | B |
| Date: | 2005–01–07 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpmh:0501002&r=pke |
| By: | Parto,Saeed (MERIT) |
| Abstract: | Policy formation is only one the three main components in the continuum of policy formation – policy implementation – policy evaluation – policy formation. To fully understand why policy outcomes often fall significantly short of policy intentions we need to examine the structuring factors, i.e., the institutions of governance, that shape the policy process. This paper focuses on the interplay between the policy process, governance, and institutions to articulate a framework for conducting institutionally sensitive policy analysis. A comparative study of the waste subsystems in the Netherlands and the United Kingdom reveals that each subsystem is the product of its “own” institutional landscape, and not directly and immediately subject to the whims of policy making at the EU scale of governance. Although there are signs of “Europeanization” in both cases, national problems, policies, and politics as manifest through the full spectrum of formal and informal institutions continue to play a major role in facilitating and curtailing change in each of the two waste subsystems. The paper concludes with a discussion of the implications of institutionally sensitive policy analysis for the current discourse on governance for sustainable development at the European scale. |
| Keywords: | Economics ; |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamer:2005001&r=pke |
| By: | Garavaglia, C. (CESPRI, Bocconi University, Milan, Italy and Cattaneo University, LIUC, Castellanza (VA), Italy) |
| Keywords: | simulation, models, industrial dynamics |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:tuecis:0419&r=pke |
| By: | Vranceanu, Radu (ESSEC Business School) |
| Abstract: | In general, capitalist countries display sustained growth, dynamism and innovation, and a high adaptability in response to external shocks. Yet in the last twenty years discontent over the notorious drawbacks of capitalism – corporate frauds, corruption, abuses of market power – have grown continually. In this paper, we argue that no remedy to these difficulties can be found if ethical dilemmas are not anticipated and addressed at the individual, firm and economy-wide level. While pro-ethical changes in business regulation would help, government action alone may not be effective enough. A possible complementary solution would be to alter the ideological foundations of capitalism, placing more emphasis on ethical issues. This intellectual change calls for a reorientation of the social sciences. In particular, to effectively support decision-makers in the difficult task of integrating the ethical constraint, economic theory should incorporate a more in-depth reflection on human goals. |
| Keywords: | Business Ethics; Capitalism; Economics; Values; Corporate social responsability |
| JEL: | A11 A13 B41 M14 P17 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:essewp:dr-05001&r=pke |
| By: | J.S Metcalfe |
| Abstract: | Growth dynamics and structural change are the two central features of variation / selection processes within populations. This paper explores them in terms of three themes, or sets of accounts, namely Logistic Growth Accounting, Competition Accounting and the Price Theorem. The accounting concepts have in common a concern with 'population thinking' and are essential elements in the study of economic development interpreted as the transformation of initial populations of activities into new kinds of populations. Development can be uncovered at many levels in an economic system, for example in the competitive process at the level of industries, sectors and markets. Business rivalry, underpinned by differential innovative activity, is the basis of the differential survival and growth of competing economic activities and the strategies deployed to create sustainable differences in competitive selection characteristics are at the core of the capitalist dynamic interpreted as an adaptive, evolutionary process. This kind of evolutionary argument is necessarily concerned with growth rate dynamics and the explanation of the diversity of growth rates across entities in a population. The accounting relationships presented are a prelude to deeper causal explanations of evolution in institutions, economies and perhaps in knowledge itself. |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:esi:evopap:2004-21&r=pke |