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on Post Keynesian Economics |
| By: | Greg Hannsgen (The Levy Economics Institute) |
| Abstract: | In dealing with the problematic relationship of morality to rational choice theory, neoclassical economists since Lionel Robbins have often argued that they can incorporate moral values into consumer theory by putting those values into the utility function. This paper tests the viability of such an approach in the context of international finance. The moral value at stake is autonomy, which may be lost when borrowers must submit to the edicts of international financial institutions. When such a value is inserted into the utility function of a small economy, the growth rate of consumption and the level of investment change. Furthermore, potential borrowers may lose their ability to credibly commit to paying back loans, resulting in a complete absence of borrowing where it might otherwise take place. The author argues that while this model illustrates the possibility of analyzing a noneconomic value (sovereignty) through rational choice theory, it also shows that standard methods of empirical inference, policy evaluation, and welfare analysis may fail in such a situation. To answer questions that mix morality and economics, economists must seek tools other than conventional rational choice theory. |
| Keywords: | : Values, Lionel Robbins, international debt, methodology |
| JEL: | B |
| Date: | 2005–05–02 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpmh:0505001&r=pke |
| By: | John Bower (Oxford Institute for Energy Studies); Nawal Kamel (Oxford Institute for Energy Studies) |
| Abstract: | Keynes proposed that a ‘Commod Control’ agency be created after the Second World War to stabilise spot prices of key internationally traded commodities by systematically buying and selling physical buffer stocks. In this paper, the creation of a new Global Commodity Insurer (GCI) is discussed that would operate an international Commodity Price Insurance (CPI) scheme with the objective of protecting national government revenues, spending and investment against the adverse impact of short- term deviations in commodity prices, and especially oil prices, from their long-run equilibrium level. Crude oil is the core commodity in this scheme because energy represents 50% of world commodity exports, and oil price shocks have historically had a significant macroeconomic impact. In effect the GCI would develop a new international market, which is currently missing, designed to protect governments against the risk of declines in their fiscal revenue, and increases in the level of claims on that income especially from social programmes, brought about by short-term commodity price shocks. GCI would take advantage of the rapid growth of trading in derivative securities in the global capital market since the 1980s by selling CPI insurance contracts tailored to the specific commodity price exposure faced by national government, and offsetting the resulting price risk with a portfolio of derivative contracts of five-year or longer maturities, supplied by banks, insurers, reinsurers, investment institutions, and commodity trading companies, with investment grade credit ratings. The difference between the CPI and a buffer stock or export/import control scheme is that it would mitigate the macro-economic shocks posed by commodity price volatility, but not attempt to control commodity prices. The cost of the CPI scheme is estimated by simulating 5-year commodity price paths using a standard log price mean reverting model parameterised from an econometric analysis of commodity price time series. |
| Keywords: | Commodity Price Insurance |
| JEL: | F3 Q43 |
| Date: | 2005–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpot:0504012&r=pke |
| By: | Siong Hook Law; Panicos Demetriades |
| Abstract: | Using cross-country and dynamic panel data techniques on 43 developing countries during 1980 - 2000, we provide evidence which suggests that financial development is enhanced when a country's borders are simultaneously open to both capital flows and trade. Our findings also suggest that institutional quality is a statistically significant independent determinant of financial development. Our findings are robust to alternative measures of financial and trade openness, as well as estimation method and sample period. |
| Keywords: | Capital inflows; trade openness; financial development and dynamic panel data analysis |
| JEL: | G2 O11 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:05/8&r=pke |
| By: | G. Buenstorf |
| Abstract: | The adequate role of Darwinist concepts in evolutionary economics has long been a contentious issue. The controversy has recently been rekindled and modified by the position of "Universal Darwinism", most prominently favored by Geoffrey Hodgson and Thorbjørn Knudsen. They argue that the ontology of all evolutionary systems accords to the basic Darwinist scheme of variation, selection and inheritance. This paper focuses on the emerging application of the Universal Darwinist framework to the analysis of market competition and industrial evolution and gauges its usefulness for organizing an evolutionary approach to industrial economics. Drawing on both a theoretical discussion and recent empirical findings, it argues that selection and inheritance concepts narrowly construed after the biological example are of limited help in studying markets and industries. As an alternative to the 'top-down' approach of Universal Darwinism, 'bottom-up' causal theories are suggested that explain how the interplay of descent, experience and learning shapes the competitive performance of firms in the evolution of industries. |
| Keywords: | Universal Darwinism, routines, pre-entry experience, spinoffs, descent |
| JEL: | B52 L10 L20 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:esi:evopap:2005-02&r=pke |
| By: | Simon Deakin |
| Abstract: | Amartya Sen’s capability approach has the potential to counter neoliberal critiques of social welfare systems by overcoming the false opposition between security and flexibility. In particular, it can be used to promote the idea of social rights as the foundation of active participation by individuals in the labour market. This idea is starting to be reflected in the case law of the European Court of Justice concerning free movement of persons but its use in the European employment strategy is so far more limited, thanks to the continuing influence of neoliberal ‘activation policies’. |
| Keywords: | capabilities, welfare state, social rights, European Union law |
| JEL: | J38 K31 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp303&r=pke |
| By: | Ajit Singh |
| Abstract: | The key analytical and policy question examined in this paper is whether multinational companies and their overseas investment need to be regulated at the national or the international level, in order to address market failures, and to enhance their potential contribution to world welfare. The paper examines two kinds of regulatory regimes: first the current regime and second, a new regime proposed by the European community and Japan at the WTO (ECJ) to institute fresh global rules of the game which will effectively allow multinationals unfettered freedom to invest where they like, whenever they like, how much and in what products. Very briefly, the central conclusion of the paper is that ECJ, despite its important concession of confining itself to only one source of external finance namely FDI, is a flawed proposal both from the perspective of developing and developed countries. Its shortcomings are particularly serious with respect to developing countries as it essentially ignores the developmental dimension altogether. It is emphasized that although the current post-Uruguay Round FDI regime is to be preferred in relation to the ECJ, the former has, nevertheless severe deficits from a developmental perspective. These need prompt action by the international community. |
| Keywords: | globalisation, foreign direct investment, trade flows, WTO |
| JEL: | F02 F40 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp304&r=pke |
| By: | Richard M. Bird (Director of the International Tax Program, Joseph L. Rotman School of Management, University of Toronto); Jorge Martinez-Vazquez (Andrew Young School of Policy Studies, Georgia State University); Benno Torgler |
| Abstract: | “Will underdeveloped countries learn to tax?” asked Nicholas Kaldor (1963), forty years ago. Underlying this question is the assumption that if a country wishes to become ‘developed’ it needs to collect in taxes an amount greater than the 10-15 percent found in many developing countries. Kaldor’s answer to his question was essentially that since even the poorest country had sufficient ‘capacity’ in both economic and administrative terms to tax more, whether or not a particular country did so depended primarily on its political institutions. Would developing countries be fortunate enough to have those with political power voluntarily give up at least some of their power to block fiscal reform in exchange for social stability? Or would the ruling groups rather wait (in the spirit of après moi le deluge) for the revolutionary upheaval that he considered the only alternative? |
| Keywords: | Societal Institutions,Tax Effort,Developing Countries |
| Date: | 2004–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:ays:ispwps:paper0406&r=pke |
| By: | Richard M. Bird; Eric M. Zolt |
| Abstract: | In developed countries, the income tax, especially the personal income tax, has long been viewed as the primary instrument for redistributing income and wealth. This article examines whether it makes sense for developing countries to rely on the income tax for redistributive purposes. We put forth three propositions. First, the personal income tax has done little to reduce inequality in many developing countries. This failure is not surprising given that in many countries personal income taxes are neither comprehensive nor very progressive—they often amount to little more than withholding taxes on labor income in the formal sector. Moreover, the personal income tax plays such a small role in the tax systems of developing countries that it would be unrealistic to believe that this tax could have a meaningful impact on distribution. Second, it is not costless to pretend to have a progressive personal income tax system. Tax systems generate real administrative, compliance, economic efficiency and political costs. The costs associated with badly designed and badly administered personal income tax systems likely exceed the costs associated with other taxes. There are opportunity costs as well. Third, given the ineffectiveness of the personal income tax, if countries want to use the fiscal system to reduce poverty or reduce inequality, alternative approaches merit consideration. Countries need to make better use of their expenditure programs in targeting resources to the poor. Given the dominance of taxes on consumption in the tax structure of developing countries, the distributional consequences of consumption taxes are of far greater importance than those of the personal income tax. Countries can also make greater use of benefit taxation and in particular fiscal decentralization may allow for better matching of those who benefit and those who pay for government activity. Finally, countries can consider alternatives to taxing income other than the current comprehensive income approach. |
| Keywords: | Redistribution, Taxation, Personal Income, and Developing Countries |
| Date: | 2005–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ays:ispwps:paper0507&r=pke |