nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2005‒07‒18
three papers chosen by
Karl Petrick
Leeds Metropolitan University

  1. The Reform of October 1979: How It Happened and Why By David E. Lindsey; Athanasios Orphanides; Robert H. Rasche
  2. Institutional Perspectives on Real Estate Investing: The Role of Risk and Uncertainty By William N. Goetzmann; Ravi Dhar
  3. Conversations between Anthropologists and Economists By Metin Cosgel

  1. By: David E. Lindsey (before his retirement in 2003: Division of Monetary Affairs at the Board of Governors of the Federal Reserve System); Athanasios Orphanides (Division of Monetary Affairs at the Board of Governors of the Federal Reserve System, Centre for Economic Policy Research, Center for Financial Studies); Robert H. Rasche (Federal Reserve Bank of St. Louis)
    Abstract: This study offers a historical review of the monetary policy reform of October 6, 1979, and discusses the influences behind it and its significance. We lay out the record from the start of 1979 through the spring of 1980, relying almost exclusively upon contemporaneous sources, including the recently released transcripts of Federal Open Market Committee (FOMC) meetings during 1979. We then present and discuss in detail the reasons for the FOMC’s adoption of the reform and the communications challenge presented to the Committee during this period. Further, we examine whether the essential characteristics of the reform were consistent with monetarism, new, neo, or old-fashioned Keynesianism, nominal income targeting, and inflation targeting. The record suggests that the reform was adopted when the FOMC became convinced that its earlier gradualist strategy using finely tuned interest rate moves had proved inadequate for fighting inflation and reversing inflation expectations. The new plan had to break dramatically with established practice, allow for the possibility of substantial increases in short-term interest rates, yet be politically acceptable, and convince financial markets participants that it would be effective. The new operating procedures were also adopted for the pragmatic reason that they would likely succeed.
    Keywords: Federal Reserve, FOMC, Paul Volcker, monetary reform, operating procedures
    JEL: E52 E58 E61 E65
    Date: 2005–01–01
  2. By: William N. Goetzmann (Yale School of Management - International Center for Finance); Ravi Dhar (International Center for Finance at Yale School of Management)
    Abstract: In this paper we address the factors influencing the institutional decision to allocate resources to real estate. We survey a sample of major institutional investors via a web questionnaire. They were willing to answer questions about their target real estate allocation, their plans to increase or decrease their allocation, the major reasons for investing in real estate, and views on the major risks and relative expense of doing so. We find that the endowments in our sample typically had a relatively short history of real estate investment, but planned to increase their allocation to the asset class - more so than pension funds. We also find uncertainty about use of historical data to be a significant factor in the allocation choice.
    Keywords: Behavioral Finance, real estate, investing, risk, uncertainty
    JEL: R33 G0 G23
    Date: 2005–07–15
  3. By: Metin Cosgel (University of Connecticut)
    Abstract: Interdisciplinary citation patterns and other indicators of the flow and sharing of academic knowledge suggest that economists and anthropologists do not talk to each other. Previous studies of this puzzling trend have typically attributed the problem to methodological differences between the two disciplines. Although there are significant differences between economics and anthropology in behavioral assumptions and modes of inquiry, similar differences exist between them and other disciplines (some with much heavier volumes of cross-citations with economics or anthropology), suggesting that the source of the problem lies elsewhere. This paper considers the problem at a deeper level by examining systematic differences in the preferences, capabilities, and literary cultures of economists and anthropologists. Adopting a rhetorical perspective, I consider not the firms, households, or tribes as the principal objective of analysis in the two disciplines, but the conversations between these units. These conversations (through non-verbal as well as verbal media) can be grouped into two genres, based on the type of problem they aim to solve. Those in the first genre aim to solve the problem of interest--how to align the incentives of the parties involved. Those in the second genre deal with the problem of knowledge--how to align localized, and dispersed information. Economists are interested and capable of dealing with primarily, if not exclusively, the first genre, and anthropologists focus on the second. This difference has far reaching consequences for how economists and anthropologists conduct their own scholarly conversations with their own colleagues, why they are having difficulty talking to each other across disciplinary boundaries, and what can be done to change the patterns of communication.
    Keywords: anthropology, conversation, interest, incentive, knowledge
    JEL: A12 B4 O5 Z1
    Date: 2005–07

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