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on Post Keynesian Economics |
| By: | L. Randall Wray |
| Abstract: | This paper briefly summarizes the orthodox approach to banking, finance, and money, and then points the way toward an alternative based on socioeconomics. It argues that the alternative approach is better fitted to not only the historical record, but also sheds more light on the nature of money in modern economies. In orthodoxy, money is something that reduces transaction costs, simplifying “economic life” by lubricating the market mechanism. Indeed, this is the unifying theme in virtually all orthodox approaches to banking, finance, and money: banks, financial instruments, and even money itself originate to improve market efficiency. However, the orthodox story of money's origins is rejected by most serious scholars outside the field of economics as historically inaccurate. Further, the orthodox sequence of “commodity (gold) money” to credit and fiat money does not square with the historical record. Finally, historians and anthropologists have long disputed the notion that markets originated spontaneously from some primeval propensity, rather emphasizing the important role played by authorities in creating and organizing markets. By contrast, this paper locates the origin of money in credit and debt relations, with the money of account emphasized as the numeraire in which credits and debts are measured. Importantly, the money of account is chosen by the state, and is enforced through denominating tax liabilities in the state’s own currency. What is the significance of this? It means that the state can take advantage of its role in the monetary system to mobilize resources in the public interest, without worrying about “availability of finance.” The alternative view of money leads to quite different conclusions regarding monetary and fiscal policy, and it rejects even long-run neutrality of money. It also generates interesting insights on exchange rate regimes and international payments systems. |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_459&r=pke |
| By: | Aldrich, John |
| Abstract: | This paper considers J. M. Keynes as a statistician and philosopher of statistics and the reaction of English statisticians to his critique of their work. It follows the development of Keynes's thinking through the two versions of his fellowship dissertation The Principles of Probability (1907/8) to his book A Treatise on Probability (1921). It places Keynes's ideas in the context of contemporary English and Continental statistical thought. Of the statisticians considered special attention is paid to the reactions of .four: Edgeworth, Bowley, Jeffreys and R. A. Fisher. Keywords; Keynes, Edgeworth, Bowley, Pearson, Jeffreys, Fisher, Lexis, Bortkiewicz. JEL Classification: B16 B23 B30 |
| URL: | http://d.repec.org/n?u=RePEc:stn:sotoec:0611&r=pke |
| By: | Joerg Bibow |
| Abstract: | This paper investigates the phenomenon of persistent macroeconomic divergence that has occurred across the eurozone in recent years. Optimal currency area theory would point toward asymmetric shocks and structural factors as the foremost candidate causes. The alternative hypothesis pursued here focuses on the working of the Maastricht regime itself, making it clear that the regime features powerful built-in destabilizers that foster divergence as well as fragility. Supposed adjustment mechanisms actually have turned out to undermine the operation of the currency union by making it less “optimal,” that is, less subject to a “one-size-fits-all” monetary policy and common nominal exchange rate, in view of the resulting business cycle desynchronization and related build-up of financial imbalances. The threats of fragility and divergence reinforce each other. Without regime reform these developments could potentially spiral out of control, threatening the long-term survival of EMU. |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_460&r=pke |
| By: | L. Randall Wray |
| Abstract: | Demographers and economists agree that we are aging--individually and collectively, nationally and globally. An aging population results from the twin demographic forces of fewer children per family and longer lives. Most experts recognize the burden that aging causes as the number of retirees supported by each worker rises. This trend is reinforced by the graying of the baby-boom generation, but burdens will continue to rise even after the boomers are buried--albeit at a slower pace. |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levypn:06-5&r=pke |
| By: | Sandra Tavares Silva (CEMPRE, Faculdade de Economia do Porto, Universidade do Porto); Aurora A.C. Teixeira (CEMPRE, Faculdade de Economia do Porto, Universidade do Porto) |
| Abstract: | The understanding of the economy's aggregate growth patterns is a fundamental objective of economic growth theorizing. However, the micro constructions are strongly linked to economic growth and so cannot be neglected in such process. This paper is concerned with this problem, proposing a formal mechanism to establish the bridge between macro regularities and micro evolutionary behavior. Within a micro to macro or bottom-up perspective, the adopted approach is focused in the influence of firms’ ‘institutional settings’ on economic growth and in the industry dynamics that lies behind more aggregate behaviors. The analysis associates such settings to firms’ labor choices in terms of hiring/firing policies and to their screening capabilities. Building a computer simulation model which deals with the nature and evolution of the knowledge that guides firms’ efforts to improve their institutional settings, we were able to draw some important implications. The results show that firm’s ability to change its ‘institutional setting’ is crucial for its survival. In a model without a learning mechanism the results show significant turbulence in terms of exit and entry of firms and no significant connection with the firm’s ‘institutional set’. In the LearnModel, the outcome is much more stable, with initial firms surviving for long period of time. Results also suggest that the presence of a learning mechanism is particularly striking in what concerns firms’ behavior and industry’s dynamics. The survival probability depends on firms’ hiring efficiency and on their ability to react to environmental changes. Since firms’ hiring efficiency and their learning rates depend on their accumulated non-routine workers, the results seem to imply some ‘lock-in’ paths. Firms with initial low values of relative non-routine workers have lower chances of survival. However, firms with initial high values of relative non-routine workers will survive if and only if they rapidly improve their hiring efficiency. |
| Keywords: | evolutionary, industrial dynamics, learning, labor decisions |
| JEL: | D21 D83 L22 M51 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:227&r=pke |