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on Post Keynesian Economics |
| By: | Peter Howells (School of Economics, University of the West of England) |
| Abstract: | Since Basil Moore published Horizontalists and Verticalists in 1988, there have been numerous attempts to model an endogenous money supply within a graphical framework which would also facilitate discussion of some of the controversial issues surrounding it. These have not generally been very successful until Fontana’s recent (2003, 2006) adoption of a pure flow of funds framework. More recently, the ‘New Keynesian consensus’ in macroeconomics has finally forced a rejection of the exogenous money paradigm and the LM part of the familiar IS/LM/AS model. In this paper we show how, with some modification, Fontana’s approach can be combined with ‘mainstream’ replacements of IS/LM (Carlin and Soskice, 2006; Bofinger, Mayer and Wollmerhäuser, 2006) to produce a model of the monetary sector which illustrates both the current wisdom about monetary policy (e.g. Woodford, 2003) and the post-Keynesian insights that have been developed over the last twenty years. |
| Keywords: | Macroeconomics; Post Keynesian; |
| JEL: | E12 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:uwe:wpaper:0703&r=pke |
| By: | Iris Biefang-Frisancho Mariscal (School of Economics, University of the West of England); Peter Howells (School of Economics, University of the West of England) |
| Abstract: | The FOMC has changed its way of communication twice, recently: from 2000-2003, the Committee imparted information about its assessment on the economic outlook (the balance-of-risk statements) and since August 2003 the FOMC informs additionally about its outlook’s implications on the future federal funds target rate (forward-looking language). The result should be that agents do not need to deduce FOMC’s likely policy move on every twitch of central bank communication and macroeconomic news. Markets have anticipated FOMC policy decisions on the day of the meeting very well since 1994. Therefore, the focus of the paper is on the behaviour of market rates between FOMC meetings and on testing for greater ‘smoothness’ and lower volatility of market rates since 2000. We apply an EGARCH model to forward rates at the short end of the yield curve. The model is used to test for the effects of the three disclosure regimes (pre-2000, 2000-2003, post-2003) on the dependence of previous and current changes of the market rates in the conditional mean equation. It is expected to observe higher inertia during the periods when market participants are better informed. Furthermore, generally, news increases interest rate volatility, since markets adjust interest rates in response to relevant news. However, other FOMC communication (other than the press statements after the FOMC meeting), may have a lower news value in the new disclosure regimes than it had in the pre-2000 period. Therefore, ‘other’ central bank communication may affect the volatility of interest rates differently in the three different regimes. This effect is tested for in the conditional variance of the regression model. We find that there is evidence of differences in smoothness between the period until 2000 and the period of the balance-of-risk statement. Furthermore, we find that the effect of other than Fed press statements after FOMC meetings varies in the three periods. This is particularly so for Fed communication concerning economic outlook and speeches by the chairman of the Board. |
| Keywords: | Macroeconomics; Post Keynesian; |
| JEL: | E12 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:uwe:wpaper:0704&r=pke |
| By: | John W. Dawson |
| Abstract: | The initial publication of the Fraser Institute’s Economic Freedom of the World index prompted an explosion of empirical research on the institutions-growth relationship. To date, little of this research has appeared in the top economics journals. Subsequently, a number of empirical growth studies using alternative sources of data on institutions have appeared in top journals. This paper explores the two tracks of empirical research on the institutions-growth relationship—one track that recognizes all the relevant literature, and one that seems wanting in that respect. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:07-04&r=pke |
| By: | Farley Grubb (Department of Economics,University of Delaware) |
| Abstract: | Paper money has often been controversial and misunderstood. Why it has value, why that value changes over time, how it influences economic activity, who should be allowed to make it, how its use and creation should be controlled, and whether it should exist at all—are questions that have perplexed the public, vexed politicians, and puzzled economic experts. Knowing how, when, and why paper money first became commonplace in America and the nature of the institutions propagating it, can help us better comprehend paper money’s role in society. Benjamin Franklin (1706-1790) dealt often with this topic and his writings can teach us much about it. |
| Keywords: | Monetary Policy, Economic History |
| URL: | http://d.repec.org/n?u=RePEc:dlw:wpaper:07-01.&r=pke |