nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2007‒08‒18
five papers chosen by
Karl Petrick
University of the West Indies

  1. "A Post-Keynesian View of Central Bank Independence, Policy Targets, and the Rules-versus-Discretion Debate" By L. Randall Wray
  2. "The Fed's Real Reaction Function Monetary Policy, Inflation, Unemployment, Inequality-and Presidential Politics" By James K. Galbraith; Olivier Giovannoni; Ann J. Russo
  3. Financial Policy By Gerald Epstein; Ilene Grabel
  4. The Unresolved Land Reform Debate: Beyond State-Led or Market-Led Models By Saturnino M. Borras; Terry McKinley
  5. What we do and don’t know about trade liberalization and poverty reduction By Rob Vos

  1. By: L. Randall Wray
    Abstract: This paper addresses three issues surrounding monetary policy formation: policy independence, choice of operating targets, and rules versus discretion. According to the New Monetary Consensus, the central bank needs policy independence to build credibility; the operating target is the overnight interbank lending rate, and the ultimate goal is price stability. This paper provides an alternative view, arguing that an effective central bank cannot be independent as conventionally defined, where effectiveness is indicated by ability to hit an overnight nominal interest rate target. Discretionary policy is rejected, as are conventional views of the central bank's ability to achieve traditional goals such as robust growth, low inflation, and high employment. Thus, the paper returns to Keynes's call for low interest rates and euthanasia of the rentier.
    Date: 2007–08
  2. By: James K. Galbraith; Olivier Giovannoni; Ann J. Russo
    Abstract: Using a VAR model of the American economy from 1984 to 2003, we find that, contrary to official claims, the Federal Reserve does not target inflation or react to "inflation signals." Rather, the Fed reacts to the very "real" signal sent by unemployment, in a way that suggests that a baseless fear of full employment is a principal force behind monetary policy. Tests of variations in the workings of a Taylor Rule, using dummy variable regressions, on data going back to 1969 suggest that after 1983 the Federal Reserve largely ceased reacting to inflation or high unemployment, but continued to react when unemployment fell "too low." Further, we find that monetary policy (measured by the yield curve) has significant causal impact on pay inequality-a domain where the Fed refuses responsibility. Finally, we test whether Federal Reserve policy has exhibited a pattern of partisan bias in presidential election years, with results that suggest the presence of such bias, after controlling for the effects of inflation and unemployment.
    Date: 2007–08
  3. By: Gerald Epstein (Univ. of Massachusetts); Ilene Grabel (Professor of International Finance, Graduate School of International Studies, University of Denver)
    Abstract: .
    Keywords: Financial Policy, Economic Policies, MDGs, Poverty, Pro-Poor Growth, Training, Programme, Research
    Date: 2007–07
  4. By: Saturnino M. Borras (Canada Research Chair in International...); Terry McKinley (International Poverty Centre)
    Keywords: Land Reform; Debate; State-Led; Market-Led; Model
    Date: 2006–11
  5. By: Rob Vos
    Abstract: Strong opinions about the impact of globalization on poverty are not always backed by robust factual evidence. As argued in this paper, however, it is not all that easy to lay our hands on ‘robust’ facts. Quantitative analyses of trade liberalization appear highly sensitive to basic modelling and parameter assumptions. Altering these could turn the expectation that, for instance, Africa’s poor stand to gain from further trade opening under the Doha Round into one in which they would stand to lose. Most studies agree though that trade opening probably adds to aggregate welfare, but gains are small and unevenly distributed.
    Keywords: computable general equilibrium models, trade policy, economic integration, trade and labour market interactions, welfare and poverty, international linkages to development, foreign exchange policy
    JEL: C68 F13 F15 F16 I3 O19 O24
    Date: 2007–08

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