nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2007‒09‒09
four papers chosen by
Karl Petrick
University of the West Indies

  1. "Endogenous Money: Structuralist and Horizontalist" By L. Randall Wray
  2. "Inequality of Life Chances and the Measurement of Social Immobility" By Jacques Silber; Olivier Giovannoni; Amedeo Spadaro
  3. John Maynard Keynes and Ludwig von Mises on Probability By van den Hauwe, Ludwig
  4. The End of (Economic) History By Jean-Paul Fitoussi

  1. By: L. Randall Wray
    Abstract: While the mainstream long argued that the central bank could use quantitative constraints as a means to controlling the private creation of money, most economists now recognize that the central bank can only set the overnight interest rate-which has only an indirect impact on the quantity of reserves and the quantity of privately created money. Indeed, in order to hit the overnight rate target, the central bank must accommodate the demand for reserves, draining the excess or supplying reserves when the system is short. Thus, the supply of reserves is best characterized as horizontal, at the central bank's target rate. Because reserves pay relatively low rates, or even zero rates (as in the United States), banks try to minimize their holdings. Over time, they continually innovate, as they seek to minimize costs and increase profits. This includes innovations that reduce the quantity of reserves they need to hold (either to satisfy legal requirements, or to meet the needs of check cashing and clearing), and also innovations that allow them to increase the rate of return on equity within regulatory constraints, such as those associated with Basle agreements. Such behavior has been a central concern of the structuralist approach-which argued that it is too simplistic to hypothesize simple horizontal loan-and-deposit supply curves.
    Date: 2007–09
  2. By: Jacques Silber; Olivier Giovannoni; Amedeo Spadaro
    Abstract: This paper begins by proposing two cardinal measures of inequality in life chances as well as an ordinal representation of such inequality based on the use of so-called social immobility curves. Using as its database a matrix in which the lines correspond to the social category of parents (e.g., their occupation or educational level) and the columns to the income distribution of their children, it then highlights the importance of the marginal distributions when comparing social immobility within two populations, and shows how it is possible to neutralize differences in these margins. The idea is to adapt a method used in the field of occupational segregation measurement that allows one to make a distinction between differences in gross and net social immobility, assuming that the marginal distributions of the two populations are identical. Borrowing ideas from recent literature on the equality of opportunity, the paper then defines the concept of an inequality in circumstances curve and relates it to that of a social immobility curve. Two empirical datasets are used to determine the usefulness of the concepts presented. The first dataset comes from a survey conducted in France in 1998 and allows one to measure the degree of social immobility and of inequality in circumstances on the basis of the occupation of fathers or mothers and the income class to which sons or daughters belong. The second dataset, drawn from a social survey conducted in Israel in 2003, is the basis for a study of social immobility and inequality in circumstances, emphasizing the transition from the educational level of the fathers to the income class of the children. Both illustrations confirm the usefulness of the analytical tools described in this paper.
    Date: 2007–09
  3. By: van den Hauwe, Ludwig
    Abstract: The economic paradigms of Ludwig von Mises on the one hand and of John Maynard Keynes on the other have been correctly recognized as antithetical at the theoretical level, and as antagonistic with respect to their practical and public policy implications. Characteristically they have also been vindicated by opposing sides of the political spectrum. Nevertheless the respective views of these authors with respect to the meaning and interpretation of probability exhibit a closer conceptual affinity than has been acknowledged in the literature. In particular it is argued that in some relevant respects Ludwig von Mises´ interpretation of the concept of probability exhibits a closer affinity with the interpretation of probability developed by his opponent John Maynard Keynes than with the views on probability espoused by his brother Richard von Mises. Nevertheless there also exist significant differences between the views of Ludwig von Mises and those of John Maynard Keynes with respect to probability. One of these is highlighted more particularly: where John Maynard Keynes advocated a monist view of probability, Ludwig von Mises embraced a dualist view of probability, according to which the concept of probability has two different meanings each of which is valid in a particular area or context. It is concluded that both John Maynard Keynes and Ludwig von Mises presented highly nuanced views with respect to the meaning and interpretation of probability.
    Keywords: General Methodology; Austrian Methodology; Keynesian Methodology; Quantitative and Qualitative Probability Concepts: Meaning and Interpretation; Frequency Interpretation; Logical Interpretation; John Maynard Keynes; Ludwig von Mises; Richard von Mises;
    JEL: B50 B53 B40 B49 C00 B00
    Date: 2007–03–12
  4. By: Jean-Paul Fitoussi (Observatoire Français des Conjonctures Économiques)
    Date: 2007

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