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on Post Keynesian Economics |
| By: | Philip Arestis; Elias Karakitsos |
| Abstract: | Central banks have an aversion to bailing out speculators when asset bubbles burst, but ultimately, as custodians of the financial system, they have to do exactly that. Their actions are justified by the goal of protecting the economy from the bursting of bubbles; while their intention may be different, the result is the same: speculators, careless investors, and banks are bailed out. The authors of this new Policy Note say that a far better approach is for central banks to widen their scope and target the net wealth of the personal sector. Using interest rates in both the upswing and the downswing of a (business) cycle would avoid moral hazard. A net wealth target would not impede the free functioning of the financial system, as it deals with the economic consequences of the rise and fall of asset prices rather than with asset prices (equities or houses) per se. It would also help to control liquidity and avoid future crises. The current crisis has its roots in the excessive liquidity that, beginning in the mid 1990s, financed a series of asset bubbles. This liquidity was the outcome of “bad” financial engineering that spilled over to other banks and to the personal sector through securitization, in conjunction with overly accommodating monetary policy. Hence, targeting net wealth would also help control liquidity, the authors say, without interfering with the financial engineering of banks. |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levypn:09-2&r=pke |
| By: | Charles Goodhart; Miguel Segoviano |
| Abstract: | The recent crisis underlined that proper estimation of distress-dependence amongst banks in a global system is essential for financial stability assessment. We present a set of banking stability measures embedding banks’ linear (correlation) and nonlinear distress-dependence, and their changes through the economic cycle, thereby allowing analysis of stability from three complementary perspectives: common distress in the system, distress between specific banks, and cascade effects associated with a specific bank. Our approach defines the banking system as a portfolio of banks and infers its multivariate density from which the proposed measures are estimated. These can be provided for developed and developing countries. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:fmg:fmgdps:dp627&r=pke |
| By: | Besley, Timothy J.; Ghatak, Maitreesh |
| Abstract: | This chapter develops a unified analytical framework, drawing on and extending the existing literature on the subject, for studying the role of property rights in economic development. It addresses two fundamental and related questions concerning the relationship between property rights and economic activity. (i) What are the mechanisms through which property rights affect economic activity? (ii) What are the determinants of property rights? In answering these, it surveys some of the main empirical and theoretical ideas from the extensive literature on the topic. This paper will form a chapter for Volume V of the Handbook of Development Economics edited by Dani Rodrik and Mark Rosenzweig |
| Keywords: | Economic Development; Property rights |
| JEL: | K11 O17 P14 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7243&r=pke |
| By: | René Sandretto (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines) |
| Abstract: | Despite its important contributions to economic thought, namely in the field of spatial economics and economics of development, François Perroux, one of the most important French economists of the 20st century, remains today poorly appreciated and frequently unrecognized.This paper tends to show how unfair is this deficit of recognition. We underline Perroux' illuminating views on asymmetry, domination and power which can be considered as a prefiguration and - to some extent - as a generalization of works made in this field half a century later, for example the American realist and neo-realist approaches of power (namely the concepts of hard and soft power) or by Susan Strange (with her concept of structural power). |
| Keywords: | Asymmetry; power; domination; influence; coercion |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00371792_v1&r=pke |