nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2009‒07‒11
four papers chosen by
Karl Petrick
University of the West Indies

  1. Should Financial Flows Be Regulated? Yes By Gerald Epstein
  2. The Theory of the Fiscal Stimulus: How Will a Debt-Financed Stimulus Affect the Future? By W. Max Corden
  3. Post-macroeconomics -- reflections on the crisis and strategic directions ahead By Monga, Celestin
  4. Preliminary Note on Financial Crisis and Trade and Investment Treaties By Third World Network

  1. By: Gerald Epstein
    Abstract: As the international financial crisis spreads, some governments are using “unconventional tools” of monetary and financial policy to protect themselves. Should policies to control international capital flows be part of the government “toolkit” in these difficult times? This essay answers: YES. It describes the economic arguments for and against using capital controls, prudential regulations and other “capital management techniques” to manage international financial flows, presents empirical evidence on their impacts, and describes the variety of policies that many countries have successfully applied to enhance macroeconomic and financial stability, create policy space, and achieve other national development goals.
    Keywords: Sub-sovereign bonds, infrastructure finance, issuers, investors, financial sector, municipal finance
    JEL: E5 F3 F4 O1 O16 O19
    Date: 2009–07
  2. By: W. Max Corden (Department of Economics, The University of Melbourne)
    Abstract: Conservative critics of Keynesian fiscal stimulus policies usually criticise such policies because of the increase in public debt that results. Hence a burden on future taxpayers would be imposed. But there are qualifications. Firstly, if there is an initial output gap that cannot be eliminated with monetary policy, fiscal expansion will increase current output, and this will lead not only to higher current consumption but also to higher savings. These savings will yield a benefit for the future. Secondly, if at least some of the stimulus finances public investment, for example in infrastructure, there are also likely to be benefits for the future. The paper also discusses moneyfinancing of the deficit, the automatic stabilisers, and exchange rate effects of a fiscal stimulus. Finally, it underlines the need for a unified policy that produces both fiscal surpluses in a boom and deficits in a slump.
    Date: 2009–06
  3. By: Monga, Celestin
    Abstract: For decades, many researchers argued that economics had nothing to fear from enriching itself with lessons and advances from other disciplines. Unfortunately, these suggestions were either neglected or dismissed upfront in what was then arbitrarily considered mainstream economics. The global crisis has led even Nobel Prize winners to acknowledge that the problem facing economists and policy makers today is mostly intellectual - it is the need to confront the systematic failure of thinking, especially on the part of macroeconomists. Despite its unprecedented magnitude and heavy financial, human, and intellectual cost, the crisis certainly does not invalidate everything that has been learned about macroeconomics. However, the costs highlight some of mistakes of the dominant intellectual macroeconomic framework. Post-macroeconomics should not be understood as another metanarrative of the end of metanarratives. The use of the prefix post here suggests and emphasizes much more than temporal posterity. Post-macroeconomics should follow from macroeconomics more than it follows after macroeconomics. The theorizing of post-macroeconomics is therefore neither systematically oppositional nor hegemonic. It does not advocate a - dialectic opposition - between macroeconomics and post-macroeconomics. Rather, it suggests that the latter builds on the former and goes beyond it.
    Keywords: Economic Theory&Research,Debt Markets,,Banks&Banking Reform,Access to Finance
    Date: 2009–07–01
  4. By: Third World Network
    Abstract: North-South free trade agreements (FTAs), bilateral investment treaties (BITs) and World Trade Organization (WTO) commitments often contain a number of provisions that can increase the likelihood of a financial crisis and make it more difficult to take the necessary measures to deal with one once it occurs. This note briefly highlights the main provisions in these agreements that can hamper the effective implementation of recommendations to deal with the current crisis. This note finds that a variety of chapters in these agreements can make it difficult to effectively carry out the measures to recover from the financial crisis. Whilst most barriers are likely to come from the services and investment chapters, the competition, goods and government procurement chapters in North-South FTAs can also have an effect.
    Keywords: financial crisis; trade; investment treaties; North-South Free Trade Agreements (FTAs); Bilateral Investment Treaties (BITs); World Trade Organisation (WTO); capital control; financial investments; financial services; trade provisions
    Date: 2009

This nep-pke issue is ©2009 by Karl Petrick. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.