nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2010‒06‒26
four papers chosen by
Karl Petrick
University of the West Indies

  1. "Does Excessive Sovereign Debt Really Hurt Growth? A Critique of This Time Is Different, by Reinhart and Rogoff" By Yeva Nersisyan; L. Randall Wray
  2. Colonialism, Elite Formation and Corruption By Luis Angeles; Kyriakos C. Neanidis
  3. The crisis of orthodox macroeconomic policy : The case for a renewed commitment to full employment By Muhammed Muqtada
  4. Post crisis blues By Beja, Jr., Edsel

  1. By: Yeva Nersisyan; L. Randall Wray
    Abstract: The worst global downturn since the Great Depression has caused ballooning budget deficits in most nations, as tax revenues collapse and governments bail out financial institutions and attempt countercyclical fiscal policy. With notable exceptions, most economists accept the desirability of expansion of deficits over the short term but fear possible long-term effects. There are a number of theoretical arguments that lead to the conclusion that higher government debt ratios might depress growth. There are other arguments related to more immediate effects of debt on inflation and national solvency. Research conducted by Carmen Reinhart and Kenneth Rogoff is frequently cited to demonstrate the negative impacts of public debt on economic growth and financial stability. In this paper we critically examine their work. We distinguish between a nation that operates with its own floating exchange rate and nonconvertible (sovereign) currency, and a nation that does not. We argue that Reinhart and Rogoff’s results are not relevant to the case of the United States.
    Keywords: Government Debt; Government Deficit; Sovereign Default; Reinhart and Rogoff; Economic Growth; Inflation; Modern Money
    JEL: E60 E61 E62 E64 E69 E31 E32 O40
    Date: 2010–06
  2. By: Luis Angeles; Kyriakos C. Neanidis
    Abstract: This paper argues that corruption in developing countries has deep historical roots; going all the way back to the characteristics of their colonial experience. The degree of European settlement during colonial times is used to di¤erentiate between types of colonial experience, and is found to be a powerful explanatory factor of present-day corruption levels. The relationship is non-linear, as higher levels of European settlement resulted in more powerful elites (and more corruption) only as long as Europeans remained a minority group in the total population.
    Date: 2010
  3. By: Muhammed Muqtada (International Labour Office, Employment Sector (retired in June 2010))
    Abstract: Critically reviews the macroeconomic experiences of the past three decades to argue the case against orthodox macroeconomics. Suggests that the prevailing orthodoxy in macroeconomics needs to give way to an alternative policy paradigm in which the Copenhagen commitment on full employment, subsequently incorporated as a Millennium Development Goal, plays a central role. The global recession of 2008-2009 reinforces the potency of this proposition.
    Keywords: employment, economic recession, economic policy, finance, international monetary system, developing countries
    Date: 2010
  4. By: Beja, Jr., Edsel
    Abstract: Debates that emphasize rapid economic recovery from major crises can extinguish progressive views that examine fundamental issues for sound economic management of present-day capitalist systems, such as: the determination of appropriate modes of cooperation including the procedures for intervention during crises, the introduction of structural changes that enable domestic economies to pursue appropriate industrial policies as well as erect institutions that could withstand external shocks, and, more importantly, the pursuit of fundamental reforms in the international economic architecture to allow for the management of cross-border flows of resources as well as coordinated adjustments to economic imbalances. There remains a lot to be done to make present-day capitalist systems reach a balance between domestic and global goals and thereby allow them to enlarge economic welfare without compromising national sovereignty.
    Keywords: 1997 Asian Crisis; 2008 Global Crisis; post-crisis; economic policy
    JEL: H10 E32 F02 O20 E61
    Date: 2010–06–18

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