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on Post Keynesian Economics |
| By: | Andrea Terzi |
| Abstract: | With the global crisis, the policy stance around the world has been shaken by massive government and central bank efforts to prevent the meltdown of markets, banks, and the economy. Fiscal packages, in varied sizes, have been adopted throughout the world after years of proclaimed fiscal containment. This change in policy regime, though dubbed the "Keynesian moment," is a "short-run fix" that reflects temporary acceptance of fiscal deficits at a time of political emergency, and contrasts with John Maynard Keynes’s long-run policy propositions. More important, it is doomed to be ineffective if the degree of tolerance of fiscal deficits is too low for full employment. Keynes’s view that outside the gold standard fiscal policies face real, not financial, constraints is illustrated by means of a simple flow-of-funds model. This shows that government deficits do not take financial resources from the private sector, and that demand for net financial savings by the private sector can be met by a rising trade surplus at the cost of reduced consumption, or by a rising government deficit financed by the monopoly supply of central bank credit. Fiscal deficits can thus be considered functional to the objective of supplying the private sector with a provision of financial wealth sufficient to restore demand. By contrast, tax hikes and/or spending cuts aimed at reducing the public deficit lower the available savings of the private sector, and, if adopted too soon, will force the adjustment by way of a reduction of demand and standard of living. This notion, however, is not applicable to the euro area, where constraints have been deliberately created that limit public deficits and the supply of central bank credit, thus introducing national solvency risks. This is a crucial flaw in the institutional structure of Euroland, where monetary sovereignty has been removed from all existing fiscal authorities. Absent a reassessment of its design, the euro area is facing a deflationary tendency that may further erode the economic welfare of the region. |
| Keywords: | Government and the Monetary System; Fiscal Policy; Keynes; Euro Area |
| JEL: | E12 E42 E62 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_614&r=pke |
| By: | Dimitri B. Papadimitriou; Greg Hannsgen |
| Abstract: | In this new policy brief, President Dimitri B. Papadimitriou and Research Scholar Greg Hannsgen evaluate the current path of fiscal deficits in the United States in the context of government debt and further spending, economic recovery, and unemployment. They are adamant that there is no justification for the belief that cutting spending or raising taxes by any amount will reduce the federal deficit, let alone permit solid growth. The worst fears about recent stimulative policies and rapid money-supply growth are proving to be incorrect once again. In the authors’ view, we must find the will to reinvigorate government and to maintain Keynesian macro stimulus in the face of ideological opposition and widespread mistrust of government. |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levppb:ppb_114&r=pke |
| By: | Addison, Tony; Tarp, Finn |
| Keywords: | Triple Crisis, Finance, Food, Climate Change |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wa2010-05&r=pke |
| By: | Abhijit Banerjee; Lakshmi Iyer |
| Abstract: | This paper analyze the colonial institutions set up by the British to collect land revenue in India, and show that differences in historical property rights institutions lead to sustained differences in economic outcomes. Areas in which proprietary rights in land were historically given to landlords have significantly lower agricultural investments, agricultural productivity and investments in public goods in the post-Independence period than areas in which these rights were given to the cultivators. It has been verified that these differences are not driven by omitted variables or endogeneity of the historical institutions, and argue that they probably arise because differences in institutions lead to very different policy choices. [Working Paper No. 003] |
| Keywords: | British, India, historical, landlords, agricultural, investments, independence, policy choices, history, land tenure, development |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2811&r=pke |
| By: | Beck, T.H.L. (Tilburg University, Center for Economic Research) |
| Abstract: | Legal institutions are critical for the development of market-based economies. This paper defines legal institutions and discusses different indicators to measure their quality and efficiency. It surveys a large historical and empirical literature showing the importance of legal institutions in explaining cross-country variation in economic development. Finally, it presents and discusses three different views of why we can observe the large cross-country variation in legal institutions, the social conflict, the legal origin and the culture and religion hypotheses. |
| Keywords: | Legal institutions;economic development;legal system indicators;property rights |
| JEL: | K1 K4 O16 O43 P14 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:201094&r=pke |
| By: | Cohen, Joseph N |
| Abstract: | This article examines the relationship between "economic freedom" and economic growth. Previous studies have found a positive relationship between economic growth rates and "economic freedom", and used this relationship as a basis for arguing that more liberal economic policies promote development. "Economic freedom" conflates laissez-faire policy with other important concepts, like good governance and macroeconomic stability. When laissez-faire is parsed from these other concepts, it shows no positive relationship with growth outside of the early-1990s, a period in which financially-strained developing governments and financial systems enjoyed debt bailouts in exchange for liberalization reforms. Further analysis shows that laissez-faire exerts no discernible effect on economic growth net of the debt relief, inflation containment and improved inward investment that occurred after the Cold War. I argue that free market capitalism itself may not have promoted economic development in the post-Cold War era. Instead, free market reforms occurred alongside domestic and international political developments that helped developing countries resolve a serious financial crises, and that the resolution of these crises were most important in explaining the comparative prosperity of the 1990s and 2000s. |
| Keywords: | economic freedom; neoliberalism; laissez faire; periodicity; economic growth; economic development; capitalism |
| JEL: | P11 P17 O21 E61 O4 |
| Date: | 2010–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:24526&r=pke |
| By: | Wilensky, Harold L. |
| Abstract: | Among the 19 rich democracies I have studied for the past 40 years, the United States is odd-man-out in its health-care spending, organization, and results. The Obama administration might therefore find lessons from abroad helpful as it moves toward national health insurance. In the past hundred years, with the exception of the U.S., the currently rich democracies have all converged in the broad outlines of health care. They all developed central control of budgets with financing from compulsory individual and employer contributions and/or government revenues. All have permitted the insured to supplement government services with additional care, privately purchased. All, including the United States, have rationed health care. All have experienced a growth in doctor density and the ratio of specialists to primary-care personnel. All evidence a trend toward public funding. Our deviance consists of no national health insurance, a huge private sector, a very high ratio of specialists to primary-care physicians and nurses, and a uniquely expensive (non)system with a poor cost-benefit ratio. The cure: increase the public share to more than 65% from its present level of 45%. In regards to funding the transition cost and the permanent cost of guaranteed universal coverage: no rich democracy has funded national health insurance without relying on mass taxes, especially payroll and consumption taxes. Whatever we do to begin, broad-based taxes will be the outcome. Three explanations of "why no national health insurance in the U.S.?" are examined. |
| Date: | 2010–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:indrel:1128379&r=pke |