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on Post Keynesian Economics |
| By: | Mark Setterfield (Department of Economics, Trinity College) |
| Abstract: | The purpose of this paper is to explore the similarities between Post Keynesian Economics (PKE) and Regulation Theory (RT). It is argued that, despite important differences between these traditions, the analytical contents of PKE and RT display broad similarities with respect to their treatments of the income-generating process, the crisis-prone nature of capitalism, and the institutional contingency of capitalist growth and development. This thesis is then exemplified and substantiated with reference to the 2007—2009 financial crisis and “Great Recession”. Specifically, it is shown that important strands of both PKE and RT characterize and were successful in anticipating the crisis as the result of the exhaustion of a financialized growth process. |
| Keywords: | Post Keynesian Economics, Regulation Theory, Great Recession, financial crisis |
| JEL: | B50 E11 E12 E21 E24 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:tri:wpaper:1007&r=pke |
| By: | L. Randall Wray |
| Abstract: | In this new brief, Senior Scholar L. Randall Wray examines the later works of Hyman P. Minsky, with a focus on Minsky’s general approach to financial institutions and policy. The New Deal reforms of the 1930s strengthened the financial system by separating investment banks from commercial banks and putting in place government guarantees such as deposit insurance. But the system’s relative stability, and relatively high rate of economic growth, encouraged innovations that subverted those constraints over time. Financial wealth (and private debt) grew on trend, producing immense sums of money under professional management: we had entered what Minsky, in the early 1990s, labeled the “money manager” phase of capitalism. With help from the government, power was consolidated in a handful of huge firms that provided the four main financial services: commercial banking, payments services, investment banking, and mortgages. Brokers didn’t have a fiduciary responsibility to act in their clients’ best interests, while financial institutions bet against households, firms, and governments. By the early 2000s, says Wray, banking had strayed far from the (Minskyan) notion that it should promote “capital development” of the economy. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levppb:ppb_115&r=pke |
| By: | David Laidler (University of Western Ontario) |
| Abstract: | The monetary economy has properties that cannot be analyzed using the tools of today's dynamic general equilibrium analysis. Keynes's economics, far from being an aberration in the otherwise orderly evolution of modern macroeconomics from Adam Smith's ideas about the "invisible hand", was a major contribution to an ongoing tradition in monetary theory in whose creation Smith himself had played a part. Retrospective consideration of this tradition suggests that the property of the monetary economy critical to the generation of economic crises and the stagnation that follows them is its capacity to permit trading at "false" prices, a phenomenon ruled out by assumption in dynamic general equilibrium models. Not only Keynes's explanation of depression but also Hayek and Robertson's analysis of the role of unsustainable forced saving in the boom can be thought of as relying on this factor. |
| Keywords: | crises; money; monetary economy; general equilibrium; cycles; sticky prices; flexible prices; false prices; rate of interest; forced saving; Keynesian economics; Monetarism; New Keynesian economics |
| JEL: | B12 B22 E12 E13 E32 E40 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:uwo:epuwoc:20101&r=pke |
| By: | Gabriel Martinez (Department of Economics, Ave Maria University) |
| Abstract: | Relying on John Henry Newman’s Idea of a University, this paper explores the relation between economics and other disciplines. Newman had high regard for disciplinary specialization, which he thought would teach students and scholars how to think and would keep them intellectually honest. At the same time, he insisted that the learning and exploring of a science had to take place within a university, that is, with proper regard to the science’s place among other disciplines. This paper contributes to the debate on the proper way to do economics by applying to it Newman’s ideas, arguing that it is at its best when faithful to its own character, as long as it seeks out the contributions and the corrections of other disciplines. Indeed, because economics focuses on order, principle, and method, and because it provides a “connected view or grasp of things,” it can contribute to the cultivation of the philosophical habit of mind. |
| Keywords: | Newman, philosophy of economics |
| JEL: | A11 A12 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:avm:wpaper:1002&r=pke |
| By: | Jan Vandemoortele (UNDP) |
| Keywords: | MDGs: Misunderstood Targets? |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:ipc:opchin:28&r=pke |
| By: | Bernhard G. Gunter (Bangladesh Development Research Center) |
| Keywords: | Towards an MDG-Consistent Debt Sustainability Concept |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:ipc:opchin:87&r=pke |