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on Post Keynesian Economics |
| By: | Peter Howells (University of the West of England, Bristol); Iris Biefang Frisancho-Mariscal (University of the West of England, Bristol) |
| Abstract: | In the fifteen years leading up to the financial crisis in 2008, there emerged a great deal of agreement on the optimal design of monetary policy. This policy ‘consensus’ was accompanied also by a widely-shared view of how macroeconomies worked as the ‘Keynesian’ versus ‘monetarist’ debates slipped into the past. This paper charts the emergence of this consensus and then looks at the way in which the apparently settled ideas of monetary policy have been disrupted by recent events. In particular, it looks at the way in which the crisis has forced a revision of both the targets and instruments of monetary policy. |
| Keywords: | Monetary policy, quantity theory, Phillips curve |
| JEL: | E4 E5 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:uwe:wpaper:1017&r=pke |
| By: | Andrés Álvarez; Jimena Hurtado |
| Abstract: | Shorter undergraduate studies, increasing specialization and the priority of applied research in Economics represent threats for the History of Economic Thought (HET) as an integral part of the training of young economists. There are mostly sociological arguments to reduce or eliminate HET courses and contents to which we try to respond in this text. We advance that HET allows developing valuable skills that might help overcome the criticisms against Economics due to its alleged incapacity to offer solutions in times of crisis and to its fascination with quantification and technique. In this context, HET appears as a space for thought, self-criticism and introspection in which new economists may understand that Economics is a process and not a product giving them the abilities necessary to participate in the extended present of their discipline. |
| Date: | 2010–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:col:000089:007712&r=pke |
| By: | Greg Hannsgen; Dimitri B. Papadimitriou |
| Abstract: | In recent years, the US public debt has grown rapidly, with last fiscal year's deficit reaching nearly $1.3 trillion. Meanwhile, many of the euro nations with large amounts of public debt have come close to bankruptcy and loss of capital market access. The same may soon be true of many US states and localities, with the governor of California, for example, publicly regretting that he has been forced to cut bone, and not just fat, from the state's budget. Chartalist economists have long attributed the seemingly limitless borrowing ability of the US government to a particular kind of monetary system, one in which money is a "creature of the state" and the government can create as much currency and bank reserves as it needs to pay its bills (this is not to say that it lacks the power to impose taxes). In this paper, we examine this situation in light of recent discussions of possible limits to the federal government's use of debt and the Federal Reserve's "printing press." We examine and compare the fiscal situations in the United States and the eurozone, and suggest that the US system works well, but that some changes must be made to macro policy if the United States and the world as a whole are to avoid another deep recession. |
| Keywords: | Budget Deficit; Federal Debt; Debt Tolerances |
| JEL: | E00 E32 E50 E62 E63 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_640&r=pke |
| By: | Timothy Azarchs; Tamar Khitarishvili |
| Abstract: | The hypothesis of the natural resource curse has captivated the economics profession, and since the mid-1990s has generated a large body of policymaking initiatives aimed at dispelling the curse. In this paper, we evaluate how the effect of resource abundance on economic growth has changed since these policies were first introduced by comparing the periods 1970–89 and 1996–2008. We disaggregate resources into oil, gas, coal, and nonfuel mineral resources, and find that disaggregation unmasks diverse effects of resources on concurrent economic and institutional outcomes, as well as on the ability of countries to transform their economic and institutional infrastructure. We consider resource dependence and institutional quality as two channels linking resource abundance to economic growth in the context of an instrumental variables (IV) model. In addition to exploring these channels, the IV framework enables us to test for the endogeneity of the measures of resource dependence and institutional quality in the growth regressions, paying particular attention to the weakness of the instruments. |
| Keywords: | Resource Curse; Resource Stocks; Resource Dependence; Rule of Law; Institutions; Economic Growth; Growth Regressions; Instrumental Variables |
| JEL: | O11 O13 O4 Q3 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_641&r=pke |
| By: | Bertocchi, Graziella (University of Modena and Reggio Emilia); Dimico, Arcangelo (University of Nottingham) |
| Abstract: | We investigate the impact of slavery on the current performances of the US economy. Over a cross section of counties, we find that the legacy of slavery does not affect current income per capita, but does affect current income inequality. In other words, those counties that displayed a higher proportion of slaves are currently not poorer, but more unequal. Moreover, we find that the impact of slavery on current income inequality is determined by racial inequality. We test three alternative channels of transmission between slavery and inequality: a land inequality theory, a racial discrimination theory and a human capital theory. We find support for the third theory, i. e., even after controlling for potential endogeneity, current inequality is primarily influenced by slavery through the unequal educational attainment of blacks and whites. To improve our understanding of the dynamics of racial inequality along the educational dimension, we complete our investigation by analyzing a panel dataset covering the 1940-2000 period at the state level. Consistently with our previous findings, we find that the educational racial gap significantly depends on the initial gap, which was indeed larger in the former slave states. |
| Keywords: | slavery, development, inequality, institutions, education |
| JEL: | D02 H52 J15 O11 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5329&r=pke |
| By: | Hellwig, Martin |
| Abstract: | The paper discusses the reform of capital regulation of banks in the wake of the financial crisis of 2007/2009. Whereas the Basel Committee on Banking Supervision seems to go for marginal changes here and there, the paper calls for a thorough overhaul, moving away from risk calibration and raising capital requirements very substantially. The argument is based on the observation that the current system of risk- calibrated capital requirements, in particular under the modelbased approach, played a key role in allowing banks to be undercapitalized prior to the crisis, with strong systemic effects for deleveraging multipliers and for the functioning of interbank markets. The argument is also based on the observation that the current system has no theoretical foundation, its objectives are ill-specified, and its effects have not been thought through, either for the individual bank or for the system as a whole. Objections to substantial increases in capital requirements rest on arguments that run counter to economic logic or are themselves evidence of moral hazard and a need for regulation. |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:633&r=pke |