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on Post Keynesian Economics |
| By: | Vivek Dehejia (Department of Economics, Carleton University, CESifo, Munich, Germany.) |
| Date: | 2010–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:car:carecp:10-09&r=pke |
| By: | Michael Hudson |
| Abstract: | The Federal Reserve's quantitative easing is presented as injecting $600 billion into "the economy." But instead of getting banks lending to Americans again—households and firms—the money is going abroad, through arbitrage interest-rate speculation, currency speculation, and capital flight. No wonder foreign economies are protesting, as their currencies are being pushed up. |
| Keywords: | Exchange Rates; Asset-price Inflation; Monetary Policy |
| JEL: | E50 E58 F34 F42 G12 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_639&r=pke |
| By: | Charles Goodhart |
| Abstract: | Although Central Banks have pursued the same objectives throughout their existence, primarily price and financial stability, the interpretation of their role in doing so has varied. We identify three stable epochs, when such interpretations had stabilised, ie 1. The Victorian era, 1840s to 1914; 2. The decades of government control, 1930s to 1960s; 3. The triumph of the markets, 1980s to 2007. Each epoch was followed by a confused inter-regnum, searching for a new consensual blueprint. The final such epoch concluded with a crisis, when it became apparent that macro-economic stability, the Great Moderation, plus (efficient) markets could not guarantee financial stability. So the search is now on for additional macro-prudential (counter-cyclical) instruments. The use of such instruments will need to be associated with controlled variations in systemic liquidity, and in the balance sheet of the Central Bank. Such control over its own balance sheet is the core, central function of any Central Bank, even more so than its role in setting short-term interest rates, which latter could be delegated. We end by surveying how relationships between Central Banks and governments may change over the next period. |
| Keywords: | central banks, financial stability, financial regulation, bank taxes |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:326&r=pke |
| By: | Sunanda Sen |
| Abstract: | China occupies a unique position among developing countries. Its success in achieving relative stability in the financial sector since the institution of reforms in 1979 has given way to relative instability since the beginning of the current global financial crisis. Over the last few years, China has been on a path of capital account opening that has drawn larger inflows of capital from abroad, both foreign-direct and portfolio investment. Of late, a surge in these inflows has introduced problems for the monetary authorities in continuing with an autonomous monetary policy in China, especially with large additions to official reserves, the latter in a bid to avoid further appreciation of the country’s domestic currency. Like other developing countries, China today faces the “impossible trilemma” of managing the exchange rate with near-complete capital mobility and an autonomous monetary policy. Facing problems in devising and sustaining this policy, China has been using expansionary fiscal policy to tackle the impact of shrinking export demand. The recent drive on the part of Chinese authorities to boost real demand in the countryside and to revamp the domestic market shows a promise far different from that of the financial rescue packages in many advanced nations. The close integration of China with the world economy over the last two decades has raised concerns from different quarters that relate both to (1) the possible effects of the recent global downturn on China and (2) the second-round effects of a downturn in China for the rest of world. |
| Keywords: | Trade Surplus; Official Reserves; Impossible Trillemma; Integration; Capital Account Opening; Financial Crisis; State-owned Enterprises; Stock Markets; Volatility |
| JEL: | P31 P33 P34 P45 Q53 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_642&r=pke |
| By: | Berg, Nathan |
| Abstract: | This article describes the emerging subfield known as behavioral economics, which borrows from psychology, empirically tests assumptions used elsewhere in economics, and provides theories that aim to be more realistic and closely tied to experimental and field data. Highlights from the experimental findings of behavioral economics are discussed. The article remarks critically on the role of empirical realism and continued use of as-if methodology in behavioral economics. Problems in normative behavioral economics are given special attention as debates arise concerning how to interpret empirical findings that contradict standard definitions of axiomatic rationality. Ecological rationality, methodological pluralism, and Simon's notion of bounded rationality are considered. |
| Keywords: | bounded rationality; ecological rationality; Herbert Simon; as-if; survey |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:26587&r=pke |