nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2011‒03‒05
four papers chosen by
Karl Petrick
University of the West Indies

  1. The Great Recession, 'Rainy Day' Funds, and Countercyclical Fiscal Policy in Latin America By Eduardo Fernández-Arias; Peter Montiel
  2. Learning about Schools in Development - Working Paper 236 By Charles Kenny
  3. Convergência para o Equilíbrio no Modelo Keynesiano: algumas considerações By Fabrício J. Missio; José Luis Oreiro
  4. Regulation of Credit Rating Agencies - Evidence from Recent Crisis By Mai Hassan; Christian Kalhoefer

  1. By: Eduardo Fernández-Arias (Inter-American Development Bank); Peter Montiel (Williams College)
    Abstract: This paper examines the fiscal policy options that were available to Latin American countries at the onset of the current global economic crisis. It concludes that most of the major countries in the region possessed the fiscal space (as measured by credible fiscal sustainability and debt headroom) to run prudent countercyclical fiscal deficits. For those countries, the appropriate policy response involved a constrained fiscal expansion focused on productive public spending and financed by drawing on the “rainy day” funds - in the form of large stocks of foreign exchange reserves - that they accumulated in prior years, rather than by market borrowing. It shows that the recent surge in multilateral financial activity to alleviate market illiquidity, whether intended for reserve or budget support, strengthens the case for this policy prescription : with multilateral support, the appropriate policy response is more expansionary, and its financing is less reliant on market borrowing.
    Keywords: countercyclical policy, fiscal space, international reserves, multilateral financial support
    JEL: E62 E63 F34
    Date: 2010–07
  2. By: Charles Kenny
    Abstract: There has been considerable progress constructing schools worldwide over the past 50 years, a lot of progress hiring teachers, and global improvement in enrollment rates, recently encouraged by the rollout of payments for attendance around the world. Nonetheless, while education requires schools, it also needs students to be in class, motivated and able to learn. And they need teachers who are skilled and resourced enough to teach, and those teachers need an incentive to instruct. There is considerable evidence that these prerequisites are not met with alarming frequency across the developing world. Tested methods to strengthen the link between schooling and learning include school choice, conditional cash transfers to students on the basis of attendance and scores, decentralization combined with published information on learning outcomes, and teacher pay based on attendance and performance. Nonetheless learning outcomes (and especially development impact) are primarily affected by the broader social and economic environment in which students live. This suggests a need for realism regarding what can be accomplished by education ministries and a focus on that broader environment – for example health and media interventions that might have considerable returns in learning.
    Keywords: education, learning, schooling
    Date: 2010–12
  3. By: Fabrício J. Missio (Departamento de Economia (Department of Economics) Faculdade de Economia, Administração, Contabilidade e Ciência da Informação e Documentação (FACE) (Faculty of Economics, Administration, Accounting and Information Science) Universidade de Brasília); José Luis Oreiro (Departamento de Economia (Department of Economics) Faculdade de Economia, Administração, Contabilidade e Ciência da Informação e Documentação (FACE) (Faculty of Economics, Administration, Accounting and Information Science) Universidade de Brasília)
    Abstract: Este trabalho faz, inicialmente, uma revisão do debate que surgiu após a publicação da Teoria Geral do Emprego, do Juro e da Moeda (TG), de Keynes, no que se refere à natureza da posição de equilíbrio assumida pela economia no longo prazo. Na sequência, são apresentados o modelo de Oreiro (1997) e algumas simulações computacionais, sendo incorporados na análise os argumentos apresentados no capítulo 19 da TG. O objetivo é retomar os argumentos de um dos principais debates da história do pensamento econômico, no intuito de demonstrar que a interpretação convencional (síntese neoclássica) é contestável. As conclusões caminham no sentido de mostrar que, quando são considerados na análise os argumentos apresentados por Keynes no referido capítulo da TG, o resultado da síntese neoclássica de convergência e estabilidade do equilíbrio com pleno emprego torna-se altamente questionável. Esse resultado é obtido por intermédio do desenvolvimento de uma estrutura analítica formal com auxílio de simulações computacionais.
    Keywords: Síntese Neoclássica, Equilíbrio, Estabilidade, Emprego e Simulações.
    JEL: B13 B22 C02 C62
    Date: 2011–02
  4. By: Mai Hassan (Faculty of Management Technology, The German University in Cairo); Christian Kalhoefer (Faculty of Management Technology, The German University in Cairo)
    Abstract: The importance of ratings for investors’ decisions and for the perceptions of the financial health of a nation pointed out the need that credit rating agencies should be regulated in some way. Regulators and market participants believed that the credit rating agencies need to abide by standards of corporate governance and supervision due to their pivotal role in the US subprime crisis. This belief was amplified recently because the rating agencies were deeply involved in the European debt crisis after various sovereign debt ratings were significantly downgraded. Therefore, the paper highlights the critique against the agencies’ role in the two most recent crises and reviews the regulation proposals which subject the rating agencies to behavioral standards.
    Keywords: Credit rating agencies, subprime, Euro crisis
    JEL: G15 G24 G38
    Date: 2011–02

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