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on Post Keynesian Economics |
| By: | Christine Sinapi |
| Abstract: | The relevancy of Minsky's Financial Instability Hypothesis (FIH) in the current (and still unfolding) crisis has been clearly acknowledged by both economists and regulators. While most papers focus on discussing to what extent the FIH or Minsky's Big Bank/Big Government interpretation is appropriate to explain and sort out the crisis, some authors have also emphasized the need to consider the institutional foundations of Minsky's work (Whalen 2007, Wray 2008, Dimsky 2010). The importance of institutions within the FIH was strongly emphasized by Minsky himself, who assigned them the function of constraining the development of financial fragility. Yet only limited literature has focused on the institutional aspects on Minsky's FIH. The reason for this may be that they were mainly dealt with by Minsky in his latest papers, and they have remained, to some extent, incomplete, unclear, and even ambiguous. In our view, a synthesis of Minsky's proposals, along with a clarification and theoretical justification, remains to be done. Our objective in this paper is to contribute to this theoretical project. It leads us to propose that the notion of "institutional fragility" can constitute a useful perspective to complement and justify the endogenous development of financial fragility within the FIH. Eventually, this view may contribute to the debate about international financial governance. |
| Keywords: | Financial Crisis; Financial Fragility; Institutional Fragility; International Financial Governance |
| JEL: | G20 G28 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_674&r=pke |
| By: | Stephen T. Ziliak (Roosevelt University) |
| Abstract: | In an article titled "Field Experiments in Economics: The Past, the Present, and the Future," Levitt and List (2009) make three important claims about the history, philosophy, and future of field experiments in economics. They claim that field experiments in economics began in the 1920s and 1930s, in agricultural work by Neyman and Fisher. Second, they claim that artificial randomization is the sine qua non of good experimental design; they claim that randomization is the only valid justification for use of Student‘s test of significance. Finally, they claim that the theory of the firm will be advanced by economists doing randomized controlled trials (RCTs) for private sector firms. Several areas of economics, for example the development economics of Banerjee and Duflo, have been influenced by the article, despite the absence of historical and methodological review. This comment seeks to fill that gap in the literature. Student has, it is found, priority over Fisher and Neyman; he compared balanced and random designs in the field—on crops from barley to timber—from 1905 to 1937. The power and efficiency of balanced over random designs - discovered by Student and confirmed by Pearson, Neyman, Jeffreys, and others adopting a decision-theoretic and/or Bayesian approach - is not mentioned by Levitt and List. Neglect of Student is especially regrettable, for he showed in his job as Head Brewer of Guinness that artificial randomization is neither necessary nor sufficient for improving efficiency, identifying causal relationships, or discovering economically significant differences. One way forward is to take a step backwards, from Fisher to Student. |
| Keywords: | field experiments, balanced, random |
| JEL: | B1 C9 C93 |
| Date: | 2011–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:aah:create:2011-25&r=pke |
| By: | Deepankar Basu |
| Abstract: | Three important features of the U.S. economy during the neoliberal era since the mid-1970shave been: (a) growing financialization, (b) increasing household debt, and (c) stagnant real wages for production and nonsupervisory workers. This paper develops a discrete-time Marxian circuit of capital model to analyze the links between these three features and economic slowdown. The discrete-time model is used to address two important theoretical issues of general interest to the heterodox economic tradition: profit-led versus wage-led growth, and the growth-reducing impact of non-production credit. First, it is demonstrated that both profitled and wage-led growth regimes can be accommodated within the Marxian circuit of capital model. Second, it is demonstrated that the steady-state growth rate of a capitalist economy is negatively related to the share of consumption credit in total net credit, when the total credit is large to begin with. Bringing these two results together, the paper demonstrates that the three characteristics of the U.S economy under neoliberalism can have a growth-reducing impact on a capitalist economy. Hence, this paper oers a novel explanation, rooted in Marx’s analysis of the circuits of capital, of the slowdown of the U.S. economy during the neoliberal period. |
| URL: | http://d.repec.org/n?u=RePEc:rmf:dpaper:30&r=pke |
| By: | Björn Frank (University of Kassel) |
| Abstract: | Economic page turners like Freakonomics are well written and there is much to be learned from them – not only about economics, but also about writing techniques. Their authors know how to build up suspense, i.e., they make readers want to know what comes. An uncountable number of pages in books and magazines are filled with advice on writing reportages or suspense novels. While many of the tips are specific to the respective genres, some carry over to economic page turners in an instructive way. After introducing some of these writing tools, I discuss whether these and other aspects of good writing lead to a biased presentation of economic theory and practice. I conclude that, whatever the problems with certain economic page turners may be, they are not due to the need to write in an accessible, appealing way. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201126&r=pke |