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on Post Keynesian Economics |
| By: | Ilene Grabel |
| Abstract: | <p> The current crisis is proving to be productive of institutional experimentation in the realm of financial architecture(s) in the developing world. The drive toward experimentation arose out of the East Asian financial crisis of 1997‐98, which provoked some developing countries to take steps to insulate themselves from future turbulence, IMF sanctions, and intrusions into policy space. I argue that there are diverse, unambiguous indications that the global financial architecture is now evolving in ways that contribute to a new institutional heterogeneity. In some policy and institutional innovations we see the emergence of financial architecture that is far less US- and IMF‐centric than has been the norm over the past several decades. Moreover, the growing economic might, self‐ confidence and assertiveness on the part of policymakers in some developing countries (and, at the same time, the attendant uncertainties surrounding the economies of the USA and Europe) is disrupting the traditional modes of financial governance and dispersing power across the global financial system. </p><p>In making these arguments it is important not to overstate the case. It is far too early to be certain that lasting, radical changes in the global financial architecture are afoot, or that the developments now underway are secure. Nor am I arguing that all regions of the developing world either enjoy the opportunity and/or have the means to participate in the process of reshaping the global financial architecture. Rather, my goal is more modest. I show here that today there are numerous opportunities for policy and institutional experimentation, and there are clear signs that these opportunities are being exploited in a variety of distinct ways. As compared to any other moment over the last several decades, we see clear signs of fissures, realignments and institutional changes in the structures of financial governance across the global South. I have elsewhere characterized this current state of affairs as one of “productive incoherence.” I use this term to capture the proliferation of institutional innovations and policy responses that have been given impetus by the crisis, and the ways in which the current crisis has started to erode the stifling neo‐liberal consensus that has secured and deepened neo‐liberalism across the developing world over the past several decades. </p><p>The productive incoherence of the current crisis is apparent in the emergence of a denser, multi-layered and more heterogeneous Southern financial architecture. The current crisis has induced a broadening of the mission and reach of some existing regional, sub‐regional, bilateral, and national financial institutions and arrangements, and has stimulated discussions of entirely new arrangements. In some limited cases these institutions and arrangements substitute for the Bretton Woods institutions. This substitution is most pronounced in cases when the Bretton Woods institutions have failed or have been slow to respond to calls for support, or when they have responded to such requests with conditionality that has been overly constraining of national policy space. But in most cases, the institutions and arrangements that I discuss here complement the global financial architecture. I will argue in what follows that recent changes in the Southern financial landscape increase its potential to promote financial stability and resilience, support the development of long-run productive capacities, advance aims consistent with human development, and expand national policy space. Moreover, the emergence of a vibrant Southern financial architecture is not simply additive. Rather it may prove transformative, insofar as the Bretton Woods institutions are pushed to respond to long‐standing concerns regarding their legitimacy, governance, and conditionalities.</p> |
| JEL: | E65 F53 O23 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:uma:periwp:wp281_revised&r=pke |
| By: | Engelbert Stockhammer |
| Abstract: | <p><span lang="EN-GB">The paper argues that the economic imbalances that caused the present crisis should be thought of as the outcome of the interaction of the effects of financial deregulation with the macroeconomic effects of rising inequality. In this sense rising inequality should be regarded as a root cause of the present crisis. We identify four channels by which it has contributed to the crisis. First, rising inequality creates a downward pressure on aggregate demand since it is poorer income groups that have high marginal propensities to consume. Second, international financial deregulation has allowed countries to run larger current account deficits and for longer time periods. Thus, in reaction to potentially stagnant demand two growth models have emerged: a debt-led model and an export-led model. Third, (in the debt-led growth models) higher inequality has led to higher household debt as working class families have tried to keep up with social consumption norms despite stagnating or falling real wages. Fourth, rising inequality has increased the propensity to speculate as richer households tend hold riskier financial assets than other groups. The rise of hedge funds and of subprime derivatives in particular has been linked to rise of the superrich.</span></p><p><span lang="EN-GB"> </span></p> |
| Keywords: | crisis, distribution, inequality, effective demand, growth regimes, post-Keynesian economics |
| JEL: | E12 E25 E60 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:uma:periwp:wp282&r=pke |
| By: | Brett Fiebiger; Scott Fullwiler; Stephanie Kelton; L. Randall Wray |
| Abstract: | This working paper presents a debate, which begins with Bret Fiebiger arguing that the approach to monetary and financial macroeconomics which terms itself "modern monetary theory” does not have sound analytic foundations and is of little relevance empirically. Scott Fullwiler, Stephanie Kelton and L. Randall Wray, three leading contributors to modern monetary theory, respond with a new statement of their overall approach, which they believe shows clearly its links with post-Keynesianism. Fiebiger provides a final rejoinder to the Fullwiler-Kelton-Wray response. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:uma:periwp:wp279&r=pke |
| By: | Robert Pollin; Jeffrey Thompson |
| Abstract: | The 2008-09 Great Recession has created an ongoing severe fiscal crisis for state and local governments throughout the United States. Republican leaders are now advancing an agenda to radically downsize state and local governments by cutting taxes, slashing wages and benefits for public workers, and selling off state-owned facilities. But Democratic Party lawmakers are also proposing sharp cuts in state and local government spending programs in the face of the budget crisis. We argue that these austerity policies are not the only possible responses to the crisis, and propose some alternative approaches that can accomplish three things: 1) Close the budget gaps in the short term; 2) Promote a sustainable recovery over the next few years; and 3) Over the long term, help insulate state and local government budgets from the effects of recessions. Our proposals include maintaining revenue-sharing support at the federal level. At the state and local level itself, we propose: 1) Raising taxes for the rich; 2) Pressuring banks to move their current huge supply of excess cash reserves into productive investments; 3) Putting state-level rainy-day funds to more effective use; 4) Pushing infrastructure projects forward more rapidly and 5) Eliminating tax giveaways to businesses. |
| JEL: | H7 H12 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:uma:periwp:wp259&r=pke |
| By: | Kevin Gallagher |
| Abstract: | <p>Unstable global capital flows to developing countries have been characteristic of the world economy in the wake of the global financial crisis. The nations that have deployed capital controls to mitigate the negative effects of such flows have been branded as “protectionist” by some. This paper argues that such claims are unfounded. There is a longstanding strand of modern economic theory that dates back to Keynes and Prebisch and continues to this day that sees the use of capital controls as essential for macroeconomic stability and in order to deploy an independent monetary policy. In a most recent development, a “new welfare economics” of capital controls has arisen within the mainstream that sees controls as measures to correct for market failures due to imperfect information, contagion, uncertainty and beyond. Taken as a whole then, rather than the “new protectionism,” capital controls could be seen as the “new correctionism” that re-justifies a tool that has long been recognized to promote stability and growth in developing countries. </p><p></p> |
| JEL: | E44 E5 F3 F30 F32 F34 F41 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:uma:periwp:wp278&r=pke |
| By: | Azizur R. Khan |
| Abstract: | <p> The purpose of this essay is to outline the evolution of inequality in the post-World War II period and the causes shaping that evolution.<span> </span>The starting proposition of the essay is that both inequality and the social tolerance of inequality have substantially increased almost everywhere over this period. The increase in inequality over this period, however, consists of divergent changes over two sub-periods: for the first three decades after the end of WWII inequality actually declined over much of the world; over the last three decades the increase in inequality has afflicted pretty much every significant human society. While in the decades immediately after WWII human societies almost everywhere were, at least seemingly, engaged in finding ways to reduce inequality, in the last three decades societies everywhere have demonstrated greater tolerance of inequality. The essay also argues that these trends in inequality were not determined by inevitable technological, economic or historical forces but largely by policy choices made by political forces. Finally it argues that, the demise of traditional standard bearers of equality, such as the actually-existing socialist system and the quest for non-capitalist development in the Third World, and the emergence of capitalism as the only economic system, do not signal the “end of history” for the human pursuit of equality. Plenty of paths to greater equality are available to contemporary societies that are serious in their pursuit of the goal.</p><p></p> |
| Keywords: | Personal Income, Wealth, Income Distribution, Living Standards |
| JEL: | D31 I31 I38 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:uma:periwp:wp277&r=pke |
| By: | Kevin Gallagher |
| Abstract: | <span>International capital mobility has long been associated with financial and banking crises.<span> </span>The Articles of Agreement of the International Monetary Fund contain multi-lateral rules to govern global capital flows.<span> </span>For some countries, especially those in the developing world, the IMF Articles of Agreement remain the core framework under which they have autonomy to regulate cross-border capital flows.<span> </span>For others, these rules have been partly superseded by more recent trade and other economic integration agreements.<span> </span>Thus what used to be a regime of ‘cooperative decentralization’ has become a patchwork of overlapping and inconsistent governance structures that pose significant challenges to nations attempting to regulate global capital flows for stability and growth.<span> </span>This paper traces the history of governing global capital flows and presents a framework for understanding three distinct eras in the modern governance of global capital.<span> </span>The framework emphasizes how power, interests, ideas, and institutions interact to shape each era in different combinations to yield different outcomes.<span> </span>From this perspective, there are many challenges ahead for effectively governing global capital flows.</span> |
| JEL: | E65 F53 O23 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:uma:periwp:wp283&r=pke |
| By: | Philip Pilkington; Warren Mosler |
| Abstract: | The root of Europe's sovereign debt crisis can be found in the fact that investors are concerned that countries in the periphery might default, causing them to demand a higher yield on government bonds. What's needed is a way of giving peripheral debt a high degree of safety while allowing peripheral countries to remain users of the euro. A simple solution to this problem would be for peripheral countries to begin issuing a new type of government debt: the "tax-backed bond." Tax-backed bonds would be similar to current government bonds except that they would contain a clause stating that if the country failed to make its payments when due--and only if this happens--the bonds would be acceptable to make tax payments within the country in question. This tax backing would set an absolute floor below which the value of the asset could not fall, assuring investors that the bond is always "money good," leading to lower bond rates and thus ensuring that peripheral countries would not be driven to default. |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levypn:12-04&r=pke |
| By: | Theriault, Veronique; Sterns, James A. |
| Abstract: | Applying John R. Commons institutional economic framework, this paper analyzes the evolution of the key institutions in the Malian cotton sector starting with the CFDT contract following the country‘s Independence in 1960; the nationalization of the cotton gin company, CMDT, in 1974; the completion of a vertically integrated market structure from the mid-1980s to mid-1990s; and, finally, to the current state of the market-oriented reforms in 2010. In accordance with John R. Commons’ economic theory, institutional changes in the Malian cotton sector have led to both intended and unintended consequences impacting economic performance at the farm, gin, and State levels, which in turn, has contributed to the emergence of new limiting factors. At present, the limiting factors to desired economic performance in the Malian cotton sector are: the lack of adequate extension services, high rates of indebtedness at both farmer and cooperative levels, difficulty in farming in an integrated system due to the limited access to cereal inputs on credit, low yields, delays in payment, and discordance between farmers and their union‘s leaders. Based on these findings, policy recommendations to revitalize the Malian cotton sector are drawn. |
| Keywords: | John R. Commons, Institutions, Cotton, Mali, Institutional and Behavioral Economics, International Development, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:124460&r=pke |
| By: | John M. Gowdy; Denise E. Dollimore; David Sloan Wilson; Ulrich Witt |
| Abstract: | The intellectual histories of economics and evolutionary biology are closely intertwined because both subjects deal with living, complex, evolving systems. Because the subject matter is similar, contemporary evolutionary thought has much to offer to economics. In recent decades theoretical biology has progressed faster than economics in understanding phenomena like hierarchical processes, cooperative behavior, and selection processes in evolutionary change. This paper discusses three very old "cosmologies" in Western thought, how these play out in economic theory, and how evolutionary biology can help evaluate their validity and policy relevance. These cosmologies, as manifested in economic theory are, (1) rational economic man, (2) the invisible hand of the market, and (3) the existence of a general competitive equilibrium. It is argued below that current breakthroughs in evolutionary biology and neuroscience can help economics go beyond these simple cosmologies. |
| Date: | 2012–06–12 |
| URL: | http://d.repec.org/n?u=RePEc:esi:evopap:2012-12&r=pke |
| By: | Giovanni Dosi |
| Abstract: | The paper, largely based on the introduction to Dosi (2012), elaborates on the main interpretative ingredients, methodology and challenges ahead of the evolutionary research program in economics. Telegraphically, such a perspective attempts to understand a wide set of economic phenomena - ranging from microeconomic behaviours to the features of industrial structures and dynamics, all the way to the properties of aggregate growth and development - as outcomes of far-from-equilibrium interactions among heterogeneous agents, characterized by endogenous preferences, most often "boundedly rational" but always capable of learning, adapting and innovating with respect to their understandings of the world in which they operate, the technologies they master, their organizational forms and their behavioural repertoires. And on methodological grounds, far from disdaining formal modelling and statistical analysis, the research program is, however, largely inductive, taking very seriously indeed empirical regularities at all levels of observation as discipline for the modelling assumptions. Together, the paper places such interpretative perspective against some fundamental questions addressed by the economic discipline in general and against the answers to such questions that contemporary theory has to offer. Such questions fundamentally concern first, the drivers of dynamics and, second, the conditions of coordination among interacting agents. |
| Keywords: | Economic Evolution, Coordination, Dynamics, Bounded Rationality, Agent-based Macro Models, Innovation |
| Date: | 2012–06–06 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2012/08&r=pke |
| By: | Gunseli Berik; Ebru Kongar |
| Abstract: | The recession precipitated by the US financial crisis of 2007 accelerated the convergence of women's and men's employment rates, as men experienced disproportionate job losses and women's entry into the labor force gathered pace. Using the American Time Use Survey (ATUS) data for 2003-10, this study examines whether the recession also occasioned a decline in disparity in unpaid work burdens and provided impetus for overall progress toward equity in the workloads, leisure time, and personal care hours of mothers and fathers. Controlling for the prerecession trends, we find that the recession contributed to the convergence of both paid and unpaid work only during the December 2007-June 2009 period. The combined effect of the recession and the jobless recovery was a move toward equity in the paid work hours of mothers and fathers, a relative increase in the total workload of mothers, and a relative decline in their personal care and leisure time. |
| Keywords: | Economics of Gender; Unemployment; Time Use; Economic Crises |
| JEL: | D13 J16 J22 J64 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_726&r=pke |