nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2013‒05‒24
five papers chosen by
Karl Petrick
Western New England University

  1. Do The Central Banks Always Do The Right Thing For Their Economies? An Appraisal Of The Monetary Policy Strategy Of The ECB By Covi, Giovanni
  2. The impact of governmental signals on environmental morale : a 'behavioural' approach. Vol. 03-12. By Barile, Lory
  3. Recasting the Power Politics of Debt: Structural Power, Hegemonic Stabilisers and Change By Antoniades, Andreas
  4. Are Consumer Decision-Making Phenomena a Fourth Market Failure? By Lunn, Pete
  5. The Impact of the U.S. Sugar Program Redux By John C. Beghin; Amani Elobeid

  1. By: Covi, Giovanni
    Abstract: The general aim of the paper is to address the doubts that too often the Central Banks’ tools and operations don’t fit for a fine tuning of the economies, and this is even more true in harsh times. The paper begins with an overview on the great failures respectively of the Federal Reserve, the so called "golden silence" in the 1929 Great Crash, and of the European Central Bank during the second great contraction, the 2008 Financial Crisis. Then I critically appraise the so-called “Two pillar approach”, a methodological tool employed by the ECB for assessing the risks to price stability. I survey the literature on the subject with the purpose of going at the roots of the “technical” difficulties. The first outcome emphasizes the existing disagreement between the criticisms and the proposed solutions. The second outcome is the unanimity of the opinions that the inflation target chosen at 2% by ECB for the Eurozone is too low, thereby making the whole MPS excessively restrictive. I conclude observing that the “core” inflation-target of 2% is in fact at the very basis of the ECB non-intervention policy. For a simple and sobering reason: even if between 2003 and 2008 the stock market bubble was growing at unreal rate, since the inflation target wasn’t in any jeopardy, the European Central Bank didn’t do anything. Maintaining the goal of price stability was much more important than assuring financial stability, thereby preventing the Financial Crisis.
    Keywords: Monetary Policy – Central Banking – European Central Bank – Inflation - Financial Crisis
    JEL: E52 E58
    Date: 2013–05–19
  2. By: Barile, Lory
    Abstract: Possible ways to enhance environmental sustainability involve encouraging people to change their life-style towards more eco-conscious behaviour using information campaigns and price-based instruments. This introduces the questions of 1) how Governments should efficiently incentivise people to behave environmentally friendly (e.g. nudging vs mandatory policies); and, 2) how people react to different policy measures according to their underlying motivations. The purpose of this analysis is to shed light on these particular aspects of policy design and to analyze the conditions under which ethical considerations – i.e. environmental morale – matter in environmental contexts.
    Keywords: intrinsic motivation; extrinsic motivation; environmental morale; crowding-in; crowding-out; recycling
    Date: 2012
  3. By: Antoniades, Andreas
    Abstract: The 2007/8 financial crisis exposed and exacerbated the debt pathologies of the ‘West’. The paper examines whether the new global debt relations that have been generated by this crisis have transformed global power politics, changing the way in which the ‘global South’ and the ‘global North’ interrelate and interact. To do so the paper juxtaposes the G20 advanced and emerging economies and examines a number of key indicators related to debt, indebtedness and financial leverage. This research leads to two main findings: (i) the crisis has indeed given rise to new global debt relations. Any reforms, therefore, in the post-crisis global political economy will take place in an environment that favours the emerging powers (ii) The US maintains its capacity to control the parameters of this new global debt politics and economics, but cannot impose a solution to the existing ‘global/hegemonic imbalances’ on the emerging powers.
    Keywords: debt politics, global debt relations, geopolitics, G20, debt crisis, financial crisis, debt thresholds, external debt, NIIP, global debtors,exorbitant privilege, currency composition of debt, valuation effects
    JEL: F3 F4 F5 H6
    Date: 2013–04–03
  4. By: Lunn, Pete
    Abstract: This paper challenges the increasingly common view that the findings of behavioural economics constitute a fourth type of market failure. The market failure framework elevates the standard competitive market model to the status of an ideal. It provides us with tools to identify departures from the ideal model and to deduce a direction policy might take to restore it. Many behavioural phenomena also imply departures from the ideal model. Yet rather than allowing us to deduce a good direction for policy, the findings question the legitimacy and usefulness of this deductive theoretical framework for policy analysis. Two policy problems are highlighted here: the validity of inferring that consumers' choices after an intervention improve outcomes relative to their previous choices, and the potential for distributional consequences when policy alters consumers' choices. The paper concludes that, given these problems, conceiving of the relevant behavioural phenomena as an additional form of market failure is potentially to misunderstand their implications for consumer and competition policy.
    Keywords: Market Failure/Decision-making biases/Behavioural economics/Regulation
    JEL: D03 D18 L96
    Date: 2013–04
  5. By: John C. Beghin; Amani Elobeid (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI))
    Abstract: We analyze the various welfare costs, transfers, trade, and employment consequences of the current U.S. sugar program for U.S. consumers, other sugar users, sugar refiners, cane and beet growing and processing industries, other associated agricultural sectors, and world markets. The removal of the sugar program would increase U.S. consumers’ welfare by $2.9 to $3.5 billion each year and generate a modest job creation of 17,000 to 20,000 new jobs in food manufacturing and related industries. Imports of sugar containing products would fall dramatically, especially confectioneries substituting for domestic inputs under the sugar program. Sugar imports would rise substantially to 5 to 6 million short tons raw sugar equivalent. World price increases would be minor, equivalent to about 1 cent per pound.
    Date: 2013–05

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