|
on Post Keynesian Economics |
| By: | Dimitri B. Papadimitriou; Greg Hannsgen; Michalis Nikiforos |
| Abstract: | As this report goes to press, the official unemployment rate remains tragically elevated, compared even to rates at similar points in previous recoveries. The US economy seems once again to be in a "jobless recovery," though the unemployment rate has been steadily declining for years. At the same time, fiscal austerity has arrived, with the implementation of the sequester cuts, following tax increases and the ending of emergency extended unemployment benefits just two months ago. Our new report provides medium-term projections of employment and economic growth under four different scenarios. The baseline scenario starts by assuming the same growth rates and government deficits as the Congressional Budget Office's (CBO) baseline projection from earlier this year. The result is a new surge of the unemployment rate to nearly 8 percent in the third quarter of this year, followed by a very gradual new recovery. Scenarios 1 and 2 seek to reach unemployment-rate goals of 6.5 percent and 5.5 percent, respectively, by the end of next year, using new fiscal stimulus. We find in these simulations that reaching the goals requires large amounts of fiscal stimulus, compared to the CBO baseline. For example, in order to reach 5.5 percent unemployment in 2014, scenario 2 assumes 11 percent growth in inflation-adjusted government spending and transfers, along with lower taxes. As an alternative, scenario 3 adds an extra increase to growth abroad and to private borrowing, along with the same amount of fiscal stimulus as in scenario 1. In this last scenario of the report, the unemployment rate finally pierces the 5.5 percent threshold from the previous scenario in the third quarter of 2015. We conclude with some thoughts about how such an increase in demand from all three sectors—government, private, and external—might be realistically obtained. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levysa:sa_mar_13&r=pke |
| By: | Jean-Bernard Chatelain (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, UP1 - Université Paris 1, Panthéon-Sorbonne - Université Paris I - Panthéon-Sorbonne - PRES HESAM) |
| Abstract: | This review of the book "The Challenge of Financial Stability: A New Model and its Applications" by Goodhart C.A.E. and Tsomocos D.P. highlights the potential of the framework of strategic partial default of banks with credit chain on the interbank market for further theoretical and applied research on financial stability. |
| Keywords: | Financial stability, Banking, Contagion, Default, General Equilibrium |
| Date: | 2013–04–16 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-00826206&r=pke |
| By: | Rainer Kattel; Ringa Raudla |
| Abstract: | What can we learn from JPMorgan Chase's recent self-proclaimed "stupidity" in attempting to hedge the bank's global risk position? Clearly, the description of the bank's trading as "sloppy" and reflecting "bad judgment" was designed to prevent the press reports of large losses from being used to justify the introduction of more stringent regulation of large, multifunction financial institutions. But the lessons to be drawn are not to be found in the specifics of the hedges that were put on to protect the bank from an anticipated decline in the value of its corporate bond holdings, or in any of its other global portfolio hedging activities. The first lesson is this: despite their acumen in avoiding the worst excesses of the subprime crisis, the bank's top managers did not have a good idea of its exposure, which serves as evidence that the bank was "too big to manage." And if it was too big to manage, it was clearly too big to regulate effectively. |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levypn:12-06&r=pke |
| By: | Giorgos Argitis |
| Abstract: | On November 27, 2012, the Eurogroup reached a new "Greek deal" that once more discloses that there is no political will to address Greece's debt crisis—or the country's economic and social catastrophe. |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levypn:12-12&r=pke |
| By: | Paulo Nakatani (Universidade federal do Espírito Santo - Brasil); Rémy Herrera (Centre d'Economie de la Sorbonne) |
| Abstract: | This working paper proposes an analysis – from a Marxist point of view – of the relationships between John Maynard Keynes and the economic mainstream of his time (first part), then presents the theoretical elements on the crisis developed by this author (second part), and finally questions, in the context of the current crisis, the opportunity for a return to so-called “Keynesian” policies (third part). |
| Keywords: | Keynes, crisis, Marxism, maintream economics, capitalism. |
| JEL: | B31 B51 E40 E50 G1 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:13048&r=pke |
| By: | Christophe Lavialle (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR7322 - Université d'Orléans) |
| Abstract: | Dans un texte de 1933 publié par The Yale Review, John Maynard Keynes présente ses arguments en faveur de l'autosuffisance nationale. Il y plaide pour le refus d'un internationalisme sans contrôle, et propose aux pays démocratiques adeptes du libéralisme politique de mettre en oeuvre le niveau de patriotisme économique adapté au maintien de leurs équilibres sociaux et à la promotion d'une " république sociale idéale ". Alors que la crise déclenchée en 2008, qui par bien des aspects montre les limites d'une globalisation financière et réelle sans contrôle, a remis au goût du jour l'enseignement du maître de Cambridge, cet article produit un écho tout à fait surprenant. Le pari de cette communication est alors qu'il peut être précisément éclairant d'analyser les enjeux de la période en cours à la lumière de cet écrit et des positions qu'y développe Keynes, pour voir, si sur ce thème aussi, sa pensée reste actuelle et riche d'enseignements. L'objet de la communication est donc de repérer les différents arguments avancés par Keynes dans son texte et d'en analyser l'actualité ou l'obsolescence. Il est aussi de rapprocher l'argumentaire, essentiellement intuitif, de celui, analytique, développé trois ans plus tard dans la Théorie Générale. Il est enfin de l'inscrire dans la philosophie globale qui est celle de Keynes des questions économiques, politiques et morales. |
| Keywords: | Keynes, nationalisme économique, libéralismes, pragmatisme. |
| Date: | 2012–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00827448&r=pke |
| By: | Thibaut Duprey (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales [EHESS] - Ecole des Ponts ParisTech - Ecole normale supérieure de Paris - ENS Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | This paper examines empirically to which extent public banks feature a different pattern in their lending behaviour over macroeconomic fluctuations. Based on a unique dataset from 1990 to 2010, including at most 459 public banks in 93 countries, I can handle ownership change by including records on privatisations as well as nationalisations during banking crisis, which would otherwise blur the picture. I find that (i) public bank lending is significantly less cyclical than that of private banks, (ii) public banks cut less on their loans during economic downturns, with a positive relation between economic development and their ability to absorb macro shocks, and (iii) privatised banks switch from a regime of low to high lending cyclicality. Then, the lower co-movement of public bank loans with macroeconomic fluctuations reveals both (a) a less vulnerable balance sheet structure and more stable financing sources, which is consistent with a lending relationship business model, (b) as well as delayed loan deterioration, which is a symptom of forbearance and inefficient loan management; the actual combination of the two is not orthogonal to economic development, with high income countries more likely to feature efficient public bank lending cyclicality, while evidences suggest it may reveal an inefficient credit allocation for less developed countries. |
| Keywords: | Lending cycle ; Procyclicality ; Public banking ; Privatisations ; Nationalisations ; Forbearance |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-00829474&r=pke |
| By: | Venkatachalam Anbumozhi (Asian Development Bank Institute (ADBI)); Armin Bauer |
| Abstract: | Half of the world’s population—3 billion people—lives below the poverty line, and Asia has the largest share. In pursuit of sustainable economic development and poverty alleviation, there is great potential among low-income households for green consumption, production, innovation, and entrepreneurial activity. This paper shows how an inclusive green growth model can uplift the poor through entrepreneurship and fiscal policy reforms. To make the case, this paper cites examples of institutions and policies in Asia that have successfully generated and tapped into the potentials of low-income households. Low-income households are recognized as resilient, value-conscious consumers and creative entrepreneurs in the inclusive and green growth paradigm. Low-income households can be the engine of a new development strategy; they can be a source of innovation for providing basic services in a green way. Evidence suggests that, without effective financial systems, not all market actors can sustain their businesses. Therefore, policy interventions are necessary to encourage and financially support enterprises to adopt best available technologies and incorporate innovative practices that are environmentally beneficial. The paper recommends fflexible redistributive and transformative public expenditure schemes and finance sector development to surmount the bottlenecks towards achieving inclusive and green growth. |
| Keywords: | Green growth, low-carbon, Inequality, Asia, low-income households, redistributive and transformative public expenditure schemes, inclusive growth |
| JEL: | E62 H61 Q2 Q3 Q4 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:eab:macroe:23423&r=pke |
| By: | Paul de Grauwe |
| Abstract: | I analyze the nature of the design failures of the Eurozone. I argue first that the endogenous dynamics of booms and busts that are endemic in capitalism continued to work at the national level in the Eurozone and that the monetary union in no way disciplined these into a union-wide dynamics. On the contrary the monetary union probably exacerbated these national booms and busts. Second, the existing stabilizers that existed at the national level prior to the start of the union were stripped away from the member-states without being transposed at the monetary union level. This left the member states “naked” and fragile, unable to deal with the coming national disturbances. I study the way these failures can be overcome. This leads me to stress the role of the ECB as a lender of last resort and the need to make macroeconomic policies more symmetric so as to avoid a deflationary bias in the Eurozone. I conclude with some thoughts on political unification, and the dangers of unification without democratic legitimacy. |
| JEL: | E44 E58 E61 F32 G01 H63 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:euf:ecopap:0491&r=pke |
| By: | Maurice Obstfeld |
| Abstract: | Because of recent economic crises, financial fragility has regained prominence in both the theory and practice of macroeconomic policy. Consistent with macroeconomic paradigms prevalent at the time, the original architecture of the euro zone assumed that safeguards against inflation and excessive government deficits would suffice to guarantee macroeconomic stability. Recent events, in both Europe and the industrial world at large, challenge this assumption. After reviewing the roots of the euro crisis in financial-market developments, this essay draws some conclusions for the reform of euro area institutions. The euro area is moving quickly to correct one flaw in the Maastricht treaty, the vesting of all financial supervisory functions with national authorities. However, the sheer size of bank balance sheets suggest that the euro area must also confront a financial/fiscal trilemma: countries in the euro zone can no longer enjoy all three of financial integration with other member states, financial stability, and fiscal independence, because the costs of banking rescues may now go beyond national fiscal capacities. Thus, plans to reform the euro zone architecture must combine centralized supervision with some centralized fiscal backstop to finance bank resolution in situations of insolvency. |
| JEL: | E44 F36 G15 G21 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:euf:ecopap:0493&r=pke |