|
on Post Keynesian Economics |
| By: | Geoff C. Harcourt (School of Economics, Australian School of Business, the University of New South WalesAuthor-Name: Craig Freedman); Peter Kriesler (School of Economics, Australian School of Business, the University of New South WalesAuthor-Name: Craig Freedman); John Nevilet (School of Economics, Australian School of Business, the University of New South Wales) |
| Abstract: | There is a myth underlying neoclassical economic analysis of a ‘Western’ economy, which is that in anything but the relatively short run, defined as the length of a business cycle, the economy reaches an equilibrium position determined entirely by supply side factors and unaffected by measures taken to increase aggregate demand during a slump This myth is not based on any factual analysis, it is simply assumed. It threatens the wellbeing of the world economy because it allows those who hold it to deny there is any need to change the deregulated state of the international financial sector, that caused the global crisis which started in 2007 and the effects of which have persisted ever since. The fundamental myth has a number of corollaries, which are worth calling associated myths. One of the most important is that the composition of spending to increase aggregate demand during a slump is irrelevant, so that it does not matter if the spending is directed towards consumer goods or to increasing physical and human capital. Another is that monetary policy has a more desirable impact on the economy than does fiscal policy. The paper focusses on neo-classical growth theory; comparative static implications are not considered. Finally, the policy implications are discussed. |
| Keywords: | Financial crisis, Macroeconomic policy, deregulation, neo-classical growth theory |
| JEL: | E6 E32 O4 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2013-36&r=pke |
| By: | Bernard Shull |
| Abstract: | The Federal Reserve has been criticized for not forestalling the financial crisis of 2007-09, and for its unconventional monetary policies that have followed. Its critics have raised questions as to whom, if anyone, reins in the Federal Reserve if and when its policies are misguided or abusive. This paper traces the principal changes in governance of the Federal Reserve over its history. These changes have, for the most part, developed in the wake of economic upheavals, when Fed policy has been challenged. The aim is to identify relevant issues regarding governance and to establish a basis for change, if needed. It describes the governance mechanism established by the Federal Reserve Act in 1913, traces the passing of this mechanism in the 1920s and 1930s, and assays congressional efforts to expand oversight in the 1970s. It also considers the changes in Fed policies induced by the financial crisis of 2007-09 and the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. It concludes that the original internal governance mechanism, a system of checks and balances that aimed to protect all the important interest groups in the country, faded in the 1920s and was never adequately replaced. In light of the Federal Reserve's continued growth in power and influence, this deficiency constitutes a threat not only to "stakeholders" but also to the independence of the Federal Reserve itself. |
| Keywords: | Central Banks; Federal Reserve; Governance |
| JEL: | E58 N2 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_784&r=pke |
| By: | Michaël Assous (GREDEG CNRS; University of Paris 1); Roberto Lampa (CONICET (National Scientific and Technical Research Council); University of Buenos Aires, Argentina) |
| Abstract: | Oskar Lange’s 1938 article “The Rate of Interest and the Optimum Propensity to Consume”, is usually associated with the original IS-LM approach of the late 1930s. However, Lange’s article was not only an attempt to illuminate Keynes’s main innovations but the first part of a wide project that included the development of a theory of economic evolution. This paper aims at showing that Lange’s article can help illuminating critical aspects of this project: in particular, Lange’s idea that a synthesis between Kaldor’s and Kalecki’s theories and that of Schumpeter, might have been possible and that it represented (in intentions) a “modern” and consistent reconstruction of the Marxist theory of the business cycle. Section 1 clarifies Lange’s early reflection on dynamics. Section 2 centers on Lange’s 1938 static model and indicates the effects of a change of saving on investment. Section 3 suggests a dynamic reconstruction from which are addressed important arguments raised by Lange in a series of papers written between 1934 and 1942. |
| Keywords: | Lange, Kalecki, Marxian theory of the business cycle, marginal propensity to save, non-linearity |
| JEL: | B22 B24 E32 E12 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2014-02&r=pke |
| By: | Craig Freedman (Department of Economics, Macquirie University); Geoff C. Harcourt (School of Economics, Australian School of Business, the University of New South WalesAuthor-Name: Craig Freedman); Peter Kriesler (School of Economics, Australian School of Business, the University of New South WalesAuthor-Name: Craig Freedman); John Nevilet (School of Economics, Australian School of Business, the University of New South Wales) |
| Abstract: | The paper considers Keynes’s major contributions before "The General Theory", namely "A Tract on Monetary Reform" and "A Treatise on Money", and shows that they were close to the views which Friedman would later develop. However, "The General Theory of Employment, Interest and Money" represented a major challenge to the orthodoxy of the time, and it was to this that Friedman radically objected. We identify the main areas in which Keynes departed from the mainstream theory of the time, and show how Friedman attempted to undermine each of Keynes’s major contributions and the extent to which he was successful. Friedman regarded Keynes’s contributions as detrimental to, and a definitive step backward for, the economics profession. |
| Keywords: | Friedman, Keynes, History of macroeconomics, Macroeconomic policy |
| JEL: | B22 B31 E6 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2013-35&r=pke |
| By: | Didier Sornette; Peter Cauwels |
| Abstract: | Using the mechanics of creep in material sciences as a metaphor, we present a general framework to understand the evolution of financial, economic and social systems and to construct scenarios for the future. In a nutshell, highly non-linear out-of-equilibrium systems subjected to exogenous perturbations tend to exhibit a long phase of slow apparent stable evolution, which are nothing but slow maturations towards instabilities, failures and changes of regimes. With examples from history where a small event had a cataclysmic consequence, we propose a novel view of the current state of the world via the logical scenarios that derive, avoiding the traps of an illusionary stability and simple linear extrapolation. The endogenous scenarios are "muddling along", "managing through" and "blood red abyss". The exogenous scenarios are "painful adjustment" and "golden east". |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1401.3281&r=pke |
| By: | Ron Martin; Peter Sunley |
| Abstract: | Over the past couple of decades or so, there have been increasing moves within evolutionary theory to move beyond the neo-Darwinian principles of variety, selection and retention, and to incorporate development. This has led to a richer palette of concepts, mechanisms and models of evolution and change, such as plasticity, robustness, evolvability, emergence, niche construction, and selforganisation, This opens up a different framework for understanding evolution. In this paper we set out the main characteristics of the recent and ongoing ‘developmental turn’ in evolutionary theory, and suggest how these might inform a corresponding ‘developmental turn’ in evolutionary economic geography. |
| Keywords: | Evolutionary economic geography, Generalised Darwinism, Evolutionary developmental biology, Developmental systems theory, Plasticity, Robustness, Evolvability, Emergence, Self organisation |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1401&r=pke |
| By: | Charles Woolfson; Arunas Juska |
| Abstract: | The causes of disaster, both immediate and underlying, that resulted in 54 fatalities in Riga in November 2013 are analyzed in this paper. The collapse of the Maxima supermarket is seen as a safety failure resulting from longer-term deregulation in Latvia encouraged by external advisors such as the World Bank and the EU, and the specific crisis-induced drive to minimize regulation by local political actors, especially in the aftermath of ongoing austerity. The paper raises the issue of what is a 'safety crime' in the context of post-communist Baltic states, and asks whether the notion of 'corporate killing' or corporate manslaughter is applicable to the circumstances of the disaster. The paper suggests the need to establish accountability for social harms caused by the unfettered pursuit of private profit over public safety. |
| Keywords: | Maxima supermarket collapse, Latvia, Baltic states, Riga, austerity, post-communism, neoliberalism, deregulation, austerity, 'safety crime', corporate killing |
| JEL: | K32 J28 P39 P16 |
| Date: | 2014–01–20 |
| URL: | http://d.repec.org/n?u=RePEc:cel:dpaper:20&r=pke |