nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2014‒08‒20
six papers chosen by
Karl Petrick
Western New England University

  1. Competition and Credit Control By C.A.E. Goodhart
  2. Lost at Sea:The Euro Needs a Euro Treasury By Jörg Bibow
  3. The Poor, the Prosperous and the ?Inbetweeners?: A Fresh Perspective on Global Society, Inequality and Growth By Peter Edward; Andy Sumner
  4. The Habit Persistence Hypothesis: Empirical Evidence from Jamaica By Bamikole, Oluwafemi
  5. Globalization and Inequality By Kanbur, Ravi
  6. The Bubble Game: A classroom experiment By Moinas, Sophie; Pouget, Sébastien

  1. By: C.A.E. Goodhart
    Abstract: The Bank of England’s ‘consultative document’ on Competition and Credit Control was published on May 14th, 1971. It was a landmark occasion, representing a decisive break with the prior system of maintaining direct controls over the, main components of the, UK banking system; the intention was now to achieve the monetary authorities’ objectives of policy via the operation of market mechanisms, notably adjustments in interest rates and open market operations. Although the ‘credit control’ aspect was, over the next few years, notably less successful than the encouragement of competition amongst the banks, (where the London Clearing Banks previously had maintained a restrictive cartel with the support of the authorities), nevertheless the direction of travel towards a more liberal, market based system, remained, despite a partial reversion towards a partial direct control system in the guise of the ‘corset’, introduced at the end of 1973, and finally laid to rest in June 1980.
    Date: 2014
  2. By: Jörg Bibow
    Abstract: The euro crisis remains unresolved even as financial markets may seem calm for now. The current euro regime is inherently flawed. Recent reforms have failed to turn the dysfunctional euro regime into a viable one. The investigation is informed by the “cartalist” critique of traditional “optimum currency area” theory (Goodhart 1998). Various proposals to rescue the euro are assessed and found lacking. A Euro Treasury scheme operating on a strict rule and specifically designed not to be a transfer union is proposed here as condition sine qua non for healing the euro’s potentially fatal birth defects. The Euro Treasury proposed here is the missing element that renders sense to the current fiscal regime that is unworkable without it. The proposed Euro Treasury scheme would end the currently unfolding euro calamity by switching policy from a public thrift campaign that can only impoverish Europe to a public investment campaign designed to secure Europe’s future. No mutualization of existing national public debts is involved. Instead, the Euro Treasury is established as a means to pool eurozone public investment spending and have it funded by proper eurozone treasury securities.
    Date: 2013
  3. By: Peter Edward (Newcastle Universtiy Business School); Andy Sumner (Institute of Development Studies, Sussex)
    Abstract: Global consumption grew by $10 trillion from 1990 to 2010. Who benefited, and what has happened to global and national inequality since 1990? (?)
    Keywords: The Poor, the Prosperous and the ?Inbetweeners?: A Fresh Perspective on Global Society, Inequality and Growth
    Date: 2014–03
  4. By: Bamikole, Oluwafemi
    Abstract: This paper seeks to empirically verify if the habit persistence phenomenon holds in the Jamaican economy. The results of the GMM time series estimation show the existence of habit formation by Jamaican consumers. Past consumption habits affect the growth rate of consumption, consequently in order to build the confidence of consumers in the Jamaican economy, the inflation rate, foreign and domestic interest rates have to be moderately adjusted to encourage good consumption habits.
    Keywords: Habit persistence, GMM, consumption growth, Jamaica
    JEL: E2 E21
    Date: 2013–05–10
  5. By: Kanbur, Ravi
    Keywords: International Development, Production Economics,
    Date: 2014
  6. By: Moinas, Sophie; Pouget, Sébastien
    Abstract: We propose a simple classroom experiment on speculative bubbles: the Bubble Game. This game is useful to discuss about market efficiency and trading strategies in a financial economics course, and about behavioral aspects in a game theory course, at all levels. The Bubble Game can be played with any number of students, as long as this number is strictly greater than one. Students sequentially trade an asset which is publicly known to have a fundamental value of zero. If there is no cap on asset prices, speculative bubbles can arise at the Nash equilibrium because no trader is ever sure to be last in the market sequence. Otherwise, the Nash equilibrium involves no trade. Bubbles usually occur with or without a cap on prices. Traders who are less likely to be last and have less steps of reasoning to perform to reach equilibrium are in general more likely to speculate.
    Keywords: financial markets, speculation, bubbles
    Date: 2014–07–07

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