nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2016‒03‒10
six papers chosen by
Karl Petrick
Western New England University

  1. "Money, Power, and Monetary Regimes" By Pavlina R. Tcherneva
  2. Theories of finance and financial crisis – Lessons for the Great Recession By Nina Dodig; Hansjorg Herr
  3. Which Institutions Promote Growth? Revisiting the Evidence By Kuntal Das; Thomas Quirk
  4. Capital Account Liberalization and Inequality By Davide Furceri; Prakash Loungani
  5. Causes and consequences of the financial crisis and the implications for a more resilient financial and economic system By Hein, Eckhard
  6. Developing Countries’ External Debt and International Financial Integration By Bruno Bonizzi; Christina Laskaridis; Jan Toporowski

  1. By: Pavlina R. Tcherneva
    Abstract: Money, in this paper, is defined as a power relationship of a specific kind, a stratified social debt relationship, measured in a unit of account determined by some authority. A brief historical examination reveals its evolving nature in the process of social provisioning. Money not only predates markets and real exchange as understood in mainstream economics but also emerges as a social mechanism of redistribution, usually by some authority of power (be it an ancient religious authority, a king, a colonial power, a modern nation state, or a monetary union). Money, it can be said, is a "creature of the state" that has played a key role in the transfer of real resources between parties and the redistribution of economic surplus. In modern capitalist economies, the currency is also a simple public monopoly. As long as money has existed, someone has tried to tamper with its value. A history of counterfeiting, as well as that of independence from colonial and economic rule, is another way of telling the history of "money as a creature of the state." This historical understanding of the origins and nature of money illuminates the economic possibilities under different institutional monetary arrangements in the modern world. We consider the so-called modern "sovereign" and "nonsovereign" monetary regimes (including freely floating currencies, currency pegs, currency boards, dollarized nations, and monetary unions) to examine the available policy space in each case for pursuing domestic policy objectives.
    Keywords: History of Money; Monetary Sovereignty; Chartalism; Counterfeiting; Public Monopoly; Currency Issuers vs. Currency Users; Exchange Rate Systems
    JEL: B5 E6 E42 E63 N1 Z1
    Date: 2016–02
  2. By: Nina Dodig (Berlin School of Economics and Law, and Institute for International Political Economy Berlin (IPE)); Hansjorg Herr (Berlin School of Economics and Law, and Institute for International Political Economy Berlin (IPE))
    Abstract: This paper presents an overview of different models which explain financial crises, with the aim of understanding economic developments during and possibly after the Great Recession. In the first part approaches based on efficient markets and rational expectations hypotheses are analyzed, which however do not give any explanation for the occurrence of financial crises and thus cannot suggest any remedies for the present situation. A broad range of theoretical approaches analyzing financial crises from a medium term perspective is then discussed. Within this group we focused on the insights of Marx, Schumpeter, Wicksell, Hayek, Fisher, Keynes, Minsky, and Kindleberger. Subsequently the contributions of the Regulation School, the approach of Social Structures of Accumulation and Post-Keynesian approach, which focus on long-term developments and regime shifts in capitalist development, are presented. International approaches to finance and financial crises are integrated into the analyses. We address the issue of relevance of all these theories for the present crisis and draw some policy implications. The paper has the aim to find out to which extent the different approaches are able to explain the Great Recession, what visions they develop about future development of capitalism and to which extent these different approaches can be synthesized.
    Keywords: theories of crisis, Marxian, Institutional, Keynesian, capitalism, finance, financial crisis
    JEL: B14 B15 B24 B25 E11 E12 E13 E32
    Date: 2015–09–01
  3. By: Kuntal Das (University of Canterbury); Thomas Quirk
    Abstract: Recent research examining the growth impacts of institutions have found that institutions are important in fostering economic growth. By building a framework around the institutional taxonomy proposed by Rodrik (2005), our paper contributes to the literature in the following way. First, we confirm the result that “institutions matter” and show that dfferent types of institutions matter differently for growth. By applying a dynamic panel model, we find that market-creating and market-stabilizing institutions are important in fostering economic growth. We then extend this analysis and investigate whether countries at different levels of development could respond heterogeneously to changes in their institutional structure. We find that poor countries benefit the most from market creating institutions and institutions that support market stability. We also find some evidence that market legitimizing institutions such as “democracy” are not necessarily optimal for growth in poor countries. These results have important implications for countries that decide on the optimal strategy to improve their institutional framework.
    Keywords: Institutions, Growth, Dynamic Panel, System GMM
    JEL: O11 O30 O43 O50
    Date: 2016–02–19
  4. By: Davide Furceri; Prakash Loungani
    Abstract: This paper examines the distributional impact of capital account liberalization. Using panel data for 149 countries from 1970 to 2010, we find that, on average, capital account liberalization reforms increase inequality and reduce the labor share of income in the short and medium term. We also find that the level of financial development and the occurrence of crises play a key role in shaping the response of inequality to capital account liberalization reforms.
    Keywords: Globalization;Inequality, Capital Account Openness, Crises, Institutions, capital account, liberalization, capital account liberalization, standard deviations, Macroeconomic Analyses of Economic Development, All Countries, Institutions.,
    Date: 2015–11–24
  5. By: Hein, Eckhard
    Abstract: The increasing dominance of finance starting in the late 1970s/early 1980s in the US and the UK, and somewhat later in other countries, was associated with two fundamental and structural processes generating the contradictions of this phase of development and finally the financial and economic crises starting in 2007: the deregulation of the financial (and economic) system and the massive redistribution of income at the expense of labour and low income households. These fundamental processes provided the conditions for the generation of major imbalances within some of the national economies, on the one hand, and at the international level, on the other hand. These imbalances and contradictions led eventually to the deep financial and economic crisis, starting in 2007. Therefore, a more resilient financial and economic system requires the re-regulation and downsizing of the financial sector, the re-distribution of income (and wealth) from top to bottom and from capital to labour, the re-orientation of macroeconomic policies towards stabilizing domestic demand at non-inflationary full employment levels, and the re-creation of international monetary and economic policy coordination.
    Keywords: financialisation,distribution,growth,financial and economic crisis,resilient financial and economic system
    JEL: D30 E02 E11 E12 E21 E22 E25 E44 E61 E65 G01
    Date: 2016
  6. By: Bruno Bonizzi (SOAS, University of London); Christina Laskaridis (SOAS, University of London); Jan Toporowski (SOAS, University of London)
    Abstract: This paper assesses the dynamics of developing and emerging countries external debt and financial vulnerability. It is argued that, although current account positions do have a role in accumulating external liabilities, developing countries’ vulnerability primarily lie in their increasing financial integration, which has resulted in the growth of their cross-border assets and liabilities. Rather than government falling into net indebtedness, which actually fell in many countries in recent years, developing countries are now more likely to be hit by financial instabilities originating from private credit and financial markets.
    Keywords: developing countries’ debt, financial integration
    JEL: F32 F34 F40
    Date: 2015–09–01

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