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on Post Keynesian Economics |
| By: | Jan Kregel (Ragnar Nurkse School of Innovation and Governance, Tallinn University of Technology) |
| Abstract: | New lending and payment systems challenge traditional banks by splitting the two sides of the balance sheet into separate operations, leaving traditional regulated institutions as the bridge between the two. They thus also represent a potential challenge to the existing regulatory system designed for traditional deposit banking. None of these payment systems are themselves subject to prudential regulation, although they have linkages to parts of the formal financial system that are regulated in different ways. This raises the question of whether these new developments are increasing the efficiency and stability of the financial system. The new payments systems have the ability to evade or distort the regulation on the liability side of financial institutions, while the p2p system replace the due diligence of bank loan officers and bank supervisors with computer algorithms. It is for this reason these system will be the major challenge to the future regulation of the financial system |
| Keywords: | Financial regulations, regulatory foresight, Hyman P. Minsky, Henry Kaufman, financial innovation, payment and lending systems, P2P |
| JEL: | G18 G21 G23 G28 O16 O31 |
| Date: | 2016–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:fes:wpaper:wpaper164&r=pke |
| By: | John Paul Dunne (School of Economics and SALDRU, University of Cape Town,); Nan Tian (School of Economics and SALDRU, University of Cape Town,) |
| Abstract: | This paper considers the determinants of civil conflict, using a zero-inflated modelling approach that deals with the problem of excess zero observations, which we argue are related to two distinct data generation processes. Despite their continued use in the literature, traditional probit and logit models have limited capacity in dealing with this issue and can create misleading results. This is illustrated by estimating the model in Elbadawi and Sambanis (2002) using their data and a zero-inflated modelling procedure, which leads to results that suggest a role for the grievance variables in contrast to the original article. A general greed-grievance model is then estimated on a sample of 134 countries, over 54 years. Again, while the standard probit model results tend to emphasise opportunity variables, as found in other studies, the zero-inflated model gives more support for grievance effects. In particular, polity, ethnicity and inequality are found to play a significant role in contrast to earlier studies. |
| Keywords: | Civil war; zero-inflation; greed and grievance |
| JEL: | D74 C3 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ldr:wpaper:191&r=pke |
| By: | Asad Zaman (Pakistan Institute of Development Economics, Islamabad) |
| Abstract: | Polanyi's book on The Great Transformation provides an analysis of the emergence and significance of capitalist economic structures which differs radically from those currently universally taught in economic textbooks. This analysis is based on a methodological approach which is also radically different from existing methodologies for doing economics, and more generally social science. This methodology is used by Polanyi without explicit articulation. Our goal in this article is to articulate the methodology used in this book to bring out the several dimensions on which it differs from current approaches to social science. Among the key differences, Polanyi provides substantial scope for human agency and capabilities to change the course of history. He also shows that the social, political and economic spheres of human existence are deeply interlinked and cannot be analysed in isolation, as current approaches assume. |
| Keywords: | Methodology, Social Science, Capitalism, Liberalism |
| JEL: | B31 B41 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2016:133&r=pke |
| By: | Ronald Schettkat; Sonja Jovicic |
| Abstract: | Expansionary macroeconomic policy is ineffective because, according to the policy ineffectiveness hypothesis (PIH), which is based on the rational expectations hypothesis (REH), it does not affect the real economy. This conclusion is false for several reasons. In their critique on Keynes’ theory, Lucas and Sargent (1978) argue that economic agents erroneously react with positive output and labor supply responses to expansionary macroeconomic policy. But they learn the long-run solution of the Lucas/Sargent model, which involves price reactions only, and do not repeat their mistakes when again confronted with expansionary macroeconomic policy. Thus, learning makes expansionary macroeconomic policy in the Lucas/Sargent model ineffective. The PIH is derived from models based on neoclassical micro-foundations where economic agents optimize in a stationary environment in ‘logical time.’ Experiencing and learning in ‘logical time’? In this paper, we take historical time seriously; that is, we investigate what economic agents actually experience regarding the effectiveness of expansionary macroeconomic policy in ‘historical time.’ We conclude that even if neoclassical micro-foundations are rigorously applied, if economic agents behave as assumed in the Lucas/Sargent model but that they move through time, the economy will not settle at the predicted long run equilibrium. Instead expansionary macroeconomic policy will be perceived as a virtue. |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:bwu:schdps:sdp16005&r=pke |
| By: | De Koning, Kees |
| Abstract: | Many economic philosophies –whether subscribed to by left or right wing politicians or economists- have as their shared aim to promote economic growth rates. Such growth in output is seen as the solution to many problems, including reducing unemployment and increasing household income levels. A key area of contention between right and left is whether such growth should be achieved primarily by actions taken in the private sector or those organized by a government. Main drivers to support economic growth include the option of additional fiscal spending and/or the use of monetary policy in which a central bank’s interest rate plays a key role. After 2008, central banks introduced quantitative easing in the policy mix. Output growth reflects a short-term positive change in the volume of goods and services produced. Output growth does not reflect the changes taking place in individual household disposable income levels, their debt obligations or their employment status. Output growth does neither reflect government nor corporate debt levels nor does it reflect the savings built up in pension funds and the lending based on such savings. In the U.S. over the period 1997-2007 total household mortgage debt as a percentage of nominal GDP grew from 43.6% in 1997 to 73.3% by 2007: a debt explosion relative to income growth levels. The Federal Reserve took no action to slow down this debt accumulation when it was happening. In the aftermath, due to its nature, the Federal Reserve was not equipped to help individual households with their subsequent liquidity crisis. It could do nothing for the 23.250 million households who were confronted with foreclosure proceedings over the period 2005-2014. Lowering interest rates does not solve outstanding household debt problems and neither does buying up government bonds or mortgage-backed securities. The commercial banking sector was no help either. Their overriding profit objective forced them to claim back outstanding mortgage debt as quickly as possible, irrespective of the economic consequences. The U.S. government saw its revenues drop by $3 trillion over the period 2007-2015 as a consequence of the household debt crisis. It also borrowed and spent another $7 trillion to help restore economic growth over this period. The result was a lack-luster period of economic growth. Economic evidence supports the view that households should have been helped in overcoming their liquidity squeeze. A lender of last resort for individual households is needed. Once operational, the myth of economic growth will turn into reality. |
| Keywords: | economic growth in U.S., financial crisis, mortgage debt levels in U.S.,foreclosures, home ownership in U.S., Fed funds rate, quantitative easing, lender of last resort for individual households, National Mortgage Bank, early warning system, home mortgage quality control system,index-linked Treasuries for pensioners |
| JEL: | E21 E3 E32 E4 E41 E5 E52 E58 E6 |
| Date: | 2016–10–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74904&r=pke |
| By: | Samuel Fankhauser; Nicholas Stern |
| Abstract: | The past three decades have seen an unprecedented increase in world living standards and a fall in poverty across many fundamental dimensions. Increased confidence in what was possible together with greater acceptance of moral responsibilities led to the adoption of the Millennium Development Goals (MDGs) at the turn of the century. They provided a real basis for international cooperation and development. In the Sustainable Development Goals (SDGs), agreed in September 2015, there is now a common platform for the next phase of the fight against poverty. The SDGs make it clear that environmental protection will be a key feature of this next phase and increasingly intertwined with poverty reduction. Thirteen of the 17 SDGs are directly concerned with the natural environment, climate or sustainability. Environment, climate and sustainability were not prominent in the MDGs. With hindsight we can now see that this was a mistake. A key factor in all this is climate change. Climate change is not the only environmental problem we face, nor is it the only threat to global prosperity. But climate change is unique in its magnitude and the vast risks it poses. It is a potent threat-multiplier for other urgent concerns, such as habitat loss, disease and global security (IPCC 2014) and puts at risk the development achievements of the past decades (World Bank 2016). If unchecked, climate change could fundamentally redraw the map of the planet, and where and how humans and other species can live. Climate change is also unique in the scale of the response that is needed. Reducing climate risks requires cooperation from all countries, developed and developing, to reorient their economic systems away from fossil fuels and harmful land-use practices. This reorientation is urgent. Our activities in the next two decades will determine whether our successes in development will be sustained or advanced, or whether they will be undermined or reversed in a hostile environment. The nature of the climate problem has implications for economic analysis. Economics has much to offer, and indeed continues to provide important insights, but there has been a dangerous tendency to force climate change into narrow existing ways of thinking. This must change. We need to construct theories and models that reflect the structure and scale of the problem and the contexts in which it occurs. Climate change also has implications for development policy. In the Paris Agreement – negotiated at the end of 2015 – there is now an international platform through which global climate action can be advanced and coordinated. The Paris Agreement sets out a process through which the rise in global mean temperatures may be curtailed to “well below†2oC above pre-industrial levels and perhaps as low as 1.5oC. These are the central long-term objectives of the agreement. Meeting the Paris objectives requires sustained action over many decades. It also requires the reorientation of investment. At least US$ 100 trillion will be invested over the next two or three decades into buildings and urban infrastructure, roads, railways, ports and into new energy systems. It is imperative that these investment decisions are taken with climate change in mind. If they are there will be substantial benefits for development and poverty reduction – living spaces where we can move, breathe and be productive, better protection for fragile ecosystems, as well as the fundamental reduction of the risks of climate change. Putting the SDGs and Paris together, the agreements of 2015 have given us, for the first time, a global agenda for sustainable development applying to all countries. This paper sets out the implications of this agenda, and climate change in particular, for development economics and development policy. It emphasizes the nature of the required changes and their implications. We start with an examination of what economics has had to say about the link between economic prosperity and the environment. We then explain why climate change is a different kind of problem and why it requires a new approach to both analysis and policy. The final two sections explore how this new approach might look. |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:lsg:lsgwps:wp253&r=pke |
| By: | Aguiar de Medeiros, Carlos (Institute of Economics, UFRJ); Trebat, Nicholas (Institute of Economics, UFRJ) |
| Abstract: | This paper discusses the connections established in recent non–neoclassical literature between growth, structural change and income distribution in large developing econo-mies. We argue that though many analyses have the merit of reintroducing income distribution as a factor in economic growth, they rely almost exclusively on macroeconomic theory, and thus ignore the structural changes that have taken place in recent decades and the ways in which structural aspects of an economy (such as resource availability, market size and geopolitical factors) affect policy options and growth. We argue that Latin American countries today face the same challenge that has constrained their development trajectory historically: to diversify their economic structure through new technological capabilities and greater equality and social progress. |
| Keywords: | Structuralism; profit–led; devaluation; New Developmentalism |
| JEL: | E60 O13 O40 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:ris:sraffa:0022&r=pke |
| By: | Asad Zaman (Pakistan Institute of Development Economics, Islamabad) |
| Abstract: | In face of the strong conflict between market norms and social norms, peaceful co-existence is impossible. In traditional societies, markets were subordinated to society. Modern society emerged via a number of revolutions which made society subordinate to markets. This led to a reversal of traditional values of social cooperation and harmony with nature. Instead, men, nature, society became objects to be exploited for creating profits. A market society generates profits by exploiting men and nature, and requires increasing profits to sustain itself. This process has run into its limits as planetary resources are being destroyed on a scale large enough to threaten the planet. Saving the planet requires reversing the transition to modernity by subordinating markets to society. This is a difficult task. |
| JEL: | B2 Q5 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2016:136&r=pke |
| By: | Pilon, André Francisco |
| Abstract: | In view of the overwhelming pressures on the global environment and the need to disrupt the systems that drive them, an ecosystemic theoretical and practical framework is posited for the evaluation and planning of public policies, research and teaching programmes, encompassing four dimensions of being-in-the-world (intimate, interactive, social and biophysical), as they combine, as donors and recipients, to induce the events (deficits/assets), cope with consequences (desired/undesired) and contribute for change (potential outputs). The focus should not be on the “bubbles” of the surface (consequences, fragmented issues), but on the configurations deep inside the boiling pot where the problems emerge. New paradigms of development, growth, power, wealth, work and freedom, embedded at institutional level, include heterogeneous attributes, behaviours and interactions and the dynamics of the systems (institutions, populations, political, economic, cultural and ecological background). Instead of dealing with the bubbles (segmented, reduced issues) and trying to solve isolated and localized problems without addressing the general phenomenon, the proposal emphasizes the definition of the problems deep inside the “boiling pot”, where the problems emerge, encompassing the current “world-system” with its boundaries, structures, techno-economic paradigms, support groups, rules of legitimation, and coherence. In the socio-cultural learning niches, heuristic-hermeneutic experiences generate awareness, interpretation and understanding beyond established stereotypes, both from a thematic (“what”) and an epistemic point of view (“how”). |
| Keywords: | education, culture, politics, economics, ethics, environment, ecosystems |
| JEL: | I00 I25 I28 I29 O21 O31 Q2 Q28 Q5 Q51 Q56 Q57 Q58 |
| Date: | 2016–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74918&r=pke |