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on Post Keynesian Economics |
| By: | Decker, Frank; Goodhart, Charles A |
| Abstract: | This paper assesses the theory of credit mechanics within the context of the current money supply debate. Credit mechanics and related approaches were developed by a group of German monetary economists during the 1920s-1960s. Credit mechanics overcomes a one-sided, bank-centric view of money creation, which is often encountered in monetary theory. We show that the money supply is influenced by the interplay of loan creation and repayment rates; the relative share of credit volume neutral debtor-to-debtor and creditor-to-creditor payments; the availability of loan security; and the behavior of non-banks and non-borrowing bank creditors . With the standard textbook models of money creation now discredited, we argue that a more general approach to money supply theory involving credit mechanics needs to be established. |
| Keywords: | balances mechanics; Bank credit; credit creation; credit mechanics; money supply theory |
| JEL: | E40 E41 E50 E51 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13233&r=pke |
| By: | Solomon Hsiang; Robert E. Kopp |
| Abstract: | Climate change management is a global challenge that requires social science as much as it requires natural science. We provide a brief introduction to the physical science of climate change, written to provide essential background for economists and other social scientists. We also highlight some key areas in which economists—including those studying macroeconomics, political economy, and development—are in a unique position to help climate science advance. |
| JEL: | Q54 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25189&r=pke |
| By: | Jesus Fernandez-Villaverde (Department of Economics, University of Pennsylvania) |
| Abstract: | This paper reviews what cryptocurrencies are, and it frames them within the context of historical monetary experiences and contemporary monetary economics. The paper argues that, as pure duciary private money, cryptocurrencies are a bubble without a fundamental value and that they will not provide, in general, optimal amounts of money or deliver price stability. Nevertheless, cryptocurrencies can play a role in improving the current means of payments and in disciplining central banks into providing better government-run duciary monies. |
| Keywords: | Private money, currency competition, cryptocurrencies, monetary policy |
| JEL: | E40 E42 E52 |
| Date: | 2018–09–03 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:18-023&r=pke |
| By: | Gabaix, Xavier |
| Abstract: | Inattention is a central, unifying theme for much of behavioral economics. It permeates such disparate fields as microeconomics, macroeconomics, finance, public economics, and industrial organization. It enables us to think in a rather consistent way about behavioral biases, speculate about their origins, and trace out their implications for market outcomes. This survey first discusses the most basic models of attention, using a fairly unified framework. Then, it discusses the methods used to measure attention, which present a number of challenges on which a great deal of progress has been achieved, although much more work needs to be done. It then examines the various theories of attention, both behavioral and more Bayesian. It finally discusses some applications. For instance, inattention offers a way to write a behavioral version of basic microeconomics, as in consumer theory and Arrow-Debreu. A last section is devoted to open questions in the attention literature. This chapter is a pedagogical guide to the literature on attention. Derivations are self-contained. |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13268&r=pke |
| By: | Murat Iyigun (University of Colorado, Boulder); Jared Rubin (Chapman University); Avner Seror (Chapman Univeristy) |
| Abstract: | Why do some societies fail to adopt more efficient political and economic institutions in response to changing economic conditions? And why do such conditions sometimes generate conservative ideological backlashes and, at other times, progressive social and political movements? We propose an explanation that highlights the interplay—or lack thereof—between productivity, cultural beliefs and institutions. In our model, production shocks that benefit one sector of the economy may induce forward-looking elites to provide public goods associated with a different, more traditional sector that benefits their interests. This investment results in more agents generating cultural beliefs complementary to the provision of the traditional good, which in turn increases the political power of the traditional elite. Hence, productivity shocks in a more advanced sector of the economy can increase investment, political power, and cultural capital associated with the more traditional sector of the economy, in the process generating a revival of beliefs associated with an outdated economic environment. |
| Keywords: | Institutions, Conservatism, Cultural Beliefs, Cultural Transmission, Institutional Change, Technological Change |
| JEL: | D02 N40 N70 O33 O38 O43 Z10 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:18-14&r=pke |
| By: | Rodrik, Dani |
| Abstract: | Many of the exports of developing countries are channeled through global value chains (GVCs), which also act as conduits for new technologies. However, new capabilities and productive employment remain limited so far to a tiny sliver of globally integrated firms. GVCs and new technologies exhibit features that limit the upside and may even undermine developing countries' economic performance. In particular, new technologies present a double whammy to low-income countries. First, they are generally biased towards skills and other capabilities. This bias reduces the comparative advantage of developing countries in traditionally labor-intensive manufacturing (and other) activities, and decreases their gains from trade. Second, GVCs make it harder for low-income countries to use their labor cost advantage to offset their technological disadvantage, by reducing their ability to substitute unskilled labor for other production inputs. These are two independent shocks that compound each other. The evidence to date, on the employment and trade fronts, is that the disadvantages may have more than offset the advantages. |
| Keywords: | Economic Growth; GVC; International Trade |
| JEL: | O33 O40 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13220&r=pke |