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on Post Keynesian Economics |
| By: | Lampe, Florian; Löscher, Anne |
| Abstract: | The paper treats the eco currency union project in West Africa and its implications for monetary policies against the backdrop of the international monetary order from a post-Keynesian perspective. The eco zone project envisions a common monetary union of the West African Economic and Monetary Union (WAEMU), i.e. the independent Western subzone of the CFA franc union, and the remaining non-CFA countries of the Economic Community of West African States (ECOWAS) with Nigeria and Ghana as the economically most important member states. The literature on the international currency hierarchy developed by Latin-American structuralists and the post-Keynesian Berlin School of thought focuses on the notion of a currency-specific liquidity premium that structurally determines the interest rate level in the corresponding currency areas. Based on this set of literature, we conduct a comparison between the liquidity premia of the Western CFA-franc, the Nigerian naira and the Ghanaian cedi to make conjectures about what implications a common ECOWAS currency union would have regarding monetary policy space. Being a non-pecuniary variable, the liquidity premium cannot be observed directly. We therefore approximate the liquidity premium by calculating differences in interest rates such as the central bank's base rate, the coupon rate on T-bills and bonds and the interest rate spread between Eurobonds and bonds denominated in local currency. Besides, we use balance of payment data to identify external financial fragilities that might become a crucial factor for monetary policy due to an increasing financialisation in West African economies. We find that investors demand structurally higher yields on bonds originating in Ghana and Nigeria than in the CFA-franc zone. One could interpret this as the CFA-franc conveying over a higher liquidity premium because it has to have lower yields rates to compensate for liquidity-differences to financial assets denominated in the US dollar or euro. However, another explanation is that expectations about the future developments of the cedi's and naira's exchange value by investors are more pessimistic in comparison to that of the CFA-franc. This is rooted in two major factors: Firstly, under the current arrangement, France still has leeway in monetary policy making and acts as exchange rate stabiliser by pushing for restrictive monetary policies and guaranteeing foreign exchange reserve provision. Secondly, the estimation of external financial fragility in the CFA-franc zone and Nigeria shows that the naira implies a greater risk of sudden devaluation due to a higher exposure to mobile liabilities vis-à-vis its asset endowments. |
| Keywords: | West African Economic and Monetary Union,CFA franc,eco zone,international currency hierarchy,external financial fragility |
| JEL: | E12 F33 F41 G11 O57 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cessdp:89&r= |
| By: | Adolfo Rodríguez Herrera (Universidad de Costa Rica) |
| Abstract: | In Marx´s texts we can recognize three positions on the concept of productive labor, arising from his critique of Smith. These positions are incompatible with each other when considering the labor that provides personal services, of growing importance in contemporary capitalism. A return to the foundations of Marx´s theory of value is necessary to understand the concept of productive labor and to decipher one of the main determinants of value transfers between sectors and regions and of the ever-increasing inequality |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:fcr:wpaper:202103&r= |
| By: | Bartscher, Alina Kristin; Kuhn, Moritz; Schularick, Moritz; Wachtel, Paul |
| Abstract: | This paper aims at an improved understanding of the relationship between monetary policy and racial inequality. We investigate the distributional effects of monetary policy in a unified framework, linking monetary policy shocks both to earnings and wealth differentials between black and white households. Specifically, we show that, although a more accommodative monetary policy increases employment of black households more than white households, the overall effects are small. At the same time, an accommodative monetary policy shock exacerbates the wealth difference between black and white households, because black households own less financial assets that appreciate in value. Over multi-year time horizons, the employment effects are substantially smaller than the countervailing portfolio effects. We conclude that there is little reason to think that accommodative monetary policy plays a significant role in reducing racial inequities in the way often discussed. On the contrary, it may well accentuate inequalities for extended periods. |
| Keywords: | monetary policy,racial inequality,income distribution,wealth distribution,wealth effects |
| JEL: | E40 E52 J15 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:lawfin:15&r= |
| By: | Lisa D. Cook (Michigan State University); Linguère Mously Mbaye (African Development Bank); Janet Gerson (University of Michigan); Anthony Simpasa (African Development Bank) |
| Abstract: | Could initial – colonial and early post-colonial – conditions explain episodes of systemic crisis in banking systems today? We exploit differences in ethnic concentration of initial ownership and management structure of Nigerian banks established during the colonial era to examine banking crisis and vulnerability of the financial system in contemporary Nigeria. Although banking institutions emerged from or were a reaction to British colonial banking structure, they pursued different practices with respect to ownership and management structure. To measure these initial conditions, we use historical data from the Nigerian banking system to construct an index of diversity in the initial ownership and management structure of each bank, where more diversity corresponds to a lower concentration of insiders, including family members, tribal affiliates, and political partners. We collected data from the “Blue Books”, British colonial banking records from 1887 to 1940, data on indigenous banks established during the colonial period from 1929 to 1960, and data on banks from 1960 to 2016. These data allow us to track the first Nigerian families, ethnic groups, and their associates who were part of the formation of the formal banking institutions in the country. We also collect individual and aggregate bank data from 2001 to 2016 collected from bank balance sheets, financial statements, annual reports, statistical bulletins, banking supervision reports, and other reports of the Central Bank of Nigeria and the Nigeria Deposit Insurance Corporation. Our estimates suggest that lower levels of diversity are associated with higher levels of risk for a bank. That is, lack of initial diversity in ownership and management of Nigerian banks may have played a role in the performance and fragility of the Nigerian banking system that lent itself to systemic crisis. Our findings are consistent with the broader recent literature that shows higher profit and stronger performance of more diverse firms relative to less diverse firms due to, for example, diversity-driven innovation and product development. |
| Keywords: | Banks, financial institutions, banking crisis, financial crisis, colonial economic history, African economic history, social networks, Africa JEL classification: G21, G32, N47, N27, O16 |
| Date: | 2021–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:adb:adbwps:2484&r= |
| By: | Nancy MacLean (Duke University) |
| Abstract: | This paper traces the origins of today`s campaigns for school vouchers and other modes of public funding for private education to efforts by Milton Friedman beginning in 1955. It reveals that the endgame of the ``school choice`` enterprise for libertarians was not then - and is not now--to enhance education for all children; it was a strategy, ultimately, to offload the full cost of schooling onto parents as part of a larger quest to privatize public services and resources. Based on extensive original archival research, this paper shows how Friedman`s case for vouchers to promote ``educational freedom`` buttressed the case of Southern advocates of the policy of massive resistance to Brown v. Board of Education. His approach - supported by many other Mont Pelerin Society members and leading libertarians of the day --taught white supremacists a more sophisticated, and for more than a decade, court-proof way to preserve Jim Crow. All they had to do was cease overt focus on race and instead deploy a neoliberal language of personal liberty, government failure and the need for market competition in the provision of public education. |
| Keywords: | School choice, Milton Friedman, public vs. private education, Jim Crow |
| JEL: | B25 I20 I24 I28 |
| Date: | 2021–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:thk:wpaper:inetwp161&r= |