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on Post Keynesian Economics |
| By: | Bertocco Giancarlo (Department of Economics, University of Insubria, Italy) |
| Abstract: | The endogenous money theory constitutes the core element of the post-keynesian monetary theory. The first formulation of this theory can be found in the works of Kaldor published in the 1970s. Taking these studies as a starting point, the post-keynesians elaborated two versions of the endogenous money theory which differ in their assumptions about the behaviour of the monetary authorities and the banking system, and hence offer different conclusions about the slope of the money supply curve. The aim of this paper is to evaluate the importance of the endogenous money theory using a criterion which can be defined on the basis of Keynes’s distinction between a real exchange economy and a monetary economy. As is well known, Keynes (1933a, 1933b) uses the former term to refer to an economy in which money is merely a tool to reduce the cost of exchange and whose presence does not alter the structure of the economic system, which remains substantially a barter economy. A monetary economy instead refers to an economic system in which the presence of fiat money radically changes the nature of exchange and the characteristics of the production process. Keynes (1933a, p. 410) notes that the classical economists formulated an explanation of how the real-exchange economy works, convinced that this explanation could be easily applied to a monetary economy. He believed that this conviction was unfounded and stressed the need to elaborate a ‘monetary theory of production, to supplement the real–exchange theories which we already possess’ (Keynes, 1933a, p. 411). The specification of the elements determining the non-neutrality of money is thus the key factor differentiating Keynes’s theory from the classical one.1 The criterion used to evaluate the significance of the endogenous money theory is whether it enables us to elaborate on and to broaden the explanation of the justification the nonneutrality of money formulated by Keynes. In The General Theory the reasons for the non-neutrality of money are grounded in the store of wealth function of money; the liquidity preference theory is the element on which the keynesian explanation of income fluctuation is based. The importance of the money endogeneity theory can therefore be assessed in relation to its ability to specify determinant factors for the non-neutrality of money that have not been highlighted by the liquidity preference theory; in other words, the significance of the endogenous money theory depends on its capacity to bring out elements of a monetary economy that have been overlooked in the liquidity preference theory. This paper presents the following results. First of all, it shows that the endogenous money theory makes it possible to extend the analysis of the factors accounting for the non-neutrality of money beyond what Keynes has done in The General Theory; in particular this paper argues that the theory of money endogeneity obtains this result by underlying the means of payment function of money. Second, the work shows that the money endogeneity theory gives credence to certain points developed by Keynes in some works published in 1933 and between 1937 and 1939. Third, the work emphasises that the novel aspects of the money endogeneity theory do not depend on the particular version of this theory, i.e. they do not depend on the slope of the credit supply curve. Finally, in the paper the most significant aspects of the money endogeneity theory are presented by means of a theoretical model that distinguishes clearly between the credit market and the money market. It is shown that an important element of the money endogeneity theory is that it elaborates an alternative credit theory to the neoclassical one. The paper is divided into three parts. In the first one, the most relevant aspects of the money endogeneity theory are presented starting from Kaldor’s work, and we bring out the consistency between that theory and the considerations formulated by Keynes in some writings which preceded and followed the publication of The General Theory. In the second part the two versions of the money endogeneity theory are analysed and it is noted that the debate between the supporters of these two versions risks overshadowing the innovative aspects of the money endogeneity theory that do not depend on the slope of the credit and money supply curves. Then in the third part, the aspects that distinguish a monetary economy from a real-exchange economy and that emerge because of the money endogeneity theory are described. |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:ins:quaeco:qf0602&r=pke |
| By: | Bertocco Giancarlo (Department of Economics, University of Insubria, Italy) |
| Abstract: | Since the 1960s Tobin has set himself the objective of developing a macroeconomic model more general than that specified by Keynes in The General Theory. Keynes had assumed that all the assets different from money were perfect substitutes; this hypothesis allowed him to explain only one interest rate. On the contrary, Tobin abandons the perfect substitutability hypothesis and elaborates a theoretical model which envisages more than two assets and explicitly deals with financial intermediaries. Moreover Tobin asks himself whether banks play a special role compared with the other intermediaries and elaborates a ‘new view’ which, in contrast with the ‘old view’, maintains that there are no reasons to attribute a special role to the banks. This paper critically analyses Tobin’s theory and presents two results. First, it shows that Tobin’s theory overlooks an important function of banks; a function highlighted by Keynes in some writings which preceded and followed the publications of The General Theory. Second, this work shows that Tobin’s thesis that the specificity of banks does not exist can be confirmed, albeit on different grounds, also taking into account the function of banks that he overlooks. The paper is divided into four parts: in the first one, the most important aspects of the Tobin’s ‘new view’ are described. The limitations of these theoretical approaches are then showed in the second section; in the last two sections the elements of an alternative theory are outlined.y. |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:ins:quaeco:qf0604&r=pke |
| By: | Johannes R. B. Rittershausen |
| Abstract: | The Federal Republic of Germany has experienced a fundamental shift in economic philosophy from Ordoliberalism to Keynesianism. This paper elucidates the main tenets of both schools of thought and their eventual influences on economic policy from 1945 through the late 1960s. West Germany’s transition to Keynesianism follows a relatively cohesive narrative, as the complexities of event history resonate to similar effect in academic and political spheres. By the end of this investigation, intellectual quagmires surrounding economic successes of the postwar period appear as the logical consequences of an academic community that underestimates the importance of normative economic philosophy for policy implementation and society writ large. Reconnecting historical narrative with economic philosophy thus serves in a dual capacity, clarifying a particularly controversial period in economic historiography while also illuminating the underlying problems of our present circumstance. |
| Keywords: | Economic History, Ordoliberalism, Keynesianism, German Economic Reform |
| JEL: | B00 B30 B40 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:kln:iwpdip:dp01/07&r=pke |
| By: | V. Vanberg |
| Abstract: | The long-standing critique of the ‘economic model of man’ has gained new impetus not least due to the broadening research in behavioral and experimental economics. Many of the critics have focused on the apparent difficulty of traditional rational choice theory to account for the role of moral or ethical concerns in human conduct, and a number of authors have suggested modifications in the standard model in response to such critique. This paper takes issue with a quite commonly adopted ‘revisionist’ strategy, namely seeking to account for moral concerns by including them as additional preferences in an agent’s utility function. It is argued that this strategy ignores the critical difference between preferences over outcomes and preferences over actions, and that it fails to recognize that ‘moral preferences’ belong into the second category. Preferences over actions, however, cannot be consistently accounted for within a theoretical framework that focuses on the rationality of single actions. They require a shift of perspective, from a theory of rational choice to a theory of rule-following behavior. Length 30 pages |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:esi:evopap:2006-21&r=pke |
| By: | Binder, Martin |
| Abstract: | Doubts about the decidability of moral questions have often been used as an excuse for economists to eschew any normative propositions. Evolutionary economics, still lacking a well-developed normative branch, gives rise to a form of descriptive moral relativism. This paper wants to explore the consequences of adopting a form of meta-ethical and normative moral relativism as well. It develops a normative position called ‘naturalistic relativism’, which is a naturalistically reconstructed neo-pragmatist form of relativism. The paper also gives an argument why this position seems to be the adequate normative correlate for evolutionary economics. |
| Keywords: | evolutionary economics; moral relativism; sensory utilitarianism; continuity hypothesis; naturalistic relativism |
| JEL: | Z00 B52 B41 |
| Date: | 2006–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:1484&r=pke |
| By: | Valeria Costantini (University of Roma Tre); Chiara Martini (University of Roma Tre) |
| Abstract: | Sustainable development is a concept strictly connected with basic needs of the individuals. During the last years a number of empirical studies have tried to discover and quantify the causal relations between economic growth and environmental consumption and degradation. The most widely used empirical model is the so-called Environmental Kuznets Curve (EKC), nowadays applied to different polluting elements. Despite the huge diffusion of EKC studies, this model has been criticised for incompleteness of a sustainable development analysis. The aim of this paper is to build a Modified EKC (MEKC) in order to consider a wider concept of development rather than pure economic growth, including well-being aspects and sustainability of the development process. Using a macroeconomic measure of sustainability such as the World Bank’s Genuine Saving and a measure of well-being such as the United Nations’ Human Development Index, we build a model in order to analyse linkages between higher welfare levels and natural resources consumption, verifying the sustainability of human development. A panel analysis for three years (1990-1995-2000) for a wide range of countries (including developed and developing countries) has been applied in order to respond to criticisms related to conjunctural results linked to pure cross-section studies. Comparisons among alternative pollutants (i.e., CO2, NOX, and SOX) and GS are described, and the robustness of the MEKC clearly emerges. Furthermore, in order to respond to criticisms for the reduced form of the EKC, an Instrumental Variables model has been tested both on CO2 and GS, while a system of equations has been tested considering simultaneously a traditional EKC and a MEKC for a longer time period (1996-2004). Unit root tests for non-stationary series have been computed, showing that the IV model gives satisfactory results. An indicator for technological capabilities has been added at this stage, accounting for diffusion of technical progress and import technology as suggested by Archibugi and Coco (2004). Causal relations identified within a MEKC allow to identify correlation between human development and sustainable development, following the classic inverted U-shaped curve of the EKC. Nonetheless, comparing the turning points of the MEKC and EKC, respectively, it seems that using this alternative specification some useful policy implications apply. The threshold level of human development in the MEKC corresponds to an income per capita level lower than the threshold level for the EKC, confirming the possibility of “tunnelling through the curve” as suggested in Munasinghe (1999). Our results show that human development should be the first objective of international development policies, and an increase in human well-being is necessary to provide a sustainability path. |
| Keywords: | Environmental Kuznets Curve, Sustainable development, Human development, Genuine saving, Panel data |
| JEL: | O15 Q01 Q56 |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.148&r=pke |