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on Post Keynesian Economics |
| By: | Jörg Bibow |
| Abstract: | This paper critically assesses the rise of central bank independence (CBI) as an apparent success story in modern monetary economics. As to the observed rise in CBI since the late 1980s, we single out the role of peculiar German traditions in spreading CBI across continental Europe, while its global spread may be largely attributable to the rise of neoliberalism. As to the empirical evidence alleged to support CBI, we are struck by the nonexistence of any compelling evidence for such a case. The theoretical support for CBI ostensibly provided by modeling exercises on the so-called time-inconsistency problem in monetary policy is found equally wanting. Ironically, New Classical modelers promoting the idea of maximum CBI unwittingly reinstalled a (New Classical) “benevolent dictator” fiction in disguise. Post Keynesian critiques of CBI focus on the money neutrality postulate as well as potential conflicts between CBI and fundamental democratic values. John Maynard Keynes’s own contributions on the issue of CBI are found worth revisiting. |
| Keywords: | Central Banks; Central Bank Independence; Democratic Accountability; Monetary Policy; Time-inconsistency |
| JEL: | B31 B59 E50 E61 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_625&r=pke |
| By: | Alessandro Vercelli |
| Abstract: | This paper explores the interaction between the Great recession triggered by the US subprime mortgages crisis and the twin crisis of macroeconomics. We argue that a major determinant of the subprime crisis and its dire consequences has been an approach to economics that is unable to deal with irregular phenomena. On the other hand, the unexpectedly deep financial crisis that has heavily affected the real economy makes clear that we need a major redirection of macroeconomic theory to make it able to explain, forecast and control irregular phenomena. The recent interaction between the crisis of the economy and the crisis of macroeconomics is analyzed in the light of similar preceding episodes in the 20th century: the Great contraction of the 1930s and the Great stagflation of the 1970s. |
| Keywords: | subprime crisis, Great recession, Great stagflation, Great contraction, Great depression, liberalism, laissez-faire, Keynesism, neoliberalism, new classical economics, theory and facts, scientific revolutions. |
| JEL: | A11 B22 B41 E E E G N1 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:usi:depfid:0410&r=pke |
| By: | Anne Trebilcock |
| Abstract: | The ILO was founded for social justice, a mandate expressed today in terms of decent work as a global goal, for all who work, whether in formal or informal contexts. In June 2002, the delegates to the International Labour Conference from governments, workers’ and employers’ organizations adopted a resolution incorporating conclusions on decent work and the informal economy. The four components of decent work – opportunities for employment and income, respect for rights at work, social protection and stronger social dialogue – form the backbone of the ILO’s approach to the informal economy. These elements can also be seen through a development lens, and necessarily feature a strong gender dimension. [Discussion Paper No. 2005/04] |
| Keywords: | employment, governance, ILO, indicators, informal sector, representation, rights, social protection |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:3002&r=pke |
| By: | Yoon Je Cho |
| Abstract: | This paper discusses the role of state intervention for prevention, containment, and resolution of financial crises based mainly on the Korean experience during the 1997 Asian financial crisis. Crises in emerging market and developing economies tend to be more complicated than those faced by advanced economies because they are twin crises: financial and currency crises. Such crises require the development of a comprehensive strategy covering the stabilization of the domestic financial market and the foreign exchange market, closely coordinated responses by different government bodies, an extraordinary effort for financial restructuring, and the introduction of a new regulatory framework. [ADBI Working Paper 196] |
| Keywords: | state intervention, prevention, containment, Asian, financial. currency, stabilization, framework |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:3017&r=pke |
| By: | Alessandro Vercelli |
| Abstract: | This paper aims to clarify the controversial concept of “weight of argument” as introduced by Keynes in the Treatise of Probabilities and explicitly resumed in crucial passages of the General Theory (GT), in order to assess its influence on the theoretical framework and methodological approach of the GT. To this end the paper carries on a preliminary examination whether, and for what reason, we should expect that the weight of argument has a significant impact on economic decisions. A few recent development in epistemology and decision theory under uncertainty have reopened the issue, providing at the same time new analytical instruments capable to translate Keynes’s intuitions in rigorous and operational instruments. We suggest an interpretation of the concept of weight of argument that we believe consistent with the spirit of Keynes’s approach and that vindicates its substantial correctness and analytical potential in the light of the recent advances in decision theory under hard uncertainty. This interpretation confirms the practical relevance of the concept getting over the doubts expressed by Keynes himself, as well as its crucial role as a foundation of the theoretical and policy message of Keynes. It is thus possible and opportune to resume the research programme, suggested by Keynes with some timidity, meant to analyze the role of the weight of argument in economic decisions. |
| Keywords: | weight of argument, decision theory under hard uncertainty |
| JEL: | B2 B4 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:usi:depfid:0610&r=pke |
| By: | Andy Denis (Department of Economics, City University, London) |
| Abstract: | 2009 marks the centenary of methodological individualism (MI). The phrase was first used in English in a 1909 QJE paper by Joseph Schumpeter. Yet after 100 years there is considerable confusion as to what the phrase means. MI is often invoked as a fundamental description of the methodology both of neoclassical and Austrian economics, as well as other approaches, from New Keynesianism to analytical Marxism. However, the methodologies of those to whom the theoretical practice of MI is ascribed differ profoundly on the status of the individual economic agent, some adopting a holistic and some a reductionist standpoint. The purpose of the research of which this paper is part is to uncover and evaluate some of the meanings of the phrase methodological individualism (MI). This first paper considers the contributions of Joseph Schumpeter, who was the first to use the term, and of Carl Menger, considered by many to be the founder of MI. The approach adopted is to apply the intellectual apparatus developed in Denis (2004) to the arguments of these writers. This constitutes a test of that apparatus: is it able to clarify the standpoints to which it is applied? The conclusion reached is that both Schumpeter and Menger adopt a reductionist ontology in the sense of Denis (2004). |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:cty:dpaper:1002&r=pke |
| By: | Andy Denis (Department of Economics, City University, London) |
| Abstract: | 2009 marks the centenary of methodological individualism (MI). The phrase was first used in English in a 1909 paper by Joseph Schumpeter in the Quarterly Journal of Economics. Yet after 100 years there is considerable confusion as to what the phrase means. MI is often invoked as a fundamental description of the methodology both of neoclassical and Austrian economics, as well as of other approaches, from New Keynesianism to analytical Marxism. However, the methodologies of those to whom the theoretical practice of MI is ascribed differ profoundly on the status of the individual economic agent, some adopting a holistic and some a reductionist standpoint. The purpose of the research of which this paper is part is to uncover and evaluate some of the meanings of the phrase methodological individualism (MI). The first paper in the series, ?A Century of Methodological Individualism Part 1: Schumpeter and Menger? (Denis, 2009), considers the contributions of Joseph Schumpeter, who was the first to use the term, and of Carl Menger, considered by many to be the founder of MI. The present paper considers the contributions of von Mises and Hayek. The conclusion drawn is that Mises and Hayek based their methodological stance on fundamentally different ontologies, with von Mises building on the reductionism of previous writers such as Schumpeter and Menger, and Hayek, on the contrary, adopting a holistic ontology more in line with Adam Smith, Marx and Keynes. From an ontological perspective this leaves Hayek as something of an outlier in the Austrian tradition. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:cty:dpaper:1003&r=pke |
| By: | Finn Olesen (Department of Environmental and Business Economics, University of Southern Denmark) |
| Abstract: | Længe har den post keynesianske tænkning angrebet den makroteoretiske mainstream for at have misforstået det fundamentale budskab – teoretisk som metodologisk – som Keynes gav i sin The General Theory. Ifølge post keyne-sianerne har mainstream en for harmonisk opfattelse af, hvorledes det makroøkonomiske systems tilpasningsprocesser forløber. Og dette er en kritik, som har fået en fornyet aktualitet de sidste års internationale finanskrise og økonomiske recession in mente. En af de mest markante røster i dette kor af mere eller mindre heterodoks tænkende økonomer er og har været Paul Davidson. I nærværende bidrag sættes der fokus på Davidsons bog om Keynes i serien Great Thinkers in Economis. Jeg skal takke Svend Ole Madsen, IME, for kommentarer til en tidligere version af nærværende papir. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:sdk:wpaper:103&r=pke |