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on Post Keynesian Economics |
| By: | Thomas I. Palley |
| Abstract: | Gattopardo constitutes change that keeps things the same. Gattopardo is relevant for understanding the economics profession's response to the financial crash of 2008. This paper explores gattopardo economics as it applies to the issues of the macroeconomics of income distribution; the global financial imbalances; and inflation policy. Gattopardo economics adopts ideas developed by critics of mainstream economics, but it does so in a way that ignores the thrust of the original critique and leaves mainstream analysis unchanged. Gattopardo economics makes change more difficult because it deceives people into thinking change has taken place. By masquerading as change, it crowds-out space for real change. That makes exposing gattopardo economics a matter of vital importance. |
| Keywords: | Gattopardo economics, income distribution, global financial imbalances, inflation policy |
| JEL: | A11 A14 E00 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:imk:wpaper:112-2013&r=pke |
| By: | Thomas I. Palley |
| Abstract: | This paper provides a novel analysis of quantitative easing (QE) that focuses on its implicit fiscal dimension. The first segment examines the theory of the liquidity trap and introduces a distinction between a "weak" and "strong" liquidity trap. The second segment analyzes the impact of QE under conditions of a weak and strong liquidity trap. In a weak liquidity trap QE is expansionary but subject to diminishing returns. As QE involves purchasing assets from the public, it transfers the income streams associated with those assets to the fiscal authority. This transfer generates a form of fiscal drag that can theoretically eventually render QE contractionary. In an open economy, exchange rate effects of QE also need to be taken account of and those tend to be expansionary. The third segment explores how to exit QE. The current suggestion of raising the policy interest rate and paying interest on reserves to check inflationary pressures is contradicted because paying interest constitutes an implicit tax cut. Instead, the paper suggests adopting a system of asset based reserve requirements. Requiring banks to hold increased reserves would permanently deactivate liquidity created by QE without recourse to interest payments and the implicit tax cut they represent. |
| Keywords: | quantitative easing, fiscal drag, interest on reserves, exit strategy, asset based reserve requirements |
| JEL: | E43 E44 E50 E52 E58 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:imk:wpaper:113-2013&r=pke |
| By: | Alimi, R. Santos |
| Abstract: | The study investigates how consumption expenditure is determined by income according to Keynes’ Absolute Income Hypothesis (AIH) for the case of Nigeria and thus presents a consumption function for Nigeria for the period 1970 to 2011, estimating total household consumption expenditure against total income. The AIH model was tested by ordinary least squares over the period using data obtained from the World Bank national accounts data and Ivan Kushnir’s Research Center. We described and tested two important theoretical predictions of the Keynesian AIH model; first, that the marginal propensity to consume (MPC) is constant and, second, that the average propensity to consume (APC) declines as income increases. Using Nigeria economic data, we estimated parameter MPC and APC both for short run and long run time series. The results shows that MPC conform with Keynes earlier proposition that MPC is less than one, however it is not stable and the value of the autonomous consumption is negative in the long run. We found also that the APC did not vary systematically with income as conjectured by Keynes that it declines as income increases. As a result, the income elasticity of consumption does not follow Keynes prediction. The absolute income hypothesis fits well for Nigeria data in the short run. In the long run, with the elasticity of consumption of about 1 or above 1, evidently there are other important determinants of consumption other than income. |
| Keywords: | Consumption function; Average Propensity to Consume; Marginal Propensity to Consume |
| JEL: | C22 E21 |
| Date: | 2013–08–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:49310&r=pke |
| By: | Charles Wyplosz |
| Abstract: | This paper argues that the sovereign debt crisis is the result of a lack of fiscal discipline broadly defined to include adequate banking supervision. The paper argues that Europe has inadvertently adopted the wrong model of collective discipline, because it is centralized while a decentralized model not only better fits the Euro Area makeup but also has a superior track record. It also notes the need for the ECB to accept its role of lender of last resort, which in turn requires the adoption of a full-blown banking union. |
| JEL: | E58 E61 G28 H53 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:euf:ecopap:0498&r=pke |
| By: | Ehsan U. Choudhri (Carleton University, Canada); Lawrence L. Schembri (Bank of Canada, Canada) |
| Abstract: | The paper examines the experience of Canada and the United States in the run-up to the two biggest financial crises in global history, in the 1920s and 2000s, and the roles of their monetary and financial stability policies. Comparing the Canadian and the U.S. experiences over the two periods is instructive because Canadian monetary policy was somewhat more conservative than U.S. monetary policy and there were important institutional differences in the two periods: Canada did not have a central bank in the 1920’s and followed different financial stability policies in the 2000’s. We present evidence that suggests two conclusions. Firstly, a more moderate Canadian monetary policy in the two booms affected Canada’s relative macroeconomic performance during the booms; in particular, the extent of the economic expansion was less. Secondly, this difference, however, by itself, does not explain why Canada fared better in the recent crisis, but not in the Great Depression. Indeed, the comparative evidence suggests that it was the difference in the effectiveness of financial stability policies, primarily financial regulation supervision with respect to banks and housing finance, that explains the better Canadian performance during the recent crisis. In contrast, in the 1920s, both countries lacked the financial policies to control excess credit growth and both suffered as a consequence. In addition, both countries made policy mistakes in aftermath of the stock market crash and credit collapses; in particular, Canada pursued inflexible interest and exchange rate policies that aggravated the economic downturn. |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:44_13&r=pke |
| By: | Khan, Haider |
| Abstract: | This paper analyzes the problems of creating and expanding national macroeconomic policy space and economic governance for the developing countries in particular within a framework of overall global and regional financial architectures. It develops a critical constructivist evolutionary theory of international financial institutions and arrangements within a framework of dynamic complex adaptive economic systems(DCAES), and applies this particularly to the current problems of developing countries. More specifically, the paper analyzes the following aspects: • Proposed BASEL III reforms for more stringent capital requirements and their implications for the developing world in particular. • BIS proposals for better regulation of financial derivatives, including commodities futures, by moving away from OTC transactions towards organized exchanges. • The IMF’s response to recent and emerging global economic and challenges, and the evolving nature of its role. • The most appropriate role of regional arrangements in financial stabilization, based on experiences with such arrangements in this and prior episodes of crisis. The Basel reforms and the BIS proposals for regulating the derivatives markets have many positive features. However, they have not been designed with the needs of DCs and LDCs in mind. The consequences of Basel I and II and proposed Basel III are analyzed from the perspective of the developing countries. It turns out that specific concerns of developing countries have not received adequate attention within the Basel Reform Initiatives and more can be and needs to be done. Most importantly, the role of IMF under the present globalization arrangements and repeated financial crises is studied by following such a critical constructivist evolutionary theory of international financial institutions within a rigorous DCAES framework. Here, too, the key finding is that much more can be done to help the developing countries than has been done so far. Furthermore, the potential for such global reforms in the wake of the global financial crisis and the great recession is analyzed from a dialectical social constructivist viewpoint that combines the power of --sometimes conflicting-- norms and ideas with the underlying structural contradictions to produce a “critical-constructivist” analysis of the potential for change. It is shown that IMF must and can change in a direction which allows for greater national policy autonomy. It is also shown that the IMF needs complementary regional institutions of cooperation in order to create a stabilizing hybrid global financial architecture that will be more democratic and pro-development in terms of its governance structure and behavior. Thus regional financial architectures will need to be integral parts of any new global financial architecture (GFA).The tentative steps taken towards regional cooperation in Asia since Asian financial crisis are discussed to illustrate the opportunities and challenges posed by the need to evolve towards a hybrid GFA. The opportunities and challenges arising from the current global crisis are also analyzed in this context. |
| Keywords: | dynamic complex adaptive economic systems; financial crises; global financial architecture; regional financial architectures; a hybrid GFA; regional cooperation; BASEL III reforms; the BIS proposals; the IMF |
| JEL: | E5 F3 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:49275&r=pke |
| By: | OECD |
| Abstract: | This working paper assesses national policy and governance mechanisms that can influence green growth in Chinese cities. It applies the OECD conceptual framework for urban green growth to examine the potential challenges and opportunities for increasing economic growth through reducing the environmental impact of urban land use, transport and buildings; through improving water and air quality; and through fostering supply and demand of green products and services. The paper first situates the issue of green growth within the nexus of urbanisation and environmental challenges now facing China. This is followed by a review of environmental and quality of life challenges posed by rapid urbanisation. Opportunities for national policies to influence green growth in four key urban policy sectors are then examined. The paper concludes with an assessment of governance challenges and considers potential changes to facilitate economic growth while reducing the environmental impact of cities. |
| Keywords: | sustainable development, innovation, transport, renewable energy, China, climate change, energy efficiency, urban sustainability, cities, green technologies, green growth, green economy, multi-level governance, urban development, regional clusters, green cities, attractiveness, metro-region |
| JEL: | O18 O44 Q01 Q55 Q58 R11 R58 |
| Date: | 2013–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:oec:govaab:2013/7-en&r=pke |
| By: | Brown, J. David (U.S. Census Bureau); Earle, John S. (George Mason University) |
| Abstract: | Small Business Administration (SBA) loans have long been one of the most significant policy interventions in the U.S. affecting firm behavior, but little is known about their outcomes. This paper estimates the effects on employment using a list of all SBA loans linked to annual data on all U.S. employers from 1976 to 2010. Our methods combine firm fixed-effect regressions with matching on exact firm age, industry, year, and pre-loan size, and on propensity scores as a function of four years of employment history and other variables. The results imply positive average effects on loan recipient employment of about 25 percent, or 3 jobs at the mean. Including loan amount, we find little or no impact of loan receipt per se, but an increase of about 5.4 jobs for each million dollars of loans. Similar results for high-growth counties and industries suggest the estimates are not driven by differential demand conditions across firms. Exploiting variation in the distance of controls from recipient firms, we find only very small displacement effects. In all these cases, the results pass "placebo" and "pre-program" specification tests. Other specifications using only matching or only regression imply somewhat higher effects, but they fail these tests. The estimates facilitate calculations of total job creation by the SBA and of the cost per job created. |
| Keywords: | small business finance, entrepreneurship, employment, program evaluation |
| JEL: | D04 G21 G28 H32 H81 J23 L52 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7544&r=pke |
| By: | John V. Winters (Oklahoma State University); Weineng Xu (Department of Finance, University of Arkansas) |
| Abstract: | Economics has been shown to be a relatively high earning college major, but geographic differences in earnings have been largely overlooked. This paper uses the American Community Survey to examine geographic differences in both absolute earnings and relative earnings for economic majors. We find that there are substantial geographic differences in both the absolute and relative earnings of economics majors even controlling for individual characteristics such as age and advanced degrees. We argue that mean earnings in specific labor markets are a better measure of the benefits of majoring in economics than simply looking at national averages. |
| Keywords: | economics major; earnings differentials; college education; local labor markets |
| JEL: | I23 J24 J31 R23 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:okl:wpaper:1405&r=pke |
| By: | Thomas Krichel; Christian Zimmermann |
| Abstract: | Identifying authorship correctly and efficiently is a difficult problem when the literature is abundant, but poorly recorded. Homonyms are tedious to differentiate. This paper describes how the field of economics has organized itself with respect to author identification. We describe the RePEc project with a special emphasis on the RePEc Author Service. We then discuss how the concept is currently being expanded to the entire scientific body with the AuthorClaim project. |
| Keywords: | ratswd, ratswd working paper, data sharing, datenmanagement, nachnutzung, deutschland, sekundärnutzung, replikation, datenverfügbarkeit, open access, forschungsinfrastruktur, metadaten, metadata, forschungsdatenzentrum, politikberatung, author identification, economics, authorclaim, repec |
| JEL: | A14 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:rsw:rswwps:rswwps222&r=pke |