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on Post Keynesian Economics |
| By: | Javier Lopez Bernardo (Kingston University) |
| Abstract: | This paper offers a novel post-Keynesian theory, in a stock-flow consistent framework, to understand equity returns and their links with economic growth and consumption decisions from a long-run perspective. The main features of such a theory can be summarised as follows. First, there is a negative relationship between Tobin’s q and economic growth. Second, the effect of economic growth on dividend yields and earnings growth is positive, but its effect on the growth in the number of shares is negative (i.e. a ‘dilution effect’), which makes the relationship between equity returns and economic growth undetermined a priori. Third, consumption decisions emerge as crucial drivers for shareholder profitability in the long-run, being such a result very close to Kalecki’s theory of profits, but now applied to financial markets. And fourth, in the post-Keynesian theory the equity yield is determined by aggregate demand, and no theory of risk is needed. Finally, the post-Keynesian theory will be compared against the mainstream financial theory, which features the famous risk-return nexus where asset returns are given by the volatility of the asset with respect to consumption. It will be claimed that the use of risk for determining equity returns at the macroeconomic level is problematic, and that depending on the risk definition assumed, the risk-return relationship can be either positive or negative – being thus such a nexus of little theoretical significance and posing serious problems for mainstream finance. |
| Keywords: | equity yield, dividend yield, Tobin’s q, post-Keynesian macroeconomic theory, Kaleckian growth models, stock-flow consistent models, mainstream finance |
| JEL: | E12 E22 E44 G10 O42 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp1613&r=pke |
| By: | Monique JEANBLANC (University of St. Gallen and Swiss Finance Institute); Didier SORNETTE (ETH Zurich and Swiss Finance Institute) |
| Abstract: | We propose a reduced form model for the Minskian dynamics of liquidity and of asset prices in terms of the so-called financial accelerator mechanism. In a nutshell, credit creation is driven by the market value of the financial assets employed as collateral in the bank loans. This leads to a self-reinforcing feedback between financial prices and liquidity that we model by coupled non–linear stochastic processes. We show that the resulting dynamics are characterized by a transient super- exponential growth qualifying a bubble regime. Unchecked, this would lead to a finite time singularity (FTS). The underlying singularity expresses the unsustainable dynamics of the corresponding econ- omy and announces a regime change, such as a crash. We propose to describe the dynamics of the crisis by the same coupled non–linear stochastic process with inverted signs, i.e., nonlinear negative feedbacks of value and money on their growth rates. Casting the financial accelerator dynamics into a simple macroeconomic model, we show that the cycle of booms and bursts of financial assets and liquidity determines economic recessions in the form of increasing aggregate default rates and decreas- ing GDP. Finally, by exploiting the implications of the proposed model on the dynamics of financial asset returns, we introduce a generalized GARCH process, called FTS-GARCH, that can provide an early warning identification of bubbles. Estimating the FTS-GARCH on well-known historical bubble episodes suggest the possibility to diagnose in real-time the presence of bubbles in financial time series. |
| Keywords: | Minskian dynamics, financial bubbles, positive feedback, financial accelerator, general- ized FTS-GARCH |
| JEL: | G01 G17 C53 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp1161&r=pke |
| By: | Roberto Sanchez Rodriguez (University of California Riverside, Department of Environmental Sciences) |
| Abstract: | Reducing vulnerability, preventing disasters and adapting to climate variability and climate change are receiving increasing attention by the international community. Contributions from the international scientific community have expanded knowledge and understanding of these problems, but experiences in communities in developed and developing countries illustrate the difficult transition from conceptual frameworks to successful operational approaches at the local level. This paper presents lessons learned from a recent project in a Mexican city seeking to prevent climate related disasters and to create adaptation to climate variability and climate change within the context of local development. The results of the project stress the importance of a detail and scientifically based analysis of social vulnerability to climate variability and climate change to reduce vulnerability, prevent disasters, and adapt to climate change. The dynamic involvement of local stakeholders along the project illustrates the value of inclusive approaches but also the huge importance of the institutional dimension of climate change adaptation. The presentation compares the lessons from this Mexican city with those in other cities around the world showing that institutional change is one of the major obstacle to adapt to climate change at the local level. |
| Keywords: | adaptation to climate change, preventing disasters, sustainable development |
| JEL: | Q54 R58 R14 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:4006517&r=pke |
| By: | Teboho Jeremiah Mosikari (North West University); Diteboho Lawrance Xaba (North West University); Johannes Tshepiso Tsoku (North West University) |
| Abstract: | The interest of this study is to examine the macroeconomic determinants of economic growth in Botswana. The paper is motivated by poverty and unemployment figures rampaging the economy of Botswana, therefore, it is necessary to investigate its growth empirics. The study adopted the Keynesian expenditure approach to identify the factors influencing Botswana’s economic growth. The study used the time series data spanning from 1966 to 2014. The paper applied a robust Engle-Granger approach to examine the long run equilibrium between Keynesian macroeconomic factors and economic growth. In an attempt to examine the long run equilibrium, the results of the study reviled that all the variables performed according to Keynesian theory expectation. Furthermore, although imports impact negatively to economic growth according to Keynes theory and it is empirically proven. The study recommends that economic policy makers in Botswana should reconsider the import structure of the economy in such a way that they promote import of capital goods that will impact positively to economic growth in the long run that will translate to eradicate poverty and reduce unemployment. |
| Keywords: | economic growth, Keynesian theory, cointegration |
| JEL: | B41 C01 E20 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:4006365&r=pke |
| By: | Anca Voicu (Rollins College); Somnath Sen (The University of Birmingham) |
| Abstract: | There is considerable dissatisfaction in the profession regarding the teaching of macroeconomics after the financial crisis. The ‘Great Recession’ highlighted the inadequacy of traditional macroeconomic modelling, based on real business cycle theory and rational expectations, to appropriately explain why the contraction world-wide was so widespread and why it has been so persistent. Textbooks have been slow to respond to these concerns, possibly because it was believed that this recession would be temporary. In addition, new policy measures such as quantitative easing and the possibility of the zero lower bound in interest rates required a re-orientation of macroeconomics pedagogy. The purpose of this paper is three-fold. First, we sketch and highlight how some of these policy issues could be explained within a traditional Keynesian macromodel. However, such formal presentation to students quickly becomes arid, so to sustain interest we need to supplement the core analytical material with innovative pedagogic strategies which needs interactive student participation. The second purpose of the paper is to give examples of such teaching methods that we have used: the use of video material; utilization of websites from news media; film screening and in-class discussion (Inside the Meltdown); flipping the classroom; playing monetary policy games; as well as, organizing a debate between the proponents of Keynesian ideas and neoclassical models in solving the long recession. Our approach is a synthesis of traditional teaching of economic models with blended learning methods. The third purpose of the paper is to evaluate an early presentation of this method and content to students and how they responded to such an approach. Our pedagogic approach is not vastly different from what policy institutions such as Central Banks are thinking. Consider the following quote from a highly rated British macroeconomist, Professor Wilhem Buiter, on the applications of monetary policy by the Bank of England: “The Bank of England in 2007 faced the onset of the credit crunch with too much Robert Lucas, Michael Woodford and Robert Merton in its intellectual cupboard. A drastic but chaotic re-education took place and is continuing. I believe that the Bank has by now shed the conventional wisdom of the typical macroeconomics training of the past few decades. In its place is an intellectual potpourri of factoids, partial theories, empirical regularities without firm theoretical foundations, hunches, intuitions and half-developed insights. It is not much, but knowing that you know nothing is the beginning of wisdom†. |
| Keywords: | macroeconomics, Great Recession, teaching methods |
| JEL: | A00 A22 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:4006445&r=pke |
| By: | Alper Karademir (Aksaray University, Department of Politics and Public Administration) |
| Abstract: | From the late 1970s onwards, a growing number of developing countries have undergone an increasing amount of fiscal asymmetries and depreciations in the way in which prosperity is formulated in their productive sectors. When attempting to balance their costs and to engender an environment in which further growth can occur, a number of Middle Eastern, African, and Latin American countries have implemented several different organisational plans. This is called Structural adjustment programs which aim to provide a lasting economic stability, producing a sustainable growth and emerging a functioning market mechanism in accordance with the global economy in countries that applied. This paper purposes to analyse the effect of this SAP, which proposed by World Bank and International Monetary Fund to developing countries, on women socially and economically. These programs may reduce purchasing power due to its main principles such as free market (possible higher prices for basic necessities such as electricity, water), minimizing some services (health care, social care etc.), macroeconomic policies (cut backs wages) and devaluation. Hence, women may have to take place in the workforce as lower paid and unskilled labour, since previously obtained family income is no longer efficient. This process may lead women to exposure to violence both in business and family life. Besides deduction of social services might increase the burden of working woman. This study will start with an introduction part which will include historical background and aims of SAP. Secondly, SAP will analyze in the context of Feminist perspective and also the topic of feminization of labour force will discuss with examples from different countries. Thirdly, the impact of SAP on women and in this context, the relationship of women’s economic participation and SAP will be debated. Consequently, women’s inequality may limit their ability to take full advantage of better macroeconomic and microeconomic conditions and this is ignored by WB and IMF. This program seems to be gender neutral and far away from eliminating these gender inequalities but it indirectly increases, public expenditure on education might be effective to reduce it. Also some other social impacts on women will be tackled in this part. Finally, some solutions and critics on the issue will be given. As methodology, secondary data is used. Various data will be utilised from various developing countries to demonstrate its negative effects. Additionally, other studies in the literature have reviewed to see all the related impacts in different developing countries. |
| Keywords: | SAP, World Bank and IMF, women, workforce participation in developing countries, gender inequality, indirect violence on women |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:4006460&r=pke |
| By: | Mustafa YAVUZ (Necmettin Erbakan University); Deniz GÜLMEZ (Necmettin Erbakan University) |
| Abstract: | Learning is a dynamic process. There are some factors that affect learning positively or negatively and in other words, facilitate or complicate learning. Learner, learning methods, types of issues to be learned and the learning environment are some of these factors. The purpose of this research to determine students’ opinions studying at the university which course they have seen until this time how they learn best. The working group consists of totally 140 students studying in 2015-2016 academic year at Necmettin Erbakan University. The study conducted in the form of qualitative research method and data were collected by semi-structured interviews. In the form of student interviews were asked to write the lessons they have learned best and explain how they learn best. The data were analyzed by content analysis. According to findings it has found that students have learned mathematics, history, literature and Turkish lessons the best. It has revealed that they learned better via expression, problem solving and through experience. |
| Keywords: | Learning, learning methods, teaching methods, students. |
| URL: | http://d.repec.org/n?u=RePEc:sek:itepro:3906215&r=pke |