IS-LM: an Inquest
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Liam Brunt – Teaching Material – Keynesian Revolution 1 Week 4
Liam Brunt – Teaching Material – Keynesian Revolution Week 4. The Keynesian Revolution. What were the major theoretical and practical obstacles to the adoption of Keynesian demand management to cure unemployment in the inter-war years? Would it have been effective? Was there a ‘Keynesian Revolution’ in economic thought and policy in the 1940s and 1950s? Readings. Peden, G. C., ‘The “Treasury View” on Public Works and Employment in the Inter-war Period,’ Economic History Review (1984). Outlines the theoretical orthodoxy against which Keynes rebelled. Middleton, R. C., ‘The Treasury in the 1930s: Political and Administrative Constraints to the Acceptance of the “New” Economics,’ Oxford Economic Papers (1982). McKibbin, R. I., ‘The Economic Policy of the Second Labour Government, 1929-31,’ Past and Present (1975). [Number 68, p96-102]. A useful look at the international reception of Keynesian policies. Floud, R., and D. N. McCloskey, The Economic History of Britain since 1700, vol. 2 (1860-1939). (Second edition, 1994). [Chapter 14 (Thomas)]. Quantitative analysis of the impact of plausible Keynesian policies. Booth, A. R., ‘The “Keynesian Revolution” in Economic Policy-making,’ Economic History Review (1983). See also the comment by Tomlinson, Economic History Review (1984). Discusses the definition and timing of the Keynesian revolution. Rollings, N., ‘British Budgetary Policy, 1945-54: a “Keynesian Revolution”?’ Economic History Review (1988). A strong rebuttal of Booth. Note: if you are unsure about the Keynesian model of the labour market then refer to Levacic and Rebmann, p70-5, 86-93. 1 Liam Brunt – Teaching Material – Keynesian Revolution KEYNESIANISM. The Central Features Of Keynesianism. 1. The economy was not self-adjusting and the government should use active policy to bring the economy back to full employment in a recession. -
Digitalisation and Monetary Policy
Does the liquidity trap exist? Lhuissier, Mojon and Rubio-Ramirez AEA Congress, 4 January 2021 The views expressed here are mine and should not be attributed to the BIS Restricted “A liquidity trap may be defined as a situation in which conventional monetary policies have become impotent, because nominal interest rates are at or near zero: injecting monetary base into the economy has no effect, because base and bonds are viewed by the private sector as perfect substitutes” Paul Krugman (1998) Restricted 2 Outline 1. Motivation 2. Literature 3. Empirical analysis 4. Results 5. Discussion Restricted 3 1. Motivation: How low can long-term rates be? Central bank balance sheets1 Share of government bonds held by central banks2 % of GDP % of GDP % Restricted 4 1. Motivation: Is there a lack of monetary policy space? • Cutting down short rates and purchasing assets to cut long rates can go only so far and • the lack of “interest rate” space is very critical in several advanced economies • However, into the medium we still need to assess whether and how much MP can do when short-term rates are near the ZLB/ELB Restricted 5 Literature: The ZLB makes MP ineffective Japan . Krugman (1998) – Coenen and Wieland (2003) “John Hicks, in introducing both the IS-LM model and the liquidity trap, identified the assumption that monetary policy is ineffective, rather than the assumed downward inflexibility of prices, as the central difference between Mr. Keynes and the classics.” US and EA, before the facts . Early Fed attemps: Furher and Madigan (97); Orphanides and Williams & Reifschneider and Williams (2000) . -
Edward S. Shaw* Simon Kuznets Remarked in His Capital in The
Edward S. Shaw* Simon Kuznets remarked in his Capital in rate. There is physical wealth, its ownership The American Economy, " ... extrapolation of represented by an homogeneous financial asset inflationary pressures over the next thirty in the form of common stock or "equity," and years raises a specter of intolerable conse there is wealth in the form of real money bal quences.... "1 Fifteen of the thirty years are ances. Accumulation of physical and monetary over, and inflation has accelerated. The central wealth derives from a constant rate of saving concern of this paper is whether Kuznets' pre for the community. Inflation occurs because the diction of "intolerable consequences" for capital growth rate of nominal money exceeds the markets and capital accumulation is on track or growth rate of real money demanded. patently wrong. 2 The inflation is immaculate because its pace Monetary theory distinguishes between "im is constant and perfectly foreseen and because maculate" inflation, "clean" inflation, and the inflation tax on real money balances is com "dirty" inflation. It is the last of these that pensated precisely by a deposit-rate of interest Kuznets dreaded and that we have endured. The on money. It is fully anticipated, and it does not first section below deals very briefly with dif impose a relative penalty on the money form of ferences between the three styles of inflation. wealth. Money-wage rates rise faster than out The second section is a catalogue of ways in put prices in the degree that labor productivity which dirty inflation may obstruct and distort is growing. -
Secular Stagnation in Historical Perspective
Secular stagnation in historical perspective Roger E. Backhouse and Mauro Boianovsky The re‐discovery of secular stagnation Negative Wicksellian natural rate of interest –savings exceed investment at all non‐negative interest rates Inequality and growth Idea that excessively unequal distribution of income can hold back demand and cause stagnation Thomas Piketty and rising inequality as a structural feature of capitalism Looking back into history Stagnation theories have a long history going back at least 200 years Inequality and aggregate demand ‐ developed by J. A. Hobson around 1900 “Secular stagnation” ‐ Rediscovery of idea proposed in Alvin Hansen’s “Economic progress and declining population growth” AEA Presidential Address, 1938 Mentions of secular stagnation in JSTOR xxx J. A. Hobson 1873‐96 “Great Depression” in Britain 1889 Hobson and Mummery The Physiology of Industry underconsumption due to over‐ investment in capital uses idea of the accelerator (not the name) 1909 Hobson The Industrial System link to unequal distribution of income and “unproductive surplus” explanation of capital exports 6 J. A. Hobson Hobsonian ideas widespread in USA in the Great Depression Failure of capitalism due to the growth of monopoly power Concentration of economic power disrupting commodity markets and the “financial machine” 7 Alvin Hansen Institutionalist (price structures) Business cycle theory drawing on Spiethoff, Aftalion, JM Clark and Wicksell In 1937, Keynes’s article on population made Hansen realise that Keynes’s multiplier could be fitted -
Econometrics As a Pluralistic Scientific Tool for Economic Planning: on Lawrence R
Econometrics as a Pluralistic Scientific Tool for Economic Planning: On Lawrence R. Klein’s Econometrics Erich Pinzón-Fuchs To cite this version: Erich Pinzón-Fuchs. Econometrics as a Pluralistic Scientific Tool for Economic Planning: On Lawrence R. Klein’s Econometrics. 2016. halshs-01364809 HAL Id: halshs-01364809 https://halshs.archives-ouvertes.fr/halshs-01364809 Preprint submitted on 12 Sep 2016 HAL is a multi-disciplinary open access L’archive ouverte pluridisciplinaire HAL, est archive for the deposit and dissemination of sci- destinée au dépôt et à la diffusion de documents entific research documents, whether they are pub- scientifiques de niveau recherche, publiés ou non, lished or not. The documents may come from émanant des établissements d’enseignement et de teaching and research institutions in France or recherche français ou étrangers, des laboratoires abroad, or from public or private research centers. publics ou privés. Documents de Travail du Centre d’Economie de la Sorbonne Econometrics as a Pluralistic Scientific Tool for Economic Planning: On Lawrence R. Klein’s Econometrics Erich PINZÓN FUCHS 2014.80 Maison des Sciences Économiques, 106-112 boulevard de L'Hôpital, 75647 Paris Cedex 13 http://centredeconomiesorbonne.univ-paris1.fr/ ISSN : 1955-611X Econometrics as a Pluralistic Scientific Tool for Economic Planning: On Lawrence R. Klein’s Econometrics Erich Pinzón Fuchs† October 2014 Abstract Lawrence R. Klein (1920-2013) played a major role in the construction and in the further dissemination of econometrics from the 1940s. Considered as one of the main developers and practitioners of macroeconometrics, Klein’s influence is reflected in his application of econometric modelling “to the analysis of economic fluctuations and economic policies” for which he was awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 1980. -
Neoclassicism and the Separation of Ownership and Control
University of Pennsylvania Carey Law School Penn Law: Legal Scholarship Repository Faculty Scholarship at Penn Law 2009 Neoclassicism and the Separation of Ownership and Control Herbert J. Hovenkamp University of Pennsylvania Carey Law School Follow this and additional works at: https://scholarship.law.upenn.edu/faculty_scholarship Part of the Business Organizations Law Commons, Corporate Finance Commons, Economic History Commons, Economic Theory Commons, Industrial Organization Commons, Law and Economics Commons, Legal History Commons, and the Securities Law Commons Repository Citation Hovenkamp, Herbert J., "Neoclassicism and the Separation of Ownership and Control" (2009). Faculty Scholarship at Penn Law. 1792. https://scholarship.law.upenn.edu/faculty_scholarship/1792 This Article is brought to you for free and open access by Penn Law: Legal Scholarship Repository. It has been accepted for inclusion in Faculty Scholarship at Penn Law by an authorized administrator of Penn Law: Legal Scholarship Repository. For more information, please contact [email protected]. VIRGINIA LAW & BUSINESS REVIEW VOLUME 4 FALL 2009 NUMBER 2 NEOCLASSICISM AND THE SEPARATION OF OWNERSHIP AND CONTROL Herbert Hovenkamp† INTRODUCTION ...................................................................................................... 374 I. FISHER’S SEPARATION THEOREM ................................................................... 383 II. VALUE MAXIMIZATION AND THE NATURE OF THE FIRM ....................... 286 III. THE FINANCIAL STRUCTURE AND VALUE -
Patinkin, the Cowles Commission, and the Theory of Unemployment and Aggregate Supply
Patinkin, the Cowles Commission, and the Theory of Unemployment and Aggregate Supply Mauro Boianovsky Universidade de Brasilia “For a long period before the writing of the first edition [of Money, Interest and Prices] I had been puzzled by the apparent contradiction between the intuitive feeling, on one hand, that there was a connection between a firm’s product-output and its labor-input, and the traditional demand curve for labor, on the other hand, that did not depend explicitly on output and whose sole independent variable was the real wage rate.” (Patinkin, 1989, p. xvi) 1. Introduction This paper offers an account of Don Patinkin’s long time quest for an explanation of the connection between a firm’s demand function for labour and its output. The task faced by Patinkin was how to make sense of an aggregate demand constraint and unemployment phenomena under the assumption that each firm is perfectly competitive (that is, it has a perfectly elastic demand for its output) and, therefore, can sell all it wants to sell at the current market price. The solution he eventually put forward in chapter XIII of his 1956 classic Money, Interest and Prices (henceforth MIP) was based on the notion that the influence of the representative firm’s output on its labour input is reflected in the form of the labour demand function, which features a kink at the employment level corresponding to aggregate demand. The view that unemployment is explained by the involuntary departure of firms from their commodity supply and labour demand curves became the hallmark of Patinkin’s contribution to the development of disequilibrium macroeconomics. -
Mit and Money
Groupe de REcherche en Droit, Economie, Gestion UMR CNRS 7321 MIT AND MONEY Documents de travail GREDEG GREDEG Working Papers Series Perry Mehrling GREDEG WP No. 2013-44 http://www.gredeg.cnrs.fr/working-papers.html Les opinions exprimées dans la série des Documents de travail GREDEG sont celles des auteurs et ne reflèlent pas nécessairement celles de l’institution. Les documents n’ont pas été soumis à un rapport formel et sont donc inclus dans cette série pour obtenir des commentaires et encourager la discussion. Les droits sur les documents appartiennent aux auteurs. The views expressed in the GREDEG Working Paper Series are those of the author(s) and do not necessarily reflect those of the institution. The Working Papers have not undergone formal review and approval. Such papers are included in this series to elicit feedback and to encourage debate. Copyright belongs to the author(s). MIT and Money Perry Mehrling October 22, 2013 I would like to thank all the participants in the HOPE conference for helpful suggestions and stimulating discussion, and in addition Bob Solow, Roger Backhouse, Goncalo Fonseca, Duncan Foley and Roy Weintraub for thoughtful and searching comment on early drafts. 1 Abstract: The Treasury-Fed Accord of 1951 and the subsequent rebuilding of private capital markets, first domestically and then globally, provided the shifting institutional background against which thinking about money and monetary policy evolved within the MIT economics department. Throughout that evolution, a constant, and a constraint, was the conception of monetary economics that Paul Samuelson had himself developed as early as 1937, a conception that informed the decision to bring in Modigliani in 1962, as well as Foley and Sidrauski in 1965. -
Report to Congress on International Economic and Exchange Rate Policies
Report to Congress on International Economic and Exchange Rate Policies U.S. Department of the Treasury Office of International Affairs February 2011 This report reviews developments in international economic and exchange rate policies and is submitted pursuant to the Omnibus Trade and Competitiveness Act of 1988, 22 U.S.C. § 5305 (the “Act”).1 1 The Treasury Department has consulted with the Board of Governors of the Federal Reserve System and IMF management and staff in preparing this report. Table of Contents KEY FINDINGS ........................................................................................................................... 2 INTRODUCTION......................................................................................................................... 2 U.S. MACROECONOMIC TRENDS ......................................................................................... 5 THE GLOBAL ECONOMY ........................................................................................................ 7 U.S. INTERNATIONAL ACCOUNTS ....................................................................................... 9 THE DOLLAR IN FOREIGN EXCHANGE MARKETS ..................................................... 10 ANALYSES OF INDIVIDUAL ECONOMIES ....................................................................... 12 ASIA ........................................................................................................................................................................ 12 China ................................................................................................................................................................. -
CR Traverse Analysis Progenitors & Pioneers
Traverse Analysis: Progenitors and Pioneers 14th History of Economic Thought Society of Australia Conference The University of Tasmania, Hobart, Australia. 11th July 2001 Colin Richardson* School of Economics University of Tasmania ABSTRACT Traverse analysis has two progenitors (David Ricardo, Karl Marx) and five pioneers: Michal Kalecki, Adolph Lowe, Joan Robinson, J.R. Hicks, and John Hicks. Defined as the dynamic disequilibrium adjustment-path that connects an initial with a different terminal state of economic growth, the traverse comes in four “flavours”. There are neoclassical (J.R. Hicks), neo-Austrian (John Hicks), observed (Ricardo, Marx, Kalecki, Robinson), and instrumental (Lowe) traverses. These terms are explained and the seven seminal contributions are summarised and commented upon in this paper. * I am indebted to Dr Jerry Courvisanos for his supervision and comments in writing this paper. Scholarship support from The University of Tasmania is also gratefully acknowledged. 2 Introduction Nobel laureate economist Robert Solow once quipped: “The traverse is the easiest part of skiing but the most difficult part of economics”. Later, Joseph Halevi and Peter Kriesler (1992, p 225) complained that “The traverse is at the same time one of the most important concepts in economic theory, and also one of the most neglected.” This paper outlines briefly the history of economic thought between 1821 and 1973 concerning this difficult, important and neglected theoretical construct. Traverse analysis has two progenitors (David Ricardo, Karl Marx) and five pioneers: Michal Kalecki, Adolph Lowe, Joan Robinson, J.R. Hicks, and John Hicks. Defined as the dynamic disequilibrium adjustment-path that connects an initial with a different terminal state of economic growth, the traverse comes in four “flavours”. -
Unemployment Did Not Rise During the Great Depression—Rather, People Took Long Vacations
Working Paper No. 652 The Dismal State of Macroeconomics and the Opportunity for a New Beginning by L. Randall Wray Levy Economics Institute of Bard College March 2011 The Levy Economics Institute Working Paper Collection presents research in progress by Levy Institute scholars and conference participants. The purpose of the series is to disseminate ideas to and elicit comments from academics and professionals. Levy Economics Institute of Bard College, founded in 1986, is a nonprofit, nonpartisan, independently funded research organization devoted to public service. Through scholarship and economic research it generates viable, effective public policy responses to important economic problems that profoundly affect the quality of life in the United States and abroad. Levy Economics Institute P.O. Box 5000 Annandale-on-Hudson, NY 12504-5000 http://www.levyinstitute.org Copyright © Levy Economics Institute 2011 All rights reserved ABSTRACT The Queen of England famously asked her economic advisers why none of them had seen “it” (the global financial crisis) coming. Obviously, the answer is complex, but it must include reference to the evolution of macroeconomic theory over the postwar period— from the “Age of Keynes,” through the Friedmanian era and the return of Neoclassical economics in a particularly extreme form, and, finally, on to the New Monetary Consensus, with a new version of fine-tuning. The story cannot leave out the parallel developments in finance theory—with its efficient markets hypothesis—and in approaches to regulation and supervision of financial institutions. This paper critically examines these developments and returns to the earlier Keynesian tradition to see what was left out of postwar macro. -
ΒΙΒΛΙΟΓ ΡΑΦΙΑ Bibliography
Τεύχος 53, Οκτώβριος-Δεκέμβριος 2019 | Issue 53, October-December 2019 ΒΙΒΛΙΟΓ ΡΑΦΙΑ Bibliography Βραβείο Νόμπελ στην Οικονομική Επιστήμη Nobel Prize in Economics Τα τεύχη δημοσιεύονται στον ιστοχώρο της All issues are published online at the Bank’s website Τράπεζας: address: https://www.bankofgreece.gr/trapeza/kepoe https://www.bankofgreece.gr/en/the- t/h-vivliothhkh-ths-tte/e-ekdoseis-kai- bank/culture/library/e-publications-and- anakoinwseis announcements Τράπεζα της Ελλάδος. Κέντρο Πολιτισμού, Bank of Greece. Centre for Culture, Research and Έρευνας και Τεκμηρίωσης, Τμήμα Documentation, Library Section Βιβλιοθήκης Ελ. Βενιζέλου 21, 102 50 Αθήνα, 21 El. Venizelos Ave., 102 50 Athens, [email protected] Τηλ. 210-3202446, [email protected], Tel. +30-210-3202446, 3202396, 3203129 3202396, 3203129 Βιβλιογραφία, τεύχος 53, Οκτ.-Δεκ. 2019, Bibliography, issue 53, Oct.-Dec. 2019, Nobel Prize Βραβείο Νόμπελ στην Οικονομική Επιστήμη in Economics Συντελεστές: Α. Ναδάλη, Ε. Σεμερτζάκη, Γ. Contributors: A. Nadali, E. Semertzaki, G. Tsouri Τσούρη Βιβλιογραφία, αρ.53 (Οκτ.-Δεκ. 2019), Βραβείο Nobel στην Οικονομική Επιστήμη 1 Bibliography, no. 53, (Oct.-Dec. 2019), Nobel Prize in Economics Πίνακας περιεχομένων Εισαγωγή / Introduction 6 2019: Abhijit Banerjee, Esther Duflo and Michael Kremer 7 Μονογραφίες / Monographs ................................................................................................... 7 Δοκίμια Εργασίας / Working papers ......................................................................................