DOCSLIB.ORG

Economic Theory and Social Policy: Where We Are, Where We Are Headed

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Economic Theory and Social Policy: Where We Are, Where We Are Headed ESIC 2018 DOI: 10.26613/esic/2.1.64 Economic Theory and Social Policy: Where We Are, Where We Are Headed Herbert Gintis Abstract Standard economic theory has told us for more than half a century that, to attain a high level of social welfare, there is no viable alternative to a market economy regulated by a powerful state. Critics often represent standard economic theory as a doctrinal defense of the free market. The truth is quite the opposite. Free market ideology is unfounded. Stan- dard economic theory provides the proper framework for analyzing market failure. This theory must of course be supplemented by a theory of state failure, as well as a theory of nonstate solutions to market failures. Standard economic theory offers a poor approach to macroeconomic dynamics, but we complexity and evolutionary theorists are working on correcting this situation. Keywords: neoclassical economic theory, general equilibrium theory, economic policy, evolutionary economics, complex dynamics RADICAL ECONOMICS AND BEYOND In the midst of bloody wars at home and abroad, with my professors either oblivious While studying for my PhD in mathematics to or mildly-to-avidly supporting the war in at Harvard, I became deeply involved in the Vietnam, I was certain that the economic theory anti-Vietnam war and civil rights movements. they espoused must be deeply flawed and began Feeling an uncomfortable gap between the to develop an alternative. How deeply disaf- abstractness of mathematical theory and con- fected was I? Here are the final sentences of a creteness of radical politics, I completed my paper I published in the orthodox American master’s in math, and switched to the PhD pro- Economic Review at that time: gram in economics at Harvard, producing some years later, at the height of the influence of the We [young economists] must be outlaws to radical student movement, a doctoral disserta- preserve our sanity and to seek a decent world tion entitled “Power and Alienation: Towards for our children. We must be outlaws because a Radical Welfare Economics.” In the process, … our expertise is otherwise … perverted I studied Marxian economics, helped to found toward ends incompatible with our personal the Union for Radical Political Economics, and self-realization in our work. But we will not be penned bitter critiques of the brand of standard outlaws forever. Join us. (Gintis 1972) neoclassical economics I learned at Harvard. I made a good living at this, and wrote a rather After finishing Schooling in Capitalist America, well-received book with my longtime coauthor Bowles and I initiated an ambitious study of Samuel Bowles entitled Schooling in Capitalist market socialism, and we began to advocate a America (Bowles and Gintis 1976). version involving democratically organized and Herbert Gintis worker-controlled firms (Bowles and Gintis school many years ago. This theory implies that 1990, 1996). But there was a problem with a successful economy will never be a free market our theory that resisted solution: if worker- economy, but rather will exhibit a high degree controlled firms would be at least as efficient as of social regulation to neutralize the effects of capitalist-controlled firms, why did such firms market failures. Second, the standard general not simply win out on competitive markets? equilibrium model in fact provides as strong One could offer silly reasons, such as collusion support for the viability of a state socialist econ- among capitalists to undermine democratic omy of the Soviet type as it does for a capitalist workplaces or laws that disfavor economic economy (Lange and Taylor 1938; Schumpeter democracy. But we considered such explana- 1942; Gintis 1991). Therefore the econo- tions as implausible at best. We concluded, on mist’s chief model of economic exchange has the basis of standard economic reasoning, that no sociopolitical bias whatever. Unfortunately, such firms cannot enjoy the benefits of widely the standard informational assumptions of this dispersed ownership characteristic of large capi- model—especially the assumption that a state talist firms (Gintis 1989). planner has complete information concerning This experience guided me to three rather all production processes, technological alterna- momentous conclusions. First, the market tives, and consumer and worker preferences— socialist economy based on worker control is no are implausible (Hayek 1945; Gintis 1991). more feasible than the state socialist economy as This undermines its support for state socialism, an alternative to capitalism. Therefore we must but not for a socially regulated market economy. embrace capitalism and search for correctives that provide social justice with high efficiency. COMBATTING ECONOMIC ILLITERACY Second, standard economic theory, despite its flaws, is often powerfully insightful. We should Progressives and conservatives alike tend to thus embrace this theory, dynamicize it, and characterize standard economic theory as a correct its flaws. Third and finally, Marxism is justification of free markets. Conservatives like a great way to develop a broad, dynamic, inter- the idea, and progressives do not. Therefore disciplinary view of social theory, but it is quite there is a strong tendency in progressive circles out of its depth as a serious economic theory. We simply to reject standard economic theory and should look elsewhere (especially to complexity to embrace one or another “heterodox” alterna- and evolution) for inspirational new directions tive. Both groups are misinformed, to the point in economic dynamics. I have thus spent the of being economically illiterate concerning the rest of my professional life trying to build on the received wisdom of economic theory. success and correct the flaws of standard neo- It may seem that there is no politically neutral classical economic theory using insights from received wisdom that is shared by most econo- the other behavioral disciplines and deploying mists, but this is not the case. Except in the area the tools of complexity analysis. of macroeconomic policy, there are few disagree- Most of my radical economist friends did ments. In the macroeconomic area, as I describe not follow this path, arguing that standard below, the standard models are pretty awful. But economic theory is simply an apology for free economic policy has a deeper problem: simple market capitalism. This view is wrong for two models can show you the general direction of reasons. First, as I shall describe below, stan- effects, but when there are offsetting tendencies, dard public economics, fully integrated into only quantitative evidence can supply a credi- standard economic theory, provides a power- ble answer. For instance, increasing government ful taxonomy of market failure, one that is as expenditure to lower the unemployment rate cogent today as when I learned it in graduate may be offset by the effects of government debt 2 Evolutionary Studies in Imaginative Culture Economic Theory and Social Policy: Where We Are, Where We Are Headed on interest, inflation, and growth rates. Only Finally, the book rather slights statistical careful attention to details can determine the information on the economy and gives little net effect of the policy, and even this is subject historical perspective. to significant error. Tom Gorman, The Complete Idiot’s Guide to However, one cannot even begin to assess Economics (Penguin, 2003) economic policy seriously unless one knows basic economic theory. The books mentioned This book is a little out of date, and is especially below are basic starting points for gaining a concerned with regulatory policy in dealing facility in economic theory. Alternatively, you with market volatility (the business cycle). can simply buy one of the leading undergradu- It has lots of interesting statistics, and gives a ate textbooks and plow through it. The textbook detailed explanation of the Federal Reserve and will be more demanding, very fat, and quite its operation. It is similarly strong on analyzing expensive. Before doing this, I advise that you international trade and exchange rates. Read tackle one or more of the following volumes. this after Economics for Dummies. They are all quite good, and it wouldn’t hurt Steve Slavin, Economics: A Self-Teaching to read them all. But here are my impressions. Guide (Wiley, 1999) Charles Wheelan, Naked Economics: Undressing This book does not deal with recent economic the Dismal Science (W. W. Norton, 2010) issues, but it is well worth reading. It is especially Wheelan explains the benefits and limitations strong on economic history and it presents in of markets, the benefits and limitations of some detail the various schools of thought in government interventions, the basics of finance macroeconomic theory. It also does consid- (especially, how to avoid the costly errors that erable national income accounting, which I about 50% of investors are prone to make, consider a prerequisite to understanding current such as believing they can pick winners), and economic issues. Its microeconomics sections the role of international competition. There are rather brief. It is certainly not a substitute is nothing that Wheelan asserts that I think for Economics for Dummies. is not 100% correct, including his exposition After this, I would tackle the more formal free of development economics and globalization. online CORE course on introductory econom- Highly recommended. ics at http://www.core-econ.org, developed by my coauthor Sam Bowles and other colleagues. Sean Flynn, Economics for Dummies (Wiley, 2011) PROBLEM AREAS OF STANDARD ECONOMICS This book is the most sophisticated of the three and covers extremely important material left There are two problem areas with the standard out of the others. This includes an analysis of neoclassical model, which I will identify here property rights, market externalities, public with the Walrasian general market interaction goods, asymmetric information, and other model, as described below. The first is that the absolutely fundamental aspects of modern eco- model is good at equilibrium analysis, but has nomic theory, which is really the theory of the no serious treatment of economic dynamics.
Load more

Recommended publications
  • COVID-19 and Economic Policy Toward the New Normal: a Monetary-Fiscal Nexus After the Crisis?
    IN-DEPTH ANALYSIS Requested by the ECON committee Monetar y Dialogue Papers, November 2020 COVID-19 and Economic Policy Toward the New Normal: A Monetary-Fiscal Nexus after the Crisis? Policy Department for Economic, Scientific and Quality of Life Policies Directorate-General for Internal Policies Author: Thomas MARMEFELT EN PE 658.193 - November 2020 COVID-19 and Economic Policy Toward the New Normal: A Monetary-Fiscal Nexus after the Crisis? Monetary Dialogue Papers, November 2020 Abstract Current developments during the COVID-19 pandemic involve strongly complementary monetary and fiscal policy, but both as responses to COVID-19 and not the outcome of an emergent monetary-fiscal nexus. Therefore, the ECB maintains its independence by using unconventional monetary policy measures to reach price stability, according to its mandate. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 19 November 2020. This document was requested by the European Parliament's committee on Economic and Monetary Affairs (ECON). AUTHOR Thomas MARMEFELT, CASE – Center for Social and Economic Research (Warsaw, Poland) and University of Södertörn (Huddinge, Sweden) ADMINISTRATOR RESPONSIBLE Drazen RAKIC EDITORIAL ASSISTANT Janetta CUJKOVA LINGUISTIC VERSIONS Original: EN ABOUT THE EDITOR Policy departments provide in-house and external expertise to support European Parliament committees
    [Show full text]
  • Uncertainty and Hyperinflation: European Inflation Dynamics After World War I
    FEDERAL RESERVE BANK OF SAN FRANCISCO WORKING PAPER SERIES Uncertainty and Hyperinflation: European Inflation Dynamics after World War I Jose A. Lopez Federal Reserve Bank of San Francisco Kris James Mitchener Santa Clara University CAGE, CEPR, CES-ifo & NBER June 2018 Working Paper 2018-06 https://www.frbsf.org/economic-research/publications/working-papers/2018/06/ Suggested citation: Lopez, Jose A., Kris James Mitchener. 2018. “Uncertainty and Hyperinflation: European Inflation Dynamics after World War I,” Federal Reserve Bank of San Francisco Working Paper 2018-06. https://doi.org/10.24148/wp2018-06 The views in this paper are solely the responsibility of the authors and should not be interpreted as reflecting the views of the Federal Reserve Bank of San Francisco or the Board of Governors of the Federal Reserve System. Uncertainty and Hyperinflation: European Inflation Dynamics after World War I Jose A. Lopez Federal Reserve Bank of San Francisco Kris James Mitchener Santa Clara University CAGE, CEPR, CES-ifo & NBER* May 9, 2018 ABSTRACT. Fiscal deficits, elevated debt-to-GDP ratios, and high inflation rates suggest hyperinflation could have potentially emerged in many European countries after World War I. We demonstrate that economic policy uncertainty was instrumental in pushing a subset of European countries into hyperinflation shortly after the end of the war. Germany, Austria, Poland, and Hungary (GAPH) suffered from frequent uncertainty shocks – and correspondingly high levels of uncertainty – caused by protracted political negotiations over reparations payments, the apportionment of the Austro-Hungarian debt, and border disputes. In contrast, other European countries exhibited lower levels of measured uncertainty between 1919 and 1925, allowing them more capacity with which to implement credible commitments to their fiscal and monetary policies.
    [Show full text]
  • Estimating the Effects of Fiscal Policy in OECD Countries
    Estimating the e®ects of ¯scal policy in OECD countries Roberto Perotti¤ This version: November 2004 Abstract This paper studies the e®ects of ¯scal policy on GDP, in°ation and interest rates in 5 OECD countries, using a structural Vector Autoregression approach. Its main results can be summarized as follows: 1) The e®ects of ¯scal policy on GDP tend to be small: government spending multipliers larger than 1 can be estimated only in the US in the pre-1980 period. 2) There is no evidence that tax cuts work faster or more e®ectively than spending increases. 3) The e®ects of government spending shocks and tax cuts on GDP and its components have become substantially weaker over time; in the post-1980 period these e®ects are mostly negative, particularly on private investment. 4) Only in the post-1980 period is there evidence of positive e®ects of government spending on long interest rates. In fact, when the real interest rate is held constant in the impulse responses, much of the decline in the response of GDP in the post-1980 period in the US and UK disappears. 5) Under plausible values of its price elasticity, government spending typically has small e®ects on in°ation. 6) Both the decline in the variance of the ¯scal shocks and the change in their transmission mechanism contribute to the decline in the variance of GDP after 1980. ¤IGIER - Universitµa Bocconi and Centre for Economic Policy Research. I thank Alberto Alesina, Olivier Blanchard, Fabio Canova, Zvi Eckstein, Jon Faust, Carlo Favero, Jordi Gal¶³, Daniel Gros, Bruce Hansen, Fumio Hayashi, Ilian Mihov, Chris Sims, Jim Stock and Mark Watson for helpful comments and suggestions.
    [Show full text]
  • Entrepreneurship in Regulated Markets: Burden Or Boon?
    Entrepreneurship in regulated markets: Burden or boon? Chair: Vickie Gibbs, Executive Director, Entrepreneurship Center, UNC Kenan-Flagler Business School Panelists: Susan Cates, Partner, Leeds Equity Partners, LLC Chris Elmore, Community Evangelist, AvidXchange Eric Ghysels, Faculty Director, Rethinc. Labs; Edward Bernstein Distinguished Professor of Economics, UNC-Chapel Hill; Professor of Finance, UNC Kenan-Flagler Business School Bill Starling, CEO, Synecor Regulatory barriers to entry can distort markets and limit innovation, but also result in breakthrough business models facing less competition. Examples include fintech, medtech and edtech. This session examined the challenges specific to entrepreneurship and innovation in regulated industries. Bill Starling started the session by describing the regulatory complexities of the medtech market. Food and Drug Administration (FDA) approval for medical device products can sometimes take more than a decade. For example, approval for the TAVR heart valve replacement device took 17 years and $2 billion in funding. One strategy for ventures is to minimize the number of approvals required to bring a product to market. For example, iRhythm focused on the unmet customer need for an affordable way to detect heart conditions. The company created a simple, bandage-like device that collected data about the heart, which allowed them to avoid regulatory scrutiny. Even so, the product required $100 million to complete the clinical trials. Starling closed by noting that regulated markets are difficult to enter, but once a venture successfully enters the market, it can do very well and find protected positions. Susan Cates provided perspective as both a business operator and as an investor within education. Cates believes that success in regulated markets often requires “nontraditional thinking inside traditional institutions.” Cates described the “stroke of the pen” risks and tailwinds that can occur when policymakers pass new laws or provide regulatory guidance.
    [Show full text]
  • The Economic Policy Response to the Covid-19 Crisis Note for Discussion April 9, 2020 *
    The economic policy response to the Covid-19 crisis Note for discussion April 9, 2020 * The dramatic social distancing measures that were needed to contain the Covid-19 outbreak and save lives have resulted in a major economic crisis. The magnitude and spread of the global decline in output exceeds that triggered by the Global Financial Crisis, if not the Great Depression. But the very nature of the crisis is unprecedented. As in previous major downturns, developing countries are facing a decline in foreign demand and a drop of commodity prices. They are also being locked out from global financial markets, suffer capital outflows and experience a fall of remittances. But in addition to the demand shortfall and the financial stress, this new crisis involves a major supply shock. Domestically, social distancing measures drastically reduce labor supply and increase transaction costs. Internationally, supply chains break down, which may result in shortages of key inputs and potentially in higher food prices. Another important difference with previous crises is the potential, recurrent return of the supply shock until a vaccine is developed, weighing on the prospects for recovery. A crisis of this magnitude and nature is not going to be reverted quickly. Even once the crisis bottoms out, widespread bankruptcies, increased unemployment and under-employment, and a depressed investment climate will make its effects persist. Moreover, developing countries are confronting this crisis from a weaker position compared to the Global Financial Crisis. Some financial sectors are vulnerable, corporate debt is generally high, and sovereign debt levels often constrain the fiscal space available to governments.
    [Show full text]
  • Supply and Demand Is Not a Neoclassical Concern
    Munich Personal RePEc Archive Supply and Demand Is Not a Neoclassical Concern Lima, Gerson P. Macroambiente 3 March 2015 Online at https://mpra.ub.uni-muenchen.de/63135/ MPRA Paper No. 63135, posted 21 Mar 2015 13:54 UTC Supply and Demand Is Not a Neoclassical Concern Gerson P. Lima1 The present treatise is an attempt to present a modern version of old doctrines with the aid of the new work, and with reference to the new problems, of our own age (Marshall, 1890, Preface to the First Edition). 1. Introduction Many people are convinced that the contemporaneous mainstream economics is not qualified to explaining what is going on, to tame financial markets, to avoid crises and to provide a concrete solution to the poor and deteriorating situation of a large portion of the world population. Many economists, students, newspapers and informed people are asking for and expecting a new economics, a real world economic science. “The Keynes- inspired building-blocks are there. But it is admittedly a long way to go before the whole construction is in place. But the sooner we are intellectually honest and ready to admit that modern neoclassical macroeconomics and its microfoundationalist programme has come to way’s end – the sooner we can redirect our aspirations to more fruitful endeavours” (Syll, 2014, p. 28). Accordingly, this paper demonstrates that current mainstream monetarist economics cannot be science and proposes new approaches to economic theory and econometric method that after replication and enhancement may be a starting point for the creation of the real world economic theory.
    [Show full text]
  • Markets Not Capitalism Explores the Gap Between Radically Freed Markets and the Capitalist-Controlled Markets That Prevail Today
    individualist anarchism against bosses, inequality, corporate power, and structural poverty Edited by Gary Chartier & Charles W. Johnson Individualist anarchists believe in mutual exchange, not economic privilege. They believe in freed markets, not capitalism. They defend a distinctive response to the challenges of ending global capitalism and achieving social justice: eliminate the political privileges that prop up capitalists. Massive concentrations of wealth, rigid economic hierarchies, and unsustainable modes of production are not the results of the market form, but of markets deformed and rigged by a network of state-secured controls and privileges to the business class. Markets Not Capitalism explores the gap between radically freed markets and the capitalist-controlled markets that prevail today. It explains how liberating market exchange from state capitalist privilege can abolish structural poverty, help working people take control over the conditions of their labor, and redistribute wealth and social power. Featuring discussions of socialism, capitalism, markets, ownership, labor struggle, grassroots privatization, intellectual property, health care, racism, sexism, and environmental issues, this unique collection brings together classic essays by Cleyre, and such contemporary innovators as Kevin Carson and Roderick Long. It introduces an eye-opening approach to radical social thought, rooted equally in libertarian socialism and market anarchism. “We on the left need a good shake to get us thinking, and these arguments for market anarchism do the job in lively and thoughtful fashion.” – Alexander Cockburn, editor and publisher, Counterpunch “Anarchy is not chaos; nor is it violence. This rich and provocative gathering of essays by anarchists past and present imagines society unburdened by state, markets un-warped by capitalism.
    [Show full text]
  • Working Paper No. 517 What Are the Relative Macroeconomic Merits And
    Working Paper No. 517 What Are the Relative Macroeconomic Merits and Environmental Impacts of Direct Job Creation and Basic Income Guarantees? by Pavlina R. Tcherneva The Levy Economics Institute of Bard College October 2007 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. The 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. The Levy Economics Institute P.O. Box 5000 Annandale-on-Hudson, NY 12504-5000 http://www.levy.org Copyright © The Levy Economics Institute 2007 All rights reserved. ABSTRACT There is a body of literature that favors universal and unconditional public assurance policies over those that are targeted and means-tested. Two such proposals—the basic income proposal and job guarantees—are discussed here. The paper evaluates the impact of each program on macroeconomic stability, arguing that direct job creation has inherent stabilization features that are lacking in the basic income proposal. A discussion of modern finance and labor market dynamics renders the latter proposal inherently inflationary, and potentially stagflationary. After studying the macroeconomic viability of each program, the paper elaborates on their environmental merits. It is argued that the “green” consequences of the basic income proposal are likely to emerge, not from its modus operandi, but from the tax schemes that have been advanced for its financing.
    [Show full text]
  • How the Rational Expectations Revolution Has Enriched
    How the Rational Expectations Revolution Has Changed Macroeconomic Policy Research by John B. Taylor STANFORD UNIVERSITY Revised Draft: February 29, 2000 Written versions of lecture presented at the 12th World Congress of the International Economic Association, Buenos Aires, Argentina, August 24, 1999. I am grateful to Jacques Dreze for helpful comments on an earlier draft. The rational expectations hypothesis is by far the most common expectations assumption used in macroeconomic research today. This hypothesis, which simply states that people's expectations are the same as the forecasts of the model being used to describe those people, was first put forth and used in models of competitive product markets by John Muth in the 1960s. But it was not until the early 1970s that Robert Lucas (1972, 1976) incorporated the rational expectations assumption into macroeconomics and showed how to make it operational mathematically. The “rational expectations revolution” is now as old as the Keynesian revolution was when Robert Lucas first brought rational expectations to macroeconomics. This rational expectations revolution has led to many different schools of macroeconomic research. The new classical economics school, the real business cycle school, the new Keynesian economics school, the new political macroeconomics school, and more recently the new neoclassical synthesis (Goodfriend and King (1997)) can all be traced to the introduction of rational expectations into macroeconomics in the early 1970s (see the discussion by Snowden and Vane (1999), pp. 30-50). In this lecture, which is part of the theme on "The Current State of Macroeconomics" at the 12th World Congress of the International Economic Association, I address a question that I am frequently asked by students and by "non-macroeconomist" colleagues, and that I suspect may be on many people's minds.
    [Show full text]
  • Preview Guide
    ContentsNOT FOR SALE Preface xiii CHAPTER 3 The Behavior of Consumers 45 3.1 Tastes 45 CHAPTER 1 Indifference Curves 45 Supply, Demand, Marginal Values 48 and Equilibrium 1 More on Indifference Curves 53 1.1 Demand 1 3.2 The Budget Line and the Demand versus Quantity Consumer’s Choice 53 Demanded 1 The Budget Line 54 Demand Curves 2 The Consumer’s Choice 56 Changes in Demand 3 Market Demand 7 3.3 Applications of Indifference The Shape of the Demand Curve 7 Curves 59 The Wide Scope of Economics 10 Standards of Living 59 The Least Bad Tax 64 1.2 Supply 10 Summary 69 Supply versus Quantity Supplied 10 Author Commentary 69 1.3 Equilibrium 13 Review Questions 70 The Equilibrium Point 13 Numerical Exercises 70 Changes in the Equilibrium Point 15 Problem Set 71 Summary 23 Appendix to Chapter 3 77 Author Commentary 24 Cardinal Utility 77 Review Questions 25 The Consumer’s Optimum 79 Numerical Exercises 25 Problem Set 26 CHAPTER 4 Consumers in the Marketplace 81 CHAPTER 2 4.1 Changes in Income 81 Prices, Costs, and the Gains Changes in Income and Changes in the from Trade 31 Budget Line 81 Changes in Income and Changes in the 2.1 Prices 31 Optimum Point 82 Absolute versus Relative Prices 32 The Engel Curve 84 Some Applications 34 4.2 Changes in Price 85 2.2 Costs, Efficiency, and Gains from Changes in Price and Changes in the Trade 35 Budget Line 85 Costs and Efficiency 35 Changes in Price and Changes in the Optimum Point 86 Specialization and the Gains from Trade 37 The Demand Curve 88 Why People Trade 39 4.3 Income and Substitution Summary 41
    [Show full text]
  • Annotated Presentation of Regulated Markets and National Provisions
    15.7.2011 EN Official Journal of the European Union C 209/21 Annotated presentation of regulated markets and national provisions implementing relevant requirements of MiFID (Directive 2004/39/EC of the European Parliament and of the Council) (2011/C 209/13) Article 47 of the Markets in Financial Instruments Directive (Directive 2004/39/EC, OJ L 145, 30.4.2004) authorises each Member State to confer the status of ‘regulated market’ on those markets constituted on its territory and which comply with its regulations. Article 4, paragraph 1, point 14 of Directive 2004/39/EC defines a ‘regulated market’ as a multilateral system operated and/or managed by a market operator, which brings together or facilitates the bringing together of multiple third-party buying and selling interests in financial instruments — in the system and in accordance with its non-discretionary rules — in a way that results in a contract, in respect of the financial instruments admitted to trading under its rules and/or systems, and which is authorised and functions regularly and in accordance with the provisions of Title III of Directive 2004/39/EC. Article 47 of Directive 2004/39/EC requires that each Member State maintains an updated list of regulated markets authorised by it. This information should be communicated to other Member States and the European Commission. Under the same article (Article 47 of Directive 2004/39/EC), the Commission is required to publish a list of regulated markets, notified to it, on a yearly basis in the Official Journal of the European Union. The present list has been compiled pursuant to this requirement.
    [Show full text]
  • FACTORS of SUPPLY & DEMAND Price Quantity Supplied
    FACTORS OF SUPPLY & DEMAND Imagine that a student signed up for a video streaming subscription, a service that costs $9.00 a month to enjoy binge- worthy television and movies at any time of day. A few months into her subscription, she receives a notification that the monthly price will be increasing to $12.00 a month, which is over a 30 percent price increase! The student can either continue with her subscription at the higher price of $12.00 per month or cancel the subscription and use the $12.00 elsewhere. What should the student do? Perhaps she’s willing to pay $12.00 or more in order to access and enjoy the shows and movies that the streaming service provides, but will all other customers react in the same way? It is likely that some customers of the streaming service will cancel their subscription as a result of the increased price, while others are able and willing to pay the higher rate. The relationship between the price of goods or services and the quantity of goods or services purchased is the focus of today’s module. This module will explore the market forces that influence the price of raw, agricultural commodities. To understand what influences the price of commodities, it’s essential to understand a foundational principle of economics, the law of supply and demand. Understand the law of supply and demand. Supply is the quantity of a product that a seller is willing to sell at a given price. The law of supply states that, all else equal, an increase in price results in an increase in the quantity supplied.
    [Show full text]