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Recurrent Hyperinflations and Learning
Recurrent Hyperin‡ations and Learning Albert Marcet Universitat Pompeu Fabra and CEMFI Juan Pablo Nicolini Universidad Torcuato Di Tella and Universitat Pompeu Fabra Working Paper No. 9721 December 1997 We thank Tony Braun, Jim Bullard, George Evans, Seppo Honkapohja, Rodi Manuelli, Ramon Marimon, Tom Sargent, Harald Uhlig, Neil Wallace and Car- los Zarazaga for helpful conversations and Marcelo Delajara and Ignacio Ponce Ocampo for research assistance. All errors are our own. Part of this work was done when both authors were visiting the Federal Reserve Bank of Minneapolis. Research support from DGICYT, CIRIT and HCM is greatly appreciated. E-mail addresses: [email protected], [email protected]. CEMFI, Casado del Alisal 5, 28014 Madrid, Spain. Tel: 341 4290551, fax: 341 4291056, http://www.cem….es. Abstract This paper uses a model of boundedly rational learning to account for the observations of recurrent hyperin‡ations in the last decade. We study a standard monetary model where the fully rational expectations assumption is replaced by a formal de…nition of quasi-rational learning. The model under learning is able to match remarkably well some crucial stylized facts observed during the recurrent hyperin‡ations experienced by several countries in the 80’s. We argue that, despite being a small departure from rational expec- tations, quasi-rational learning does not preclude falsi…ability of the model and it does not violate reasonable rationality requirements. Keywords: Hyperin‡ations, convertibility, stabilization plans, quasi-rationality. JEL classi…cation: D83, E17, E31. 1 Introduction The goal of this paper is to develop a model that accounts for the main fea- tures of the hyperin°ations of last decade and to study the policy recomen- dations that arise from it. -
Neoliberalism and Regional Development in Latin America
Neoliberalism and Regional Development in Latin America Robert N.Gwynne School of Geography University of Birmingham Edgbaston Birmingham B15 2TT Abstract This paper is an attempt to promote discussion on the contemporary relationship between the adoption of neoliberal policies by many Latin American governments and the social and economic development of space within those countries. The shift towards neoliberal policies in Latin America is also associated with increasing economic integration between countries but this topic is not the priority in this paper. Rather the emphasis is to see if any generalizations can be made on how the productive response to neoliberalism is taking place within the regions of Latin American countries. After brief discussions on the political economy and origins of neoliberalism, the paper seeks to examine some broad themes of the political economy of regional development within Latin America. Issues of regional production have very much focused on the growth of non-traditional exports. It is argued that these can be best divided into two groups - those based on manufacturing products and those based on renewable resources. This paper pursues analysis of the latter category, mainly in relation to regional development in Chile - first in relation to the wide range of primary exports and then more specifically in terms of the impact of agricultural export growth on regional land and labour markets. Brief Perspectives on the political economy of neoliberalism The political economy of Latin American countries seems increasingly characterized by neoliberal approaches. The use of the term neoliberal has numerous problems in terms of its ideological connotations. For example in international policy circles, the term Washington consensus (Williamson, 1990) tends to be used, indicating virtually the same package of reforms. -
Nominal Rigidity and Some New Evidence on the New Keynesian Theory of the Output-Inflation Tradeoff Rongrong Sun1
Munich Personal RePEc Archive Nominal Rigidity and Some New Evidence on the New Keynesian Theory of the Output-Inflation Tradeoff Sun, Rongrong University of Wuppertal 2012 Online at https://mpra.ub.uni-muenchen.de/45021/ MPRA Paper No. 45021, posted 15 Mar 2013 06:19 UTC Nominal Rigidity and Some New Evidence on the New Keynesian Theory of the Output-Inflation Tradeoff Rongrong Sun1 Abstract: This paper develops a series of tests to check whether the New Keynesian nominal rigidity hypothesis on the output-inflation tradeoff withstands new evidence. In so doing, I summarize and evaluate different estimation methods that have been applied in the literature to address this hypothesis. Both cross-country and over-time variations in the output-inflation tradeoff are checked with the tests that differentiate the effects on the tradeoff that are attributable to nominal rigidity (the New Keynesian argument) from those ascribable to variance in nominal growth (the alternative new classical explanation). I find that in line with the New Keynesian hypothesis, nominal rigidity is an important determinant of the tradeoff. Given less rigid prices in high-inflation environments, changes in nominal demand are transmitted to quicker and larger movements in prices and lead to smaller fluctuations in the real economy. The tradeoff between output and inflation is hence smaller. Key words: the output-inflation tradeoff, nominal rigidity, trend inflation, aggregate variability JEL-Classification: E31, E32, E61 1 Schumpeter School of Business and Economics, University of Wuppertal, [email protected]. I would like to thank Katrin Heinrichs, Jan Klingelhöfer, Ronald Schettkat and the seminar (conference) participants at the Schumpeter School of Business and Economics, the DIW Macroeconometric Workshop 2009, the 2011 meeting of the Swiss Society of Economics and Statistics (SSES) and the 26th Annual Congress of European Economic Association (EEA), 2011 Oslo for their helpful comments. -
The Socialization of Investment, from Keynes to Minsky and Beyond
Working Paper No. 822 The Socialization of Investment, from Keynes to Minsky and Beyond by Riccardo Bellofiore* University of Bergamo December 2014 * [email protected] This paper was prepared for the project “Financing Innovation: An Application of a Keynes-Schumpeter- Minsky Synthesis,” funded in part by the Institute for New Economic Thinking, INET grant no. IN012-00036, administered through the Levy Economics Institute of Bard College. Co-principal investigators: Mariana Mazzucato (Science Policy Research Unit, University of Sussex) and L. Randall Wray (Levy Institute). The author thanks INET and the Levy Institute for support of this research. 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 2014 All rights reserved ISSN 1547-366X Abstract An understanding of, and an intervention into, the present capitalist reality requires that we put together the insights of Karl Marx on labor, as well as those of Hyman Minsky on finance. The best way to do this is within a longer-term perspective, looking at the different stages through which capitalism evolves. -
Economic Models
Economic models Crucini/Driskill August 25, 2007 List of Figures 1 TheMonk’spaths.......................... 4 2 TheO’Rourkegraph......................... 13 d 3 Pairs of (PS,Si ) ........................... 20 4 Sd = 1 ............................... 21 i 4PS 3 5 Inverse linear demand function: Yi = 4 . .............. 24 6 Inverse demand functions with different Yi’s............ 24 1 7 PS = d ............................... 27 4Si 1 1 8 PS = d ; PS = d ......................... 27 4Si Si 9 Marketandindividualinversedemands.............. 31 10 Individualinversesupplyfunctions................. 33 11 Market and individual inverse supply . ............... 34 12 Depictingthedemand-supplymodel............... 44 13 Equilibrium with differentincome.................. 45 Contents 1LearningObjectives 2 2 Introduction 3 3 The power and ubiquitousness of models 3 4 The structure, language, and depiction of economic models. 6 4.1 Some definitions........................... 6 4.2 A problem: The effects of an end of EU sugar - production subsidies 7 4.3Elementsofmodels.......................... 7 4.3.1 Variables........................... 7 4.3.2 Logicalstructuringandrepresentation........... 8 4.4Solvingthemodel.......................... 9 4.4.1 Thecanonicalquestion.................... 9 4.4.2 Solutionstrategies...................... 12 1 5 The microeconomic partial-equilibrium model of competitive demand and supply for sugar 14 5.1Anoteonnotation.......................... 14 5.2Demandsubmodel.......................... 15 5.2.1 Variables.......................... -
Modern Monetary Theory: a Marxist Critique
Class, Race and Corporate Power Volume 7 Issue 1 Article 1 2019 Modern Monetary Theory: A Marxist Critique Michael Roberts [email protected] Follow this and additional works at: https://digitalcommons.fiu.edu/classracecorporatepower Part of the Economics Commons Recommended Citation Roberts, Michael (2019) "Modern Monetary Theory: A Marxist Critique," Class, Race and Corporate Power: Vol. 7 : Iss. 1 , Article 1. DOI: 10.25148/CRCP.7.1.008316 Available at: https://digitalcommons.fiu.edu/classracecorporatepower/vol7/iss1/1 This work is brought to you for free and open access by the College of Arts, Sciences & Education at FIU Digital Commons. It has been accepted for inclusion in Class, Race and Corporate Power by an authorized administrator of FIU Digital Commons. For more information, please contact [email protected]. Modern Monetary Theory: A Marxist Critique Abstract Compiled from a series of blog posts which can be found at "The Next Recession." Modern monetary theory (MMT) has become flavor of the time among many leftist economic views in recent years. MMT has some traction in the left as it appears to offer theoretical support for policies of fiscal spending funded yb central bank money and running up budget deficits and public debt without earf of crises – and thus backing policies of government spending on infrastructure projects, job creation and industry in direct contrast to neoliberal mainstream policies of austerity and minimal government intervention. Here I will offer my view on the worth of MMT and its policy implications for the labor movement. First, I’ll try and give broad outline to bring out the similarities and difference with Marx’s monetary theory. -
Nber Working Paper Series David Laidler On
NBER WORKING PAPER SERIES DAVID LAIDLER ON MONETARISM Michael Bordo Anna J. Schwartz Working Paper 12593 http://www.nber.org/papers/w12593 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 October 2006 This paper has been prepared for the Festschrift in Honor of David Laidler, University of Western Ontario, August 18-20, 2006. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. © 2006 by Michael Bordo and Anna J. Schwartz. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. David Laidler on Monetarism Michael Bordo and Anna J. Schwartz NBER Working Paper No. 12593 October 2006 JEL No. E00,E50 ABSTRACT David Laidler has been a major player in the development of the monetarist tradition. As the monetarist approach lost influence on policy makers he kept defending the importance of many of its principles. In this paper we survey and assess the impact on monetary economics of Laidler's work on the demand for money and the quantity theory of money; the transmission mechanism on the link between money and nominal income; the Phillips Curve; the monetary approach to the balance of payments; and monetary policy. Michael Bordo Faculty of Economics Cambridge University Austin Robinson Building Siegwick Avenue Cambridge ENGLAND CD3, 9DD and NBER [email protected] Anna J. Schwartz NBER 365 Fifth Ave, 5th Floor New York, NY 10016-4309 and NBER [email protected] 1. -
Economic Exchange During Hyperinflation
Economic Exchange during Hyperinflation Alessandra Casella Universityof California, Berkeley Jonathan S. Feinstein Stanford University Historical evidence indicates that hyperinflations can disrupt indi- viduals' normal trading patterns and impede the orderly functioning of markets. To explore these issues, we construct a theoretical model of hyperinflation that focuses on individuals and their process of economic exchange. In our model buyers must carry cash while shopping, and some transactions take place in a decentralized setting in which buyer and seller negotiate over the terms of trade of an indivisible good. Since buyers face the constant threat of incoming younger (hence richer) customers, their bargaining position is weak- ened by inflation, allowing sellers to extract a higher real price. How- ever, we show that higher inflation also reduces buyers' search, increasing sellers' wait for customers. As a result, the volume of transactions concluded in the decentralized sector falls. At high enough rates of inflation, all agents suffer a welfare loss. I. Introduction Since. Cagan (1956), economic analyses of hyperinflations have fo- cused attention on aggregate time-series data, especially exploding price levels and money stocks, lost output, and depreciating exchange rates. Work on the German hyperinflation of the twenties provides a We thank Olivier Blanchard, Peter Diamond, Rudi Dornbusch, Stanley Fischer, Bob Gibbons, the referee, and the editor of this Journal for helpful comments. Alessandra Casella thanks the Sloan Foundation -
Neo-Classical Economics: a Trail of Economic Destruction Since the 1970S Erik S
real-world economics review, issue no. 60 Neo-classical economics: A trail of economic destruction since the 1970s Erik S. Reinert [The Other Canon Foundation, Norway] Copyright: Erik S. Reinert, 2012 You may post comments on this paper at http://rwer.wordpress.com/2012/06/20/rwer-issue-60/ ‘...soon or late, it is ideas, not vested interests, which are dangerous for good or evil’. John Maynard Keynes, closing words of The General Theory (1936). Abstract This paper argues that the international financial crisis is just the last in a series of economic calamities produced by a type of theory that converted the economics profession from a study of real world phenomena into what in the end became mathematized ideology. While the crises themselves started by halving real wages in many countries in the economic periphery, in Latin America in the late 1970s, their origins are found in economic theory in the 1950s when empirical reality became academically unfashionable. About half way in the destructive path of this theoretical tsunami – from its origins in the world periphery in the 1970s until today’s financial meltdowns – we find the destruction of the productive capacity of the Second World, the former Soviet Union. Now the chickens are coming home to roost: wealth and welfare destruction is increasingly hitting the First World itself: Europe and the United States. This paper argues that it is necessary to see these developments as one continuous process over more than three decades of applying neoclassical economics and neo-liberal economic policies that destroyed, rather than created, real wages and wealth. -
“Modern” Economics: Engineering and Ideology
Working Paper No. 62/01 The formation of “Modern” Economics: Engineering and Ideology Mary Morgan © Mary Morgan Department of Economic History London School of Economics May 2001 Department of Economic History London School of Economics Houghton Street London, WC2A 2AE Tel: +44 (0)20 7955 7081 Fax: +44 (0)20 7955 7730 Additional copies of this working paper are available at a cost of £2.50. Cheques should be made payable to ‘Department of Economic History, LSE’ and sent to the Economic History Department Secretary. LSE, Houghton Street, London WC2A 2AE, UK. 2 The Formation of “Modern” Economics: Engineering and Ideology Mary S. Morgan* Economics has always had two connected faces in its Western tradition. In Adam Smith's eighteenth century, as in John Stuart Mill's nineteenth, these might be described as the science of political economy and the art of economic governance. The former aimed to describe the workings of the economy and reveal its governing laws while the latter was concerned with using that knowledge to fashion economic policy. In the twentieth century these two aspects have more often been contrasted as positive and normative economics. The continuity of these dual interests masks differences in the way that economics has been both constituted and practiced in the twentieth century when these two aspects of economics became integrated in a particular way. Originally a verbally expressed body of scientific law-like doctrines and associated policy arts, in the twentieth century these two wings of economics became conjoined by a set of technologies routinely and widely used within the practice of economics in both its scientific and policy domains. -
The Oxford Economics Global Economic Model
The Oxford Economics Global Economic Model April 2015 Who we are About Oxford Economics ■ Oxford Economics is a world leader in global forecasting and quantitative analysis. Our worldwide client base comprises over 850 international corporations, financial institutions, government organizations and universities. ■ Founded in 1981 as a joint venture with Oxford University, Oxford Economics is now a leading independent economic consultancy. Our link to Oxford University is still present today through our management board, empirical research approach and access to Oxford scholars. ■ Headquartered in Oxford, with offices around the world, we employ more than 150 people, including 90 economists, and a network of 500 contributing researchers. The rigor of our analysis, caliber of staff and links with Oxford University and other leading research groups make us a trusted resource for decision makers. We specialise on three types of analysis Forecasts & Models Economic Impact Thought Leadership Track, analyse, forecast Assess the impact of a Evidence-based research and model country, company, industry, new to influence corporate industry and urban trends technology, regulation, or leaders, policy-makers, around the world market change and other stakeholders We go deeper and further with our global analysis Further Event-driven scenario planning and stress testing Tailored market sizing and sales forecasting Impact of macro events on your markets and business Deeper Economic outlook for 201 countries Forecasts for 100 industrial sectors Analysis on 3,000 cities and sub-regions Our modelling expertise sets us apart ■ Oxford Economics has developed the world’s leading globally integrated economic model, relied on by over 100 leading organisations around the world. -
THE DEBATE of the MODERN THEORIES of REGIONAL ECONOMIC GROWTH Ra Ximhai, Vol
Ra Ximhai ISSN: 1665-0441 [email protected] Universidad Autónoma Indígena de México México Díaz-Bautista, Alejandro; González-Andrade, Salvador THE DEBATE OF THE MODERN THEORIES OF REGIONAL ECONOMIC GROWTH Ra Ximhai, vol. 10, núm. 6, julio-diciembre, 2014, pp. 187-206 Universidad Autónoma Indígena de México El Fuerte, México Available in: http://www.redalyc.org/articulo.oa?id=46132135014 How to cite Complete issue Scientific Information System More information about this article Network of Scientific Journals from Latin America, the Caribbean, Spain and Portugal Journal's homepage in redalyc.org Non-profit academic project, developed under the open access initiative Ra Ximhai Revista de Sociedad, Cultura y Desarrollo Sustentable Ra Ximhai Universidad Autónoma Indígena de México ISSN: 1665-0441 México 2014 THE DEBATE OF THE MODERN THEORIES OF REGIONAL ECONOMIC GROWTH Alejandro Díaz-Bautista y Salvador González-Andrade Ra Ximhai, Julio - Diciembre, 2014/Vol. 10, Número 6 Edición Especial Universidad Autónoma Indígena de México Mochicahui, El Fuerte, Sinaloa. pp. 187 - 206 Ra Ximhai Vol. 10, Número 6 Edición Especial, Julio - Diciembre 2014 DEBATE EN LAS TEORÍAS MODERNAS DE CRECIMIENTO REGIONAL THE DEBATE OF THE MODERN THEORIES OF REGIONAL ECONOMIC GROWTH Alejandro Díaz-Bautista1 y Salvador González-Andrade2 1He is Professor of Economics and Researcher at the Department of Economic Studies, El Colegio de la Frontera Norte (COLEF), he has also been a member of the United States - Mexico Border Governors Council of Economic Advisers. Email: [email protected]. 2He is Professor of Economics and Researcher at the Department of Economic Studies, COLEF. Email: [email protected] RESUMEN ¿Cómo podemos explicar las diferencias en el crecimiento económico en las distintas regiones del país y del mundo en los últimos sesenta años? El objetivo del estudio es el de realizar una revisión de la literatura tradicional de los principales modelos del crecimiento económico regional.