DOCSLIB.ORG

From Sudden Stops to Fisherian Deflation: Quantitative Theory and Policy Implications

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
From Sudden Stops to Fisherian Deflation: Quantitative Theory and Policy Implications NBER WORKING PAPER SERIES FROM SUDDEN STOPS TO FISHERIAN DEFLATION: QUANTITATIVE THEORY AND POLICY IMPLICATIONS Anton Korinek Enrique G. Mendoza Working Paper 19362 http://www.nber.org/papers/w19362 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 August 2013 We would like to acknowledge An Wang for his superb research assistance. Korinek thanks Olivier Jeanne for his coauthorship and inspiration on a number of projects on which we draw in this survey. He also acknowledges financial support from INET/CIGI. Mendoza would like to thank Javier Bianchi, Emine Boz, Bora Durdu, Katherine Smith, Marco Terrones, and specially Guillermo Calvo for the opportunity to collaborate with them on several papers on the Sudden Stops phenomenon that served as background material for this article. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. Data for our event analysis of sudden stops, Matlab source codes and supplementary materials are available at http://www.korinek.com/suddenstops NBER working papers are circulated for discussion and comment purposes. They have not been peer- reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2013 by Anton Korinek and Enrique G. Mendoza. 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. From Sudden Stops to Fisherian Deflation: Quantitative Theory and Policy Implications Anton Korinek and Enrique G. Mendoza NBER Working Paper No. 19362 August 2013 JEL No. E44,F34,F41 ABSTRACT The 1990s Sudden Stops in emerging markets were a harbinger for the 2008 global financial crisis. During Sudden Stops, countries lost access to credit, causing abrupt current account reversals, and suffered Great Recessions. This paper reviews a class of models that yields quantitative predictions consistent with these observations, based on an occasionally binding credit constraint that limits debt to a fraction of the market value of incomes or assets used as collateral. Sudden Stops are infrequent events nested within regular business cycles, and occur in response to standard shocks after periods of expansion increase leverage ratios sufficiently. When this happens, the Fisherian debt-deflation mechanism is set in motion, as lower asset or goods prices tighten further the constraint causing further deflation. This framework also embodies a pecuniary externality with important implications for macro- prudential policy, because agents do not internalize how current borrowing decisions affect collateral values during future financial crises. Anton Korinek Department of Economics Johns Hopkins University 440 Mergenthaler Hall 3400 N. Charles Street Baltimore, MD 21218 and NBER [email protected] Enrique G. Mendoza Department of Economics University of Pennsylvania 3718 Locust Walk Philadelphia, PA 19104 and NBER [email protected] From Sudden Stops to Fisherian Deflation Quantitative Theory and Policy Implications Anton Korineky Enrique G. Mendozaz August 2013 Abstract The 1990s Sudden Stops in emerging markets were a harbinger for the 2008 global financial crisis. During Sudden Stops, countries lost access to credit, causing abrupt current account reversals, and suffered Great Recessions. This paper reviews a class of models that yields quantitative predictions consistent with these observations, based on an occasionally binding credit constraint that limits debt to a fraction of the market value of incomes or assets used as collateral. Sudden Stops are infrequent events nested within regular business cycles, and occur in response to standard shocks after periods of expansion increase leverage ratios suffi ciently. When this happens, the Fisherian debt-deflation mechanism is set in motion, as lower asset or goods prices tighten further the constraint causing further deflation. This framework also embodies a pecuniary externality with important implications for macro-prudential policy, because agents do not internalize how current borrowing decisions affect collateral values during future financial crises. JEL Classification: F34, F41, E44 Keywords: sudden stops, financial crises, balance sheet effects, pecuniary externali- ties, macroprudential regulation 1 Introduction From the surface, the debacle of the Mexican economy that began in Decem- ber 20th of 1994 seemed a familiar event. Episodes of failed stabilization plans We would like to acknowledge An Wang for his superb research assistance. Korinek thanks Olivier Jeanne for his coauthorship and inspiration on a number of projects on which we draw in this survey. He also acknowledges financial support from INET/CIGI. Mendoza would like to thank Javier Bianchi, Emine Boz, Bora Durdu, Katherine Smith, Marco Terrones, and specially Guillermo Calvo for the opportunity to collaborate with them on several papers on the Sudden Stops phenomenon that served as background material for this article. Data for our event analysis of sudden stops, Matlab source codes and supplementary materials are available at http://www.korinek.com/suddenstops yDepartment of Economics, Johns Hopkins University, Baltimore, Maryland 21218 and NBER, Cambridge, Massachusetts 02138; email: [email protected] zDepartment of Economics, University of Pennsylvania, Philadelphia, Pennsylvania 19104 and NBER, Cambridge, Massachusetts 02138; email: [email protected] anchored on managed exchange rate regimes abound in the annals of the de- veloping world, and in Mexico in particular this was a recurrent event that had coincided with every presidential election since 1976. Yet, the 1994 Mexican crash was different. It was the beginning of a new era of financial instability in the newly-created global financial system. It was the first of a collection of similar events that swept through emerging markets wordlwide during the 1990s and that we now refer to as Sudden Stops.1 The defining characteristic of a Suddent Stop is a sharp reversal in external capital inflows, which is often measured by a sudden jump in the current account. At about the same time as the access to foreign financing is lost, or shortly after, the economies a­ icted by Sudden Stops experience deep recessions, in many countries the largest since the Great Depression, sharp real depreciations and collapses in asset prices.2 Moreover, Sudden Stops typically come in clusters: The 1994 Mexican Crash triggered a Sudden Stop in Argentina in 1995 —this spillover effect is often referred to as the Tequila Effect. In 1997-98, the East Asian crisis engulfed Korea, Malaysia, Indonesia, Thailand, Singapore, Hong Kong and the Philippines, and before the 1990s were over there were Sudden Stops in emerging economies across the world in Bulgaria, Chile, Colombia, Ukraine, Ecuador, Morocco, Venezuela, Russia and Turkey.3 Academic research on Sudden Stops surged starting in the second half of the 1990s and led to many valuable contributions that aimed to connect the dots between the financial instability at the root of Sudden Stops and their disas- trous macroeconomic consequences. Many of these contributions are collected in prestigious conference volumes and reviewed in related surveys.4 They were also published in leading academic journals.5 The central focus of research on Sudden Stops was precisely on the intersection of macroeconomics and finance, and especially on the connection between financial instability and macroeco- nomic collapse. This was at a time when much of modern macroeconomics was not paying attention to financial frictions and their potentially catastrophic consequences for the real economy. Moreover, many of the developments in theoretical analysis and quantitative tools produced by this literature are now 1 The term “Sudden Stop”was first used in this context in a paper by Dornbusch, Goldfajn and Valdés (1995), inspired by an old bankers’adage. 2 Interestingly, nominal devaluations are not a necessary condition for Sudden Stops. In Argentina in 1995 and Hong Kong in 1998, the nominal exchange rate remained constant, yet the real exchange rate collapsed and deep recessions followed. 3 Moreover, the 1998 Russian crash was followed by a sudden “flight to quality”in global capital markets, which caused the infamous collapse of hedge fund Long Term Capital Man- agement. Conditions in capital markets in the United States worsened to the point that the Federal Reserve was forced into lowering interest rates to ease access to liquidity and brokering an arrangement for the orderly winding down of LTCM amongst its creditors. 4 See for example the symposia issues of the Journal of International Economics (1996, 2000 and 2006), the Journal of Money, Credit and Banking (2001), and the Journal of Economic Theory (2004), as well as the NBER conference volumes edited by Krugman (2000), Edwards and Frankel (2002), and Dooley and Frankel (2003). 5 See e.g. Calvo and Mendoza (1996, 2000), Cole and Kehoe (2000), Caballero and Kr- ishnamurty (2001, 2003, 2004), Chang and Velasco (2001), Kaminsky and Reinhart (1999), Martin and Rey (2006), Mendoza (2010). 2 Declining Relative Prices Falling Individual Spending Tightening Constraint Figure 1: Financial amplification effects serving as a key building block in the growing literature on the 2008 financial crash and the reinassance of the macro/finance field (see e.g. the handbook article by Gertler and Kiyotaki 2010). In this paper,
Load more

Recommended publications
  • 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) .
    [Show full text]
  • Cities, Information, and Economic Growth
    Cities, Information, and Economic Growth Cities, Information, and Economic Growth Edward L. Glaeser Harvard University Great are the advantages which people following the same skilled trade get from near neighborhood to one another. The mysteries of the trade become no mysteries; but are, as it were, in the air. A. Marshall Principles of Economics For centuries economists have fervently sought to understand the forces behind economic progress. Smith (1776), Marx (1909), Marshall (1890), Young (1928), and Keynes (1936) all hotly pursued this topic. In the post-World War II period, economic theorists, develop- ment economists, macroeconomists, econometricians, economic historians, and growth economists have devoted considerable energy to thinking about the forces behind long- run growth rates. It would be impossible to claim that these economists have reached a consensus on the causes of growth, but it seems clear that the growth of economies does not involve the simple accumulation of capital and labor. Theoretical models of capital accumulation (based on Solow, 1956, for example) ultimately leave the growth rate as an unexplained outside parameter. Empirically the stunning range of cross-national experiences makes it clear that the forces driving growth are rich and varied. Instead of continuing to use simple capital accumulation models, economists (following Romer, 1986) have moved toward models in which the stock of knowledge, in the Nation and the world, plays a critical role in facilitating progress. The nature of intellectual capi- tal—mostly the presence of strong external effects—solves certain technical problems when explaining why global increasing returns, which are necessary to explain growth, can coexist with competition.
    [Show full text]
  • Globalization: What Did We Miss?
    Globalization: What Did We Miss? Paul Krugman March 2018 Concerns about possible adverse effects from globalization aren’t new. In particular, as U.S. income inequality began rising in the 1980s, many commentators were quick to link this new phenomenon to another new phenomenon: the rise of manufactured exports from a group of newly industrializing economies. Economists – trade economists, anyway – took these concerns seriously. After all, standard models of international trade do say that trade can have large effects on income distribution: the famous 1941 Stolper-Samuelson analysis of a two-good, two-factor economy showed how trading with a labor-abundant economy can reduce real wages, even if national income grows. There was every reason to believe that the same principle applied to the emergence of trade with low-wage economies exporting not raw materials but manufactured goods. And so during the 1990s a number of economists, myself included (Krugman 1995), tried to assess the role of Stolper-Samuelson-type effects in rising inequality. Inevitably given the standard framework, such analyses did in fact find some depressing effect of growing trade on the wages of less-educated workers in advanced countries. As a quantitative matter, however, they generally suggested that the effect was relatively modest, and not the central factor in the widening income gap. Meanwhile, the political salience of globalization seemed to decline as other issues came to the fore. So academic interest in the possible adverse effects of trade, while it never went away, waned. 1 In the past few years, however, worries about globalization have shot back to the top of the agenda, partly due to new research, partly due to the political shocks of Brexit and Trump.
    [Show full text]
  • The Secret of Our Non-Success
    Print edition version: Monday October 22, 2012 The Secret of Our Non-Success By PAUL KRUGMAN The U.S. economy finally seems to be recovering in earnest, with housing on the rebound and job creation outpacing growth in the working-age population. But the news is good, not great — it will still take years to restore full employment — and it has been a very long time coming. Why has the slump been so protracted? Fred R. Conrad/The New York Times Paul Krugman The answer — backed by overwhelming evidence — is that this is what normally happens after a severe financial crisis. But Mitt Romney’s economic team rejects that evidence. And this denialism bodes ill for policy if Mr. Romney wins next month. About the evidence: The most famous study is by Harvard’s Carmen Reinhart and Kenneth Rogoff, who looked at past financial crises and found that such crises are typically followed by years of high unemployment and weak growth. Later work by economists at the International Monetary Fund and elsewhere confirmed this analysis: crises that followed a sharp run-up in private-sector debt, from the U.S. Panic of 1893 to the Swedish banking crisis of the early 1990s, cast long shadows over the economy’s future. There was no reason to believe that this time would be different. This isn’t an after-the-fact rationalization. The Reinhart-Rogoff “aftermath” paper was released almost four years ago. And a number of other economists, including, well, me, issued similar warnings. In early 2008 I was already pointing out the distinction between recessions like 1973-5 or 1981-2, brought on by high interest rates, and “postmodern” recessions brought on by private-sector overreach.
    [Show full text]
  • Modern Monetary Theory: Cautionary Tales from Latin America
    Modern Monetary Theory: Cautionary Tales from Latin America Sebastian Edwards* Economics Working Paper 19106 HOOVER INSTITUTION 434 GALVEZ MALL STANFORD UNIVERSITY STANFORD, CA 94305-6010 April 25, 2019 According to Modern Monetary Theory (MMT) it is possible to use expansive monetary policy – money creation by the central bank (i.e. the Federal Reserve) – to finance large fiscal deficits that will ensure full employment and good jobs for everyone, through a “jobs guarantee” program. In this paper I analyze some of Latin America’s historical episodes with MMT-type policies (Chile, Peru. Argentina, and Venezuela). The analysis uses the framework developed by Dornbusch and Edwards (1990, 1991) for studying macroeconomic populism. The four experiments studied in this paper ended up badly, with runaway inflation, huge currency devaluations, and precipitous real wage declines. These experiences offer a cautionary tale for MMT enthusiasts.† JEL Nos: E12, E42, E61, F31 Keywords: Modern Monetary Theory, central bank, inflation, Latin America, hyperinflation The Hoover Institution Economics Working Paper Series allows authors to distribute research for discussion and comment among other researchers. Working papers reflect the views of the author and not the views of the Hoover Institution. * Henry Ford II Distinguished Professor, Anderson Graduate School of Management, UCLA † I have benefited from discussions with Ed Leamer, José De Gregorio, Scott Sumner, and Alejandra Cox. I thank Doug Irwin and John Taylor for their support. 1 1. Introduction During the last few years an apparently new and revolutionary idea has emerged in economic policy circles in the United States: Modern Monetary Theory (MMT). The central tenet of this view is that it is possible to use expansive monetary policy – money creation by the central bank (i.e.
    [Show full text]
  • 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.
    [Show full text]
  • Breaking the Mould: an Institutionalist Political Economy Alternative to the Neoliberal Theory of the Market and the State Ha-Joon Chang, May 2001
    Breaking the Mould An Institutionalist Political Economy Alternative to the Neoliberal Theory of the Market and the State Ha-Joon Chang Social Policy and Development United Nations Programme Paper Number 6 Research Institute May 2001 for Social Development The United Nations Research Institute for Social Development (UNRISD) thanks the governments of Denmark, Finland, Mexico, the Netherlands, Norway, Sweden, Switzerland and the United Kingdom for their core funding. Copyright © UNRISD. Short extracts from this publication may be reproduced unaltered without authorization on condition that the source is indicated. For rights of reproduction or translation, application should be made to UNRISD, Palais des Nations, 1211 Geneva 10, Switzerland. UNRISD welcomes such applications. The designations employed in UNRISD publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of UNRISD con- cerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The responsibility for opinions expressed rests solely with the author(s), and publication does not constitute endorse- ment by UNRISD. ISSN 1020-8208 Contents Acronyms ii Acknowledgements ii Summary/Résumé/Resumen iii Summary iii Résumé iv Resumen v 1. Introduction 1 2. The Evolution of the Debate: From “Golden Age Economics” to Neoliberalism 1 3. The Limits of Neoliberal Analysis of the Role of the State 3 3.1 Defining the free market (and state intervention) 4 3.2 Defining market failure 6 3.3 The market primacy assumption 8 3.4 Market, state and politics 11 4.
    [Show full text]
  • JAPAN's TRAP Paul Krugman May 1998 Japan's Economic Malaise Is First and Foremost a Problem for Japan Itself. but It Also Poses
    JAPAN'S TRAP Paul Krugman May 1998 Japan's economic malaise is first and foremost a problem for Japan itself. But it also poses problems for others: for troubled Asian economies desperately in need of a locomotive, for Western advocates of free trade whose job is made more difficult by Japanese trade surpluses. Last and surely least - but not negligibly - Japan poses a problem for economists, because this sort of thing isn't supposed to happen. Like most macroeconomists who sometimes step outside the ivory tower, I believe that actual business cycles aren't always real business cycles, that some (most) recessions happen because of a shortfall in aggregate demand. I and most others have tended to assume that such shortfalls can be cured simply by printing more money. Yet Japan now has near-zero short-term interest rates, and the Bank of Japan has lately been expanding its balance sheet at the rate of about 50% per annum - and the economy is still slumping. What's going on? There have, of course, been many attempts to explain how Japan has found itself in this depressed and depressing situation, and the government of Japan has been given a lot of free advice on what to do about it. (A useful summary of the discussion may be found in a set of notes by Nouriel Roubini . An essay by John Makin seems to be heading for the same conclusion as this paper, but sheers off at the last minute). The great majority of these explanations and recommendations, however, are based on loose analysis at best, purely implicit theorizing at worst.
    [Show full text]
  • MICHAEL BURAWOY: Good Evening! Today Is the Fourth Day of the Meetings of the American Sociological Association 2004, the 99Th Meeting of the Association
    MICHAEL BURAWOY: Good evening! Today is the fourth day of the meetings of the American Sociological Association 2004, the 99th meeting of the association. I find it quite extraordinary that there are so many people here today. [ Laughter ] Normally, the American Sociological Association meetings end with a whimper. [ Laughter ] People trickle away, the place is abandoned. It looks terrible. I am so pleased today to see so many of you. We have a chief goal that is to have a beginning and indeed an ending to the meetings. Well, it's not an accident. We have of course two very, very distinguished guests who will be talking to you, but before they are introduced by Juliet Schor, I just want to make one or two announcements. The first is an announcement I made before, that we will proceed with questions through the method of index cards gathered by Berkeley students, decked out in Marxist t-shirts. [ Laughter ] They are becoming extremely famous. However, they are going to have a real difficult task today because they are supposed to patrol the aisles. I want you to give them space, credit, recognition, and room for maneuver if you possibly can. [ Applause ] Yes, acting they deserve applause, right. [ Applause ] So, the idea is that when you have questions, you write them on index cards or bits of paper and hand them to the aisles. As I understand it, there are, is it, there are people down the middle too, right? Yes. Well, there's one person down the middle and there are people on the left and right.
    [Show full text]
  • The Deflation Bias and Committing to Being Irresponsible
    The Deflation Bias and Committing to being Irresponsible Gauti B. Eggertsson* First draft November 2000, this version November 2003 Abstract Imodeldeflation, at zero nominal interest rate, in a microfounded general equilibrium model. Ishowthatdeflation can be analyzed as a credibility problem if the government has only one policy instrument, i.e. increasing money supply by open market operations in short-term bonds, and cannot commit to future policies. I propose several policies to solve the credibility problem. They involve printing money or issuing nominal debt and either 1) cutting taxes, 2) buying real assets such as stocks, or 3) purchasing foreign exchange. The government credibly “commits to being irresponsible” by using these policy instruments. It commits to higher money supply in the future so that the private sector expects inflation instead of deflation. This is optimal since it curbs deflation and increases output by lowering the real rate of return. Key words: Deflation, liquidity traps, zero bound on nominal interest rates JEL Classifications: E31, E42, E52, E63. ––––––––––––––––––––––––––– * IMF. It’s impossible to overstate the debt I owe to Mike Woodford for continuous advise and extensive com- ments on various versions of this paper. I would also like to thank Tam Bayoumi, Ben Bernanke, Alan Blinder, Eric Le Borgne, Larry Christiano, Helima Croft, Olivier Jeanne, Robert Kollmann, Paul Krugman, Aprajit Ma- hajan, Torsten Persson, Bruce Preston, Ken Rogoff, Ernst Schaumburg, Rob Shimer, Chris Sims, Lars Svensson, Andrea Tambalotti and seminar participants in the 2002 NBER Summer Workshop, 2002 CEPR conference in INSEAD, 2003 Winter Meeting of the Econometric Society, IUC at University of Pennsylvania, Princeton Univer- sity, Columbia, University of California-Davis, University of California - San Diego, Federal Reserve Board, NY Fed,HumboldtUniversity,IMF,IIESStockholmUniversity,MichiganStateandPompeuFabraformanyuseful comments and suggestions and Shizume Masato for data.
    [Show full text]
  • 2009* Paul R. Krugman**
    artículo de reflexión the road to global economic recovery, 2009* Paul R. Krugman** * Ponencia del Premio Nobel de Economía 2008, Paul Krugman, presen- tada durante el Foro Panorama Económico Mundial: El camino hacia la recuperación económica (Universidad del Norte, 20 de agosto/2009). Entidades organizadoras: Universidad del Norte, Barranquilla (Colombia), Cámara de Comercio de Barranquilla (Colombia) y Centro de Liderazgo y Gestión, Bogotá (Colombia). La transcripción del texto fue realizada por la profesora Olga Gómez y la edición final estuvo a cargo del profesor Cesar Corredor V., Ph.D. (c) en Economía, Universidad de Texas A&M. Director Departamento de Economía, Universidad del Norte. ** Professor of economics and international affairs at Princenton University. Noble Prize in Economics in 2008. Guest Forum: Word Economics Outlook organized by Universidad del Norte (Colombia), Cámara de Comercio de Barranquilla (Colombia) and the Centro de Liderazgo y Gestión, Bogotá (Colombia). revista de economía del caribe n° 4 Fecha de recepción: agosto de 2009 Fecha de aceptación: agosto de 2009 issn: 2011-2106 [1] the road to global economic recovery, 2009* r e s u m e n Este documento se enfoca inicialmente en las lecciones aprendidas a partir de los sucesos que provocaron la crisis de la economía mundial de los años 2008-2009 y la forma como se ha manejado por parte de las autoridades económicas en los Estados Unidos y a nivel mundial, plan- teando la importancia de la intervención del Gobierno y los obstáculos de la política monetaria como fuentes de crecimiento y recuperación en este período. La segunda parte interpreta los acontecimientos actuales y discute la tesis de que Krugman acepta que ya ha habido una salida a la crisis ocurrida en el verano de 2009, pero todavía estamos lejos de una economía en expansión.
    [Show full text]
  • Marxist Political Economy in a Contemporary Vein
    Marxist Political Economy in a Contemporary Vein The continuing world recession that has now dragged on since late 2007, with no sign of abating, has renewed interest in Marx’s critique of capitalism. So much so that even respectably “mainstream” TIME.com now writes: “Karl Marx was supposed to be dead and buried. With the collapse of the Soviet Union and China’s Great Leap Forward into capitalism, communism faded into the quaint backdrop of James Bond movies or the deviant mantra of Kim Jong Un…. “Or so we thought. With the global economy in a protracted crisis, and workers around the world burdened by joblessness, debt and stagnant incomes, Marx’s biting critique of capitalism—that the system is inherently unjust and self- destructive—cannot be so easily dismissed…. “A growing dossier of evidence suggests that he may have been right. It is sadly all too easy to find statistics that show the rich are getting richer while the middle class and poor are not….”* Similarly, Nouriel Roubini, professor of economics at New York University’s Stern School of Business, writes presciently in his and New York Times economics writer Stephen Mihm’s Crisis Economics: A Crash Course in the Future of Finance (Penguin Press, 2010), p. 37: “Toward the end of 2008 the pandemic worsened, and the history of long-forgotten crises became increasingly relevant for explaining what was happening. So did the writings of economists who had languished in obscurity for many years. John Maynard Keynes came back into vogue, as did Joseph Schumpeter, Hyman Minsky, Irving Fisher, and even Karl Marx.
    [Show full text]