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One Pager No.37
30 January 2013
Διδάγματα από έναν μη συμβατικό κεντρικό τραπεζίτη
AbstractΗ παγκόσμια χρηματοοικονομική κρίση έχει προκαλέσει ανανεωμένο ενδιαφέρον στη Συμφωνία Υπουργείου Οικονομικών-Ομοσπονδιακής Τράπεζας του 1951 και στα διδάγματα αυτής της διαπραγμάτευσης για την ανεξαρτησία της κεντρικής τράπεζας. Μια ευρύτερη ερμηνεία της Συμφωνίας και του ρόλου του Marriner Eccles στην Ομοσπονδιακή Τράπεζα Αποθεματικών θα διδάξει στους κεντρικούς τραπεζίτες ότι η ανεξαρτησία μπορεί να είναι ζωτικής σημασίας για την καταπολέμηση του πληθωρισμού, αλλά και να τους ενθαρρύνει να προσφέρουν στήριξη στις κυβερνητικές προσπάθειες για την καταπολέμηση του αποπληθωρισμού και της μαζικής ανεργίας.
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Working Paper No.748
17 January 2013
Analyzing Public Expenditure Benefit Incidence in Health Care
AbstractThe effectiveness of public spending remains a relatively elusive empirical issue. This preliminary analysis is an attempt, using benefit incidence methodology, to define the effectiveness of spending at the subnational government level in India’s health sector. The results reveal that the public health system is “seemingly” more equitable in a few states, while regressivity in the pattern of public health-care utilization is observed in others. Both results are to be considered with caution, as the underdeveloped market for private inpatient care in some states might be a factor in the disproportionate crowding-in of inpatients, making the public health-care system simply appear more equitable. However, patients “voting with their feet” and choosing better, private services seems evident only in the higher-income quintiles. Results also suggest that polarization is distinctly evident in the public provisioning of health-care services, though more related to inpatient, rather than ambulatory, services.
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Working Paper No.747
17 January 2013
Marriner S. Eccles and the 1951 Treasury – Federal Reserve Accord
AbstractThe 1951 Treasury – Federal Reserve Accord is an important milestone in central bank history. It led to a lasting separation between monetary policy and the Treasury’s debt-management powers, and established an independent central bank focused on price stability and macroeconomic stability. This paper revisits the history of the Accord and elaborates on the role played by Marriner Eccles in the events that led up to its signing. As chairman of the Fed Board of Governors since 1934, Eccles was also instrumental in drafting key banking legislation that enabled the Federal Reserve System to take on a more independent role after the Accord. The global financial crisis has generated renewed interest in the Accord and its lessons for central bank independence. The paper shows that Eccles’s support for the Accord—and central bank independence—was clearly linked to the strong inflationary pressures in the US economy at the time, but that he was as supportive of deficit financing in the 1930s. This broader interpretation of the Accord holds the key to a more balanced view of Eccles’s role at the Federal Reserve, where his contributions from the mid-1930s up to the Accord are seen as equally important. For this reason, the Accord should not be seen as the eternal beacon for central bank independence but rather as an enlightened vision for a more symmetric policy role for central banks, with equal weight on fighting inflation and preventing depressions.
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One Pager No.36
11 January 2013
Expansion of Federal Reserve Authority in the Recent Financial Crisis Raises Questions about Governance
AbstractSeveral years before the onset of the recent financial crisis, ex – Federal Reserve Board Member Lawrence Meyer wrote that the Fed “is often called the most powerful institution in America,” its key decisions made by 19 people whose names are known by few, meeting regularly behind closed doors. Bernard Shull examines the origin and nature of Fed authority and independence, and reviews the impact of Dodd-Frank on our central bank. His conclusion? The new constraints placed on the Fed are modest at best, and its continued expansion inexorably raises questions of governance.
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One Pager No.36
11 January 2013
Η επέκταση της εξουσίας του Ομοσπονδιακού Αποθεματικού στην πρόσφατη χρηματοοικονομική κρίση εγείρει ερωτήματα διακυβέρνησης
AbstractΑρκετά χρόνια πριν από το ξέσπασμα της πρόσφατης χρηματοοικονομικής κρίσης, ο Lawrence Meyer, πρώην διοικητικό μέλος του Ομοσπονδιακού Αποθεματικού, έγραψε ότι η Ομοσπονδιακή Τράπεζα «αναφέρεται συχνά ως ο ισχυρότερος θεσμός στην Αμερική». Οι «αποφάσεις κλειδιά λαμβάνονται από 19 άτομα—τα ονόματα των οποίων ελάχιστοι γνωρίζουν—τα οποία συνεδριάζουν τακτικά πίσω από κλειστές πόρτες». Ο Bernard Shull εξετάζει την προέλευση και τη φύση της εξουσίας και της ανεξαρτησίας της Fed και επιθεωρεί την επίπτωση του Νόμου Dodd-Frank στην κεντρική τράπεζα των ΗΠΑ. Το συμπέρασμά του; Οι νέοι περιορισμοί στην Fed είναι στην καλύτερη περίπτωση μέτριοι και η συνεχιζόμενη επέκτασή των εξουσιών της γείρει αναπόφευκτα θέμα διακυβέρνησης.
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Working Paper No.746
09 January 2013
Finance-dominated Capitalism and Redistribution of Income
AbstractThis paper examines a major channel through which financialization or finance-dominated capitalism affects macroeconomic performance: the distribution channel. Empirical data for the following dimensions of redistribution in the period of finance-dominated capitalism since the early 1980s is provided for 15 advanced capitalist economies: functional distribution, personal/household distribution, and the share and composition of top incomes. Based on the Kaleckian approach to the determination of income shares, the effects of financialization on functional income distribution are studied in more detail. Some stylized facts of financialization are integrated into the Kaleckian approach, and by means of reviewing empirical and econometric literature it is found that financialization and neoliberalism have contributed to the falling labor income share since the early 1980s through three main Kaleckian channels: (1) a shift in the sectoral composition of the economy; (2) an increase in management salaries and rising profit claims of the rentiers, and thus in overheads; and (3) weakened trade union bargaining power.
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Working Paper No.746
09 January 2013
Ο χρηματιστικός καπιταλισμός και η αναδιανομή του εισοδήματος
AbstractΤο κείμενο εξετάζει έναν σημαντικό δίαυλο μέσω του οποίου η χρηματιστικοποίηση ή ο χρηματιστικός καπιταλισμός επηρεάζει τις μακροοικονομικές επιδόσεις: το κανάλι διανομής. Παρέχονται εμπειρικά στοιχεία για 15 ανεπτυγμένες οικονομίες, που καλύπτουν την περίοδο του χρηματιστικού καπιταλισμού από τις αρχές της δεκαετίας του 1980, σχετικά με τις ακόλουθες διαστάσεις της αναδιανομής: τη λειτουργική διανομή του εισοδήματος, την ατομική/ οικιακή διανομή, το μερίδιο και τη σύνθεση των ανώτατων εισοδημάτων. Οι συνέπειες της χρηματιστικοποίησης στη λειτουργική κατανομή του εισοδήματος εξετάζονται με μεγαλύτερη λεπτομέρεια με βάση το µοντέλο του Kalecki για τον προσδιορισμό του μεριδίου του εισοδήματος. Μερικές χαρακτηριστικές τάσεις της χρηματιστικοποίησης ενσωματώνονται στην προσέγγιση με βάση το μοντέλο του Kalecki, και διαπιστώνεται, μέσω της αναθεώρησης της εμπειρικής και οικονομετρικής βιβλιογραφίας, ότι η χρηματιστικοποίηση και ο νεοφιλελευθερισμός έχουν συμβάλει στην πτώση του μεριδίου του εισοδήματος από τις αρχές της δεκαετίας του 1980 μέσα από τρεις βασικούς διαύλους: (1) τη μετατόπιση στην τομεακή σύνθεση της οικονομίας, (2) την αύξηση των διοικητικών μισθών και τις αυξανόμενες απαιτήσεις κέρδους εκ μέρους των ραντιέρηδων και (3) την αποδυνάμωση της συνδικαλιστικής διαπραγματευτικής ισχύος.
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Working Paper No.745
03 January 2013
Stock-flow Consistent Modeling through the Ages
AbstractThe aim of the paper is to provide an overview of the current stock-flow consistent (SFC) literature. Indeed, we feel the SFC approach has recently led to a blossoming literature, requiring a new summary after the work of Dos Santos (2006) and, above all, after the publication of the main reference work on the methodology, Godley and Lavoie’s Monetary Economics: An Integrated Approach to Credit, Money, Income, Production and Wealth (2007). The paper is developed along the following lines. First, a brief historical analysis investigates the roots of this class of models that can be traced as far back as 1949 and the work of Copeland. Second, the competing points of view regarding some of its main controversial aspects are underlined and used to classify the different methodological approaches followed in using these models. Namely, we discuss (1) how the models are solved, (2) the treatment of time and its implication, and (3) the need—or not—of microfoundations. These results are then used in the third section of the paper to develop a bifocal perspective, which allows us to divide the literature reviewed according to both its subject and the methodology. We explore various topics such as financialization, exchange rate modeling, policy implication, the need for a common framework within the post-Keynesian literature, and the empirical use of SFC models. Finally, the conclusions present some hypotheses (and wishes) over the possible lines of development of the stock-flow consistent models.
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Policy Notes No.12
24 December 2012
Η Ελλάδα στην παγίδα της λιτότητας της τρόικας
AbstractΣτις 27 Νοεμβρίου 2012, το Eurogroup κατέληξε σε μια νέα «ελληνική συμφωνία», που αποκαλύπτει για μια ακόμη φορά ότι δεν υπάρχει πολιτική βούληση για την αντιμετώπιση της κρίσης χρέους στην Ελλάδα ή για την οικονομική και κοινωνική καταστροφή της χώρας.
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Policy Notes No.12
24 December 2012
Greece: Caught Fast in the Troika’s Austerity Trap
AbstractOn November 27, 2012, the Eurogroup reached a new “Greek deal” that once more discloses that there is no political will to address Greece’s debt crisis—or the country’s economic and social catastrophe.
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Research Project Report
21 December 2012
The Interlocking of Time and Income Deficits
AbstractThis report is published as part of the “Undoing Knots, Innovating for Change” series, issued by the United Nations Development Programme (UNDP) Regional Centre for Latin America and the Caribbean through its Gender Practice Area. It includes findings from a UNDP-supported research project undertaken in 2011 by the Levy Economics Institute with the objective of proposing an alternative to official income poverty measures, one that takes into account household production (unpaid work) requirements—an issue still largely ignored by official poverty estimates. This has significant consequences for policymaking. The resulting Levy Institute Measure of Time and Income Poverty is a two-dimensional measure that jointly tracks income gaps and time deficits. Using this alternative measure, the authors present selected results of empirical estimates of poverty and compare them with official income poverty rates for Argentina, Chile, and Mexico, with a focus on the study's policy implications.
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Working Paper No.744
20 December 2012
Interest Rate Determination in India
AbstractControlling for capital flows using the high-frequency macro data of a financially deregulated regime, this paper examines whether there is any evidence of the fiscal deficit determining the interest rate in the context of India. The period of analysis is FY 2006–07 (April) to FY 2011 (April). Contrary to the debates in policy circles, the paper finds that an increase in the fiscal deficit does not cause a rise in interest rates. Using the asymmetric vector autoregressive model, the paper establishes that the interest rate is affected by changes in the reserve currency, expected inflation, and volatility in capital flows, but not by the fiscal deficit. This result has significant policy implications for interest rate determination in India, especially since the central bank has cited the high fiscal deficit as the prime reason for leaving the rates unchanged in all of its recent policy announcements. The paper analyzes both long- and short-term interest rates to determine the occurrence of financial crowding out, and finds that the fiscal deficit does not appear to be causing either shorts and longs. However, a reverse causality is detected, from interest rates to deficits.
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Working Paper No.743
19 December 2012
Investment, Financial Markets, and Uncertainty
AbstractThis paper provides a theoretical explanation of the accumulation process, which accounts for the developments in the financial markets over the recent past. Specifically, our approach is focused on the presence of correlations between physical and financial investment, and how the latter could affect the former. In order to achieve this objective, two assets are considered: equities and bonds. This choice permits us to account for two extreme alternative possibilities: taking risk in the short run with unknown profits, or undertaking a commitment to the long run with known yields. This proposal also accounts for the influence of the cost of external finance and the impact of financial uncertainty, as proxied by the interest rate in the former case and the exchange rate in the latter case; thereby utilizing the Keynesian notion of conventions in the determination of investment. The model thus formulated is subsequently estimated by applying the difference GMM and the system GMM in a panel of 14 OECD countries from 1970 to 2010.
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Working Paper No.743
19 December 2012
Επένδυση, χρηματοπιστωτικές αγορές και αβεβαιότητα
AbstractΗ εργασία παρέχει μια θεωρητική εξήγηση της διαδικασίας της συσσώρευσης, που υπολογίζει τις εξελίξεις στις χρηματοπιστωτικές αγορές κατά το πρόσφατο παρελθόν. Συγκεκριμένα, η προσέγγισή μας εστιάζεται στην παρουσία των συσχετίσεων μεταξύ των φυσικών και χρηματοοικονομικών επενδύσεων και πως οι χρηματοοικονομικές επενδύσεις θα μπορούσαν να επηρεάσουν τις φυσικές επενδύσεις. Προκειμένου να επιτευχθεί ο στόχος αυτός, εξετάζονται δύο στοιχεία: οι μετοχές και τα ομόλογα. Η επιλογή αυτή μας επιτρέπει να δώσουμε εξήγηση σε δύο ακραίες εναλλακτικές δυνατότητες: την ανάληψη κινδύνου σε βραχυπρόθεσμο χρονικό διάστημα με άγνωστα κέρδη, ή την μακροπρόθεσμη δέσμευση με γνωστές αποδόσεις. Αυτή η προσέγγιση μπορεί επίσης να υπολογίσει την επίδραση του κόστους της εξωτερικής χρηματοδότησης και τον αντίκτυπο της χρηματοοικονομικής αβεβαιότητας, όπου στην πρώτη περίπτωση μεσολαβεί το επιτόκιο και στην δεύτερη η συναλλαγματική ισοτιμία. Με τον τρόπο αυτόν, αξιοποιούμε την κεϋνσιανή έννοια των συμβάσεων για τον προσδιορισμό των επενδύσεων. Αυτή η διαμόρφωση του μοντέλου υπολογίζεται στη συνέχεια με την εφαρμογή της διαφοράς GMM και του συστήματος GMM σε μια ομάδα από 14 χώρες του ΟΟΣΑ για την περίοδο μεταξύ 1970–2010.
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Working Paper No.742
19 December 2012
ECB Worries / European Woes
AbstractFinancial market crises with the threat of a subsequent debt-deflation depression have occurred with increasing regularity in the United States from 1980 through the present. Almost reflexively, when confronted with such circumstances, US institutions and the policymakers that run them have responded in a fashion that has consistently thwarted debt-deflation-depression dynamics. It is true that these “remedies,” as they succeeded, increasingly contributed to a moral hazard in US and global financial markets that culminated with the crisis that began in 2007. Nonetheless, the straightforward steps taken by established institutions enabled the United States to derail depression dynamics, while European 1930s-style austerity proved as ineffective as it was almost a century ago. Europe’s, and specifically Germany’s, steadfast refusal to embrace the US recipe has fostered mushrooming economic hardship on the continent. The situation is gruesome, and any serious student of economic history had to have known, given European policy commitments, that it was destined to turn out this way.
It is easy to understand why misguided policies drove initial European responses. Economic theory has frowned on Keynes. Economic successes, especially in Germany, offered up the wrong lessons, and enduring angst about inflation was a major distraction. At the outset, the wrong medicine for the wrong disease was to be expected.
What is much harder to fathom is why such a poisonous elixir continues to be proffered amid widespread evidence that the patient is dying. Deconstructing cognitive dissonance in other spheres provides an explanation. Not surprisingly, knowing what one wants to happen at home completely informs one’s claims concerning what will be good for one’s neighbors. In such a construct, the last best hope for Europe is ECB President Mario Draghi. He seems to be able to speak German and yet act European.
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Working Paper No.742
19 December 2012
Τα προβλήματα της ΕΕ και οι ανησυχίες της Ευρωπαϊκής Κεντρικής Τράπεζας
AbstractΟι χρηματοοικονομικές κρίσεις που συνοδεύονται από την απειλή μιας επακόλουθης ύφεσης και τον αποπληθωρισμό χρέους λαμβάνουν χώρα με αυξανόμενη ταχύτητα στις Ηνωμένες Πολιτείες από το 1980 έως σήμερα. Σχεδόν αντανακλαστικά, όταν έρχονται αντιμέτωποι με αυτές τις συνθήκες, οι αμερικανικοί θεσμοί και οι διαμορφωτές πολιτικής που διαχειρίζονται αυτούς τους θεσμούς ανταποκρίνονται με έναν τρόπο ο οποίος ανατρέπει με συνέπεια τη δυναμική ύφεσης-χρέους-αποπληθωρισμού. Από την άλλη μεριά, όμως, ενώ οι πολιτικές που εφαρμόστηκαν μπορούν να θεωρηθούν πετυχημένες, συνέβαλαν ωστόσο στον ηθικό κίνδυνο στις παγκόσμιες χρηματοπιστωτικές αγορές, ο οποίος κορυφώθηκε με την κρίση που ξεκίνησε το 2007. Παρ\’ όλα αυτά, τα απλά βήματα που έγιναν από τους καθιερωμένους θεσμούς επέτρεψαν στις Ηνωμένες Πολιτείες να εκτροχιάσουν τη δυναμική της ύφεσης, ενώ οι ευρωπαϊκές πολιτικές λιτότητας του στυλ 1930 αποδείχθηκαν το ίδιο αναποτελεσματικές όπως ήταν σχεδόν πριν από έναν αιώνα. Η σταθερή άρνηση της Ευρώπης, και συγκεκριμένα της Γερμανίας, να εφαρμόσει τη συνταγή των ΗΠΑ έχει ενδυναμώσει τις οικονομικές κακουχίες στην ήπειρο. Η κατάσταση είναι ανατριχιαστική και κάθε σοβαρός μελετητής της οικονομικής ιστορίας γνώριζε ότι η κατάσταση θα εξελισσόταν με αυτόν τον τρόπο.
Είναι εύκολο να καταλάβουμε γιατί εφαρμόστηκαν άστοχες πολιτικές για την αντιμετώπιση της κρίσης στην ευρωζώνη. Η οικονομική θεωρία βλέπει με στραβό μάτι τον Κέυνς. Οι οικονομικές επιτυχίες, κυρίως στη Γερμανία, προσέφεραν τα λάθος διδάγματα, και η διαρκή αγωνία για τον πληθωρισμό απέσπασαν την προσοχή από τα βαθύτερα προβλήματα. Με το ξέσπασμα της κρίσης, η λάθος συνταγή για την κρίση ήταν αναμενόμενη.
Αυτό που είναι πολύ πιο δύσκολο να γίνει κατανοητό είναι γιατί συνεχίζεται να προσφέρεται το δηλητήριο της λιτότητας εν μέσω σαφών αποδείξεων ότι ο ασθενής πεθαίνει. Ωστόσο, η τελευταία καλύτερη ελπίδα για την Ευρώπη φαίνεται να είναι ο πρόεδρος της ΕΚΤ Μάριο Ντράγκι. Δείχνει ότι μπορεί να μιλάει γερμανικά, αλλά να ενεργεί ως ευρωπαίος.
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Working Paper No.741
13 December 2012
Primary and Secondary Markets
AbstractThe analytical starting point determines the course of a theoretical investigation and, ultimately, the productiveness of an approach. The classics took production and accumulation as their point of departure; the neoclassics, exchange. Exchange implies behavioral assumptions and notions like rationality, optimization, and equilibrium. It is widely recognized that this approach has led into a cul-de-sac. To change a theory means to change its premises; or, in Keynes’s words, to “throw over” the axioms. The present paper swaps the standard behavioral axioms for structural axioms and applies the latter to the analysis of the emergence of secondary markets from the flow part of the economy. Real and nominal residuals at first give rise to the accumulation of the stock of money and the stock of commodities. These stocks constitute the demand-and-supply side of secondary markets. The pricing in these markets is different from the pricing in the primary markets. Realized appreciation in the secondary markets is different from income or profit. To treat primary and secondary markets alike is therefore a category mistake. Vice versa, to take a set of objective propositions as the analytical starting point yields a comprehensive and consistent theory of market exchange and valuation.
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Working Paper No.740
07 December 2012
Conflicting Claims in the Eurozone?
AbstractIn this paper, we analyze the role of the current institutional setup of the eurozone in fostering the ongoing peripheral euro countries’ sovereign debt crisis. In line with Modern Money Theory, we stress that the lack of a federal European government running anticyclical fiscal policy, the loss of euro member-states’ monetary sovereignty, and the lack of a lender-of-last-resort central bank have significantly contributed to the generation, amplification, and protraction of the present crisis. In particular, we present a Post-Keynesian eurozone center–periphery model through which we show how, due to the incomplete nature of eurozone institutions with respect to a full-fledged federal union, diverging trends and conflicting claims have emerged between central and peripheral euro countries in the aftermath of the 2007–08 financial meltdown. We emphasize two points. (1) Diverging trends and conflicting claims among euro countries may represent decisive obstacles to the reform of the eurozone toward a complete federal entity. However, they may prove to be self-defeating in the long run should financial turbulences seriously deepen in large peripheral countries. (2) Austerity packages alone do not address the core problems of the eurozone. These packages would make sense only if they were included in a much wider reform agenda whose final purpose was the creation of a government banker and a federal European government that could run expansionary fiscal stances. In this sense, the unlimited bond-buying program recently launched by the European Central Bank is interpreted as a positive, albeit mild step in the right direction out of the extreme monetarism that has thus far shaped eurozone institutions.
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Working Paper No.739
30 November 2012
On the “Utilization Controversy”
AbstractThis paper examines the “utilization controversy” around the Kaleckian model of growth and distribution. We show that the Federal Reserve data on capacity utilization, which have been used by both sides of this debate, are the wrong kind of data for the issue under examination. Instead, a more appropriate measurement can be derived from the data on the Average Workweek of Capital. We argue that the long-run dynamic adjustment proposed by Kaleckian scholars lacks a coherent economic rationale, and provide an alternative path toward the endogeneity of the desired utilization at the micro and macro levels. Finally, we examine the proposed adjustment mechanism econometrically. Our results verify the endogeneity of the normal utilization rate.
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Working Paper No.738
28 November 2012
Το ευρώ και η Ευρωπαϊκή Κεντρική Τράπεζα: στο σταυροδρόμι
AbstractΟ Jörg Bibow, ερευνητής στο Ινστιτούτου Οικονομικών Levy, διερευνά το ρόλο της Ευρωπαϊκής Κεντρικής Τράπεζας (ΕΚΤ) στη λειτουργία (ή μάλλον στη δυσλειτουργία) της Οικονομικής και Νομισματικής Ένωσης (ΟΝΕ) στην Ευρώπη, με επίκεντρο τη γερμανική πνευματική και ιστορική παράδοση που βρίσκεται πίσω από το καθεστώς της πολιτικής του ευρώ και του κηδεμόνα του, που είναι η κεντρική τράπεζα. Η ανάλυσή του αντιπαραθέτει την αντίληψη του Κέυνς για το χρήμα και το κεντρικό τραπεζικό σύστημα με την μεταπολεμική γερμανική παράδοση, που εκπροσωπείται από την Μπούντεσμπανκ και βασίζεται στο φόβο της δημοσιονομικής κυριαρχίας. Ο Κέυνς έβλεπε την κεντρική τράπεζα ως όργανο του κράτους, που οδηγεί και ελέγχει το χρηματοπιστωτικό σύστημα και την ευρύτερη οικονομία, αλλά αποτελεί σε τελική ανάλυση αναπόσπαστο μέρος του κράτους και ελέγχεται από αυτό. Σε αντίθεση, «το καθεστώς του Μάαστριχτ», που είναι γερμανικής κατασκευής, τοποθετεί την κεντρική τράπεζα πάνω από το κράτος. Ουσιαστικά, παρατηρεί ο Bibow, η εθνική επιτυχία του μοντέλου της Μπούντεσμπανκ στην προ-ΟΝΕ εποχή έχει αφήσει την Ευρώπη εγκλωβισμένη με ένα καθεστώς πολιτικής που είναι παντελώς ακατάλληλο για την περιοχή στο σύνολό της. Αλλά η μεταρρύθμιση του καθεστώτος περιπλέκεται από τη σοβαρή ανισορροπία στις θέσεις της ανταγωνιστικότητας που έχουν διαμορφωθεί εντός της ευρωζώνης και από την κληρονομιά του χρέους. Ο αναπροσανατολισμός της ΕΚΤ προς την ανάπτυξη και τη σταθερότητα των τιμών θα πρέπει να αποτελεί μέρος της οποιασδήποτε λύσης, καθώς και ο επαναπροσδιορισμός της δημοσιονομικής πολιτικής για την ανάπτυξη και τις επενδύσεις.
Download Επιστημονική εργασία υπό εξέλιξη (Working Paper) No. 738 PDF (625.50 KB) -
Working Paper No.738
28 November 2012
At the Crossroads: The Euro and Its Central Bank Guardian (and Savior?)
AbstractResearch Associate Jörg Bibow investigates the role of the European Central Bank (ECB) in the (mal)functioning of Europe’s Economic and Monetary Union (EMU), focusing on the German intellectual and historical traditions behind the euro policy regime and its central bank guardian. His analysis contrasts Keynes’s chartalist conception of money and central banking with the postwar traditions nourished by the Bundesbank and based on a fear of fiscal dominance. Keynes viewed the central bank as an instrument of the state, controlling the financial system and wider economy but ultimately an integral part of, and controlled by, the state. By contrast, the “Maastricht (EMU) regime” (of German design) positions the central bank as controlling the state. Essentially, Bibow observes, the national success of the Bundesbank model in pre-EMU times has left Europe stuck with a policy regime that is wholly unsuitable for the area as a whole. But regime reform is complicated by severely unbalanced competitiveness positions and debt overhang legacies. Refocusing the ECB on growth and price stability would have to be a part of any solution, as would refocusing area-wide fiscal policy on growth and investment.
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Working Paper No.737
21 November 2012
The (Normal) Rate of Capacity Utilization at the Firm Level
AbstractThis paper examines the endogeneity (or lack thereof) of the rate of capacity utilization in the long run at the firm level. We provide economic justification for the adjustment of the desired rate of utilization toward the actual rate on behalf of a cost-minimizing firm after examining the factors that determine the utilization of resources. The cost-minimizing firm has an incentive to increase the utilization of its capital if the rate of the returns to scale decreases as its production increases. The theory of economies of scale provides justification for this kind of behavior. In this manner, the desired rate of utilization becomes endogenous.
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Working Paper No.736
21 November 2012
A Meme for Money
AbstractThis paper argues that the usual framing of discussions of money, monetary policy, and fiscal policy plays into the hands of conservatives.That framing is also largely consistent with the conventional view of the economy and of society more generally. To put it the way that economists usually do, money “lubricates” the market mechanism—a good thing, because the conventional view of the market itself is overwhelmingly positive. Acknowledging the work of George Lakoff, this paper takes the position that we need an alternative meme, one that provides a frame that is consistent with a progressive social view if we are to be more successful in policy debates. In most cases, the progressives adopt the conservative framing and so have no chance. The paper advances an alternative framing for money and shows how it can be used to reshape discussion. The paper shows that the Modern Money Theory approach is particularly useful as a starting point for framing that emphasizes use of the monetary system as a tool to accomplish the public purpose.
It is not so much the accuracy of the conventional view of money that we need to question, but rather the framing. We need a new meme for money, one that would emphasize the social, not the individual. It would focus on the positive role played by the state, not only in the creation and evolution of money, but also in ensuring social control over money. It would explain how money helps to promote a positive relation between citizens and the state, simultaneously promoting shared values such as liberty, democracy, and responsibility. It would explain why social control over money can promote nurturing activities over the destructive impulses of our “undertakers” (Smith’s evocative term for capitalists).
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Working Paper No.735
14 November 2012
The Impact of Financial Reform on Federal Reserve Autonomy
AbstractThe Federal Reserve has been criticized for not preventing the risky behavior of large financial companies prior to the financial crisis of 2008–09, for approving mergers that aggravated the “too big to fail” problem, and for its substantial contribution to bailouts when their risk management failed. The Dodd-Frank Act of 2010, in attempting to diminish financial instability and eliminate too-big-to-fail policies, has established a new regulatory framework and laid out new responsibilities for the Federal Reserve. In doing so, it appears to address criticisms of the central bank by constricting its autonomy. The law, however, has also extended the Federal Reserve’s supervisory authority and expanded its capacity to exercise regulatory control over its extended domain. This new authority is in addition to the augmentation of its monetary powers over the past several years.
This paper reviews and evaluates both constraints imposed on the Federal Reserve by the Dodd-Frank Act and the expansion of Federal Reserve authority. It finds that the constraints are unlikely to have much impact, but the expansion of authority constitutes a significant increase in power and influence. The paper concludes that the expansion of Federal Reserve authority invites questions about the organizational design and governance of the central bank, and its traditional autonomy.
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