Alternative passive monetary policies in an inflationary economy

This paper considers three alternative specifications of passive monetary policies in a simple dynamic macroeconomic model of an inflationary economy in which both the dynamics of wealth accumulation and the evolution of inflationary expectations play central roles. These policies include one in which the real stock of money is held fixed; one in which the rate of nominal monetary growth is held constant; and a third in which the real stock of government bonds is held fixed. We compare the dynamic behavior of the system as well as its steady state properties under these alternative policies. Two expectations hypotheses—the adaptive and perfect myopic foresight—are considered and their implications related at some length.     

Flexible policies and IS-LM dynamics

A dynamic IS-LM model with a Phillips curve is used to analyze the consequences of familiar flexible government policies. The dynamic behavior of the model depends critically upon the monetary and fiscal policies followed by the government. If a passive stance is taken in which real government spending and the nominal money supply do not adapt to the course of economic events, then the model is unstable. The government can, however, follow simple policy rules which stabilize the economy. The most clearly stable policies involve the joint employment of monetary and fiscal policies.     

The meta-crisis of secular capitalism

The current global economic crisis concerns the way in which contemporary capitalism has turned to financialisation as a double cure for both a falling rate of profit and a deficiency of demand. Although this turning is by no means unprecedented, policies of financialisation have depressed demand (in part as a result of the long-term stagnation of average wages) while at the same time not proving adequate to restore profits and growth. This paper argues that the current crisis is less the ‘normal’ one that has to do with a constitutive need to balance growth of abstract wealth with demand for concrete commodities. Rather, it marks a meta-crisis of capitalism that is to do with the difficulties of sustaining abstract growth as such. This meta-crisis is the tendency at once to abstract from the real economy of productive activities and to reduce everything to its bare materiality. By contrast with a market economy that binds material value to symbolic meaning, a capitalist economy tends to separate matter from symbol and reduce materiality to calculable numbers representing ‘wealth’. Such a conception of wealth rests on the aggregation of abstract numbers that cuts out all the relational goods and the ‘commons’ on which shared prosperity depends.     

Mill’s radical end of laissez-faire: A review essay of the political economy of progress: John Stuart Mill and modern radicalism

Can John Stuart Mill’s radicalism achieve liberal egalitarian ends? Joseph Persky’s The Political Economy of Progress is a provocative and compelling discussion of Mill’s economic thought. It is also a defense of radical political economy. Providing valuable historical context, Persky traces Mill’s intellectual journey as an outspoken proponent of laissez-faire to a cautious supporter of co-operative socialism. I propose two problems with Persky’s optimistic take on radical social reform. First, demands for substantive equality have led past radicals to endorse exclusionary nationalist and eugenics policies. It pushes some contemporary radicals towards illiberal interventions into intimate social life. Second, the radical critique of capitalism relies on an account of profit that neglects the epistemic function of private-property markets. Once this is acknowledged, capitalism retains some progressive credentials against radical alternatives.     

Technical change and the “tendency of the rate of profit to fall”

For the most part, the discussion of Marx' falling rate of profit has been of a qualitative and fairly imprecise nature. In particular, the transformation problem concerning the relationship between the price and value rates of profit is usually not adequately dealt with. The present article defines the various concepts rigorously and demonstrates the relationship between the price and value concepts. It is then shown that technical change which competitive capitalists will introduce always raises the rate of profit, if real wages are constant; that these viable technical changes are always socially desirable; but that there are socially desirable technical changes which will not be introduced under competitive capitalism. Some of these desirable technical changes would cause the profit rate to fall. Any efforts to demonstrate a falling rate of profit as a consequence of technical change must therefore concentrate on the relationship between technical innovation and changes in the real wage.     

Does the road to serfdom lead to the Servile State?

Hilaire Belloc's The Servile State is often seen as an antisocialist tract arguing that “socialism is slavery.” It is typically assumed that an appreciation and defense of free market capitalism, as well as a general dislike of government intervention must motivate the its thesis. Nevertheless The Servile State is an argument against what Belloc saw as unbridled capitalism not collectivism. Belloc defines capitalism to mean a state in which there is a skewed distribution of wealth in society where the majority of people are dispossessed, proletariat, and a minority makes up the capitalist, property owning class. For Belloc capitalism is an inherently unstable system and servile measures arise to ameliorate insecurity and instability.     

Money demand instability and real exchange rate persistence in the monetary model of USD–JPY exchange rate

This paper proposes a hybrid monetary model of the dollar–yen exchange rate that takes into account factors affecting the conventional monetary model's building blocks. In particular, the hybrid monetary model is based on the incorporation of real stock prices to enhance money demand stability and also, productivity differential, relative government spending, and real oil price to explain real exchange rate persistence. By using quarterly data over a period of high international capital mobility and volatility (1980:01–2009:04), the results show that the proposed hybrid model provides a coherent long-run relation to explain the dollar–yen exchange rate as opposed to the conventional monetary model.     

基于MSVAR模型的房地产通货膨胀效应研究

笔者运用Markov区制转移模型对我国房地产波动的通货膨胀效应进行研究,发现我国房地产波动的通胀效应具有区制依赖性特点:通货膨胀率预期成分在低速增长区制和中速增长区制阶段,均显著影响房地产收益率,并且方向相反;在三个区制中通货膨胀率的周期成分均显著影响房地产波动,在高速发展阶段房地产波动的通胀效应表现为"代理假说",其余阶段均表现为"费雪假说"。     

Monetary and fiscal policy interactions in a post Keynesian open-economy model

Using a post Keynesian model, this study aims to analyze the stabilizing role of fiscal and monetary policies in an open economy with a managed exchange rate regime. The real exchange rate is modeled as an endogenous variable and inflation explained using the conflicting claims approach. The dynamic properties of macroeconomic equilibrium are evaluated in different regimes of fiscal and monetary policies. The main result of this study suggests that the preferred policy regime is the one in which economic authorities are complementary and fiscal policy plays an explicitly active role. In this regime, the fiscal policy must commit to the target for the rate of capacity utilization and the monetary authority must commit to the inflation target.     

Going out of the Great Recession? Contrast between the United States and Europe: Proposed work from economic history, 1960–2014

In recent work, the authors have proposed to the United States a model that explains the trend behavior of the rate of profit from share surplus, capital productivity, and the coefficient of financialization. The main results of the explanatory model allow the authors to affirm that with the change of control of Keynesianism to neoliberalism since 1980, there has been a substantial fall in the profit rate to half the values achieved in the years of Keynesian regulation (1945–1973). This significant fall in the level of benefits is due to a substantial fall in capital productivity. The authors are currently working on adapting the explanatory model for the U.S. economy to the main countries of the European Union (Germany, France, Italy, United Kingdom, and Spain). The results show that the pattern of behavior of the variables described in the reference country—the world capitalist economic system, the United States—is repeated more or less precisely in the main countries of the European Union; Germany, France, Italy, United Kingdom, and Spain.     

“CONVENTIONAL” MONETARY POLICY IN OLG MODELS: REVISITING THE ASSET-SUBSTITUTION CHANNEL

Conventional monetary policy involves actions by the monetary and fiscal authorities: the former sets a nominal interest rate and the latter sets lump-sum taxes to finance the implied flow of interest payments on government debt. We model such policy within an overlapping generations framework and show that absent any other frictions the magnitude of the nominal interest rate gives rise to asset substitution between government debt and either private debt or capital—substitution that has both real and nominal effects. Such substitution is not in standard New Keynesian models because their dynastic specification implies that government debt is not net wealth.     

韩国财阀改革的政治经济学：以小股东运动为例

正如自由放任非自然形成，韩国财阀的形成也是一个政治的产物。除了政府的金融和产业等政策支持。不少韩国财阀直接源自韩国国有企业和公共资产的贱价私有化。以财阀为中心的经济增长也成为了当下韩国资本主义的不稳定力量之源。为了拯救处于困境中的韩国财阀资本主义，作为一种社会运动和公司治理的方式，股东积极主义被引介到韩国。过去十多年里，韩国小股东运动在抵制财阀力量扩张、改善公司治理、促进经济民主等方面取得了一些成就，但也面临着不少挑战。处于十字路口的小股东运动及财阀改革是理解当下韩国资本主义的极好注脚。     

新古典宏观经济学的经济周期理论述评

二十世纪七十年代初,凯恩斯主义经济学在受到经济实践批判的同时,新古典宏观经济学也指出了其理论的缺陷,并以此为基础构建其宏观经济学的微观基础,即经济主体的理性原则、理性预期、市场出清,建立了货币经济周期理论和实际经济周期理论,否定政府政策的有效性,反对政府干预,力图完成其对凯恩斯主义经济学全面彻底的批判。     

British Influence on Argentine Growth: The Dependency Controversy

Using Russia's state capitalist economy as an illustration, this paper discusses possible roles that the emergent regime of state capitalism could play in shaping societal evolution along more democratic and equitable lines. The study discusses major currents within the modern discourse of constructivist evolutionism to situate suggested roles for state capitalism within evolutionary economics, thus increasing the range of research issues that can be investigated. The paper argues that the theoretical framework of institutionalist constructivism makes it possible to demonstrate, with a progressivist agenda, the potential that could exist in a state capitalist order. Moreover, the paper outlines policies for progressive development through state capitalism.     

Hartmut Elsenhans,Saving Capitalism from the Capitalists

Hartmut Elsenhans's Saving Capitalism from the Capitalists presents an intriguing argument: capitalist elites have induced unsustainable capitalism to the disadvantage of labor and the system as a whole. The author proposes a fairly unconventional solution. He suggests that democratic socialism can be the necessary political complement to our capitalist system. By drawing on the socialist capacity to empower labor and increase mass consumption, we could achieve a more balanced and sustainable capitalism. The book is ideally suited for readers of Keynesian and post Keynesian analysis on contemporary capitalism and it fits in the discourse on problems of low income growth, declining demand, and investment opportunities in major world economies.     

A MODEL OF AN OPPORTUNISTIC-PARTISAN POLITICAL BUSINESS CYCLE

According to political business cycle theory, separate opportunistic and partisan approaches exist. It is obvious, as seen from theoretical and empirical points of view, that politicians aim for both opportunistic as well as partisan goals. This paper presents a model of a pre‐election political business cycle that manifests an indication of competence and a post‐election political business cycle that occurs because of the uncertainty of an election's winner monetary policy. In the pre‐election period competent governments expand the economy. The post‐election cycle depends on whether a leftist or a conservative government is in power in the pre‐election period, and if they are re‐elected or not.     

次贷危机后美国经济金融化趋势是否逆转?

20世纪70年代以来资本主义经济金融化趋势显著,以金融资本为主导的积累模式在一定时期内刺激了资本主义经济增长,但也为由美国次贷危机引发的2008年国际金融危机埋下了祸根。而今,距离危机的爆发已经十余年,危机后当代资本主义也经历了一系列调整。本文考察了危机后美国政府的系列"再工业化"政策、新自由主义持续强劲的势头、新形势下美国经济的新矛盾与新变化,探讨"再工业化"能否为美国寻得摆脱经济危机的新型积累模式、危机后金融部门为何迅速恢复并依然主导美国经济、劳资矛盾的持续加剧能否催生新的变革等问题,认为危机后美国经济金融化趋势尚未逆转,新型积累模式尚不可得,其实质是资本主义内部的经济调节机制无法解决其持续激化的基本矛盾,而矛盾的激化酝酿着新的变革。     

Monetary–fiscal interactions with endogenous liquidity frictions

I develop a tractable macro model with endogenous asset liquidity to understand monetary–fiscal interactions with liquidity frictions. Agents face idiosyncratic investment risks and meet financial intermediaries in competitive search markets. Asset liquidity is determined by the search friction and the cost of operating the financial intermediaries, and it drives the financing constraints of entrepreneurs (those who have investment projects) and their ability to invest. In contrast to private assets, government bonds are fully liquid and can be accumulated in anticipation of future opportunities to invest. A higher level of real government debt enhances the liquidity of entrepreneurs׳ portfolios and raises investment. However, the issuance of debt also raises the cost of financing government expenditures: a higher level of distortionary taxation and/or a higher real interest rate. A long-run optimal supply of government debt emerges. I also show that a proper mix of monetary and fiscal policies can avoid a deep financial recession.     

Government size and macroeconomic stability: A comment

We show that in a standard, technology shock-driven one-sector real business cycle model, the stabilization effects of government fiscal policy depend crucially on how labor hours enter the household's period utility function and the associated labor-market behavior. In particular, as Galí [European Economic Review 38 (1994), 117-132] has shown, when the household utility is logarithmic in both consumption and leisure, income taxes are destabilizing and government purchases are stabilizing. However, the results are reversed when preferences are instead convex in hours worked. That is, income taxes are now stabilizing and public spending is destabilizing. Furthermore, under both preference specifications, the magnitude of cyclical fluctuations in output remains unchanged when the income tax rate and the share of government purchases in GDP are equal (including laissez-faire).