Emil Lederer and Joseph Schumpeter on Economic Growth,Technology and Business Cycles

This paper compares Joseph Schumpeter and Emil Lederer with respect to their visions concerning the notions of economic growth, technology and business cycles. Their theoretical investigations in a number of thematic areas seem to converge to similar views. More precisely, both Schumpeter and Lederer regard the capitalist economy as a dynamic system where the introduction of innovations is its distinctive characteristic. In such a system, static analysis based on the concept of equilibrium is useful as an expository device to describe the adjustment mechanisms of the economic system. They also paid attention to the emergence of large oligopolistic firms and considered this development as being interwoven with technological progress. Both economists used similar arguments to emphasize the link between economic development and technological change. In their analyses, Schumpeter and Lederer referred to psychological factors motivating the entrepreneur, in order to explain the forces that set in motion the process of innovation and thus economic development. The concept of technological unemployment is also described in a similar manner by both of them. Regarding the issue of business cycles, Schumpeter and Lederer considered them to be a result of endogenous processes within a capitalist economy. Lederer in his late works, argued in a way analogous to Schumpeter, that economic fluctuations are caused from the disruptions created by innovations, which are introduced discontinuously into the economic system. Conclusively, Schumpeter and Lederer delivered theses which are similar in scope and conclusions probably because they were developed in the same social, political, theoretical and ideological environment and were also well acquainted with each other’s ideas.     

A methodology for constructing a financial systemic stress index: An application to Greece

The paper develops a financial systemic stress index (FSSI) for Greece. We present a novel methodology for constructing and evaluating a systemic stress index which i) adopts the suggestion of Hollo et al. (2012) [“CISS — A ‘Composite Indicator of Systemic Stress’ in the Financial System” ECB working paper] to incorporate time-varying correlations between different market segments, but uses a multivariate GARCH approach which is able to capture abrupt changes in correlations, shown to be a prerequisite for correctly identifying financial crises, ii) utilizes both market and balance sheet data which is a novel feature for systemic stress indicators and iii) evaluates the FSSI utilizing the results of a survey, conducted among financial experts, in order to construct a benchmark chronology of financial crises for Greece, which in turn is used to investigate whether changes in the FSSI are good leading indicators for financial crises. The results show that the FSSI is able to provide a precise periodization of crises. Our findings suggest that accurate depiction of the systematic nature of stress is pivotal in order to provide proper policy guidance with respect to financial crisis identification.     

The International Economic Crisis and the Crisis of Economics

The objective of this paper is to explore the correlation between the recent economic crisis and economic science and demystify the dogmatic conflict surrounding them. The paper starts by summarising the various arguments against economic science and economists, considered by many to be responsible for the crisis. Following that, an attempt is made, subject to space constraints, to objectively evaluate the individual arguments. Particular reference is made to the role of both policy and the markets in the crisis and the prospects for replacing the neoclassicist school, dominant until now, with the Keynesian. The analysis concludes that economic science did not cause the crisis; however, many of its theories did offer an intellectual background or some sort of academic legitimacy to both policy and the markets, and, in the case of the recent crisis, there was not only a failure of the dominant form of economic thought but, above all, of those two. The analysis shows that there is a problem of selective use of economic theories when it comes to practical economics and that, in order to be useful, economics ought to utilise knowledge from other disciplines and take more account of interdependencies between political and social phenomena.     

Modelling the risk–return relation for the S&P 100: The role of VIX

A significantly positive risk–return relation for the S&P 100 market index is detected if the implied volatility index (VIX) is allowed for as an exogenous variable in the conditional variance equation. This result holds for 4 alternative GARCH specifications, irrespective of the conditional distribution, and regardless of whether the conditional mean equation includes a constant term. This finding is robust to sub-samples, and to using VIX innovations to control for dividend yield and trading volume effects. Monte Carlo evidence suggests that if VIX is not included, the risk–return relation is more likely to be negative or weak, in line with several previous studies. If VIX is included, the distribution of the risk–return parameter has more than 99% of its mass in the area of positive values. We conclude that VIX carries important forward-looking information which improves the precision of the conditional variance estimation and, subsequently, reveals a significantly positive relation.     

Revisiting the forward—spot relation: an application of the nonparametric long-run correlation coefficient

This study revisits the statistical relationship between the spot and the forward rate. Unlike previous studies, this association is measured by the estimation of the long-run correlation coefficient, a non-parametric measure of linear association. This estimator was shown to be equivalent to the Bartlett kernel spectral estimator of the complex coherency at frequency zero. This statistic allows for the measurement of the intensity of correlation. Using data for the ￡/DM over the May 1992 British General Election and September 1992 ERM devaluation, and for the FF/DM, BEF/DM, AT/DM, and NLG/DM up to the introduction of Euro, the results show that the predictive ability of the forward rate increased.     

The social dimension and cohesion: Complementary or contradictory?

It is again being argued that the low labour costs and social standards in countries on the periphery of the EC—Greece, Ireland, Portugal and Spain—jeopardise employment in the northern EC countries and the social safety net they have constructed. A common social policy harmonising employment and social standards to safeguard the social status quo is therefore being advocated. How valid is this argument? What consequences would the implementation of such a “social action programme” have for the economies on the periphery? How are the Community’s objectives with regard to cohesion and social policy to be reconciled?     

Comparison of seasonal estimation methods in multi-item short-term forecasting

This paper addresses the issue of estimating seasonal indices for multi-item, short-term forecasting, based upon both individual time series estimates and groups of similar time series. This development of the joint use of individual and group seasonal estimation is extended in two directions. One class of methods is derived from the procedures developed for combining forecasts. The second employs the general class of Stein Rules to obtain shrinkage estimates of seasonal components. A comparative evaluation has been undertaken of several versions of these methods, based upon a sample of retail sales data. The results favour these newly developed methods and provide some interesting insights for practical implementation.     

Cornelius Castoriadis on the Scope and Content of Neoclassical and Marxian Economics

The paper presents the thought of the political philosopher Cornelius Castoriadis on economic methodology and the neoclassical and Marxian traditions. Castoriadis suggested that the scope of economic theory includes the identification of “local” regularities and not the search for invariant “laws.” He criticized the use of equilibrium and the utilitarian framework in the neoclassical tradition and proposed to approach human agency based on the Aristotelian concept of the “social individual.” In addition, he criticized the deterministic nature of the Marxian “laws.” According to Castoriadis, the use of concepts such as the “production function” and “capital” presents a number of caveats.     

Revenue trade-offs: Implications for state Government finance

Modifications in state level fiscal structures to address inequitable tax burdens or the issue of public sector growth have been accomplished by substituting one tax for another or by adjusting rates of existing taxes. This paper presents this fiscal adjustment process on the state level in terms of a policy in which complementary or competitive taxes are jointly determined as a tax mix in a process of revenue trade-offs.