Capital Flows to Latin America (2003–17): A Critical Survey from Prebisch’s Business Cycle Theory

ABSTRACT

The economic literature on capital flows to developing countries has shared two important commonalities since the 1990s. Published works (whether they focus on the external situation or stress the domestic determinants of capital flows) tend to assume a beneficial effect of capital inflows, which leads to an improvement of peripheral institutions, whose deficiencies are ostensibly the main cause of economic turmoil and/or failure in attracting capital flows, in continuity with New Institutional Economics. In doing so, mainstream economists deliberately overlook the asymmetric characteristics of the international monetary system and the persisting hegemony of dollar. Raul Prebisch’s pioneering work on business cycles in Latin America provide an alternative view, one capable of amending the existing mainstream literature. On the one hand, Prebisch stressed the destabilizing role of capital inflows on Latin American economies, particularly short-term speculative capital. On the other hand, Prebisch designed a set of counter cyclical monetary policies in order to contrast capital volatility, particularly during downturns. An analysis of stylized facts shows that, when correctly updated, Prebisch’s theory has remarkable explanatory potential when applied to Latin America’s current economic and financial situation.     

Marxism,Crypto-Marxism and the Political Economy of Capitalism

ABSTRACT

This article conducts groundwork for a discussion of Marx’s influence through examining the boundaries of the specifically Marxian school of economics. This Marxian school extends well beyond the bounds of the self-identified Marxian school. Marx’s influence, Marxian themes and effectively Marxian theory can be found in several important heterodox traditions of economics, though this is often unacknowledged. A consideration of the proper boundaries of the Marxian school of economics is essential for a full understanding of Marx’s legacy and could contribute to the emergence of a more unified heterodoxy in economics.     

Export intensity of foreign subsidiaries of multinational enterprises: The role of trade finance availability

We examine the relationship between the role of trade finance availability and the export intensity of foreign subsidiaries of multinational enterprises (MNEs). In developing our hypotheses, we draw upon insights derived from “new” internalisation theory (international business literature) and international trade finance (international economics literature). We empirically test these hypotheses using survey data compiled from subsidiary managers in six ASEAN countries, supplemented with host-country level data. We conceptualise, empirically test, and establish that the subsidiary-level capability in combining and utilising internal and external debts is an important subsidiary-specific advantage to support export intensity. We find that subsidiaries employ intra-firm loans from MNE internal capital markets and, to some extent, bank loans from external financial institutions to boost their export intensity. Subsidiaries may have concerns about foreign exchange risks, but the use of appropriate foreign exchange risk management is positively associated with export intensity. We discuss the implications of our findings for theory and practice.     

Institutional Economics as Theory of Policy Change: Impact of Past Policy Failures on Present Policy

Social scientists have developed several theories for understanding or evaluating policy change over time. Since all costs or benefits are not internalized owing to positive transaction costs, policymaking is always implemented under cost underestimation conditions and, therefore, is imperfect. I call this trait policy failure in this article. Furthermore, I show that a new framework combining the social costs approach and the legal/economic approach in institutional economics is suitable and can be applied to evaluating how past policy failures affect present policy, providing as an example the Fukushima nuclear disaster in Japan.     

Political markets? Politics and economics in the emergence of markets for biodiversity offsets

This paper analyses the relationship between politics and performativity of economics in the emergence of markets for biodiversity offsets. While the role of economics in constructing markets has been demonstrated by sociology and social studies of science, it has also become apparent that politics plays an important role in the material outcome of economic experiments. Two case studies of the creation of markets for biodiversity offsets are analysed, in the United States and England. The findings suggest that the creation of both markets is rooted in the language, concepts and models of economics. Politics, on the other hand, functions as a mediator of the material expression of those models. Through this mediation effect, similar economic models are performed differently, resulting in a variety of markets. This suggests that the material outcomes of processes of market creation are not defined at the outset, but can be influenced by political processes.     

中国改革开放40年经济发展态势与新时代转型升级展望

中国改革开放40年来，创造了世界经济发展的奇迹。这是中国对世界作出的贡献。经过40年的高速增长，党的十九大作出了重要论断，指出中国经济已经进入新时代。在这一现实背景下，准确把握中国未来发展态势尤其重要。改革开放以后的中国能够实现长达39年的平均9.5%的增长，并高出“常态化增长”的2倍水平，其根源在于，作为发展中国家，中国拥有“后来者优势”。在中国经济的总体发展态势下，作为一个中等发达的经济体，新时代中国经济发展的关键在于发展实体经济。设立直辖市以后，重庆的发展即使有各种波折，仍然是领先于全国。重庆应继续抓住这个发展机遇，继续领跑全国，对中华民族的伟大复兴作出贡献。     

The Neutrality Illusion: Biased Economics,Biased Training,and Biased Monetary Policy. Testing the Role of Ideology on FOMC Voting Behaviour

This research is trying to shed light on two myths that are usually widespread: the first one being the idea of the academic economist as a neutral scientist finding uncontestable consensual truths, thanks to uncontestable empirical methods, the second, the idea of the central banker as a Weberian neutral bureaucrat setting aside personal beliefs to act mechanically for the common good. Deconstructing this ‘neutrality illusion’, this work argues that economics is actually a divided and ideologically marked discipline despite its aim at natural-science-type-legitimacy. It argues in a related discussion that such ideological bias also impedes a purely neutral conduct of monetary policy, undermining the very idea of central bank independence. Linking these two arguments, it argues that graduate training in economics is the first place for the formation of biased preferences, because of the substantial ideological sorting that exists across universities. Using a unique database on FOMC members’ votes and ideology, the paper tests this idea empirically and despite unavoidable caveats, finds robust evidence of a systematic impact of the ideological features of their alma mater on FOMC members’ voting behaviour – impact that we found more important than the other traditional determinants of central bankers’ actions.     

Multiple product qualities in monopoly: Sailing the RMS Titanic into the economics classroom

In this pedagogical contribution the authors extend the traditional three-class tariff employed in the French passenger railway system with the more resonant story of the service quality variations associated with the three passenger classes of the ill-fated RMS Titanic. In doing so, they provide economics instructors with an opportunity to integrate the well-known motion picture Titanic (Cameron and Landau 1997 Cameron, J., and J. Landau. 1997. Titanic. Los Angeles: 20th Century Fox, Paramount Pictures, and Lightstorm Entertainment. [Google Scholar]) into the teaching of economics. This article provides instructors with resources that can be used to link historical and modern travel examples of price discrimination in order for students to reach a “deeper understanding of course concepts” (Salemi 2002 Salemi, M. K. 2002. An illustrated case for active learning. Southern Economic Journal 68 (3): 721–31.[Crossref], [Web of Science ®] , [Google Scholar], 725).     

Does peer group size influence social preferences and risk taking?

This paper examines whether the ex post relative payoffs of peers as well as the size of the peer group impact an agent's willingness to take risks. For example, persons in a flood plain may be less likely to purchase flood insurance if their neighbors also refrain from purchasing. We generalize the Fehr‐Schmidt (1999) model to allow the intensity of the social preferences to vary with the size of the peer group. Our experiment tests whether subjects are more or less likely to choose a lottery over a fixed payment when others have been assigned either the same lottery or the fixed payment. Using both between and within subject designs, we find risk‐taking behaviour is not responsive to the risks faced by others regardless of the size of peer group.     

The Impact of Farmland Transfers on Agricultural Investment in China: A Perspective of Transaction Cost Economics

There is growing concern that farmland transfers lead to less agricultural investment, which may adversely affect agricultural productivity growth in China. Prior research has primarily focused on the differences between owned cultivated land and rented plots, but little is known about how farmland transfers between relatives, which are popular in rural China, specifically affect agricultural investment. In this paper, we present a conceptual framework of transaction cost economics to compare different contracting strategies in China's farmland rental markets. As farmland rental markets in China are immature, land transfer between relatives establishes bilateral governance, which has the advantage of addressing the opportunistic activities of both parties and can ultimately increase investment by tenants. Based on data from two waves of household surveys, we empirically examine the impact of bilateral governance on the application of organic fertilizer, an indicator for agricultural investment. Our findings show that apart from economic factors, kinship is important to the functioning of farmland rental markets in rural areas.