Public credit and liquidity in James Steuart's Principles

Abstract

The aim of this article is to shed new light on the monetary and financial theory of James Steuart (1767) through his examination of the speculative bubbles of 1720: that is, the John Law System in France and the South Sea Bubble in England. In contrast to most contemporary writers – particularly David Hume and Adam Smith – Steuart had a balanced opinion about these two financial experiments. On the one hand, Steuart considered them worthwhile, since they were attempts at public debt restructuring by reducing its expense and increasing its liquidity. Moreover, according to Steuart, a well-managed public debt favours the liquidity of both banks and the financial market. These worked together for the growth of wealth. However, on the other hand, Steuart claimed that the failure of these experiments was due to: (i) a poor management of money; (ii) a violation of credit rules and its corollary, the weakness of banks; (iii) the adoption of contestable dividend and financial information policy. This article presents Steuart's proposals for creating the liquidity of both banks and the financial market via a well-managed public debt.     

Wealth accumulation and economic progress

In an evolutionary dynamic economic theory the accumulation of durable goods (i.e., wealth) is a key feature. Here we show that the wealth of individual economic agents can be measured by the progress function (PF). PF is a function of goods and money under straightforward assumptions, notably the ‘no-loss’ rule for transactions. We derive explicit formulae for wealth from the PF. We also show how the compatibility of the PF and the neoclassical economics deriving the conventional utility functions from the PF.     

Discount rate and research progress in economic analysis on climate change

This paper has organized and summarized the economic analysis on climate change from five angles,namely,connotation of discount rate,identification of and dispute about discount rate,discounting way,impact of the discount rate,and the integrated evaluation model of climate change impact and the discount evaluation.As the climate change economic analysis shows,there is a major dispute about discount rate between the market school and the ethic school.Rate of discount largely relates to the present value of potential loss attributable to climate change,and then influences the selection of policies for adapting and slowing down climate change.In the past,the constant index discount was adopted as the main way.But with the full understanding of discount rate,the uncertainty of loss attributable to climate change has been considered in the discount.     

Management competence, firm growth and economic progress

Starting from the empirical observation of a positive correlationbetween the prosperity of an economy and the relative role oflarge firms operating in that economy, we propose that thiscorrelation is an artifact of the positive influence of 'managementcompetence' on both these variables. Drawing on Penrose's TheTheory of the Growth of the Firm, we develop a theoretical frameworkthat distinguishes between two aspects of management competence,i.e., entrepreneurial judgment and organisational capability.Both aspects relate to the process of value creation throughthe combination and exchange of economic resources. Whereasentrepreneurial judgement refers to the cognitive aspects ofperceiving potential new resource combinations and exchanges,organisational capability is the ability to actually carry themout. As we show, the interplay of these two factors affectsthe speed at which firms expand their operations, the kind ofexpansion, and the process through which firms create value,not just for themselves, but for society as a whole.     

Path-dependent economic progress and regress: The negative role of subsidies in economic growth

This paper develops a two-stage economic growth model with real options and examines the effects of various subsidy policies. The economic stages are the deterministic and stochastic AK stages, and the economy may shift between the two, depending upon state variables and technological shocks. This model allows for path-dependent economic growth that accounts for both club convergence and divergence across countries. Moreover, it is shown that under certain conditions, a decrease in the subsidy rate facilitates the shift from the deterministic to stochastic AK stages, which is defined as “economic progress”, even in the face of an economic crisis, while more subsidies delay economic progress and promote the shift from the stochastic to deterministic AK stages, which is defined as “economic regress”.     

Natural resources,technological progress,and economic modernization

The present inquiry focuses on the modernization perspectives of the commodity‐exporting countries through the lens of development economics. To this end, the study adopts the Kaldorian framework to address the modernization effects, epitomized in the absorption of surplus labor. To trace the process of economic modernization, the study augments Lewis’s dualistic economy model by the extractive sector. Three different scenarios for the management of resource revenues are scrutinized. An altruistic mode, which implies a pure redistribution of the revenues among the poor swaths of the population, protracts the process of economic modernization, requires a greater amount of capital stock, and harbors a greater risk of a poverty trap. This effect is less pronounced if the modern sector is more capital‐intensive. A productive mode, which elicits full reinvestment of the commodity revenues, in contrast, accelerates the pace of economic modernization. Further, predicated on the scrutiny of a more realistic scenario, a bargaining mode, the study derives the condition for a net positive (or negative) modernization effect. The study identifies technical progress alongside capital accumulation as a further important source of economic modernization.     

Freedom,barriers to entry,entrepreneurship, and economic progress

While entrepreneurs benefit from unrestricted free entry into markets, they have a time-inconsistent incentive to lobby for government entry restrictions once they become successful. Bad political institutions yield to these demands, and growing barriers are placed on domestic and international competition. Good institutions do not, and this effort is instead channeled toward further wealth creation. We find that productive entrepreneurship depends on both the freedom to succeed and discipline of failure that free markets provide. Trade barriers result in fewer combinations of goods and inputs attempted, and less productive entrepreneurial resource use. We also provide evidence on the value of business failure.

APEC数字经济合作的最新进展及展望

数字经济改变了传统经济增长方式和贸易模式,催生出新需求、新业态和新领域,数字经济成为全球创新、转型和增长的重要驱动力,随着各国经济联系愈发紧密,数字经济合作逐渐成为国际经济合作的重要议题。APEC顺应数字经济快速发展的趋势,进行了战略规划、运行机制、组织结构方面的改革,以进一步加强亚太地区的数字经济合作。当前,APEC的数字经济议题不断拓展和深化,并在缩小"数字鸿沟"、推进亚太地区隐私保护等领域取得了重要进展。展望未来,信息基础设施建设和数字化转型依然是亚太地区数字经济合作的焦点,APEC应采取更灵活、多元的机制开展合作。     

The trade wind,the statesman and the system of commerce: Sir James Steuart's vision of political economy

In the conception of history of the abbé de Condillac, one thing is really original. He establishes a causal relation between the functioning of the human mind and the history of societies. First, the understanding of humankind is not disordered: society develops, stages follow one another. But the commercial stage leads societies to divide into classes, the landowners are interested only in frivolous, luxurious objects: they have become denatured. Their behaviour entails society in a long phase of decline. However, this course is not inevitable. Condillac wishes to reform the individual in order to modify society and he proposes economic safeguards capable of reducing disparities. Life is simple, but history is not halted.     

Growth versus equity: A CGE analysis for effects of factor-biased technical progress on economic growth and employment

With factor-biased technical progress described as labor-saving and skill-biased technical changes, there are concerns that technological innovation can lead to unemployment and widen inequality in the economy. This study explores impacts of factor-biased technical changes on the economic system in terms of economic growth, employment, and distribution, using a computable general equilibrium (CGE) model. The results show that technological innovation contributes to higher level of economic growth with productivity improvements. However, our analysis suggests that economic growth accompanied by skill- and capital-biased technical progress disproportionately increases demand for capital and high-skilled labor over skilled and unskilled labor. This shift in the value-added composition is found to deepen income inequality, as more people in higher income groups benefit from skill premium and capital earnings. Our results suggest that policymakers should prepare a wide range of policy measures, such as reforms in educational programs and taxation systems, in order to ensure sustainable growth.     

Effects of economic variables on NPLs depending on the economic cycle

Late payments are a major problem for Spanish banks. This paper studies as determinants of loan delinquency: unemployment, interest rates, inflation, housi     

Notes on economic equality

In this paper we propose a simple definition of economic equality and characterize non- paternalist egalitarian preferences. We compare our definition to the ideas of envy and fairness and extend these ideas to the case of extended benevolent preferences. In productive economies efficiency and equality may conflict, just as do efficiency and the absence of envy. We suggest a feasible compromise in this case.     

Animal spirits: the effect of economic expectations on economic output

The public is characterized as able forecasters of future economic performance. They engage in rational expectations. Empirical evidence exists to bolster the claim. This article considers the possibility that the public does more than predict economic output. They may engage in a self-fulfilling prophecy where belief about the future economy translates into personal financial behaviour (e.g., consumption and investment) that actually drives economic performance. After controlling for rational expectations with elite forecasts, leading indicators and past economic performance, it is shown that between 5% and one-third of the variance in economic output can be explained by prospective economic sentiment. This result has broad implications for electoral behaviour research.     

经济学界看经济社会与科学发展

党的"十八大"报告,凝聚了全党、全国人民的理论智慧,阐明了在新的国际国内形势下,如何坚持走中国特色社会主义道路的重大问题,描绘了全面建成小康社会、实现中华民族伟大复兴的宏伟前景。振奋人心、催人奋进。为了深刻领会"十八大"精神,进一步创新经济理论以促进中国经济发展,我们特邀国内部分专家、学者,畅谈自己的观点,以飨读者。     

An analysis on economic opportunity

Although economic opportunity is considered as a latent variable, it can serve as another factor in promoting growth and development. Through the construction of an economic opportunity index, this article identifies the extensity and intensity channels through which economic opportunity is created. Data on 24 variables for 184 world economies for the period 2000 to 2010 are collected for the empirical analysis. The methodology involves the use of principal component analysis in constructing three indices for the parametric and nonparametric regression analyses. The country sample is divided into OECD and non-OECD economies so as to examine their different performances. Extensity seems to be the more important channel to all economies, but for non-OECD economies, a higher performance in intensity can enrich the effect of extensity on economic opportunity.