Property,Power, and Public Choice: An Inquiry into Law and Economics

This article briefly describes the evolution of the recent economic crisis based on different theories toward my own interpretation of it. The deregulation wave of the last decades has created new profit opportunities in various contexts — from labor flexibility to privatization and from financialization to globalization — so promoting a renewed process of capitalist accumulation after the stagflation of the 1970s. This has taken place at the cost of a wide-ranging increase in inequality and instability, thus bringing a cascade of crises, including the latest one of 2008.     

The Grameen Bank as Progressive Institutional Adjustment

Over the past 25 years, a variety of Neoliberal reforms were introduced. Instead of growth, stability, and the narrowing of income gaps, however, we have seen stagnation, volatility, and increased inequality. The paper examines the theory that justified these policies, describes an alternative approach, and takes a brief look at a small group of Latin American countries in the aftermath of the Mexican Crisis. It is shown that not only does the alternative view raise serious doubts about the efficacy of Neoliberalism, but that those countries that refused to follow suit were better protected against contagion after the December Mistake.     

Relationships between corruption,political orientation,and income inequality: evidence from Latin America

This research sheds light on the analysis of the impact of corruption and political orientation on income distribution in Latin America. Although it has been theoretically demonstrated that corruption worsens the income distribution, the empirical evidence has yielded ambiguous results based on biased estimates not considering a measurement error in the estimation of inequality. This article fills this gap by correcting the previous measurement error bias in the fixed-effects estimation. Additionally, political orientation and its relationship with income inequality are also investigated. The sample covers 18 Latin American countries between 1996 and 2012. Results reveal that corruption increases income inequality.     

Explaining Self-Declared Social Tolerance for Human Diversity in Latin America and the Caribbean

Abstract

Social tolerance enables heterogeneous persons to find harmony in their differences. This has been shown to reduce the likelihood of inter- and intra-group conflicts, thereby creating an environment conducive for economic and social development. This paper examines socio-economic factors that influence individual differences in social tolerance in Latin America and the Caribbean. Being mindful of the fact that there are socio-cultural differences between Latin America and the Caribbean, five dimensions of social tolerance are investigated: tolerance for racial and religious dissimilarity, homosexuals, AIDS victims and immigrants. Using the 2005 World Values Survey data, we simultaneously estimate tolerance towards these groups using multivariate probit models. Education is found to positively and significantly enhance all five dimensions of social tolerance, suggesting that policies meant to enhance social tolerance should be directed towards improving educational systems. Overall, the analysis underscores heterogeneity of factors affecting self-declared tolerance of the selected social groups. Thus, analyses of social tolerance and ensuing policies should be developed specific to a particular dimension of tolerance.     

Veblen’s Imperial Germany and the Industrialization of Latin America

Veblen’s Imperial Germany is a theory of development and industrialization, and the role the business enterprise played in these processes. Through a reassessment of Veblen’s Imperial Germany, this paper explores the main aspects that Veblen considered about the industrialization of England and Germany, deriving theoretical implications for the preconditions of a successful industrialization and development, based on an evolutionary Institutional perspective. Veblen’s analysis is then used to analyze the current state of the industrialization of Latin America, evaluating the last two decades since the 1990s, and comparing the orthodox approach, the neostructural view and the Veblenian perspective, arguing for the validity of a policy framework not reduced only to targeted protectionism but emphasizing the necessity of generating the institutional preconditions suggested by Veblen in his seminal work.     

Determinants of compliance with fiscal rules: Misplaced efforts or hidden motivations?

This paper empirically examines which factors have influenced numerical compliance with fiscal rules in Latin American and Caribbean countries over the period 2000 to 2020. We use logistic regression models to associate three groups of specific factors with a greater or lesser probability of compliance with the rule: the macroeconomic and political environment of the countries and the design features of the enforced rules. We find that only changes in the macroeconomic and political context affect the probability of compliance with the enforced rules. In contrast, the institutional design of the fiscal rules does not seem to play an essential role in the compliance outcome. This result suggests that adjustments in this direction are not decisive for rule compliance.     

Book Review

The diffusion of the Internet is becoming a central policy issue for developing countries, being identified by scholars as a key driver of knowledge, innovation and development. Remarkably, the related literature is scarce and fragmented. In order to contribute to fill this gap, we analyse Internet access and usage patterns in seven Latin American countries. In addition to the traditional socio-economic determinants of Internet access, the results also suggest an important role for network effects, presence of students at households and complementarities in Internet use at different locations. Concerning usage, estimations show that Internet access does not translate automatically into usage. In particular, females are found to be less likely to use the Internet, even once access is provided. Finally, the evidence suggests that while technological skills are necessary to fully exploit Internet potentialities, individuals located in rural areas are more likely to use the Internet for education purposes, confirming the potential connectivity impact on human capital.     

Research on the Roles of Commercial Banks and IMF in the Latin American Debt Crisis

In the 1980s Latin American countries ran into debt crisis. Heavy debt has been the shade that cannot be waved all the time. Commercial banks＇ expansionist thrnst into Latin America made these countries go deeply into the debt crisis. International Monetary Fund played an indispensable role in resolving the crisis. It might temporarily steady the financial situation of an area, but it was difficult to stem the enormous economical loopholes of these countries and couldn＇t solve the basic problems of economy, politics and society. It was unable to make the countries pass the crisis substantially.     

The Evolution of the Veblenian Dichotomy: Veblen,Hamilton, Ayres,and Foster

One of the most troubling developments in recent years has been widening income inequality in the United States and elsewhere. We argue Post Keynesian Institutionalism (PKI) provides insight into the causes of increasing income inequality and our contribution is threefold. First, we compare PKI to the “financialization” literature, noting key similarities and differences. Second, we examine changes in financial structure and income inequality for a sample of developed nations, showing that financialization has increased in nearly all the countries sampled and that this increase has generally been accompanied by a rise in income inequality. Third, we demonstrate that the development of modern financial structures does not preclude an expansive welfare state and egalitarian public policies. Our finding is congruent with Hyman Minsky's conception of PKI, which stressed both that “economic systems are not natural systems” and that capitalism comes in as many varieties as Heinz has of pickles.     

Does corruption increase or decrease employment in firms?

We use representative data for firms for Latin American firms and show that corruption decreases employment in firms. This result is robust to changes in specification and also consistent with the use of an instrumental variables approach. Corruption appears to negatively impact the growth and wealth in a country, not by introducing labour distortion in firms, but by keeping them small.     

Kicking Away the Ladder,Too: Inside Central Banks

Central banks are evolving institutions. In developed countries, particularly in Britain, central banks were used as instruments of the state to finance government and to promote economic development. However, once they went up the economic ladder, advanced economies kicked it to preclude developing countries from climbing it, too. It is in this context that the modern independent central bank, concerned with inflation targeting alone, which harkens back to the Victorian era, should be interpreted. This paper analyzes the recent evolution of the Argentine central bank in this broad historical perspective.     

The Complex Inequality–Innovation–Public Investment Nexus: What We (Don’t) Know,What We Should Know and What We Have to Do

In this paper, we deal with the complex relationship connecting inequality to innovation, and the ways through which public investment can affect it. We first stress that inequality and innovation may interact in many different ways. The positive relation that part of the economic theory often assumes to exist between (initially) rising inequality and improving innovation performances emerges as only one among many other far less virtuous dynamic trajectories. We then analyse the specific case of the US. We put emphasis on the possible perverse effects that the financialization of the US economy may have on the inequality–innovation nexus. We note that the US developmental state—very often neglected by the economic literature—can effectively mitigate such undesirable outcomes. According to our interpretation of recent developments in the US economy, the widespread belief in the positive pro-innovation effects of fierce cut-throat remuneration systems may prove to be ungrounded.