Post Keynesian endogenous money theory: A theoretical and empirical investigation of the credit demand schedule

The article investigates the relationship between interest rates and loan amounts provided by commercial banks from both a theoretical and an empirical perspective. Theoretically, some scholars belonging to the post Keynesian endogenous money tradition advocate that a decrease (increase) in interest rates leads to a positive (negative) effect on the amount of loans demanded by households and firms. On the other hand, some heterodox economists maintain that interest rates do not stimulate firms’ credit demand but that a certain degree of influence is allowed for loans provided to households. By applying a vector autoregression (VAR) and vector error-correction model (VECM) methodology to European Central Bank and Organisation for Economic Co-operation and Development data for the eurozone, this article proposes an empirical validation of such theoretical premises by analysing the relationship between the different types of credit provided by commercial banks and the corresponding interest rates. The main results show a negative relationship between the interest rates and the credit provided for the purchase of houses. Conversely, no significant relationship is found between loans granted to enterprises and loans for the purchase of consumption goods and the corresponding interest rates.     

Keynes on State and Economic Development

ABSTRACT

This article has two purposes. On the one hand, it develops Keynes’s concept of economic development. On the other hand, it presents Keynes’s ideas about the role of State, chiefly the State Agenda. Keynes believed that the stage of economic development would only be attained if the State Agenda was in practice. In turn, to Keynes the economic development would be a stage in which the economic problems of society have been surpassed, and the motto of the individual behavior has been changed from the love of money to the love of living.     

Endogenous Money,Fiscal Policy,Interest Rates and the Exchange Rate Regime: A Comment on Palley,Tymoigne and Wray

One of the main collective contributions of the various heterodox schools of monetary thought, such as circuit theory, Post Keynesian theory, modern money theory (MMT) and others, has been to stress the importance of the endogeneity of money via bank credit creation. It is necessary to stress the notion of a collective contribution because of the various claims and counter-claims to academic priority made in the literature. The recent exchange between T.I. Palley and E. Tymoigne and L.R. Wray in this journal provides a clear example of this. This response examines the differences between these writers in some detail.     

我国人力资本投资对经济增长作用的实证研究

我国作为世界上的大国,拥有世界1/5的人口,但是资源的稀缺约束着我国的发展。不过,我国所具备的充裕人力劳动资源是不可忽视的优势,若能将人力资源转化为人力资本,必定会推动我国经济进一步发展。通过计量经济学分析模式,剖析了我国人力资本投资对经济增长的贡献作用,阐明了人力资本投资对经济增长的促进作用。并就如何加强我国人力资本投资与建设提出了建议。     

Money Creation in the Eurozone: An Empirical Assessment of the Endogenous and the Exogenous Money Theories

ABSTRACT

The aim of this paper is to strengthen our understanding of the money creation process in the Eurozone for 1999–2016 period, through an empirical assessment of two main monetary theories, namely the (Post Keynesian) endogenous money theory and the (Monetarist) exogenous money theory. By applying a VAR and VECM methodology, we analyse the causal relationship among monetary reserves (or monetary base), bank deposits and bank loans. Our empirical analysis supports several propositions of the Post Keynesian endogenous money theory since (i) bank loans determine bank deposits, and (ii) bank deposits in turn determine monetary reserves.     

Expectations,uncertainty and institutions. An application to the analysis of social security reforms

The aging process that many developed economies will face in the medium-term is leading to reforms in the public pensions systems in order to solve the potential financial unsustainability generated by the foreseeable increase in the expenditure in pension benefits (assuming that the current social security contributions and the eligibility conditions will remain unchanged). Neoclassical economics defends a radical reform of these systems, substituting the current pay-as-you-go (PAYGO) systems by funded systems. In this paper, using the Post-Keynesian theory as a theoretical framework, we provide an alternative reflection to that proposed by the neoclassical economics about the choice between the alternative pension systems. The focus of the paper is the advantages of the PAYGO pension systems to stabilize the expectations of future income.     

Population and Economic Growth Under Different Growth Engines

Using a growth model with physical capital accumulation, human capital investment and horizontal R&D activity, this paper proposes an alternative channel through which an increase in the population growth rate may yield a non‐uniform (i.e., a positive, negative, or neutral) impact on the long‐run growth rate of per‐capita GDP, as available empirical evidence seems mostly to suggest. The proposed mechanism relies on the nature of the process of economic growth (whether it is fully or semi‐endogenous), and the peculiar engine(s) driving economic growth (human capital investment, R&D activity, or both). The model also explains why in the long term the association between population growth and productivity growth may ultimately be negative when R&D is an engine of economic growth.     

内生经济增长理论与反贫困——基于“丝路明珠”和田地区的贫困问题研究

本文运用内生经济增长理论,探讨政府有关人力资本和基础设施的投资对贫困人口发生率的影响程度.利用1995～2004年之间和田地区各县的面板数据,建立多元线性回归模型,评价不同类型政府投入的效果.分析表明,政府提高人力资本的投资,如在公共医疗、信息化、教育和基础设施建设方面的投入对推动地区经济增长,打破贫困与环境之间的恶性循环,减少贫困人口数量效果显著.     

Bringing Social Structure Back into Economics: On Critical Realism and Hayek's Scientism Essay

This paper offers a critique of the critical realist (CR) interpretation of Friedrich Hayek's famous essay Scientism and the Study of Society presented in Tony Lawson's recent Economics and Reality. It is argued, contrary to Lawson's reading, that Hayek's social structures (1) do have an existence over and above the conceptions of the individual actors and (2) serve as a precondition for human action on the lines proposed by CR. Some links are made between Hayek's essay and the theory of social reality recently proposed by John Searle, and some comparisons drawn with CR.     

Labor supply: Toward the construction of an alternative conception from post Keynesian and institutional economics

Post Keynesian and institutional economics have traditionally maintained a critical stance toward the orthodox model of labor supply, questioning many of its underlying assumptions. Nevertheless, this critical view has not led to the formulation of an alternative conception of labor supply that is sufficiently coherent and structured to be generally accepted within these branches of the literature. Accordingly, the purpose of this study is to contribute to the construction of such an alternative. To do so, the article starts by analyzing the relationship between the reasons that lead to individuals offering their labor and what that activity can bring to human beings in return. Secondly, the authors present an alternative concept of what workers contribute at work. They then analyze how the decision-making process regarding the labor supply actually takes place. Finally, the article concludes by briefly presenting certain additional points, in particular how differentiation is an inherent feature of the labor supply.     

Accounting for the business cycle: Nominal rigidities, factor heterogeneity, and Austrian capital theory

An Austrian interpretation of the New Keynesian small menu cost model of the business cycle is proposed. Austrian and New Keynesian business cycle theories share the feature that the cycle is generated by rigidities which prevent the economy from adapting instantaneously to changing conditions. Austrian business cycle theory is capital-based, focusing on credit expansion which artificially lowers interest rates and causes an investment boom and unsustainable business expansion. In contrast, the New Keynesian small menu cost model of the business cycle is based on nominal rigidities which prevent markets from clearing. Small menu costs introduce dichotomous behavior, where firms find it locally optimal to avoid instantaneous output price adjustments in the face of the cost, but this local optimum results in economy-wide output and employment fluctuations which are much greater in relative magnitude. The small menu cost model of the business cycle is extended and reinterpreted in light of Austrian business cycle theory with heterogeneous, multiply-specific capital, thus providing a rigorous formalization of the Austrian business cycle. The Austrian interpretation of this New Keynesian model fortuitously addresses several of its shortcomings. JEL classification B53, E12, E23, E32     

Deriving the Engel Curve: Pierre Bourdieu and the Social Critique of Maslow's Hierarchy of Needs

In Post Keynesian Economics, theorists have sought an alternative to neoclassical choice theory by turning to Maslow's hierarchy of needs (Pasinetti 1981 Pasinetti LL 1981 Structural Change and Economic Growth Cambridge: Cambridge University Press  , Lavoie 1992 Lavoie M 1992 Foundations of Post-Keynesian Economic Analysis London: Edward Elgar  ). Instead of each individual surveying a complete choice set, individuals prioritize (basic) physiological needs, moving with increasing incomes to satisfy safety and social needs, through to the higher needs associated with self-actualization. This framework provides a theoretical foundation for the Engel curve, since as incomes increase consumers become satiated when particular needs are satisfied. As an alternative to the neoclassical preoccupation with prices and substitution, a Post Keynesian theory of consumption has been formulated with income effects as the cornerstone. The main problem with Maslow's approach is that individual needs are innate, so that questions of social interaction and culture are seriously downgraded. In this article, the social theory of Pierre Bourdieu is offered as an alternative to the Maslow approach, providing the basis for a social critique of consumerism and an alternative evolutionary theory of consumption. In this approach, the structure of the social hierarchy both constrains the consumption of lower social strata and leads to subtle, less conspicuous consumption patterns at the top of the social hierarchy: a scenario that could provide a social foundation to the Engel curve.     

Monetary and fiscal policy interactions in the post-war U.S.

A New Keynesian model allowing for an active monetary and passive fiscal policy (AMPF) regime and a passive monetary and active fiscal policy (PMAF) regime is estimated to fit various U.S. samples from 1955 to 2007. The results show that data in the pre-Volcker periods strongly prefer an AMPF regime, even with a prior centered in the PMAF region. The estimation, however, is not very informative about whether the Federal Reserve's reaction to inflation is greater than one in the pre-Volcker period, because much lower values can still preserve determinacy under passive fiscal policy. In addition, whether a PMAF regime can generate consumption growth following a government spending increase depends on the degree of price stickiness. An income tax cut can yield an unusual negative labor response if monetary policy aggressively stabilizes output growth.     

Neo-Kaleckian and Sraffian Controversies on the Theory of Accumulation

Abstract

Non-orthodox economists generally share the Keynesian Hypothesis of the independence of investment from capacity savings, in the long run no less than in the short run. This hypothesis marks an essential point of difference from neoclassical theory. Keynes showed that within the limits of the existing capacity utilisation, investment determines savings rather than the other way around. How best to extend this conclusion to the long run is the object of the current paper. The paper assesses the controversy on demand-led growth that has taken place since the mid-1980s between neo-Kaleckian and Sraffian authors. The Sraffian front may be divided into a first and a second Sraffian position, the latter being the Sraffian supermultiplier approach. I shall argue that this second approach is the most promising framework for analysing economic growth.     

Boettke,The Austrian School and the Reclamation of Reality in Modern Economics

In a series of recent papers, the prominent Austrian economist Peter Boettke has criticised orthodox economics for its lack of realism. This paper situates Boettkes critique in the context provided by recent developments in the methodology of economics, most notably critical realism. While there is a good deal of common ground between Boettkes approach and critical realism, the latter also helps to reveal some of the limitations of the variant of Austrian economics to which Boettke subscribes. Suggestions are made as to how critical realists and Austrians such as Boettke might move forward together in developing a more realistic, relevant and fruitful approach to economic analysis.     

金融发展与经济增长:国外研究综述

本文较为详细地介绍了近年来国外金融发展与经济增长关系的研究文献,并对有关研究进行了评述.主要内容包括金融发展与经济增长的关系,金融结构主义和金融抑制主义的主要观点的产生、发展(演变路径)和研究现状.     

The labour share and the dynamics of output

We derive a new Keynesian IS curve that is augmented to capture the direct effects of the labour share on output. Our derivation shows that the direct effect of the labour share on output is ambiguous. Furthermore, theory suggests that the expected labour share negatively affects output. Empirically, we find that the labour share plays a significant role in driving output dynamics. However contrary to theoretical expectation, the expected labour share positively affects output in some cases, a finding we call the ‘labour share puzzle’. We also find that over time, there seems to be a general shift in aggregate demand dynamics towards being profit-led, i.e. rising labour share decreases output. We conclude that policymakers should not ignore the labour share in their decisions.     

The Reality of the Present and the Challenge of the Future: J. Fagg Foster for the Twenty-First Century

This paper revisits J. Fagg Foster’s early assessment of the relevance of John Maynard Keynes’s theory of institutional economics. In his view, neither institutionalists nor most of Keynes’s followers really recognized the importance of Keynes’s theoretical insights. I examine Foster’s views on economic theory, with a particular focus on monetary theory. I apply Foster’s approach to what is now called modern money theory, an approach developed by heterodox economists working in the institutionalist and post-Keynesian traditions. I argue that this approach is consistent with Foster’s, and it offers a way forward to policy formation for the twenty-first century.     

The Rate of Change in Evolutionary Systems and Evolutionary Economic Modeling

Evolutionary economics seeks to model socio-economic reality as an evolutionary system. This powerful approach entails the implication of the continuous loss of information through the evolutionary process. The implication corresponds to evolutionary biology, although the systems in evolutionary economics are different from those in evolutionary biology. The issue of the loss of information has not been extensively studied in economics. Many open questions remain: Which knowledge is lost under what circumstances? Can loss of information be harmful to the socio-economic system as a whole in the presence of runaway dynamics caused by, for example, network externalities? How can the development of knowledge in economic systems be studied? The present article examines these questions and more.