Value and exchange in economic theorizing: The contribution of the Freiburg School

The purpose of this contribution is to point out the main characteristics of the research program of the German economist Walter Eucken, the head of the Freiburg or ORDO-school. An exposé of his thoughts will be given on (a) the relation between theory and history, (b) the foundations of economic science (c) his contributions to economic theory, and (d) his contributions to the theory of economic policy. Moreover the relevance of the contribution of the Freiburg School (Eucken) to the theme of this symposium on value and exchange in economic theorizing will get attention.     

Understanding the demand-side of economic change: a contribution to formal evolutionary theorizing

An outstanding fact of capitalist change in the last few centuries is the ongoing emergence of new consumption alternatives which accompany income and productivity growth in expanding economies. Far from satiating consumers, exponential economic growth seems to stimulate human desires by providing novelty and variety embodied in a persuasive flow of unsettling goods. Although this is a well-known fact characteristic of capitalist change, little attention has been paid by modern growth theorists to the understanding of demand-side phenomena related to the increasing significance of consumption activities in our societies. Against this background, in this article, we show that as soon as we start drawing the demand-side contour of economic change, new phenomena appear which enrich our understanding of economic growth and structural change. By using ‘replicator dynamics’ systems, consumption dynamics are formally linked to the ongoing generation of innovations in capitalist economies. Certain emergent properties concerning economic growth and structural change and several policy implications follow.     

The real exchange rate and economic development

Recent empirical studies have found a robust correlation between competitive exchange rates and economic growth in developing economies. This paper presents (i) a formal model to help explain these findings and (ii) econometric evidence on the relation between investment and the real exchange rate. The model emphasizes the existence of (hidden) unemployment as a source of endogenous growth, even under constant returns to scale. Growth promoting policies, however, affect the external balance, and two instruments are needed in order to achieve targets for both the growth rate and the trade balance. The real exchange rate can serve as one of those instruments. The implications of the model for the relation between real exchange rates and the rate of capital accumulation find support in our econometric analysis.     

Managing real exchange rate for economic growth: Empirical evidences from developing countries

Abstract

This article analyses macroeconomic policies capable of influencing the long-run real exchange rate (RER). In this vein, it identifies economic policy tools that can devalue RER, covering a theoretical issue neglected by the economic literature, which argues that competitive exchange rate enhances growth. After discussing the “Trilemma,” we identify those variables that could affect RER without constraining monetary policy or exchange rate regime choice. In what follows, we model the probability of achieving an undervalued (small or large) RER for a sample of 14 developing countries from 1980 to 2010 (30?years) by applying econometric techniques for discrete choice and censored data. Afterwards, we compare the results for Latin American nations with Asian ones. They suggest that competitive exchange rate requires different approaches depending on the region. Moreover, Latin American countries need to take on additional policies so that interventions in the foreign exchange market become effective.     

China's economic growth and its real exchange rate

The shocks that underlie China's comparatively rapid growth include gains in productivity, factor accumulation and policy reforms that increase allocative efficiency. The well-known Balassa–Samuelson hypothesis links productivity growth in tradable industries with real appreciations. Yet it relies heavily on the law of one price applying for tradable goods, against which there is now considerable evidence. In its absence, other growth shocks also affect the real exchange rate by influencing relative supply or demand for home product varieties. This paper investigates the pre-conditions for the Balassa–Samuelson hypothesis to predict a real appreciation in the Chinese case. It then quantifies the links between all growth shocks and the Chinese real exchange rate using a dynamic model of the global economy with open capital accounts and full demographic underpinnings to labor supply. The results suggest that financial capital inflows most affect the real exchange rate in the short term, while differential productivity is strong in the medium term. Contrary to expectation, in the long term demographic forces prove to be weak relative to changes in the skill composition of the labor force, which enhances services sector performance and depreciates the real exchange rate.     

Time and money: The universals of macroeconomic theorizing

A broad overview of the macroeconomic literature suggests that two objects of economizing behavior, time and money, are the universals or common denominators of macroeconomic theory. Explicit recognition of these universals allows for a fruitful comparison of Keynesians and Monetarists. The former tend to deny the possibility of a market solution to macroeconomic problems, while the latter tend to deny the problems themselves. Austrian macroeconomics, which consists of an integration of capital theory and monetary theory and lies between these two extreme positions, is used to assess recent developments in the mainstreams of macroeconomics.     

Real exchange rate levels and economic development: theoretical analysis and econometric evidence

According to the development approach to exchange rates, competitivecurrencies have been a key factor in most East and SoutheastAsian successful growth strategies. There is also today an importantempirical literature that relates overvaluations to low percapita growth rates. While the econometric literature on thisissue is relatively rich, theoretical analysis of channels throughwhich real exchange rate levels could affect economic developmentare very scarce. This paper intends to contribute to the debateby bringing more theoretical elements and providing new econometricevidence to the connections between real exchange rate levelsand development.     

Value and exchange in law and economics: Buchanan versus posner

Meir Kohn’s Exchange and Value claims that economics can be organised around two opposed paradigms, the exchange and the value paradigms. In this paper, we apply this dichotomy to characterize the analyses proposed by economists in the field known as “law and economics”. We compare and contrasts the perspectives proposed by two prominent scholars—James Buchanan and Richard Posner—and argue that they, respectively, represent the exchange and the value paradigm in law and economics. More precisely, we show that Buchanan sticks to a definition of economics based on the exchange paradigm, and this leads him to define law and economics in a rather specific, different, narrower than Posner’s way to define law and economics—a definition that corresponds to a conception of economics based on the value paradigm.     

Pure exchange equilibrium of dynamic economic models

This paper studies competitive equilibrium over time of a one good model in which the agents are members of a population which grows at a constant rate. Each agent lives for n periods and in the i-th period of his life receives an endowment of e_i units of goods. Goods can neither be produced nor stored. The model is thus the n-period generalization of the two- and three-period models studied by Samuelson in [4]. We seek to ascertain the structure of the time paths of consumption in these models. Our results can be summarized roughly as follows: In general, there will exist two kinds of steady state paths, (i) golden rule paths in which the rate of interest equals the growth rate of population and (ii) “balanced” paths in which the aggregate assets or indebtedness of the society as a whole is zero (a fundamental fact about dynamic models is that it is possible for aggregate debt not to equal aggregate credit as it must in the static case). A model is termed classical if in the golden rule state aggregate assets are negative (or debt positive) and Samuelson (following [4]) in the opposite case. It is conjectured that the golden rule program is globally stable in the classical case and the balanced program is stable in the Samuelson case. This is established for the special case n = 2.     

Stagflation and expansionary economic policies under flexible exchange rates

For a small Keynesian open economy with imported inputs and rational price expectations of workers it is shown that under flexible exchange rates expansionary domestic monetary or fiscal policy may cause stagflation. Simple conditions for such an outcome are given.     

Consumption and Welfare: Two Views of Value Added

The standard view is that value is added to raw material by labor and capital. The question here discussed is whether or not raw material must contain value previously added by nature, or whether it can be simply inert indestructible building blocks. Can humanly added value substitute for value added by nature? If the answer were yes, it should be possible, since matter-energy is not destroyed in consumption, to substitute the waste flow of matter-energy for the flow of fresh natural resources (raw materials). But this would contradict the second law of thermodynamics. The quality of low entropy is what differentiates raw material from waste, and we know of no process whose net effect is to lower the entropy of the total system on which we depend. We must focus more on “that to which value is added,” and not just on value added. This is especially true as the former more and more replaces the latter as the limiting factor in production. Further consequences of the two different views about value added for theory and policy are discussed.     

价值观与经济分析:历史与逻辑的统一

经济分析中是否存在价值判断,“经济人”的涵义是否包含价值观,是经济学发展过程中长期探讨的问题。本文沿着经济学的历史发展过程分析,认为古典经济学中追求自利的经济分析其实就是一种价值观的体现;到了新古典经济学,纯“经济人”已经转化为“社会人”;而演进理论和现代经济学在其分析中已明确赋予自由、文化等超经济因素价值观的涵义。本文将理论逻辑的发展阶段与历史的发展阶段紧密结合起来,认为经济分析与价值观始终有着不可分割的统一关系。     

Two polar cases of dynamic stability: voluntary exchange and income redistribution

Summary. It is known that when voluntary exchange is permitted at disequilibrium, dynamic stability may fail because of lack of liquidity. In this paper it is shown that when the economy runs out of liquidity dynamic stability can still be restored by means of a planning procedure of redistributing personal incomes.Received: 30 May 2003, Revised: 20 January 2005, JEL Classification Numbers: D01, D50.I wish to thank a referee for helpful comments.     

The effects of exchange rate risk on economic performance: the Turkish experience

This study examines the effects of real exchange rate risk on the economic performance for an emerging, small open economy: Turkey. When the ratios of the total foreign exchange liabilities of the Central Bank of the Republic of Turkey (CBRT) to: (1) total reserves; (2) the CBRT's reserves; and (3) the CBRT's total Turkish lira liabilities are taken proxy of exchange rate risk, the empirical evidence suggests that the increase in exchange rate risk causes a depreciation in the real exchange rate, an increase in prices and a decrease in output.     

The impacts of economic sanctions on exchange rate volatility

This research empirically analyzes the impact of various instruments of economic sanctions on official exchange rate volatility by employing data from a panel of 23 target countries covering the period 1996–2015 and using the Least Squares Dummy Variable Corrected (LSDVC) model. Our findings suggest that economic sanctions do significantly influence the target countries’ exchange rate volatility. Specifically, we are able to see different sanction present its different effects on exchange rate volatility. Furthermore, the robustness evidence of the eliminating country as Iran, eliminating variable of political ideology, intercepting time period, cross-sectional regression analysis, using real exchange rate volatility as proxy variable and a new sanctions database, are basically consistent with the previous finding. Overall, our empirical findings offer implications for those sanctioned countries about how to stabilize their exchange rate when facing sanctions.     

Money,exchange and division of labour in Rousseau's economic philosophy

Abstract

This paper examines the arguments advanced by Rousseau to explain his rejection of monetary exchange. First we show that the rejection of money as mean of exchange expresses a dismissal of any form of exchange, motivated by a need for independence. In Julie, the community of Clarens exemplifies an autarchic, paternalistic economy that is at once unequal and deceptive. To understand why Rousseau chose such a downbeat solution to the problems arising from the organisation of the division of labour, we make a parallel between the economic and amatory themes, showing in each case the dependence upon others produced by the development of amour-propre.     

汇率低估与中国经济结构问题

自1994年以来,我国人民币汇率基本保持不变,相对于我国经济强劲的增长势头和外汇储备大幅增长的现实,这种汇率稳定的状况未能反映我国经济发展的实质,汇率低估问题成为目前理论界争论的一个焦点。尽管汇率低估有利于扩大出口、拉动经济增长,但长期实施固定汇率制导致的汇率低估,也会加剧我国经济结构的畸形发展,破坏产业结构的协调性,使消费需求的增长受到限制,最终影响到国民收入水平的提高。解决这一问题,必须逐步形成有管理的浮动汇率制度,使汇率制度适应国内经济结构调整的需要,加快国民经济结构调整的步伐。一、对我国现行汇率制度的再…     

我国巨额外汇储备的经济效应分析

本文采用逐对分析的方法,运用Granger因果检验和回归分析,实证研究了94年结售汇制实施以来,我国巨额外汇储备的经济效应.并针对其带来的影响,提出了政策建议.     

Niches and economic competition: implications for economic efficiency,growth and diversity

This article examines the relationship between market niches and economic competition and explores the consequences of niches for economic efficiency, growth and diversity of commodities. Concepts of a niche in everyday use, ecology, economics and business management are compared. Factors giving rise to market niches, some of which are institutional, are identified, and their links with barriers to entry and mobility are discussed. Common negative views about their consequences for competition and economic efficiency are outlined. However, the availability of niches can potentially have a very positive impact on economic growth and development as well as on the diversity of commodities. New measures of global diversity of commodities are introduced. Economic globalisation involves institutional change that reduces the availability of niches and threatens long-term economic growth and diversity of commodities. Niches also provide frictions in economic systems and may have stabilising properties.