Bilateral capital flows and the exchange rate: The case of the U.S.A. vis-à-vis Canada,France, West Germany and the U.K.

After a preliminary test (with generally negative results) of the interest parity assumption, an eclectic portfolio adjustment approach, which determines an exchange pressures variable (under a régime of a managed float) is constructed, for bilateral comparisons between the United States and its major trading partners taken individually. This approach to bilateral capital flows and managed exchange rate determination appears to function reasonably well, as judged by the empirical results. Interestingly, factors specific to individual exchange markets appear to play important roles in explaining bilateral capital flows and cross exchange rates, which would not occur in a Walrasian world, with global market clearing.     

The economic content of G.D.H. Cole’s guild socialism: behavioral assumptions,institutional structure,and analytical arguments

Despite a utopian tendency, G.D.H. Cole’s Guild Socialist writings exhibit considerable economic content. After sketching the historical context of Cole’s Guild Socialism and its broad ideology, we address its economic content by: 1. Cataloging Cole’s assumptions concerning worker motivation and utilitarian norms; 2. Clarifying the economic problems Cole sets out to address; 3. Describing the institutional structures of Cole’s Guild Socialism; 4. Exploring Cole’s theoretical contributions and their relation to modern constructs such as the economics of the employment relationship; and 5. Evaluating the extent to which the resulting body of theory is coherent, non-trivial, and normatively attractive.     

The Uzawa–Lucas model without scale effects: theory and empirical evidence

Numerous cross-sectional tests have been performed to evaluate the predictions of recent growth theories such as the Uzawa–Lucas growth model. In a series of papers and in his book, Jones [Q. J. Econ. 110 (1995a) 495; J. Political Econ. 103 (1995b) 759; The upcoming slowdown in US economic growth, Stanford University, Stanford] has shifted the attention toward the time series predictions of endogenous growth models. By contrasting endogenous growth models with facts, one is frequently confronted with the prediction that levels of economic variables, such as human capital, imply lasting effects on the per capita growth rate of an economy. As stylized facts show, measures of education or human capital in most advanced countries have dramatically increased, mostly more than the gross domestic production (GDP). Yet, the growth rates have roughly remained constant or even declined. In this paper we modify the growth effects of education and human capital in our variant of the Uzawa–Lucas growth models and test the model using time series data for the US and Germany from 1962.1 to 1996.4. We consider two versions. In the first, we treat the time spent for education as exogenously given and we neglect the external effect of human capital. In the second version, the time spent for education is an endogenous variable and the external effect of human capital is taken into account. Our results demonstrate that the model is compatible with the time series for aggregate data in those countries. The parameters fall into reasonable ranges.     

The changing economic status of U.S. disabled men: Trends and their determinants, 1982–1991

We track the level of economic well-being of the population of men who began receiving Social Security Disability Insurance benefits in 1980–81 from the time just after they became beneficiaries (in 1982) to 1991. We present measures of the economic well-being of disabled individuals and their nondisabled peers as indicators of the relative economic position of these two groups. These measures also provide an intertemporal comparison of well-being and hardship as disabled persons and their nondisabled peers age and retire. We first show several economic well-being indicators for new male recipients of disability benefits in 1982 and 1991. We then compare their economic position to that of a matched group of nondisabled males with sufficient work histories to have been disability-insured. Because labor market changes over this decade have led to a relative deterioration in the position of younger and less-educated workers, we compare men with disabilities to those without disabilities and distinguish different age and educational levels within the groups. We conclude by assessing the antipoverty effectiveness of Social Security income support for both younger and older male SSDI recipients. First version received: May 1998/final version received: July 1999     

The Analysis of U.S. Deposit Insurance System and the Enlightenment to China

U.S. deposit insurance system has important and deep influence on the building and operating of the deposit insurance system for many countries in the world. Based on the analysis of the development stage and status quo of the U.S. deposit insurance system, this paper suggests that China should learn from the experience of U.S. deposit insurance system, to build and perfect the laws of deposit insurance system, and the mandatory, the scope, the insurance premium, and the top insurance amount of the deposit insurance system should be stated, and the deposit insurance agencies should maintain their independence and restrain the moral hazard. Only in that way can the deposit insurance system of China be built and perfected.     

A post‐Keynesian model of output,employment and monetary demand

This paper presents a simple model based on three broad Post‐Keynesian hypotheses: (1) the economic process develops over time; (2) money is endogenous; and (3) producers are price setters. To make the analysis easier we also assume (4) that firms are vertically integrated. Producers assess the expected demand and ask banks for credit in order to start production; banks create credit at the request of producers to finance the wage bill; workers buy goods sold by firms; firms must repay banks the amount borrowed plus interest and earn a target rate of profit. Since firms have created only as much purchasing power as they have advanced to workers in the form of the wage fund, equilibrium requires that there is an amount of autonomous monetary demand equal to profits and interest. Furthermore, in order to make the value of supply equal to the value of effective demand, firms will employ the number of workers necessary to create the purchasing power which, when added to the anticipated autonomous demand, enables all costs to be covered and the planned rate of profits to be attained.     

How well does a small structural model with sticky prices and wages fit postwar U.S. data?

In this paper, we ask whether a small structural model with sticky prices and wages, embedding various modelling devices designed to increase the degree of strategic complementarity between price-setters, can fit postwar U.S. data. To answer this question, we resort to a two-step empirical evaluation of our model. In a first step, we estimate the model by minimizing the distance between theoretical autocovariances of key macroeconomic variables and their VAR-based empirical counterparts. In a second step, we resort to Watson's [Watson, M.W., 1993. Measures of fit for calibrated models. Journal of Political Economy 101, 1011–1041.] procedure [Measures of fit for calibrated models. Journal of Political Economy 101 (6), 1011.1041] to quantify the model's goodness-of-fit. Our main result is that the combination of sticky prices and sticky wages is central in order to obtain a good empirical fit. Our analysis also reveals that a model with only sticky wages does not perform well according to Watson's criterion [Watson, M.W., 1993. Measures of fit for calibrated models. Journal of Political Economy 101, 1011–1041.].     

The BRICS’s Bank,Institutional Framework,and Other Current Limitations

Abstract:

Based on Polanyi’s concepts of embeddedness, disembeddedness, and the double movement, the aim of this article is to show that the new development bank (NDB) established by Brazil, Russia, India, China, and South Africa (grouped as BRICS) lacks an institutional context to spur growth and development, similar to the growth that occurred during the Bretton Woods era. First, I examine some of the BRICS’s strengths, such as growth rates, share of world GDP (gross domestic product), and the level international reserves as a percent of the world total. Second, I outline the BRICS’s and other Third World countries’ need for financing. I maintain that the main flaw in the BRICS’s bank is that it follows market rationality in obtaining and granting resources, and that China (the most important member of the BRICS) is still dependent on the G7’s economies. Finally, I remark that as long as the NDB follows market fundamentals, it will be less likely to achieve growth.     

“Bad” Decisions,Poverty, and Economic Theory: The Individualist and Social Perspectives in Light of “The American Myth”

Social outcomes are analyzed either by placing responsibility for those outcomes on the individual or to locate the cause in a specific social factor – discrimination. Here, I argue that individual decision-making cannot be the cause of poverty, illustrative of one outcome, and that commentary specifying a particular social factor is insufficient to address the fundamental, underlying cause of poverty. Rather, one must examine the nature of the economic system that lies at the root of such issues. In the process of developing the argument, it is shown that the individualist explanation of poverty is linked to the neoclassical framework, and that this individualist explanation is a product of the (capitalist) economic system itself which then induces an ideology both privileging such an explanation and preventing the development of satisfactory theory that would inform proper policy. An example of this point is drawn from the 1960’s “war on poverty” program.