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.     

Hayek’s monetary theory and policy: A note on alleged inconsistency

Challenging the dominant view, we claim that Hayek’s monetary views did not significantly change over his lifetime. The prevalent perception of early Hayek as a money stream stabilizer and late Hayek as a price level stabilizer is attributable to an unjustified normative interpretation of Hayek’s positive analysis. We argue that in his contributions to monetary theory, Hayek took the goals of monetary policy as exogenously given and analysed the efficiency of different means of achieving them. Hayek’s allegedly inconsistent transformation from a critic to an advocate of price level stabilization is explained by a change of issues under his focus, rather than by a change in his positive views. We also claim that Hayek was always aware that every practical monetary policy involves difficult trade-offs and that he was therefore reluctant to impose his own value judgments on what people should strive for.     

“New” monetary policy instruments and exchange rate volatility

Turkish economy has been suffering from rises in financial flows since the last two decades that these flows have raised financial stability challenges across emerging economies including Turkey. Regarding the ability of the central banks to decrease the financial risks including volatile exchange rate, the Central Bank of the Republic of Turkey has designed and implemented a new policy mix. In this study, we investigated the effect of new policy instruments (IRC, RRR and ROM) on the volatilities of US dollar, euro, British pound and basket rate for Turkish economy between January 2, 2002 and December 9, 2014 by using ARMA-GARCH, ARMA-EGARCH and SWARCH models. From the estimation results, we could not reach enough evidence that the IRC and RRR instruments could decrease the volatilities of exchange rates under investigation while the ROM instrument was successful, especially on US dollar and basket rate. We also found strong evidence in favour of asymmetric volatility, indicating that the positive shocks led to greater exchange rate volatility than negative ones.     

Money,reserves, and the transmission of monetary policy: Does the money multiplier exist?

With the use of non-traditional policy tools, the level of reserve balances has risen in the US from roughly $20 billion before the financial crisis to well past $1 trillion. The effect of reserve balances in macroeconomic models often comes through the money multiplier, affecting the money supply and the bank lending. In this paper, we document that the mechanism does not work through the standard multiplier model or the bank lending channel. If the level of reserve balances is expected to have an impact on the economy, it seems unlikely that a standard multiplier story will explain the effect.     

A Comment on “Grade Inflation: A Way Out”

The authors develop an original measure of learning in higher education, based on grades in subsequent courses. Using this measure of learning, they show that student evaluations are positively related to current grades but unrelated to learning once current grades are controlled. They offer evidence that the weak relationship between learning and student evaluations arises, in part, because students are unaware of how much they have learned in a course. They conclude with a discussion of easily implemented, optimal methods for evaluating teaching.     

A Comment on “Economic Inefficiency: A Failure of Economists”

This comment argues that the Staten-Umbeck critique of welfare economics, published earlier in this journal, is useful in that it challenges economists to carefully specify the assumptions of welfare analysis, but its primary point is only that welfare analysis is not methodologically positive.     

The “price puzzle” in the monetary transmission VARs with long-run restrictions

This study addresses the “price puzzle” — a positive response of prices to monetary tightening in VAR models. By using long-run instead of the usual short-run restrictions on the US data including output, prices and interest rate, we find that monetary tightening had a negative effect on prices.     

Housing,consumption and monetary policy: how different are the first-, second- and third-tier cities in China?

This article presents an empirical analysis of the relationship between house prices and the real economy in China’s first-, second- and third-tier cities. A Structural Vector Autoregression model is applied to study the impacts of monetary policy shocks and housing demand shocks on various housing markets across China. We also investigate the role of house prices in the transmission mechanism of monetary policy. The results reveal that in first-tier cities, raising interest rates has a stronger negative effect on house prices. Also, as house prices decrease in first-tier cities, private consumption declines sharply. There is a stronger role of housing markets in the transmission of monetary policy shocks in these cities. Our findings indicate that interest rate adjustment could effectively curb spikes in housing prices in the first-tier cities, but the impact of such adjustments on household consumption must also be considered.     

Unemployment duration,Fiscal and monetary policies,and the output gap: How do the quantile relationships look like?

We use country-level panel data on average unemployment duration (AvgUD) to explore how the conditional distribution of AvgUD varies with primary fiscal balance (fiscal policy), short-term interest rate (monetary policy), and the state of the business cycle (output gap). We obtain the quantile estimates via a Bayesian quantile mixed effects model, which has so far received limited attention in economics. Our results reveal rich heterogeneity in both the sign and strength of these associations at different quantiles of AvgUD, in different gender and age groups, and in some transition economies that have markedly different labour markets. A higher fiscal balance/surplus is associated with higher middle-upper quantiles of AvgUD among prime-age and old-age men, whereas the empirical association is weak at all quantiles of AvgUD among young men and women. The association between quantiles of AvgUD and fiscal and monetary policies tends to be weaker among women than men. A better state of the business cycle is associated with a lower AvgUD at all quantiles among young men and women.     

Geography, skills or both: What explains Fed watchers’ forecast accuracy of US monetary policy?

The paper shows that there is a substantial degree of heterogeneity in the ability of Fed watchers to forecast US monetary policy decisions. Based on a novel database for 268 individual professional forecasters since 1999, the average absolute forecast error of FOMC decisions varies 5–10 basis points between the best and worst-performers across the sample. This heterogeneity is found to be related to both the skills of analysts – such as their educational and employment backgrounds – and to geography. In particular, forecasters located in regions which experience more idiosyncratic economic conditions perform worse in anticipating monetary policy. This evidence is indicative that limited attention and heterogeneous priors are present even for anticipating important events such as monetary policy decisions.     

农业:从无“保护”,何来“冲击”?

5年前中国加入世界贸易组织时,很多人都担心农业开放是否会造成农产品进口的大幅增长,进而影响到中国的农产品生产以及农民的收入,甚至威胁到国家的粮食安全。现在看来,当时的认识有些过于悲观。首先,农产品进口在入世后大幅度上升,但是其影响并非都是负面的。其次,农民的收入也没有减少,国家的粮食安全也没有受到影响。如果再深入考察的话,会发现中国的农业其实并不存在“开放”之说,因为原本就没有“保护”。逆差并不可怕2004年中国的农产品贸易额大概是514亿美元,如果把欧盟算成一个共同体的话,中国是第四大农产品贸易国,如果把欧盟成员…