Sraffa on Fixed Capital,Money and the Phases of Capitalism

In this paper I address some elements in Piero Sraffa's thinking that are connected to his conceptualization of the phases of capitalism. Sraffa describes various stages of capitalism using similar categories to the ones employed in the model of the economy provided in Production of Commodities. This is done by distinguishing the role of population, land and (circulating, intermediate and fixed) capital in each stage. Sraffa changed his conceptualization of fixed capital over the years, until he reached its final formulation. The conceptualizations of fixed capital that Sraffa discusses, together with his remarks on money which are made through an analogy with circulating and fixed capital, provide some elements that shed light on Sraffa's view of the dynamics of capitalism.     

Territorial identity and development: From topophilia to terraphilia

This paper brings about a conceptual and methodological framework for the study of topophilia and its enrichment in terms of development policy and actions seeking (re)affirmation of landscape-related and other territorial identity features. To this end, the results of an empirical verification of a newly introduced concept, named terraphilia, are presented. Records and assessments of the topophilia–terraphilia interface were carried out in the framework of the Identerra Model that enables empirical delimitation and systematization of the state (spatial fixes) and change (spatial flows) of natural, economic, societal and cultural features of territorial identity. The research area was the Oeste Region (a NUTS III, North-west of the Lisbon Metropolitan Area). The promotion of terraphilia may be important in the process of identification and assessment of strategically relevant elements of local and regional development, such as “sense of territorial belonging” and “territorial attractiveness”.     

Optimal allotment policy in central bank open market operations1

This article derives a central bank's optimal liquidity supply towards a money market with an unrestricted lending facility. We show that when the effect of liquidity on market rates is not too small, and the monetary authority is concerned with both interest rates and liquidity conditions, then the optimal allotment policy may entail a ‘discontinuous’ reaction to initial conditions. In particular, the model predicts a threshold level of liquidity below which the central bank will not bail out the banking system. An estimation of the liquidity effect for the euro area suggests that the discontinuity might have contributed to the Eurosystem's tight response to occurrences of underbidding during the period June 2000 through March 2004.     

Trade Preferences to Small Developing Countries and the Welfare Costs of Lost Multilateral Liberalization

The proliferation of preferential trade liberalization overthe last 20 years has raised the question of whether it slowsmultilateral trade liberalization. Recent theoretical and empiricalevidence indicates that this is the case even for unilateralpreferences that developed countries provide to small and poorcountries, but there is no estimate of the resulting welfarecosts. This stumbling block effect can be avoided by replacingthe unilateral preferences with a fixed import subsidy, whichgenerates a Pareto improvement. More importantly, this paperpresents the first estimates of the welfare cost of preferentialliberalization as a stumbling block to multilateral liberalization.Recent estimates of the stumbling block effect of preferenceswith data for 170 countries and more than 5,000 products areused to calculate the welfare effects of the European Union,Japan, and the United States switching from unilateral preferencesfor least developed countries to an import subsidy scheme. Ina model with no dynamic gains to trade, the switch producesan annual net welfare gain for the 170 countries that adds about10 percent to the estimated trade liberalization gains in theDoha Round. It also generates gains for each group: the EuropeanUnion, Japan, and the United States ($2,934 million), leastdeveloped countries ($520 million), and the rest of the world($900 million).     

Capabilities as causal powers

The author argues that Sen's capability approach is primarilya philosophical under-labouring exercise aimed at elaboratingcertain central economic categories, and that the philosophicaland methodological underpinnings of Sen's approach are radicallydifferent from those of contemporary welfare economics and mainstreameconomic practice. Sen's notion of ‘capabilities’as the potential functionings to achieve well-being is interpretedhere as a specification of the ontological category of ‘causalpower’, presupposing an open system conception of realitythat contrasts with much of contemporary economic practice.     

Policy choice: Theory and evidence from commitment via international trade agreements

Why do governments employ inefficient policies when more efficient ones are available for the same purpose? We address this puzzle in the context of redistribution toward special interest groups (SIGs) by focusing on a set of important policies: tariffs and non-tariff barriers (NTBs). In our policy choice model a government can gain by committing to constrain tariffs through international agreements even if this leads to the use of less efficient NTBs; commitment has political value because it improves the bargaining position of a government that is weak relative to domestic SIGs. Using detailed data we find support for several of the model's predictions including: (i) tariff commitments in trade agreements increase the likelihood and restrictiveness of NTBs but not enough to offset the original tariff reductions; (ii) tariff commitments are more likely to be adopted and more stringent when the government is weaker relative to a SIG. Thus, the results can explain the use of inefficient policies for redistribution and suggest that the bargaining motive is an important source of the political value of commitment in international agreements.     

Episodic Liquidity Crises: Cooperative and Predatory Trading

We describe how episodic illiquidity arises from a breakdown in cooperation between market participants. We first solve a one‐period trading game in continuous‐time, using an asset pricing equation that accounts for the price impact of trading. Then, in a multi‐period framework, we describe an equilibrium in which traders cooperate most of the time through repeated interaction, providing apparent liquidity to one another. Cooperation breaks down when the stakes are high, leading to predatory trading and episodic illiquidity. Equilibrium strategies that involve cooperation across markets lead to less frequent episodic illiquidity, but cause contagion when cooperation breaks down.     

Comercio y empleo en Europa. El papel de las exportaciones de servicios en modo 5

En las dos últimas décadas, el empleo sostenido por las exportaciones extracomunitarias de bienes y servicios ha crecido considerablemente en la UE, con un giro hacia el empleo sostenido por los servicios exportados como parte de productos manufacturados. Para estudiar este fenómeno, los autores descomponen totalmente los flujos comerciales de 40 países y 35 sectores durante el periodo 1995–2011 utilizando un modelo input‐output multirregional y la base de datos mundial input‐output (WIOD). Los resultados indican que los cuatro modos de suministro de servicios tradicionales del Acuerdo General sobre el Comercio de Servicios deberían revisarse para adecuarlos a la nueva realidad del comercio mundial.