Pub Date : 2020-11-01DOI: 10.4337/ejeep.2020.03.04
M. Setterfield
{"title":"Editorial to the special issue","authors":"M. Setterfield","doi":"10.4337/ejeep.2020.03.04","DOIUrl":"https://doi.org/10.4337/ejeep.2020.03.04","url":null,"abstract":"","PeriodicalId":44368,"journal":{"name":"European Journal of Economics and Economic Policies-Intervention","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2020-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77450746","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"‘I have never held models as depictions of anything real; they are just tools for understanding some aspects of the real world’","authors":"Eckhard Hein, M. Lavoie","doi":"10.4337/ejeep.2020.0063","DOIUrl":"https://doi.org/10.4337/ejeep.2020.0063","url":null,"abstract":"","PeriodicalId":44368,"journal":{"name":"European Journal of Economics and Economic Policies-Intervention","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2020-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77407471","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-11-01DOI: 10.4337/ejeep.2020.03.02
Emiliano Libman
Blecker and Setterfield's new textbook from 2019 presents an updated discussion of heterodox models of growth and distribution. This note clarifies and elaborates on three important issues discussed in the book. First, the text presents mainly one-sectoral and one-technique models, which is a reasonable set-up to keep things simple but not always enough to discuss some controversial issues. Second, continuous substitution is important but not essential for neoclassical growth theory. Third, the popular Goodwin model presented in the text does not produce ‘limit cycles.’
{"title":"A note on Heterodox Macroeconomics by Blecker and Setterfield","authors":"Emiliano Libman","doi":"10.4337/ejeep.2020.03.02","DOIUrl":"https://doi.org/10.4337/ejeep.2020.03.02","url":null,"abstract":"Blecker and Setterfield's new textbook from 2019 presents an updated discussion of heterodox models of growth and distribution. This note clarifies and elaborates on three important issues discussed in the book. First, the text presents mainly one-sectoral and one-technique models, which is a reasonable set-up to keep things simple but not always enough to discuss some controversial issues. Second, continuous substitution is important but not essential for neoclassical growth theory. Third, the popular Goodwin model presented in the text does not produce ‘limit cycles.’","PeriodicalId":44368,"journal":{"name":"European Journal of Economics and Economic Policies-Intervention","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2020-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82989792","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-11-01DOI: 10.4337/ejeep.2020.03.03
Robert A. Blecker, M. Setterfield
Emiliano Libman's constructive comments on our recent book, Heterodox Macroeconomics: Models of Demand, Distribution and Growth (HM), raise three main points of contention: the suitability of single-sector/single-technique (as opposed to multi-sector/multi-technique) models; the appropriate choice of production function; and the distinction between limit cycles and closed orbits as representations of Goodwinian dynamics. In this reply, we respond to Libman's critique in a manner that is designed to develop his arguments into a useful addendum to our book. In so doing, we hope that this exchange will engage interested students and other readers in issues and avenues of inquiry that lie beyond some of the first-pass simplifications in HM.
{"title":"On multi-sector and multi-technique models, production functions and Goodwin cycles: a reply to Libman","authors":"Robert A. Blecker, M. Setterfield","doi":"10.4337/ejeep.2020.03.03","DOIUrl":"https://doi.org/10.4337/ejeep.2020.03.03","url":null,"abstract":"Emiliano Libman's constructive comments on our recent book, Heterodox Macroeconomics: Models of Demand, Distribution and Growth (HM), raise three main points of contention: the suitability of single-sector/single-technique (as opposed to multi-sector/multi-technique) models; the appropriate choice of production function; and the distinction between limit cycles and closed orbits as representations of Goodwinian dynamics. In this reply, we respond to Libman's critique in a manner that is designed to develop his arguments into a useful addendum to our book. In so doing, we hope that this exchange will engage interested students and other readers in issues and avenues of inquiry that lie beyond some of the first-pass simplifications in HM.","PeriodicalId":44368,"journal":{"name":"European Journal of Economics and Economic Policies-Intervention","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2020-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80688079","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Banks play an important role in the post-Keynesian theory of endogenous money but post-Keynesians have not paid much attention to the prudential regulation of banks. Do post-Keynesian insights into the role of banks cast any light on the way they ought to be regulated, or can the conventional treatment of prudential bank regulation be grafted onto post-Keynesian theory without any significant modification? This paper begins a process of reflection on these questions. It argues that conventional prudential regulation theory can be utilised by post-Keynesians but with important modifications including a renewed emphasis on liquidity and greater recognition of endogenously generated systemic risk. A post-Keynesian approach to prudential bank regulation is shown to be characterised by both liquidity and capital requirements, as well as by a macroprudential framework that facilitates the counter-cyclical adjustment of these requirements in response to endogenous variations in systemic risk.
{"title":"Prudential bank regulation: a post-Keynesian perspective","authors":"P. Docherty","doi":"10.4337/ejeep.2020.0060","DOIUrl":"https://doi.org/10.4337/ejeep.2020.0060","url":null,"abstract":"Banks play an important role in the post-Keynesian theory of endogenous money but post-Keynesians have not paid much attention to the prudential regulation of banks. Do post-Keynesian insights into the role of banks cast any light on the way they ought to be regulated, or can the conventional treatment of prudential bank regulation be grafted onto post-Keynesian theory without any significant modification? This paper begins a process of reflection on these questions. It argues that conventional prudential regulation theory can be utilised by post-Keynesians but with important modifications including a renewed emphasis on liquidity and greater recognition of endogenously generated systemic risk. A post-Keynesian approach to prudential bank regulation is shown to be characterised by both liquidity and capital requirements, as well as by a macroprudential framework that facilitates the counter-cyclical adjustment of these requirements in response to endogenous variations in systemic risk.","PeriodicalId":44368,"journal":{"name":"European Journal of Economics and Economic Policies-Intervention","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2020-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74279266","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
For Basil Moore and post-Keynesians who have followed him in developing the theory of endogenous money, accommodative central-bank behavior is a logical necessity in credit-money economies. Such central banks have no choice but to accommodate the banking system's demand for liquidity. Accommodative central banking evolved through a historical process, as this paper shows for the specific case of the US economy. The road to accommodative central banking was a long one in the US, marked by failed experiments with alternative institutional regimes: the Second Bank of the US of the early national period, the urban clearing-houses of the late nineteenth century, and the early Federal Reserve.
对于巴兹尔·摩尔和追随他发展内生货币理论的后凯恩斯主义者来说，在信贷货币经济中，央行的宽松行为是合乎逻辑的必然。这些央行别无选择，只能迎合银行体系对流动性的需求。正如本文针对美国经济的具体案例所展示的那样，宽松的中央银行制度是通过一个历史过程演变而来的。在美国，通往宽松央行的道路是漫长的，其标志是对其他制度制度的失败试验:建国初期的美国第二银行(Second Bank of US)、19世纪末的城市清算所，以及早期的美联储(fed)。
{"title":"The long road to accommodative central banking: the US case","authors":"Jane E. Knodell","doi":"10.4337/ejeep.2020.0061","DOIUrl":"https://doi.org/10.4337/ejeep.2020.0061","url":null,"abstract":"For Basil Moore and post-Keynesians who have followed him in developing the theory of endogenous money, accommodative central-bank behavior is a logical necessity in credit-money economies. Such central banks have no choice but to accommodate the banking system's demand for liquidity. Accommodative central banking evolved through a historical process, as this paper shows for the specific case of the US economy. The road to accommodative central banking was a long one in the US, marked by failed experiments with alternative institutional regimes: the Second Bank of the US of the early national period, the urban clearing-houses of the late nineteenth century, and the early Federal Reserve.","PeriodicalId":44368,"journal":{"name":"European Journal of Economics and Economic Policies-Intervention","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2020-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87292780","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-09-01DOI: 10.4337/ejeep.2020.02.06
P. Bofinger
The paper discusses the monetary policy of the European Central Bank (ECB) under the presidency of Mario Draghi. It first shows the serious mistakes made under his predecessor, Jean-Claude Trichet, during which period the ECB destabilized rather than stabilized. Draghi, on the other hand, embarked on a more expansive course immediately after taking office, thereby securing the existence of the euro in a very threatening situation. In 2014, he then identified the deflationary risks for the eurozone at an early stage and successfully countered them with massive bond purchases. The undesirable developments for the financial system and especially the banks predicted by his critics, who are to be found primarily among German economists, have not materialized.
{"title":"The ECB's policy under the presidency of Mario Draghi: a curse or a blessing for Europe?","authors":"P. Bofinger","doi":"10.4337/ejeep.2020.02.06","DOIUrl":"https://doi.org/10.4337/ejeep.2020.02.06","url":null,"abstract":"The paper discusses the monetary policy of the European Central Bank (ECB) under the presidency of Mario Draghi. It first shows the serious mistakes made under his predecessor, Jean-Claude Trichet, during which period the ECB destabilized rather than stabilized. Draghi, on the other hand, embarked on a more expansive course immediately after taking office, thereby securing the existence of the euro in a very threatening situation. In 2014, he then identified the deflationary risks for the eurozone at an early stage and successfully countered them with massive bond purchases. The undesirable developments for the financial system and especially the banks predicted by his critics, who are to be found primarily among German economists, have not materialized.","PeriodicalId":44368,"journal":{"name":"European Journal of Economics and Economic Policies-Intervention","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72544411","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-09-01DOI: 10.4337/ejeep.2020.02.09
H. Hagemann
The paper points out that capital theory has always been a hotly debated subject, partly because the theoretical issues involved are very complex, and partly because rival ideologies and value systems directly affect the issues discussed. The focus is on the history, the main protagonists, and the relevant problems examined and argued about during the two Cambridges controversy on the theory of capital which was at its peak 50 years ago. Whereas one clear result of these debates is that neither Samuelson's surrogate production function nor Solow's rate-of-return concept could resurrect aggregate neoclassical theory, many other questions, such as the treatment of capital in temporary or intertemporal general equilibrium models or the empirical relevance of the reswitching phenomenon, are still discussed controversially.
{"title":"The Cambridge–Cambridge controversy on the theory of capital: 50 years after","authors":"H. Hagemann","doi":"10.4337/ejeep.2020.02.09","DOIUrl":"https://doi.org/10.4337/ejeep.2020.02.09","url":null,"abstract":"The paper points out that capital theory has always been a hotly debated subject, partly because the theoretical issues involved are very complex, and partly because rival ideologies and value systems directly affect the issues discussed. The focus is on the history, the main protagonists, and the relevant problems examined and argued about during the two Cambridges controversy on the theory of capital which was at its peak 50 years ago. Whereas one clear result of these debates is that neither Samuelson's surrogate production function nor Solow's rate-of-return concept could resurrect aggregate neoclassical theory, many other questions, such as the treatment of capital in temporary or intertemporal general equilibrium models or the empirical relevance of the reswitching phenomenon, are still discussed controversially.","PeriodicalId":44368,"journal":{"name":"European Journal of Economics and Economic Policies-Intervention","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72554805","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-09-01DOI: 10.4337/EJEEP.2020.02.01
J. Priewe
The origins of the reference values for budget deficits and public debt (3 and 60 per cent of GDP) in the euro area are explored. Both numbers came into the Maastricht Treaty by coincidence. Later attempts to legitimise them are traced and found unconvincing. In particular the debt cap is scrutinised, often considered as a precondition for debt sustainability. Since the first overhaul of the Stability and Growth Pact in 2005, reference values for structural deficits became the focus of fiscal policy, but derived from the 60 per cent debt cap. With the so-called Fiscal Compact from 2012, caps for structural deficits were added to the semi-primary law of the European Union. It is argued that the reference values for deficits and debt are not consistent. If the Domar equation is observed, the changing relationship between interest rates on public debt and output growth should be included in the fiscal policy framework. Therefore ‘eternal’ reference values for deficits and debt should be removed from the primary law by Treaty amendments.
本文探讨了欧元区预算赤字和公共债务(分别占GDP的3%和60%)参考值的来源。《马斯特里赫特条约》(Maastricht Treaty)中的这两个数字都是巧合。后来试图使其合法化的努力被追踪，发现难以令人信服。特别是债务上限受到仔细审查，这通常被视为债务可持续性的先决条件。自2005年《稳定与增长公约》(Stability and Growth Pact)首次修订以来，结构性赤字的参考值成为财政政策的焦点，但它源自60%的债务上限。随着2012年所谓的《财政契约》(fiscal Compact)的生效，结构性赤字的上限被添加到欧盟的半主要法律中。有人认为，赤字和债务的参考值并不一致。如果观察到多玛方程，公共债务利率与产出增长之间的变化关系应纳入财政政策框架。因此，应通过《条约》修正案将赤字和债务的“永恒”参考值从基本法中删除。
{"title":"Why 3 and 60 per cent? The rationale of the reference values for fiscal deficits and debt in the European Economic and Monetary Union","authors":"J. Priewe","doi":"10.4337/EJEEP.2020.02.01","DOIUrl":"https://doi.org/10.4337/EJEEP.2020.02.01","url":null,"abstract":"The origins of the reference values for budget deficits and public debt (3 and 60 per cent of GDP) in the euro area are explored. Both numbers came into the Maastricht Treaty by coincidence. Later attempts to legitimise them are traced and found unconvincing. In particular the debt cap is scrutinised, often considered as a precondition for debt sustainability. Since the first overhaul of the Stability and Growth Pact in 2005, reference values for structural deficits became the focus of fiscal policy, but derived from the 60 per cent debt cap. With the so-called Fiscal Compact from 2012, caps for structural deficits were added to the semi-primary law of the European Union. It is argued that the reference values for deficits and debt are not consistent. If the Domar equation is observed, the changing relationship between interest rates on public debt and output growth should be included in the fiscal policy framework. Therefore ‘eternal’ reference values for deficits and debt should be removed from the primary law by Treaty amendments.","PeriodicalId":44368,"journal":{"name":"European Journal of Economics and Economic Policies-Intervention","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83275761","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-09-01DOI: 10.4337/ejeep.2020.02.03
A. Bénassy-Quéré
The euro area crisis was less a crisis of the euro than a crisis of the Maastricht doctrine. The latter was based on a triple ban: no monetization of fiscal deficits, no bail-out, no sovereign default. The euro architecture was also based on a strict division of tasks: the European Central Bank would stabilize prices in the euro area as a whole, whereas national governments would stabilize their own economies in case of idiosyncratic shocks. To make things even more dysfunctional, bank supervision remained under the competence of the member states. Although much has been done since the crisis to reform the Maastricht framework, there are still major flaws that weaken the single currency.
{"title":"Recovering from Maastricht","authors":"A. Bénassy-Quéré","doi":"10.4337/ejeep.2020.02.03","DOIUrl":"https://doi.org/10.4337/ejeep.2020.02.03","url":null,"abstract":"The euro area crisis was less a crisis of the euro than a crisis of the Maastricht doctrine. The latter was based on a triple ban: no monetization of fiscal deficits, no bail-out, no sovereign default. The euro architecture was also based on a strict division of tasks: the European Central Bank would stabilize prices in the euro area as a whole, whereas national governments would stabilize their own economies in case of idiosyncratic shocks. To make things even more dysfunctional, bank supervision remained under the competence of the member states. Although much has been done since the crisis to reform the Maastricht framework, there are still major flaws that weaken the single currency.","PeriodicalId":44368,"journal":{"name":"European Journal of Economics and Economic Policies-Intervention","volume":null,"pages":null},"PeriodicalIF":0.6,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75075702","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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