{"title":"Book review: Dong Wang and Dejun Cao, Re-Globalisation: When China Meets the World Again (Routledge, London, UK 2020, ISBN 978-1-0031-2693-5) 168 pp.","authors":"Oktay Özden","doi":"10.4337/roke.2023.04.07","DOIUrl":"https://doi.org/10.4337/roke.2023.04.07","url":null,"abstract":"","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":"23 2","pages":""},"PeriodicalIF":1.6,"publicationDate":"2023-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139276453","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The emergence of private digital currencies poses a threat to payment systems and monetary policy because they challenge all functions of money as we know them. In this paper, we focus mainly on the banking and monetary policy issues raised by stablecoins and Central Bank Digital Currencies (CBDCs). We begin by describing the current working of bank-centered payment systems. We next touch upon cryptoassets and focus on the domestic and international impact of stablecoins. We identify two problems with stablecoins: their role in the breakup of uniform currency, and as a source of financial instability due to the lack of a monetary backstop in the event of a run to withdraw funds in adverse situations. We then deal with the pros and cons of CBDCs, whether they are an adequate response to the challenges raised by stablecoins, their possible impact on monetary and banking policy, and some open economy issues. While we do not see major advantages in private digital currencies as a payment system or as an investment, we also do not find any robust motivation for the introduction of CBDCs beyond geopolitical reasons and the oversight of a technological area.
{"title":"Central Bank Digital Currencies: a proper reaction to private digital money?","authors":"S. Cesaratto, Eladio Febrero","doi":"10.4337/roke.2023.04.05","DOIUrl":"https://doi.org/10.4337/roke.2023.04.05","url":null,"abstract":"The emergence of private digital currencies poses a threat to payment systems and monetary policy because they challenge all functions of money as we know them. In this paper, we focus mainly on the banking and monetary policy issues raised by stablecoins and Central Bank Digital Currencies (CBDCs). We begin by describing the current working of bank-centered payment systems. We next touch upon cryptoassets and focus on the domestic and international impact of stablecoins. We identify two problems with stablecoins: their role in the breakup of uniform currency, and as a source of financial instability due to the lack of a monetary backstop in the event of a run to withdraw funds in adverse situations. We then deal with the pros and cons of CBDCs, whether they are an adequate response to the challenges raised by stablecoins, their possible impact on monetary and banking policy, and some open economy issues. While we do not see major advantages in private digital currencies as a payment system or as an investment, we also do not find any robust motivation for the introduction of CBDCs beyond geopolitical reasons and the oversight of a technological area.","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":"33 6","pages":""},"PeriodicalIF":1.6,"publicationDate":"2023-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139276775","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper argues for broadening the application of hysteresis to institutions, policy lock-in, psychology, identity, and economic ideas. Hysteresis is an element of historical processes, and the real world is historical. That explains why hysteresis is pervasive and important. Hysteresis should be a fundamental building block of political economy. Expanding its application in economics is both an opportunity and a challenge. The opportunity is that it provides a means for incorporating political, sociological, and psychological forces, which economics tends to neglect. That will enrich economics and can also provide a mutually enriching bridge to other social sciences. The challenge is introducing such concerns raises questions about the character of economics’ knowledge claims, which is likely to trigger resistance from economists.
{"title":"Broadening the application of hysteresis in economics: institutions, policy lock-in, psychology, identity, and ideas","authors":"Thomas Palley","doi":"10.4337/roke.2023.04.02","DOIUrl":"https://doi.org/10.4337/roke.2023.04.02","url":null,"abstract":"This paper argues for broadening the application of hysteresis to institutions, policy lock-in, psychology, identity, and economic ideas. Hysteresis is an element of historical processes, and the real world is historical. That explains why hysteresis is pervasive and important. Hysteresis should be a fundamental building block of political economy. Expanding its application in economics is both an opportunity and a challenge. The opportunity is that it provides a means for incorporating political, sociological, and psychological forces, which economics tends to neglect. That will enrich economics and can also provide a mutually enriching bridge to other social sciences. The challenge is introducing such concerns raises questions about the character of economics’ knowledge claims, which is likely to trigger resistance from economists.","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":"5 10","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136229428","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The 2008 financial crisis saw a resurgence of interest in the hysteresis hypothesis, which was subsequently reflected in policy responses to the COVID-19 and cost-of-living crises. In this paper, we present new evidence in favour of the hysteresis hypothesis for Germany, France, and the United Kingdom, using a dataset that spans from 1960 to 2019. Our model is based on the popular unobserved components approach to estimating the degree of hysteresis, which is generalised to permit a reduced form Phillips curve that takes the form of an ARIMAX model. Our results are robust to ARCH effects and varying the sample span. They support contemporary warnings of the risk of scarring effects following the COVID-19 crisis, long-standing Post-Keynesian models of hysteresis, and the recent resurgence of mainstream interest in hysteresis.
{"title":"Revisiting the hysteresis hypothesis: an ARIMAX approach","authors":"Robert Calvert Jump, Engelbert Stockhammer","doi":"10.4337/roke.2023.04.03","DOIUrl":"https://doi.org/10.4337/roke.2023.04.03","url":null,"abstract":"The 2008 financial crisis saw a resurgence of interest in the hysteresis hypothesis, which was subsequently reflected in policy responses to the COVID-19 and cost-of-living crises. In this paper, we present new evidence in favour of the hysteresis hypothesis for Germany, France, and the United Kingdom, using a dataset that spans from 1960 to 2019. Our model is based on the popular unobserved components approach to estimating the degree of hysteresis, which is generalised to permit a reduced form Phillips curve that takes the form of an ARIMAX model. Our results are robust to ARCH effects and varying the sample span. They support contemporary warnings of the risk of scarring effects following the COVID-19 crisis, long-standing Post-Keynesian models of hysteresis, and the recent resurgence of mainstream interest in hysteresis.","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":"5 9","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136229429","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
An important property of hysteresis is that temporary events of sufficient magnitude can have permanent effects. The COVID-19 recession in the US was both temporary and extremely deep. This invites the hypothesis that the recession had permanent effects on the US economy as a result of hysteresis. We investigate this hypothesis by focusing on aggregate activity – both actual and potential – and searching for signs of possible adverse hysteresis effects in the data generated by the first two to three years of recovery from the COVID-19 recession. Results suggest that few such signs exist. The conclusion that emerges is that aggregate levels of activity in the US economy will emerge largely unscathed in the longer term from short-term adversities associated with the COVID-19 recession.
{"title":"Will hysteresis effects afflict the US economy during the post-COVID-19 recovery?","authors":"M. Setterfield","doi":"10.4337/roke.2023.04.04","DOIUrl":"https://doi.org/10.4337/roke.2023.04.04","url":null,"abstract":"An important property of hysteresis is that temporary events of sufficient magnitude can have permanent effects. The COVID-19 recession in the US was both temporary and extremely deep. This invites the hypothesis that the recession had permanent effects on the US economy as a result of hysteresis. We investigate this hypothesis by focusing on aggregate activity – both actual and potential – and searching for signs of possible adverse hysteresis effects in the data generated by the first two to three years of recovery from the COVID-19 recession. Results suggest that few such signs exist. The conclusion that emerges is that aggregate levels of activity in the US economy will emerge largely unscathed in the longer term from short-term adversities associated with the COVID-19 recession.","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":"1 1","pages":""},"PeriodicalIF":1.6,"publicationDate":"2023-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139277561","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Book review: Louis-Phillipe Rochon and Sergio Rossi (eds), Elgar Encyclopedia of Post-Keynesian Economics (Edward Elgar Publishing, Cheltenham, UK and Northampton, MA, USA 2023, hardcover, ISBN 978-1-78897-392-2, US$305.00) 474 pp.","authors":"Ivan D. Velasquez","doi":"10.4337/roke.2023.04.08","DOIUrl":"https://doi.org/10.4337/roke.2023.04.08","url":null,"abstract":"","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":"BME-22 4","pages":""},"PeriodicalIF":1.6,"publicationDate":"2023-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139276340","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study a model of secular stagnation, income and wealth distribution, and employment in the Classical–Marxian (CM) tradition, with the purpose of drawing a contrast with established Neoclassical accounts of the topic (Piketty 2014, Gordon 2015). In these explanations, which assume full employment of labor at all times, an exogenous reduction in the growth rate g increases the difference with the endogenous rate of return to capital r. The capital–income ratio rises and, if the elasticity of substitution is above one, the wage share falls. Our explanation does not presuppose full employment, and features a crucial tension between profit-driven capital accumulation and wage-driven labor-augmenting technical change: both these features are defining for CM economics and have been emphasized in recent heterodox macro literature. Institutional or technological shocks that lower the wage share initially foster capital accumulation – which is profit-driven – and increase wealth inequality. However, the effect on long-run growth is negative, because a reduction in the wage share lessens the incentives by firms to introduce labor-saving innovation, which is wage-driven. The capital–income ratio must rise in order to restore balanced growth and stabilize employment in the long run; and the increase in wealth inequality is permanent. The ultimate effect on long-run employment depends on the relative strength of the response of technical change versus real wage growth to labor market institutions: we identify a simple condition that delivers either a wage-led or a profit-led long-run employment regime. We then test the model using time-series data for the US (1960–2019): impulse responses from vector error-correction model (VECM) estimators lend support to the main predictions of our model, and point to the employment–population ratio being wage-led.
我们研究了古典马克思主义（CM）传统中的世俗停滞、收入和财富分配以及就业模型，目的是与新古典主义对这一主题的既定解释（皮凯蒂，2014 年；戈登，2015 年）形成对比。在这些假定劳动力始终充分就业的解释中，外生增长率 g 的下降会增加与内生资本回报率 r 的差异。资本收入比上升，如果替代弹性大于 1，工资份额下降。我们的解释并不以充分就业为前提，其特点是利润驱动的资本积累与工资驱动的劳动力增强型技术变革之间存在着关键的紧张关系：这两个特点都是CM经济学的决定性因素，并在近期的异端宏观文献中得到了强调。降低工资份额的制度或技术冲击最初会促进资本积累（由利润驱动），并加剧财富不平等。然而，这对长期增长的影响是负面的，因为工资份额的减少会降低企业引入节省劳动力的创新的动力，而这是由工资驱动的。资本-收入比率必须上升，才能恢复均衡增长，稳定长期就业；财富不平等的加剧是永久性的。对长期就业的最终影响取决于技术变革相对于实际工资增长对劳动力市场体制的相对反应强度：我们确定了一个简单的条件，可以实现工资主导型或利润主导型的长期就业体制。然后，我们使用美国（1960-2019 年）的时间序列数据对模型进行了检验：向量误差修正模型（VECM）估计器的脉冲响应支持了我们模型的主要预测，并指出就业人口比率是工资主导型的。
{"title":"Secular stagnation: a Classical–Marxian view","authors":"Manuel David Cruz, Daniele Tavani","doi":"10.4337/roke.2023.04.06","DOIUrl":"https://doi.org/10.4337/roke.2023.04.06","url":null,"abstract":"We study a model of secular stagnation, income and wealth distribution, and employment in the Classical–Marxian (CM) tradition, with the purpose of drawing a contrast with established Neoclassical accounts of the topic (Piketty 2014, Gordon 2015). In these explanations, which assume full employment of labor at all times, an exogenous reduction in the growth rate g increases the difference with the endogenous rate of return to capital r. The capital–income ratio rises and, if the elasticity of substitution is above one, the wage share falls. Our explanation does not presuppose full employment, and features a crucial tension between profit-driven capital accumulation and wage-driven labor-augmenting technical change: both these features are defining for CM economics and have been emphasized in recent heterodox macro literature. Institutional or technological shocks that lower the wage share initially foster capital accumulation – which is profit-driven – and increase wealth inequality. However, the effect on long-run growth is negative, because a reduction in the wage share lessens the incentives by firms to introduce labor-saving innovation, which is wage-driven. The capital–income ratio must rise in order to restore balanced growth and stabilize employment in the long run; and the increase in wealth inequality is permanent. The ultimate effect on long-run employment depends on the relative strength of the response of technical change versus real wage growth to labor market institutions: we identify a simple condition that delivers either a wage-led or a profit-led long-run employment regime. We then test the model using time-series data for the US (1960–2019): impulse responses from vector error-correction model (VECM) estimators lend support to the main predictions of our model, and point to the employment–population ratio being wage-led.","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":"20 5","pages":""},"PeriodicalIF":1.6,"publicationDate":"2023-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139277845","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper argues that history, path dependence and hysteresis should have a much greater role in economic analysis than they do at present. To do so, it first reviews several meanings of hysteresis and path dependence using different abstract formulations and discusses applications of these approaches to economic analysis to examine the aspects of the economy to which they have been applied, and the causes and effects of these applications. It then suggests a taxonomy of the broad causes of path dependence. It concludes by summarizing the argument for giving these phenomena a much greater role in models and analyses, and makes some additional comments about these phenomena and their incorporation into economic analysis.
{"title":"Hysteresis and path dependence in economic analysis: formalizations, causes and implications","authors":"A. Dutt","doi":"10.4337/roke.2023.04.01","DOIUrl":"https://doi.org/10.4337/roke.2023.04.01","url":null,"abstract":"This paper argues that history, path dependence and hysteresis should have a much greater role in economic analysis than they do at present. To do so, it first reviews several meanings of hysteresis and path dependence using different abstract formulations and discusses applications of these approaches to economic analysis to examine the aspects of the economy to which they have been applied, and the causes and effects of these applications. It then suggests a taxonomy of the broad causes of path dependence. It concludes by summarizing the argument for giving these phenomena a much greater role in models and analyses, and makes some additional comments about these phenomena and their incorporation into economic analysis.","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":"46 4","pages":""},"PeriodicalIF":1.6,"publicationDate":"2023-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139277896","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Carlos Garcimartín, Arnoldo Marmolejo, Carlos Eggers
This paper studies the effect of social expenditure on imports. In doing so, it uses cross-country panels of the world economy to estimate an augmented balance-of-payments-constrained growth model that takes into account social spending. The results show that social expenditure reduces imports and offsets the negative effect it could have on the balance of trade through its effect on exports. We also find that for OECD countries, education spending is relevant to imports but not to exports, for which the most relevant component is spending on social protection (old-age and unemployment benefits). This result is particularly relevant for development policy in countries with low social expenditure.
{"title":"The effect of public social expenditure on imports","authors":"Carlos Garcimartín, Arnoldo Marmolejo, Carlos Eggers","doi":"10.4337/roke.2023.03.05","DOIUrl":"https://doi.org/10.4337/roke.2023.03.05","url":null,"abstract":"This paper studies the effect of social expenditure on imports. In doing so, it uses cross-country panels of the world economy to estimate an augmented balance-of-payments-constrained growth model that takes into account social spending. The results show that social expenditure reduces imports and offsets the negative effect it could have on the balance of trade through its effect on exports. We also find that for OECD countries, education spending is relevant to imports but not to exports, for which the most relevant component is spending on social protection (old-age and unemployment benefits). This result is particularly relevant for development policy in countries with low social expenditure.","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2023-07-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48046437","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Opposing the mainstream view that economic sentiment conveys information of purely short-term relevance, we assess the long memory characteristics of confidence indicators derived from Business and Consumer Surveys (BCS). We utilize a battery of fractional integration tests on five sectoral BCS indicators in 28 European economies. Conforming to social learning theory, we find that the examined confidence indicators in all five sectors exhibit noteworthy persistence. This finding stays intact in various robustness checks: across countries and for different fractional integration test specifications. Nevertheless, post hoc comparisons reveal that confidence in the construction and consumer sectors exhibits considerably more intensive persistence than in the industry, retail trade, and services. Since it is evident that shocks in economic sentiment have long-term or permanent effects, this calls for a revival of Keynesian ideas and the stabilization role of well-thought and timely countercyclical economic policy measures.
{"title":"A sectoral perspective on the persistence of economic sentiment: mere transitory effect or a long memory process?","authors":"Ivana Lolić, Petar Sorić, Marijan Logarušić","doi":"10.4337/roke.2023.03.03","DOIUrl":"https://doi.org/10.4337/roke.2023.03.03","url":null,"abstract":"Opposing the mainstream view that economic sentiment conveys information of purely short-term relevance, we assess the long memory characteristics of confidence indicators derived from Business and Consumer Surveys (BCS). We utilize a battery of fractional integration tests on five sectoral BCS indicators in 28 European economies. Conforming to social learning theory, we find that the examined confidence indicators in all five sectors exhibit noteworthy persistence. This finding stays intact in various robustness checks: across countries and for different fractional integration test specifications. Nevertheless, post hoc comparisons reveal that confidence in the construction and consumer sectors exhibits considerably more intensive persistence than in the industry, retail trade, and services. Since it is evident that shocks in economic sentiment have long-term or permanent effects, this calls for a revival of Keynesian ideas and the stabilization role of well-thought and timely countercyclical economic policy measures.","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2023-07-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42904023","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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