Since the late 2000s, the Chinese government has been adopting active industrial policies to create a market for electric vehicles. While celebrated as a success nationally and internationally, a closer look reveals a mixed picture with market growth concentrated in only a few cities. On the basis of heterodox industrial policy literature, Chinese-language policy documents and interviews, we develop an analytical framework to empirically study electric vehicles deployment at the city-level, and to assess the achievements and obstacles of implementing industrial policies in this sector. We particularly stress the interrelatedness of policies governing the demand structure of the electric vehicles market and its main complementary sector, the charging infrastructure, which need to be aligned in the progressively more complex segments making up the electric vehicles market. Taking this industry as a case study, we contribute to the wider debate on the determinants of industrial policy effectiveness.
{"title":"Industrial policy and the creation of the electric vehicles market in China: demand structure, sectoral complementarities and policy coordination","authors":"A. Gomes, R. Pauls, Tobias ten Brink","doi":"10.1093/cje/beac056","DOIUrl":"https://doi.org/10.1093/cje/beac056","url":null,"abstract":"\u0000 Since the late 2000s, the Chinese government has been adopting active industrial policies to create a market for electric vehicles. While celebrated as a success nationally and internationally, a closer look reveals a mixed picture with market growth concentrated in only a few cities. On the basis of heterodox industrial policy literature, Chinese-language policy documents and interviews, we develop an analytical framework to empirically study electric vehicles deployment at the city-level, and to assess the achievements and obstacles of implementing industrial policies in this sector. We particularly stress the interrelatedness of policies governing the demand structure of the electric vehicles market and its main complementary sector, the charging infrastructure, which need to be aligned in the progressively more complex segments making up the electric vehicles market. Taking this industry as a case study, we contribute to the wider debate on the determinants of industrial policy effectiveness.","PeriodicalId":48156,"journal":{"name":"Cambridge Journal of Economics","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-11-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41949729","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Data and digital platforms have simultaneously upended entrenched positions in some industries, opening-up greater and disruptive competition, while driving overall higher levels of concentration through the growing power of multi-sided digital platforms. The coexistence of rivalry and collusion – a key feature of Cowling’s monopoly capitalism – persists and takes new forms in the digital economy. Taking into account the heterogenous nature of platforms, this paper analyses the relationships between large digital platforms and the development of industrial capabilities, especially in middle-income countries and the implications for industrial and competition policies. We advance an analytical-policy framework connecting the different dimensions and sources of platform power responsible for value capture and extraction, and the different platform capability-functions responsible for value creation. Building on this recasting of Hymer’s ‘efficiency contradiction’ and Cowling theory of monopoly capitalism, we advance an integrated industrial-competition policy approach to overcome it and propose a conception of an ‘entrepreneurial-regulatory state’. Complementary industrial and competition policies are required to foster optimal rivalry, being a rivalry which rewards the development of dynamic capabilities and enables contestation by different business models.
{"title":"Governing digital platform power for industrial development: towards an entrepreneurial-regulatory state","authors":"Antonio Andreoni, S. Roberts","doi":"10.1093/cje/beac055","DOIUrl":"https://doi.org/10.1093/cje/beac055","url":null,"abstract":"\u0000 Data and digital platforms have simultaneously upended entrenched positions in some industries, opening-up greater and disruptive competition, while driving overall higher levels of concentration through the growing power of multi-sided digital platforms. The coexistence of rivalry and collusion – a key feature of Cowling’s monopoly capitalism – persists and takes new forms in the digital economy. Taking into account the heterogenous nature of platforms, this paper analyses the relationships between large digital platforms and the development of industrial capabilities, especially in middle-income countries and the implications for industrial and competition policies. We advance an analytical-policy framework connecting the different dimensions and sources of platform power responsible for value capture and extraction, and the different platform capability-functions responsible for value creation. Building on this recasting of Hymer’s ‘efficiency contradiction’ and Cowling theory of monopoly capitalism, we advance an integrated industrial-competition policy approach to overcome it and propose a conception of an ‘entrepreneurial-regulatory state’. Complementary industrial and competition policies are required to foster optimal rivalry, being a rivalry which rewards the development of dynamic capabilities and enables contestation by different business models.","PeriodicalId":48156,"journal":{"name":"Cambridge Journal of Economics","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-11-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48205348","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
M. Conyon, M. Ellman, C. Pitelis, A. Shipman, P. Tomlinson
This Special Issue of the Cambridge Journal of Economics (CJE) marks and celebrates forty years since the publication of Keith Cowling’s (1982) seminal Monopoly Capitalism, which synthesised, updated, and extended the earlier work of scholars such as Steindl (1952), Baran and Sweezy (1966), Hymer (1970, 1972) and Kalecki (1971). Since the publication of Monopoly Capitalism, the critical transformative event has been the latest (fourth) technological revolution and the emergence of Big Tech companies such as Facebook, Apple, Amazon, Netflix and Google (aka FAANGs), alongside Microsoft and so-called ‘gig’ or ‘sharing economy’ firms (such as Uber, Airbnb). While initially regarded as exemplars of the dynamics of contemporary capitalism, in recent years there has been a public backlash against Big Tech, and its impact and influence within the global economy. Indeed, several commentators have raised concerns that beneath the veneer of Big Tech lies potentially insidious business models and practices that have led to a rise in corporate power and the monopolisation of markets. These criticisms, however, largely ignore the contributions of earlier scholars of monopoly capitalism. This Special Issue addresses this oversight with a series of papers re-examining and extending the work of Cowling and others in the monopoly capitalism tradition, in the specific context of Big Tech. The Introduction opens with a portrait of Keith Cowling, as a person and his scholarly contribution to the field. It then provides a critical assessment of the papers in this Special Issue. In the Epilogue, we summarise and conclude.
{"title":"Big Tech Oligopolies, Keith Cowling, and Monopoly Capitalism","authors":"M. Conyon, M. Ellman, C. Pitelis, A. Shipman, P. Tomlinson","doi":"10.1093/cje/beac062","DOIUrl":"https://doi.org/10.1093/cje/beac062","url":null,"abstract":"\u0000 This Special Issue of the Cambridge Journal of Economics (CJE) marks and celebrates forty years since the publication of Keith Cowling’s (1982) seminal Monopoly Capitalism, which synthesised, updated, and extended the earlier work of scholars such as Steindl (1952), Baran and Sweezy (1966), Hymer (1970, 1972) and Kalecki (1971). Since the publication of Monopoly Capitalism, the critical transformative event has been the latest (fourth) technological revolution and the emergence of Big Tech companies such as Facebook, Apple, Amazon, Netflix and Google (aka FAANGs), alongside Microsoft and so-called ‘gig’ or ‘sharing economy’ firms (such as Uber, Airbnb). While initially regarded as exemplars of the dynamics of contemporary capitalism, in recent years there has been a public backlash against Big Tech, and its impact and influence within the global economy. Indeed, several commentators have raised concerns that beneath the veneer of Big Tech lies potentially insidious business models and practices that have led to a rise in corporate power and the monopolisation of markets. These criticisms, however, largely ignore the contributions of earlier scholars of monopoly capitalism. This Special Issue addresses this oversight with a series of papers re-examining and extending the work of Cowling and others in the monopoly capitalism tradition, in the specific context of Big Tech. The Introduction opens with a portrait of Keith Cowling, as a person and his scholarly contribution to the field. It then provides a critical assessment of the papers in this Special Issue. In the Epilogue, we summarise and conclude.","PeriodicalId":48156,"journal":{"name":"Cambridge Journal of Economics","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45617876","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper addresses the questions of corporate power represented by digital platforms. We undertake a conceptual analysis of platform power so that it can provide an explanation of key motivations and behaviours for monopolisation in the platform economy. We argue that there emerges a hierarchical power structure in which platform companies relentlessly pursue power over users, and small platforms increasingly depend on big tech and financial capital. Drawing theoretical insights from the monopoly capital school and empirical evidence from platform companies in China, this paper further explores the macroeconomic implications of platform monopolisation and financialisation. It is demonstrated that the hierarchical power structure in the platform economy may increase income inequality, exacerbate overcapacity and generate financial instability.
{"title":"Platform power: monopolisation and financialisation in the era of big tech","authors":"Zhongjin Li, Hao Qi","doi":"10.1093/cje/beac054","DOIUrl":"https://doi.org/10.1093/cje/beac054","url":null,"abstract":"\u0000 This paper addresses the questions of corporate power represented by digital platforms. We undertake a conceptual analysis of platform power so that it can provide an explanation of key motivations and behaviours for monopolisation in the platform economy. We argue that there emerges a hierarchical power structure in which platform companies relentlessly pursue power over users, and small platforms increasingly depend on big tech and financial capital. Drawing theoretical insights from the monopoly capital school and empirical evidence from platform companies in China, this paper further explores the macroeconomic implications of platform monopolisation and financialisation. It is demonstrated that the hierarchical power structure in the platform economy may increase income inequality, exacerbate overcapacity and generate financial instability.","PeriodicalId":48156,"journal":{"name":"Cambridge Journal of Economics","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-10-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48572310","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The paper applies the radical view of Monopoly Capitalism to the digital platform economy. Based on the seminal ideas of Hymer and Zeitlin that led Cowling and Sugden to define the large monopolistic firm as a means to plan production from a single strategic decision-making centre, we attempt to develop a framework where digital platforms are conceived as an evolution of large transnational corporations. Power and control, in our view of monopoly capitalism, are thus to be understood not only in terms of market relations, but rather as levers for coordinating global production and influencing world societies. Applying this framework to the Amazon case, we highlight the key analytical dimensions to be considered: not only does Amazon dominate other firms and suppliers through its diversification and direct control of data and technology; its power is also linked to global labour fragmentation and uneven bargaining power vis-à-vis the world’s governments, as in the tradition set by Hymer and Cowling.
{"title":"Monopoly Capital in the time of digital platforms: a radical approach to the Amazon case","authors":"Andrea Coveri, C. Cozza, D. Guarascio","doi":"10.1093/cje/beac044","DOIUrl":"https://doi.org/10.1093/cje/beac044","url":null,"abstract":"\u0000 The paper applies the radical view of Monopoly Capitalism to the digital platform economy. Based on the seminal ideas of Hymer and Zeitlin that led Cowling and Sugden to define the large monopolistic firm as a means to plan production from a single strategic decision-making centre, we attempt to develop a framework where digital platforms are conceived as an evolution of large transnational corporations. Power and control, in our view of monopoly capitalism, are thus to be understood not only in terms of market relations, but rather as levers for coordinating global production and influencing world societies. Applying this framework to the Amazon case, we highlight the key analytical dimensions to be considered: not only does Amazon dominate other firms and suppliers through its diversification and direct control of data and technology; its power is also linked to global labour fragmentation and uneven bargaining power vis-à-vis the world’s governments, as in the tradition set by Hymer and Cowling.","PeriodicalId":48156,"journal":{"name":"Cambridge Journal of Economics","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-10-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43224754","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The classical-marxian conception of capitalist monopoly, based on restrictions to capital mobility arising from production conductions and property rights rather than oligopolistic market structure, is a fruitful way of approaching the implications of the pervasive spread of modern corporations—what has been termed the stage of Monopoly Capital. The relevance of the classical-marxian conception of ‘capitalist monopoly’ in the context of new technology is investigated by applying it to the monopoly exercised by contemporary digital platforms, with a specific focus on Google (Alphabet), Amazon and Facebook.
{"title":"Digital platforms: monopoly capital through a classical-marxian lens","authors":"R. Vasudevan","doi":"10.1093/cje/beac045","DOIUrl":"https://doi.org/10.1093/cje/beac045","url":null,"abstract":"\u0000 The classical-marxian conception of capitalist monopoly, based on restrictions to capital mobility arising from production conductions and property rights rather than oligopolistic market structure, is a fruitful way of approaching the implications of the pervasive spread of modern corporations—what has been termed the stage of Monopoly Capital. The relevance of the classical-marxian conception of ‘capitalist monopoly’ in the context of new technology is investigated by applying it to the monopoly exercised by contemporary digital platforms, with a specific focus on Google (Alphabet), Amazon and Facebook.","PeriodicalId":48156,"journal":{"name":"Cambridge Journal of Economics","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45471899","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper analyses events in financial markets since the 2008 financial crisis in both the developed and the developing worlds, giving especial attention to the processes of ‘financialisation’. Its main conclusion is that we are paying the price (a huge one) for two related phenomena. The first relates to the failure of economic theory since the 1970s, especially (although not only) of the mainstream type, to really take on board those developments in the world of international finance that ‘did not fit in their models’ (such as the 1970s stagflation; Volker’s subsequent radical monetarist recession; the ‘savings and loan’ debacle following Reagan’s financial liberalisation and deregulation―policies reinforced in the 1990s; the inability of both monetarists, and traditional Keynesian policies to revert Japan’s ‘lost decade’; and the ‘endogenous’ nature of the 2008 financial crisis). Basically, economic theory has failed to reinvent itself when needed as it did after the 1930s crash. The second, in turn, relates to the fact that rocketing the net worth of a few individuals was a rather odd way to reactivate fragile economies after the 2008 crisis and the 2020 pandemic. But when rentier agents were allowed to become ‘too-large-to-be-challenged’, it was likely that these newly (and artificially) created ‘whales’ would capture policy-making and take it in this direction―leaving the politicians and central bankers to tell stories explaining why the very rich should become the biggest welfare recipients of all time. As one group of Native Americans used to say, ‘Those who are better at storytelling will dominate the world’.
{"title":"Finance as an (ever more fragile) ‘perpetual mania’: have they all lost their collective minds?","authors":"J. G. Palma","doi":"10.1093/cje/beac031","DOIUrl":"https://doi.org/10.1093/cje/beac031","url":null,"abstract":"\u0000 This paper analyses events in financial markets since the 2008 financial crisis in both the developed and the developing worlds, giving especial attention to the processes of ‘financialisation’. Its main conclusion is that we are paying the price (a huge one) for two related phenomena. The first relates to the failure of economic theory since the 1970s, especially (although not only) of the mainstream type, to really take on board those developments in the world of international finance that ‘did not fit in their models’ (such as the 1970s stagflation; Volker’s subsequent radical monetarist recession; the ‘savings and loan’ debacle following Reagan’s financial liberalisation and deregulation―policies reinforced in the 1990s; the inability of both monetarists, and traditional Keynesian policies to revert Japan’s ‘lost decade’; and the ‘endogenous’ nature of the 2008 financial crisis). Basically, economic theory has failed to reinvent itself when needed as it did after the 1930s crash. The second, in turn, relates to the fact that rocketing the net worth of a few individuals was a rather odd way to reactivate fragile economies after the 2008 crisis and the 2020 pandemic. But when rentier agents were allowed to become ‘too-large-to-be-challenged’, it was likely that these newly (and artificially) created ‘whales’ would capture policy-making and take it in this direction―leaving the politicians and central bankers to tell stories explaining why the very rich should become the biggest welfare recipients of all time. As one group of Native Americans used to say, ‘Those who are better at storytelling will dominate the world’.","PeriodicalId":48156,"journal":{"name":"Cambridge Journal of Economics","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-08-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47929106","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
M. Mollo, Fernando Fellows Dourado, Edemilson Paraná
In this paper, we discuss financialisation as the development of fictitious capital in more developed and less developed countries. The controversies surrounding the meaning of fictitious capital require a preliminary discussion on its conceptual definition, which is done by means of an analysis of the relationship between real and fictitious capital within the labour theory of value. Once theoretically explained why the relative autonomy of circulation from production supports financialisation as the development of fictitious capital, we focus on the limits of this relative autonomy, which is something objectified in economic crises. Relevant data were gathered to determine how the concentration of financial investments in fictitious capital in a few markets was able to underpin its enormous and lasting development, even though this fictitious capital, by definition, does not generate surplus or new (labour) value. Furthermore, the analysis of net capital flows between developed and developing countries also demonstrates that the latter are net donors of capital. Therefore, it is possible to verify the relationship between the development of fictitious capital and the increase of inequality between countries.
{"title":"Financialisation as the development of fictitious capital in developing and developed economies","authors":"M. Mollo, Fernando Fellows Dourado, Edemilson Paraná","doi":"10.1093/cje/beac041","DOIUrl":"https://doi.org/10.1093/cje/beac041","url":null,"abstract":"\u0000 In this paper, we discuss financialisation as the development of fictitious capital in more developed and less developed countries. The controversies surrounding the meaning of fictitious capital require a preliminary discussion on its conceptual definition, which is done by means of an analysis of the relationship between real and fictitious capital within the labour theory of value. Once theoretically explained why the relative autonomy of circulation from production supports financialisation as the development of fictitious capital, we focus on the limits of this relative autonomy, which is something objectified in economic crises. Relevant data were gathered to determine how the concentration of financial investments in fictitious capital in a few markets was able to underpin its enormous and lasting development, even though this fictitious capital, by definition, does not generate surplus or new (labour) value. Furthermore, the analysis of net capital flows between developed and developing countries also demonstrates that the latter are net donors of capital. Therefore, it is possible to verify the relationship between the development of fictitious capital and the increase of inequality between countries.","PeriodicalId":48156,"journal":{"name":"Cambridge Journal of Economics","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-08-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43789192","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article provides an empirically grounded study of financialisation in India and assesses the challenges of theorising financialisation and applying it to developing countries. Drawing on the case study of the Indian telecommunication (telecom) sector, this article then contrasts the characteristics of financialisation in India with those in other developing countries. Using the case study, the key institutions, policies and practices that produce and reproduce financial accumulation in this sector are mapped, detailing how the primary role of finance in the telecom sector has changed from facilitating business to making telecom companies investable financial assets that could be bought and sold for profit. The article shows how the uniqueness of India’s financial system leads to a structure where the state, the public sector banks, the big businesses and the financial markets together play a key role in producing and reproducing financialisation in India.
{"title":"The Indian road to financialisation: a case study of the Indian telecommunication sector","authors":"Jai Bhatia","doi":"10.1093/cje/beac039","DOIUrl":"https://doi.org/10.1093/cje/beac039","url":null,"abstract":"\u0000 This article provides an empirically grounded study of financialisation in India and assesses the challenges of theorising financialisation and applying it to developing countries. Drawing on the case study of the Indian telecommunication (telecom) sector, this article then contrasts the characteristics of financialisation in India with those in other developing countries. Using the case study, the key institutions, policies and practices that produce and reproduce financial accumulation in this sector are mapped, detailing how the primary role of finance in the telecom sector has changed from facilitating business to making telecom companies investable financial assets that could be bought and sold for profit. The article shows how the uniqueness of India’s financial system leads to a structure where the state, the public sector banks, the big businesses and the financial markets together play a key role in producing and reproducing financialisation in India.","PeriodicalId":48156,"journal":{"name":"Cambridge Journal of Economics","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-08-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48962717","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
During the 2000s, Brazil accumulated a substantial amount of foreign reserves through foreign exchange market interventions undertaken by its Central Bank. Mainstream economics considers such interventions a restriction to monetary policy autonomy. This article analyses the relationship between monetary policy autonomy and exchange rate regimes theoretically and empirically for the Brazilian economy. We argue that the compensation principle, as a direct derivation of the endogenous money approach, is an alternative to both the trilemma and dilemma views in the mainstream perspective. Then, we provide empirical evidence in favour of the compensation principle in the Brazilian economy by verifying the exogeneity of the interest rate and estimating a vector error-correction model (VECM) that indicates that the foreign reserves do not have a long-term effect on the monetary base, while they present a significant and large effect on the repos account. In line with the compensation view, we conclude that in the 2000s, Brazil had more monetary policy autonomy than conventional approaches would have suggested.
{"title":"Monetary policy autonomy and foreign reserves accumulation in Brazil: a compensation view","authors":"Enzo Gerioni, L. Rolim, J. Omizzolo, N. Schiozer","doi":"10.1093/cje/beac035","DOIUrl":"https://doi.org/10.1093/cje/beac035","url":null,"abstract":"\u0000 During the 2000s, Brazil accumulated a substantial amount of foreign reserves through foreign exchange market interventions undertaken by its Central Bank. Mainstream economics considers such interventions a restriction to monetary policy autonomy. This article analyses the relationship between monetary policy autonomy and exchange rate regimes theoretically and empirically for the Brazilian economy. We argue that the compensation principle, as a direct derivation of the endogenous money approach, is an alternative to both the trilemma and dilemma views in the mainstream perspective. Then, we provide empirical evidence in favour of the compensation principle in the Brazilian economy by verifying the exogeneity of the interest rate and estimating a vector error-correction model (VECM) that indicates that the foreign reserves do not have a long-term effect on the monetary base, while they present a significant and large effect on the repos account. In line with the compensation view, we conclude that in the 2000s, Brazil had more monetary policy autonomy than conventional approaches would have suggested.","PeriodicalId":48156,"journal":{"name":"Cambridge Journal of Economics","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-08-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49477619","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"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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