Archive

Interview with Jan Kregel

Special Forum on Economic Policy Studies

Nigel F.B. Allington, John S.L. McCombie:
Productivity Growth and Unemployment under Mrs. Thatcher Reconsidered

Thomas Bernhardt:
Dimensions of the Argentine Crisis 2001/02. A Critical Survey of Politicoeconomical Explanations

Karin Fischer:
Policy Reform and Income Distribution in Honduras

Special Forum on Recent Interpretations of Keynes and the General Theory

Victoria Chick:
Contextualising Keynes’s Revolution. Review of Michael S. Lawlor’s ›The Economics of Keynes in Historical Context‹

Jan Toporowski:
Keynes Betrayed? Review of Geoff Tily’s ›Keynes’s General Theory, the Rate of Interest, and Keynesian Economics: Keynes Betrayed‹

Paul Davidson:
Understanding Keynes: A Response to Spahn’s Review of ›John Maynard Keynes‹

Reiner Franke:
A Microfounded Herding Model and its Estimation on German Survey Expectations

Special Issue on Financial Markets, Financialisation and the Macroeconomy

Editorial to the Special Issue

Marc Lavoie:
Financialisation Issues in a Post-Keynesian Stock-flow Consistent Model

Soon Ryoo, Peter Skott:
Financialization in Kaleckian Economies with and without Labor Constraints

Sebastian Dullien:
Who is Afraid of Asian FX Interventions? Lessons for Europe from a Three-asset-portfolio Model

Joachim Becker, Rudy Weissenbacher (eds.):
Dollarization, Euroization and Financial Instability. Central and Eastern European Countries between Stagnation and Financial Crisis?
(Berksoy Bilgin)

Philip Arestis, Malcolm Sawyer (eds.):
A Handbook of Alternative Monetary Economics
(Eckhard Hein)

Martin Schürz, Beat Weber:
Das Wissen vom Geld. Auf dem Weg zum Finanzbildungsbürgertum
(Hermann Rauchenschwandtner)

Hartmut Görgens:
Sind die Löhne in Deutschland zu hoch? Zahlen, Fakten, Argumente
Gerhard Bosch, Claudia Weinkopf (Hg.):
Arbeiten für wenig Geld. Niedriglohnbeschäftigung in Deutschland
(Kai Eicker-Wolf)

A Microfounded Herding Model and Its Estimation On German Survey Expectations

Reiner Franke

The paper considers the dynamic adjustments of an average opinion index that can be derived from a microfounded framework where the individual agents switch between two kinds of sentiment with certain transition probabilities. The index can thus represent a general business climate, i.e., expectations about the future course of the economy. This approach is empirically tested with the survey expectations published by the ZEW and ifo institute. The estimated coefficients make economic sense and are highly significant. In particular, besides effects from fundamental data like the output gap in the recent past, one can identify a strong herding mechanism within both panels, such that the agents do not just join the majority but, metaphorically speaking, follow each single motion of the crowd. In addition, the transition probabilities of the ZEW agents are found to be influenced by the ifo climate but not the other way around.

JEL classifications: D84, E32, E37

Keywords: herding dynamics, animal spirits, individual transition probabilities, ifo and ZEW climate index, Kalman filter

Financialisation Issues in a Post-Keynesian Stock-flow Consistent Model

Marc Lavoie

This paper presents a stock-flow consistent growth model which is set in the Post-Keynesian tradition. A key feature of the model, however, is that real government expenditures grow at a rate which is compatible over the long period with a constant rate of unemployment (at the »natural rate of growth«). The model incorporates a detailed description of the household, production, banking and government sectors. This paper focuses on changes in parameters that are tied with financialization. The effects on the following changes are examined: the target proportion of retained earnings to investment, the proportion of profits distributed as dividends, the propensity of households to hold equities, and the propensity of households to take new loans as a proportion of their personal income. There is also a short analysis of the impact of a change in the loan repayment ratio and in the loan default ratio.

JEL classifications: E12, O42

Keywords: financialization, growth, buffer stocks, disequilibria

Financialization in Kaleckian Economies with and without Labor Constraints

Soon Ryoo and Peter Skott

Most Kaleckian models assume a perfectly elastic labor supply, an assumption that is questionable for many developed economies. This paper presents simple labor-constrained Kaleckian models and uses these models to compare the implications of financialization under labor-constrained and dual-economy conditions. The paper complements the analysis in Skott and Ryoo (2008) which did not include labor-constrained Kaleckian economies. We show that for plausible parameter values the financial changes commonly associated with financialization tend to be expansionary in both dual-economy and labor-constrained settings.

JEL classifications: E12, E44

Keywords: financialization, stock-flow consistency, labor constraints, Kaleckian model

Who is Afraid of Asian FX Interventions? Large Lessons for Europe from a Three-assetportfolio Model

Sebastian Dullien

The paper develops a three-asset-portfolio model to analyse consequences of foreign exchange market operations by Asian central banks on the exchange rates between euro, dollar and an Asian currency. It is found that – contrary to public belief – the purchase of dollar assets by Asian central banks strengthens the dollar against both the euro and the Asian currency. A diversification of Asian central bank reserves from dollar into euro would weaken the dollar against both other currencies. Thus, such a diversification would be incompatible with Asian currency pegs. However, it is shown that Asian central banks could alter their relative portfolio composition while keeping the peg intact if they shifted from intervening against the dollar into intervening against the euro.

JEL classification: F31

Keywords: foreign exchange interventions, exchange rates, revived Bretton-Woods-System