Saturday , March 17 2018
Home / Matias Vernengo
Matias Vernengo

Matias Vernengo

I was Associate Professor at the University of Utah, Senior Research Manager at the Central Bank of Argentina, and external consultant for the ECLAC, ILO, UNDP and UNCTAD. Taught also at the Federal University of Rio de Janeiro, Kalamazoo College and the Graduate Faculty of the New School for Social Research.

Articles by Matias Vernengo

GDP growth in Latin America

2 days ago

Writing a paper on Latin America. Nothing particularly relevant to report. I was just checking the date. Many sources to get the data. I suggest both the World Bank Development Indicators and the Conference Board Total Economic Database. At any rate, below GDP growth from the Golden Age (after the Korean War and up to Debt crisis) to the Neoliberal Era (starting in the 1990s).

Clearly growth has been more volatile and at lower rates. So much for the notion that Neoliberalism works.

Read More »

Classical Political Economics and the History of Central Banks

4 days ago

As promised not long ago, here a short paper on the history of central banks presented at ASSA meeting in Philadelphia. The paper is short, given the submission policy. It discusses the growing literature on the origins of central banks, and essentially disagrees with Charles Goodhart, who is the authority on the topic.The conventional argument is that central banks only become effectively central banks in the late 19th century when a concern with financial stability was developed and the function of Lender of Last Resort (LOLR) was more formally established. The notion is that up to that point central banks were essentially concerned with profit making, as private institutions, and that only when a concern with financial stability as a public good was developed is that they can be

Read More »

On the blogs

5 days ago

Trying to resurrect my brief look at blogs during weekends. So here are three post/entries/op-ped pieces worth reading (look at this space for three or four of these every Sunday):Will bourgeoisie ever rule the Chinese state?– Branko Milanovic on Arrighi’s question. Funny thing is this weekend I was re-reading Adam Smith in Beijing, since I’m giving one of the keynote speeches at the Political Economy of World Systems (PEWS) meeting in April at Fairfield University (the other being Immanuel Wallerstein. Btw, looking at my notes on the side of the book, I seemed to complain back then (bought the book in 2009 in NY) the absence of a discussion of the Fiscal-Military State in Arrighi.Trump’s steel tariffs are mere political theater– James Galbraith’s piece on The Guardian. More or less

Read More »

Basil Moore (1933-2018)

5 days ago

Basil Moore

I first met Basil in 2000 or 2001, which was quite late, since I’ve read his work as an undergraduate back in the late 1980s. I was Assistant Director of the Center for Economic Policy Analysis (CEPA, now the Schwartz Center) at the New  School, and we invited him for a talk, which was about his forthcoming (at that time) book Shaking the Invisible Hand: Complexity, Endogenous Money and Exogenous Interest Rates  which was published considerably later (my review here).Basil came down from Wesleyan, were he was for most of his career before retiring to South Africa, and we had an interesting debate on the relevance of the Keynesian (not the monetary one, on that we agreed) multiplier, which he considered a mistake, and on dollarization, which, at least at the time, he

Read More »

Andrea Ginzburg and Anthony Brewer

8 days ago

These were two great economists, that I never met, and that sadly have passed away. I would recommend this paper by Andrea Ginzburg, with Annamaria Simonazzi, on foreign debt cycles, and this paper by Anthony Brewer on the effects of capital mobility on the Ricardian comparative advantage model. Their contributions are certainly much more relevant than these two papers, but I think this provide a good example.

Read More »

The left and the return of protectionism

8 days ago

So if you believe a simplified version of conservative views on the economy, Trumponomics is pretty contradictory (and yes they are contradictory, even if one may doubts about why). Tax cuts should lead to growth, via supply side economics, and the recently proposed tariffs on steel and aluminum do exactly the opposite. Protectionism (not a very good name, I prefer managed trade, as I discussed here before) has made a come back, but while many heterodox economists have suggested that ‘free trade’ is not always beneficial to all, and those concerned with the fate of manufacturing and the working class in the United States have decried Free Trade Agreements (FTAs) over the years, it seems that the association of these ideas with Trumponomics has made them less keen on the recent tariff

Read More »

The Godley-Tobin Lecture by James K. Galbraith

11 days ago

Presenting the Lecture

Here is the audio file of Jamie Galbraith inaugural Godley-Tobin Lecture. Due to the weather he recorded the lecture before hand. The paper will appear in the Review of Keynesian Economics (ROKE) soon. Jamie presents a macro discussion of income distribution, which he correctly points out has been absent from most discussion of inequality in recent times.Further, he connects his concern with the data (the UNIDO data that his team at UTIP has worked on for years now) to Wynne Godley’s preoccupation with data consistency and accuracy. He also noted that James Tobin’s preoccupation with the role of monetary variables, which Wynne certainly admired, is central to understand global inequality. We were very happy to have Jamie give the inaugural lecture, not just

Read More »

Theotônio dos Santos (1936-2018)

17 days ago

Theotônio dos Santos, one of the main authors of the Latin American Dependency School, has passed away. I had some minimal contact with him, seeing some of his talks as an undergraduate, and then at a few conferences were we could talk a bit more, including after I had published this paper.When I was a student, I might add, I was basically taught that there were two dependency school traditions, and often the Marxist one, in which Theotônio and André Gunder Frank were the key figures, was seen, at my alma mater (the Federal University of Rio de Janeiro) at least, as the lesser one, with the Structuralist school, of Fernando Henrique Cardoso, being the ‘good’ one. In retrospect, given the political views (and some of the economic views too) that Cardoso came to defend from the late

Read More »

The inaugural Godley – Tobin Memorial Lecture

18 days ago

The inaugural Godley – Tobin Memorial Lecture at the Eastern Economic Association meetings in Boston on Saturday March 3, 11.30am – 12.50pm. The lecture pays tribute to both Godley and Tobin’s emphasis on being non-hyphenated Keynesians (more on that for a later post).The lecture is sponsored by the Review of Keynesian Economics (ROKE) and will be delivered by Professor James K. Galbraith, whose talk is titled “A global macroeconomics – Yes, macroeconomics damn it – of inequality and income distribution.”It will be held in Gardner A & B of the Boston Sheraton. If you are attending the EEA meetings, I hope you will attend.

Read More »

Was Keynes a Keynesian?

18 days ago

Mike Beggs wrote an interesting Review of the book In the Long Run We Are All Dead (which I started, but have not finished yet). Beggs argues that: "Marx lived long enough to declare himself ‘not a Marxist.’ Keynes was not so lucky. Followers would make the distinction between ‘Keynesian economics’ and ‘the economics of Keynes.’ But by then the word had well and truly transcended the man." That’s not altogether correct.

Dave Colander retells the Abba Lerner story of Keynes’ famous presentation at the Fed in 1943, which according to Colander might be the source for the Alan Meltzer (based on Terence Hutchison) argument that Keynes indeed did say "I am not a Keynesian," where Keynes was essentially against deficit spending, and that Evsey Domar, who was next to Lerner, "whispered: ‘He

Read More »

Talk of military intervention in Venezuela is absurd

24 days ago

In early February, US Secretary of State Rex Tillerson embarked on a Latin America tour aimed at promoting "democratic security". But just before he set off on his trip, he speculated on the possibility of a military coup in Venezuela. "In the history of Venezuela and South American countries, it is often times that the military is the agent of change when things are so bad and the leadership can no longer serve the people," he said at an event at the University of Texas at Austin. Tillerson’s comments came six months after US President Donald Trump threatened military action in Venezuela.Full piece published by Al Jazeera here.

Read More »

Cohen and DeLong on Hamilton’s Report on Manufactures

February 13, 2018

Hamilton’s Reports, posthumous 1821 edition
Stephen Cohen* and Brad DeLong, in their highly readable book Concrete Economics: The Hamilton Approach to Economic Growth and Policy (if you haven’t, go buy a copy now), argue that “Alexander Hamilton [was a] major economic theorist. His theory of economic development, first set out in his famous Report on Manufactures (1791), not only reshaped America’s economy but was channeled by Frederich List half a century later to play a central role in Germany’s rapid industrialization, and still later became a canonical text in Japan." Further they suggest that: “This Hamiltonian project was contrary to Ricardo’s canons of comparative advantage as well as Smith’s free markets. It was bold. The direction of economic activity was not commanded, but

Read More »

What About the New Tax Law?

February 7, 2018

New Event from the Susquehanna Progressives. Drop by if you’re around the area. Info below.

"As activists we need to understand the history of US tax policies, how they have changed since the 50’s and why, the affect on our social fabric and what the new tax bill will mean for the health of our nation (Presentation followed by Q&A)."Presenter: Matías Vernengo, Professor of Economics, Bucknell UniversityThursday, February 22 | 7:00 – 8:30 PM
Community Zone, Market Street in Lewisburg 7-8:30

Read More »

Keynes’ intellectual influence: the theorist vs the pamphleteer

February 5, 2018

Keynes’ 1933 and 1929 pamphlets, respectively
One of the many unfair criticisms of Keynes’ General Theory (GT) is that is badly written or somewhat incomprehensible. Note that Keynes started to write it in 1932, four years into the Depression, and two years after publishing the Treatise, which he probably thought was going to be his Magnus Opus. In other words, by the time he started to write the GT the worst part of the Depression was coming to an end (the UK had abandoned gold in 1931, and the US would start the Mew Deal the following year). Keynes’ policy advice, mostly about the need to abandon gold and promote public works was not based on the GT, which came considerably later.As he said, the book was basically for his fellow economists. More importantly the book marked a theoretical

Read More »

Alan Blinder on Fiscal Adjustment

February 2, 2018

Alan Blinder published recently two columns on the WSJ (here and here) on the need to exercise fiscal restraint. In both cases he complains that the fiscal deficit is too large. Note that he is not saying that this is always the case, he emphasizes that in the second and most recent piece. The reason, as always, is that we are close to full employment. In his words:"… today we are back at full employment, or perhaps beyond it, ad economic growth kooks solid. The economy doesn’t need fiscal stimulus."Blinder one must note was strongly for hiking rates in the mid to late 1990s, when he was the vice chairperson at the Fed, exactly for the same reasons (see this old piece in The American Prospect).  So at least he is coherent. We cannot grow too fast, since that would cause inflation. And

Read More »

Investment Rate, Growth and Accelerator Effect in the Supermultiplier Model: the case of Brazil

February 1, 2018

A new paper by Julia Braga, that she will present at the next Eastern Association Economic Meeting in Boston. From the abstract:

"This paper investigates the role of demand in the productive investment evolution in the Brazilian economy. First, it assesses the long-run relationship between investment rate and GDP growth, taking annual data since 1962 until 2015. We then construct a “Final Demand” index and estimate its impact on productive investment growth rate, taking quarterly data since 1996q1 until 2017q2, highlighting a shift in the aftermath of the 2008 world economic crisis. The results support two hypotheses of the Supermultiplier model of Freitas and Serrano (2015) and Serrano, Freitas and Behring (2017) for the Brazilian economy: 1) non-capacity creating expenditures lead

Read More »

Demand Drives Growth all the Way

January 27, 2018

New paper by Lance Taylor, Duncan Foley and Armon Rezai. From the abstract:

"A demand-driven alternative to the conventional Solow-Swan growth model is analyzed. Its medium run is built around Marx-Goodwin cycles of demand and distribution. Long-run income and wealth distributions follow rules of accumulation stated by Pasinetti in combination with a technical progress function for labor productivity growth incorporating a Kaldor effect and induced innovation. An explicit steady state solution is presented along with analysis of dynamics. When wage income of capitalist households is introduced, the Samuelson-Modigliani steady state “dual” to Pasinetti’s cannot be stable. Numerical simulation loosely based on US data suggests that the long-run growth rate is around two percent per

Read More »

The slow recovery in historical perspective: 10 years after the Great Recession

January 14, 2018

It’s hard to believe, but it has been almost a decade since the Great Recession. The official recession started in December 2017, but everybody remembers the collapse of Lehman in September of 2008. When you look at the recovery from the last recession in historical perspective, two things are clear. If you take GDP fall, or increase in unemployment, the Great Recession does not compare to the Great Depression, and that means that fiscal policy (automatic stabilizers and stimulus package) did work. The other is that 10 years into it, we are more or less were we where after 10 years of the Depression (which means the New Deal worked too, since the decline in GDP back then was much more pronounced, and recovery started in 1933).

But what I think is crucial, if one extends the historical

Read More »

The Latin American Crisis

January 12, 2018


I have not written on the problems in the region for a while now (last stuff that is more comprehensive here in the talk at Keene, for example), in part, because the whole theme is a bit depressing (more recently the Honduras crisis, and the return of the right in Chile). As I have noted before, there is no doubt that the collapse of commodity prices has played a significant role in the downturn in the region, but it is also true that a lot of the problems are political in nature, and the resurgence of neoliberalism (with the support of the US, btw) has played a significant role too. In my view, the latter is far more relevant.Two recent issues that I wanted to note, and that prompted my return to the issue of the crisis in the region. One is the downgrading of the Brazilian

Read More »

On mainstream Keynesianism

January 8, 2018

Looking up to Galbraith

The ASSA Meeting was this last weekend in Philadelphia. It was the bomb… cyclone (Nate Cline’s joke; I’m sure many others too came up with that one). I don’t have much to report actually. I did participate in one section, and will post a link to a preliminary version of my paper soon. I was at the Economists for Peace and Security (EPS) dinner, that honored Jamie Galbraith. This blog was named Naked Keynesianism, as you may know, because years ago Fox News accused him of teaching naked Keynesianism, and I thought that was both funny and a reasonable name for the stuff I did.Anwar Shaikh was at the dinner, and suggested that Jamie has one foot in each side of the heterodox/orthodox divide, as a result of his paternal influence (Richard Parker noted that as

Read More »

The IMF and fiscal policy

December 22, 2017

This is a topic I discussed several times here (for example, here, here, here, here or here). Now there is a paper by Marc Lavoie (with co-author) in Intervention, on the same topic. The paper notes that: "There is a paper by Vernengo/Ford (2014) that covers some of the same ground. Their conclusion is that the 2008 crisis prompted only some cautious change in the views being entertained at the IMF" (my paper with Kirsten is here). Just to clarify, that’s not exactly our point. The point we make is that while the research department has changed some of their views, without discarding the crucial concept of the natural rate of unemployment in their analytical framework, the policies pursued by the IMF changed very little indeed. So that there is a kind of double discourse. I referred

Read More »

Review of Shaikh’s Capitalism

December 19, 2017

Woof, woof

I haven’t posted in a while. As I noted before, it’s harder to post new things after almost 7 years. Also, I’ve been both busy and not particularly fond of talking about economics (a certain degree of pessimism about the economy and the profession, I guess). But not yet ready to shut the blog down.Anwar Shaikh was here at Bucknell and gave a lecture on his new book (Capitalism). Here a review by Susan K. Schroder, who was my micro TA back in graduate school a little more than 20 years ago."It has long been recognized that the state of economic theory, particularly modern macroeconomics, is in disarray. With the release of Capitalism: Competition, Conflict and Crises, Anwar Shaikh attempts to place the discipline on a more secure footing. Without doubt, this is a very large

Read More »

Hyperinflation and inequality

November 10, 2017

I’m still reading The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century, which is fun, well-written and in my view less controversial than what most reviews have suggested. Yes, inequality tends to fall mostly by violent means during periods of crisis. Note, also, that Walter Scheidel uses in this book the concept of surplus, and as noted earlier here (or here and here) before is part of this broader group of social scientists that still use the concepts of the old and forgotten classical political economists. There are significant advantages to this approach (see here, for example).

Having said there is an issue that is a bit annoying in the book, which is it simplistic Monetarist view of hyperinflation. For example, he says about

Read More »

More on “Why Latin American Nations Fail”

November 6, 2017

Brief summary of the content of the book published in the newsletter of the World Economics Association.Institutions are central to explaining the way in which, nations grow and develop. Traditionally the study of institutional economics focused on a very broad range of interests and made contributions in several different areas, including the structure of power relations, the beliefs systems, and also social norms of conduct. Contrarily the New Institutionalist turn in mainstream economics places the weight of its explanation on property rights.Within the logical construct of neoclassical economic theory, the contribution of the New Institutional Economics is a necessity, basically because exchange and production in a market economy requires the prior definition of property rights

Read More »

Monitoring the evolution of Latin American economies using a flow-of-funds framework

November 2, 2017

New paper by Esteban Pérez. From the abstract:

Flow-of-funds accounting permit to monitor the financial sector in terms of flows and stocks and to analyze its relationship with the real sector. These show inter-sectoral financial flows, capture balance sheet positions and all financial transactions by instrument, type and economic sector. The construction of flow-of-funds accounts has been traditionally spearheaded by the central banks of developed nations including the Federal Reserve, the European Central Bank and the Bank of Japan. In spite of its usefulness, flow-of-funds accounting has not experienced a parallel development for developing countries including for those of Latin American, In order to start filling this gap we undertook the construction of a data base of

Read More »

The General Theory at 80: Reflections on the History and Enduring Relevance of Keynes’ Economics

November 1, 2017

New paper by Tom Palley. From the abstract:

This paper reflects on the history and enduring relevance of Keynes’ economics. Keynes unleashed a devastating critique of classical macroeconomics and introduced a new replacement schema that defines macroeconomics. The success of the Keynesian revolution triggered a counter-revolution that restored the classical tradition and now enforces a renewed classical monopoly. That monopoly has provided the intellectual foundations for neoliberalism which has produced economic and political conditions echoing the 1930s. Openness to Keynesian ideas seems to fluctuate with conditions, and current conditions are conducive to revival of the Keynesian revolution. However, a revival will have to overcome the renewed classical monopoly.

Read full

Read More »

Why Latin American Nations Fail

October 16, 2017

Book has finally been published. I just got my copies. And yes it is a critique of New Institutionalist views and the title a play with the Acemoglu and Robinson’s book title. From the back cover."The question of development is a major topic in courses across the
social sciences and history, particularly those focused on Latin
America. Many scholars and instructors have tried to pinpoint, explain,
and define the problem of underdevelopment in the region. With new ideas
have come new strategies that by and large have failed to explain or
reduce income disparity and relieve poverty in the region. Why Latin American Nations Fail
brings together leading Latin Americanists from several disciplines to
address the topic of how and why contemporary development strategies
have failed

Read More »

The Passage of Time, Capital, and Investment in Traditional and in Recent Neoclassical Value Theory

October 15, 2017

New paper by Fabio Petri published in Œconomia. From the abstract:
With the shift from traditional analyses
where capital is a single value factor of variable ‘form’ to the
neo-Walrasian versions, general equilibrium theory has encountered new
problems pointed out by P. Garegnani (1976, 1990): impermanence problem,
price-change problem, substitutability problem radically question the
right to consider neo-Walrasian equilibria as approximating the actual
path of real economies. The paper briefly summarizes these problems and
then concentrates on a fourth problem, the savings-investment problem,
arguing that neo-Walrasian general equilibrium theory assumes that
investment is adjusted to full-employment savings but cannot justify
this assumption. The attempt to justify it in

Read More »