Friday , November 15 2019
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Articles by V. Ramanan

John Eatwell’s Speech On Joan Robinson

8 days ago

John Eatwell’s Speech On Joan RobinsonGood speech on Joan Robinson by John Eatwell from earlier this year at Girton CollegeEatwell argues how Robinson was a top economist. He talks of the “new mercantilism”, on how free trade creates a deflationary bias on the world economy, many among other things.

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Lance Taylor — Not So Modern Monetary Theory

13 days ago

Lance Taylor — Not So Modern Monetary TheoryLance Taylor has a new working paper Synthetic MMT: Old Line Keynesianism With An Expansionary Twist with a summary blog post at INET.Paper linked in that post.He talks of the reluctance of Neochartalists to talk of increases in tax rates. Politicians such as Bernie Sanders and Elizabeth Warren running for the President of the United States as a Democrat have proposed plans to raise government spending. There is also a proposed legislation, Green New Deal. These programs may take the US economy to full capacity and hence it is important to take of increases in tax rates. Sanders and Warren have put forward some plans to raise taxes, especially on the highly wealthy. Of course, full capacity or not, tax laws affect the distribution of the national

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Omission And Commission In The Development Economics Of Daron Acemoglu And Esther Duflo

13 days ago

Omission And Commission In The Development Economics Of Daron Acemoglu And Esther DufloThere’s a new paper by Robert Chernomas and Ian Hudson which critiques the economics of Daron Acemoglu and Esther Duflo. The paper was written earlier but it’s publication coincides with the recent award of the Nobel Prize, of which Duflo was one of the recipients.Abstract:This article is a critical review of the work of Esther Duflo, recently awarded the 2019 Nobel Prize for economics, and of Daron Acemoglu, who like Duflo has received the John Bates Clark Medal in recognition of research in development economics. Aside from the differences in the two scholars’ approaches, we argue that both downplay the role of the state and of international economic structures that influence national development,

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Marc Lavoie — History And Fundamentals Of Post-Keynesian Macroeconomics

14 days ago

Marc Lavoie — History And Fundamentals Of Post-Keynesian MacroeconomicsMarc Lavoie talks on Post-Keynesian macroeconomics at the recent conference Euro At 20 – Macroeconomic Challenges in BerlinThere were some interesting additions to his table on macro paradoxes at 31:20 in the video on flexible wages leading to more instability, which is counter-intuitive from a neoclassical viewpoint.

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Citations Needed — Episode 92: The Responsibility-Erasing Catch-All Of ‘Automation’

16 days ago

Citations Needed — Episode 92: The Responsibility-Erasing Catch-All Of ‘Automation’The latest episode of the podcast Citations Needed has a great discussion of the political economy around “automation”. It features Mark Weisbrot of CEPR and Peter Frase of Jacobin.The episode talks of the misleading discourse and and post-truths in mainstream economics and media. For example Weisbrot points out how the US trade imbalance has a lot to contribute to reduction in manufacturing employment.

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Paul Krugman’s Mea Culpa On Globalisation

20 days ago

Last year, Paul Krugman had an article on globalisation and how he got it wrong. Of course, typically, the ones doing mea culpa rarely admit it that they were totally wrong and spin it the way which is most opportunistic. I had a post on it.Recently Bloomberg published an excerpt from it.Noam Chomsky wrote a book Profit Over People in 1999 with an Introduction by Robert McChesney who had a fanstastic description of globalisation:And nowhere is the centrality of governments and policymaking more apparent than in the emergence of the global market economy. What is presented by pro-business ideologues as the natural expanson of free markets across borders is, in fact, quite the opposite. Globalization is the result of powerful governments, especially that of the United States, pushing trade

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Fantastic Critique Of Liberalism By Perry Anderson

22 days ago

Fantastic Critique Of Liberalism By Perry AndersonPerry Anderson in Situationism À L’envers? in New Left Review, Issue 119, Sep-Oct 2019:Liberalism has always contained different shades, and its dominant version has varied across countries and periods. In the capitalist world, going back to the eighties, the line of division separating a liberal politics from a politics of the left is their respective attitudes to the existing order of things: does it require structural change or situational adjustment? The degree envisaged of each defines relative locations on either side of the dividing-line. To see where Tooze’s position might lie requires a sense of the dominant liberalism of the period. That comes in two inter-related packages. Between states, the ‘liberal international order’ has for

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Appreciation Of Wynne Godley’s Work In Adam Tooze’s Crashed And Its Reviews

23 days ago

Adam Tooze’s book Crashed seems popular. The book and two reviews have some good appreciation of Wynne Godley’s work used in the book to explain why the crisis happened. The two reviews, both published in New Left Review:In The Crisis Cockpit, by Cédric Durand,Situationism À L’envers? by Perry Anderson.In the acknowledgments section of his book Adam Tooze writes:Wynne Godley was a mentor and teacher of a very different kind. Spontaneously warm and generous in spirit, he took me under his cape in my first year at King’s and introduced me, and a group of my contemporaries, to what was, at the time, a highly idiosyncratic brand of economics. In so doing he provided a model of intellectual warmth and vitality. He also confirmed doubts that had been gestating in me about the IS-LM model that

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Fine Heterodox Critiques Of The 2019 Economic Nobel Prize

28 days ago

The economics Nobel Prize was announced on Monday.There has been a good Twitter debate on the 2019 Nobel prize in economics, led by women in heterodox economics.In my opinion, the award delegitimises the political economic causes of poverty. I like this tweet by Sara Stevano:Experiments to alleviate poverty = correct the biases of the poor through narrow interventions and RCTs with huge issues in terms of ethics and research rigour. Seems completely odd at a time when many economists have come to realise we need to rethink the Global economic order!Then a Twitter thread today by Ingrid Kvangraven linking to her article. She points out:This movement towards “thinking small” is a part of a broader trend, which has squeezed out questions related to global economic institutions, trade,

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Anthony Thirlwall — Thoughts On Balance-Of-Payments-Constrained Growth After 40 Years

October 13, 2019

Anthony Thirlwall — Thoughts On Balance-Of-Payments-Constrained Growth After 40 YearsROKE (Review Of Keynesian Economics) has a special issue, Thirlwall’s Law At 40, celebrating Thirlwall’s law which Anthony Thilwall discovered in 1979.Thirlwall himself has an article in the issue.Interesting, from the conclusion:Structural change almost certainly requires a country to design an industrial policy embracing a national innovation system to facilitate the flow of technological knowledge across all sectors of the economy. The market mechanism itself is unlikely to bring about the required structural changes needed. I am attracted to the concepts of growth diagnostics (Hausmann et al. 2008) and self-discovery (Hausmann and Rodrik 2003). Growth diagnostics involves locating the binding

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SFC Model From The 80s

October 10, 2019

SFC Model From The 80sGennaro Zezza has shared a 1987 paper by him and Wynne Godley modeling the Italian economy using a “real stock flow monetary model”

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The Cambridge Political Economy Society Digital Archive

October 6, 2019

I came across the Cambridge Political Economy Society digital archive today. It has scans of papers which aren’t available elsewhere.There’s an interesting article, Causes Of Growth And Recession In World Trade, there, by Francis Cripps, in which he describes the Cambridge Keynesian idea of achieving balanced trade, because nations face a balance-of-payments constraint:The main conclusion of the analysis presented below is that demand creation by means of fiscal and monetary action at the national level is very unlikely to be able to procure a recovery from world recession, because it does not offer a solution to the structural problem of imbalances in trade. On the other hand, demand creation at the international level, designed to boost countries’ import capacity in a manner analogous to

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RWER Issue On Neochartalism

October 4, 2019

The latest issue of Real World Economic Review is titled Modern Monetary Theory And Its Critics with 204 pages of papers is your weekend reading.Marc Lavoie talks of how the neochartalists have made it look like all Post-Keynesian monetary theory has been discovered by neochartalists themselves. Lack of credit, basically. Jo Michell challenges them on open economy issues. Thomas Palley points out how their arithmetic doesn’t add up.Long read. Just my initial impressions.I have a few comments on Jo Michell’s article with his two co-authors. Jo points out that monetary sovereignty is a spectrum. Some neochartalists such as Fadel Kaboub and Nathan Tankus also say the same without these are contradictory to neochartalists’ claims. The idea of external constraints is an important part of

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Marc Lavoie — Advances In The Post-Keynesian Analysis Of Money And Finance

September 27, 2019

Marc Lavoie — Advances In The Post-Keynesian Analysis Of Money And FinanceThere’s a new article by Marc Lavoie in a newly released book which is an interesting read. Abstract:This chapter focuses on the various monetary themes that have been emphasized by post-Keynesian economists and that turned out to have been validated by the events that occurred during and after the subprime financial crisis. These include interest rate targeting by the central bank, interest rate spreads, endogenous money, the reversed causality between reserves and money, the defensive role of central banks, the links between the central bank and the government, banks as very special financial institutions, the different role of the shadow banking system, and whether there are limits to the amounts of credit that

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UNCTAD Trade And Development Report 2019

September 26, 2019

UNCTAD has released its Trade And Development Report 2019. Always, one of the most important voices promoting a concerted action.Most interesting excerpt, fromChapter III, A Road Map For Global Growth And Sustainable Development,Section C, Main considerations in the design of a strategic framework,Item 7, International coordination for growth, industrialization and crisis response(pages 54-56 in print/81-83 in the pdf):Reflationary strategies cannot work as intended without explicit international coordination. Whereas uncoordinated policies ignore global aggregation effects and run into multiple constraints (such as unsustainable external deficits and pressing trade-offs between emission reduction and development priorities) coordination can expand policy space and align the incentives

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Thomas Piketty On Globalisation And Borders

September 24, 2019

Thomas Piketty has an interesting observation on globalisation and migration/borders.From slide 11 from a lecture from July (and in earlier talks too):Why is rising inequality not leading to rising demand for redistribution?One possible explanation: globalisation & competitition between countries make vertical redistribution more difficult to organize.I.e. if the only thing the modern nation-state can do is to control borders, then unsurprisingly the political conflict will be entirely about border controls and immigration.→ end of class-based redistributive politics, rise of identity-based conflictCertainly part of the explanation, but not enough: too mechanical.Nothing in globalization makes redistribution technically impossible.Globalisation—under the current rules of the game—puts a

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Roy Harrod by Esteban Pérez Caldentey

September 17, 2019

If you’ve worked with Post-Keynesian models of the open economy, you’ll see the expression X/μ often. This, or the “foreign trade multiplier” was first discovered by Roy Harrod in the early ’30s.Esteban Pérez Caldentey has a new biography of Roy Harrod.Description:This landmark book describes and analyzes the original contributions Sir Roy Harrod made to fields including microeconomics, macroeconomics, international trade and finance, growth theory, trade cycle analysis and economic methodology. Harrod’s prolific writings reflect an astounding and unique intellectual capacity, and a wide range of interests. He became Keynes’ biographer and wrote a volume on inductive logic. At the policy level, Harrod played a central role in the formulation of the Keynes´ Clearing Union plan for

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Thomas Piketty’s New Book

September 12, 2019

Thomas Piketty is out with a new book Capital Et Idéologie.Picture credit L’ObsHis tweet, announcing. The English version will be released in a few months.Branko Milanovic has already read it and his review has this explanation of Piketty’s brilliant phrase, Brahmin Left:… In [the second] part, we find the Piketty who plays to his strength: bold and innovative use of data which produces a new way of looking at phenomena that we all observe but were unable to define so precisely. Here, Piketty is “playing” on the familiar Western economic history “terrain” that he knows well, probably better than any other economist.This part of the book looks empirically at the reasons that left-wing, or social democratic parties have gradually transformed themselves from being the parties of the

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Thomas Palley — Central Bank Independence: A Rigged Debate Based On False Politics And Economics

September 9, 2019

Thomas Palley — Central Bank Independence: A Rigged Debate Based On False Politics And EconomicsAbstract:The case for central bank independence is built on an intellectual two-step. Step one argues there is a problem of inflation prone government. Step two argues independence is the solution to that problem. This paper challenges that case and shows it is based on false politics and economics. The paper argues central bank independence is a product of neoliberal economics and aims to institutionalize neoliberal interests. As regards economics, independence rests on a controversial construction of macroeconomics and also fails according to its own microeconomic logic. That failure applies to both goal independence and operational independence. It is a myth to think a government can set

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Mario Seccareccia and Marc Lavoie — Central Banks, Secular Stagnation, And Loanable Funds

September 5, 2019

Mario Seccareccia and Marc Lavoie — Central Banks, Secular Stagnation, And Loanable FundsMario Seccareccia and Marc Lavoie comment on Larry Summers’ recent shift on his view of fiscal policy:… At the time [2013], however, he still sought to explain this new normalcy of secular stagnation in terms of interest rate rigidity.Now, however, he seems to have abandoned that view altogether and has embraced Keynesian and post-Keynesian ideas originating with the General Theory. For instance, nowhere in the article by Summers and Stansbury is there mention of the negative natural rate as the explanation for an incapacity of central bankers to deal with secular stagnation. Is that because he has now abandoned the loanable funds theory, which remains at the core of mainstream thinking and to which he

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Government Borrowing In Foreign Currency

September 3, 2019

On Twitter, people are discussing the Argentinian debt in foreign currency, as if it’s solely the error of the government to have done it. There is of course truth to it, some governments might volitionally issue bonds in foreign currency. But that alone seems insufficient as an explanation.Also, people wonder what the government does with the funds obtained. Maybe the government buys some goods for public distribution? But if the government wants to buy something from abroad, it can anyway make an FX transaction with a bank and this question about usage for goods doesn’t seem that relevant.The answer is: original sin.In their paper Exchange Rates And Financial Fragility, Barry Eichengreen and Ricardo Hausmann write:The Original Sin Hypothesis. The second view emphasizes an incompleteness

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Gerald Epstein — What’s Wrong With Modern Money Theory

August 29, 2019

Gerald Epstein — What’s Wrong With Modern Money TheoryGerald Epstein  has written a book critiquing neochartalism from a policy perspective. On an initial look he seems to attack the neochartalists on two things: their reluctance to talk about rise in tax rates and the international aspect — the limited applicability of their ideas to a few rich countries.

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Lawrence Summers On The Failure Of The New Consensus

August 23, 2019

Lawrence Summers On The Failure Of The New ConsensusLarry Summers has a Twitter thread in which he talks of how the economics profession got it wrong by downgrading fiscal policy. He also concedes to Post-Keynesians:We have come to agree w/ the point long stressed by Post Keynesian economists & recently emphasized by Palley that the role of specific frictions in economic fluctuations should be de-emphasized relative to a more fundamental lack of aggregate demand.The title is the link.

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Marc Lavoie — A System With Zero Reserves And With Clearing Outside Of The Central Bank: The Canadian Case

June 20, 2019

Marc Lavoie — A System With Zero Reserves And With Clearing Outside Of The Central Bank: The Canadian CaseMarc Lavoie has a new paper in Review Of Political Economy in which he explains how the Bank of Canada, the central bank of Canada 🇨🇦 is able to maintain the target interest rate at the center of the corridor with high perfection despite zero reserve requirement and clearing happening privately.Abstract:In a number of ways, implementing monetary policy in Canada stands apart from monetary policy in most other industrial countries. Commercial banks and other participants to the main clearinghouse – the large-value transfer system (LVTS) – hold no reserves at the central bank. Clearing and settlement is both in real time and net, while only settlement occurs on the books of the central

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Dani Rodrik — Globalization’s Wrong Turn And How It Hurt America

June 15, 2019

Dani Rodrik — Globalization’s Wrong Turn And How It Hurt AmericaSome comments on globalisation by Bill Clinton and Tony Blair caught my attention in a recent article by Dani Rodrik for Foreign Affairs:Globalization, exclaimed U.S. President Bill Clinton, “is the economic equivalent of a force of nature, like wind or water.” British Prime Minister Tony Blair mocked those who wanted to “debate globalization,” saying, “you might as well debate whether autumn should follow summer.”Rodrik’s article takes issue with this, explaining how globalisation’s rules of the game aren’t immutable by going through its history.As Noam Chomsky says, the term globalisation has been appropriated by a narrow sector of power and privilege to refer to their version of international integration and it makes sense

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BadMouse On How The Left Abandoned Opposing The EU

May 31, 2019

BadMouse On How The Left Abandoned Opposing The EUBadMouse, the vlogger on the EU and Brexit:The right has been a stickler when it comes to appropriating leftist talking points, as I have spoken numerous times now. The EU used to be lot more of a conservative tradition opposed by many factions of the left including, of course, the late Tony Benn. But after sections of the right-wing discourse took it by their shoulders, all the left could seem in response was to go, “No! EU good”.The EU is an undemocratic monolithic entity that controls large hegemony over the continent. This is something the left has always been against and now we seem to have all been been shovelled into the pro-EU corner just to own the right is baffling. How dare they! How dare we allow them to take control of this

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Anthony Thirlwall — A Plain Man’s Guide To Kaldor’s Growth Laws

May 16, 2019

An old article, worth your time.Excerpt:In the course of his Inaugural Lecture at Cambridge in 1966 on the causes of the U.K’s slow growth rate, Kaldor (1966) presented a series of “laws” to account, for growth rate differences between advanced capitalist countries; he later elaborated these laws in a lecture at Cornell University (1967). These laws, and their interpretation and validity, have been the subject of considerable scrutiny and debate, and Kaldor himself has clarified and modified his own position since their enunciation. The basic thrust of the model consists of the following propositions:1The faster the rate of growth of the manufacturing sector, the faster will be the rate of growth of Gross Domestic Product (GDP), not simply in a definitional sense in that manufacturing

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Lance Taylor — Macroeconomic Stimulus À La MMT

May 15, 2019

Lance Taylor — Macroeconomic Stimulus À La MMTLance Taylor on troubles with Neochartalists; ideas of stimulus without raising tax rates and implications for the external imbalance.Lance Taylor had an excellent review of the book Monetary Economics by Wynne Godley and Marc Lavoie, if you remember and you can find the reference in his post.

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