1,720,978 research outputs found
Politiche monetarie con tassi di interesse negativi come soluzione alla crisi?
Full text linkStefano Di Bucchianico e Riccardo Zolea discutono la proposta di affrontare la crisi mediante tassi di interesse negativi, come sostenuto di recente da Rogoff. Invece di soffermarsi sugli aspetti operativi riguardanti l’implementazione di tali politiche, i due autori spostano l’attenzione sui possibili rischi connessi a queste ultime e illustrano le ragioni per le quali considerano preferibile un’alternativa basata su politiche di spesa pubblica e istituti di credito pubblici
A Note on Krugman’s Liquidity Trap and Monetary Policy at the Zero Lower Bound
No full textKrugman’s ‘liquidity trap’ model constituted a ground-breaking
contribution by attributing the long-lasting Japanese stagnation
to a negative natural interest rate. Our critique to such a proposal
will focus on three aspects. First, we will question the logical
structure of the model, providing an alternative interpretation of
its closure and arguing that aggregate demand has no crucial role
in it. Second, we will argue that a negative natural interest rate
can emerge only after a series of overtly restrictive assumptions in
a model that does not treat capital and avoids long-run
equilibrium analysis. Finally, we will discuss the mainstream
literature which followed up until the recent rediscovery of the
Secular Stagnation Theory. Within that line of literature, the key
features of the ‘liquidity trap’ model continue to occupy a
prominent role, thereby letting the critical issues that have been
singled out resurface. Our conclusion is that the ‘liquidity trap’
explanation did not provide a satisfying rationale for Japan’s
stagnation and cannot describe later economic predicaments
either. A comparison with Post-Keynesian models shows their
ability to offer insightful policy prescriptions without relying on
those shaky theoretical foundations
Negative Interest Rate Policy to Fight Secular Stagnation: Unfeasible, Ineffective, Irrelevant, or Inadequate?
No full textThis paper discusses three explanations for Secular Stagnation: Summers’s demand-side Secular Stagnation Theory, Palley’s Investment Saturation Hypothesis, and Gordon’s supply-side Secular Stagnation Theory. All three involve a judgement on the efficacy of a negative interest rate policy (NIRP) in tackling stagnation: according to the first it is unfeasible, according to the second it is ineffective (and even dangerous), and according to the third it is irrelevant. First, we argue that these theories face the fundamental difficulty constituted by the use of a (negative) natural (or equilibrium) rate of interest. We propose an original critique of the negative equilibrium rate of interest determined by the marginal efficiency of capital. Second, we claim that the negative interest rate policy is an inadequate tool to fight stagnation. While monitoring and fostering financial stability should be a fundamental role of monetary authorities, monetary policy is unable to stimulate growth, whereas fiscal policy is better suited to the task
The Impact of Financialization on the Rate of Profit
No full textThis work investigates some channels through which financialization may impact the normal rate of profit by making use of the ‘integrated wage-commodity sector’ methodology. We analyse the effect of technical innovations in the financial sector, a higher financial sector’s share of profits and GDP, rising household indebtedness and socio-political factors that reduce workers’ bargaining power. We find that during the financialization era, the first factor did not impact normal profitability since it mostly regarded instruments such as derivatives. The second should in principle not affect the normal rate of profit although it may impact aggregate income shares. The third, as far as its effect on aggregate demand is concerned, does not have an impact on the normal rate of profit. The fourth turns out to be the main factor that drives the normal rate of profit upwards through its impact on functional income distribution
A neglected route to Krugman's liquidity trap revival
Full text linkKrugman’s 1998 seminal model that revived the liquidity trap theory stimulated a debate on its origins in and differences with respect to Keynes and Hicks’s insights. The present paper illustrates and comments on a neglected line of thought innervating Krugman’s model, which hinges on the presence of a negative natural rate of interest. This result is argued to ensue from theoretical premises analogous to those present in Samuelson’s 1958 article on the overlapping generations model. In turn, Samuelson obtained a negative equilibrium interest rate by opportunely recasting Böhm-Bawerk’s three causes for a positive rate of interest
A Note on the Interpretation of Financialization as the ‘Sixth Countertendency’ to Marx’s Law of the Tendency of the Rate of Profit to Fall
Full text linkMarxian economics has been dealing extensively with the phenomenon of financialization. Among the wide variety of approaches, there are those putting at the center of the stage the issue of faltering profitability. Besides the analytical arguments, one finds in this line of research contributions linking financialization and the list of counter-elements to the Law of the Tendency of the Rate of Profit to Fall. Financialization is thus interpreted as the 'sixth' countertendency to that law (the ‘increase of stock capital’), referring to the list in Chapter XIV of Capital, Vol. III. We aim to provide an alternative interpretation of that last counter-factor. The proposal is based on three elements. First, the role of joint-stock companies issuance of long-term financing instruments yielding low remuneration. Second, how the average rate of profit is calculated. Third, the role of the organic composition of capital in determining differences in sectoral profitability. We eventually claim that the sixth element should be read as referring to the convergence of the rate of profit towards a uniform value and not as a prediction of the emergence of financializatio
A note on financialization from a Classical-Keynesian standpoint
Full text linkIn this paper we present a Classical-Keynesian viewpoint on financialization by using Garegnani’s ‘integrated wage-commodity sector’ method. We focus on three aspects. First, we argue that financial instruments such as derivatives have played the role of ‘luxury’ goods, unnecessary and/or detrimental to the direct and indirect production of the wage-basket. Second, we show that the accumulation of household debt can result in a higher normal rate of profit. Third, there is scope to reconsider the connection between financialization and labour market institutions, which makes labour bargaining strength wane. Labour market relationships need not be strictly tied to financialization
The role of commodity speculation and household debt accumulation during financialization: a Classical-Keynesian analysis
No full textIn this paper, we present a Classical-Keynesian viewpoint on financialisation grounded on the 'integrated wage-commodity sector' model. We focus on two aspects. First, with reference to the case of commodities, we argue that financial speculation in these markets did not affect normal prices but only caused market price short-run deviations. In addition, such speculation is unnecessary and even detrimental to the direct and indirect production of the wage-basket. Thus, financial regulation can restrain it without impairing the capability of the economic system to reproduce itself. Second, we show that the accumulation of household debt can enhance absolute and relative surplus value extraction from workers. This, in turn, positively impacts profitability. But, while absolute surplus value extraction boosts the amount of profit, only relative surplus value extraction increases the normal rate of profit
Discussing Secular Stagnation: A case for freeing good ideas from theoretical constraints?
No full textThis paper discusses the neoclassically-inspired Secular Stagnation Theory. Its ‘demand-side’ explanation is based on a long-run equilibrium position featuring a negative natural rate of interest. The first objective of the paper is to show that this concept is not acceptable in a neoclassical framework. This claim is made after studying plausibility of the hypotheses and logical consistency of the position in: the Euler equation, the Wicksellian/IS-LM model, the Ramsey model, and the Overlapping generations model. The second objective is to show that the long-lasting deficit-spending policy proposal, which is remarkable and should be welcomed, is inconsistent with the neoclassical framework. Without a negative natural interest rate and the zero lower bound, arguing so forcefully for deficit-spending would not be possible. The Secular Stagnation Theory can be strengthened and consistently proposed if analysis is placed outside the neoclassical framework. Demand-led models are advocated to be better equipped to account for stagnation
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