Posts

Beyond the traditional monetary circuit

Slow posting will continue the rest of the Summer. Here a paper by Sergio Cesaratto that might be of interest. From the abstract:
The paper is a contribution to a long-run theory of effective demand with elements from monetary circuit theory, Modern Monetary Theory and endogenous finance analysis. Some shortcomings of the still influential neo-Kaleckian growth model and monetary circuit theory are underlined, and the Sraffian supermultiplier is indicated as the most promising heterodox approach to growth and instability in capitalism. The Sraffian supermultiplier allows full consideration of the autonomous components of aggregate demand as the ultimate sources of growth and instability in modern capitalism. Following Steindl, capital gains are included among these components. Autonomous demand and investment are typically fed by endogenous finance. The paper articulates the relation between autonomous demand and investment on one hand, and endogenous finance on the other, in the ligh…

From Vulture Funds to 100-year bonds: Has Argentina Turned Around?

Just a couple of years ago Argentina’s left of center government was besieged by foreign investors, the hedge funds known as Vulture Funds, that demanded full payment for their bonds acquired at heavily discounted prices in the secondary markets. The New York courts ruled in favor of the Vulture Funds, and Argentina was unable to borrow in international markets, even though during the successive governments of the late Néstor Kirchner and her wife Cristina Fernández de Kirchner the country had successfully renegotiated its debts with 93 percent of the bondholders, and the economy had recovered from the worst crisis in its history, growing at fast pace while diminishing inequality.

In November 2015, the left of center candidate associated to the Kirchners lost a close election to the center-right, neoliberal ex-mayor of Buenos Aires. Mauricio Macri, the new president, the heir to a private fortune amassed mostly during the last and bloody dictatorship and the ex-president of Boca Junio…

A theory of economic policy

New paper by Thomas Palley tilted "A theory of economic policy lock-in and lock-out via hysteresis: rethinking economists’ approach to economic policy" has been published. From the abstract: This paper uses hysteresis to develop the concept of policy lock-in and lock-out. Policy changes may near-irrevocably change the economy’s structure, thereby changing the distribution of wealth, income and power. That may lock-in policy by changing the political equilibrium. Exit costs that block policy reversals also cause lock-in. Conventional thinking treats policy as a dial which is adjusted according to the economy’s state. Policy lock-in questions the dial formulation and raises new issues for optimal policy design. It also offers insights into economic and political crisis theory. Policy lock-in is illustrated with examples that include tax policy, government spending, the euro, globalization, and the neoliberal policy experiment. Read full paper here.

Trumpcare and More at the Rick Smith Show

I briefly discuss the Senate Bill, and how it really it's just a tax cut for the wealthy, rather than a health plan. It's as Trump himself admitted just mean. I also discuss how bleak the prospects for the near future are.

Prebisch and Central Banking

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You can read here the Power Point of our presentation at History of Economics Society conference on Prebisch and Central Banking and his role as a Money Doctor in the 1940s after he left the Central Bank of Argentina.

Capitalism is national & transnational, but what about the money?

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This is my short response, originally posted here, to William I. Robinson's post here and Fred Magdoff's note in the comment section of that post:

While I generally agree with Robinson's and Magdoff's analyses, what is absent, specifically with respect to Robinson's discussion, is a concrete assessment of the acute variables that measure the degree to which national States have the capacity to engage in power-maximizing behavior and, thus, pursue certain responses, i.e. imperialism, to the competitive nature of the capitalist world economy. Certain material capabilities of national States generate the space to be 'constituted', whereby they embody a structural authority to shape the framework of global economic relations. This structural authority is tied to the qualification to establish and enforce a particular item, currency, as the unit of account in which global economic calculations are made, facilitating the functioning of financial markets and thus …