Classical Economics, Keynes and Money Essays in Honour of Carlo Panico

Description

Classical Economics, Keynes and Money casts new light on an approach to economic theory and policy that combines the modern classical theory of prices and income distribution with a Keynesian analysis of money and finance. Structured in four parts, the work considers issues within classical economics, monetary economics, Keynesian and post-Keynesian Economics, rationality and economic methodology. These themes are all central to the work of Carlo Panico, and the chapters both reflect on and build on his key contributions to the field. This collection is of interest to advanced students and researchers in the history of economic thought, monetary theory, financial economics and heterodox economics. Cover Half Title Series Page Title Page Copyright Page Contents Contributors 1. Introduction 2. Asking the right questions References Part I: Classical theory of value and distribution 3. On physical real cost, labour and metaphysics: Sraffa on alternative theories of value and distribution and on Pareto's distinction between 'literary' and 'mathematical economists' 1 Introduction 2 Physical real cost 2.1 The background of Sraffa's early work 2.2 Physical real cost vs labour 2.3 Which labour? 2.4 Trying to cope with heterogeneity 2.5 Physical real cost vindicated 3 Smith, Ricardo and James Mill on physical real cost and 'labour' 3.1 Adam Smith 3.2 David Ricardo 3.3 James Mill 4 Marx on Aristotle, human labour and a 'popular prejudice' 4.1 Relying on the 'fixity of popular prejudice' 4.2 Only 'human' labour matters 4.3 Where do labour values come from? 5 Sraffa on Pareto 5.1 Pareto on the non-mathematical economists 5.2 Sraffa's reaction to Pareto 6 Concluding observations Notes References 4. Sraffa and the problem of returns: A view from the Sraffa archive 1 Introduction 2 Determinants of variable returns in the 1920s and in 1960 3 Interdependence and the assumption of given quantities 4 Final remarks Notes References 5. Class struggle and hired prize-fighters: A Marx-inspired perspective on the present state of economic theory and its social causes 1 The question: why so little effect of the 2008 crisis on economic theory 2 Marx's perspective on economic theory as politically conditioned 3 Political conditionings on the subsequent evolution of economic theory: a quick overview 4 The scientific weakness of monetarism and of its developments 5 The current situation: the dominance of neoclassical theory is scientifically unjustified 6 Marx's perspective appears confirmed, and supplies the answer to the original question 7 Five causes of the persistence of neoclassical theory 8 A glimmer of hope? Notes References 6. On the productiveness of welfare expenditures 1 The question 2 The classical approach 3 The neo-classical approach 4 The Marxist approach 5 Keynes' view 6 Unlimited needs and investment in human capital 7 Conclusion Notes References 7. Is Ricardian intensive rent a Nash equilibrium? 1 Introduction 2 Preliminaries: Ricardian intensive rent theory 3 The distribution of land ownership 3.1 The residual demand 3.2 When the claims of the Ricardian theory of intensive rent constitute a Nash equilibrium 4 Concluding remarks Notes References 8. Organisations and institutions in Sraffa's thinking 1 Introduction 2 Production and distribution in the neoclassical approach and in Sraffa 3 The role of institutions and interest groups in the distribution of income 4 Changes in economic organisations and institutions 5 Conclusions Notes References Part II: Keynesian and Post-Keynesian theories of growth and distribution 9. Key elements of post-Keynesian economics 1 Introduction 2 The economy as a historical process 3 Scepticism with respect to the validity of equilibrium methods 4 The role of institutions, social and political forces in shaping economic events 5 Marxian/Kaleckian influence 6 Effective demand, money and finance 7 Philosophical underpinnings 8 Inflation 9 Policy Notes References 10. Classical theories of wages and heterodox models of distribution 1 Introduction 2 Some heterodox models 3 Some classical models 4 Classical and Marxian theories of wages 5 Classical and heterodox theories of the wage and a formulation of wage dynamics 6 Conclusion Acknowledgement Notes References 11. On changes and differences: Joan Robinson vs Sraffa 1 What is the question 2 Sraffa on the notion of change in economics 3 The false analogy with mechanics 4 Short-period analysis 5 The debate against and in defence of long-period analysis 6 Concluding remarks Notes References 12. Behavioural changes and distribution effects in a Pasinetti-Solow model 1 Introduction 2 The model 3 Stationary states 4 Dynamics 4.1 Local stability analysis 4.2 Global dynamics 5 Economic interpretation 6 Final remarks Notes References Part III: Monetary and fiscal policies and the role of institutions 13. The underground economy and the financial market: A two-sided relationship 1 Introduction 2 The related literature 3 The impact of financial development on the underground economy 3.1 The government incentive to invest in financial development 4 The impact of the underground economy on the financial system 4.1 The optimal financial contract 4.2 Firms and bank's optimal choice 5 Concluding remarks Notes References 14. Latin America's macroeconomic policies and growth: An uncoordinated dance 1 Introduction 2 Latin America's economic growth and development: lights and shadows 3 The balance-of-payments constraint and macroeconomic policy making in Latin America 4 Macroeconomic policy in Latin America, a balanced-of-payments constrained region 4.1 Monetary policy in Latin America and the inflation targeting framework 4.2 Inflation targeting in an open economy 4.3 Fiscal policy 5 Final remarks: rethinking macroeconomic policies to trigger economic growth Acknowledgements Notes References 15. Elections and government deficit spending: Evidence from Italian regions 1 Introduction 2 Data and empirical model 3 Findings 4 Conclusions Disclaimer Notes References 16. Monetary policy and national fiscal policies in the euro area 1 Introduction 1.1 Summary of the paper 1.2 Related literature 2 The model 2.1 Monetary authority 2.2 Fiscal authorities 3 Econometric analysis 3.1 Econometric model and methods 3.2 Data 3.3 Results 4 Discussion 5 Conclusions Notes References 17. Monetary policy and financial stability in the Economic and Monetary Union 1 Introduction 2 The institutional framework 3 The literature review 3.1 The trade-off between macroeconomic and financial stability 3.2 The role of macro-prudential and micro-prudential supervision 3.3 The application of the SSM 4 An analytical analysis of the EMU institutional framework 4.1 A simple analytical framework 4.2 Discussion 5 Conclusions Notes References Part IV: The problem of rationality in economics 18. Economics situational rationality Introduction 1 'What can we know?' 2 Social world distinct from the natural world? 3 Logics of the situation: economics and sociology 4 Logics of the situation: economics 5 Two forms of integrating economics and sociology 6 Conclusion 7 Postcriptum: Carlo Panico Notes References 19. Rationality, uncertainty and ecological adaptation 1 Introduction 2 Classical economics 3 General equilibrium economics 4 Defenders and critics 5 Cumulative prospect theory 6 Constructivism vs naturalism 7 Conclusions Notes References Index