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The supply of credit money and capital accumulation: A critical view of Post-Keynesian analysis
Abstract
This chapter critically examines the Post Keynesian horizontalist theory of money from a Marxian perspective. Horizontalist analyses are criticised from three angles. First, monetary theory should be historically specific. Second, credit money is an advanced form of money, created mostly as liabilities of financial institutions, and its supply is endogenous in a more complex and profound sense than Post Keynesian analysis allows. Third, although credit money is endogenous, the quantity supplied is not always compatible with the needs of the sphere of circulation. Consequently, pronounced instability and inflation are possible for purely monetary reasons.
... De Brunhoff (1976), Crotty (1987), Evans (1997), Foley (1983Foley ( , 1986a and Weeks (1981) hold that Marx's commodity theory of money is a correct albeit historically restricted starting point for the analysis of money and therefore not applicable to modern economies. Lapavitsas (2000) and Lapavitsas & Saad-Filho (2000) do not only consider commodity money to be an appropriate starting point for Marx's theory of money and credit but also argue that anchoring the monetary system on a money commodity would stabilize capitalist reproduction, also in modern times. Graziani (1997), on the contrary, argues that the capital labour relation requires credit money because the purchase of labour power is logically prior to the production of commodities and hence also to the production of the money commodity. ...
... In Marx's theory, money and credit are not considered to be means to overcome uncertainty as ahistorical characteristics of human life as such, as in Davidson (1994). Marx rather considers money and credit to be historically specific social institutions mediating the social division of labour which itself cause uncertainty and instability as main characteristics of capitalist reproduction (see also Lapavitsas & Saad-Filho 2000). 24 It should be noted that the position sketched here differs from those post-Keynesian views which assume that a decreasing liquidity position of commercial banks and rising lender's and borrower's risk finally lead to rising interest rates when the quantity of credit is expanding in the accumulation process (Minsky, 1986;Palley, 1996;Rousseas, 1998;Wray, 1990). ...
... We therefore disagree withLapavitsas (1997Lapavitsas ( , 2000a andLapavitsas & Saad-Filho (2000) who consider the credit system in Marx's theory to be mainly a mechanism for the internal reallocation of idle funds among industrial and commercial capitalists. ...
Starting from Schumpeter's important distinction between 'real analysis' and 'monetary analysis', in this paper it is shown that major elements of Marx's economic theory fall in the camp of 'monetary analysis'. This is true for Marx's theory of value, his rejection of Ricardo's interpretation of Say's Law, his treatment of the realization problem in the schemes of reproduction and his theories of credit and the rate of interest. The implications of this monetary interpretation for Marx's theory of distribution and growth display broad similarities to a monetary extension of a Kaleckian version of the post-Keynesian model, in which the equilibrium growth path is determined by the interaction between monetary and real variables.
... Ideally, the economy ensures no excess supply of credit over demand (Stoop & Sornette, 2010). Lapavitsas and Saad-Filho (2000) proposed the same shape of money supply: ...
... Excess reserves influence the money supply through credit extension. The Central bank can limit money supply by initiating changes in the reserve requirement for commercial banks and can implement the control mechanism in the money supply (Lapavitsas & Saad-Filho, 2000). Theoretically, the total amount of money creation depends on the percentage of the total deposits that banks require to hold over the excess reserve. ...
... 532-533), Duménil (1980, pp. 8, 22-23, 51), Lipietz (1982, p. 64), Meek (1956, p. 98;1973, pp. xxi, 191), Sweezy (1949, p. xxiv;1968, p. 115), de Vroey (1982, p. 47) and Winternitz (1948, p. 278). 1 Marx's theory of money is analysed by Arnon (1984), de Brunhoff (1976de Brunhoff ( , 1978b, Campbell (1997Campbell ( , 1998, , Foley (1975Foley ( , 1983, Hilferding (1981), Itoh and Lapavitsas (1999), Lapavitsas (1994Lapavitsas ( , 2000aLapavitsas ( , 2000c and Lapavitsas and Saad-Filho (2000). See also Fine (1989, pp. ...
... Many post-Keynesian writers (e.g., Moore 1988) argue that if the money supply is endogenous there cannot be excess supply of money. For a counter-argument, see Hilferding (1981, ch. 5) and Lapavitsas and Saad-Filho (2000). 45 De Vroey (1984). ...
Introduction 1. Materialist Dialects 1.1 Real Abstractions and Mental Generalisations 1.2 Marx, Hegal and 'New Dialects' 1.3 Conclusion 2. Interpretations of Marx's Value Theory 2.1 Embodied Labour Approaches 2.1.1 Traditional Marxism 2.1.2 Sraffian Analyses 2.2 Values from Theories 2.2.1 The Rubin Tradition 2.2.2 The 'New Interpretation' 2.3 Conclusion 3. Value and Capital 3.1 Division of Labour, Exploitation and Value 3.2 Capital 3.3 Conclusion 4. Wages and Exploitation 4.1 Wage Labour and Exploitation 4.2 Value of Labour Power 4.3 Conclusion 5. Values, Prices and Exploitation 5.1 Normalisation of Labour 5.1.1 Labour Intensity and Complexity, Education and Training 5.1.2 Mechanisation, Deskilling and Capitalist Control 5.2 Synchronisation of Labour 5.2.1 Value Transfers 5.2.2 Technical Change, Value and Crisis 5.3 Homogenisation of Labour 5.4 Conclusion 6. Composition of Capital 6.1 Understanding the Composition of Capital 6.2 Production and the Composition of Capital 6.3 Capital Accumulation 6.4 Conclusion 7. Transformation of Values into Prices of Production 7.1 Surplus Value, Profit, and the Composition of Capital 7.2 From Values to Prices of Production 7.3 The Transformation of Input Values 7.4 Conclusion 8. Money, Credit and Inflation 8.1 Labour and Money 8.2 Money and Prices of Production 8.3 Credit, Money and Inflation 8.4 Conclusion Conclusion References
... 532-533), Duménil (1980, pp. 8, 22-23, 51), Lipietz (1982, p. 64), Meek (1956, p. 98;1973, pp. xxi, 191), Sweezy (1949, p. xxiv;1968, p. 115), de Vroey (1982, p. 47) and Winternitz (1948, p. 278). 1 Marx's theory of money is analysed by Arnon (1984), de Brunhoff (1976de Brunhoff ( , 1978b, Campbell (1997Campbell ( , 1998, , Foley (1975Foley ( , 1983, Hilferding (1981), Itoh and Lapavitsas (1999), Lapavitsas (1994Lapavitsas ( , 2000aLapavitsas ( , 2000c and Lapavitsas and Saad-Filho (2000). See also Fine (1989, pp. ...
... Many post-Keynesian writers (e.g., Moore 1988) argue that if the money supply is endogenous there cannot be excess supply of money. For a counter-argument, see Hilferding (1981, ch. 5) and Lapavitsas and Saad-Filho (2000). 45 De Vroey (1984). ...
... De Brunhoff (1976), Crotty (1987), Evans (1997), Foley (1983Foley ( , 1986a and Weeks (1981) hold that Marx's commodity theory of money is a correct, albeit historically restricted starting point for the analysis of money and therefore not applicable to modern economies. Lapavitsas (2000) and Lapavitsas and Saad-Filho (2000), however, do not only consider commodity money to be an appropriate starting point for Marx's theory of money and credit but also argue that anchoring the monetary system on a money commodity would stabilize capitalist reproduction, also in modern times. 8 Graziani (1997), on the contrary, convincingly argues that the capital labour relation requires credit money because the purchase of labour power is logically prior to the production of commodities and hence also to the production of a money commodity. ...
... This view comes close to the position following from Marx's theory: Money and credit are not considered to be means to overcome uncertainty as ahistorical characteristics of human life and economic processes as such. Marx rather considers money and credit to be historically specific social institutions indispensable for capitalist commodity production and exchange which itself cause uncertainty and instability as main characteristics of capitalist reproduction (Lapavitsas and Saad-Filho, 2000). ...
In this paper we have taken issue with those Marxian and post-Keynesian views which neglect the broad similarities between Marx’s economics and post-Keynesian approaches in the field of money, credit and the rate of interest. Starting from the older observations on the common ground of Marx’s and Keynes’s views in the fields mentioned above, we have shown that Marx’s economics cannot only be seen as one of the sources of post-Keynesian economics because his theory of capitalist reproduction has had a major impact on Kalecki’s theory of effective demand, but also because his monetary economics fit quite well into the post-Keynesian research programme of a monetary theory of production.
... Further to this, post-Keynesian theorists, following Kaldor's tradition, formulated the conception that in contemporary developed economies based on credit, money is created endogenously (for a compendious presentation of these approaches, see Moore 1988;Rousseas 1992: 65-122;Itoh/Lapavitsas 1999: 207-245;Mollo 1999;Lapavitsas/Saad-Fihlo 2000). ...
This paper examines the relation between the fluctuations in the quantity of money and the fluctuations in economic activity; that is, the cyclical components of each variable. The principal question posed is: how do the fluctuations in the quantity of money affect or get affected by the fluctuations of output and profitability in the US economy (1958–2006)? Our investigation stops in 2006 as the dynamics of the traditional economic structures changed dramatically in the US and globally after 2006. The empirical results indicate strong cyclical behaviour of most variables. Furthermore, the cyclical components of output/profitability and the quantity of money move in the same direction and there is also a significant relationship between them. A very interesting result is that fluctuations in output/profitability do cause fluctuations in the quantity of money, but fluctuations in the quantity of money do not cause fluctuations in output/profitability, giving priority to a ‘macroeconomic’ point of view, where overall economic activity, expressed through profitability and output, shapes (but is not shaped by) the quantity of money. Our empirical findings, thus, imply a revision of the usual reading which favours causality running from the quantity of money.
... Further to this, post-Keynesian theorists, following Kaldor's tradition, formulated the conception that in contemporary developed economies based on credit, money is created endogenously (for a compendious presentation of these approaches, see Moore 1988;Rousseas 1992: 65-122;Itoh/Lapavitsas 1999: 207-245;Mollo 1999;Lapavitsas/Saad-Fihlo 2000). ...
This paper examines the relation between the fluctuations in the quantity of money and the fluctuations in economic activity; that is, the cyclical components of each variable. The principal question posed is: how do the fluctuations in the quantity of money affect or get affected by the fluctuations of output and profitability in the US economy (1958–2006)? Our investigation stops in 2006 as the dynamics of the traditional economic structures changed dramatically in the US and globally after 2006. The empirical results indicate strong cyclical behaviour of most variables. Furthermore, the cyclical components of output/profitability and the quantity of money move in the same direction and there is also a significant relationship between them. A very interesting result is that fluctuations in output/profitability do cause fluctuations in the quantity of money, but fluctuations in the quantity of money do not cause fluctuations in output/profitability, giving priority to a 'macroeconomic' point of view, where overall economic activity, expressed through profitability and output, shapes (but is not shaped by) the quantity of money. Our empirical findings, thus, imply a revision of the usual reading which favours causality running from the quantity of money.
Este artigo sugere uma maneira de determinar a “Expressão Monetária do Tempo de Trabalho” (a “EMTT”) no atual regime de dinheiro de crédito inconversível – uma maneira que é consistente com a teoria geral do dinheiro de Marx e é quantitativamente a mesma determinação de Marx para a EMTT no caso do dinheiro fiduciário inconversível de seu tempo. No intuito de explicar o método de determinação da EMTT no caso do moderno dinheiro de crédito inconversível, primeiramente o artigo revisa a determinação de Marx da EMTT no caso do dinheiro-mercadoria e no caso do dinheiro fiduciário inconversível. Por fim, discute as semelhanças e as diferenças entre minha interpretação e a de Saros (2007) sobre a EMTT no caso do dinheiro fiduciário inconversível.
Abstract
Money as a social relation: an analysis of the monetary power of the State in the MMT
This article discusses the following ideas proposed by the Modern Money Theory (MMT): i) the postulate of money as a
creature of the state; ii) that economic growth can be achieved through fiscal deficits; and iii) that the state action can enable
the attainment of full employment. Such ideas imply a significant monetary role carried out by the state, a role that is
evaluated here in light of a Marxist conception of money as a social relation. We emphasize the hierarchically superior
power of the state in this regard, but also its limits, highlighting some barriers to the application of MMT prescriptions. On
the one hand, we show that there can be substantive effects of fiscal and monetary policies on real production; on the other
hand, we problematize the notion of full employment in light of the limits imposed by class struggles on the role of the state
as the employer of last resort.
Between 1980 and 2008, US household debt became progressively de-collateralised, allowing for an unprecedented expansion in personal credit and making repayments increasingly dependent on the future, contingent income of debtors. This thesis examines these developments, focusing on their connection with the emergence of credit scoring. It argues that, in societies where the capitalist mode of production prevails, and wealth takes the form of value, the constitution of credit as an important form of socio-economic mediation is predicated upon the development of mechanisms enabling debt to take the form of value; that the valuation of debts tends to take the form of discounting future repayments by a factor that embodies the general rate of interest and the riskiness of the borrower; and that, consequently, the full development of capitalist credit-debt relations presupposes the constitution of a social form of creditworthiness based upon the category of risk. The thesis shows that such a problematic, which follows directly from Marx’s value-form analysis, is strange to both the neoclassical and the Keynesian approaches – which, despite their differences, coincide in presupposing the categories inherent to the valuation of personal debt as transhistorical forms, and thus disregard the transformation of debts into values as a problem. It then explores the hypothesis that the intensive and extensive growth of personal indebtedness in the US was coterminous with a process of reconfiguration of the social form of creditworthiness carried out by the rise of credit scoring and the positioning of the FICO score as the socially validated expression of individual riskiness. By giving individual creditworthiness the form of risk, these processes enabled the generalised transformation of personal debts into values, thus establishing the conditions for the rise of the asset-backed securities (ABS) market and the de-collateralisation and expansion of household debt in the United States.
This article reveals the processes of financialisation in the South African economy by tracing the sources and destinations of NFCs' liquidity. The paper argues that rather than the volume of NFCs' financial investment, the composition of financial assets is crucial to assess corporate financialisation in the country. Non-financial businesses in South Africa fundamentally transformed their investment behaviour during the 1990s, shifting from more productive uses such as trade credit towards highly liquid and potentially innovative (and therefore risky) financial investment. Following the direction of financial flows the article shows that – fuelled by foreign capital inflows – companies' financial operations contributed to the price inflation in South African property markets.
This is the second installment of a two-part article on Canadian inflation. This article builds on the traditional conflict theory of inflation by applying insights from the post-Keynesian and micro-politics theories of money and central bank policy. It argues that the Bank of Canada’s inflation targets — not just inflation itself — have to be understood in terms of social conflict and power. This analysis extends the evidence on the distributive implications of Canadian inflation offered in Part I. © 2016, Journal of Economic Issues / Association for Evolutionary Economics.
'Jan Toporowski's Theories of Financial Disturbance is a tour de force. With his substantial knowledge of financial markets, his deep conceptual understanding of relevant concepts and his exhaustive reading of the essential literature, he is ideally placed to tell an absorbing narrative of, as he writes, critical theories of finance from Adam Smith to the present days - and he has. In a world in which finance and industrial and commercial capital are so out of kilter with one another, Toporowski's lucid wisdom is required reading.'
Where does the power of money come from? Why is trust so important in financial operations? How does the swapping of gifts differ from the exchange of commodities? Where does self-interest stop and communal solidarity start in capitalist economies? These issues and many more are discussed in a rigorous, yet readable, manner in Social Foundations of Markets, Money and Credit. It is shown in particular that capitalist economies are permeated with non-economic characteristics. This carefully argued book will prove interesting and valuable to students and researchers not only in economics, but also in sociology and anthropology. Well-informed critics of capitalism will also find it a useful read.
RMF invites discussion papers that may be in political economy, heterodox economics, and economic sociology. We welcome theoretical and empirical analysis without preference for particular topics. Our aim is to accumulate a body of work that provides insight into the development of contemporary capitalism. We also welcome literature reviews and critical analyses of mainstream economics provided they have a bearing on economic and social development. Submissions are refereed by a panel of three. Publication in the RMF series does not preclude submission to journals. However, authors are encouraged independently to check journal policy.
In a recent debate in Economy and Society, Ingham criticized Marxist theory of money on the grounds that it relates money to commodities through the labour theory of value, while ignoring credit money. Ingham suggested instead that money is constituted by social relations characteristic of credit, namely relations of ‘promise to pay’. Drawing on Marx, this article shows that, pace Ingham, it is necessary theoretically to relate money to commodities. Money is indeed constituted by social relations, but these are commercial relations among ‘foreign’ commodity owners, not credit relations. The social relations of money are successfully captured by Marx's concept of the universal equivalent, when that is interpreted as monopoly over the ability to buy. In this light, both commodity and credit money are forms of the universal equivalent, but qualitatively different from each other.
Marxian analyses of inflation tend to fall under three broad categories, those that emphasise primarily the role distributive conflicts, monopoly power, or state intervention on the dynamics of credit money. This article reviews these interpretations, and indicates how they can be integrated. The proposed approach, based on the ‘extra money’ view, departs from the circuit of capital and the endogeneity of credit money in order to explain inflation in inconvertible paper money systems.
enomenal spread of unconventional means of payments has been one of the most controversial features of Russia's post-socialist economic development. Orthodox analyses tend to trace the causes of the non-monetary economy to the inconsistency of political reforms, to the legacy of the past, and to endemic corruption. This article challenges such accounts. From the perspective of international political economy, the proliferation of nonpayments, severe liquidity squeeze and the structural disjuncture between Russia's financial and productive circuits are the outcomes of the country's pursuit of the paradigm of the Washington Consensus. In this light, barter and nonpayments in Russia are neither the‘inevitable’features of the market restructuring, nor simply the residue of the command system. The non-monetary economy in Russia is a peculiar reaction to the politico-economic imperatives brought onto the country by the deregulated financial markets and by the neoliberal political ideology that underpins their global expansion.
This paper suggests a way to determine the “monetary expression of labor” (the “MELT”) in today’s regime of inconvertible credit money, a way that is consistent with Marx’s general theory of money and is quantitatively the same as Marx’s determination of the MELT in the case of the inconvertible fiat money of his time. In order to explain this method of determination of the MELT in the case of modern inconvertible credit money, the paper first reviews Marx’s determination of the MELT in the case of commodity money and in the case of the inconvertible fiat money of his time. The final section of the paper discusses the similarities and the differences between my interpretation and Saros’s (2007) interpretation of the MELT in the case of inconvertible fiat money.
JEL classification: B51, E11
A leading problem for contemporary Marxist economics is to explain the general commodity price level in monetary systems based on state credit when the value of the national currency is not determined by its guaranteed convertibility into gold or some other external asset. The problem arises because the coherent and persuasive theory of money that Marx, following Tooke (see Arnon, 1990), developed in Capital (1867) presupposes the existence of an international commodity money system. (For the sake of brevity I will refer to this system as a ‘gold standard’ system, and abuse precise language by distinguishing between ‘gold’, that is, the money commodity, on the one hand, and ‘commodities’, that is, all other produced commodities, on the other.) On the gold standard assumption, Marx was able to outline theoretically transparent and convincing explanations for the level of commodity prices in terms of gold or national currencies defined as a given quantity of gold. But we encounter substantial problems when trying to apply this theory to a monetary system in which the values of national currencies are not fixed in terms in gold since there appears to be no relation at all between the national currency, which is the debt of the state. and commodity production.
The banking system has no direct control over the prices of individual commodities or over the rates of money earnings of the factors of production. Nor has it, in reality, any direct control over the quantity of money; for it is a characteristic of modern systems that the central bank is ready to buy for money at a stipulated rate of discount any quantities of securities of certain approved types. (Keynes, 1972, vol. 6, p. 189) Recently it has become convenient to divide the inflation problem into two distinct subquestions (Brunner, 1975). The first concentrates on the relation between monetary growth and inflation. Abundant empirical evidence confirms that the major historical accelerations and decelerations of inflation have been accompanied by accelerations and decelerations in the rate of growth of the money stock. The second focuses on the sources of the changes in the money stock, the "political economy" of monetary growth. Today's worldwide inflation appears to be a new phenomenon, and the processes behind monetary growth across time in particular countries, and across countries at a given time, are currently the subject of searching inquiry by many economists (Gordon, 1976). This article examines the interrelationships between these two subquestions. An analysis of the political economy of monetary growth leads to rejection of the statistical exogeneity of the money stock. The conclusion is reached that for the United States-at least in the postwar period-the high-powered monetary base, while exogenous in a control sense, is endogenous in a statistical sense, since it is closely correlated with the past rate of change in money wage rates. The chief empirical evidence for the monetarist
Years ago, Dennis Robertson (1956, p. 81) uttered the following witticism about economic doctrine: ‘Now, as I have often pointed out to my students, some of whom have been brought up in sporting circles, high-brow opinion is like a hunted hare; if you stand in the same place, or nearly the same place, it can be relied upon to come round to you in a circle.’
This article was first presented as the RIPE annual lecture at Durham University on 7 November 1995. It seeks to explore the transformation of the capital-labour relation in the aftermath of the postwar crisis of Fordism. It examines how various solutions to this crisis, in the developed world, the newly industrialized world and, latterly, the former socialist bloc, have brought about a radical restructuring of the world's economic hierarchy. One consequence has been the emergence of continental blocs characterized by the heterogeneity of the economic systems within their sphere. The coexistence of countries with differing labour regimes within integrated continental blocs is the primary focus, with each bloc analysed in turn for its particular aspects. This leads to consideration of the possibility of a third international division of labour. The article concludes with an examination of an unexpected consequence of this restructuring, namely the relation between systems of labour-capital relations and attitudes towards global ecological crisis.
Preface Acknowledgments Part I. The Endogeneity of Credit Money: 1. The differences between commodity, fiat, and credit money 2. Contemporary commercial banking 3. A simple model of bank intermediation 4. The money 'multiplier' 5. The endogeneity of the high-powered base 6. The US money supply process 7. A causality analysis of the determinants of money growth 8. Keynes and the endogeneity of credit money Part II. The Macroeconomic Implications of Monetary Endogeneity: 9. The determination of the nominal money supply 10. Interest rates: a real or monetary phenomenon? 11. Interest rates: an exogenous policy variable 12. Monetary change, deficit spending, and the growth of aggregate demand 13. The determination of the real money supply 14. Inflation and velocity 15. the dynamics of disequilibrium: toward a new macroeconomic paradigm Bibliography Index.
Marxian analyses of inflation tend to fall under three broad categories, those that emphasise primarily the role distributive conflicts, monopoly power, or state intervention on the dynamics of credit money. This article reviews these interpretations, and indicates how they can be integrated. The proposed approach, based on the ‘extra money’ view, departs from the circuit of capital and the endogeneity of credit money in order to explain inflation in inconvertible paper money systems.
The formation of money hoards, which underpins the demand for money, is typically treated by mainstream monetary theory as originating in the motives of the rational individual. In contrast, Marxs discussion of money hoarding treats hoard formation as a necessary tendency of capitalist production and circulation rather than as a result of the individuals predilections. Based on Marxs analysis, this article identifies several structural reasons for money hoard formation in the circuit of capital. It is also shown that Marxs discussion, despite its insight, suffers from a technical error in analysing the overlapping of production and circulation time in the circuit, and in drawing the implications for hoarding. Finally, it is argued that the broader significance of capitalist money hoarding lies in the foundations it provides for the emergence of the credit system.
Despite Friedman’s numerous trenchant confrontations with ‘Keynesians’, he has never compared his analytical framework with the ‘Theory of a Monetary Economy’ developed by Keynes. The purpose of this paper is, therefore, to enumerate a few of the more fundamental conceptual differences between the monetary analysis of Keynes and that of Friedman. Keynes’s analysis involves (1) the concept of uncertainty in the Knight-Keynes sense, (2) the inapplicability of a Walrasian system to a real world production economy where false trades occur, and (3) the essential properties of money which follow from the existence of uncertainty. This paper shows that recognition of these conceptual differences leads to significantly different specification of the demand for money and its supply aspects in the Keynesian system compared with Friedman’s theoretical framework.
This paper questions the practice of representing the endogenous money supply by means of a 'horizontal' money supply curve, implicitly contrasted with the conventional 'vertical' (stock) supply curve. What is drawn as a horizontal curve is strictly a locus between a continually shifting stock curve and a shifting demand curve. Consequently, demand (for money) considerations have been suppressed in the 'horizontal' presentation. One response is that the resulting deposits are automatically held, through some process such as 'convenience lending'. However, the argument behind 'convenience lending' points to the conclusion that it is changes in relative interest rates that reconcile the demand for additional loans with the demand for additional deposits. (c) 1996 Academic Press Limited Copyright 1996 by Oxford University Press.
This article offers a critique of the horizontalist view of money that banks are passive in the face of credit demand. It
is argued that banks' liquidity preference influences their responsiveness to the demand for credit. Their liquidity preference
is expressed in risk assessment (understood in terms of Keynes' theory of uncertainty). It is argued that rationing in the
sense of adverse changes in risk assessment occurs systematically in the downturn of the business cycle. Systematic rationing
also occurs with respect to particular classes of borrowers; the focus here is on the case of small firms.
This paper investigates empirically the importance of technological catch-up in explaining productivity growth in a sample of countries since the 1960s. New proxies for a country's absorptive capability--based on data for students studying abroad, telecommunications and publications--are tested in regression models. The results indicate that absorptive capability is a factor in explaining growth, with the most robust finding that countries with relatively high numbers of students studying science or engineering abroad experience faster subsequent growth. However, the paper also indicates that the significance of coefficients varies across specifications and samples, suggesting caution in focusing on individual results. Copyright 2004, Oxford University Press.
Methodology and the Analysis of a Monetary Economy
- S. Dow
Has the Demand for Money been Mislaid?
- B. Moore
The Political Economy of Central Banks, Agents of Stability or Source of Instability?
- C. Lapavitsas