ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Romar CorreaSubscribe to Romar Correa

Monetary Economics of Fascism and a Working-class Alternative

Fascism is the usurpation of the economic process by the elite and the related decimation of the working class and the poor. This process is represented by the shrinkage of fiat money backing the production of goods and services and its substitution by financial instruments. This domestic coup is accomplished by the spread of what is generally referred to as “false consciousness.” The tools of basic economics can be fashioned to introduce students to these concepts. Mainstream economists continue to demonstrate the different ways utility functions can be manipulated.

And a Little Child Shall Lead You...

An elementary model of the Urjit Patel report is formulated here. Along with the positive repo rate-infl ation rate target connection, open economy controls as well as institutional data are potentially adjusting variables

Open-Economy Macro and Inflation Targeting: A Tutorial

Economic theory tells us that there should be at least as many instruments as there are targets. But the Reserve Bank of India does try to kill two birds with one stone: increasing interest rates so as to shoot down infl ationary expectations as well as bring capital into the country. This is poor macroeconomics. A comment that elaborates on Partha Sen's "India's Current Account Woes: An Attempt to Clarify" (EPW, 12 October 2013).

Predatory Capitalism

Animal Spirits by George A Akerlof and Robert J Shiller (Princeton: Princeton University Press), 2010;

East Is East and West Is West

Twenty years ago West German institutions were exported to East Germany following the fall of the Berlin Wall. One outcome has been the halting of convergence between the two.

Reinventing Fiscal Policy

Practising policy-makers have not been tardy in jettisoning new classical-new Keynesian wisdom when called upon to do so. It turns out that in the industrial world, stabilisation policy, defined as the minimisation of squared deviations of output around potential, has never been far from the concerns of monetary authorities. There has been a concerted move away not just from monetary policy rules but also from the limits of flexible discretion that theory would permit.

Stock-Flow Norms and Systemic Stability

We offer a dynamical systems translation of the Godley and Cripps (1983) framework. Stability of an economy is shown to depend on the concatenation of four parameters: a steady-state money income ratio, a speed-of-adjustment-of-assets coefficient, an inventory accumulation index, and the share of government in aggregate income.

Money and Production

Monetary and financial reforms in India are targeted at financial circulation. We recommend a return to the focus in Indian planning on the monetary circuit.

Macroeconomic Policy and Asset Markets

Bank-based and stock market-based systems are compared from the viewpoint of macroeconomic policy. The author suggests that the former has desirable properties with reference to the objective of increasing output and employment.

Does the Government Budget Constraint Matter?

According to Economic Survey 1999-2000, "The inadequacy of exclusive reliance on broad money growth is also reflected in the coexistence of high monetary growth and low inflation" (p 49). We proffer an explanation that runs in terms of the price-setting behaviour of workers and firms. In the framework of a simple model, decreasing wage indexation is shown to be sufficient to provide the required result.

Domestic Financial Architecture

To assess the relative efficiency of stock markets and banks as intermediaries between savers and investors, this article examines the macrofoundations of micro-economics. The conclusion is that both stock market-based and bank-based systems are inefficient. There is scope for government intervention in the allocation of credit.

On Interest Rate Policies

The context in which the subject is treated is the different institutional arrangements that are being contemplated worldwide. Institutions, for the present purpose, are defined as outcomes of the strategic interaction between members of the private sector and the monetary authorities. In a generalisation of the credit transmission approach we consider an aggregate monetary economy consisting of three agents: a firm, a bank and a household. The relationship between pairs of them is characterised by bilateral private information. Bonds, loans and savings are contracts in the level of output, the rate of interest on bonds, loans and the deposit rate. It is shown that the contracts have a common functional form. This renders the model dynamically unstable. We consider the potentially stabilising role of monetary policy in two cases. In the first, the monetary authority operates the discount window. Formally, we introduce a parameter in the objective functions of the private sector agents. In the second, the central bank enters as a player with the interest rate on government paper as a strategy. We examine the relative merits of the two policy regimes.
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