Goodwin cycles result from the dynamic interaction between a profit-led demand regime and a reserve army effect in income distribution. The paper proposes the concept of a pseudo-Goodwin cycle. We define this as a counter-clockwise movement in output and wage share space which is not generated by the usual Goodwin mechanism. In particular, it does not depend on a profit-led demand regime. To illustrate this, a simple Minsky-type model is extended by a reserve army distribution adjustment. In this model the cycle is generated by the interaction of financial fragility and demand. The wage share rises at higher levels of output but this generates no feedback so that, by design, demand does not react to changes in income distribution. But the model does exhibit a pseudo-Goodwin cycle in the output-wage share space. This holds true even if we introduce a wage-led demand regime. This demonstrates that the existence of a counter-clockwise movement of output and the wage share cannot be regarded as proof of the existence of a Goodwin cycle and a profit-led demand regime.
This new volume by three leading scholars of Modern Monetary Theory (MMT) is something of a rarity: an eagerly anticipated economics textbook. Already, Bloomberg reports, the book is into its second print run, selling out only two months after publication. This enthusiasm is a result of the growing popularity of MMT: the ideas developed since the 1990s by authors at institutions such as UMKC in Missouri, the University of Newcastle in Australia and the Levy Institute in the state of New York. These authors have had notable success in popularising their ideas among a wider section of the non-academic public than usually takes an interest in the dry topics of inflation and fiscal policy, not least through the use of blogs and social media.The volume's cover promises that this compelling argument contrasts the MMT emphasis on the spending and job creation powers of currency-issuing governments, with the mainstream insistence that government must curb spending.The table of contents lists a range of topics from methodology, history of economic thought and economic history to national accounting, money and banking, and contemporary debates. The opening chapter contrasts Lionel Robbins's famous definition of economics with the authors' 'heterodox definition of economics: the study of social creation and social distribution of society's resources' (Mitchell et al. 2019: 7), and explains that 'because [MMT] places an emphasis on monetary arrangements … it adds new insights that were not previously available within the heterodox tradition' (ibid.: 13). These new insights are briefly enumerated, and will be familiar to anyone who has followed discussions of MMT: a country with a floating exchange rate that issues its own currency can never become technically insolvent; spending logically precedes taxation and/or borrowing for a sovereign government; and the government 'can always afford to purchase anything that is available for sale in its own currency' (ibid.: 16). The chapter closes with a short discussion of the policy implications of these insights, concluding in favour of the implementation of a job guarantee programme to respond to unemployment and as an inflation control mechanism. The remainder of the introductory section includes a chapter on scope and method, some brief notes on Marx's modes of production, a pair of chapters on basic national accounting and labour market indicators, and chapters on sectoral balances, basic algebra and the 'use of framing and language in macroeconomics ' (ibid.: 118).This eclectic approach to both the choice and sequencing of topics continues throughout the book. The material covered includes some history of economic thought (Keynes vs 'the Classics', Keynesians and Monetarists); mainstream macro (New Classical and New
The COVID-19 pandemic has reinforced the dominance of what Daniela Gabor calls the Wall Street Consensus (WSC) as the hegemonic approach to sustainable development. Public commitments to "green recoveries" and climate resilience, growing fiscal deficits in the Global South, and new central bank emergency liquidity measures have created more space for WSC policies. We examine the key WSC climate policy toolsclimate infrastructure as an asset class, climate rescuer of last resort, disclosure of climate-related financial risks and carbon pricingand argue that these will increase financial vulnerability in the Global South while doing little to achieve climate-aligned development. RÉSUMÉLa pandémie de COVID-19 a renforcé la prééminence de ce que Daniela Gabor appelle le Consensus de Wall Street (CWS) en tant que stratégie de développement durable. L'engagement public à soutenir la "régénérations verte" et la résilience climatique, le déficit fiscal croissant des pays du Sud, et les nouvelles mesures d'urgence de la banque centrale pour les liquidités ont créé plus d'espace pour les stratégies du CWS. Nous examinons les outils clés du CWS à l'usage de la politique sur le climatl'infrastructure du climat comme actif, les derniers recours pour un sauvetage du climat, l'indexation des risques financiers liés au climat et du prix du carboneet démontrons que ceux-ci augmenteront la vulnérabilité financière des pays du Sud, tout en accomplissant peu en termes de développement responsable visà-vis du climat.
The rise of the shadow banking system is viewed through the theoretical lens of Graziani's Monetary Theory of Production. Graziani's categories of ‘initial finance’ and ‘final finance’ are used to analyse the new forms of credit created in the shadow banking sector. It is argued that the accumulation of leverage in the shadow banking system and the creation of credit money by the traditional banking sector are symbiotic processes. While Graziani's triangular debtor‐bank‐creditor relationship remains central, the circuit operates in a perverse form in which household debt is stored on the balance sheets of shadow banks, allowing the banking system to break the historical connection between money creation and productive activity.
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