Browse

Before Method and Models offers a revisionist account of political economy in the time of Thomas Robert Malthus and David Ricardo, c. 1790–1823. In contrast to simply assuming that ‘classical political economy’ existed and provides the context for making sense of the writings of Malthus and Ricardo, this book recovers the circumstances that shaped their works. This leads the inquiry into the major political controversies of the time—the Bullion Controversy and the Corn Laws debate—and the texts with which Malthus and Ricardo attempted to intervene into these disputes. The results show that political economy was produced using ready-to-hand concepts and instruments, giving its practitioners great intellectual freedom. Yet political economy was also expected to act as a species of counsel to Parliament and resolve policy questions. In this context, the presumption of Malthus and Ricardo to style themselves as ‘theorists’ who possessed special intellectual capacities that set them above merely ‘practical’ writers attracted hostile responses from their contemporaries. The tenuous position of theory in this period was worsened by the intellectual aftermath of the French Revolution, which enabled the enemies of Malthus and Ricardo to portray their work as theoretical enthusiasm—as the product of undisciplined minds that had succumbed to the pleasures of system, utopia, and fanaticism. The attack and defence of political economy in this setting was conducted with the vocabulary of theory and practice, and the period thus stands as a time when reflection on commerce and politics was conducted without method and models.

Even before the United States became a country, laws prioritizing access to credit set colonial America apart from the rest of the world. This book examines how the drive to expand credit shaped property laws and legal institutions in the colonial and founding eras of the republic. The book describes how the British Parliament departed from the customary ways that English law protected land and inheritance, enacting laws for the colonies that privileged creditors by defining land and slaves as commodities available to satisfy debts. Colonial governments, in turn, created local legal institutions that enabled people to further leverage their assets to obtain credit. The book shows how loans backed with slaves as property fueled slavery from the colonial era through the Civil War, and that increased access to credit was key to the explosive growth of capitalism in nineteenth-century America. The book presents a new vision of American economic history, one where credit markets and liquidity were prioritized from the outset, where property rights and slaves became commodities for creditors' claims, and where legal institutions played a critical role in the Stamp Act crisis and other political episodes of the founding period.

This book is an attempt to resolve an enigma that has puzzled social scientists since Condorcet in the eighteenth century: Why are collective choices so stable and easy to make in practice, when in theory it should be totally otherwise? A striking illustration of this enigma is the almost unanimous support of shareholders in publicly traded companies for the motions tabled by directors. The first part of the book explores the interplay between the voting and trading mechanisms. Two main arguments are proposed: on the one hand, the better the market works, the easier it is for majority voting to achieve political stability; on the other hand, among all market equilibria, those that are politically stable are more likely to be economically efficient. The second part of the book explores the feedback from collective choices to individual preferences. It investigates the behavioral assumptions leading to an alignment of shareholders, even in a context of severe market failures, and provides an analysis of the philosophical and axiomatic underpinnings of these assumptions. In sum, and figuratively, the book argues that the invisible hand of the market and the active hand of democracy can work hand in hand to give rise to a better world. The analysis relies on formal models which are kept as simple as possible and make use only of elementary convex and vector analysis.

A wave of liberalization swept the end of the twentieth century. From the 1970s and 1980s onwards, most developed countries have passed various measures to liberalize and ‘modernize’ the financial markets. Each country had its agenda, but most of them have experienced, to a different extent, a change in regulatory regime. This change, often labelled deregulation and associated with the advent of neoliberalism, was sharply contrasting with the previous era, the Bretton Woods system, which has sometimes been portrayed as an era of ‘financial repression’. On the other hand, a quick glance at financial regulation today, at the amount of paper it produces, at its complexity, at the number of people involved, and at the resources invested in it, is enough to say that, somehow, there is more regulation today than ever before. In the new system, financial regulation has taken unprecedented importance. As more archival material is becoming available, a better understanding of the fundamental changes in the regulatory environment towards the end of the twentieth century is now possible. What kind of change exactly was deregulation? Did competition between financial regulators lead to a ‘race to the bottom’ in regulation? Is deregulation responsible for the recurring financial crises which seem to have characterized the international financial system since the 1980s? The movement towards a more liberal regulatory regime was neither linear nor simple. This book—a collection of chapters studying deregulation in various countries and contexts—examines the national and international pathways of deregulation by providing an in-depth analysis of a short but crucial period in a few major countries.

Around the world, governments are starting to directly measure the subjective wellbeing of their citizens and to use it for policy evaluation and appraisal. What would happen if a country were to move from using GDP to using subjective wellbeing as the primary metric for measuring economic and societal progress? Would policy priorities change? Would we continue to care about economic growth? What role would different government institutions play in such a scenario? And, most importantly, how could this be implemented in daily practice, for example in policy evaluations and appraisals of government analysts, or in political agenda-setting at the top level? This book provides answers to these questions from a conceptual to a technical level by showing how direct measures of subjective wellbeing can be used for policy evaluation and appraisal, either complementary in the short run or even entirely in the long run. It gives a brief history of the idea that governments should care about the happiness of their citizens, provides theories, makes suggestions for direct measurement, derives technical standards, shows how to conduct wellbeing cost-effectiveness and cost-benefit analyses, and gives examples of how real-world policy evaluations and appraisals would change if they were based on subjective wellbeing. In doing so, the book serves the growing interest of governments as well as non-governmental and international organizations in how to put subjective wellbeing metrics into policy practice.

This book theorizes that information is a critical factor for subnational government (SNG) capital market formation and development. It empirically tests the stated relationship between information resolution institutions and mechanisms of information resolution on SNG borrowing. Based on empirical results, analyses of underlying fundamentals of city credit quality, and the study of contexts of information resolution reforms, the book recommends policy measures for central governments, regional and local governments, and financial sector firms to build capital markets for subnational borrowing. As subnational governments across the globe, especially cities, bear increasing pressures to provide critical capital infrastructure, responsibilities for the provision of local infrastructure resulting from decentralization efforts and population demands, the need for a wider array of internal and external resources, including bond market alternatives, become a priority. With information resolution, access to capital market financing becomes a feasible option of regional and local government finance. The evidence reported in this book demonstrates that SNG access to capital market financing depends on credit contractibility, which is the nation’s capacity of information resolution. The bases of credit contractibility are transparency of credit information, depth of credit information, dissemination, and regulatory quality. Evidence also shows that the informational content of underlying credit quality is a significant covariate of city-level borrowing and debt composition. Based on empirical findings and focusing on cities, the book argues that SNGs can and should strengthen their agency vis-à-vis the public and financial sector actors, in an environment where global capital is increasingly intertwined with the provision of critical infrastructure finance. Agency is necessary for city policymakers not only to achieve their key governance tasks efficiently, but do so effectively and equitably, consistent with the demands of the citizenry.

The book gives broad coverage of monetary policy issues in Low Financial Development Countries (LFDCs). These low- and lower-middle-income countries are characterized by a predominance of bank finance, shallow financial markets, low financial inclusion, weak integration with world capital markets, and a high degree of informality in economic activity. Monetary policy acquires special twists, making it different in many aspects from the policies followed in advanced and emerging market economies. The book covers the main facets of monetary policy-making, using an approach that combines discussion of theoretical arguments, of results from empirical studies, and of policy experiences relevant for LFDCs. The book presents the monetary policy instruments used in these countries, and assesses the specificities of their monetary transmission mechanism. It evaluates the advantages, drawbacks, and challenges of the different nominal anchors they may choose from: exchange rate targeting, monetary targeting, and inflation targeting. This discussion is set against the background of the three main goals pursued by central banks: price, output, and financial stability. Particular attention is devoted to the issue of the credibility of central banks and to the trade-offs they face when external shocks, to which these countries are very vulnerable, lead to conflicts among the three goals they pursue. The book also covers more specific topics, such as challenges raised by fiscal dominance and by dollarization, implications of informal labour markets and of microfinance institutions for monetary policy-making, and the role of models for forecasting and policy evaluation.

The 20th anniversary of Economic and Monetary Union (EMU) offers an opportunity to look back on the record of the European Central Bank (ECB) and learn lessons that can improve the conduct of policy in the future. This volume charts the way the ECB has defined, interpreted, and applied its monetary policy framework—its strategy—over the years from its inception, in search of evidence and lessons that can inform those reflections. Our ‘Tale of Two Decades’ is largely a tale of ‘two regimes’: one—stretching slightly beyond the ECB’s mid-point—marked by decent growth in real incomes and a distribution of shocks to inflation almost universally to the upside; and the second—starting well into the post-Lehman period—characterized by endemic instability and crisis, with the distribution of shocks eventually switching from inflationary to continuously disinflationary. We show how the most defining feature of the ECB’s monetary policy framework, its characteristic definition of price stability with a hard 2 per cent ceiling, functioned as a key shock absorber in the relatively high-inflation years prior to the crisis, but offered a softer defence in the face of the disinflationary forces that hit the euro area in its aftermath. The imperative to halt persistent disinflation in the post-crisis era therefore called for a radical, unprecedented policy response, comprising negative policy rates, enhanced forms of forward guidance, a large asset purchase programme and targeted long-term loans to banks. We study the multidimensional interactions among these four instruments and quantify their impact on inflation and the macroeconomy.

At the dawn of World War I (WWI), the British stock market was the preserve of a wealthy elite, and most people in finance and politics agreed that it should stay this way. By the end of the century, Britain had more individual shareholders than trade union members. This book explores the financial, political, and cultural forces that brought about this dramatic change in British society. By capturing the voices and experiences of everyday investors, this study brings to life the history of Britain’s vibrant stock market culture: from the mass investment in war bonds during WWI, through the expansion of the financial press in the post-war decades, to the ‘popular capitalism’ of Margaret Thatcher’s Conservative Party during the 1980s. Throughout the century, the stock market came to play an ever larger role in people’s lives through pension funds and life insurances. But as financial securities lost their age-old stigma of being either immoral or suitable only for the upper classes, the markets also became a popular pastime for millions of Britons who were seeking higher than average returns and a similar thrill of risk and reward to that of gambling on horses or the football pools. Playing the Market forcefully reminds us that gambling is not—as many financial professionals would have us believe—a parasitical element to the otherwise rational and prudent sphere of modern finance. Instead, it is one of its constituent features and explains why until this day, the stock market is either criticized or celebrated as a casino.

The purpose of this book is to bring together for the first time a description, with examples, of the main methods used in microsimulation modelling, used in the field of income-distribution analysis. The book provides a practical complement to the Handbook of Microsimulation Modelling, published in 2014. It is structured to develop and use the different types of models used in the field, with a focus on household-targeted policy. The book aims to fill a gap in the literature in providing a greater degree of codified knowledge through a practical guide to developing and using microsimulation models. At present, the training of researchers and analysts that use and develop microsimulation modelling is done on a relatively ad-hoc basis through occasional training programmes and lecture series, built around lecture notes. This book would enable a more formalized and organized approach. Each chapter addresses a separate modelling approach in a similar, consistent way, describing in practical terms the key methodological skills for each approach: · It provides some policy context to each modelling approach so as to understand the modelling choices made and structures developed. · As a very data-intensive modelling approach, each chapter describes key data analysis and data-preparation methods. · As a modelling approach that is used extensively for deciding policy, often involving huge budgets, validation is key. Each chapter describes an approach to validating the model. · Depending upon the policy context, the analysis is assessed in different ways. Each chapter contains a section devoted to measurement issues and tabulating output from the models. · Last, each chapter contains an example simulation of a policy analysis using the chapter’s methodological approach.

Through the coordination of work of a team of analysts in twelve countries for twenty years, the International Social Security (ISS) project has used the differences in social security programs across countries as a natural laboratory to study the effects of retirement program provisions on the labor force participation of older persons and related questions. The first several phases documented the strong relationship across countries between social security incentives and older men’s labor force participation, confirmed this relationship in microeconomic analysis, and estimated the labor market and fiscal implications of social security reform. Later volumes have examined the relationship between disability insurance program provisions, health, and retirement and explored whether older employment affects youth unemployment and whether older workers are healthy enough to work longer. The project has examined recent trends in labor force participation at older ages and potential explanations for these behavioral changes, such as cohort changes in health and education. In this volume, we explore how financial incentives to work at older ages have evolved from 1980 to today. We highlight the important role of reforms in these changing incentives and examine how changing incentives may have affected retirement behavior by comparing trends in incentive measures within and across countries to trends in employment.

The book traces the development and consequences of the economic reform measures undertaken in the utilities sector in Australia (communications, energy, water/wastewater services, and transport) in the last years of the 20th century and the early decades of the 21st century. In doing so, it looks at the process of reform across industries, and across the state and federal jurisdictions, to identify what motivations the various governments had for pursuing reform, how change varied across jurisdictions, and what issues arose in the process. Although by the mid-1990s all states and territories and the Australian Government were committed to reforming utilities as part of the National Competition Policy, not all pursued this reform with the same degree of speed and breadth of action. The broad trends of economic reform in Australia, and abroad, are also touched upon, to provide an outline of the wider context in which the reform of the utilities occurred. This book, therefore, explores the relationship between politics and society on the one hand and economic reform on the other; as well as on the efforts of governments in Australia to promote economic growth and the wealth of Australians in an increasingly complex and challenging global economic climate.