Yesterday, March 13th had a special event, a virtual conference in honour of the great Wynne Godley.
If you hadn’t joined it, you can still view the recordings which have now been made available, thanks to Gennaro Zezza, who organised the event.
Here’s another poster, prior to the event. You can find the picture here.
Picture credit: Levy Institute on Twitter.
All videos now seem available. Check again with the conference page for the presentation or write-ups.
Hassan Bougrine and Louis-Philippe Rochon have edited two volumes of essays in honour of Marc Lavoie and Mario Seccareccia!
Publisher’s pages for the books:
Volume 1
Volume 2
The contents of the two books are available in the links to the publisher’s website above.
Cover images credits: Louis-Philippe Rochon on Twitter.
📅 Conference: The Legacy Of Wynne Godley
Levy Economics Institute has announced a virtual conference in commemoration of Wynne Godley on May 13th.
The site says that you can join by Google Meet.
Marc Lavoie’s talk is Wynne Godley And The Monetary Circuit. There’s a roundtable Godley’s Approach In The Current Crisis.
There are several new speakers who didn’t attend the conference in honour of Godley in 2011 such as Ken Coutts, Graham Gudgin, Bill Martin.
Poster from Levy Institute’s Facebook page.
Marc Lavoie On A Podcast Episode ❗
Marc Lavoie recently appeared on David Beckworth’s podcast, Macro Musings, where he discusses his recent paper on the Canadian settlement system and its relation to monetary policy. He also discusses a few more things such as inflation and Post-Keynesian perspectives on this.
Marc Lavoie — History And Fundamentals Of Post-Keynesian Macroeconomics
Marc Lavoie talks on Post-Keynesian macroeconomics at the recent conference Euro At 20 – Macroeconomic Challenges in Berlin
There were some interesting additions to his table on macro paradoxes at 31:20 in the video on flexible wages leading to more instability, which is counter-intuitive from a neoclassical viewpoint.
Marc Lavoie — Advances In The Post-Keynesian Analysis Of Money And Finance
There’s a new article by Marc Lavoie in a newly released book which is an interesting read. Abstract:
This chapter focuses on the various monetary themes that have been emphasized by post-Keynesian economists and that turned out to have been validated by the events that occurred during and after the subprime financial crisis. These include interest rate targeting by the central bank, interest rate spreads, endogenous money, the reversed causality between reserves and money, the defensive role of central banks, the links between the central bank and the government, banks as very special financial institutions, the different role of the shadow banking system, and whether there are limits to the amounts of credit that banks can create. The chapter analyzes unconventional monetary policies, including quantitative easing (QE), QE for the people and 100% reserves. It also discusses the consequences, for the theory of endogenous central bank money, of the adoption of a system where the target interest rate is the interest rate on reserves.
Mario Seccareccia and Marc Lavoie — Central Banks, Secular Stagnation, And Loanable Funds
Mario Seccareccia and Marc Lavoie comment on Larry Summers’ recent shift on his view of fiscal policy:
… At the time [2013], however, he still sought to explain this new normalcy of secular stagnation in terms of interest rate rigidity.
Now, however, he seems to have abandoned that view altogether and has embraced Keynesian and post-Keynesian ideas originating with the General Theory. For instance, nowhere in the article by Summers and Stansbury is there mention of the negative natural rate as the explanation for an incapacity of central bankers to deal with secular stagnation. Is that because he has now abandoned the loanable funds theory, which remains at the core of mainstream thinking and to which he had previously subscribed? Nor do he and his coauthor suggest now that activist fiscal policy to combat secular stagnation is needed as a temporary measure to kick-start an economy stuck in a liquidity trap.
Marc Lavoie has a new paper in Review Of Political Economy in which he explains how the Bank of Canada, the central bank of Canada 🇨🇦 is able to maintain the target interest rate at the center of the corridor with high perfection despite zero reserve requirement and clearing happening privately.
Abstract:
In a number of ways, implementing monetary policy in Canada stands apart from monetary policy in most other industrial countries. Commercial banks and other participants to the main clearinghouse – the large-value transfer system (LVTS) – hold no reserves at the central bank. Clearing and settlement is both in real time and net, while only settlement occurs on the books of the central bank. The Bank of Canada does not conduct open-market operations and rarely intervenes in the repo market; and despite this, the collateralized overnight rate always remains within 2 or 3 basis points of the target interest rate. The paper explains why this is so by describing the setup of the Canadian clearing and settlement system, including the rules that have been put forward in case a bank defaults on its due payments before settlement occurs. Some puzzles that arose through the years are also discussed, as well as the unlikely prospect of introducing blockchain technology in the Canadian clearing and settlement system.
A good lecture by Marc Lavoie on whether Hyman Minsky was a Post-Keynesian. The answer is in the end and I won’t give out the answer!
One of the points Marc discusses when discussing the financial instability hypothesis is that Minsky’s analysis avoids discussing dynamic effects: a rise in production of firms leads to a rise in demand for their products because of incomes generated and will hence generate profits for firms. Hence firms’ debt ratios needn’t worsen necessarily. Minsky’s narrative makes it look like it is always worsening. Also Minsky assumes that the rise in supply of debts will raise interest rates, which has a sound of the loanable funds model to it.
Which is no to say that the hypothesis is irrelevant but just that a better articulation is required.
Marc Lavoie at Poznan Summer School 2018
The video was live at the Review Of Political Economy‘s page on Facebook but still available.
Some background papers on this:
There’s now a paper, Was Hyman Minsky A Post-Keynesian Economist?, at Review Of Evolutionary Political Economy.
Recently I commented on a paper, The Financial Crisis In The Eurozone: A Balance-Of-Payments Crisis With A Single Currency? by Eladio Febrero, Jorge Uxó and Fernando Bermejo, published in ROKE, Review Of Keynesian Economics. I hadn’t realised that Sergio Cesaratto has a reply (paywalled) in the same issue.
Sergio Cesaratto. Picture credit: La Città Futura, Sergio Cesaratto
Abstract:
Febrero et al. (2018) criticise the balance-of-payments (BoP) view of the European Economic and Monetary Union (EMU) crisis. I have no major objections to most of the single aspects of the crisis pointed out by these authors, except that they appear to underline specific sides of the EMU crisis, while missing a unifying and realistic explanation. Specific semi-automatic mechanisms differentiate a BoP crisis in a currency union from a traditional one. Unfortunately, these mechanisms give Febrero et al. the illusion that a BoP crisis in a currency union is impossible. My conclusion is that an interpretation of the eurozone’s troubles as a BoP crisis provides a more consistent framework. The debate has some relevance for the policy prescriptions to solve the eurocrisis. Given the costs that all sides would incur if the currency union were to break up, austerity policies are still seen by European politicians as a tolerable price to pay to keep foreign imbalances at bay – with the sweetener of some European Central Bank (ECB) support, for as long as Berlin allows the ECB to provide it.
Sergio carefully responds to all views of Febrero et al. and Marc Lavoie, Randall Wray and also Paul De Grauwe, pointing out that he agrees with most of their views except that their dismissal of this being a balance-of-payments crisis with their claims that the problem could have been addressed by the Eurosystem/ECB lending to governments without limits. He points out that, “The austerity measures that accompanied the ECB’s more proactive stance are clearly to police a moral hazard problem”. It is true that the ECB, the European Commission and the IMF overdid the austerity but it doesn’t mean that Sergio’s opponents’ claims are accurate.