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1342. The (Im-)Possibility of Rational Socialism: Mises in China’s Market Reform Debate
- Author:
- Isabella Weber
- Publication Date:
- 10-2021
- Content Type:
- Working Paper
- Institution:
- Political Economy Research Institute (PERI), University of Massachusetts Amherst
- Abstract:
- Investigate the long first decade of reform in China (1978-1992) to show that Mises, in particular his initiating contribution to the Socialist Calculation Debate, became relevant to the reconfiguration of China’s political economy when the reformers gave up on the late Maoist primacy of continuous revolution and adhered instead to an imperative of development and catching up. During the Cultural Revolution, Mao had rejected the notions of efficiency and rational economic management. In the late 1970s, the reformers under Deng Xiaoping’s leadership elevated these notions to highest principle. As a result, Mises’ critique that socialism could not achieve a rational economic order came to be debated throughout the 1980s and Chinese economists developed their own reading of Mises and the Socialist Calculation Debate. When Deng Xiaoping reinstated market reforms in the early 1990s after the Tiananmen crackdown, a history of thought review of the possibility of rational socialism and socialist markets helped to justify the Socialist Market Economy with Chinese Characteristics the official designation of China’s economic system to this day.
- Topic:
- Markets, History, Reform, Economy, and Socialism
- Political Geography:
- China and Asia
1343. The Nature of Money and the Theory of International Trade: Thornton and Ricardo
- Author:
- Isabella Weber
- Publication Date:
- 10-2021
- Content Type:
- Working Paper
- Institution:
- Political Economy Research Institute (PERI), University of Massachusetts Amherst
- Abstract:
- A rich recent literature reinvestigates the nature of money, but little attention has been paid to the ramifications of the ways in which we theorize money for the theory of international trade. This paper examines the logical relationship between the neutrality of money and self-balancing trade based on Henry Thornton and David Ricardo as two foundational contributions to credit and commodity money theories respectively. I show that both authors theorize trade as self-balancing whenever money is conceptualized as neutral. I distinguish two notions of the neutrality of money: ex ante and ex post neutrality. In Thornton’s Paper Credit money is not neutral ex ante: there can be temporary trade imbalances. But in the long-run money is neutral ex post and international trade boils down to self-balancing barter. In Ricardo money is neutral both ex ante and ex post and international trade is always balanced unless central bank policy undermines monetary neutrality.
- Topic:
- International Trade and Finance, Economy, Money, and Trade
- Political Geography:
- Global Focus
1344. The Impact of Environmental Regulations on Manufacturing Outsourcing: Re-examining the Pollution Haven Effect in Global Value Chain
- Author:
- An Li
- Publication Date:
- 11-2021
- Content Type:
- Working Paper
- Institution:
- Political Economy Research Institute (PERI), University of Massachusetts Amherst
- Abstract:
- As countries worldwide attempt to address a series of global and domestic environmental challenges, the pollution haven effect remains an ongoing concern among trade and environment researchers and policymakers. This paper examines the pollution haven effect in the context of global value chains using inter-country input-output data at the manufacturing industry level from 1995-2009. This paper pays special attention to the issue of “doublecounting” caused by intermediate trade. The analysis utilizes two outsourcing measures and two revealed comparative advantage measures appropriate for analyzing global value chains. I propose women’s political power as a novel instrumental variable to address the endogeneity of environmental regulation. Regression results show that more stringent environmental policies are not a significant determinant of manufacturing outsourcing and competitiveness in global value chains. At the same time, women’s political power is associated with more stringent environmental policies.
- Topic:
- Environment, Women, Economy, Trade, Pollution, and Global Value Chains
- Political Geography:
- Global Focus
1345. U.S. Monetary Policy and the Decline in the Interest Rates (1990-2007)
- Author:
- Santiago Capraro, Carlo Panico, and Luis Daniel Torres-Gonzalez
- Publication Date:
- 12-2021
- Content Type:
- Working Paper
- Institution:
- Political Economy Research Institute (PERI), University of Massachusetts Amherst
- Abstract:
- Interest rates in the U.S. and in other countries have experienced persistent and generalised declines since the 1980s. The main interpretations of this phenomenon ignore the role of monetary factors, such as financial and monetary policy. The essay proposes an alternative interpretation based on the choice of the Federal Reserve (FED) to conduct monetary policy by attributing high priority to financial stability. The interaction between changes in financial regulation, the transformation of "specialized" into "universal” banking, and the concern with financial instability have led the central bank to add to the role of "lender of last resort" that of "lender of first resort," which systematically provides liquidity at a low cost to financial firms. This new conduct of monetary policy has produced the downward trend in interest rates.
- Topic:
- Monetary Policy, Federal Reserve, Economy, and Interest Rates
- Political Geography:
- United States of America
1346. The State-Constituted Market Economy: A Conceptual Framework for China’s State–Market Relations
- Author:
- Isabella Weber and Hao Qi
- Publication Date:
- 12-2021
- Content Type:
- Working Paper
- Institution:
- Political Economy Research Institute (PERI), University of Massachusetts Amherst
- Abstract:
- China has created a distinct economic system. Yet despite a growing literature with valuable contributions on the institutional arrangements under ‘capitalism with Chinese characteristics,’ the precise economic mechanisms underpinning China’s state–market relations remain undertheorised. In this paper we develop a conceptual framework of what we call China’s state-constituted market economy. We define essential as ‘systemically significant from the perspective of the state.’ We argue that the Chinese state ‘constitutes’ the market economy by creating, participating and steering markets for essentials in order to stabilise and guide the economy as a whole. We draw on China’s statecraft tradition as well as on proposals for financial policy reform in the U.S. to conceptualise the state market-constitution in China.
- Topic:
- Markets, Economy, and State-Market Relations
- Political Geography:
- China and United States of America
1347. Is There a Case for National Development Banks in Africa? Conceptual Rationale and Empirical Evidence
- Author:
- Léonce Ndikumana, Karmen Naidoo, and Francisco Perez
- Publication Date:
- 05-2021
- Content Type:
- Working Paper
- Institution:
- Political Economy Research Institute (PERI), University of Massachusetts Amherst
- Abstract:
- National development banks remain an important part of modern financial systems in developed as well as developing countries. The attention to the role of national development banks was reinvigorated in the aftermath of the 2008 global financial crisis, and their potential role in promoting access to finance and providing counter-cyclical financing is better appreciated today than in the structural adjustment era of the 1980s and 1990s. In this context, this study examines the landscape of national development banks in Africa and provides empirical evidence of their role in complementing commercial banks to meet the financing needs of the real sector using bank-level data from selected countries and the BankFocus database. The empirical results show that while national development banks do not lend more relative to commercial banks, they tend to focus more on medium-term and long-term lending as prescribed by their mandate. Interestingly, medium-term and long-term lending is associated with lower non-performing loan ratios as well as higher returns on assets. The results are similar for public banks. The evidence suggests that empowering national development banks with enhanced lending capacity and operational autonomy would significantly help alleviate the shortage of medium-term and long-term credit in African economies. The paper includes suggested avenues for further research.
- Topic:
- Economy, Banks, and Financial Systems
- Political Geography:
- Africa
1348. Predicting Chinese State-Owned Enterprise Policy Incidence
- Author:
- Sara Hsu
- Publication Date:
- 06-2021
- Content Type:
- Working Paper
- Institution:
- Political Economy Research Institute (PERI), University of Massachusetts Amherst
- Abstract:
- In this exploratory research, we examine the effect of economic and noneconomic indicators on the creation of Chinese state-owned enterprise policies. Using a VAR model, we find indicators that explain state-owned enterprise policy creation variance, which means that we can explain, to some extent, the incidence of state-owned enterprise policies. This reduces economic policy uncertainty, thereby having the potential to increase economic activity and reduce costs.
- Topic:
- Political Economy, Economy, and State-Owned Enterprises
- Political Geography:
- China and Asia
1349. Stranded Fossil-Fuel Assets Translate into Major Losses for Investors in Advanced Economies
- Author:
- Gregor Semieniuk, Philip B. Holden, Jean-Francois Mercure, Pablo Salas, Hector Pollitt, Katharine Jobson, Pim Vercoulen, Unnada Chewpreecha, Neil Edwards, and Jorge E Viñuales
- Publication Date:
- 10-2021
- Content Type:
- Working Paper
- Institution:
- Political Economy Research Institute (PERI), University of Massachusetts Amherst
- Abstract:
- The distribution of ownership of transition risk associated with stranded fossil-fuel assets remains poorly understood. We compute global stranded assets of US$1.4 trillion in the upstream oil and gas sector as expectations change to be consistent with stated climate policies. We trace the equity risk ownership from these 43,439 assets through a global equity network of 1.8 million companies to their ultimate owners. Most of the market risk falls on private investors, overwhelmingly in OECD countries, including substantial exposure through pension funds. Financial markets are exposed to a US$690 billion correction, comparable to the mispricing that triggered the 2007-08 crisis. The ownership distribution also shows the large stake OECD investors have in the continued operation of fossil-fuel facilities incompatible with climate change mitigation goals.
- Topic:
- Climate Change, Political Economy, Economy, Investment, and Fossil Fuels
- Political Geography:
- Global Focus
1350. The crisis of the Turkish lira: Toward economic collapse or a new economic model?
- Author:
- Al Jazeera Center for Studies
- Publication Date:
- 12-2021
- Content Type:
- Policy Brief
- Institution:
- Al Jazeera Center for Studies
- Abstract:
- As with any economic or fiscal policy, Erdogan is taking a risk, betting that his vision can turn the Turkish economy around. The only problem is that with presidential and parliamentary elections scheduled for June 2023, he has just 18 months to prove the efficacy of his policies.
- Topic:
- Economy, Recep Tayyip Erdoğan, Fiscal Policy, and Currency
- Political Geography:
- Turkey, Middle East, and Mediterranean