Alternative Economic Policies Research Articles

Reacting to the Lucas Critique

In 1976, Robert Lucas explicitly criticized Keynesian macroeconometric models for their inability to correctly predict the effects of alternative economic policies. Today, most contemporary macroeconomists and some historians of economics consider that Lucas’s critique led forcefully to an immediate disqualification of the Keynesian macroeconometric approach. This narrative is based on the interpretation of the Lucas critique as a fundamental principle for economic reasoning that was (and still is) logically unquestionable. We consider that this narrative is problematic both in terms of historiography and the effects that it can have in the field as a way of assigning importance and credit to particular macroeconomists. Indeed, the point of view of the Keynesian economists is missing despite the fact that they were the target of Lucas’s paper and that throughout the 1970s and 1980s they produced a fierce reaction against it. In this article we analyze the reactions by a broad set of authors (which we label “Keynesians”) that disputed the relevance of the critique. In spite of their diversity in methodological, theoretical, and policy issues, these reactions were characterized by their common questioning of the empirical and practical relevance of the Lucas critique.

Indonesia–Chicken: Tensions between International Trade and Domestic Food Policies?

AbstractThis paper analyzes the dispute Indonesia – Measures Concerning the Importation of Chicken Meat and Chicken Products from a legal-economic perspective. We evaluate alternative explanations for the motive behind Indonesia's import restrictions and conclude that they can be linked to protectionist political-economic motives and are most likely due to a self-sufficiency objective and the legal requirements attached to it. Economically, the import restrictions on chicken and other food products have led to substantial price volatility, and they impose costs on Indonesian consumers and small farmers who are net buyers of food, firms that import certain raw materials, as well as foreign exporters. Therefore, by making food more expensive and less accessible, they could reduce food security. We also argue that an additional issue with the goal of self-sufficiency in Indonesia is lack of comparative advantage in some food items, including chicken meat and chicken products. Legally, although the Panel highlighted that self-sufficiency is a legitimate policy objective that as such does not lead to a violation of WTO law, the Indonesia–Chicken case leads to the question of whether, in practice, it is feasible to implement a self-sufficiency target resorting only to WTO-compliant policies. Finally, we discuss potential alternative economic policies and examine whether Indonesia could have attained its food self-sufficiency objective in a WTO-consistent manner.

Dealing with the consequences of exchange rate misalignments for macroeconomic adjustments in the EMU

AbstractThe euro crisis sheds light on the nature of alternative adjustment mechanisms in the EMU. This article examines the exchange rate misalignments within the euro zone, using a FEER approach. To explore the consequences of these misalignments, we use an open economy SFC model with endogenous interest rates and Eurobonds. Facing a competitiveness loss in southern countries due to misalignments, three sets of alternative economic policy are investigated: a policy‐mix based on tax rebates to improve competitiveness; an increase in intra‐European financing by banks of northern countries; and an issuance of Eurobonds to pool European sovereign debt.

Alternative economic policies for Europe – but with global significance

Alternative economic policies for Europe – but with global significance

Schooling and the 'Left': Policy Alternatives for Education and the Economy in the 80's

This paper looks at the economic policy alternatives emerging on the political left in the United States, as a response to the continuing crisis of the American economy. Focusing on the two most significant of these - increased government intervention on behalf of corporate needs, and economic democratization - the author considers each in terms of its implications for education. He concludes that they represent profoundly conflicting views of education, culture. And the role of the worker in U.S. society.

Latin America: Limits to Alternative Economic Policies

From 2003 to 2008, Latin America had a remarkable period of growth with few precedents in its economic history. This corresponds to the strengthening of economic policy options far from those advocated by the International Monetary Fund, World Bank, or the Washington Consensus agenda. With the exception of Venezuela, the international financial crisis and the great recession did not significantly affect economic growth. In the following years and until the end of 2011 and the beginning of 2012, GDP continued growing. From this moment forward, there was a change in economic growth tendencies and in some countries even strong recessions. The literature has argued that the change was the result of a rapid and significant drop in the international prices of raw materials, all relevant component of these countries’ exports. This article argues that there are other macroeconomic data that also explain the change in the dynamics in the some LA economies. Structural reforms and economic policies implemented since the 1980s through the early years of the last decade had effects that transformed economies and economic power relations. The changes carried out by governments, which were promoting an alternative economic policy in the region, were not able to advance sufficiently in the creation of new institutions. At the same time, they could not modify economic power relations to the point of creating significant increases in the rate of investment and the expansion of internal productive chains within the industrial base to give continuity to the process of economic development.

Indonesia – Chicken: Tensions between International Trade and Domestic Food Policies?

This paper analyzes the dispute Indonesia – Measures concerning the importation of chicken meat and chicken products from a legal-economic perspective. We evaluate alternative explanations for the motive behind Indonesia's import restrictions and conclude that they can be linked to protectionist political-economic motives and are most likely due to a self-sufficiency objective and the legal requirements attached to it. Economically, the import restrictions on chicken and other food products have led to substantial price volatility, and they impose costs on Indonesian consumers and small farmers who are net buyers of food, firms that import certain raw materials, as well as foreign exporters. Therefore, by making food more expensive and less accessible, they could reduce food security. We also argue that an additional issue with the goal of self-sufficiency in Indonesia is lack of comparative advantage in some food items, including chicken meat and chicken products. Legally, although the Panel highlighted that self-sufficiency is a legitimate policy objective that as such does not lead to a violation of WTO law, the Indonesia - Chicken case leads to the question of whether, in practice, it is feasible to implement a self-sufficiency target resorting only to WTO-compliant policies. Finally, we discuss potential alternative economic policies and examine whether Indonesia could have attained its food self-sufficiency objective in a WTO-consistent manner.

Old and New Criteria for the Governance of Political and Economic Structures on the Basis of the Bible and the Quran

Abstract This study presents a sociological analysis of the Holy Books of two world religions (the Bible and the Quran) since, according to prognoses and risk analyses, a political, economic, cultural, and religious confrontation between the world religions will be unavoidable. Special economic and political aspects also contribute to the up-to-datedness of the topic in the democratic world; in fact: the economic crisis at the beginning of the 21st century, the difficulties of managing the crisis with traditional micro- and macroeconomic tools as well as the Europe-wide issue of migration processes. These challenges have directed our attention to alternative economic solutions and policy options, including theories on ethical basis. Modern academic discourse has recently started to direct research at leadership skills as acknowledged forms of talent. The priority of moral talent is never disputed in the Bible and the Quran, more so by certain leaders holding political or economic positions.

Intelligent simulation of aquatic environment economic policy coupled ABM and SD models

Rapid urbanization and population growth have resulted in serious water shortage and pollution of the aquatic environment, which are important reasons for the complex increase in environmental deterioration in the region. This study examines the environmental consequences and economic impacts of water resource shortages under variant economic policies; however, this requires complex models that jointly consider variant agents and sectors within a systems perspective. Thus, we propose a complex system model that couples multi-agent based models (ABM) and system dynamics (SD) models to simulate the impact of alternative economic policies on water use and pricing. Moreover, this model took the constraint of the local water resources carrying capacity into consideration. Results show that to achieve the 13th Five Year Plan targets in Dianchi, water prices for local residents and industries should rise to 3.23 and 4.99 CNY/m3, respectively. The corresponding sewage treatment fees for residents and industries should rise to 1.50 and 2.25 CNY/m3, respectively, assuming comprehensive adjustment of industrial structure and policy. At the same time, the local government should exercise fine-scale economic policy combined with emission fees assessed for those exceeding a standard, and collect fines imposed as punishment for enterprises that exceed emission standards. When fines reach 500,000 CNY, the total number of enterprises that exceed emission standards in the basin can be controlled within 1%. Moreover, it is suggested that the volume of water diversion in Dianchi should be appropriately reduced to 3.06×108m3. The reduced expense of water diversion should provide funds to use for the construction of recycled water facilities. Then the local rise in the rate of use of recycled water should reach 33%, and 1.4 CNY/m3 for the price of recycled water could be provided to ensure the sustainable utilization of local water resources.

South Korea’s Aging Workforce and Labor Productivity

Strong government policies in the 1950s~1960s helped Korea to partake in ‘The East Asian miracle’ (World Bank, 1993). An effective policy environment allowed Korea to take advantage of its first demographic dividend, and to attain rapid industrialization and strong labor productivity within a century (Park, Lee& Mason, 2012). Korea is now the world’s eleventh biggest economy (World Bank, 2017). While a young Korean workforce ushered in domestic economic growth over the last decade, an aging workforce now threatens Korea’s labor productivity prospects. Korea has been aging since the 1970s and in 2018, its elderly (citizens aged 60 years and over) will account for at least 14% of Korean population (Howe, Jackson & Nakashima, 2007). This paper analyzes Korean economic policy alternatives necessary for bridging the forthcoming labor gap, and for sustaining (and improving) Korean labor productivity in the long run amidst an aging workforce. Given an economic policy focus of the paper, a comparative research methodology is applied in analyzing policy alternatives. The paper considers economic policies for aging labor applied in Japan, Germany and US because (a) all three countries have advanced aging policies (Hoehn, 2000; Kim 2010; Achenbaum & Carr, 2014) (b) Japan’s cultural environment and family values are relatively similar to ones in Korea (Kim, 2010) and (c) Korean legal system is similar to German and U.S. legal systems (Jin, 2004). The first section of the paper highlights the urgency in addressing Korea’s aging demographic crisis. The second part of the paper discusses existing government aging policies to enhance labor productivity in its aging workforce. The last section of the paper offers policy suggestions that can add value to existing government policies on sustaining long-term Korean labor productivity.

An Analysis of Brazil’s Economic Situation: 2014-2017, the short-term outlook and policy alternatives

The main goal of this paper is to discuss Brazil’s economic situation in the recent period. Although the analysis is centred on the current Brazilian business conditions (known as the <em>conjuntura econômica</em> in the Portuguese language), the paper covers the period after 2014, during which the country’s economic problems have significantly worsened. The remainder of the paper is divided into the following sections. Section 2 seeks to analyze and discuss the main structural and short-term causes that explain the worsening of Brazil’s economic situation in 2014, as well as the deep recession that followed it. Section 3 critically analyzes the macroeconomic policy adopted by Temer’s government, assuming implicitly that there are both fiscal and monetary policy alternatives. Section 4 concludes and discusses economic policy alternatives for growth recovery of the Brazilian economy, other than those chosen and adopted by Temer’s economic team in 2016 and onwards.

Alternative economic policy under a regime with inflation targeting, primary surpluses and a floating exchange rate: an analysis for developing economies

Inflation targeting, primary surpluses and a floating exchange rate under supply and exchange-rate shocks can combine to create deleterious effects on the economic dynamic. This paper reports on computer simulation experiments using a dynamic and stochastic model that can incorporate different restrictions. In general, the data show that under supply and exchange-rate shocks, a better method for minimising social loss includes flexible inflation targeting, counter-cyclical primary surpluses and capital control without eliminating the floating exchange rate.

Economic environment and health care coverage: Analysis of social acceptance of access restrictive policies applied in Spain in the context of economic crisis

The strongest economic crisis ever known, started in 2008, destroyed much of the social achievements. Although the European Union had to deal with this situation by designing common policies, the member states have handled this crisis in many different ways. Nevertheless, not all the countries had the same possibilities for manage their economic policies inside a common currency area. These states involved in the EuroZone have faced some restrictions due to their belonging to a currency area, so they have had to design alternative economic policies to the monetary one. The main objective of this paper is to assess the acceptance of the restrictive policies on public health expenses due to economic crisis and the implemented economic policy, from the point of view of citizens. This paper hypothesized that this acceptance or not depends on citizens perception of adequate use of the public health care system. A survey was conducted among the main social actors involved on healthcare system: the general population and health professionals. And for testing the hypotheses a means comparison (t-test and ANOVA) and Structural Equation Modeling (SEM) has been developed using data from that survey. Outcomes from those econometric exercises show a general disagreement with the cuts in health expenses, but in a level very related with citizen’s perceptions of overuse of public health services.

From Growth to Well-Being: A New Paradigm for EU Economic Governance

This policy brief criticizes the European Economic Governance system for being too narrowly focused on economic growth and competitiveness.Starting from the 2009 report by the Commission on the measurement of economic performance and social progress (Stiglitz-Sen-Fitoussi), the brief proposes a new framework (a ‘magic polygon’) and a new scoreboard for an alternative economic policy geared towards well-being, convergence and social-ecological sustainability.

Book Review: Ha-Joon Chang and Ilene Grabel, Reclaiming Development: An Alternative Economic Policy Manual and Gerard Strange, Towards a New Political Economy of Development: States and Regions in the Post-Neoliberal World

Book Review: Ha-Joon Chang and Ilene Grabel, <i>Reclaiming Development: An Alternative Economic Policy Manual</i> and Gerard Strange, <i>Towards a New Political Economy of Development: States and Regions in the Post-Neoliberal World</i>

Secular stagnation and progressive economic policy alternatives

This paper summarizes two main findings in the post-Keynesian literature regarding the linkages between financialization, income distribution, accumulation and productivity. First, at the core of secular stagnation lies the missing link between profits and investment. Second, rising inequality and financialization have been the main reasons for this missing link and hence the major brakes against capital accumulation and growth. The paper concludes with alternative progressive policies based on a coordinated policy mix of equality-led development and public investment.

Reclaiming Development: An Alternative Economic Policy Manual, by CHANG, H.‐J. and GRABEL I. (London &amp; New York: Zed Books, 2014, 2nd ed.).

Reclaiming Development: An Alternative Economic Policy Manual, by CHANG, H.‐J. and GRABEL I. (London &amp; New York: Zed Books, 2014, 2nd ed.).

The Greek economic crisis: causes and alternative policies

ABSTRACTThe Greek economic crisis is primarily structural and the result of an international economic impasse that developed in 2007, with devastating implications for the struggling peripheral economies of Europe. This article suggests that falling profitability led to the stagnation of profits, which in turn discouraged new investment, decreased production and increased unemployment. The resulting recessionary economic environment, in conjunction with the mounting public debt and the austerity policies imposed on the Greek economy by the so-called ‘troika’ of creditors in 2010, has decimated the Greek economy even further, causing one of the worst economic crises since the Second World War. The article also provides some broad guidelines for an alternative economic policy.

Mediating the German Ideology: Ordoliberal Framing in European Press Coverage of the Eurozone Crisis

The German Government has played a leading role in the Eurozone crisis management, largely characterised by a commitment to fiscal austerity and supply-side structural reforms. The legitimation of these measures in the European policy arenas as well as in the public domain has partly rested on an ordoliberal economic policy framing, which has presented the Eurozone crisis as one of public indebtedness and loss of competitiveness. To study the public legitimation of the crisis management, we analyse the press coverage of the crisis in 8 Eurozone member states, with a total of 7986 newspaper articles included in the sample. Focusing on ‘problem definitions’ and ‘treatment recommendations’ as two key elements of issue framing, we find that an ordoliberal framing of the crisis prevails in all the studied countries, while a competing Keynesian policy frame is mostly undermined. Significant variation between the countries emerges, however, on the question of EU federalisation and on the framing of the sovereign bailout loans. We discuss the implications of these findings for the success of the German Government to maintain the austerity orthodoxy across the Eurozone and crowd out economic policy alternatives.

Avanços e dificuldades para o mercado de trabalho

resumo O objetivo deste estudo é avaliar a trajetória dos principais indicadores de mercado de trabalho brasileiro desde o início do governo Lula. Os dados revelam aumento da participação do emprego formal, do salário real médio e redução da desigualdade no período 2003-2014, mas alguns problemas revelados durante os doze anos iniciais mostram-se preocupantes, podendo ser agravados no médio prazo. Os dados do início de 2015 mostram aumento do desemprego e queda da massa salarial, como reflexo da política econômica que vem sendo adotada no início do segundo mandato de Dilma Rousseff. Nas conclusões, advoga-se pela necessidade de criação de um consenso político em favor de uma política econômica que seja apoiada no fortalecimento do mercado interno e na retomada da atividade industrial. São feitas também críticas ao papel que tem sido desempenhado pela imprensa especializada no debate sobre alternativas de política econômica.