In the field of economics, perhaps the most important break with the past—one that leaves open huge areas for future work—lies in the economics of information. It is now recognized that information ...is imperfect, obtaining information can be costly, there are important asymmetries of information, and the extent of information asymmetries is affected by actions of firms and individuals. This recognition deeply affects the understanding of wisdom inherited from the past, such as the fundamental welfare theorem and some of the basic characterization of a market economy, and provides explanations of economic and social phenomena that otherwise would be hard to understand.
In the 1990s, development policy advocated by international financial institutions was influenced by Washington Consensus thinking. This strategy, based largely on liberalization, privatization, and ...price-flexibility, downplayed, if not disregarded, the role of government in steering the processes of technological learning and economic growth. With the exception of the Far East, many developing countries adopted the view that industrial policy resulted in inefficiency and poor economic growth. Ample historical evidence shows that industrial policy does work, when the right technologies and industries are supported and when appropriate combinations of policy measures are implemented. This book provides an in-depth exploration of which industrial policies have been successful, the trade-offs associated with these microeconomic approaches to growth and development, and the opportunities and constraints associated with the current organization of international economic relations. Available in OSO: http://www.oxfordscholarship.com/oso/public/content/economicsfinance/9780199235261/toc.html Contributors to this volume - Mario Cimoli, Economic Commission for Latin America and the Carribean (ECLAC) and University of Venice Giovanni Dosi, LEM Pisa and University of Manchester Joseph E. Stiglitz, Columbia University Richard R. Nelson, Carolina Castaldi, Utrecht University Nelson Correa, ECLAC Erik S. Reinert, Norway and Tallinn University of Technology Michele Di Maio, University of Macerata Yilmaz Akyuz, Former Director UNCTAD Wilson Peres, ECLAC Jose Gabriel Palma, University of Cambridge Bernardo Kosakoff, Director ECLAC Adrian Ramos, ECLAC Antonio Barros de Castro, BNDES Ajit Singh, University of Cambridge Carl J. Dahlman, Georgetown University Mushtaq H. Khan, SOAS, University of London Stephanie Blankenburg, SOAS, University of London Roberto Mazzoleni, Hofstra University Alice H. Amsden Colin Mayer, University of Oxford Mario L. Possas, Federal University of Rio de Janeiro Heloisa L. Borges, IE/UFRJ Mike Hobday, University of Sussex Fernando Afonso de Barros Perini, University of Sussex Benjamin Coriat, Universite de Paris 13 Annalisa Primi, ECLAC, United Nations
This paper reviews briefly the arguments for capital market liberalization, and identifies their theoretical and empirical weaknesses. This provides the foundations for the argument for intervention ...in short-term capital flows. The paper concludes with a brief discussion of the various ways in which such interventions may be implemented.
There is growing dissatisfaction with the economic policies advocated by the IMF and other international financial institutions - policies that have often resulted in stagnating growth, crises, and ...recessions for client countries. This book presents an alternative to "Washington Consensus" neo-liberal economic policies by showing that both macro-economic and liberalization policy must be sensitive to the particular circumstances of developing countries. One-size-fits-all policy prescriptions are likely to fail given the vast differences between countries. This book discusses how alternative approaches to economic policy can better serve developing countries both in ordinary times and in times of crisis. Available in OSO: http://www.oxfordscholarship.com/oso/public/content/economicsfinance/0199288143/toc.html
It is shown that information economics represents a fundamental change in the prevailing paradigm within economics. The ways by which information assymetries are dealt with and how they can be ...overcome are discussed. The competitive paradigm that dominated economic thinking for two centuries was not robust, did not explain key economic phenomena, and led to misguided policy prescriptions. The underlying forces of demand and supply are still important, though in the new paradigm, they become only part of the analysis. They are not the whole analysis.
•We propose a credit network model with a large number of firms and banks.•The model is analytically solved through statistical mechanics techniques.•The analytical solution mimics the results of the ...numerical simulations.•It is the first application of this type of network analysis in macroeconomics.
In recent years, a growing stream of literature has investigated the credit market from a network perspective, highlighting the systemic effects of sectoral or idiosyncratic shocks. Models within this literature have to contain the number of possible agents and interaction channels in order for the models to be tractable, or, in case of large-scale ones such as agent-based models, the only possible solution is numerical. This paper proposes a novel approach to the representation of networks in macroeconomics, and presents a credit network model that is solved using statistical physics methods. This approach extends and enriches the network literature by providing an analytical representation of the dynamic evolution of the network structure during the cycle.
The purpose of this paper is to discuss the broad issue of how to make the financial sector serve society, at least serve it better than it has until now. Finance has been the centre of attention, ...for better or for worse, for more than a quartercentury, partly because of its increasing share of GDP, and partly because of the negative behaviour and activities of its professionals. The paper is divided into six parts. The first section concerns the necessity of stopping adverse behaviours (activities). Section II presents some measures aimed at encouraging positive activities and promoting positive behaviour. Section III discusses a crucial issue concerning the urgent need to curb rent-seeking. Section IV discusses taxation in the context of the corrosive effect of tax competition. Section V, using analysis provided, presents measures to enhance the role of government in restoring the public’s eroded trust in financial institutions. Finally, Section VI discusses questions about how we can restore trust.
This paper examines whether two regions should remain together within a fiscal federation, or separate, when their inhabitants have different preferences for publicly provided goods. The paper ...focuses on trade-offs between returns to scale in the provision of the goods, and the scope to tailor provision to the tastes of the inhabitants in each region. A general model is developed that includes, as special cases, both pure public and publicly provided goods, and regional and national public goods. We show that when there is a choice between public investment and consumption goods, there will, in general, be a bias against public consumption goods unless taxing powers are fully devolved. We provide conditions under which independence may be desirable even when the region contemplating independence is relatively small.
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