money creation under full reserve banking a stock flow consistent model this paper presents a stock flow consistent model of full reserve banking it is found that in a steady state full reserve banking can accommodate a zero growth economy and provide both full employment and zero inflation furthermore a money creation experiment is conducted with the model an increase in central bank reserves translates into a two thirds increase in demand deposits money creation through government spending leads to a temporary increase in real gdp and inflation surprisingly it also leads to a permanent reduction in consolidated government debt the claims that full reserve banking would precipitate a credit crunch or excessively volatile interest rates are found to be baseless

immigrant trade links transplanted home bias and network effects macro level data for the us and 73 trading partners spanning the years 1980 to 2001 is used with a gravity specification to investigate the influence of immigration on bilateral trade prior research has identified immigrant stocks as a significant determinant of trade however this study indicates that the us immigrant trade link is driven by immigration from relatively low income countries a 10 increase in the immigrant stock is found to generate respectively 4 7 and 1 5 increases in domestic imports from and exports to the typical low income home country the observed link is decomposed into two hypothesized channels network effects and transplanted home bias considerable variation in per immigrant trade effects is found across home countries imports from the typical low income home country are estimated to increase by up to 2057 due to transplanted home bias and by as much as 2967 as a result of network effects while exports rise by up to 910 as a result of networks

consistency and stability analysis of models of a monetary growth imperative ist das streben nach wirtschaftswachstum eine frage des politischen willens oder eine notwendige bedingung fur okonomische stabilitat es ist umstritten ob solche wachstumszwange im heutigen geldsystem bestehen und einen konflikt mit nachhaltigkeit hervorrufen zur untersuchung der ersten behauptung dass zinseszinsen einen wachstumszwang hervorrufen stellen wir funf post keynesianische modelle vor und fuhren eine stabilitatsanalyse im parameterraum durch eine stationare okonomie mit spar und investitionsquote von null kann bei positivem zinssatz erreicht werden wenn der parameter konsum aus dem bestand oberhalb eines schwellenwerts liegt der mit dem zinssatz ansteigt die andere behauptung dass die bildung von gewinnrucklagen aus den zinseinnahmen der banken zu einem wachstumszwang fuhrt basiert auf modellen des monetaren kreislaufs die wir fur widerlegbar halten ihre bilanzierung ist inkonsistent und eine zentrale modellannahme ist nicht theoretisch begrundet aber die hauptursache des wachstumszwangs das eigenkapital der bank muss gesteigert werden selbst wenn ihre verbindlichkeiten nicht wachsen was eine diskrepanz zwischen der intention der autoren und dem eigentlichen modell ist wir kommen zum schluss dass das heutige geldsystem auf der basis von zinstragendem kreditgeld mit privaten banken nicht zu einem inharenten wachstumszwang fuhrt falls der stationare zustand instabil ist liegt es an entscheidungen wirtschaftlicher agenten und nicht an struktureller unvermeidbarkeit

facilitating the transition to a steady state economy some macroeconomic fundamentals abstract central government policy is based on a misguided understanding of the macroeconomics of a modern fiat currency economy as the owner issuer of a nation s currency a central government has unlimited spending power moreover taxation exists as nothing more than a means by which a central government can destroy the spending power of the private sector in the process of outlining some of the policies required to facilitate the transition to a steady state economy this paper does not recommend that central governments should spend wildly and irresponsibly to the contrary this paper explains how a central government can use its unique spending and taxation powers in a disciplined and policy effective manner yet in a manner that is being largely overlooked

100 percent reserve banking a critical review of green perspectives abstract 100 percent reserve banking c perb is an enduring proposal for monetary reform that has been taken up by some ecological economists this paper identifies three groups of green arguments in favor of c perb and offers some criticism first the proposal could serve to constrain new investments by the availability of savings thereby checking economic growth however this would strongly increase interest rate volatility second it could potentially elevate environmental considerations in decisions about resource allocation by increasing the role of the democratic state as an economic actor this line of argument faces problems that require further detailed exploration and historical perspective third a transition to c perb would allow debt levels to be drastically cut this is technically possible but politically a tall order whether the existing system of debt based bank money generates a significant growth imperative is unclear and the importance of other driving forces behind perennial economic growth in modern societies which c perb does not address remains an issue of contention in general the adoption of c perb presupposes a tremendous reconfiguration of power relations between states and finance capital

a time series analysis of representative agent models of consumption andleisure choice under uncertainty this paper investigates empirically a model of aggregate consumption and leisure decisions in which utility from goods and leisure is nontime separable the nonseparability of preferences accommodates intertemporal substitution or complementarity of leisure and thereby affects the comovements in aggregate compensation and hours worked these cross relations are examined empirically using postwar monthly u s data on quantities real wages and the real return on the one month treasury bill the estimated values of the parameters governing preferences differ significantly from the values assumed in several studies of real business models several possible explanations of these discrepancies are discussed

to value or not to value that is not the question abstract should we reject money when we value nature like most environmentalists ecological economists are increasingly divided on this question synthesizing political ecology with ecological economics we argue that this way of framing the question is limited we propose a reformulation of the question into when and how to value with money and under what conditions we recommend four criteria for a sound choice environmental improvement distributive justice and equality maintenance of plural value articulating institutions and confronting commodification under neo liberalism we call for due attention to the socio political context within which a valuation is placed and the political goals it serves the relevance of this framework is demonstrated by applying it to three practical cases pollution damages water pricing and payments for ecosystem services

capitalist diversity and de growth trajectories to steady state economies abstract growth critical scholarship has done much to both expose the environmentally unsustainable nature of the capitalist growth economies of the overdeveloped part of the world and to develop an alternative vision of a de growth transition leading to a steady state economy however this scholarship fails to adequately take into consideration that if planned de growth actually materialised it would do so in societies that differ considerably from one another and that this would have implications both for the transition processes and the nature of their outcomes in other words not enough importance is ascribed to capitalist diversity and the nature of institutional change in the growth critical literature against this background the purpose of the present article is to make the concrete utopia of de growth scholars and steady state economists more specific by utilising insights from scholarship on capitalist diversity and institutional change on the basis of a typology of different models of capitalism the article suggests that if de growth transitions took place they would take different forms and lead to a variety of types of steady state economies sses to illustrate this point three ideal typical sses are delineated

economic democracy as an environmental measure abstract even though the conventional capitalist corporation is the globally dominant form of business organization it may not be the most environmentally friendly given the need for a sustainable steady state economic system some other form of business organization will likely be required that uses natural resource inputs more efficiently and is less growth oriented than the typical corporation an attractive alternative is the producer cooperative where employment is accompanied by a right to democratic participation in organizational governance and a share of surplus earnings a comparative theoretical analysis of cooperative and profit maximizing corporate behavior suggests that cooperatives will tend to use natural resource inputs more efficiently and will be less growth oriented than corporations the limited comparative empirical research that is available supports the greater input efficiency of cooperatives relative to corporations this same research suggests that in fully employed economies cooperatives will be less growth oriented than corporations although where unemployment is substantial the reverse is likely environmentally sustainable full employment is theoretically achievable through workweek reductions

keynesian macroeconomics without the lm curve the is lm model has been a central tool of macroeconomic teaching and practice for over half a century legions of earlier writers have offered criticisms of the model that have become familiar with the passage of time the model lacks microeconomic foundations assumes price stickiness has no role for expectations and simplifies the economy s complexities to a handful of crude aggregate relationships but countless teachers students and policymakers have found the model to be a powerful framework for understanding macroeconomic fluctuations recent developments have created new difficulties for the is lm model although the new difficulties are less profound than the traditional ones they are more likely to be fatal like all models the is lm model is not universal its assumptions and simplifications make it better suited to analyzing some issues than others and to describing some economic environments than others but neither the issues nor the environment of macroeconomic fluctuations are fixed in terms of issues one major change is that the debates between keynesians and monetarists about the relative effectiveness of monetary and fiscal policy that were central to macroeconomics in the 1960s and 1970s now play only a modest role in the analysis of short run fluctuations in terms of the environment one important change is that most central banks including the u s federal reserve now pay little attention to monetary aggregates in conducting policy but the is lm model is particularly well suited to presenting the debates between keynesians and monetarists and one of its basic assumptions is that the central bank targets the money supply in short recent developments work to the disadvantage of is lm this observation suggests that it is time to revisit the question of whether is lm is the best

community currencies and sustainable development a systematic review community or complementary currency systems have spread all around the world most often they have been promoted as tools to foster sustainable development albeit they differ in terms of specific objectives while many case studies have tried to assess the actual impact of these systems there has been no global analysis summarizing their global impact this paper aims to fill the gap by exploring whether complementary currencies contribute to the three pillars of sustainable development we use the systematic review methodology on an original dataset gathering most academic publications on the topic in english french and spanish our main findings suggest that community currencies mostly contribute to social sustainability and that their economic benefits are somewhat limited due to their small scale and the lack of awareness on their scope moreover very few studies explicitly identify environmental outcomes finally this review reveals some limits regarding current methods for impact assessment in this field therefore it encourages more standardization to provide greater accuracy and strengthen the legitimacy of community currencies in order to foster their continued development

marx s reproduction schemes and the environment abstract ecological economists have argued that marx s reproduction schemes are self contained circular flows that downgrade the importance of natural conditions the present paper evaluates this criticism in light of both marx s methodology and his response to quesnay s tableau economique it is shown that marx follows quesnay in clearly distinguishing monetary circular flows from material throughput and that his schemes encapsulate the dependence of capitalist production on natural conditions as developed elsewhere in capital at the same time the purpose of marx s schemes is not to theorize environmental crises but to set out the basic exchanges necessary for capitalist reproduction as a material and social class process marx s analyses of capitalist environmental crises are developed at other points in capital

overcoming accumulation is a capitalist steady state economy possible abstract this article critically reviews the case for a steady state zero growth economy posing the question whether such an economy can be stable and socially just given that in the current global economy lack of growth is synonymous with crisis the sse thesis is analysed within a framework of marxian political economy concluding that a stable and just sse is possible but not feasible within the social relations of capitalism using the marxian analysis of capital accumulation the article then considers whether the reforms proposed by ecological economists can form an effective countervailing force to the drive for accumulation the conclusion is that such reforms can be successful but only in so far as they are complemented and brought to their logical conclusion by a wider attempt to transcend the capitalist relations of production

full reserve banking more cranks than brave heretics this paper analyses the main features and policy implications of full reserve banking frb proposals it argues that whilst frb advocates recognize the essential endogeneity of the money creation process they have failed to understand the post keynesian and monetary circuitist analyses of endogenous money which leads them to analytical errors including lending activity creates seigniorage privilege for commercial banks inflation is always and everywhere a monetary phenomenon the inability of distinguishing the actual from the planned supply of bank loans and money to be spent from money hoarded and the debt free money proposition the paper also argues that an frb system is likely to exacerbate financial instability for several reasons including the obsessive focus on commercial banks while ignoring non bank financial intermediaries and shadow banking a blind fascination for the safety and security of the payment system with little consideration for the financing needs of capitalist economies and an inherent deflationary bias furthermore frb arrangements would soon be undermined by the development of alternative near moneys finally frb will nullify the automatic stabilisers of fiscal policy and lead to a de facto dominance of monetary policy and unelected central bankers over fiscal policy and democratic decision making

potential consequences on the economy of low or no growth short and long term perspectives potential consequences on the economy of low or no growth short and long term perspectives

local currencies for purposive degrowth a quality check of some proposals for changing money as usual this article provides a quality check of the degrowth movement s proposal of local currencies as tools for advancing socially equitable and ecologically sustainable degrowth the article draws comprehensively upon mainly english language academic research about four widespread local currency types lets time banks hour currencies and convertible local currencies clcs to assess their performance with respect to four degrowth related criteria community building advancement of alternative values in economic exchange facilitation of alternative livelihoods and eco localization lets have been found to support alternative livelihoods under quite uncommon conditions and contribute indirectly to eco localization by moderately facilitating informal resale repair and sharing of commercially produced goods although their burdensome management and confinement to small memberships limit their usefulness time banks help expand social networks and are best at reaching the socially excluded however they are confined to unskilled personal services and dependent on grant funding hour currencies do not stand out with regard to any criteria but may have a minor capacity to promote local purchasing clcs are best at attracting local businesses but no significant evidence of their said capacity to localize supply chains has surfaced as yet and their business friendly design works to the detriment of other criteria in sum existing research provides a very weak basis for advocating local currencies as tools for purposive degrowth local currencies are here categorized as two utopian socialist approaches the behind society s back variety of lets and hour currencies and the appeal to elites variety of time banks and clcs marx and engels s critiques of these approaches remain valid successful monetary systems require resources that are not available behind society s back notably the power to levy taxes and designate by which means they can be paid local currencies that appeal for elite support without mass popular backing have shaken off most radical connotations and are vulnerable to changing policy agendas given the present historical conjuncture of popular outrage against the banking sector this paper argues that the degrowth movement would improve its chances of contributing to purposive degrowth by prioritizing government centred ecological reform of the monetary system over local currencies

degrowth and the supply of money in an energy scarce world abstract degrowth is going to happen whether governments want it or not because as fossil fuels run out incomes will shrink along with the energy supply this degrowth can either be unplanned and catastrophic or managed and relatively benign this paper argues that three tools are essential to avoid degrowth becoming a catastrophic collapse these are i a system to share the benefits from using increasingly scarce fossil fuels ii new ways of financing businesses and iii the introduction of debt free regional and local currencies

how friedman and schwartz became monetarists during the late 1940s and the early 1950s milton friedman favored a rule under which fiscal policy would be used to generate changes in the money supply with the aim of stabilizing output at full employment he believed that the economy is inherently unstable because of endogenous movements in money supply under a fractional reserve banking system in her work anna schwartz downplayed the role of monetary factors in business cycles and the role of monetary policy as a stabilization tool we show how the joint work of friedman and schwartz from 1948 to 1958 led friedman to view money as the primary mover of the business cycle and underpinned his shift to a rule based on money growth so that discretionary monetary policy would not act as a source of destabilizing shocks the decisive factor in the evolution of friedman s thinking was the empirical confirmation that the great depression had been both initiated and deepened by the fed the largely neglected influence of clark warburton on the evolution of friedman s thinking provides a missing but crucial link in explaining friedman s recognition of the role of monetary factors in the great depression and of the fed s ability to offset the destabilizing effects produced by shifts from deposits into currency under a fractional reserve banking system

rational beliefs or distorted beliefs the equity premium puzzle and micro survey data 1 introductionsince shiller 1982 and mehra and prescott 1985 questioned why the gap between the rates of returns from stocks and bonds is so large the equity premium puzzle has attracted the attention of many economists the numerous explanations for the puzzle that have been put forth can be categorized into three approaches the first approach is to explain the puzzle under full rationality by introducing more complex utility functions epstein and zin 1989 and weil 1989 use a utility function that breaks the tight relation between the risk aversion coefficient and the elasticity of intertemporal substitution constantinides 1990 introduces the utility function with habit formation to the literature and campbell and cochrane 1999 succeed in explaining the equity premium puzzle and stock return predictability by making use of a particular variant of habit formation the second approach is to see the puzzle as being a result of distorted beliefs while maintaining the traditional power utility function rietz 1988 shows that the puzzle can be explained if consumers believe that a disastrous situation has a higher probability of arising than the historical data imply recently cecchetti lam and mark 2000 also succeeded in matching the first and second moments of the equity premium and the predictability of stock returns by assuming that the representative consumer with the traditional power utility function has distorted beliefs of a particular kind that lead him her to expect that both expansions and contractions end more quickly than the data suggest the third approach is to see the puzzle as being a result of market frictions such as borrowing constraints and short sale constraints heaton and lucas 1996 show the potential of this approach and luttmer 1999 estimates the magnitude of such frictions using the first order conditions from utility maximization however because of the success of campbell and cochrane 1999 and cecchetti lam and mark 2000 in explaining various aspects of the asset pricing phenomena including the equity premium puzzle this paper mainly focuses on an investigation of the first two approaches with the use of survey forecasts 1 in spite of the success of both approaches the puzzle has not yet been resolved because both approaches use completely different mechanisms to explain the puzzle we still do not know which one provides a better description of the cause of the puzzle in other words because the stylized facts in the financial market can be explained by both models it is hard for economists to judge which is the correct mechanism by looking at financial and consumption data 2 hence the main purpose of this paper is to derive different implications of consumers expectations from both models and to examine which implication is supported more through an investigation of the survey forecasts because campbell and cochrane s model retains rational expectations whereas cecchetti lam and mark s model is based on distorted beliefs the two models implications for survey forecasts will differ whereas campbell and cochrane 1999 would predict that survey forecasts are rational cecchetti lam and mark 2000 would claim that forecasts are excessively pessimistic over expansions and excessively optimistic over contractions using the livingston survey forecasts for the standard and poor s 500 index which is managed by the federal reserve bank of philadelphia this paper conducts a test of these implications to check whether the expected excess returns from the survey forecasts are rational a panel data model allowing a four dimensional structure for forecast errors individual bias business cycle effect aggregate shocks and idiosyncratic errors is analyzed 3the test results seem to support the model of cecchetti lam and mark 2000 the expected equity premium implied by the survey forecasts is on average lower than the actual realized equity premium during the sample period

technology appropriation in a de growing economy this article proposes a concept of technology appropriation as a means of ideological repurposing of technology in a de growing economy its economic and institutional foundations are set forth using an endogenous theory of economic development in the spirit of marx schumpeter and veblen technological and institutional change lead interdependently to the emergence of socio technical complexes which are subject to ideological appropriation these complexes are analyzed as actor networks from an ontological perspective and exemplified using special cases in the information and communication technologies icts the approach contributes to synthesizing critical political economy with actor network theory technology appropriation is elaborated as a means of repurposing existing technologies in terms of recombination with an emphasis on the strategy of habilitation this political economic strategy delivers new insights for a solidary mode of economic reproduction in a low carbon de growing economy

immigrant links to the home country empirical implications for u s bilateral trade flows immigrants ties to their home countries can play a key role in fostering bilateral trade linkages immigrant ties include knowledge of home country markets language preferences and business contacts that have the potential to decrease trading transaction costs empirical results for the united states suggest that immigrant links have historically been important in increasing bilateral trade flows with immigrants home countries copyright 1994 by mit press

a degrowth transition pathways for the degrowth niche to replace the capitalist growth regime abstract facing the intertwined environmental social and economic crisis requires us to seriously consider alternatives to the current capitalist system including the emerging concept of degrowth existing understandings of degrowth have focused on characterizing the shape the key elements and the proposals for a degrowth society however its dynamic and evolving nature as an alternative vision of the future and the dynamics of a transition toward degrowth are inadequately considered this paper seeks to address this conceptual gap through a reconceptualisation of degrowth as a radical niche innovation to the capitalist growth regime by extending the multi level perspective framework to the capitalist growth system we undertake a critical reconsideration of the multi level perspective exposing key assumptions of this framework grounded in capitalist economic theory through this we propose a pluriversal potential pathway for change to consider this further a bibliometric analysis is used to measure and visualize research activity in degrowth as a proxy for the processes of development of the degrowth niche then we return to the multi level perspective to consider two potential pathways for change involving the degrowth niche and the capitalist growth regime finally we point to areas for further research that build on this new conceptualisation of a degrowth transition

seminonparametric estimation of conditionally constrained heterogeneous processes asset pricing applications the overidentifying restrictions of the intertemporal capital asset pricing model are usually rejected when tested using data on consumption growth and asset returns particu larly when additively separable constant relative risk utility is attributed to the representa tive agent this article investigates the extent to which specification error can explain these rejections the empirical strategy is limited information maximum likelihood in conjunc tion with seminonparametric expanding parameter space representations for both the law of motion and utility we find that consumption growth and asset returns display conditional heterogeneity but this fact does not account for rejection of the overidentifying restrictions as might be anticipated from the work of hansen singleton and others using generalized method of moments methods we also find that expansion of the parameter space in the direction of nonseparable utility causes the overidentifying restrictions to be accepted our estimation strategy provides information on the manner in which the restrictions distort the law of motion in particular imposition of additively separable constant relative risk aversion utility causes the conditional variance of consumption growth to be overpredicted the conditional covariance of asset returns with consumption growth to be overpredicted and an equity premium imposition of nonseparable seminon parametric utility causes distortion in these same directions though the distortions are much smaller which is consistent with the outcomes of the tests of the restrictions

the economics of degrowth economic degrowth is ecologically desirable and possibly inevitable but under what conditions can it become socially sustainable how can we have full employment and economic stability without growth what will happen to public spending and to public debt how would production be organised in a degrowing economy and under what plausible socio political conditions could such grand changes happen standard economic theories and models ignore these questions for them economic growth is an axiomatic necessity this article reviews recent contributions in the economics of degrowth and identifies research avenues for ecological economists

sustainable development looking for new strategies abstract many strategies have been proposed to reach sustainable development a great many of these strategies aim at one type of problem preventing environmental deterioration while ignoring the importance of economic or social goals in addition while political decisions are at the heart of the choices to be made most researchers seem to consider sustainable development as a mere technical problem in this paper we describe a more complete strategy for sustainable development we use the outlines of this strategy to find out what knowledge and skills are still needed the strategy is based on the idea that it is necessary to find consensus on the development of a socio environmental system as a whole and between all people involved it leaves us with at least two main areas that need further study the supply of information and the management of consensus building a formal procedure for consensus building might be developed based on the literature and on experiences with environmental impact assessments special attention is paid to the information needed it can be summarized as information about 1 delimiting a socio environmental system 2 the needs and wants to be satisfied via that system and 3 the physical ecological economic social and cultural constraints of satisfying those needs and wants

intra generational equity and sustainable welfare a time series analysis for the uk and sweden this paper discusses the importance of intra generational equity to sustainable development it outlines a number of methodologies for measuring income inequality in the economy and presents several possible ways of incorporating the impact of distributional effects into measures of welfare in the economy the authors highlight in particular an index developed by atkinson atkinson a b 1970 distributive politics and economic growth q j econ may 465 490 based on the social welfare model this method possesses two main advantages over other methods firstly it is expressed directly in terms of social well being secondly value judgements incorporated into the measure are made explicit through the parameter o which expresses society s degree of aversion to income inequality the paper calculates the value of the atkinson index for two case study countries sweden and the uk between 1950 and 1996 for a central estimate of o0 8 the results show that the welfare loss due to inequalities in the distribution of income varied between 5 and 10 for sweden and between 6 and 14 for the uk with the higher values coming towards the end of the period the paper explores the sensitivity of these results to changes in the value of o for the case of the uk and discusses the relevance of the work to the measurement of sustainable welfare 2000 elsevier science b v all rights reserved

allocation distribution and scale towards an economics that is efficient just and sustainable abstract the practical policy of issuing tradeable permits for depletion and pollution requires for its implementation the clear separation of the three basic economic goals of efficient allocation equitable distribution and sustainable scale economic theory needs to catch up with policy in recognizing that scale issues cannot be reduced to either allocation or distribution

an ecological monetary theory abstract while money is critical to the modern world ecological economics does not have a theory of money that is applicable to its theoretical framework and policy prescriptions accordingly the field often defers to an orthodox conception of money that is historically inaccurate and ontologically inconsistent the dualized nature of western philosophy informs orthodoxy by defining money according its function as a medium of exchange this conceptualization creates logical and historical problems that can be addressed by exploring an interdisciplinary literature that defines money according to its nature as a social relation expressed in a unit of account this paper develops an ecological monetary theory that is simultaneously rooted in a socio historical understanding of money s nature and in an ontology of social and ecological embeddedness such a theory provides ecological economists and others concerned with social and ecological equity with a framework from which to address monetary systems and policy

galtung meets daly a framework for addressing inequity in ecological economics abstract since world war ii economic growth has been the leading policy goal in efforts to eradicate poverty there is strong evidence that this strategy has gone hand in hand with increasing inequity and environmental degradation we need concepts that will help us understand the inadequacies of the current economic system we propose drawing from the ideas of sociologist johan galtung on social power structures and those of economist herman daly on the physical features of the economy a fusion of these perspectives creates a novel framework for analysis and a basis to formulate alternatives to the current growth strategy

degrowth taking stock and reviewing an emerging academic paradigm degrowth has evolved within a decade from an activist movement into a multi disciplinary academic paradigm however an overview taking stock of the peer refereed degrowth literature is yet missing here we review 91 articles that were published between 2006 and 2015 we find that the academic degrowth discourse occupies a small but expanding niche at the intersection of social and applied environmental sciences the discourse is shaped by authors from high income mainly mediterranean countries until 2012 articles largely constitute conceptual essays endorsed by normative claims more recently degrowth has branched out into modelling empirical assessments and the study of concrete implementations authors tend to agree in that economic growth cannot be sustained ad infinitum on a resource constraint planet and that degrowth requires far reaching societal change whether degrowth should be considered as a collectively consented choice or an environmentally imposed inevitability constitutes a major debate among degrowth thinkers we argue that the academic discourse could benefit from rigid hypotheses testing through input output modelling material flow analysis life cycle assessments or social surveys by analyzing the potentials for non market value creation and identifying concrete well being benefits the degrowth discourse could receive wider public support and contribute to a paradigmatic change in the social sciences

keeping ethical investment ethical regulatory issues for investing for sustainability regulation must target the financial sector which often funds and profits from environmentally unsustainable development in an era of global financial markets the financial sector has a crucial impact on the state of the environment the long standing movement for ethically and socially responsible investment sri has recently begun to advocate environmental standards for financiers while this movement is gaining more adherents it has increasingly justified responsible financing as a path to be prosperous rather than virtuous this trend partly owes to how financial institutions view their legal responsibilities the business case motivations that now predominantly drive sri are not sufficient to make the financial sector a means to sustainable development some modest legal reforms to improve the quality and extent of sri have yet to make a tangible difference a more ambitious strategy to promote sri for environmental sustainability is possible based on reforming the fiduciary duties of financial institutions such duties tied to concrete performance standards could make financiers invest in more ethically responsible ways other collateral reforms to financial markets including improved corporate environmental reporting are required to promote sustainability

can degrowth overcome the leakage problem of unilateral climate policy abstract unilateral climate policy suffers from carbon leakage i e the partial offset of the initial emission reduction by increases in other countries different than most typically discussed climate policies degrowth not only aims at reducing the fossil fuel use in an economy but rather besides other social and political goals at a reduction of all factor inputs which may lead to different leakage implications we conduct the first investigation of degrowth in a multi country setting in order to i compare the leakage effects of national pure emission reduction policies to degrowth scenarios ii identify underlying channels by decomposing the implied emission changes into scale composition and technique effects and iii investigate which country characteristics determine degrowth s relative effectiveness to overcome the leakage problem using a structural gravity model we find that degrowth indeed significantly reduces leakage by keeping the sectoral composition of the country more stable and reducing uncommitted countries incentives to shift towards more energy intensive production techniques the higher effectiveness of degrowth in reducing carbon emissions is most pronounced for small and trade open economies with comparatively clean production technologies

habit formation as a resolution to the equity premium puzzle what is in the data what is not the consumption based asset pricing model of lucas 14 defines a theoretical relationship between streams of consumption and equilibrium asset prices since data of both aggregate consumption and asset prices are available the theory can be tested empirical tests of the lucas model using standard time separable utility functions indicate mismatches between the theory and the data for example in the gmm generalized method of moments estimation of hansen and singleton 9 overidentifying constraints implied by the model were rejected mehra and prescott 16 demonstrated the difficulty of explaining a particular statistic the theoretical expected equity premium the yield differential between stocks and risk free bonds is much higher than the observed one if a standard utility function is used they called the mismatch the equity premium puzzle to improve the performance of the model several authors have relaxed the time separability of preferences in a stimulating paper constantinides 1 argued that the equity premium puzzle can be resolved through the assumption of habit formation the idea is that consumption in the past reduces utility in the present because it establishes habits his model can match the observed mean and the variance of both the equity premium and the consumption growth rate the match of the low moments is consistent with the bound tests of heaton 11 gallant hansen and tauchen 7 and hansen and jagannathan 10 on the other hand gmm estimations using monthly aggregate consumption of nondurable goods and leisure by eichenbaum hansen and singleton 3 and that using consumption of nondurable goods and durable goods by dunn and singleton 2 and eichenbaum and hansen 4 showed that if current utility depends on current and past consumption then current utility increases in past consumption i e consumption has local durability the opposite of that implied by habit formation a particularly strong result was obtained by gallant and tauchen 6 they estimated a general form of utility functions with a general law of motion of data and found that the source of the time non separability is local durability since it is known that local durability

reconsidering monetary policy an empirical examination of the relationship between interest rates and nominal gdp growth in the u s u k germany and japan abstract the rate of interest the price of money is said to be a key policy tool economics has in general emphasised prices this theoretical bias results from the axiomatic deductive methodology centring on equilibrium without equilibrium quantity constraints are more important than prices in determining market outcomes in disequilibrium interest rates should be far less useful as policy variable and economics should be more concerned with quantities including resource constraints to investigate we test the received belief that lower interest rates result in higher growth and higher rates result in lower growth examining the relationship between 3 month and 10 year benchmark rates and nominal gdp growth over half a century in four of the five largest economies we find that interest rates follow gdp growth and are consistently positively correlated with growth if policy makers really aimed at setting rates consistent with a recovery they would need to raise them we conclude that conventional monetary policy as operated by central banks for the past half century is fundamentally flawed policy makers had better focus on the quantity variables that cause growth

the ecology of money a critical assessment abstract this paper assesses the proposal to transform the monetary system into an ecology of money that is into a system made of a large diversity of complementary currencies its central aim is to examine whether this proposal could provide a systemic solution to both the ecological and financial crises as several authors most notably lietaer and douthwaite have argued to this end it analyses the two main arguments in favour of this proposal first it focuses on the claim that an ecology of money would be more resilient and less prone to crisis than the present monetary system it shows that this argument suffers from several conceptual flaws and argues that it fails to provide sufficient normative reasons to favour an ecology of money second this paper analyses the claim that an ecology of money could help defeat the monetary growth imperative that supposedly plagues our economies the paper raises serious doubts about the existence of such an imperative and questions the claim that an ecology of money could contribute to weaken it in a significant way

the euthanasia of the rentier a way toward a steady state economy abstract a positive interest rate has many impacts on ecology one of them is the pushing of economic growth in the present economy accumulation of capital is an end in itself according to the golden rule of accumulation the extension rate of the capital stock is equal to the interest rate however in the present economic conditions the interest rate is always significantly higher than zero due to the liquidity premium of money keynes in this context old proposals such as the free money approach of silvio gesell could provide interesting solutions gesell wanted to neutralize the liquidity premium by putting artificial carrying costs on money by increasing the stock of capital assets without being interrupted by economic crises the interest and profitability level should be reduced down to zero because in this situation every marginal saving and marginal investment would cause a negative interest or profitability rate they would be stopped though keynes was very excited by the proposals of gesell he criticized the fact that gesell did not see many of the further obstacles however these obstacles could be overcome by means of further institutional reforms

ecological monetary economics a post keynesian critique the monetary analysis of some ecological economists currently appears to be mostly articulated around the following core a stationary economy and a fortiori a degrowth economy is incompatible with a system in which money is created as interest bearing debt to question the relevance of the debt money positive interest rate output growth nexus this paper adopts a critical stance towards the currently emerging ecological monetary economics from the standpoint of another strand of heterodox economics the post keynesian approach in its current state ecological monetary economics is at odds with post keynesian economics in its analysis of the money growth relationship this will be shown using the theory of endogenous money and a simple cambridgian kaleckian model where debt money and a positive interest rate are compatible with a full stationary economy

two paradoxes with one stone a critical reading of ecological modernization abstract the current contribution aims at critically reviewing state initiatives in the frame of ecological modernization under the lenses of the labor theory of value further the article addresses two phenomena related to ecological modernization that have received much attention namely the porter hypothesis and the jevons paradox state led environmental regulation in terms of environmental legislation as well as initiatives to promote green technology can be understood as a twofold attempt which ultimately leads to re defining socially necessary labor time first state intervention would wish to remove surplus profit from polluting or resource depleting capitals through legislation which would tend to increase socially necessary labor time in the branch of production under reference state policy might then attempt to propel the adoption of green technology which would tend to decrease socially necessary labor time in the sectors targeted through state initiatives competition among rival capitals would be re aligned so as to allow for conditions of production to be renewed the porter hypothesis can be approached as a strategy followed by individual capitals to gain an early mover advantage while the jevons paradox can be seen as the result of an imitation process when rival capitals take up technological modifications launched by innovators

in old chicago simons friedman and the development of monetary policy rules this paper examines the different policy rules proposed by henry simons who beginning in the mid 1930s advocated a price level stabilization rule and by milton friedman who beginning in the late 1950s advocated a rule that targeted a constant growth rate of the money supply although both rules shared the objective of eliminating the policy uncertainty emanating from discretion they differed because of the different views of simons and friedman about the stability of secular relationships simons rule relates to modern rules that emphasize the pursuit of price stability as representing optimal monetary policy

assessing the degrowth discourse a review and analysis of academic degrowth policy proposals abstract debates on ecological and social limits to economic growth and new ways to deal with resource scarcity without compromising human well being have re emerged in the last few years central to many of these is a call for a degrowth approach in this paper a framework is developed to support a systematic analysis of degrowth in the academic literature this article attempts to present a clearer notion of what the academic degrowth literature explores by identifying organising and analysing a set of proposals for action retrieved from a selection of articles the framework is applied to classify proposals according to their alignment to ecological economics policy objectives sustainable scale fair distribution and efficient allocation type of approach top down versus bottom up and geographical focus local national or international a total of 128 peer reviewed articles focused on degrowth were reviewed and 54 that include proposals for action were analysed the proposals identified align with three broad goals 1 reduce the environmental impact of human activities 2 redistribute income and wealth both within and between countries and 3 promote the transition from a materialistic to a convivial and participatory society the findings indicate that the majority of degrowth proposals are national top down approaches focusing on government as a major driver of change rather than local bottom up approaches as advocated by many degrowth proponents the most emphasised aspects in the degrowth literature are related to social equity closely followed by environmental sustainability topics such as population growth and the implications of degrowth for developing nations are largely neglected and represent an important area for future research moreover there is a need for a deeper analysis of how degrowth proposals would act in combination

the vermont common assets trust an institution for sustainable just and efficient resource allocation both private and public sectors have failed to adequately provide critical ecosystem goods and services or an equitable distribution of wealth and income to address this problem the vermont legislature is considering the creation of a vermont common assets trust vcat that would make the state s atmosphere aquifers and other resources created by nature or by society as a whole the common property of all vermonters present and future under the trust a board of trustees would have the legal obligation to manage these assets for the benefit of all vermonters including future generations this paper first explains why certain resources are likely to be managed more sustainably fairly and efficiently as common property than as private property it then discusses mechanisms for integrating assets into the trust estimates of potential revenue from a vcat suggest that it could eliminate the state budget deficit contribute to a better distribution of wealth and resources and help address critical ecological problems survey results suggest that a vcat is politically feasible the vcat promises to be an important pilot project that could later be scaled up to a national or global level

small scale cooperative banking and the production of capital reflecting on the role of institutional agreements in supporting rural livelihood in kampot cambodia this paper explores the ecological economics of small scale cooperative banking sscb through reference to the empirical case of a rice farming village in kampot cambodia it combines georgescu roegen s discussion of an economy s capacity to produce economic processes with ostrom s concept of institutional performance in order to address the implications and functioning of sscb within a small farmer economy the local collective action situation of maintaining and making use of a sscb system a specific finance model provides the studied community with access to a pooled capital fund that may play an important role in ensuring its capacity to produce and reproduce economic processes according to its own specifications the coordinated action among the villagers which matches up well with ostrom s criteria for effective institutional performance of common pool resource use governance is found to include social and environmental dimensions which we understand to be necessary for achieving transformations toward more sustainable economic activity while we do not wish to suggest that the adoption of sscb guarantees either improved ecological or social impacts our results suggest that this finance model could play a supporting role in enhancing the potential of small farming communities to improve both should they wish to do so

hawtrey harvard and the origins of the chicago tradition milton friedman has claimed that his monetary economics derives from a chicago tradition that in the 1930s offered a monetary explanation of cyclical fluctuations in general and the great depression in particular an optimistic view of the power of monetary policy and a case for governing it by rules rather than discretion it is argued that all the elements of this tradition except the last are to be found in earlier writings of ralph hawtrey allyn young and lauchlin currie and that there is much evidence to point to a direct influence running from hawtrey through harvard to chicago

the economic and financial dimensions of degrowth abstract we respond to the call for future research on degrowth and specifically analyze the implications of economic degrowth on the monetary and financial system we argue that any early indications of degrowth would cause the stock market to crash which would trigger further deleveraging contagion and a deflation as a result the economy would implode which would eventually allow for a new rapid growth cycle given the likely extraordinary fiscal and monetary policy response during the implosion thus in our view degrowth as an explicit strategy option is economically unsustainable and unfeasible as a limitation our analysis centers on the examples of unplanned crisis leading to an economic implosion which imperfectly represent the idea of planned voluntary degrowth

the positive effects of the schengen agreement on european trade enacted in 1985 the schengen agreement is widely heralded as both a symbol and major institutional advancement of the european project by eliminating passport requirements for workers the compact ostensibly produces gains from travel ease of market access and economies of scale yet despite these optimistic predictions scholars know little about the actual effects of schengen on trade we fill this void by identifying why labour mobility should expand the cross country exchange of goods and services and then test our theory with data from europe spanning the period 1980 to 2011 we argue that labour mobility resulting from schengen yields positive effects on trade by increasing demand for foreign goods improving awareness of low cost producers abroad and lowering the risks associated with buying and selling outside the country using the gravity model of trade we show empirically that schengen membership makes european states more robust trading partners

retrospectives economists and the fed beginnings as usually understood the significant debate over the founding of the fed was between advocates of the real bills doctrine and advocates of the quantity theory of money this understanding however conflates two different distinctions one between the banking principle and the currency principle and one between self regulation and active management it also fails to take seriously both the context of practical experience with the national banking system and the developing practical experience inside the fed i propose a new interpretation focused mainly on the contributions of four economists j laurence laughlin irving fisher paul warburg and benjamin strong

does credit create a growth imperative a quasi stationary economy with interest bearing debt abstract this paper addresses the question of whether a capitalist economy can ever sustain a stationary or non growing state or whether as often claimed capitalism has an inherent growth imperative arising from the charging of interest on debt we outline the development of a dedicated system dynamics macro economic model for describing financial assets and liabilities in a stock flow consistent framework falstaff and use this model to explore the potential for stationary state outcomes in an economy with balanced trade credit creation by banks and private equity contrary to claims in the literature we find that neither credit creation nor the charging of interest on debt creates a growth imperative in and of themselves this finding remains true even when capital adequacy and liquidity requirements are imposed on banks we test the robustness of our results in the face of random variations and one off shocks we show further that it is possible to move from a growth path towards a stationary state without either crashing the economy or dismantling the system nonetheless there remain several good reasons to support the reform of the monetary system our model also supports critiques of austerity and underlines the value of countercyclical spending by government

the prerequisites for a degrowth paradigm shift insights from critical political economy abstract what would it take for a degrowth paradigm shift to take place drawing on contemporary critical political economy scholarship this article identifies four prerequisites for socio economic paradigm shifts deep crisis an alternative political project a comprehensive coalition of social forces promoting the project in political struggles and broad based consent it is argued that on the one hand there is much to suggest that current crises cannot be resolved under existing institutional frameworks and that degrowth is a political project that provides solutions to some of the key problems currently facing humanity on the other hand the prospects for a degrowth paradigm shift remain bleak unlike political projects that became hegemonic in the past degrowth has neither support from a comprehensive coalition of social forces nor any consent to its agenda among the broader population