the creation of effective property rights traditionally general equilibrium models have taken effective property rights to be given and have been concerned only with analyzing the allocation of resources among productive uses and the distribution of the resulting product but this formulation of the economic problem is incomplete because it neglects that the appropriative activities by which people create the effective property rights that inform allocation and distribution are themselves an alternative use of scare resources this paper develops two canonical general equilibrium models of resource allocation and income distribution that allow for the allocation of time and effort to the creation of effective property rights to valuable resources in one model the valuable resources are initially in common pool in the other models the analysis reveals how the amount of time and effort that agents allocate to the creation of effective property rights on the technology of production and on the scale of the economy the paper also analyses the security of initial claims to valuable resources and speculates about why initial claims are perfectly secure

empty sources of growth accounting and empirical replacements a la kaldor with some beef standard sources of growth accounts are empty of content because they rely on neoclassical production theory rather analysis can be based on productivity growth quations derived either from nipa accounting conventions or algebraic identities these complementary schemes impose valid restrictions on growth rates of the wage rate profit rate capital labor and their respective average productivities a solow type growth model based on proper accounting can be shown to converge detailed results differ markedly from those of the standard model alternative essentially kaldorian supply and demandbased alternatives to sources of growth based on a familiar output growth vs productivity growth diagram with constant employment growth contours added in look like a useful alternative to the mainstream models

economic activity in the shadow of conflict i introduction production prices and welfare are altered when exchange emerges in an autarkic economy these same variables are likewise affected when appropriation arises in a production and exchange economy consider robinson crusoe who allocates resources to clothing and food the implicit relative price of clothing and the production consumption point are determined by crusoe s preferences and production possibilities when friday appears and exchange enters crusoe s world there is a change in all of the fundamental economic variables relative price production consumption and utility but suppose friday has the capacity to profitably seize some or all of crusoe s goods or resources crusoe might guard against such a contingency by building defenses sufficient defenses could induce friday to carry out an exchange that might otherwise not occur by allocating some of his resources to defense crusoe alters economic fundamentals including the existence of exchange itself throughout its history economics has generally ignored the effects of appropriation possibilities on production and exchange often however the three economic activities are enmeshed according to barraclough 1994 specialized production and trade became quite extensive in the ancient eurasian world because empires could provide protection for trading links more recently european colonial powers created trading empires based upon strong navies skaperdas and syropoulos 1996 mansfield 1994 today within russia and china there are numerous examples of intertwined production exchange and appropriation even in commonplace crime these activities can be interdependent a potential shoplifter could steal if the store s defenses are low or trade if defenses are high 1 when appropriation possibilities are overlooked the results of standard trade models can be misleading when the role of exchange is ignored the predictions of conflict models can be erroneous economists need a new class of models designed to investigate economic activity in the shadow of conflict where production exchange and appropriation are intertwined pure trade and pure conflict models will be special cases of these new integrated models 2 the fundamental goal of this paper is to contribute to the theoretical development of the new class of integrated models of production exchange and appropriation specifically we model a one time interaction between two agents as a sequential predator prey game with the potential for ricardian trade think of crusoe as a potential prey and friday as a potential predator crusoe moves first by allocating some resources to defensive fortifications to protect his remaining resources friday moves second and faces two options either allocate some resources to weapons in hope of seizing resources from crusoe or produce no weapons and pursue specialized production and trade the economic interactions among appropriation production and exchange depend on key parameters in the model relative resource endowments effectiveness of offensive weapons against defensive fortifications and weapons and consumer goods productivities within the model we show how conflict can be subdued by the potential of mutually beneficial exchange but at a resource cost that modifies fundamental economic variables like relative price production trade volume gains from trade and security of property the model also identifies the conditions under which conflict is so powerful that specialized production and trade cannot emerge further we discover that the integrated model opens up a new way to think about and measure the gains from trade a predator may gain from trade relative to predation or autarky but prefer that the exchange institution be precluded alternatively a predator may be indifferent about trade relative to predation or autarky but gain from the trade institution in section ii we present a general theoretical framework for integrating production exchange and appropriation in a one shot sequential game

from rent seeking to human capital a model where resource shocks cause transitions from stagnation to growth we present a growth model where agents divide time between rent seeking in the form of resource competition and working in a human capital sector the latter is interpreted as trade or manufacturing rent seeking exerts negative externalities on the productivity of human capital adding shocks in the form of fluctuations in the size of the contested resource the model can replicate a long phase with stagnant incomes and high levels of rent seeking interrupted by small failed growth spurts eventually followed by a permanent transition to a sustained growth path where rent seeking vanishes in the limit the model also generates a rise and fall of the so called natural resource curse before the takeoff an increase in the size of the contested resource has a positive effect on incomes shortly after the takeoff the effect is negative and on the balanced growth path the growth rate of per capita income is independent of resource shocks les auteurs presentent un modele de croissance ou les agents divisent leur temps entre la chasse aux rentes sous la forme de concurrence pour la ressource existante et le travail productif dans le secteur du capital humain cette derniere activite peut se faire dans le commerce ou le secteur manufacturier la chasse aux rentes a des effets externes negatifs sur la productivite du capital humain si l on injecte des chocs prenant la forme de fluctuations dans la taille de la ressource contestee le modele peut generer une longue periode durant laquelle les revenus stagnent et le niveau de chasse aux rentes est eleve periode interrompue par des petits sursauts de croissance qui tournent court et suivie eventuellement par une transition permanente a un sentier de croissance soutenue ou a la limite les activites de chasse aux rentes disparaissent le modele genere aussi l apparition et la disparition de la malediction des ressources naturelles avant que la croissance prenne son envol un accroissement de la taille de la ressource contestee a un effet positif sur les revenus peu apres le decollage l effet est negatif et sur le sentier de croissance equilibree le taux de croissance des revenus per capita est independant des chocs sur la ressource

vulnerable trade the dark side of an edgeworth box abstract we examine incentives to seize and defend goods offered for trade in an edgeworth box economy appropriation possibilities generate equilibrium of coerced redistribution and voluntary trade in a reduced box potential mutual gains remain untaken because the prospect of piracy creates a price wedge wherein the effective relative price is lowered for the exporter and raised for the importer as the vulnerability of one or both goods increases the price wedge widens causing trade to diminish if vulnerability becomes sufficiently high then equilibrium with trade ceases to exist in the edgeworth box economy

michal kalecki on capitalism the appearance of a definitive english language collection of kalecki s works edited by jerzy osiatynski is an event to be warmly welcomed the collection makes available articles previously published in obscure places as well as important articles which have been translated from the polish and italian they thus make many of kalecki s major contributions available to a general audience for the first time these first two volumes of a projected seven volume set deal with topics which throw light on capitalist dynamics they begin with pre world war ii papers stemming from kalecki s reaction to the great depression and close with his articles in the economic journal of 1962 and 1968 on growth processes of the modern capitalist economy as well as the posthumously published kyklos paper about the nature of class struggle and the first english publication of a joint paper on the possibility of reform in capitalism observations on the crucial reform 1

post keynesian stock flow consistent modelling a survey the aim of the paper is to provide an overview of the current stock ow consistent sfc literature indeed we feel the sfc approach has recently led to a blossoming literature requiring a new summary after the work of dos santos and above all after the publication of the main reference work on the methodology godley and lavoie s monetary economics an integrated approach to credit money income production and wealth the paper is developed along the following lines first a brief historical analysis investigates the roots of this class of models that can be traced as far back as 1949 and the work of copeland second the competing points of view regarding some of its main controversial aspects are underlined and used to classify the different methodological approaches followed in using these models namely we discuss i how the models are solved ii the treatment of time and its implication and ii the need or not for microfoundations these results are then used in the third section of the paper to develop a bifocal perspective which allows us to divide the literature reviewed according to both its subject and the methodology we explore various topics such as financialisation exchange rate modelling policy implication the need for a common framework within the post keynesian literature and the empirical use of sfc models finally the conclusions present some hypotheses and wishes for the possible lines of development of sfc models

traders cops and robbers abstract we propose a simple model of trade outside the law preyed on by robbers and possibly protected by private cops we establish the conditions for trade collapse secure trade and insecure trade endogenous predation and enforcement can explain both puzzling failures of commonly observed state policies against illegal trade and puzzlingly large trade responses to liberalization in licit goods

pirates and traders some economics of pirate infested seas abstract even where all agents are risk neutral merchants can insure themselves against piracy such self insurance is surprisingly invulnerable to moral hazard further there exist a patrolling intensity and or penalties for captured pirates which along with mercantile self insurance could eliminate piracy

insecurity and the pattern of trade an empirical investigation corruption and imperfect contract enforcement dramatically reduce international trade this paper estimates the reduction using a structural model of import demand in which insecurity acts as a hidden tax on trade we find that inadequate institutions constrain trade as much as tariffs do we also find that omission of indices of institutional quality biases the estimates of typical gravity models obscuring a negative relationship between per capita income and the share of total expenditure devoted to traded goods finally we argue that cross country variation in the effectiveness of institutions and the consequent variation in the prices of traded goods offer a simple explanation for the stylized fact that high income capital abundant countries trade disproportionately with each other

public choice and the economic analysis of anarchy a survey public choice economists began studying anarchy in the 1970s since then the amount of research on anarchy has burgeoned this article surveys the important public choice contributions to the economics of anarchy following early public choice economists many economists are researching how individuals interact without government from non public interested explanations of the creation of government to historical studies of internalizing externalities under anarchy public choice scholars are arriving at a more realistic perspective of human interaction with and without government although the economics of politics receives more attention the economics of anarchy is an important area of research in public choice

does globalisation affect crime theory and evidence globalization skeptics argue that trade liberalization has high social costs including an increase in expropriative behavior such as civil conflict coercion of labor and crime we show that a theoretical relationship between trade and expropriation exists but the sign differs for developed and developing economies we verify this empirically using data on crime rates specifically we find trade liberalization as measured by both higher openness and lower import duty rates tends to increase burglaries and theft in very labor abundant countries for other countries however we find that trade liberalization has either a small negative effect on crime or no effect depending on the country s capital abundance

efficient policy in a predatory economy to him who hath shall be given trade subject to predation generates externalities within and between markets efficient tax infrastructure and enforcement policies internalize the net externality more trade implies fewer predators but drawn to trade at rising cost the balance is positive negative as enforcement is weak strong dual economies pair weak periphery and strong core enforcement markets efficient taxation and infrastructure promote the core at the expense of the periphery efficient enforcement promotes both tolerance intolerance of smuggling is efficient when core enforcement is weak strong tolerance of informal market mafias that provide enforcement and infrastructure is efficient when core enforcement is strong

anarchy and autarky endogenous predation as a barrier to trade this article presents a general equilibrium two country ricardian trade model with endogenous transactions costs that arise from individual utility maximizing allocation of labor to production and piracy in the absence of institutions for risk sharing and coordination of defense autarky obtains over most of the parameter space when both trade and predation are supported in equilibrium terms of trade effects can make security immiserizing in that case paradoxically predation creates trade

is piracy sustainable we develop a model of international trade between three countries one of which hosts pirates when the number of pirate ships increases the probability for one of the pirate ships for one commercial ship encountering a commercial pirate ship decreases increases then the commercial ships have an incentive to spend more on defense and pirate ships to invest less on attack if pirates operate under free entry they do not internalize the entry externality then their number rises until it reaches a level such that their attack power has become negligible and the defense of the commercial ships has reached a high level the economy settles in a full deterrence equilibrium however if the number of pirate ships is controlled by an authority which maximizes their total profit the economy settles in an equilibrium where piracy is active and commercial ships spend less on defense piracy is a substitute for trade piracy depends on the terms of trade of the pirate country and on the relative efficiency of the attack versus the defense

a note on multiple general equilibria with child labor abstract it has been conjectured that the child labor market may exhibit multiple equilibria this paper develops the concept of a wage bill curve and establishes the multiple equilibrium result in a general equilibrium model thereby clarifying the circumstances where child labor should be banned

optimal foreign aid and tariffs this paper investigates the optimal choice of foreign aid when trade policies are decided in a non cooperative fashion three alternative scenarios depending on the timing of the actions and on whether aid is tied are analyzed it is shown that in the case where aid is decided before tariffs untied aid can lead to the reduction of the recipient s optimal trade tax when the donor can tie the aid to a reduction in the recipient s tariff the optimal aid level is always positive and the world can always achieve a pareto efficient equilibrium

trade wars and trade talks when governments meet in the international arena their actions reflect the political situations at home previous studies of trade relations have focused on governments that are immune from political pressures and that act as benevolent servants of the public interest here we introduce domestic politics into the analysis of international economic relations we study the interactions between national leaders who are concerned both with providing a high standard of living to the general electorate and collecting campaign contributions from special interest groups our analysis sheds light on the determinants of the structure of protection in non cooperative and cooperative policy equilibria

global liquidity and monetary policy autonomy an examination of open economy policy constraints this paper examines the monetary policy constraints facing economies on a fixed peg or managed float regime contrasting the mundell fleming trilemma view against the compensation view commonly found at central banks while the former holds that foreign exchange inflows and outflows affect the domestic money base and constrain monetary policy under non floating regimes unless capital controls are adopted the latter purports that endogenous sterilisation of foreign exchange flows invalidates this trade off the predictions of both theories are empirically evaluated for five east asian economies using central bank balance sheets vector error correction models and impulse response functions the findings indicate that the dynamics for the economies studied correspond more closely to the compensation view than the trilemma view suggesting that it is a sustained loss of foreign exchange reserves not the adoption of a non floating exchange rate regime that imposes a relevant constraint on autonomy

appropriation violent enforcement and transaction costs a critical survey this paper focuses on the extension of transaction costs to appropriative activity and coercive power in the property rights approach it has been argued that including the costs of appropriation and violent enforcement in transaction costs is based on the assumption that coaseian bargaining can be extended to any institutional scenario i e voluntary as well as coercive exchange however voluntary transactions cannot capture the logic of coercive power this means that the assumption of an efficient political market is not valid and that the political coase theorem lacks the logical consistency to provide a cornerstone for political theory

a foxy hedgehog wynne godley and macroeconomic modelling wynne godley has made enormous contributions to macroeconomic modelling they are reviewed here in connection with his recent book with marc lavoie monetary economics an integrated approach to credit money income production and wealth copyright the author 2008 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

trade and insecure resources we construct a model of conflict and trade to study the consequences of interstate disputes over contested resources land oil water or other resources for arming welfare and trade flows different trade regimes imply different costs of such disputes in terms of arming depending on world prices free trade can intensify arming to such an extent that the additional security costs it brings swamp the traditional gains from trade and thus render autarky more desirable for one or all rival states free trade though is always an equilibrium and sometimes is a dominant one with features of a prisoner s dilemma outcome furthermore contestation of resources can reverse a country s apparent comparative advantage relative to its comparative advantage in the absence of conflict and where such conflict is present comparisons of autarkic prices to world prices could be inaccurate predictors of trade patterns

economic integration and the civilising commerce hypothesis economic integration lowers one form of trade costs tariffs and stimulates changes in other trade costs this paper offers a model in which integration may raise or lower the important trade cost associated with insecurity the model can help to explain the varied experience with integration and it points to the usefulness of combining enforcement policy integration with trade policy integration

food for education versus school quality a comparison of policy options to reduce child labour in a model in which credit markets play a crucial role we examine two policy options for reducing child labour food for education and investment in education quality with an imperfectly elastic supply of credit an increase in food subsidy is more eective in reducing child labour than an income equivalent increase in expenditures in education quality the eectiveness of the latter policy improves and the optimal share of resources devoted to this policy increases at the expense of food subsidies as the supply of credit becomes more elastic

guns butter and openness on the relationship between security and trade sovereign states arm to defend real or hypothetical interests presumably because they cannot engage in complete long term contracting that would prevent such arming international trade therefore takes place within an essentially anarchic context and we can expect trade regimes and security policies to be related indeed many embargoes sanctions and various other forms of trade restrictions that have been used throughout history and continue to be used today can be considered extensions of security policies whereas some security policies can be attributed to trade policy the relationship between trade and security however has been barely explored within economics we could fairly characterize the prevailing view within the discipline as the classical liberal view according to which the expansion of international trade does not just increase the welfare of the trading partners but can also patch up any differences they might have over other contentious issues solomon polachek 1980 represents a rare articulation of this widely held perspective more boldly it could be argued that the expansion of trade always alleviates conflict by forcing the adoption of measures that manage conflict nevertheless one does not need to dig much into history to show that while trade and economic interdependence can contribute to the peaceful resolution of disputes they are not sufficient by themselves to guarantee the absence of war and the reduction of arming many observers before world war i for example considered that the hitherto unprecedented expansion of trade and interdependence between britain and germany made war unthinkable and impossible yet war occurred and with much ferocity and destruction furthermore as donald kagan 1995 pp 373 80 has argued the british policy of appeasement toward germany during the 1930 s was based on similar arguments about the use of economic caltots to avoid war what can inter

insecure resources bilateral trade and endogenous predation a game theoretic analysis of conflict and trade this article analyzes how interstate conflict over resources affects the incentives to trade and how greater trade openness affects the endogenous decisions of arming by enemy countries we identify conditions under which there is trade between two adversary countries and show that each adversary s arming affects domestic welfare in three different ways the first is an export revenue effect which increases welfare because arming causes export revenue to go up i e there is an arming induced terms of trade improvement the second is a resource predation effect which increases welfare because arming increases the appropriation of a rival country s resource input to produce a consumption good the third is an output distortion effect which reduces welfare because arming lowers the domestic production of civilian goods based on these effects we show circumstances in which greater trade openness reduces the intensity of arming we also discuss the implications of resource security asymmetry for conflict and trade

pirates and fishermen is less patrolling always bad abstract motivated by the somali fishermen pirates i explore the time allocation decision of potential pirates between piracy and an alternative non violent occupation fishing when the returns of both piracy and fishing are sensitive to patrolling intensity for a range of parameters the static model yields multiple equilibria an efficient one with no patrolling and low piracy a less efficient equilibrium with intermediate levels of both piracy and patrolling and a highly inefficient high patrolling high piracy equilibrium analyzing the dynamic analogue i obtain the surprising result that sufficiently low patrolling can be a good strategy

bilateral war in a multilateral world carrots and sticks for conflict resolution this paper constructs a three country many good and many factor trade theoretic model in which two of the countries are in conflict and where war eort is determined endogenously

swords or plowshares a theory of the security of claims to property this paper develops a general equilibrium model of the allocation of resources among appropriative and productive activities the model emphasizes the distinction between offensive weapons which are the instruments of predation and fortifications which provide defense against predation the analysis of this model shows how the equilibrium security of claims to property is determined the analysis focuses on the possibility of a nonaggressive equilibrium in which no resources are allocated to offensive weapons and claims to property are fully secure we also analyze the complex relation between economic welfare and the security of claims to property we find for example that a relatively poor agent could be better off in an equilibrium with less secure claims to property

stock flow consistent macroeconomic models a survey the stock flow consistent sfc modelling approach grounded in the pioneering work of wynne godley and james tobin in the 1970s has been adopted by a growing number of researchers in macroeconomics especially after the publication of monetary economics by godley and lavoie which provided a general framework for the analysis of whole economic systems and the recognition that macroeconomic models integrating real markets with flow of funds analysis had been particularly successful in predicting the great recession of 2007 2009 we introduce the general features of the sfc approach for a closed economy showing how the core model has been extended to address issues such as financialization and income distribution we next discuss the implications of the approach for models of open economies and compare the methodologies adopted in developing sfc empirical models for whole countries we review the contributions where the sfc approach is being adopted as the macroeconomic closure of microeconomic agent based models and how the sfc approach is at the core of new research in ecological macroeconomics finally we discuss the appropriateness of the name sfc for the class of models we survey