Anwar M. Shaikh

Measuring the Wealth of Nations

1. Introduction 2. The basic theoretical foundations 3. Marxian categories and national accounts: money value flows 4. Marxian categories and national accounts: labor value calculations 5. Empirical estimates of Marxian categories 6. A critical analysis of previous empirical studies 7. Summary and conclusions.

ECONOMIC POLICY IN A GROWTH CONTEXT: A CLASSICAL SYNTHESIS OF KEYNES AND HARROD

This paper clarifies key differences between Harrodian and Keynesian theories and policies, and develops a classical alternative to both. The stability of the Harrodian warranted path is proved, and the Keynesian paradox of thrift is shown to be transient. Distinct Harrodian fiscal policies are derived, and Post-Keynesian debates about Harrodian dynamics are addressed. Finally, it is argued that business and household savings are fundamentally different, and it is shown that if the business savings rate responds at all to the investment–savings gap, it becomes possible to have both profit-driven accumulation as in Keynes and normal capacity growth as in Harrod.

Is Personal Debt Sustainable

The long economic expansion was fueled by an unprecedented rise in private expenditure relative to income, financed by a growing flow of net credit to the private. On the surface, it seemed that the growing burden of the household sectors debt was counterbalanced by a spectacular rise in the relative value of its financial assets, but this was never a match among equals, and the great meltdown in the financial markets has proved this imbalance to be true. The private sector has dramatically cut back its acquisition of new credit and reversed the path of its financial balance, but this adjustment has been uneven within the sector: the business sector suffered a huge drop in investment while the household sector has continued to borrow.

Real Exchange Rates and the International Mobility of Capital

This paper demonstrates that the terms of trade are determined by the equalization of profit rates across international regulating capitals, for socially determined national real wages. This provides a classical/Marxian basis for the explanation of real exchange rates, based on the same principle of absolute cost advantage which rules national prices. Large international flows of direct investment are not necessary for this result, since the international mobility of financial capital is sufficient. Such a determination of the terms of trade implies that international trade will generally give rise to persistent structural trade imbalances covered by endogenously generated capital flows which will fill any existing gaps in the overall balance of payments. It also implies that devaluations will not have a lasting effect on trade balances, unless they are also attended by fundamental changes in national real wages or productivities. Finally, it implies that neither the absolute nor relative version of the Purchasing Power Parity hypothesis (PPP) will generally hold, with the exception that the relative version of PPP will appear to hold when a country experiences a relatively high inflation rate. Such patterns are well documented, and in contrast to comparative advantage or PPP theory, the present approach implies that the existing historical record is perfectly coherent. Empirical tests of the propositions advanced in this paper have been conducted elsewhere, with good results.

Explaining long term exchange rate behavior in the United States and Japan

Conventional exchange rate models are based on the fundamental hypothesis that, in the long run, real exchange rates will move in such a way as to make countries equally competitive. Thus they assume that in the long run, trade between countries will be roughly balanced. The difficulty in assessing expectations about the consequences of trade arrangements (such as NAFTA or the EEC), is that these models perform quite poorly at an empirical level, making them an unreliable guide to economic policy. To have a sound foundation for economic policy requires operating from a theoretically grounded explanation of exchange rates that works well across a spectrum of developed and developing countries. This paper applies the theoretical and empirical foundation developed in Shaikh (1980,1991,1995), and previously applied to Spain, Mexico and Greece (Roman 1997, Ruiz-Napoles 1996, Antonopoulos 1997), to the explanation of the exchange rates of the United States and Japan. Such a framework implies that it is a countrys competitive position, as measured by the real unit costs of its tradables, which determines its real exchange rate. This determination of real exchange rates through real unit costs provides a possible explanation for why trade imbalances remain persistent, as well as a policy rule-of-thumb for sustainable exchange rates. The aim is to show that a theoretically grounded, empirically robust, explanation of real exchange rate movements can be constructed that also can be of practical use to researchers and policy makers.

Deficits, Debts and Growth: A Reprieve But Not a Pardon

These are fast moving times. Two years ago, the U.S. Congressional Budget Office (CBO, 2001) projected a federal budget surplus of

Is Deficit-Financed Growth Limited? Policies and Prospects in an Election Year

172 billion for fiscal year 2003. One year ago, the projected figure had changed to a deficit of

Reflexivity, path dependence, and disequilibrium dynamics

145 billion (CBO 2002). The actual figure, near the end of fiscal year 2003, turned out to be a deficit of about

How Fragile is the U.S. Economy

390 billion. And just one month ago, President Bush submitted a request to Congress for an additional

Income Distribution, Econophysics and Piketty

87 billion appropriation for war expenditures, over and above the