Eleonora Sanfilippo

Behavioral Foundations for the Keynesian Consumption Function

This paper has two main goals. The first is to show that behavioral rather than maximizing principles emerge from textual analysis as the microeconomic foundations for Keynes’s Consumption Theory; the second goal is to demonstrate that it is possible to ground a Keynesian-type aggregate Consumption function on the basis of (some of) the principles underlying contemporary behavioral models.

Speculation In Commodities: Keynes’ “Practical Acquaintance” With Futures Markets

In this paper we address the subject of Keynes as a speculator. We look first at the primary sources of information, which are in the form of unpublished letters and broker’s statements. Secondly, we look at the theory Keynes sparingly presented in his writings, but which nevertheless is grounded on his first-hand knowledge of speculative behavior. Thirdly, we examine the focus on speculation in commodities, which had great weight in his portfolio, and have chosen a particular commodity -wheat- for our investigation. In particular, we examine some of Keynes’s dealings in wheat futures with the aim of shedding light on the underlying investment strategy .

Speculation and buffer stocks: The legacy of Keynes and Kahn

Abstract We review Keyness constant concern with commodity prices, both as speculator and as theorist, arguing that it was never divorced from his view on market instability. We also look at Kahns contribution on buffer stocks, which brought to fruition the original intuition by Keynes, refining it with his usual attention to the finest details. Finally, we will draw some general considerations on the relevance of the proposals of stabilization of commodity prices, based on buffer stocks, in the present sentiment of ‘a return to Keynes’ in the attempt to cope with possibly the worst global economic crisis since the 1930s.

The Short Period and the Long Period in Macroeconomics: An Awkward Distinction

The aim of this paper is to show that the meaning of the well-known concepts of short period and long period is often unclear and may be seriously misleading when applied to macroeconomic analysis. Evidence of this confusion emerges through reappraisal of the interpretative debate of the 1980s and 1990s, which aimed to establish whether Keyness General Theory should be considered a short- or long-period analysis of the aggregate level of production. Further evidence is provided by the ambiguous use that seems to be made of this distinction in macroeconomics textbooks, as will be shown in the paper. Having explored some possible explanations for the difficulties in defining and applying these methodological tools at a ‘macro’ level, the conclusion is drawn that it would be preferable to abandon this terminology in classifying different aggregate models and simply to make explicit the given factors and the independent and dependent variables in each model, exactly as Keynes did in Chapter 18 of his major work.

Social Interdependencies in Consumption: An Early Economic Debate on Social Distinction, Emulation and Fashion

This article analyzes an early and relatively little known debate on the role of social interdependencies in consumption and their implications for economic theory. The debate began in the pages of the Economic Journal when, in 1892, Alfred Marshalls student Henry Cunynghame addressed the consequences that an increase in the supply of goods might have for individual utility when this includes external effects such as a desire for display and distinction. Such interdependencies in consumption were also taken very seriously by A. C. Pigou who, in successive articles in the same journal (1903, 1910, 1913), explored in great detail the impact of third-party consumption on an individuals utility function and, potentially, on social welfare. In fact, in such cases, the derivation of the market demand curve, and even the very notion of consumer surplus, seemed to become problematic. Both Marshall and F. Y. Edgeworth remained skeptical toward the theoretical treatment of externalities in consumption, offering reasons of both practical and analytical relevance. In the same period in the Economic Journal, Caroline Foley (1893) analyzed the phenomenon of social interrelations among consumers in a more evolutionary perspective, emphasizing in addition more general possibilities in interdependencies, including change and innovation. What is of interest in this debate is that it was the first attempt in the history of economic analysis to examine the analytical consequences that considerations of social interdependencies in consumption may have for economic theory. These related to the drawing of the market demand curve, the measurement of consumer surplus, and the more general issue of how to deal with time and change in economic models. These considerations, however, proved difficult to be addressed with the then available economic tools and this, in turn, led to their being simply shelved. We conclude by noting that the participants in this debate cast the problem of social interrelations in consumption almost exclusively in terms of positional rivalry and emulation. This overshadowed the creative dimension and positive externalities that can arise through such interrelations. Foleys more historical perspective has the merit of highlighting precisely this dimension.

A note on the notions of risk-premium and liquidity-premium in Hicks's and Keynes's analyses of the term structure of interest rates.

Abstract While in Hickss analysis there is the idea of a yield curve normally upward sloping, Keynes does not appear to envisage a systematic positive spread between long-term and short-term interest rates. This is mainly due a difference in their notions of liquidity, and in particular to Keyness disbelief in the possibility of quantifying the premium required to induce investors to hold long-term rather than short-term assets. It follows that Hickss and Keyness explanations of the term structure are neither identical nor can be assimilated to the notion of ‘preferred habitat’, as suggested in some literature.

At the origin of the notion of ‘creative’ goods in economics: Scitovsky and Hawtrey

The notion of ‘creativity’ has taken on growing importance in the recent economic literature on happiness, motivations and life-satisfaction. Starting from the seminal contribution by Scitovsky, the effects of ‘creative’ goods and activities on consumers’ well-being, in connection with cultural, sociological, psychological and educational aspects, have been analyzed. An increasing interest in these concepts has also recently been shown by policy-makers and international institutions (see, e.g., the UNCTAD/UNESCO Reports on Creative Economy, 2010, 2013, 2016). On the other hand, a clear analytical definition of this category of goods and activities and searching investigation into its peculiar characteristics in comparison with other types of products and activities, broadly defined as comfort or defensive ones, is still lacking in economic literature. This is why, despite its wide use, the nature of the distinction and the role it should play in economic analysis still remain somewhat vague and ambiguous. The aim of this paper is to provide a contribution to help clarify this distinction by reconstructing and comparing its original meaning and purpose in the works of Scitovsky (1976, 1992) and Hawtrey (1925) - the first economists who attributed a fundamental role to the notion of ‘creative’ goods in their analyses of consumption behavior.