Cycles, Growth, and the Great Recession: Economic Reflections in Times of Uncertainty

261 Pages·2015·4.142 MB·English

by  Annalisa Cristini, Steven M. Fazzari, Edward Greenberg and Riccardo Leoni (Eds.)

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Cycles, Growth and the
Great Recession
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u Cycles, Growth and the Great Recession is a collection of papers that assess the nature
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8 and role of the business cycle in contemporary economies. These assessments are
2 made in the context of the financial market instability that distinguishes the Great
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1 Recession from previous post-war slowdowns. Theorists and applied scholars in the
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1 fields of economics and mathematical economics discuss various approaches to under-
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t standing cycles and growth, and present mathematical and applied macro models to
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] show how uncertainty shapes cycles by affecting the economic agent choice. Also
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r included is an empirical section that investigates how the Great Recession affected
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br households’ housing wealth, labour productivity and migration decisions.
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L This book aims to:
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s 1 Propose a novel understanding of the business cycle by comparing the
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S approaches of various scholars, starting from Hyman Minsky and Piero Ferri.
of 2 Show that uncertainty is a main feature of the business cycle that affects
y decision-making and economic behaviour in general.
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s 3 Explain with mathematical models how the behaviour of economic agents
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v can lead to cyclical paths for modern developed economies.
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n 4 Augment theory with empirical analysis of some central issues related to the
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[ Great Recession.
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d This book comprises an original view of such widely discussed subjects as busi-
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d ness cycles, uncertainty, economic growth and the Great Recession, constructed
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o around theory, models and applications.
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o Annalisa Cristini is Professor of Economics, University of Bergamo, Italy.
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Steven M. Fazzari is Bert A. and Jeanette L. Lynch Distinguished Professor,
Washington University in St. Louis, USA.
Edward Greenberg is Professor Emeritus of Economics, Washington University
in St. Louis, USA.
Riccardo Leoni is Professor of Economic Policy, University of Bergamo, Italy.
Routledge Critical Studies in Finance and Stability
Edited by Jan Toporowski, School of Oriental and
African Studies, University of London, UK
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u The 2007–8 Banking Crash has induced a major and wide-ranging discussion on
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8 the subject of financial (in)stability and a need to revaluate theory and policy. The
2 response of policy-makers to the crisis has been to refocus fiscal and monetary
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1 policy on financial stabilisation and reconstruction. However, this has been done
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1 with only vague ideas of bank recapitalisation and ‘Keynesian’ reflation aroused
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t by the exigencies of the crisis, rather than the application of any systematic theory
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] or theories of financial instability.
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r Routledge Critical Studies in Finance and Stability covers a range of issues
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b in the area of finance including instability, systemic failure, financial macroeco-
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L nomics in the vein of Hyman P. Minsky, Ben Bernanke and Mark Gertler, central
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e bank operations, financial regulation, developing countries and financial crises,
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s new portfolio theory and New International Monetary and Financial Architecture.
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of 1 Banking Systems in the Crisis
y The faces of liberal capitalism
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s Edited by Sue Konzelmann and Marc Fovargue-Davies
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n 2 Post-Keynesian Views of the Crisis and its Remedies
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[ Edited by Óscar Dejuán Asenjo, Eladio Febrero Paňos and
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b Jorge Uxo Gonzalez
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d 3 The Rise and Fall of Money Manager Capitalism
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o Minsky’s half century from World War Two to the Great Recession
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w Eric Tymoigne and L. Randall Wray
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4 Cycles, Growth and the Great Recession
Economic reflections in times of uncertainty
Edited by Annalisa Cristini, Steven M. Fazzari, Edward
Greenberg and Riccardo Leoni
Cycles, Growth, and
the Great Recession
Economic reflections in times
of uncertainty
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g Edited by Annalisa Cristini,
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8 Steven M. Fazzari, Edward Greenberg
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2 and Riccardo Leoni
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First published 2015
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
711 Third Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2015 selection and editorial material, Annalisa Cristini, Steven M.
Fazzari, Edward Greenberg and Riccardo Leoni; individual chapters, the
6 contributors.
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0 The right of the editors to be identified as the authors of the editorial
2 material, and of the authors for their individual chapters, has been asserted
st in accordance with sections 77 and 78 of the Copyright, Designs and
u Patents Act 1988.
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A All rights reserved. No part of this book may be reprinted or reproduced or
8 utilised in any form or by any electronic, mechanical, or other means, now
2 known or hereafter invented, including photocopying and recording, or in
2 any information storage or retrieval system, without permission in writing
1 from the publishers.
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1 Trademark notice: Product or corporate names may be trademarks or
at registered trademarks, and are used only for identification and explanation
] without intent to infringe.
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a British Library Cataloguing in Publication Data
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b A catalogue record for this book is available from the British Library
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x Library of Congress Cataloging in Publication Data
e Cycles, growth and the Great Recession /edited by Annalisa Cristini, Steven
s M. Fazzari, Edward Greenberg and Riccardo Leoni.
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u pages cm. — (Routledge critical studies in finance and stability) Includes
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f bibliographical references and index.
o 1. Business cycles. 2. Recessions. 3. Economic development. I. Cristini,
y Annalisa, 1961-
it HB3711.C9175 2014
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r 338.5(cid:99)42—dc23
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v 2014020009
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ISBN: 978-0-415-74819-3 (hbk)
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y ISBN: 978-1-315-79663-5 (ebk)
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e Typeset in Times New Roman
d by Swales & Willis Ltd, Exeter, Devon, UK
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u The editors and contributors dedicate this book to Piero Ferri, our
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8 friend, colleague, teacher, and collaborator.
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2 Bergamo, Italy, 2014
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Contents
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u List of figures ix
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8 List of tables x
2 List of contributors xi
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1 Introduction 1
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y PART I
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r Understanding cycles and growth 9
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x 1 Minsky as a critic of Keynesianism 11
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of 2 Can we say “Minsky moment” when households matter? 25
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t ANNA MARIA VARIATO
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v 3 Are macroeconomic models with ceilings and floors
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y STEVEN M. FAZZARI AND EDWARD GREENBERG
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e 4 The theory of business cycles from a methodological
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PART II
Uncertainty and information in business cycle models 75
5 The business cycle as a method of analysis 77
JAN TOPOROWSKI
6 The asymmetric-information approach and the Great
Recession: a critical appraisal 84
ALESSANDRO VERCELLI
viii Contents
PART III
Formal models of the business cycle 101
7 A Kaleckian macromodel with memory 103
GIAN ITALO BISCHI AND AHMAD NAIMZADA
8 The dynamics of the labour market in an agent-based
model with financial constraints 117
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1 DOMENICO DELLI GATTI, MAURO GALLEGATI AND SAUL DESIDERIO
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u LAURA GARDINI AND FABIO TRAMONTANA
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2 PART IV
1 Empirical and institutional factors in cycles and growth 141
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x 11 The Great Recession, housing wealth and consumption in
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S ANNALISA CRISTINI
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y 12 Growth and migration in Italy (1861–1913) interpreted with
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s a dual model of an underdeveloped economy 183
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v GIANCARLO GRAZIOLA
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[ 13 Organisational and technological paradigms: asynchronised
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oa RICCARDO LEONI
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o Index 234
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Figures
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u 7.1 Stability region of equilibrium E 109
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8 7.2 Bifurcation diagram, with bifurcation parameter ω,
2 obtained with (cid:69) (cid:32) 17 110
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1 7.4 The attractor around E for ω (cid:32) 0.588 112
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of 8.2(a) Phillips curve 125
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d 11.1 Percentage of dwellings occupied by owners 158
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11.5 Mean of house price growth and stock market capitalisation
growth 171
11.6 Consumption growth vs. housing wealth growth and
financial wealth growth 171
12.1 Model 1 – an agricultural economy 184
12.2 Model 2 – a dual economy 186
12.3 GDP per capita for Italy and main countries of its emigration,
1861–1913 190
13.1 The combination of organisational and technological paradigms 217
13.2 Non-concavity and multiplicity of positioning of ‘local’
congruence 219