Economic theory in an imperfect world: Frank Hahn, general equilibrium, and Keynesian economics

Backhouse, Roger E.

doi:10.1093/oep/gpaa005

Cited by 4 publications

(1 citation statement)

References 37 publications

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“…The interest rate does not, in reality, establish a balance for the volume of investment with the propensity to save (Backhouse 2020). The interest rate equilibrates the need for holding cash and the amount of money available.…”

Section: Liquidity Preference and The Liquidity Trap Phenomenonmentioning

confidence: 99%

Inhomogeneous Financial Markets in a Low Interest Rate Environment—A Cluster Analysis of Eurozone Economies

Tatay

Orlovits

Novák

2022

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In the present paper, we investigate the financial homogeneity of the euro area economies by contrasting eurozone countries’ responses to monetary policy steps to the theoretical assumptions of the liquidity trap phenomenon. Our assumption is that the euro area economies are not completely homogeneous. Hence, in a zero-interest rate environment, the asset holding decisions of economic agents exhibit detectable differences across countries. We verify our assumptions using Eurostat data. We use the financial asset stocks of the euro area countries to cluster the countries concerned. Previous literature has not examined changes in the ratio of financial assets to GDP, nor differences in structural changes in the total stock of financial assets under the zero lower bound. The paper uses k-centers cluster analysis based on Euclidean distance for detecting changes in the portfolio holdings of eurozone economic actors owing to economic crises and monetary policy responses. The results confirm that euro area financial markets are fragmented. There are significant differences across asset markets of different Eurozone countries, both during and after the crisis. Despite some similarities in the portfolio rearrangement across countries, the ECB’s monetary policy does not have a uniform impact on euro area financial markets, and notable differences prevail in the financial asset structures of the economies concerned.

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Section: Liquidity Preference and The Liquidity Trap Phenomenonmentioning

confidence: 99%

Inhomogeneous Financial Markets in a Low Interest Rate Environment—A Cluster Analysis of Eurozone Economies

Tatay

Orlovits

Novák

2022

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Equilibrium Theory

Scandizzo

2023

Encyclopedia of Law and Economics

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Theory to the Rescue of Large-Scale Models: Edmond Malinvaud's View on the Search for Microfoundations

Renault

2022

History of Political Economy

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Edmond Malinvaud's case is peculiar in the history of macroeconomics as he committed to two different microfoundational programs, namely the disequilibrium theory (more properly, the non-Walrasian approach) and the practice of large-scale macroeconomic modeling. Such a twofold commitment was far from anecdotal because Malinvaud regarded these programs as fully compatible. The search for microfoundations he promoted did not aim at reconsidering the autonomy of macroeconomics. It was instead subject to the condition of being connected and oriented toward the needs of large-scale models. The best illustration was Malinvaud's own contributions to the non-Walrasian approach throughout the 1970s and 1980s, by which he intended to rationalize and improve the practice of French large-scale modeling.

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Economic theory in an imperfect world: Frank Hahn, general equilibrium, and Keynesian economics

Cited by 4 publications

References 37 publications

Inhomogeneous Financial Markets in a Low Interest Rate Environment—A Cluster Analysis of Eurozone Economies

Inhomogeneous Financial Markets in a Low Interest Rate Environment—A Cluster Analysis of Eurozone Economies

Equilibrium Theory

Theory to the Rescue of Large-Scale Models: Edmond Malinvaud's View on the Search for Microfoundations

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