the wealth effect
Monetary policy is said to influence aggregate demand via: 1) the wealth effect regarding consumer spending 2) the interest rate effect, as a lower price level increases savings 3) the exchange rate effect. Keynesians claim that the wealth effect is small, because money holdings are a minor part of household wealth. The exchange-rate effect is minor. Therefore the interest rate effect is the greatest of the three and thus the most important cause of the downward-sloping aggregate demand as the price level drops and output rises. But, contra Keynesianism, it seems to me that the wealth effect on households is the greatest of these, since what matters is MV, not money holdings at some moment in time. With lower prices, the flow of income MV buys more stuff, and that should swamp the interest rate effect. If Keynesians are correct, I'd be interested in an explanation. Fred Foldvary = [EMAIL PROTECTED]
Re: North on ideology
--- Kevin Carson [EMAIL PROTECTED] wrote: One neocon recently argued that anyone who does not support Isreael is, by definition, an antisemite, because Israel is the Jewish national homeland. Which is ironic in that Arabs are Semitic as well. Picking sides in the conflict is not anti- or pro-Semitic, any more than hating the Scots and loving the Welsh is anti-British. Go figure. -jsh __ Do You Yahoo!? HotJobs - Search Thousands of New Jobs http://www.hotjobs.com
AD and the wealth eff
The aggregate demand curve, plotting price level against output, is said to slope down because of the wealth effect on households, the interest rate on investment, and the exchange-rate effect on exports. Keynesians claim the interest rate effect - savings rising when prices fall - is more important than the household wealth effect because money holdings are a small part of hh wealth. But, contra Keynesians, it seems to me that what matters for household wealth is MV as a flow, not money stocks at some moment. As households buy more stuff at lower prices, the share of income going to them, hence the money flow (M times velocity), would seem to matter more than the minor amount of extra purchasing power saved. So the hh wealth effect should be greater than the added investment due to lower interest rates. If anyone thinks the Keynesians are correct, I'd be interested in the explanation of why my argument is not. Fred Foldvary = [EMAIL PROTECTED]
RE: how to eliminate unemployement
--- Kevin Carson [EMAIL PROTECTED] wrote: I know Georgists support land taxes (or community collection of rent, if you prefer) to fund services. That is one of my central points of disagreement. Ideally, taxes should be eliminated altogether. In which case you yourself are 80% Georgist, because if taxes there be not, then landowners will bear the major cost of infrastructure now paid for by the taxation of labor and capital. That will deflate their land value, now puffed up by the capitalization of neighborhood benefits they don't pay for. The rent would be collected by the private providers, but such rent-based public finance is Georgist nonetheless. This is how condominiums, homeowner associations, hotels, and other real-estate complexes operate today, so this is not just hypothetical. I suspect that there are very few (if any) true public goods, that cannot be internalized and paid for entirely by those who use them. Agreed. Everything, including government itself, can be privatized or voluntarized. A purely privatized world would be much closer to Georgism than today's world. Indeed, the most feasible reform towards Georgism is the privatization of civic governance. Presumably you do not disagree with the central aim of Georgism, free trade. Fred Foldvary = [EMAIL PROTECTED]
Re: Nations as Corporations--how to price?
Suppose, for the sake of argument, that you wish to speculate in U.S. Citizenship Stocks, UCS for short--pronounced yuks. By low sell high, and all that sort of thing. Assume that: 1. An individual is free to own many UCS 2. Non-human legal entities may own UCS 3. There is no legally recognized disenfranchised class, in line w/ Mr. Hanson's affirmation that one may be stopped and asked for proof of citizenship. Anyone without at least one UCS who cannot be deported is shot on sight. Fatally. As a speculator in UCS, how would you go about estimating a fair price? Do you think taking the break-up value of the States gives the fair price? Recall that one must be able to go somewhere after selling; no foreign visa, no sale. Terminally curious, jsh __ Do You Yahoo!? HotJobs - Search Thousands of New Jobs http://www.hotjobs.com
Breakup value WAS Nations as Corporations
Eric Crampton: The break-up value shouldn't be less than the value of the assets in the country Only if the New Institutionlaists are all wet about asset specificity. Me, I think that the value of individual assets is _embedded_ in specific locations, relations, uses, contracts, plans, etc. Michael Michael E. Etchison Texas Wholesale Power Report MLE Consulting www.mleconsulting.com 1423 Jackson Road Kerrville, TX 78028 (830) 895-4005
Re: Savings Rates
Hence the rise in the value of a painting is zero-sum for society. can't the same can't be said of the appreciation in any tangible asset, such as real estate? David Yes. The point is to differentiate a change in net worth due to appreciation from a change of net worth due to saving income. Fred Foldvary = [EMAIL PROTECTED]
Accounting data
I was wondering if anybody knew of work relating to the reliability of accounts data given the recent cases of alleged corporate mismanagement/fraud. I am a bit of a novice in the area so if there is even anything that is old that would be helpful too. Tim James.
Re: Savings Rates
--- William Dickens [EMAIL PROTECTED] wrote: Economic income is consumption plus the change in net worth Not in national income and product accounts. Right. National income accounts track *accounting* income, not *economic* income. The economic meaning of income is the Haig-Simmons meaning, consumption plus the change in wealth. Further, if you want savings to be equal to the flow of investment in the NIPA then you can't include change in asset value in your income calculation. Right. For the economy, a change in asset value is not income, because the increase in income to the owner is offset by a liability for the rest of society, since the next buyer will have to give up more assets to acquire the appreciated asset. Fred Foldvary = [EMAIL PROTECTED]
RE: how to eliminate unemployement
Kevin Carson wrote By funding services out of general revenue, we break the market price system's feedback link that tells the consumer the real cost of what he consumes, and lets him adjust his level of consumption on the basis of the price signal. I suspect that there are very few (if any) true public goods, that cannot be internalized and paid for entirely by those who use them. Many of the (good) features of the market could be restored to the payment of government, if the collection of taxes were kept as local as possible. That way, people would be (more) able to vote with their feet. This could also allow communities to experiment with different kinds of taxes, allowing e.g. the georgists to prove the superiority (if any) of their system of land value taxation. In some sense, local tax collecting communities would then act as competing corporations to link this thread with the other topic floating around on the list - jacob braestrup
Re: Nations as Corporations
Hi. I'm on vacation, and can't respond to this thread much now, but will when I get back in a week and a half. But for now let me confirm that we can think of this discussion in two steps. One, assuming that a CEO maximized share value of a nation, what would they do wrong or right. And two, what institutions could get them to maximize share value. The first question is interesting even if we don't know the answer to the second question. Robin D. Hanson, Asst Prof Economics, hanson.gmu.edu MSN 1D3, George Mason Univ., Fairfax, VA 22030 --- [EMAIL PROTECTED] wrote: I feel fairly confident in believing, however, that he did not mean that the financial incentives would produce CEOs with a militaristic or glory-seeking bent. So do i.
Re: how to eliminate unemployement
In a message dated 8/16/02 11:50:09 AM, [EMAIL PROTECTED] writes: In some sense, local tax collecting communities would then act as competing corporations – to link this thread with the other topic floating around on the list - jacob braestrup In some sense they do already. New York City, for instance, imposes a local income tax, and more people flee to the suburbs. On the flip side, you find Iowa, Tennessee and Massachusetts (or some other state) offering tax reduction or elimination to a large corporation that will build a new plant in their state. Some of the locals may object to a newcomer paying lower taxes than the locals do already, and in some cases this may lead people to moving to states where the tax for the average joe (or business) is lower than in the state granting the special exemptions. Still there are other considerations besides tax rates, like crime rates, weather, ranking of the government-monopoly school system versus other government-monopoly school systems, proximity to family, and locale prejudices. Having lived in Chicago, Denver, Iowa City and now Fairfax, Virginia I've found that people have very strong prejudices about some places. When I moved to Denver many family and friends in Chicago treated me as a traitor. Nonetheless many family and friends came to visit me in Denver, which has the reputation of being a cool place. (Note: you can tell that people consider a place cool if it's featured in beer commercials.) I found that in Denver people came to visit me whether I wanted them to or not. When I moved to Iowa, I got ribbed incessantly at first about whether they had flush toilets (they do) and a John Deere dealership on the corner (actually it was two corners away) etc. In Iowa City I came to know many families after whom streets were named--the Danes, the Gilpins, etc--whom I couldn't see moving regardless of what taxes anyone imposed on them. I confess I don't have a clue what any of that means. ;-) David
