On the Nature and Causes of the Collapse of the Wealth of Nations, 2007-2008: The End of a Façade Called Globalization

In this working paper, Erinç Yeldan investigates the 2007-2008 financial crisis, hailed as the most devastating (and complex) crisis of capitalism since the great depression of 1929. He suggests that the 2007-2008 crisis was not the end result of a series of technical errors or ad hoc developments that occurred on their own, but was instead the result of the systemic imbalances of capitalism over the last three decades. In order to evaluate the conditions of the global crisis more clearly, Yeldan considers it critical that its underlying structural causes are understood. The paper reflects the Marxian literature on crises, prominently that of Rosa Luxemburg, pointing out to the necessity of a ‘corrective war’ in order to break with old institutions, old technologies, and old methods of accumulation.Crises of capitalism; Bretton Woods system, golden age of capital; financialization; corrective war

Queues with Lévy input and hysteretic control

We consider a (doubly) reflected Lévy process where the Lévy exponent is controlled by a hysteretic policy consisting of two stages. In each stage there is typically a different service speed, drift parameter, or arrival rate. We determine the steady-state performance, both for systems with finite and infinite capacity. Thereby, we unify and extend many existing results in the literature, focusing on the special cases of M/G/1 queues and Brownian motion. © The Author(s) 2009

Optimal dividend policies with random profitability

We study an optimal dividend problem under a bankruptcy constraint. Firms face a trade-off between potential bankruptcy and extraction of profits. In contrast to previous works, general cash flow drifts, including Ornstein--Uhlenbeck and CIR processes, are considered. We provide rigorous proofs of continuity of the value function, whence dynamic programming, as well as comparison between the sub- and supersolutions of the Hamilton--Jacobi--Bellman equation, and we provide an efficient and convergent numerical scheme for finding the solution. The value function is given by a nonlinear PDE with a gradient constraint from below in one dimension. We find that the optimal strategy is both a barrier and a band strategy and that it includes voluntary liquidation in parts of the state space. Finally, we present and numerically study extensions of the model, including equity issuance and credit lines

Current challenges for preseismic electromagnetic emissions: shedding light from micro-scale plastic flow, granular packings, phase transitions and self-affinity notion of fracture process

Are there credible electromagnetic (EM) EQ precursors? This a question debated in the scientific community and there may be legitimate reasons for the critical views. The negative view concerning the existence of EM precursors is enhanced by features that accompany their observation which are considered as paradox ones, namely, these signals: (i) are not observed at the time of EQs occurrence and during the aftershock period, (ii) are not accompanied by large precursory strain changes, (iii) are not accompanied by simultaneous geodetic or seismological precursors and (v) their traceability is considered problematic. In this work, the detected candidate EM precursors are studied through a shift in thinking towards the basic science findings relative to granular packings, micron-scale plastic flow, interface depinning, fracture size effects, concepts drawn from phase transitions, self-affine notion of fracture and faulting process, universal features of fracture surfaces, recent high quality laboratory studies, theoretical models and numerical simulations. Strict criteria are established for the definition of an emerged EM anomaly as a preseismic one, while, precursory EM features, which have been considered as paradoxes, are explained. A three-stage model for EQ generation by means of preseismic fracture-induced EM emissions is proposed. The claim that the observed EM precursors may permit a real-time and step-by-step monitoring of the EQ generation is tested

The Labor Share in the Post-1980 Economy: An Analysis of the Contributing Factors

During the Neoliberal period, which roughly began in the early 1980s in the U.S., there was a substantial slowdown in the growth rate of real hourly compensation, while productivity had continued to grow. The last two decades of the Neoliberal period (2000 – 2020) also experienced somewhat of a substantial decline in the labor share. In recent decades, there has been a growing amount of literature attempting to explain the major factors that have contributed to these recent labor market developments. This study provides a means of investigating the changes in the labor share and its components (i.e., real hourly compensation, productivity and price ratio). In particular, this study looks at the decomposition of the labor share in the nonfinancial corporate sector during three periods, namely the Golden Age (1947-1970), the Transition period (1970- 1980), and the Neoliberal period (1980-2021). The results of the study are as follows: First, during the Golden age, the growth in the real hourly wage and productivity rose in tandem in the nonfinancial corporate sector. Second, the growth rate of real hourly compensation slowed down much more dramatically than the productivity growth during the Transition period. The unfavorable shift in the price ratio became the main contributing factor to the growth rate of labor share. Third, this trend continued in the Neoliberal period. The largest decline in the labor share has occurred within the last 20 years of Neoliberal period from 2000-2021. The paper then discusses competing theories on the slowdown in the real hourly compensation and the recent decline in the labor share

A Celebration of the Ties That Bind Us: Connections Between Actuarial Science and Mathematical Finance

The articles in this volume are contributed by scholars who are not only experts in areas of Actuarial Science (AS) and Mathematical Finance (MF), but also those who present diverse perspectives from both industry and academia. Topics from multiple areas, such as Stochastic Modeling, Credit Risk, Monte Carlo Simulation, and Pension Valuation, among others, that were maybe thought to be the domain of one type of risk manager, are shown time and again to have deep value to other areas of risk management as well. The articles in this collection, in my opinion, contribute techniques, ideas, and overviews of tools that folks in both AS and MF will find useful and interesting to implement in their work. It is also my hope that this collection will inspire future collaboration between those who seek an interdisciplinary approach to risk management

The Debate on Excess Capacity, Issues of Competition and Time

There has been a great deal of soul-­‐searching in the economic community over the past few years. Economists of varying stripes have begun to question the academic and business paradigm which is the orthodox approach to economics. Questions of capital theory, of method, of normative philosophy are being reconsidered as the community questions the wisdom of the textbooks of Dornbusch and Bernanke, the truisms of Solow on growth and Friedman on financial markets, the intellectual sons of the marginalist revolution. The public and policymakers alike are also searching for alternatives, with proposals of a Tobin tax across Europe and occupations of Wall Street the most striking recent examples. Without doubt, the global financial crisis has done far more than simply cut the hair of the Samson of international finance, it has forced the jaws of orthodox economists to clamp down on Eve’s apple and awaken, naked and impure, outside the ivory walls and locked gates of Eden. They now lie, castrate, amongst the intellectual barrenness and moral decrepitude which was neoclassical economics. If they can open their eyes, they will see there are many rich traditions of heterodox thought which have persisted outside the bastions of economic Eden. These are not built from invisible hands, and they do not need to assume full employment or abstract from that which they do not understand to work. The theoretical underpinnings of these approaches are methodologically Babylonian, not Cartesian, and thus sustain themselves on more than just axioms (Dow, 1996). The insights of Keynes (1936), Robinson (1941), Steindl (1952), Sraffa (1960), Kalecki (1971), Marx (1971), Amadeo (1986a), White (1996), Missaglia (2007), Arestis and Sawyer (2009b), and Moudud (2010) are but a few authors whose contribution to understanding the phenomenon and implications of excess capacity cannot be understated. It would be a travesty of morality and justice for the Department of Political Economy at this University to be closed, amalgamated out, or in any other way undermined, because if there is one thing which the past few years 10 of economic experience and this body work shares in common, it is that pluralism leads to a better, greater, and more fruitful understanding. I pray the University makes the right decision