How Big are the Big Multinational Companies?

Multinational corporations are increasingly seen as excessively big and powerful, and as having dramatically increased in size and power. This perception has led to the view that the big corporations are threatening democratic institutions of the nation-states and that they pervert the cultural and social fabric of countries. In this paper we analyse the size of large corporations and the recent trends in this size. Using value-added data (instead of sales) we find that multinationals are surprisingly small compared to the GDP of many nation-states. In addition, if anything, the size of multinationals relative to the size of nations has tended to decline somewhat during the last 20 years. Finally, we argue that there is little evidence that the economic and political power of multinationals has increased in the last few decades.

Time to Change Budgetary Priorities in the Eurozone

With the spectre of a recession looming in the eurozone (and elsewhere), the policy question arises as to how much leeway do the fiscal authorities in the eurozone have to follow counter-cyclical fiscal policies aimed at providing some stimulus to the economy

Toward a sustainable eurozone

We argue that the various proposals aimed at stabilizing the Eurozone using financial engineering do not eliminate the inherent instability of the sovereign bond markets in a monetary union. During crises, this instability becomes systemic and no amount of financial engineering can stabilize an otherwise unstable system. The real stabilization of the Eurozone entails two mechanisms. The first is the willingness of the European Central Bank (ECB) to provide liquidity in the Eurozone sovereign bond markets during times of crisis. The ECB has set up its Outright Monetary Transactions (OMT) program to do this. However, OMT is loaded with austerity conditions, which will be counterproductive when used during recessions, which is when crises generally occur. That is why a second mechanism is necessary, which consists in creating a Eurozone budget

Structural Reforms, Growth, and Inequality: An Overview of Theory, Measurement, and Evidence

This chapter provides a critical overview of the state of the art in the economics literature on structural reforms. It takes stock of theoretical developments, measurement efforts, and of the econometric evidence. We start with a simple theoretical framework for the relationship between structural reforms, economic growth, and income inequality. We argue that whether structural reforms have a positive or negative impact depends on various factors. The type of reform, timing, sequence, and political constraints play crucial roles in determining the effectiveness of reforms on economic growth and income inequality. We conclude by proposing a 7-point agenda for future research

An oligopoly model of free banking: Theory and tests

The paper demonstrates that in an environment of free banking where some agents have imperfect information regarding the circulation and debasement rates of alternative money suppliers, the equilibrium supply of money involves mixed strategies. It follows that the circulation and debasement rates are intrinsically stochastic, but that their averages are below the rates set by a monopoly bank. Empirical tests reveal that these predictions are consistent with the free banking era of the United States. The paper is also relevant for the discussion about the future monetary union in the EC

An Outline of a Progressive Resolution to the Euro-area Sovereign Debt Overhang: How a Five year Suspension of the Debt Burden Could Overthrow Austerity

The present study puts forward a plan for solving the sovereign debt crisis in the euro area (EA) in line with the interests of the working classes and the social majority. Our main strategy is for the European Central Bank (ECB) to acquire a significant part of the outstanding sovereign debt (at market prices) of the countries in the EA and convert it to zero-coupon bonds. No transfers will take place between individual states; taxpayers in any EA country will not be involved in the debt restructuring of any foreign eurozone country. Debt will not be forgiven: individual states will agree to buy it back from the ECB in the future when the ratio of sovereign debt to GDP has fallen to 20 percent. The sterilization costs for the ECB are manageable. This model of an unconventional monetary intervention would give progressive governments in the EA the necessary basis for developing social and welfare policies to the benefit of the working classes. It would reverse present-day policy priorities and replace the neoliberal agenda with a program of social and economic reconstruction, with the elites paying for the crisis. The perspective taken here favors social justice and coherence, having as its priority the social needs and the interests of the working majority

Financial frictions and housing collateral constraints in a macro model with heuristics

https://editorialexpress.com/cgi-bin/conference/download.cgi?db_name=CEF2019&paper_id=

Fundamentals versus market sentiments in the euro bond markets: Implications for QE

This policy contribution was prepared on request of the ECON Committee of the European Parliament for the Monetary Dialogue with the President of the European Central Bank on 29 May 2017 (http://www.europarl.europa.eu/committees/en/econ/monetarydialogue.html). Copyright remains with the European Parliament at all times.Despite the partial realignment of European long-term government bonds after the crisis in 2012, there has been some renewed divergence in yields in the last years. We analyse the sources of these divergences and find that the government bond markets in the Eurozone are highly sensitive to changing market sentiments, both in time and across countries. We analyse the implications of this finding for the QE-programme. Our analysis of the recent developments in the bond markets and in the macroeconomic developments of the euro area suggests that pulling the plug on QE too soon might undo some of the benefits of QE in the countries of the periphery and may lead to increases in the refinancing costs of member states with little or no fiscal space.Economic and Social Research Council (ESRC) [grant number ES/K002309/1]