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.

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

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

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

General Framework for phase synchronization through localized sets

We present an approach which enables to identify phase synchronization in coupled chaotic oscillators without having to explicitly measure the phase. We show that if one defines a typical event in one oscillator and then observes another one whenever this event occurs, these observations give rise to a localized set. Our result provides a general and easy way to identify PS, which can also be used to oscillators that possess multiple time scales. We illustrate our approach in networks of chemically coupled neurons. We show that clusters of phase synchronous neurons may emerge before the onset of phase synchronization in the whole network, producing a suitable environment for information exchanging. Furthermore, we show the relation between the localized sets and the amount of information that coupled chaotic oscillator can exchange

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

The international synchronisation of business cycles: the role of animal spirits

Business cycles among industrial countries are highly correlated. We develop a two-country behavioral macroeconomic model where the synchronization of the business cycle is produced endogenously. The main channel of synchronization occurs through a propagation of “animal spirits”, i.e. waves of optimism and pessimism that become correlated internationally. We find that this propagation occurs with relatively low levels of trade integration. We do not need a correlation of exogenous shocks to generate synchronization. We also empirically test the main predictions of the model

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

Framing the eurozone crisis: a case of limited ambition

The eurozone crisis provided a new opportunity for obtaining supranational fiscal integration within the European single currency area. This study applies a framing analysis to the crisis discourse that emerged from within the European Union’s intergovernmental forums involved in fiscal policy coordination. As well as linking policy frames to two different integration scenarios for the Economic and Monetary Union, the broader influence of macroeconomic ideology is also emphasised. It is found that the response to the intensification of the crisis in Europe was to employ framing devices supporting intergovernmental fiscal discipline. While there were emergent supranational discourses over the longer term, these were reflective of a limited reform ambition. A key constraining factor here were the sovereignty concerns and issues of moral hazard circulating amongst member states, which together have ensured that a supranational fiscal policy is unlikely to be obtained in Europe

On the (nonlinear) relationship between exchange rate uncertainty and trade: An investigation of US trade figures in the Group of Seven

In this paper bilateral models formalizing monthly growth of US imports and exports are employed to investigate the potential of nonlinear relationships linking exchange rate uncertainty and trade growth. Parametric linear and nonlinear as well as semiparametric time series models are evaluated in terms of fitting and ex ante forecasting. The overall impact of exchange rate variations on trade growth is found to be weak. In periods of large exchange rate variations, trade growth forecasts gain from conditioning on volatility. Empirical results support the view that the relationship of interest might be nonlinear and, moreover, lacks homogeneity across countries and imports vs. export