(Re)Conceptualising the space of markets: The case of the 2007–9 global financial crisis

The 2007–9 period saw an unprecedented crisis emerge in global financial markets with the collapse of several large western financial institutions, and the nearest moment of systemic crisis yet witnessed in the globalised financial system. The crisis has thus provoked a significant questioning of market theories, and in particular understandings of market within orthodox neoclassical economics. Within the social sciences, a significant element of this response has built on a growing heterodox socioeconomic literature which is heavily critical of hegemonic conceptions of the market within economics. However, whilst a small body of work in economic geography has begun to engage with this literature, geographical thinking has not directly sought to conceptualise the nature and significance of market spatiality. Utilising a cultural economy approach, this paper therefore argues that economic geographical theories need to foreground the concept of market rather than treat markets as a ‘component’ of wider processes. It further contends that the concept of the ‘market’ needs to be reconceptualised in a way that captures the spatialities of markets and the difference that space makes to market behaviours and outcomes. Drawing on the growing heterodox socioeconomic literature on markets, it thus proposes a practice-oriented ‘socio-spatial approach’ for framing conceptions of market spatiality, arguing that such a spatial epistemology opens up a range of theoretical possibilities for further contesting hegemonic neoclassical theories of the market beyond current socioeconomic critiques. It seeks to illustrate the utility of such a framework through a case study analysis of the limitations inherent in existing policy practices surrounding the early phase of the recent global financial crisis

Monetary policy rules and U.S. monetary policy

An inflation-augmented Atesoglu monetary policy rule is introduced. The Atesoglu rule is based on an estimate of the neutral rate of interest of Keynes. Actual Fed monetary policy and policy implied by Atesoglu rules are compared. During the 1994:2-2006:4 period, monetary policy suggested by the inflation-augmented Atesoglu rule is closer to that indicated by the Atesoglu rule rather than the actual Fed monetary policy. Findings reveal that the monetary policy implied by the Atesoglu rules has been less restrictive and less volatile than the actual Fed monetary policy.monetary policy, monetary policy rule, neutral rate of interest,

Economic consequences of a rise in defense spending after September 11, 2001

The purpose of this paper is to discuss the effects of a rise in defense spending on key macroeconomic variables since September 11, 2001. For examining the effects of the rise in defense spending, empirical models were developed for GDP, employment, trade deficit, and budget deficit. In addition to estimation results, simulations were made to assess the effect of defense spending employing the empirical models. Findings reveal that the rise in defense spending had a favorable impact on GDP and employment but led to larger trade and budget deficits.budget deficit, defense spending, employment, GDP, trade deficit,

Asset price bubbles, monetary policy and financial crisis

In this paper, asset price bubbles in equities and housing that were developed from August 1987 to September 2008 are examined. Monetary policy reaction functions are estimated. Results revealed that, although not successful in pricking the bubble, the Federal Reserve System did follow a restrictive monetary policy with respect to the equity price bubble. Results also indicate that monetary policy did not respond to housing price bubbles. The findings suggest that the bursting of the housing price bubble in early 2007 resulted in the recent financial crisis. This crisis, together with the rise in oil prices and an unnecessarily restrictive monetary policy, led to the start of the recession in December 2007 and the subsequent collapse of equity prices.asset prices, price bubbles, monetary policies, financial crises, equities, housing, house prices, reaction functions, Federal Reserve System, central banks, banking, USA, United States, equity prices, restrictive policies, oil prices, recessions, price collapse, public policy, economic policies, alternative paradigms,

Monetary policy and long-term interest rates

Empirical relations between the federal funds rate and long-term interest rates are analyzed by employing the vector error correction modeling and cointegration techniques. The findings reveal a cointegration relation and a unidirectional causality from the federal funds rate to the long-term interest rates and are supportive of the horizontalist rather than the structuralist view of the money supply endogeneity. Findings also reveal that changes in the federal funds rate do not have much of an effect on the long-term interest rates in the short run. These results raise doubts concerning the effectiveness of monetary policy in the short run.cointegration, federal funds rate, long-term interest rates, monetary policy,