The Financial System, Bussiness Cycles and Growth

Los economistas han reconocido desde hace mucho tiempo la importancia del sistema financiero. Muchas de las discusiones tratan al sistema financiero aisladamente, o lo relacionan sólo superficialmente a la macroeconomía. Este artículo discute los intrincados lazos entre el sistema financiero y la macroeconomía. El principal resultado de los modelos microeconómicos de finanzas desarrollados en el pasado cuarto de siglo han mostrado cuan diferente es el sector financiero de otros sectores, incluyendo la persistencia de situaciones de no equilibrio en los mercados y equilibrios ineficientes. Aquí hay una aplicación de esas ideas a una discusión de los modelos macroeconómicos basados en finanzas, usándolos para arrojar luz sobre las causas de las fluctuaciones cíclicas de los negocios y algunos de los determinantes del crecimiento. Finalmente, en la última parte de la discusión hay algunas respuestas a desarrollos en flujos de capitales internacionales, incluyendo las cuestiones de convertibilidad de la cuenta de capital y la respuesta a crisis.Financial System; Bussiness Cycles; modelos microeconómicos

Promoting Competition in Telecommunications

There is a growing recognition of the importance of competition for the success of market economies, and of the need for government action both to maintain competition and to regulate industries where competition remains limited. In the area of telecommunications, upon which I shall focus today, we have seen examples where privatization has not delivered on its promises: in some cases access in certain vital areas has actually been reduced. Competition and regulatory policy are vital for a market economy. The fundamental theorems of welfare economics, assume that both private property and competitive markets exist in the economy. Until recently, however, emphasis was placed almost exclusively on creating private property, and privatization of public assets. A well designed privatization, where there is a good regulatory framework in place, can raise enormous revenues and at the same time increase services and lower prices.market economies; government; competition; regulate industries; telecommunications

Making Globalisation Work – The 2006 Geary Lecture

This paper was delivered as the Geary Lecture 2006 at the Burlington Hotel, Dublin, Ireland on 30 August. The Geary Lecture is organised each year in honour of Professor R. C. Geary (1896–1963) the first Director of The Economic and Social Research Institute and the most eminent Irish Statistician and Economist of the twentieth century. This lecture was organised in association with Penguin Books and The Irish Times.

Money, Credit, and Business Fluctuations

This paper provides a critique of standard theories of money, in particular those based on money as a medium of exchange. Money is important because of the relationship between money and credit. The process of judging credit worthiness, in which banks play a central role, involves the collection and processing of information. Like many other economic activities involving information, these processes are not well described by means of standard production functions. Changes in economic circumstances can have marked effects on the relevance of previously accumulated information and accordingly on the supply of credit. Changes in the availability of credit may have marked effects on the level of economic activity, while changes in real interest rates seem to play a relatively minor role in economic fluctuations. This alternative view has a number of implications for policy, both at the macro-economic level (for instance, on the role of monetary policy for stabilization purposes and the choice of targets) and at the micro-economic level.

The General Theory of Tax Avoidance

This paper outlines a general set of principles for tax avoidance. Most of at least the common tax avoidance schemes can be reinterpreted as making use of one or more of these principles. Four such methods are described. In a perfect capital market, these methods would enable the astute taxpayer to eliminate all taxation on capital income. The fact that the tax system raises revenue is attributed to lack of astuteness of the taxpayer and/or lack of perfection of the capital market. Accordingly, models which attempt to analyze the effects of taxation assuming rational, maximizing taxpayers working within a perfect capital market may give misleading results.A full analysis of tax avoidance cannot be conducted within a partial equilibrium model; transactions which reduce one individual's tax liability may at the same time increase another's.We delineate tax avoidance schemes which reduce the aggregate tax liabilities of the participants. Much of the"general equilibrium" gain from tax avoidance arises from differences in tax rates, both across individuals and across classes of income. Our analysis is shown to have implications both for patterns of ownership of assets and the timing of transfers.

Economics of Information and the Theory of Economic Development

This paper shows how recent developments in the Economics of Information can provide insights into economic relations in less developed countries, and how they can provide explanations for institutions which, in neoclassical theory, appear anomalous and/or inefficient. Sharecropping and other tenancy relationships in the rural sector and wage determination and urban unemployment are both investigated within this perspective.

Technological Change, Sunk Costs, and Competition

macroeconomics, technological change

Information and the Change in the Paradigm in Economics

Nobel Prize lecture.Asymmetric Information;

A Simple Proof That Futures Markets are Almost Always Informationally Inefficient

Previous work which showed that prices could aggregate perfectly the diverse information of traders depended critically on the assumption that all agents had constant absolute risk utility. We show that either all agents must have constant absolute risk aversion utility, or all must have constant relative aversion in order for the strong form of the efficient market hypothesis to hold generically.