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Hirschman: A great social scientist
Luis Armando Blanco [pdf][html]

[Keywords: economic growth, balance of payments, industrialization; JEL: B22, O19, O43]

Hirschman was a great social scientist who was committed to justice and democracy. This paper, a small homage in his memory, analyizes his most important book, The Strategy of Economic Development , and his reflections about late industrialization, inflation, balance of payment deficits, the linkage hypothesis, and relations between development theory and economic theory.

Voice and loyalty improve market efficiency
Jorge Iván González

[Keywords: economics, politics, human interaction, market efficiency; JEL: B20, B41, O43]

Voice and loyalty play an important role because they facilitate market adjustments and improve efficiency. Conventional theory establishes an immediate relationship between prices and output, and ignores the complexities introduced by human interaction in markets. Voice and loyalty postpone exit, and these mechanisms will help companies to improve their relationships with customers. Hirschman's perspective builds bridges between economics and politics. As he said: “I hope to show political science academics the value of economic concepts, and economists the value of political ideas”

Market and virtue or how to make economics complicated. About The Passions and the Interests of Albert Hirschman
Alberto Castrillón

[Key words: Albert Hirschman, economic thought, origins of capitalism; JEL: B25, B31, O43, P16 ]

This article addresses some of the ideas about the intellectual origins of capitalism, discussed in Albert Hirschman's The Passions and the Interests . Montesquieu, James Steuart and Adam Smith saw interest as a sort of benevolent passion that could dominate or keep away evil passions, such as violence or rulers' despotism. For them, the links between trade –and the profit that drives it today– and the progress of civilization were neither a natural law, nor undisputable, as is currently thought.

Implications of an endogenous theory of growth in Allyn Young's macroeconomic concept of increasing returns
Lauchlin Currie y Roger Sandilands [pdf][html]

[Key words: endogenous growth, increasing returns, macroeconomic theory, reciprocal demand, self-sustaining growth; JEL: F43, O11, O43]

In this article, Lauchlin Currie clarifies the macroeconomic theory of Allyn Young's "increasing returns", which influenced Currie's policy proposals for Colombia. His theory arises from Adam Smith's classical emphasis on how competition and mobility extend the size of real reciprocal market supply and demand (sharply differentiated from inflationary monetary demand). From this arises, endogenously, greater specialization as a primary source of self-sustaining growth, through the mutual diffusion of external economies. On the other hand, other endogenous theories emphasize the internal economies of scale and greater input of labour and capital -whose contributions are measured by their income-, technical progress driven by protectionism and monopolistic profits.

Crisis after the crisis? Financial macroeconomics after the global crisis
Boris Salazar [pdf][html]

[Key words: financial crisis, financial macroeconomics, research programs, paradigm, crisis JEL: B41, B22, G21, N20]

Though the global financial crisis induced the emergence of a new set of stylized facts, and propitiated the use of techniques and tools emerging from other disciplines, it did not unleash a crisis of the current research program in financial macroeconomics. This article is an attempt to explain that turn of events. It does explore two interlocked hypotheses: the structural asymmetry between paths linking the ‘hard core' of a research program with its ‘protective belt'; what goes from the hard core onto the periphery never stops flowing under the guise of basic modules required to build up new models, whereas the periphery's findings never make their way up to the hard core. The second one is an observable fact: both, the strongest contender for the DSGE models –econophysics– and the heterodox research programs, are outsiders in mainstream economics.

Consumption and cycles' theory in Thorstein Veblen
Alberto José Figueras y Hernán Alejandro Morero [pdf][html]

[Key words: Thorstein Veblen, institutionalism, consumption, economic cycles, leisure class, business enterprise; JEL: B15, B30]

Thorstein Veblen (1857-1929) is one of the founders of American institutional economics. This paper aims to make a presentation of his theory of consumption and his theory of business cycles and crises, through an analytical reading of his works: The Theory of the Leisure Class and The Theory of Business Enterprise . In order to complete this analysis, we also make a general presentation of the author's thought and a brief systematization of his critique of orthodox economic thought.

The modern debate on the Aristotelian economic writings
Hernán Borisonik [pdf][html]

[Keywords: Aristóteles, economics, primitivism and modernism, Marx, Schumpeter, Polanyi, Finley; JEL: B11, B19, B20]

The present article is a critical reading of the most important modern interpretations on Aristotle's economic writings. Firstly, the debate between the "primitivists" and the "modernists" (headed by Rodbertus, Bücher and Meyer) will be studied. Then, the readings of Karl Marx, Joseph Schumpeter, Karl Polanyi and Moses Finley, will be analyzed, considering these authors as the most renowned commentators of the Aristotelian economical legacy.

The liberalization and management of capital flows: an institutional view
Vivek Arora, Karl Habermeier, Jonathan D. Ostry y Rhoda Weeks-Brown [pdf][html]

[Keywords: capital flow; monetary system; public policy; JEL: F21, F32, O16]

Capital flows have increased significantly in recent years and are a key aspect of the global monetary system. They offer potential benefits to countries, but their size and volatility can also pose policy challenges. The Fund needs to be in a position to provide clear and consistent advice with respect to capital flow and policies related to them. In 2011, the International Monetary and Financial Committee called for “further work on a comprehensive, flexible, and balanced approach for the management of capital flows”. This paper proposes an institutional view to underpin this approach, drawing on earlier Fund policy papers, analytical work, and Board discussions on capital flow.

Taxation in Latin America since the debt crisis and legislature role in Colombia
Víctor Mauricio Castañeda Rodríguez [pdf][html]

[Keywords: taxation, Latin America; tax reform; debt crisis; special interests; JEL: F53, F59, H20, O54]

This paper analyzes the political nature of taxation, which helps to explain why adoption from the model sponsored by the IMF in Latin America, especially after the debt crisis, has not been homogeneous. Colombia is taken as a case study to show how tax reforms depend on the political process in Congress, which opens a gap between the bills, inspired by IMF , and the final laws. Finally, it raises some arguments that suggest the special interests' role in the design and application of tax policy, which interact without being necessarily reconcilable and can also explain the divergence between bills and laws.

Creation, destruction and job reallocation in Colombian manufacturing sector
Ligia Alba Melo y Carlos Andrés Ballesteros [pdf][html]

[Keywords: job flows, job creation, job destruction, Colombia; JEL: E30, J20, J60]

This paper analyzes the characteristics of job flows in the Colombian manufacturing sector between 1994 and 2009, at the industry group level and for the occupational categories. The results suggest high levels of job creation and job destruction in manufacturing firms, which are not usually evident in the figures of net employment growth. Similarly, we find that job creation and job destruction are persistent. Finally, the results at a disaggregated level indicate significant differences by industry group and occupational category.

Uncertainty, governance and economic growth. Venezuela 1968-2010
Carlos José Peña Parra [pdf][html]

[Keywords: uncertainty, investment, growth, governance, fiscal volatility; JEL: E22, E32]

This paper examines the relationship between macroeconomic uncertainty, fiscal governance and economic growth in Venezuela from 1968 to 2010. There is feedback between fiscal volatility and uncertainty, but the latter may be the result of weak governance, particularly volatile fiscal policy. Fiscal volatility affects fiscal outcomes, especially when fiscal policy is discretionary. A VAR model is used to examine these results.

Universal cash transfers and income. Simulation in a Mexican zone
Oscar Alfonso Martínez Martínez [pdf][html]

[Keywords: social policy, basic income and poverty; JEL: E24, I38, I32]

This article compares the effects of the basic income and conditioned cash transfer programs that have been implemented in Latin America. The empirical case study is the Programa Oportunidades from a Mexican metropolitan zone. A Kernel estimation was applied and it showed no statistical differences in household incomes whether they received cash transfers or not. However, family incomes equivalent to the threshold of the minimum wage or the extreme poverty show significant statistical differences in the purchasing power which aids in the eradicaton of extreme poverty.


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