Short term Thinking in Investment Decisions of Businesses and Financial Markets

Short term Thinking in Investment Decisions of Businesses and Financial Markets

 

When companies buyback shares and pay dividends rather than investing in new capacity, it leads to low economic growth and low aggregate demand.

Central Banks respond by cutting interest rates.  Yet Businesses do not invest in new capacity.

Many studies attribute this to short term thinking dominant in corporate investment decisions.  Pressures from shareholders push corporate managers to be short term oriented.

Many economists and thinkers have criticized this recently as advanced economies are suffering from anemic growth.

Larry Summers has invoked Secular Stagnation.  He says one of the reason for Secular Stagnation is short term thinking.

Andy Haldane of Bank of England has criticized short term thinking as it prevents investments and causes low economic growth.

Key Terms:

  • Quarterly Capitalism
  • Secular Stagnation
  • Short Term Thinking
  • Low Economic Growth
  • Business Investments
  • Real Interest Rates
  • Monetary Policy
  • Income and Wealth Inequality
  • Aggregate Demand
  • Productive Capacity
  • Productivity growth
  • Long Term Investments
  • Share Buybacks
  • Dividends
  • Corporate Cash Pools

 

Capitalism for the Long Term

The near meltdown of the financial system and the ensuing Great Recession have been, and will remain, the defining issue for the current generation of executives. Now that the worst seems to be behind us, it’s tempting to feel deep relief—and a strong desire to return to the comfort of business as usual. But that is simply not an option. In the past three years we’ve already seen a dramatic acceleration in the shifting balance of power between the developed West and the emerging East, a rise in populist politics and social stresses in a number of countries, and significant strains on global governance systems. As the fallout from the crisis continues, we’re likely to see increased geopolitical rivalries, new international security challenges, and rising tensions from trade, migration, and resource competition. For business leaders, however, the most consequential outcome of the crisis is the challenge to capitalism itself.

That challenge did not just arise in the wake of the Great Recession. Recall that trust in business hit historically low levels more than a decade ago. But the crisis and the surge in public antagonism it unleashed have exacerbated the friction between business and society. On top of anxiety about persistent problems such as rising income inequality, we now confront understandable anger over high unemployment, spiraling budget deficits, and a host of other issues. Governments feel pressure to reach ever deeper inside businesses to exert control and prevent another system-shattering event.

My goal here is not to offer yet another assessment of the actions policymakers have taken or will take as they try to help restart global growth. The audience I want to engage is my fellow business leaders. After all, much of what went awry before and after the crisis stemmed from failures of governance, decision making, and leadership within companies. These are failures we can and should address ourselves.

In an ongoing effort that started 18 months ago, I’ve met with more than 400 business and government leaders across the globe. Those conversations have reinforced my strong sense that, despite a certain amount of frustration on each side, the two groups share the belief that capitalism has been and can continue to be the greatest engine of prosperity ever devised—and that we will need it to be at the top of its job-creating, wealth-generating game in the years to come. At the same time, there is growing concern that if the fundamental issues revealed in the crisis remain unaddressed and the system fails again, the social contract between the capitalist system and the citizenry may truly rupture, with unpredictable but severely damaging results.

Most important, the dialogue has clarified for me the nature of the deep reform that I believe business must lead—nothing less than a shift from what I call quarterly capitalism to what might be referred to as long-term capitalism. (For a rough definition of “long term,” think of the time required to invest in and build a profitable new business, which McKinsey research suggests is at least five to seven years.) This shift is not just about persistently thinking and acting with a next-generation view—although that’s a key part of it. It’s about rewiring the fundamental ways we govern, manage, and lead corporations. It’s also about changing how we view business’s value and its role in society.

There are three essential elements of the shift. First, business and finance must jettison their short-term orientation and revamp incentives and structures in order to focus their organizations on the long term. Second, executives must infuse their organizations with the perspective that serving the interests of all major stakeholders—employees, suppliers, customers, creditors, communities, the environment—is not at odds with the goal of maximizing corporate value; on the contrary, it’s essential to achieving that goal. Third, public companies must cure the ills stemming from dispersed and disengaged ownership by bolstering boards’ ability to govern like owners.

When making major decisions, Asians typically think in terms of at least 10 to 15 years. In the U.S. and Europe, nearsightedness is the norm.

None of these ideas, or the specific proposals that follow, are new. What is new is the urgency of the challenge. Business leaders today face a choice: We can reform capitalism, or we can let capitalism be reformed for us, through political measures and the pressures of an angry public. The good news is that the reforms will not only increase trust in the system; they will also strengthen the system itself. They will unleash the innovation needed to tackle the world’s grand challenges, pave the way for a new era of shared prosperity, and restore public faith in business.

1. Fight the Tyranny of Short-Termism

As a Canadian who for 25 years has counseled business, public sector, and nonprofit leaders across the globe (I’ve lived in Toronto, Sydney, Seoul, Shanghai, and now London), I’ve had a privileged glimpse into different societies’ values and how leaders in various cultures think. In my view, the most striking difference between East and West is the time frame leaders consider when making major decisions. Asians typically think in terms of at least 10 to 15 years. For example, in my discussions with the South Korean president Lee Myung-bak shortly after his election in 2008, he asked us to help come up with a 60-year view of his country’s future (though we settled for producing a study called National Vision 2020.) In the U.S. and Europe, nearsightedness is the norm. I believe that having a long-term perspective is the competitive advantage of many Asian economies and businesses today.

Myopia plagues Western institutions in every sector. In business, the mania over quarterly earnings consumes extraordinary amounts of senior time and attention. Average CEO tenure has dropped from 10 to six years since 1995, even as the complexity and scale of firms have grown. In politics, democracies lurch from election to election, with candidates proffering dubious short-term panaceas while letting long-term woes in areas such as economic competitiveness, health, and education fester. Even philanthropy often exhibits a fetish for the short term and the new, with grantees expected to become self-sustaining in just a few years.

Lost in the frenzy is the notion that long-term thinking is essential for long-term success. Consider Toyota, whose journey to world-class manufacturing excellence was years in the making. Throughout the 1950s and 1960s it endured low to nonexistent sales in the U.S.—and it even stopped exporting altogether for one bleak four-year period—before finally emerging in the following decades as a global leader. Think of Hyundai, which experienced quality problems in the late 1990s but made a comeback by reengineering its cars for long-term value—a strategy exemplified by its unprecedented introduction, in 1999, of a 10-year car warranty. That radical move, viewed by some observers as a formula for disaster, helped Hyundai quadruple U.S. sales in three years and paved the way for its surprising entry into the luxury market.

To be sure, long-term perspectives can be found in the West as well. For example, in 1985, in the face of fierce Japanese competition, Intel famously decided to abandon its core business, memory chips, and focus on the then-emerging business of microprocessors. This “wrenching” decision was “nearly inconceivable” at the time, says Andy Grove, who was then the company’s president. Yet by making it, Intel emerged in a few years on top of a new multi-billion-dollar industry. Apple represents another case in point. The iPod, released in 2001, sold just 400,000 units in its first year, during which Apple’s share price fell by roughly 25%. But the board took the long view. By late 2009 the company had sold 220 million iPods—and revolutionized the music business.

It’s fair to say, however, that such stories are countercultural. In the 1970s the average holding period for U.S. equities was about seven years; now it’s more like seven months. According to a recent paper by Andrew Haldane, of the Bank of England, such churning has made markets far more volatile and produced yawning gaps between corporations’ market price and their actual value. Then there are the “hyperspeed” traders (some of whom hold stocks for only a few seconds), who now account for 70% of all U.S. equities trading, by one estimate. In response to these trends, executives must do a better job of filtering input, and should give more weight to the views of investors with a longer-term, buy-and-hold orientation.

If they don’t, short-term capital will beget short-term management through a natural chain of incentives and influence. If CEOs miss their quarterly earnings targets, some big investors agitate for their removal. As a result, CEOs and their top teams work overtime to meet those targets. The unintended upshot is that they manage for only a small portion of their firm’s value. When McKinsey’s finance experts deconstruct the value expectations embedded in share prices, we typically find that 70% to 90% of a company’s value is related to cash flows expected three or more years out. If the vast majority of most firms’ value depends on results more than three years from now, but management is preoccupied with what’s reportable three months from now, then capitalism has a problem.

Roughly 70% of all U.S. equities trading is now done by “hyperspeed” traders—some of whom hold stocks for only a few seconds.

Some rightly resist playing this game. Unilever, Coca-Cola, and Ford, to name just a few, have stopped issuing earnings guidance altogether. Google never did. IBM has created five-year road maps to encourage investors to focus more on whether it will reach its long-term earnings targets than on whether it exceeds or misses this quarter’s target by a few pennies. “I can easily make my numbers by cutting SG&A or R&D, but then we wouldn’t get the innovations we need,” IBM’s CEO, Sam Palmisano, told us recently. Mark Wiseman, executive vice president at the Canada Pension Plan Investment Board, advocates investing “for the next quarter century,” not the next quarter. And Warren Buffett has quipped that his ideal holding period is “forever.” Still, these remain admirable exceptions.

To break free of the tyranny of short-termism, we must start with those who provide capital. Taken together, pension funds, insurance companies, mutual funds, and sovereign wealth funds hold $65 trillion, or roughly 35% of the world’s financial assets. If these players focus too much attention on the short term, capitalism as a whole will, too.

In theory they shouldn’t, because the beneficiaries of these funds have an obvious interest in long-term value creation. But although today’s standard practices arose from the desire to have a defensible, measurable approach to portfolio management, they have ended up encouraging shortsightedness. Fund trustees, often advised by investment consultants, assess their money managers’ performance relative to benchmark indices and offer only short-term contracts. Those managers’ compensation is linked to the amount of assets they manage, which typically rises when short-term performance is strong. Not surprisingly, then, money managers focus on such performance—and pass this emphasis along to the companies in which they invest. And so it goes, on down the line.

Only 45% of those surveyed in the U.S. and the UK expressed trust in business. This stands in stark contrast to developing countries: For example, the figure is 61% in China, 70% in India, and 81% in Brazil.

As the stewardship advocate Simon Wong points out, under the current system pension funds deem an asset manager who returns 10% to have underperformed if the relevant benchmark index rises by 12%. Would it be unthinkable for institutional investors instead to live with absolute gains on the (perfectly healthy) order of 10%—especially if they like the approach that delivered those gains—and review performance every three or five years, instead of dropping the 10-percenter? Might these big funds set targets for the number of holdings and rates of turnover, at least within the “fundamental investing” portion of their portfolios, and more aggressively monitor those targets? More radically, might they end the practice of holding thousands of stocks and achieve the benefits of diversification with fewer than a hundred—thereby increasing their capacity to effectively engage with the businesses they own and improve long-term performance? Finally, could institutional investors beef up their internal skills and staff to better execute such an agenda? These are the kinds of questions we need to address if we want to align capital’s interests more closely with capitalism’s.

2. Serve Stakeholders, Enrich Shareholders

The second imperative for renewing capitalism is disseminating the idea that serving stakeholders is essential to maximizing corporate value. Too often these aims are presented as being in tension: You’re either a champion of shareholder value or you’re a fan of the stakeholders. This is a false choice.

The inspiration for shareholder-value maximization, an idea that took hold in the 1970s and 1980s, was reasonable: Without some overarching financial goal with which to guide and gauge a firm’s performance, critics feared, managers could divert corporate resources to serve their own interests rather than the owners’. In fact, in the absence of concrete targets, management might become an exercise in politics and stakeholder engagement an excuse for inefficiency. Although this thinking was quickly caricatured in popular culture as the doctrine of “greed is good,” and was further tarnished by some companies’ destructive practices in its name, in truth there was never any inherent tension between creating value and serving the interests of employees, suppliers, customers, creditors, communities, and the environment. Indeed, thoughtful advocates of value maximization have always insisted that it is long-term value that has to be maximized.

Capitalism’s founding philosopher voiced an even bolder aspiration. “All the members of human society stand in need of each others assistance, and are likewise exposed to mutual injuries,” Adam Smith wrote in his 1759 work, The Theory of Moral Sentiments. “The wise and virtuous man,” he added, “is at all times willing that his own private interest should be sacrificed to the public interest,” should circumstances so demand.

Smith’s insight into the profound interdependence between business and society, and how that interdependence relates to long-term value creation, still reverberates. In 2008 and again in 2010, McKinsey surveyed nearly 2,000 executives and investors; more than 75% said that environmental, social, and governance (ESG) initiatives create corporate value in the long term. Companies that bring a real stakeholder perspective into corporate strategy can generate tangible value even sooner. (See the sidebar “Who’s Getting It Right?”)

Creating direct business value, however, is not the only or even the strongest argument for taking a societal perspective. Capitalism depends on public trust for its legitimacy and its very survival. According to the Edelman public relations agency’s just-released 2011 Trust Barometer, trust in business in the U.S. and the UK (although up from mid-crisis record lows) is only in the vicinity of 45%. This stands in stark contrast to developing countries: For example, the figure is 61% in China, 70% in India, and 81% in Brazil. The picture is equally bleak for individual corporations in the Anglo-American world, “which saw their trust rankings drop again last year to near-crisis lows,” says Richard Edelman.

How can business leaders restore the public’s trust? Many Western executives find that nothing in their careers has prepared them for this new challenge. Lee Scott, Walmart’s former CEO, has been refreshingly candid about arriving in the top job with a serious blind spot. He was plenty busy minding the store, he says, and had little feel for the need to engage as a statesman with groups that expected something more from the world’s largest company. Fortunately, Scott was a fast learner, and Walmart has become a leader in environmental and health care issues.

Tomorrow’s CEOs will have to be, in Joseph Nye’s apt phrase, “tri-sector athletes”: able and experienced in business, government, and the social sector. But the pervading mind-set gets in the way of building those leadership and management muscles. “Analysts and investors are focused on the short term,” one executive told me recently. “They believe social initiatives don’t create value in the near term.” In other words, although a large majority of executives believe that social initiatives create value in the long term, they don’t act on this belief, out of fear that financial markets might frown. Getting capital more aligned with capitalism should help businesses enrich shareholders by better serving stakeholders.

3. Act Like You Own the Place

As the financial sector’s troubles vividly exposed, when ownership is broadly fragmented, no one acts like he’s in charge. Boards, as they currently operate, don’t begin to serve as a sufficient proxy. All the Devils Are Here, by Bethany McLean and Joe Nocera, describes how little awareness Merrill Lynch’s board had of the firm’s soaring exposure to subprime mortgage instruments until it was too late. “I actually don’t think risk management failed,” Larry Fink, the CEO of the investment firm BlackRock, said during a 2009 debate about the future of capitalism, sponsored by the Financial Times. “I think corporate governance failed, because…the boards didn’t ask the right questions.”

What McKinsey has learned from studying successful family-owned companies suggests a way forward: The most effective ownership structure tends to combine some exposure in the public markets (for the discipline and capital access that exposure helps provide) with a significant, committed, long-term owner. Most large public companies, however, have extremely dispersed ownership, and boards rarely perform the single-owner-proxy role. As a result, CEOs too often listen to the investors (and members of the media) who make the most noise. Unfortunately, those parties tend to be the most nearsighted ones. And so the tyranny of the short term is reinforced.

The answer is to renew corporate governance by rooting it in committed owners and by giving those owners effective mechanisms with which to influence management. We call this ownership-based governance, and it requires three things:

Just 43% of the nonexecutive directors of public companies believe they significantly influence strategy. For this to change, board members must devote much more time to their roles.

More-effective boards.

In the absence of a dominant shareholder (and many times when there is one), the board must represent a firm’s owners and serve as the agent of long-term value creation. Even among family firms, the executives of the top-performing companies wield their influence through the board. But only 43% of the nonexecutive directors of public companies believe they significantly influence strategy. For this to change, board members must devote much more time to their roles. A government-commissioned review of the governance of British banks last year recommended an enormous increase in the time required of nonexecutive directors of banks—from the current average, between 12 and 20 days annually, to between 30 and 36 days annually. What’s especially needed is an increase in the informal time board members spend with investors and executives. The nonexecutive board directors of companies owned by private equity firms spend 54 days a year, on average, attending to the company’s business, and 70% of that time consists of informal meetings and conversations. Four to five days a month obviously give a board member much greater understanding and impact than the three days a quarter (of which two may be spent in transit) devoted by the typical board member of a public company.

Boards also need much more relevant experience. Industry knowledge—which four of five nonexecutive directors of big companies lack—helps boards identify immediate opportunities and reduce risk. Contextual knowledge about the development path of an industry—for example, whether the industry is facing consolidation, disruption from new technologies, or increased regulation—is highly valuable, too. Such insight is often obtained from experience with other industries that have undergone a similar evolution.

In addition, boards need more-effective committee structures—obtainable through, for example, the establishment of a strategy committee or of dedicated committees for large business units. Directors also need the resources to allow them to form independent views on strategy, risk, and performance (perhaps by having a small analytical staff that reports only to them). This agenda implies a certain professionalization of nonexecutive directorships and a more meaningful strategic partnership between boards and top management. It may not please some executive teams accustomed to boards they can easily “manage.” But given the failures of governance to date, it is a necessary change.

More-sensible CEO pay.

An important task of governance is setting executive compensation. Although 70% of board directors say that pay should be tied more closely to performance, CEO pay is too often structured to reward a leader simply for having made it to the top, not for what he or she does once there. Meanwhile, polls show that the disconnect between pay and performance is contributing to the decline in public esteem for business.

Companies should create real risk for executives.Some experts privately suggest mandating that new executives invest a year’s salary in the company.

CEOs and other executives should be paid to act like owners. Once upon a time we thought that stock options would achieve this result, but stock-option- based compensation schemes have largely incentivized the wrong behavior. When short-dated, options lead to a focus on meeting quarterly earnings estimates; even when long-dated (those that vest after three years or more), they can reward managers for simply surfing industry- or economy-wide trends (although reviewing performance against an appropriate peer index can help minimize free rides). Moreover, few compensation schemes carry consequences for failure—something that became clear during the financial crisis, when many of the leaders of failed institutions retired as wealthy people.

There will never be a one-size-fits-all solution to this complex issue, but companies should push for change in three key areas:

• They should link compensation to the fundamental drivers of long-term value, such as innovation and efficiency, not just to share price.

• They should extend the time frame for executive evaluations—for example, using rolling three-year performance evaluations, or requiring five-year plans and tracking performance relative to plan. This would, of course, require an effective board that is engaged in strategy formation.

• They should create real downside risk for executives, perhaps by requiring them to put some skin in the game. Some experts we’ve surveyed have privately suggested mandating that new executives invest a year’s salary in the company.

Redefined shareholder “democracy.”

The huge increase in equity churn in recent decades has spawned an anomaly of governance: At any annual meeting, a large number of those voting may soon no longer be shareholders. The advent of high-frequency trading will only worsen this trend. High churn rates, short holding periods, and vote-buying practices may mean the demise of the “one share, one vote” principle of governance, at least in some circumstances. Indeed, many large, top-performing companies, such as Google, have never adhered to it. Maybe it’s time for new rules that would give greater weight to long-term owners, like the rule in some French companies that gives two votes to shares held longer than a year. Or maybe it would make sense to assign voting rights based on the average turnover of an investor’s portfolio. If we want capitalism to focus on the long term, updating our notions of shareholder democracy in such ways will soon seem less like heresy and more like common sense.

While I remain convinced that capitalism is the economic system best suited to advancing the human condition, I’m equally persuaded that it must be renewed, both to deal with the stresses and volatility ahead and to restore business’s standing as a force for good, worthy of the public’s trust. The deficiencies of the quarterly capitalism of the past few decades were not deficiencies in capitalism itself—just in that particular variant. By rebuilding capitalism for the long term, we can make it stronger, more resilient, more equitable, and better able to deliver the sustainable growth the world needs. The three imperatives outlined above can be a start along this path and, I hope, a way to launch the conversation; others will have their own ideas to add.

The kind of deep-seated, systemic changes I’m calling for can be achieved only if boards, business executives, and investors around the world take responsibility for bettering the system they lead. Such changes will not be easy; they are bound to encounter resistance, and business leaders today have more than enough to do just to keep their companies running well. We must make the effort regardless. If capitalism emerges from the crisis vibrant and renewed, future generations will thank us. But if we merely paper over the cracks and return to our precrisis views, we will not want to read what the historians of the future will write. The time to reflect—and to act—is now.

 

Please see my other related posts.

Business Investments and Low Interest Rates

Mergers and Acquisitions – Long Term Trends and Waves

 

 

Key sources of Research:

Secular stagnation and low investment: Breaking the vicious cycle—a discussion paper

McKinsey

http://www.mckinsey.com/global-themes/europe/secular-stagnation-and-low-investment-breaking-the-vicious-cycle

Case Still Out on Whether Corporate Short-Termism Is a Problem

Larry Summers

http://larrysummers.com/2017/02/09/case-still-out-on-whether-corporate-short-termism-is-a-problem/

Where companies with a long-term view outperform their peers

McKinsey

http://www.mckinsey.com/global-themes/long-term-capitalism/where-companies-with-a-long-term-view-outperform-their-peers

How short-term thinking hampers long-term economic growth

FT

https://www.ft.com/content/8c868a98-b821-11e4-b6a5-00144feab7de

Anthony Hilton: Short-term thinking hits nations as a whole, not just big business

http://www.standard.co.uk/comment/comment/anthony-hilton-short-term-thinking-hits-nations-as-a-whole-not-just-big-business-10427294.html

Short-termism in business: causes, mechanisms and consequences

EY Poland Report

http://www.ey.com/Publication/vwLUAssets/EY_Poland_Report/$FILE/Short-termism_raport_EY.pdf

Overcoming the Barriers to Long-term Thinking in Financial Markets

Ruth Curran and Alice Chapple
Forum for the Future

https://www.forumforthefuture.org/sites/default/files/project/downloads/long-term-thinking-fpf-report-july-11.pdf

Understanding Short-Termism: Questions and Consequences

http://rooseveltinstitute.org/wp-content/uploads/2015/11/Understanding-Short-Termism.pdf

Ending Short-Termism : An Investment Agenda for Growth

http://rooseveltinstitute.org/wp-content/uploads/2015/11/Ending-Short-Termism.pdf

The Short Long

Speech by
Andrew G Haldane, Executive Director, Financial Stability, and Richard Davies

Brussels May 2011

http://www.bankofengland.co.uk/archive/Documents/historicpubs/speeches/2011/speech495.pdf

Capitalism for the Long Term

Dominic Barton

From the March 2011 Issue

https://hbr.org/2011/03/capitalism-for-the-long-term

Quarterly capitalism: The pervasive effects of short-termism and austerity

https://currentlyunderdevelopment.wordpress.com/2016/05/10/quarterly-capitalism-the-pervasive-effects-of-short-termism-and-austerity/

Is Short-Term Behavior Jeopardizing the Future Prosperity of Business?

http://www.wlrk.com/docs/IsShortTermBehaviorJeopardizingTheFutureProsperityOfBusiness_CEOStrategicimplications.pdf

Andrew G Haldane: The short long

Speech by Mr Andrew Haldane, Executive Director, Financial Stability, and Mr Richard
Davies, Economist, Financial Institutions Division, Bank of England,
at the 29th Société
Universitaire Européene de Recherches Financières Colloquium,
Brussels, 11 May 2011

http://www.bis.org/review/r110511e.pdf

THE UNEASY CASE FOR FAVORING LONG-TERM SHAREHOLDERS

Jesse M. Fried

https://dash.harvard.edu/bitstream/handle/1/17985223/Fried_795.pdf?sequence=1

The fringe economic theory that might get traction in the 2016 campaign

https://www.washingtonpost.com/news/wonk/wp/2015/03/02/the-fringe-economic-theory-that-might-get-traction-in-the-2016-campaign/?utm_term=.932bc0b97758

FCLT Global:  Focusing Capital on the Long Term

Publications

http://www.fcltglobal.org/insights/publications

Finally, Evidence That Managing for the Long Term Pays Off

Dominic Barton

James Manyika

Sarah Keohane Williamson

February 07, 2017 UPDATED February 09, 2017

https://hbr.org/2017/02/finally-proof-that-managing-for-the-long-term-pays-off

Focusing Capital on the Long Term

Dominic Barton

Mark Wiseman

From the January–February 2014 Issue

Is Corporate Short-Termism Really a Problem? The Jury’s Still Out

Lawrence H. Summers

February 16, 2017

Yes, Short-Termism Really Is a Problem

Roger L. Martin

October 09, 2015

Long-Termism or Lemons

The Role of Public Policy in Promoting Long-Term Investments

By Marc Jarsulic, Brendan V. Duke, and Michael Madowitz October 2015

Center for American Progress

https://cdn.americanprogress.org/wp-content/uploads/2015/10/21060054/LongTermism-reportB.pdf

 

Overcoming Short-termism: A Call for A More Responsible Approach to Investment and Business Management

https://corpgov.law.harvard.edu/2009/09/11/overcoming-short-termism-a-call-for-a-more-responsible-approach-to-investment-and-business-management/

 

 

Focusing capital on the Long Term

Jean-Hugues Monier – Senior Parter – McKinsey & Company

Princeton University – November 2016

http://jrc.princeton.edu/sites/jrc/files/jean-hugues_j._monier_slides_final.pdf

Growth and Form in Nature: Power Laws and Fractals

Growth and Form in Nature: Power Laws and Fractals

 

There are several instances of power laws found in nature and in society.  Some of the well known ones are:

  • City Sizes (Zipf’s Law)
  • Firm Sizes
  • Stock Market Movements
  • Income and Wealth (Pareto’s Law)
  • Metabolic Rate and Body Mass (Kleiber’s Law-3/4 or Rubner’s Law-2/3)

 

Power laws and Scaling in Biology

After 1997 paper by West et all, many publications have analyzed  empirical evidence as to what the correct exponent is and what is the fundamental theoretical basis for power law.

West found 3/4 as exponent, others have reported 1/4, 2/3, 4/5 etc.

Animals and Mammals follow 3/4 exponent.  Plants follow 2/3.

The Metabolic Theory of Ecology

Scaling in biology has a rich and important history. Typically body mass, or some other parameter relating to organism size, is related to anatomical, physiological, and ecological parameters across species. Quite remarkably, diverse organisms, from tiny microbes to the earth’s largest organisms are found to fall along a common slope, with a high degree of variance explained. The beauty of such scaling ‘‘laws’’ has been the generality in biotic organization that they suggest, and the challenge (for ecologists) has often been interpreting their mechanistic bases and ecological consequences.

Scaling laws have thus far inspired scientists in at least three major areas. First, scaling laws may illuminate biology that is otherwise shrouded. For example, if scaling relationships can account for variation in a parameter of interest, the residual variation may be much more easily examined because the major influence of some trait, say, body size, is removed. Second, some scientists have taken an interest in ‘‘the exponent’’—essentially the exponential scaling values that produce the allometric relationship. What are the precise values of these exponents? Are they all from a family of particular values (quarter powers) for many different biological relationships? This area seeks to define the generality of patterns in nature and to explore the empirical robustness of the relationships. Third, from a mechanistic perspective, if scaling laws are mechanistic and truly general, then this suggests some underlying common biological process that forms the structure and function of species and ultimately generates biological diversity. The mechanistics of scaling from metabolism and the currently favored fractal network model of resource acquisition and allocation may allow scientists to understand the laws of how life diversified and is constrained. Perhaps more importantly, such a mechanistic understanding should allow the successful prediction of evolutionary trends, responses of organisms to global change, and other basic and applied biological problems.

The Ecological Society of America’s MacArthur Award winner, James H. Brown, working together with colleagues for over a decade on scaling in biology, has arrived at an outline for a metabolic theory of ecology—a proposal for a unifying theory employing one of the most fundamental aspects of biology, metabolism. This metabolic theory incorporates body size, temperature (metabolic kinetics described by the Boltzmann factor), and resource ratios of the essential elements of life (stoichiometry). Indeed, this bold and visionary proposal is likely to inspire ecologists and provoke much discussion. My goal in assembling this Forum was to work toward a balanced discussion of the power and logic of the metabolic theory of ecology. I have asked both junior and senior scientists to evaluate the ideas presented in the metabolic theory and to go beyond the listing of strong and weak points. As such, this collection of commentaries should be viewed neither as a celebration of the theory nor as a roast of Jim Brown. It should, however, serve as a springboard for future research and refinements of the metabolic theory.

Several themes and axes of admiration and agitation emerge from the forum. The focus on metabolism, and metabolic rate in particular, is an advance that most agree is the fundamental basis for the processes of acquisition of resources from the environment and, ultimately, survival and reproduction of organisms. The combination of size, temperature, and nutrients has compelling predictive power in explaining life-history traits, population parameters, and even broader-scale ecosystem processes. The key point here is that Brown et al. are making a direct link between factors that affect the functioning of individuals and the complex role that those individuals play in communities and ecosystems. Although what we have before us is a proposal for a unified theory of ‘‘biological processing of energy and materials’’ in ecosystems, Brown et al. embrace the unexplained variation and acknowledge other areas of ecology that may not be subject to metabolic laws.

The commentaries presented in this Forum are unanimous in their admiration of Brown et al.’s broad theoretical proposal and its clear predictions. Yet, points of discussion abound and range widely: What really is the correct exponent? Does the scale at which scaling is applied affect its explanatory power? Are the laws really based on mechanism or phenomena? How does the addition of temperature and resource limitation enhance the power of scaling relationships? And, is scaling up from the metabolic rate and body mass of organisms to population dynamics, community structure, and ecosystem processes possible? This Forum ends with Brown’s response to the commentaries. Although there will be continued debate over the correct exponent, the data at hand from the broadest taxonomic groups support quarter powers. There is general agreement over the issue of scale and the fact that, depending on the scale of interest, metabolic theory may have more or less to offer. Finally, nutrient stoichiometry is the most recent addition to metabolic theory, and all agree that further research and refinement will determine the role for such nutrient ratios in the ecological scaling. The benefits of a metabolic theory of ecology are clear. The authors of this Forum have outlined some of the future challenges, and tomorrow’s questions will evaluate these theses.

 

Metabolism provides a basis for using first principles of physics, chemistry, and biology to link the biology of individual organisms to the ecology of populations, communities, and ecosystems. Metabolic rate, the rate at which organisms take up, transform, and expend energy and materials, is the most fundamental biological rate. We have developed a quantitative theory for how metabolic rate varies with body size and temperature. Metabolic theory predicts how metabolic rate, by setting the rates of resource uptake from the environment and resource allocation to survival, growth, and reproduction, controls ecological processes at all levels of organization from individuals to the biosphere. Examples include:

(1) life history attributes, including development rate, mortality rate, age at maturity, life span, and population growth rate;

(2) population interactions, including carrying capacity, rates of competition and predation, and patterns of species diversity;

(3) ecosystem processes, including rates of biomass production and respiration and patterns of trophic dynamics.

Data compiled from the ecological literature strongly support the theoretical predictions. Eventually, metabolic theory may provide a conceptual foundation for much of ecology, just as genetic theory provides a foundation for much of evolutionary biology.

 

 

Key Terms

  • Power Laws
  • Multi-scale
  • Fractals
  • Allometric Scaling Laws
  • Kleiber Law
  • Metabolic Ecology
  • Zipf Distribution
  • allometry
  • biogeochemical cycles
  • body size
  • development
  • ecological interactions
  • ecological theory
  • metabolism
  • population growth
  • production
  • stoichiometry
  • temperature
  • trophic dynamics

 

 

 

Key Sources of Research:

 

The Origin of Universal Scaling Laws in Biology

Geoffrey B. West

 

https://www.cs.cornell.edu/~ginsparg/physics/Phys446-546/gbwscl99.pdf

 

 

Life’s Universal Scaling Laws

Geoffrey B. West and James H. Brown

 

https://www.cs.unm.edu/~forrest/classes/cs523-2015/readings/Life’sUniversalScalingLaws.pdf

 

 

A General Model for the Origin of Allometric Scaling Laws in Biology

Geoffrey B. West, James H. Brown, Brian J. Enquist

 

http://eeb37.biosci.arizona.edu/~brian/West_Brown_Enquist_1997.pdf

 

 

Power Laws in Economics: An Introduction

Xavier Gabaix

 

http://pages.stern.nyu.edu/~xgabaix/papers/pl-jep.pdf

 

 

 

The origin of allometric scaling laws in biology from genomes to ecosystems: towards a quantitative unifying theory of biological structure and organization

Geoffrey B. West, James H. Brown

http://jeb.biologists.org/content/jexbio/208/9/1575.full.pdf

 

 

 

A general model for ontogenetic growth

Geoffrey B. West, James H. Brown & Brian J. Enquist

 

http://math.bard.edu/belk/math314/OntogeneticGrowth.pdf

 

 

 

Plants on a different scale

Lars O. Hedin

 

http://www.swarthmore.edu/NatSci/jmachad1/publications/nature_news_views_06.pdf

 

 

 

The Fourth Dimension of Life: Fractal Geometry and Allometric Scaling of Organisms

Geoffrey B. West, James H. Brown, Brian J. Enquist

 

http://isites.harvard.edu/fs/docs/icb.topic1386881.files/Chaos%20and%20Fractals/S1999_West.pdf

 

 

 

TOWARD A METABOLIC THEORY OF ECOLOGY

JAMES H. BROWN,

with JAMES F. GILLOOL Y, ANDREW P. ALLEN, VAN M. SA V AGE, AND GEOFFREY B. WEST

 

https://www.esa.org/history/Awards/papers/Brown_JH_MA.pdf

 

 

 

Complexity and Transdisciplinarity; Science for the 21st Century(?)!

GEOFFREY WEST

 

http://www.paralimes.ntu.edu.sg/NewsnEvents/MoreisDifferent/Documents/Geoffrey%20West.pdf

 

 

 

Scaling Laws in Complex Systems

 

http://www.muicmath.com/_media/seminar/ma_scaling_laws.pdf

 

 

 

A General Model for the Origin of Allometric Scaling Laws in Biology

Geoffrey B. West, James H. Brown,* Brian J. Enquist

http://umdberg.pbworks.com/w/file/fetch/48318752/Science-1997-West.pdf

 

 

 

Effects of Size and Temperature on Metabolic Rate

James F. Gillooly,1* James H. Brown,1,2 Geoffrey B. West,2,3 Van M. Savage,2,3 Eric L. Charnov

 

https://dspace.unm.edu/bitstream/handle/1928/1656/science2001.pdf?sequence=2&isAllowed=y

 

 

 

Growth, innovation, scaling, and the pace of life in cities

Luís M. A. Bettencourt, Jose ́ Lobo, Dirk Helbing, Christian Kuhnert, and Geoffrey B. West

 

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1852329/pdf/zpq7301.pdf

 

 

 

Urban Scaling and Its Deviations: Revealing the Structure of Wealth, Innovation and Crime across Cities

Lu ́ıs M. A. Bettencourt1,2*, Jose ́ Lobo3, Deborah Strumsky4, Geoffrey B. West1,2

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2978092/pdf/pone.0013541.pdf

 

 

 

URBAN DYNAMIC LAWS AND OUR DEGREES OF FREEDOM FOR DEVELOPMENT

Francisco J. Martínez

 

http://www.cedeus.cl/wp-content/uploads/2013/09/Francisco-Martinez_Urban-dynamic-laws.pdf

 

 

 

Allometric Scaling Laws and the Derivation of the Scaling Exponent

Marcel Grunert

 

http://jaguar.biologie.hu-berlin.de/~wolfram/pages/seminar_theoretische_biologie_2007/ausarbeitungen/grunert.pdf

 

 

Cities, Markets, and Growth: The Emergence of Zipf’s Law

Jeremiah Dittmar

August 10, 2011

 

http://www.jeremiahdittmar.com/files/Zipf_Dittmar.pdf

 

 

Self-similarity and power laws

 

http://autsys.aalto.fi/pub/control.tkk.fi/vanhat/as-74.330-k03/komulainen.pdf

 

 

The fractal nature of nature: power laws, ecological complexity and biodiversity

James H. Brown1,2*, Vijay K. Gupta3, Bai-Lian Li1, Bruce T. Milne1, Carla Restrepo1 and Geoffrey B. West

 

http://www.fractal.org/Bewustzijns-Besturings-Model/Fractal-Nature.pdf

 

 

Metabolic Rate and Kleiber’s Law

https://universe-review.ca/R10-35-metabolic.htm

 

 

Patterns in Nature

http://www.patternsinnature.org/Book/PowerLaws.html

 

 

Zipf, Power-laws, and Pareto – a ranking tutorial

Lada A. Adamic

http://www.labs.hp.com/research/idl/papers/ranking/ranking.html

 

 

The Power of Power Laws

http://www.the-scientist.com/?articles.view/articleNo/14689/title/The-Power-of-Power-Laws/

 

 

Re-examination of the 3/4-law of Metabolism

P. S. DODDS, D. H. ROTHMAN- AND J. S. WEITZ

 

http://biology.unm.edu/jhbrown/Miami/Dodds%20et%20al%202001.pdf

 

 

Fifth dimension of life and the 4/5 allometric scaling law for human brain

Ji-Huan He, Juan Zhang

 

http://www.uvm.edu/pdodds/files/papers/others/2004/he2004a.pdf

 

 

Lack of Evidence for 3/4 Scaling of Metabolism in Terrestrial Plants

Hai-Tao LI1*, Xing-Guo HAN2 and Jian-Guo WU

 

http://igsnrr.cas.cn/xwzx/kydt/200704/W020090624623546294020.pdf

 

 

Is West, Brown and Enquist’s model of allometric scaling mathematically correct and biologically relevant?

J. KOZLOWSKI and M. KONARZEWSK

 

https://biol-chem.uwb.edu.pl/IP/POL/BIOLOGIA/pdf/FE.pdf

 

 

Evidence against universal metabolic allometry.

Folmer Bokma

 

http://www.uvm.edu/pdodds/teaching/courses/2009-08UVM-300/docs/others/everything/bokma2003u.pdf

 

 

An evaluation of two controversial metabolic theories of ecology

 

http://www.bio.vu.nl/thb/deb/essays/Louw2011.pdf

 

 

ASSESSING SCALING RELATIONSHIPS: USES, ABUSES, AND ALTERNATIVES

Karl J. Niklas1, and Sean T. Hammond

 

http://www.journals.uchicago.edu/doi/pdfplus/10.1086/677238

 

 

􏱂􏱅Network Allometry

http://perso.crans.org/~bernot/Rinaldo/network%20allometry.pdf

 

 

A critical understanding of the fractal model of metabolic scaling

José Guilherme Chaui-Berlinck

 

http://jeb.biologists.org/content/jexbio/209/16/3045.full.pdf

 

 

 

Allometric scaling of metabolic rate from molecules and mitochondria to cells and mammals

Geoffrey B. West*†‡, William H. Woodruff*§, and James H. Brown

􏰻􏰽􏱃􏱄􏱁􏱂􏰾 􏰼􏰿􏰿􏱁􏱀􏰽􏱃􏱂􏱅
􏱝􏱏 􏱨􏰼􏱂􏱹􏱃􏰼􏱻􏱍􏱑 􏱫􏱏 􏱫􏱹􏱷􏱁􏱻􏱍􏱒 􏱦􏱏􏱞􏱏 􏱞􏰼􏱻􏰼􏲀􏰼􏱂􏱍􏱓 􏱝􏱏 􏱫

The Collapse of Global Trade during Global Financial Crisis of 2008-2009

The Collapse of Global Trade during Global Financial Crisis of 2008-2009

There are three broad categories of global Trade.

  • Trade in Commodities
  • Trade in Manufactured Goods
  • Trade in Services

During the Financial Crisis, Trade in commodities declined due to increase in Prices.

Trade in Services were largely unaffected.

Trade in Manufactured goods declined sharply for variety of reasons not yet entirely clear.

 

Potential Causes for decline

  • Fall in Aggregate Demand of goods
  • Constrained Trade Finance
  • Increase in Trade Barriers
  • Impact of Global Value Chains

 

From GLOBAL VALUE CHAINS IN A POSTCRISIS WORLD A DEVELOPMENT PERSPECTIVE

The global economic crisis of 2008–09 has revealed the interdependence of the world economy. The financial crisis originated in the United States, but the resulting economic downturn quickly spread to the rest of the world. Trade, along with finance, was one of the main vectors of transmission of the crisis. In 2009, there was a massive contraction in global trade—minus 13 percent. The contraction was largely a reflection of a drop in demand, especially for durable goods. The fact that the shock was transmitted very rapidly reflects the increasing reliance by businesses on so-called global value chains (GVCs)—the process of ever-finer specialization and geographic fragmentation of production, with the more labor-intensive parts of the production process transferred to developing countries. In a world where GVCs are the prevalent business model for multinational corporations, a reduction in demand for final products by global buyers implies that demand shocks are immediately transmitted “upstream” to subcontractors in developing countries.

 

From Resilient to the crisis? Global supply chains and trade flows

According to the most recent IMF estimates (IMF 2009), the ongoing recovery will drive a wedge between output and trade. Output is supposed to shrink by ‘only’ 1.1% at the end of 2009 (-3.4% in advanced economies), but world trade is forecast to still experience a drop of -11.9%. While other estimates put the latter figure at –9% (WTO, World Bank), it is indisputable that during 2009 official figures recording trade flows will fall much more than GDP.

Apart from its magnitude, the fall in trade in 2009 has also been quite homogeneous across all countries (more than 90% of OECD countries have exhibited simultaneously a decline in exports and imports exceeding 10%, as noted by Araujo and Olivera Martins 2009). This fall has also been very fast, with trade virtually grinding to a halt in the last month of 2008.1 These facts led Baldwin and Evenett (2009) to qualify the drop in trade during the crisis as “severe, sudden and synchronised”.

A number of transmission mechanisms have recently been proposed to account for these three attributes of the contraction of trade flows, many of which impinge upon the role that global supply chains might have played in exacerbating the drop in global demand.

The basic argument is that in a world characterised increasingly by vertical specialisation, goods are produced sequentially in stages across different countries – so-called international supply chains. The constituent parts and components of a final good crosses borders several times before the final product reaches the consumer; at each border crossing, the full value of the partially assembled good is recorded as trade. As a result, for a given reduction in world income, trade should decline “not only by the value of the finished product, but also by the value of all the intermediate trade flows that went into creating it”.

This implies that the extensive presence of supply chains does not automatically explain why world trade overshot the world GDP drop; other explanatory factors are needed. These may include:

  • The collapse in internal demand and production, affecting current and future level of (tradable) inventories worldwide;
  • Fiscal stimulus plans with a relatively stronger support of non-tradable sectors, like construction and infrastructures (Bénassy-Quéré et al. 2009);
  • The rise of ‘murky’ protectionism; and
  • The problems of trade finance with financial spreads still well-above ‘normal’ (i.e. pre-crisis) market rates (Auboin, 2009).

Do the above arguments mean that global supply chains are totally neutral as a transmission mechanism of the crisis from GDP to trade? Of course not. In all likelihood, however, the channels are much more complex than originally thought, and entail important compositional effects.

For the sake of argument, let us take the following story based on the idea that a relatively large part of the overreaction of trade has been caused by the sudden drying up of liquidity in trade finance. Auboin (2009) notes that, in the second part of 2008, spreads on short-term trade credit facilities suddenly soared to between 300 to 600 basis points above LIBOR, compared to 10 to 20 basis points in normal times, leading to a virtual freeze of important trade deals throughout the globe, with supply chain operations being disrupted by lack of financing, especially for developing country suppliers.

Under this assumption we would have a scenario in which the liquidity channel has led trade to overshoot the fall in demand, with the effect being larger within supply chains, as the trade financing of these operations is typically managed by large international financial institutions, particularly hit by the crisis.3

In this scenario, we would still obtain a severe, sudden and synchronised drop in trade flows, with the effects correlated with (but not caused by) the behaviour of global supply chains.

Moreover, under the same scenario, we would also observe that, during the crisis,trade falls more along the intensive margin (i.e. value per trade) than the extensive margins (i.e. number of traders). The reason being that, if the overreaction of trade was caused relatively more by liquidity constraints than by a disruption of supply chains, the above effects would lead to a reduction in the volume of trade, but not necessarily to a similar reduction in the number of traders worldwide.

This is exactly what Bricongne et al. (2009) find in a paper analysing the behaviour of French exporters during the crisis. Relying on monthly data for individual French exporters observed until April 2009, the authors find that the drop in French exports is mainly due to the intensive margin of large exporters, with small and large firms evenly affected once sectoral and geographical specialisation are controlled for. Interestingly, they also find that firms (small and large) in sectors more dependent on external finance are the most affected by the crisis.

While any conclusion must wait for more data to become available, there are good reasons to believe that the rise of global supply chains has not necessarily been the main cause of the recent “severe, sudden and synchronised” fall in global trade flows. Based on the available evidence, one may even be tempted to conclude that, under certain circumstances, international networks of production may also display some degree of ‘resilience’ to adverse shocks like the current crisis: supply-chain-related trade flows may react later (rather than sooner) to an adverse shock. Their fall may be smaller and, eventually, their recovery may happen faster relative to overall trade flows.

The observed resilience of supply chains may arise from some intrinsic attribute of production chains, as argued above. Alternatively, it may be the outcome of the political economy. Fearing that a collapse of supply chains would set off a sudden process of de-globalisation and implosion of international trade, governments may intervene in favour of supply chains. For example, the massive bail-outs of large financial institutions have helped their best customers, among them the big players within supply chains. Finally, of course, this indirect support of supply chains may have also been an unintended consequence of financial bailouts implemented for very different reasons.

 

From UNCTAD Global Value Chains: Investment and Trade for Development

gvc

 

Key Terms

  • BLS ( Bureau of Labor Statistics)
  • UNCTAD ( United Nations Conference on Trade and Development)
  • NIPAs ( National Income and Product Accounts)
  • OECD ( Organization for Economic Cooperation and Development)
  • EBRD (European Bank for Reconstruction and Development)
  • WTO (world Trade Organization)
  • GATT (General Agreement on Trade and Tariffs)
  • ILO (International Labor Organization)
  • ADB (Asian Development Bank)
  • UNIDO ( United Nations Industrial Development Organization)
  • BEA ( Bureau of Economic Analysis)
  • Production Networks
  • Vertical Specialization
  • Production Fragmentation
  • Intermediate Goods
  • Network Linkages
  • Global Supply Chains
  • Global Value Chains (GVCs)
  • Production Sharing
  • Inter Industry Input Output Tables
  • Inter Country Input Output Tables
  • Global Networks
  • Multi National Companies ( MNCs)
  • Regional Economic Integration
  • Trade Globalization
  • Trade in Goods and Services
  • Trade in Value Added (TIVA)
  • World Input Output Database (WIOD)
  • OECD-WTO TIVA Database
  • UNCTAD-EORA GVC Database
  • Global Trade Analysis Project (GTAP) Database
  • Institute of Developing Economies (IDE-JETRO) Asian IO Tables
  • World Input Output Network (WION)
  • Global Multi Regional Input Output (GMRIO) Framework
  • EXIOBASE/EXIOPOL EXIOBASE is a global, detailed Multi-regional Environmentally Extended Supply and Use / Input Output (MR EE SUT/IOT) database.

 

 

Key Sources of Research:

 

The Global Trade Slowdown: Cyclical or Structural?

Cristina Constantinescu, Aaditya Mattoo, and Michele Ruta

2015

https://www.imf.org/external/pubs/ft/wp/2015/wp1506.pdf

 

 

The future of global trade: Where are we heading and should we be concerned?

Gaaitzen de Vries
Bart Los
Robert Stehrer
Marcel Timmer

2016

https://www.weforum.org/agenda/2016/11/the-future-of-global-trade-where-are-we-heading

 

 

Demand Spillovers and the Collapse of Trade in the Global Recession

Rudolfs Bems Robert C. Johnson

Kei-Mu Yi

2010

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.186.7680&rep=rep1&type=pdf

 

 

Vertical Linkages and the Collapse of Global Trade

Rudolfs Bems
Robert C. Johnson
Kei-Mu Yi

AMERICAN ECONOMIC REVIEW
VOL. 101, NO. 3, MAY 2011

https://pdfs.semanticscholar.org/a8ab/600661c5f17781a38ca3168026b8663b8ebb.pdf

 

 

The Role of Vertical Linkages in the Propagation of the Global Downturn of 2008

Rudolfs Bems Robert C. Johnson

Kei-Mu Yi

2010

 

https://pdfs.semanticscholar.org/5519/0e43be03f9da1c48a385b94fbcc4904a3fb0.pdf

 

 

The Great Trade Collapse

Rudolfs Bems, Robert C. Johnson and Kei-Mu Yi

Annual Review of Economics
Vol.5:1-549 (Volume publication date August 2013)

 

 

GLOBAL VALUE CHAINS DURING THE GREAT TRADE COLLAPSE

A BULLWHIP EFFECT?

by Carlo Altomonte, Filippo Di Mauro, Gianmarco Ottaviano, Armando Rungi and Vincent Vicard

2012

 

http://www.suomenpankki.fi/pdf/169822.pdf

 

 

The bullwhip effect and the Great Trade Collapse

Veronika Zavacka

 

http://www.ebrd.com/downloads/research/economics/workingpapers/wp0148.pdf

 

 

Trade Finance and the Great Trade Collapse

By JaeBin Ahn, Mary Amiti, and David E. Weinstein

2011

 

http://www.columbia.edu/~dew35/Ahn-Amiti-WeinsteinAERPP.pdf

 

 

Economic Crisis and Global Supply Chains 

Agnès Bénassy-Quéré, Yvan Decreux, Lionel Fontagné & David Khoudour-Casteras

http://www.cepii.fr/PDF_PUB/wp/2009/wp2009-15.pdf

 

 

 

The Financial Crisis and Global Supply Chains

 

Robert N. Mefford, University of San Francisco, USA

http://repository.usfca.edu/cgi/viewcontent.cgi?article=1010&context=fe

 

 

International Supply Chains and Trade Elasticity in Times of Global Crisis

https://www.wto.org/english/res_e/reser_e/ersd201008_e.pdf

 

 

GLOBAL SUPPLY CHAINS: TRADE AND ECONOMIC POLICIES FOR DEVELOPING COUNTRIES

Alessandro Nicita Victor Ognivtsev Miho Shirotori

 

http://unctad.org/en/PublicationsLibrary/itcdtab56_en.pdf

 

 

The Great Trade Collapse: Shock Amplifiers and Absorbers in Global Value Chains

Zhengqi Pan

June 2016

 

http://gpn.nus.edu.sg/file/Zhengqi%20Pan_GPN2016_008.pdf

 

 

The Age of Global Value Chains: Maps and Policy Issues

 

https://www.esri.ie/pubs/JACB201530.pdf

 

 

Asia and Global Production Networks Implications for Trade, Incomes and Economic Vulnerability

 

https://www.adb.org/sites/default/files/publication/149221/asia-and-global-production-networks.pdf

 

 

Mapping globaL Value Chains

Koen De Backer and Sébastien Miroudot

2014

https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1677.pdf

 

 

Mapping Global Value Chains:

Intermediate Goods Trade and Structural Change in the World Economy

Timothy J. Sturgeon

Olga Memedovic

2011

 

http://www.unido.org//fileadmin/user_media/Publications/Research_and_statistics/Branch_publications/Research_and_Policy/Files/Working_Papers/2010/WP%2005%20Mapping%20Glocal%20Value%20Chains.pdf

 

 

 

World Investment Report 2013:

Global Value Chains: Investment and Trade for Development

2013

 

http://unctad.org/en/PublicationsLibrary/wir2013_en.pdf

 

 

Trade finance: developments and issues

Report submitted by a Study Group established by the Committee on the Global Financial System

The Group was chaired by John J Clark, Federal Reserve Bank of New York

January 2014

 

http://www.bis.org/publ/cgfs50.pdf

 

 

East Asian Value Chains and the Global Financial Crisis

Genet Zinabou

2010

http://publications.gc.ca/collections/collection_2010/maeci-dfait/FR4-14-8-2010-eng.pdf

 

 

The collapse of global trade, murky protectionism, Recommendations for the G20

and the crisis

 

Edited by: Richard Baldwin and Simon Evenett

2009

http://www.felixpena.com.ar/contenido/negociaciones/anexos/2009-03-murky-protectionism.pdf

 

 

Production Sharing in East Asia: Who Does What for Whom and Why?

 

Francis Ng and Alexander Yeats

1999

 

http://documents.worldbank.org/curated/en/380281468771676867/102502322_20041117140004/additional/multi-page.pdf

 

 

PRODUCTION SHARING IN EAST ASIA: CHINA’S POSITION, TRADE PATTERN AND TECHNOLOGY UPGRADING

Laike Yang

 

http://unctad.org/en/PublicationChapters/gdsmdp20152yang_en.pdf

 

 

GLOBAL VALUE CHAINS SURVEYING DRIVERS AND MEASURES

João Amador and Sónia Cabral

2014

 

https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1739.en.pdf

 

 

A New Measurement for International Fragmentation of the Production Process: An International Input-Output Approach

Satoshi Inomata

October 2008

 

http://www.ide.go.jp/English/Publish/Download/Dp/pdf/175.pdf

 

 

GLOBAL VALUE CHAINS IN A POSTCRISIS WORLD

A DEVELOPMENT PERSPECTIVE

Olivier Cattaneo, Gary Gereffi, and Cornelia Staritz Editors

 

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.364.8729&rep=rep1&type=pdf#page=97

 

 

THE NATURE AND GROWTH OF VERTICAL SPECIALIZATION IN WORLD TRADE

David Hummels Jun Ishii Kei-Mu Yi

March 1999

 

https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr72.pdf

 

 

TRADE INTEGRATION IN EAST ASIA:
THE ROLE OF CHINA AND PRODUCTION NETWORKS

MONA HADDAD

2007

http://documents.worldbank.org/curated/en/934051468236684868/pdf/wps4160.pdf

 

 

Production Networks and Trade Patterns in East Asia: Regionalization or Globalization?

Prema-chandra Athukorala

No. 56 | August 2010

https://www.adb.org/sites/default/files/publication/28530/wp56-trade-patterns-east-asia.pdf

 

 

Trade Integration and Production Network in East Asia

Pornnapa Leelapornchai

August 2007

 

https://www.jcer.or.jp/eng/pdf/Pornnapa.pdf

 

 

Trade patterns and global value chains in East Asia:
From trade in goods to trade in tasks

 

https://www.wto.org/english/res_e/booksp_e/stat_tradepat_globvalchains_e.pdf

 

 

Global production sharing and trade patterns in East Asia

Prema-chandra Athukorala

June 2013

http://www.waseda.jp/gsaps/eaui/educational_program/PDF_2/TU_VIROT,%20Ali_Reading2_Global%20Production%20Sharing%20and%20Trade%20Patterns%20in%20East%20Asia.pdf

 

 

Global Production Networks in Electronics and Intra-Asian Trade

Byron Gangnes

Ari Van Assche

2010

 

http://www.uhero.hawaii.edu/assets/WP_2010-4.pdf

 

 

The Role of China, Japan, and Korea in Machinery Production Networks

Ayako OBASHI†

Fukunari KIMURA

March 2016

 

http://www.eria.org/ERIA-DP-2016-10.pdf

 

 

China’s evolving role in global production networks: the decoupling debate revisited

Prema-chandra Athukorala

John Ravenhill

 

https://acde.crawford.anu.edu.au/sites/default/files/publication/acde_crawford_anu_edu_au/2016-07/2016-12_athukorala_ravenhill_wp_june_2016.pdf

 

 

International Production Networks And Changing Trade Patterns In East Asia: The Case Of The Electronics Industry

Dieter Ernst & Paolo Guerrieri

May 1997

http://www3.druid.dk/wp/19970007.pdf

 

 

UNDERSTANDING THE WORLD TRADE COLLAPSE

Calista Cheung and Stéphanie Guichard

2009

http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?doclanguage=en&cote=eco/wkp(2009)70

 

 

GLOBAL TRADE: WHAT’S BEHIND THE SLOWDOWN?

IMF World Economic Outlook Report October 2016

 

https://www.imf.org/external/pubs/ft/weo/2016/02/pdf/c2.pdf

 

 

A Theory of Domestic and International Trade Finance

JaeBin Ahn

2011

https://www.researchgate.net/profile/Jaebin_Ahn/publication/228202593_A_Theory_of_Domestic_and_International_Trade_Finance/links/0c96052274d4abea86000000.pdf

 

 

The Great Trade Collapse: Causes, Consequences and Prospects

 

Edited by Richard Baldwin

2009

 

http://lionel.fontagne.free.fr/papers/great_trade_collapse.pdf

 

 

Understanding the Weakness in World Trade

2015

 

https://www.ecb.europa.eu/pub/pdf/other/eb201503_article01.en.pdf

 

 

The mystery of the missing world trade growth after the global financial crisis

Hanna armelius, Carl-JoHan Belfrage and Hanna stenBaCka

2014

 

http://www.riksbank.se/Documents/Rapporter/POV/2014/2014_3/rap_pov_artikel_1_141121_eng.pdf

 

 

Resilient to the crisis? Global supply chains and trade flows

Carlo Altomonte, Gianmarco Ottaviano

27 November 2009

http://voxeu.org/article/resilient-crisis-global-supply-chains-and-trade-flows

 

 

The great trade collapse: What caused it and what does it mean?

Richard Baldwin

27 November 2009

 

 

The Collapse of International Trade During the 2008-2009 Crisis: In Search of the Smoking Gun

Andrei A. Levchenko

Logan T. Lewis

Linda L. Tesar

2009

 

 

Off the Clif  and Back? Credit Conditions and International Trade during the Global Financial Crisis

Davin Chory

Kalina Manova

This version: December 2009

 

 

WHY THE WORLD SUDDENLY CARES ABOUT GLOBAL SUPPLY CHAINS

GARY GEREFFI AND JOONKOO LEE

2012

 

 

China’s Slowdown: The First Stage of the Bullwhip Effect

Yossi Sheffi

September 09, 2015

 

 

Financial Crisis and Supply-Chain Financing

Leora Klapper and Douglas Randall

 

 

The mystery of the missing world trade growth after the global financial crisis

Hanna Armelius, Carl-Johan Belfrage and Hanna Stenbacka

2014

 

 

Trade Collapse, Trade Relapse and Global Production Networks: Supply Chains in the Great Recession

Escaith, Hubert

OECD, DEFI, WTO

28. October 2009

 

 

SPIDERS AND SNAKES: OFFSHORING AND AGGLOMERATION IN THE GLOBAL ECONOMY

Richard Baldwin Anthony Venables

Working Paper 16611

2010

 

 

 

GLOBAL VALUE CHAINS IN A POSTCRISIS WORLD A DEVELOPMENT PERSPECTIVE

Olivier Cattaneo, Gary Gereffi, and Cornelia Staritz

2010

 

 

Accounting relations in bilateral value added trade

Robert Stehrer

2013

 

http://www.wiod.org/publications/papers/wiod14.pdf

 

 

NETWORKS OF VALUE ADDED TRADE

Working Papers 2015

João Amador | Sónia Cabral

 

 

Trade patterns and global value chains in East Asia: From trade in goods to trade in tasks

WTO Report

 

 

Counting borders in global value chains

Kirill Muradov:

May 2016

 

 

Using Average Propagation Lengths to Identify Production Chains in the Andalusian Economy

ERIK DIETZENBACHER*, ISIDORO ROMERO LUNA** AND NIELS S. BOSMA

2005

https://idus.us.es/xmlui/bitstream/handle/11441/17372/file_1.pdf?sequence=1

 

 

Trade in Value Added: An East Asian Perspective

Satoshi Inomata

No. 451 December 2013

 

https://www.adb.org/sites/default/files/publication/156306/adbi-wp451.pdf

 

 

TRADE INTERCONNECTEDNESS: THE WORLD WITH GLOBAL VALUE CHAINS

2013

 

 

The globalisation of inflation: the growing importance of global value chains

by Raphael Auer, Claudio Borio and Andrew Filardo

 

 

 

 

GLOBAL MULTIREGIONAL INPUT–OUTPUT FRAMEWORKS: AN INTRODUCTION AND OUTLOOK

Arnold Tukker a b & Erik Dietzenbacher

2013

http://unstats.un.org/unsd/trade/events/2014/mexico/documents/session6/UNSD%20-%20Tukker%20-%20Overview%20on%20International%20IO%20Tables%20-%202013.pdf

 

Jay W. Forrester and System Dynamics

Jay W. Forrester and System Dynamics

 

 

Jay Forrester passed away at the age of 98 on November 16, 2016

The link below will take you to JWF memorial webpage.

Jay W Forrester Memorial Web Page at the System Dynamics Society

I admire Jay W Forrester greatly.  I was introduced to Operational Research and System dynamics back in early 1980s after I graduated from IIT Roorkee Engineering undergraduate degree in India.  I had bought a book on Operations Research at a road side book seller in Dariya Ganj, Old Delhi, India.

I met Jay on three occasions.  I attended Business Dynamics Executive Education program at MIT Sloan School of Management back in 2002.  Jay was one of the Instructor.  Then I again met Jay at 2003 SDS International Conference at New York City.  Last time I met Jay was in Washington DC at the Club of Rome Symposium celebrating 40 yrs anniversary of publication of The Limits to Growth book.

Jay will be missed greatly.

– Mayank Chaturvedi

 

Jay Forrester’s vision of future of Economics and System Dynamics.

Traditional mainstream academic economics, by trying to be a science, has failed to answer major questions about real- life economic behavior. Economics should become a systems profession, such as management, engineering, and medicine. By closely observing the structures and policies in business and government, simulation models can be constructed to answer questions about business cycles, causes of major depressions, inflation, monetary policy, and the validity of descriptive economic theories. A system dynamics model, as a general theory of economic behavior, now endogenously generates business cycles, Kuznets cycles, the economic long wave, and growth. A model is a theory of the behavior that it generates. The economic model provides the theory, thus far missing from economics, for the Great Depression of the 1930s and how such episodes can recur 50–70 years apart. Simpler system dynamics models can become the vehicle for a relevant and exciting pre-college economics education.

 

From PHD thesis of I David Wheat

Within the interdisciplinary system dynamics (SD) community, the motivation to improve understanding of economic systems came nearly fifty years ago with Jay W. Forrester’s seminal call for a new kind of economics education, a call that he has renewed in the K-12 education setting in recent years. John Sterman’s encyclopedic Business Dynamics is a symbol not only of the breadth of his own economic policy and management research and teaching but also the range of work done by others in this field.

Teaching the economics of resource management with system dynamics tools has been the devotion of Andrew Ford and Erling Moxnes. James Lyneis took his management consultant’s expertise into the university classroom and developed an SD-based microeconomics course. Economists Michael Radzicki and Kaoru Yamaguchi have developed complete graduate-level economics courses on a system dynamics foundation. An informal survey produced this list of others who have used SD as a teaching tool in economics courses: Glen Atkinson, Scott Fullwiler, John Harvey, Steve Keen, Ali Mashayekhi, Jairo Parada, Oleg Pavlov, Khalid Saeed, Jim Sturgeon, Linwood Tauheed, Pavlina Tcherneva, Scott Trees, Eric Tymoigne, Lars Weber, and Agnieszka Ziomek, and that is surely just a fraction.

 

Key Sources of Research:

 

Economic theory for the new millennium

Jay W. Forrester

2003

 

System Dynamics Review vol 29, No 1 (January-March 2013): 26–41

 

 

 

Three slices of Jay Forrester’s general theory of economic behavior: An interpretation

 

Khalid Saeed

Worcester Polytechnic Institute Worcester, MA, USA

February 13, 2013

 

http://www.systemdynamics.org/conferences/2013/proceed/papers/P1018.pdf

 

 

System Dynamics: A disruptive science

A conversation with Jay W. Forrester, founder of the field

Khalid Saeed Worcester Polytechnic Institute Sept. 2013

 

http://static.clexchange.org/ftp/ISDC2013_forresterchat.pdf

http://digitalcommons.wpi.edu/cgi/viewcontent.cgi?article=1000&context=ssps-papers&sei-redir=1&referer=https%3A%2F%2Fscholar.google.com%2Fscholar%3Fstart%3D40%26q%3Djay%2Bw%2Bforrester%2Bsystem%2Bdynamics%26hl%3Den%26as_sdt%3D0%2C47%26as_ylo%3D2013#search=%22jay%20w%20forrester%20system%20dynamics%22

 

 

Unintended Consequences

Jay Forrester

http://simgua.com/documents/SB_Forrester.pdf

 

 

A dynamic synthesis of basic macroeconomic theory : implications for stabilization policy analysis

Nathan Forrester

PHD THESIS

https://dspace.mit.edu/handle/1721.1/15739

 

 

SYSTEM DYNAMICS: PORTRAYING BOUNDED RATIONALITY

 

John D.W. Morecroft

1982

 

https://dspace.mit.edu/bitstream/handle/1721.1/49181/systemdynamicspo00more.pdf?sequence=1

 

 

THE SYSTEM DYNAMICS NATIONAL MODEL:  MACRO BEHAVIOR FROM MICRO STRUCTURE

JAY W FORRESTER

 

http://systemsmodelbook.org/uploadedfile/1470_0a924c5b-b909-42fa-be9b-932588278f36_forre004.pdf

 

 

1976 Economic Forecast Report including studies by Jay W Forrester and Nathial Mass

US congress Joint Economic Review of US Economy

http://njlaw.rutgers.edu/collections/gdoc/hearings/7/76603310f/76603310f_1.pdf

 

 

Backround Material for a Meeting on Long Waves, Depression and Innovation –

IMPLICATIONS FOR NATIONAL AND REGIONAL ECONOMIC POLICY

Jay W. Forrester, Alan K.Oraham, Peter M.Senge, John D Sterman

 

Siena/Florence, October 26-29, 1983

Bianchi, G., Bruckmann, G. and Vasko, T.

 

http://pure.iiasa.ac.at/2338/1/CP-83-044.pdf

 

 

 

Industrial Dynamics-After the First Decade

Author(s): Jay W. Forrester

Management Science, Vol. 14, No. 7, Theory Series (Mar., 1968), pp. 398-415

 

http://www.sfu.ca/~vdabbagh/Forrester68.pdf

 

 

Systems Analysis as a Tool for Urban Planning

JAY W. FORRESTER, FELLOW, IEEE

1970

 

http://web.boun.edu.tr/ali.saysel/ESc59M/forrester.pdf

 

 

IS ECONOMETRIC MODELING OBSOLETE?

AUTHOR: Mr. Oakley E. Van Slyke

 

https://www.casact.org/pubs/dpp/dpp80/80dpp650.pdf

 

 

Money and Macroeconomic Dynamics : Accounting System Dynamics Approach

 

Kaoru Yamaguchi

Ph.D. Japan Futures Research Center

Awaji Island, Japan

November 11, 2016

 

http://muratopia.org/Yamaguchi/macrodynamics/Macro%20Dynamics.pdf

 

 

The Feedback Method : A System Dynamics Approach to Teaching Macroeconomics

I. David Wheat, Jr.

Dissertation for the degree philosophiae doctor (PhD)

System Dynamics Group, Social Science Faculty University of Bergen

 

http://bora.uib.no/bitstream/handle/1956/2239/Introduction_David_Wheat.pdf?sequence=46

 

 

Disequilibrium Systems Representation of Growth Models—Harrod-Domar, Solow, Leontief, Minsky, and Why the U.S. Fed Opened the Discount Window to Money-Market Funds

Frederick Betz

2015

 

http://file.scirp.org/pdf/ME_2015120814432915.pdf

 

 

Cyclical dynamics of airline industry earnings

Kawika Piersona and John D. Sterman

System Dynamics Review vol 29, No 3 (July-September 2013): 129–156

https://www.researchgate.net/profile/John_Sterman2/publication/259542762_Cyclical_dynamics_of_airline_industry_earnings/links/5550ead108ae739bdb9202a9.pdf

 

 

 

Modeling Financial Instability

Steve Keen

http://www.debtdeflation.com/blogs/wp-content/uploads/2014/02/Keen2014ModelingFinancialInstability.pdf

 

 

Harvey, J.T.,

2013.

Keynes’s trade cycle: a system dynamics model.

Journal of Post Keynesian Economics, 36(1), pp.105-130.

 

 

ECONOMICS, TECHNOLOGY, AND THE ENVIRONMENT

Jay Forrester

 

https://dspace.mit.edu/bitstream/handle/1721.1/2197/SWP-1983-18213738.pdf?sequence=1

 

 

Forrester, J. W. (1968). Market Growth as Influenced by Capital Investment. Industrial Management Review (now Sloan Management Review), 9(2), 83-105.

 

 

Forrester, J. W 1971). Counterintuitive Behavior of Social Systems. Collected Papers of J.W. Forrester. Cambridge, MA: Wright-Allen Press.

 

 

Forrester, J. W (1976). Business Structure, Economic Cycles, and National Policy. Futures, June.

 

 

Forrester, J. W (1979). An Alternative Approach to Economic Policy: Macrobehavior from Microstructure. In Kamrany & Day (Eds.), Economic Issues of the Eighties. Baltimore: The Johns Hopkins University Press.

 

 

Forrester, J. W., Mass, N. J., & Ryan, C. (1980). The System Dynamics National Model: Understanding Socio-economic Behavior and Policy Alternatives. Technology Forecasting and Social Change, 9, 51-68.

 

 

Forrester, N. B. (1982). A Dynamic Synthesis of Basic Macroeconomic Theory: Implications for Stabilization Policy Analysis. Unpublished PhD dissertation, Massachusetts Institute of Technology, Cambridge, MA.

 

 

Low, G. (1980). The Multiplier-Accelerator Model of Business Cycles Interpreted from a System Dynamics Perspective. In J. Randers (Ed.), Elements of the System Dynamics Method. Cambridge, MA: MIT Press.

 

 

Mass, N. J. (1975). Economic Cycles: An Analysis of Underlying Causes. Cambridge, MA: Wright-Allen Press, Inc.

 

 

Mass, N. J.(1980). Stock and Flow Variables and the Dynamics of Supply and Demand. In J. Randers (Ed.), Elements of the System Dynamics Method. (pp. 95-112). Cambridge, MA: MIT Press.

 

 

Meadows, D. L., Behrens III, W. W., Meadows, D. H., Naill, R. F., & Zahn, E. (1974). Dynamics of Growth in a Finite World. Cambridge, MA: Wright-Allen Press.

 

 

Morecroft, J. D. W. & Sterman, J. D. (Eds.). (1994). Modeling for Learning Organizations. Portland, OR: Productivity Press.

 

 

Radzicki, M. (1993). A System Dynamics Approach to Macroeconomics (Guest lecture at the Department of Information Science, University of Bergen.).

 

 

Richardson, G. P. (1991). Feedback Thought in Social Science and Systems Theory. Waltham, MA: Pegasus Communications, Inc.

 

 

Senge, P. M. (1990). The Fifth Discipline: The Art and Practice of the Learning Organization. New York: Doubleday.

 

 

Sterman, J. D. (1985). A Behavioral Model of the Economic Long Wave. Journal of Economic Behavior and Organization, 6, 17-53.

 

 

Sterman, J. D. (2000). Business Dynamics: Systems Thinking and Modeling for a Complex World. Boston, MA: McGraw-Hill Companies.

Increasing Returns, Path Dependence, Circular and Cumulative Causation in Economics

Increasing Returns, Path dependence, and Circular and Cumulative Causation in Economics

 

Increasing Returns is another term for Positive Feedback loop.

Path Dependence is also known as Lock-In

Circular and Cumulative Causation is another name for Positive Feedback Loop.

 

Vicious Circle – Bad gets to worse, Failure leads to more failure

Virtuous Circle – Success breeds Success, Wealth gets more wealth

 

See this Document – Book Foreward by Geoffrey Hodgson

Geoffrey Hodgson foreward in a book The Foundations of Non Equilibrium Economics.

 

Key Economists :

  • Allyn Young
  • Gunnar Myrdal
  • Karl William Kapp
  • Kaldor
  • Veblen
  • Paul Romer
  • Knut Wicksell
  • W. Brian Arthur
  • Paul David
  • Steven Durlauf
  • Nicholas Georgescu-Roegen

 

Various Increasing Returns, Circular and Cumulative Causations Theories

  • CCC Theory of Allyn Young
  • CCC Theory of N Kaldor
  • CCC Theory of Gunnar Myrdal
  • CCC Theory of T Veblen
  • CCC Theory of Paul Romer
  • CCC Theory of Paul Krugman
  • CCC Theory of W. Brain Arthur

 

Circular Causation in Kaldor Theory

kaldor

 

 

Key Sources of Research:

 

A A Young

Increasing Returns and Technical Progress

The Economic Journal

1928

https://periferiaactiva.files.wordpress.com/2015/08/young28.pdf

 

 

Kaldor, N. (1966)

Causes of the Slow Rate of Economic Growth of the United Kingdom,

Cambridge: Cambridge University Press.

 

 

Kaldor, N. (1970)

“The case for regional policies,”

Scottish Journal of Political Economy, 17, pp. 337-348.

 

 

Kaldor, N. (1985)

Economics Without Equilibrium,

Cardiff, University College Cardiff Press.

 

 

Kaldor, N. (1996)

Causes of Growth and Stagnation in the World Economy,

Cambridge, Cambridge University Press

 

 

 

Kaldor, N., 1981.

The role of increasing returns, technical progress and cumulative causation in the theory of international trade and economic growth.

Economie appliquée, 34(4), pp.593-617.

 

 

Nicholas Kaldor on Endogenous Money and Increasing Returns

Guglielmo Forges Davanzati

2013

 

http://www.siecon.org/online/wp-content/uploads/2015/10/Forges.pdf

 

 

Fujita, Nanako.

“Myrdal’s theory of cumulative causation.”

Evolutionary and Institutional Economics Review 3, no. 2 (2007): 275-284.

 

 

Gunnar Myrdal’s Theory of Cumulative Causation Revisited

Nanako Fujita

 

http://ir.nul.nagoya-u.ac.jp/jspui/bitstream/2237/11958/3/paper147.pdf

 

 

Circular Cumulative Causation (CCC) à la Myrdal and Kapp — Political Institutionalism for Minimizing Social Costs

Sebastian Berger

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.587.5765&rep=rep1&type=pdf

 

 

European Contributions to Evolutionary Institutional Economics: The Cases of ‘Cumulative Circular Causation’ (CCC) and ‘Open Systems Approach’ (OSA).
Some Methodological and Policy Implications

Sebastian Berger and Wolfram Elsner

 

http://www.lim.uni-bremen.de/files/elsner/publikationen/European_Institutionalism_Berger_Elsner_JEI_No_2_07_5_07.pdf

 

 

Dutt, Amitava Krishna.

“Path dependence, equilibrium and economic growth.”

In Path Dependency and Macroeconomics, pp. 119-161. Palgrave Macmillan UK, 2009.

 

 

Setterfield, Mark.

“Notes and comments. Cumulative causation, interrelatedness and the theory of economic growth: a reply to Argyrous and Toner.”

Cambridge Journal of Economics 25, no. 1 (2001): 107-112.

 

 

Setterfield, Mark.

“‘History versus equilibrium’and the theory of economic growth.”

Cambridge Journal of Economics 21, no. 3 (1997): 365-378.

 

 

Setterfield, M. (2009)

“Path dependency, hysteresis and macrodynamics,”

in P. Arestis and M. Sawyer (eds) Path Dependency and Macroeconomics (International Papers in Political Economy 2009), London, Palgrave Macmillan, 37-79

 

 

Setterfield, M.

(1997a)

Rapid Growth and Relative Decline: Modelling Macroeconomic Dynamics with Hysteresis,

London: Macmillan.

 

 

 

Kaldor’s 1970 Regional Growth Model Revisited

A.P.Thirlwall

ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1311.pdf

 

 

Argyrous, George.

“Setterfield on cumulative causation and interrelatedness: a comment.”

Cambridge Journal of Economics 25, no. 1 (2001): 103-106.

 

 

Endogenous Growth: A Kaldorian Approach

Mark Setterfield

2010

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.163.8257&rep=rep1&type=pdf

 

 

Increasing Returns and Long Run Growth

Paul Romer

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.589.3348&rep=rep1&type=pdf

 

 

O’Hara, P.A., 2008.

Principle of circular and cumulative causation: Fusing Myrdalian and Kaldorian growth and development dynamics.

Journal of Economic Issues, 42(2), pp.375-387.

 

 

Path Dependency and Macroeconomics

edited by P. Arestis, Malcolm Sawyer

 

 

Main Currents in Cumulative Causation: The Dynamics of Growth and Development
Phillip Toner
Palgrave Macmillan UK, May 12, 1999 – Business & Economics – 228 pages

 

 

 

Why is Economics not an Evolutionary Science?

Thorstein Veblen

(with an introduction by Jean Boulton)

 

https://emergentpublications.com/ECO/ECO_other/Issue_12_2_6_CP.pdf?AspxAutoDetectCookieSupport=1

 

 

 

On the evolution of Thorstein Veblen’s evolutionary economics

Geoffrey M. Hodgson

 

http://www.geoffrey-hodgson.info/user/image/evveblenec.pdf

 

 

 

“Different epistemologies beneath similar methods: The case of causal loop thinkers.”

Maruyama, Magoroh.

Human Systems Management 9, no. 3 (1990): 195-198.

http://content.iospress.com/download/human-systems-management/hsm9-3-07?id=human-systems-management%2Fhsm9-3-07

 

 

The feedback concept in American social science, with implications for system dynamics.

Richardson, G.

(1983, July).

http://www.systemdynamics.org/conferences/1983/proceed/plenary/richa001.pdf

 

 

Path Dependence in Aggregate Output

STEVEN N. DURLAUF

 

https://pdfs.semanticscholar.org/30c8/9870fa9010ed42d897dae442a3316d5cf805.pdf

 

 

Nonergodic Economic Growth

STEVEN N. DURLAUF

 

http://ssc.wisc.edu/~sdurlauf//includes/pdf/Nonergodic%20Economic%20Growth.pdf

 

 

Evolution and Path Dependence in Economic Ideas: Past and Present

edited by Pierre Garrouste, Stavros Ioannides,

European Association for Evolutionary Political Economy

 

 

Path dependence, its critics and the quest for ‘historical economics

Paul A. David

http://www-siepr.stanford.edu/workp/swp00011.pdf

 

 

Positive Feedbacks and Research Productivity in Science: Reopening Another Black Box

Paul A. David

 

http://www.aidaf-ey.unibocconi.it/wps/allegatiCTP/David(1994)_PositiveFeedbacks_Marstrand3_re-release%5B1%5D.20070702.120531.pdf

 

 

Increasing Returns and Path Dependence in the Economy

By W. Brian Arthur

University of Michigan Press, 1994 – Business & Economics – 201 pages

 

 

Positive Feedbacks in the Economy

W. Brian Arthur

26 November 1989

 

https://files.itslearning.com/data/ntnu/open/co35568/1558085.pdf?

 

 

Complexity economics: a different framework for economic thought

W. Brian Arthur

March 12, 2013

 

http://tuvalu.santafe.edu/~wbarthur/Papers/Comp.Econ.SFI.pdf

 

 

A webpage for resources on Path dependence in Economics

http://www2.econ.iastate.edu/tesfatsi/apathdep.htm

 

 

The Foundations of Non-Equilibrium Economics: The Principle of Circular and Cumulative Causation

edited by Sebastian Berger

 

 

The New Approach to Regional Economics Dynamics: Path Dependence and Spatial Self-Reinforcing Mechanisms

Domenico Marino and Raffaele Trapasso

 

http://ebooks.narotama.ac.id/files/Growth%20and%20Innovation%20of%20Competitive%20Regions;%20The%20Role%20of%20Internal%20and%20External%20Connections/Chapter%2015%20The%20New%20Approach%20to%20Regional%20Economics%20Dynamics;%20Path%20Dependence%20and%20Spatial%20Self-Reinforcing%20Mechanisms.pdf

 

Positive Feedback Mechanisms in. Economic Development: A Review of Recent Contributions

A RODRFGUEZ-CLARE

http://eml.berkeley.edu/~arodeml/Papers/Positive%20Feedback%20Mechanisms%20in%20Economic%20Development.pdf

 

 

Increasing Returns and Economic Geography

Paul Krugman

JPE,1991

March 4, 2010

 

http://dave-donaldson.com/wp-content/uploads/2015/12/krugman91.pdf

Economic Growth Theories – Orthodox and Heterodox

Economic Growth Theories – Orthodox and Heterodox

My humble  attempt to make sense of Economic Growth Theories.

 

Economic Growth (Trend) and Business Cycles ( Fluctuations)

Growth- Cycles

Economists distinguish between short-run economic changes in production and long-run economic growth. Short-run variation in economic growth is termed the business cycle. Generally, economists attribute the ups and downs in the business cycle to fluctuations in aggregate demand. In contrast, economic growth is concerned with the long-run trend in production due to structural causes such as technological growth and factor accumulation.

 

economic-growth-5

Types of Models

  • Economic Cycles Vs Business Cycles Vs Financial Cycles
  • Economic Growth , Business Growth, Financial Growth
  • Equilibrium Vs. Non Equilibrium
  • Deterministic vs Stochastic
  • Linear Vs Non Linear Models

 

From Introduction to Post Keynesian Economics / Lavoie

economic-schools

 

Classical and Neo Classical Growth Models

(Equilibrium Models) – Supply Side / No aggregate demand -Say Law

  • Wassily Leontief – Input-Output Linear Models
  • John Von Neumann
  • Cass – T Koopmans
  • Solow Swan Growth Model
  • Ramsey Model
  • Endogenous Growth Theory
    • Robelo – AK Model
    • Uzawa – Lucas Model
    • Romer Model
    • Jones Model
    • Grossman Helpman
    • Aghion and Howitt
    • Barro
  • DSGE Models
  • Real Business Cycles

 

Classical/Neo Classical /Monetarists/Neo Keynesian  Economists

  • Alfred Marshall
  • Leon Walrus
  • Irving Fisher
  • Paul Samuelson – Multiplier Accelerator
  • John Maynard Keynes
  • Alvin Hansen – IS-LM Framework
  • AW Phillips
  • Robert M Solow – Neo Classical Growth Model
  • Trevor W Swan
  • Paul Romer – Endogenous Growth Theory
  • Robert Lucas, Jr.
  • Milton Friedman
  • James Tobin
  • John G Gurley
  • Edward S Shaw
  • Knut Wicksell 
  • Franco Modigliani
  • James Meade
  • Luigi Pasinetti
  • Piero Sraffa

 

Keynesian Growth Models

Role of Aggregate Demand

  • John M Keynes Model
  • Harrod Domar Model
  • Hicks – Hansen IS-LM Model
  • AD-AS
  • Tobin’s Model
  • New Keynesian Models
  • Non Walrasion Equilibrium models
  • Phillips Curve

 

economic-growth-2economic-growth-3economic-growth-theory

 

economic-growth-4

 

Heterodox Schools

  • Institutionalist
  • Cambridge Keynesians
  • American Post Keynesians
  • Evolutionary Economics
  • Complexity School/Santa Fe
  • System Dynamics
  • Behavioral Economics
  • Austrian Economics
  • Ecological Economics

 

Cambridge/Oxford Keynesians

(Dynamic/Business Cycles/Non Linear Models)

  • N. Kaldor
  • J Robinson
  • M. Kalecki
  • John Hicks
  • Roy Harrod

 

Post Keynesians

  • Evsey Domar
  • Hyman Minsky
  • Steve Keen
  • Marc Lavoie
  • Richard Werner
  • Perry Mehrling
  • Morris Copeland
  • Wynn Godley
  • Dirk Bezemer
  • Paul Davidson
  • Mark Setterfield
  • Steve Pressman
  • Basil Moore
  • Tom Palley
  • LP Rochon
  • L Randall Ray
  • Eckhard Hein
  • G C Harcourt
  • G Fontana
  • J King
  • AK Dutt
  • Stephanie Kelton
  • Scott Fullwiler
  • Lance Taylor
  • Geoffrey Hodgson
  • Alfred Eichner

     

Evolutionary School / Institutionalist School

(Increasing Returns/Circular and Cumulative Causation)

  • Karl Marx
  • R M Goodwin
  • J Schumpeter
  • Ken Boulding
  • T Veblen
  • Gunnar Myrdal

 

Complexity/Santa Fe

  • Scott Page
  • W Brian Arthur
  • Doyne Farmer

 

System Dynamics

  • John Sterman
  • Jay Forrester
  • Khalid Saeed
  • M Radzicki
  • K Yamaguchi
  • N Forrester
  • Tom Fiddaman
  • David Wheat
  • Peter Senge

 

Austrian Economics

  • F Hayak
  • Ludwig Von Mises
  • Murray Rothbard

 

 

Heterodox Growth Models

  • Kaldor
    • Dixen and Thirlwall
  • Kalecki
    • AK DUTT
    • Marglin
    • Rawthorn
  • Harris
  • Sweezy

 

Heterodox / Post Keynesian School – Ideas

  • Debt Deflation of Irving Fisher
  • Financial Stability Hypothesis of Hyman Minsky
  • Credit/Debt Cycles of Steve Keen
  • Stock Flow Consistent (Accounting) Models of Marc Lavoie and Wynn Godley
  • Joseph Schumpeter – Innovation/Creative Destruction
  • Richard Werner – Disaggregated Credit – Financial vs Real 
  • Perry Mehrling / Zoltan Pozsar – Money View
  • Morris Copeland – Flow of Funds
  • Austrian School – Hayak / Von Mises / Rothberg
  • Dirk Bezemer – Money as Credit / Accounting Models
  • Richard Koo – Balance sheet Recession
  • Quadruple Accounting / Interlocking Balance sheets
  • Asset Liability Matrix Analysis – K Tsujimura
  • Financial Social Accounting Matrix (F-SAM)
  • Monetary Circuit
  • Banks as Payment System
  • Banks as Market Makers (Dealers)
  • Liquidity – Solvency Nexus
  • Central Banks as Lender and Dealer of Last Resort
  • Focus on Disaggregated / Operational/Horizontal View of Banks and Central Banks and Financial Markets.

 

 

From Growth theory after Keynes, part I: the unfortunate suppression of the Harrod-Domar model

After Harrod and Domar independently developed a dynamic Keynesian circular flow model to illustrate the instability of a growing economy, mainstream economists quickly reduced their model to a supply side-only growth model, which they subsequently rejected as too simplistic and replaced with Solow’s neoclassical growth model. The rejection process of first diminishing the model and then replaced it with a neoclassical alternative was similar to how the full Keynesian macroeconomic paradigm was diminished into IS-LM analysis and then replaced by a simplistic neoclassical framework that largely ignored the demand side of the economy. Furthermore, subsequent work by mainstream economists has resulted in a logically inconsistent framework for analyzing economic growth; the popular endogenous growth models, which use Schumpeter’s concept of profit-driven creative destruction to explain the technological change that Solow left as exogenous, are not logically compatible with the Solow model.

 

From Institutional Economics, Post Keynesian Economics, and System Dynamics: Three Strands of a Heterodox Economics Braid

A. Lineage of Institutional Economics

In Figure 1, the intellectual lineage leading to the present-day school of institutional economics begins with Quesnay and Smith and follows two principal routes. The first runs through Ricardo and Marx and then through the “American institutionalists” Veblen, Commons, and Mitchell. The last link in this route passes through Clarence Ayres, Galbraith, and Myrdal. The second or “thermodynamics/general systems” route runs through Ricardo and Marx, passes through Schumpeter (1976), and links with Boulding (1970, 1978, 1991), Georgescu-Roegen (1971), and Robert Ayres (1978). This route has also been influenced by the cybernetics of Norbert Wiener (1948). Figure 1 also shows, via two-way arrows, four schools of thought that directly complement institutional economics: Post Keynesian economics, behavioral economics, ecological economics, and evolutionary economics. An argument can be made, however, that a two-way arrow between agent-based computational economics and institutional economics should be included as well.

 

B. Lineage of Post Keynesian Economics

Figure 1 presents one direct route and two main “directions of flow,” each incorporating several routes, that lead to the modern Post Keynesian school of economics. The direct route simply runs from Quesnay and Marx to Leontieff and then to the Post Keynesian school because input-output analysis is frequently used by Post Keynesian economists. On the other hand, the first main direction of flow runs through the Cambridge Post Keynesians (e.g., Robinson, Kaldor, Passinetti) and the founders of American Post Keynesian school (e.g., Weintraub, Davidson, Eichner, Minsky). This direction is traversed by way of Quesnay, Marx, and Kalecki or via Smith, Malthus, Keynes, Harrod, and Domar. The second main direction of flow runs through those economists who pioneered the “engineering systems” approach to economics such as Tustin (1953), Phillips (1950, 1954,1957), Allen (1955), Goodwin,10 and Leijonhufvud (1968).11 This direction is traversed via: (1) Keynes directly, (2) early Keynesian business cycle theorists such as Harrod, Hicks and Samuelson, (3) Hayek, because Post Keynesians such as Kaldor had their thinking influenced to some degree by Austrian economics, and (4) Schumpeter, because Goodwin both taught, and was taught by, Schumpeter [see Goodwin (1993, p. 305)].

 

C. Lineage of Ecological Economics

 

In Figure 1, the intellectual lineage leading to the present-day school of ecological economics begins with Quesnay and Smith and follows three principal routes. The first runs through Malthus and then directly to Costanza and Daly (1992). The second runs through Quesnay and then through Leontieff. The third runs through Ricardo and Marx and then passes through Schumpeter. In terms of complementary schools of thought, both evolutionary economics and institutional economics are linked to ecological economics with a two- way arrow. An argument can be made, however, that a two-way arrow between ecological economics and agent- based computational economics should be added because the emergence and evolution of social structures such as property rights and environmental valuations and norms, that are crucial to avoiding “tragedy of the commons” and other non-sustainable dynamics, can be identified and studied.

 

D.  Agent Based Computational Economics/Complexity/Santa Fe Institute

In Figure 1, there are several routes that lead to the present -day school of agent -based computational economics. The main route runs from John von Neumann and his work on self-replicating machines during the nineteen forties directly to the agent-based school; via John Nash and then Thomas Schelling [due to Schelling’s (1978) path-breaking agent-based work on the emergence of racially segregated neighborhoods]; or via some of von Neumann’s present-day followers such as John Holland [Holland and Miller (1991)], Stuart Koffman, John Miller (1998), W. Brian Arthur (1993, 1994), and Christopher Langton (1989).20 Leigh Tesfatsion (1997, 2000, 2001a, 2001b, 2002), Robert Axtell, Joshua Epstein, Robert Axelrod and David Lane (1993) would also be legitimately included in this group. Most of these modern day researchers have ties to the Santa Fe Institute, an organization specializing in the study of complex systems.21  One of the leaders of the Sante Fe Institute, W. Brian Arthur (1988, 1990), has written extensively about being influenced by economists who emphasized the importance of positive feedback loops, increasing returns, and path dependency, in explaining evolutionary economic behavior. As a result, in Figure 1 links to Arthur run from Nicholas Kaldor (1981), Gunnar Myrdal, Paul David (1985), and Ilya Progogine (1993).

 

E.  Lineage of Behavioral Economics

In Figure 1, the intellectual lineage leading to the present-day school of behavioral economics begins with Quesnay, Smith, and Ricardo and follows three principal routes. The first runs through Marx, to Dobb, Baran, Sweezy and Mandel, and then through some more modern-day radical political economists such as Sherman, Weiskopf, Bowles [Bowles, Ginits and Osborne (2001)], Foley (1997), and Marglin (1984). The second runs through Marx and then through Schumpeter, passes through Richard Day (1975) [see also Day and Eliasson (1986) and Day and Chen (1993)], and then through George Akerlof, Richard Thayler, and Robert Frank. The third runs through Veblen, Commons and Mitchell and then through Duesenberry and Simon (1957, 1979, 1984). It continues directly through Ackerlof, Thayler and Frank and also takes a side branch through Cyert and March (1963). This last route emphasizes the contributions to behavioral economics of the “Carnegie School” and the work of Herbert Simon. Indeed, Simon is considered to be the father of the field and frequently wrote that his thinking on bounded rationality was influenced by the work of John Commons [e.g., Simon (1979, p. 499; 1991, p. 87)].

 

F.  Lineage of Austrian Economics

In Figure 1, the intellectual lineage leading to the present-day school of Austrian economics begins with Quesnay, Smith and Ricardo and works its way to Carl Menger via Say and Mill. This route continues via Menger’s most prominent disciples Böhm-Bawerk and Wieser to Mises and then to his student Hayek.27 From Hayek, the route extends to the more modern-day Austrians such as Israel Kirzner (1987, 1997) and Murray Rothbard and finally to the school itself. A two-way arrow is shown between the Austrians and agent-based computational economics because many of Mises’ and Hayek’s beliefs are in harmony with central tenets of agent-based modeling. Indeed, Vriend (2002) lays out a strong case that Hayek was essentially an agent-based computational economist.

 

G.  Lineage of Evolutionary Economics

In Figure 1, the intellectual lineage leading to the present-day school of evolutionary economics begins with Quesnay and Smith and follows several routes. The first runs through both Marx and Schumpeter and then through economic historians such as David (1985) and Rostow (1990). The second runs through Schumpeter and the neo-Schumpeterians such as Nelson (1995), Winter (1964), Witt (1992, 1993), Iawi (1984a, 1984b), Eliasson, Silverberg (1988), and Dosi [and Nelson (1994)]. The third runs through Schumpeter and then the far-from-equilibrium thermodynamicists [Prigogine (1993), Nicolis, Allen (1988)] and the punctuated equilibrium theorists [Tushman and Romanelli (1985)], and finally through England (1994), who notes that he was inspired by Boulding (1970, 1978, 1991), Georgescu-Roegen (1971), and Prigogine (1993). The fourth runs through Schumpeter and the classical thermodynamicists [Georgescu-Roegen (1971), Ayres (1978)], and then through England (1994), or directly to the school. Two-way arrows indicating complementary schools of thought are drawn between all of the other evolutionary schools except the Austrians.

 

 

Key sources of Research:

 

A Contribution to Theory of Economic Growth

Robert Solow

1956

https://www.econ.nyu.edu/user/debraj/Courses/Readings/Solow.pdf

 

 

On the Concept of Optimal Economic Growth

T Coopmans

 

http://cowles.yale.edu/sites/default/files/files/pub/d01/d0163.pdf

 

Interactions between the Multiplier Analysis and the Principle of Acceleration

Paul A. Samuelson

The Review of Economics and Statistics
Vol. 21, No. 2 (May, 1939), pp. 75-78

 

 

ON THE MECHANICS OF ECONOMIC DEVELOPMENT

Robert E. LUCAS, Jr.

 

http://www.parisschoolofeconomics.eu/docs/darcillon-thibault/lucasmechanicseconomicgrowth.pdf

 

 

Increasing Returns and Long-Run Growth

Paul M. Romer

 

http://ihome.ust.hk/~dxie/OnlineMacro/romerjpe1986.pdf

 

 

‘Growth theory after Keynes, part I: the unfortunate suppression of the Harrod-Domar model’

Van den Berg, Hendrik

(2013)

The Journal of Philosophical Economics, VII:1

 

http://www.jpe.ro/pdf.php?id=4995

 

 

‘Growth theory after Keynes, part II: 75 years of obstruction by the mainstream economics culture’

Van den Berg, Hendrik

(2014)

The Journal of Philosophical Economics, VII:2

 

http://jpe.ro/pdf.php?id=6300

 

 

The Neoclassical Growth Model and Twentieth-Century Economics

Mauro Boianovsky and Kevin D. Hoover

http://public.econ.duke.edu/~kdh9/Source%20Materials/Research/Boianovsky-HooverIntroductionGrowth.pdf

 

 

TREVOR SWAN AND THE NEOCLASSICAL GROWTH MODEL

Robert W. Dimand and Barbara J. Spencer (née Swan)

 

http://www.nber.org/papers/w13950.pdf

 

 

The History of Macroeconomics from Keynes’s General Theory to the Present

Michel De Vroey and Pierre Malgrange

June 2011

 

http://sites.uclouvain.be/econ/DP/IRES/2011028.pdf

 

 

Keynes and the Cambridge School

G. C. Harcourt and Prue Kerr

 

https://historiadelamacroeconomia.wikispaces.com/file/view/Chapter22.pdf

 

 

NEW GROWTH THEORY, EFFECTIVE DEMAND, AND POST-KEYNESIAN DYNAMICS

Amitava Krishna Dutt

September 2001

 

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.463.871&rep=rep1&type=pdf

 

 

A Brief Introduction to Post Keynesian Macroeconomics

J. E. King

2013

 

http://wug.akwien.at/WUG_Archiv/2013_39_4/2013_39_4_0485.pdf

 

 

CONTEMPORARY ECONOMIC GROWTH MODELS AND THEORIES: A LITERATURE REVIEW

Ilkhom SHARIPOV

 

http://www.ceswp.uaic.ro/articles/CESWP2015_VII3_SHA.pdf

 

 

The structure of growth models: A comparative survey

Antonio D’Agata

Giuseppe Freni

 

http://growthconf.ec.unipi.it/papers/DAgataFreni.pdf

 

 

Major Schools of Economic Theory

 

http://www.tamut.edu/Walter-Casey/DOCUMENTS/CV-and-papers/Economic%20Theory.pdf

 

 

Getting rid of Keynes? A survey of the history of macroeconomics from Keynes to Lucas and beyond

 

Michel De Vroey

2010

 

https://www.nbb.be/doc/oc/repec/reswpp/wp187en.pdf

 

 

Neoclassical Growth Theory and Heterodox Growth Theory: Opportunities For and Obstacles To Greater Engagement

Mark Setterfield

December 2009

 

http://internet2.trincoll.edu/repec/WorkingPapers2009/wp09-01.pdf

 

 

Endogenous Growth: A Kaldorian Approach

Mark Setterfield

2010

 

https://pdfs.semanticscholar.org/bea6/c7a330e8859a2fd6bf09043e864ac71bbe92.pdf

 

 

Financialization in Kaleckian economies with and without labor constraints

Soon Ryoo and Peter Skotty

18th March 2008

 

https://www.umass.edu/economics/publications/2008-05.pdf

 

 

Post-Keynesian macroeconomics since the mid-1990s – main developments

Eckhard Hein

Working Paper, No. 75/2016

Institute for International Political Economy Berlin

 

 

Aggregate Demand, Aggregate Supply and Economic Growth

AMITAVA KRISHNA DUTT

2006

 

http://piketty.pse.ens.fr/files/Dutt2006.pdf

 

 

A dynamic synthesis of basic macroeconomic theory: implications for stabilization policy analysis

Forrester, N. B.

(1982).

(Doctoral dissertation, M. I. T., Alfred P. Sloan School of Management).

 

 

The System Dynamics National Model

Jay Forrester

http://systemsmodelbook.org/uploadedfile/1470_0a924c5b-b909-42fa-be9b-932588278f36_forre004.pdf

 

 

Understanding Recent Developments in Growth Theory

Lars Weber

 

https://www.systemdynamics.org/conferences/2007/proceed/papers/WEBER326.pdf

 

 

Linking Economic Modeling and System Dynamics: A Basic Model for Monetary Policy and Macroprudential Regulation

 

Klaus Dieter John

 

https://www.systemdynamics.org/conferences/2012/proceed/papers/P1396.pdf

 

 

System Dynamics and Its Contribution to Economics and Economic Modeling

M Radzicki

https://www.researchgate.net/publication/227167378_System_Dynamics_and_Its_Contribution_to_Economics_and_Economic_Modeling

 

 

Evolutionary Economics and System Dynamics

M Radzicki

J Sterman

http://www.systemdynamics.org/conferences/1993/proceed/radzi338.pdf

 

 

A Post Keynesian Model of Macroeconomic Growth, Instability, and Income Distribution

M Radzicki and K Saeed

http://www.systemdynamics.org/conferences/1993/proceed/saeed435.pdf

 

 

Institutional Economics, Post Keynesian Economics, and System Dynamics: Three Strands of a Heterodox Economics Braid

M Radzicki

2008

https://www.researchgate.net/publication/237138677_Institutional_Economics_Post_Keynesian_Economics_and_System_Dynamics_Three_Strands_of_a_Heterodox_Economics_Braid

 

 

Was Alfred Eichner a System Dynamicist?

M Radzicki

2006

https://www.researchgate.net/publication/239920399_Was_Alfred_Eichner_a_System_Dynamicist

 

 

Mr. Hamilton, Mr. Forrester and a Foundation for Evolutionary Economics

Michael J. Radzicki

2004

 

http://www.systemdynamics.org/conferences/2003/proceed/PAPERS/923.pdf

 

 

Disequilibrium Systems Representation of Growth Models—Harrod-Domar, Solow, Leontief, Minsky, and Why the U.S. Fed Opened the Discount Window to Money-Market Funds

Frederick Betz

 

http://file.scirp.org/pdf/ME_2015120814432915.pdf

 

 

An Institutional Dynamics Model of the Euro zone crisis: Greece as an Illustrative Example

Domen Zavrl
Miroljub Kljajić

2010

 

http://www.systemdynamics.org/conferences/2010/proceed/papers/P1144.pdf

 

 

“Deterministic chaos in an experimental economic system.”

Sterman, John D.

Journal of Economic Behavior & Organization 12.1 (1989): 1-28.

https://dspace.mit.edu/bitstream/handle/1721.1/47164/deterministicchax00ster.pdf?sequence=1

 

 

NONLINEAR MODE-INTERACTION IN THE MACROECONOMY

Erik MOSEKILDE, Erik REIMER LARSEN, John D. STERMAN

and Jesper SKOVHUS THOMSEN

1992

 

https://www.researchgate.net/profile/John_Sterman2/publication/225978240_Nonlinear_Mode-Interaction_in_the_Macroeconomy/links/5733372708ae298602dce4ba.pdf

 

 

Devil’s staircase and chaos from macroeconomic mode interaction

Larsen, Erik Reimer, et al.

Article in Journal of Economic Dynamics and Control ·

February 1993

 

https://www.researchgate.net/profile/Erik_Mosekilde/publication/4830250_Devil’s_staircase_and_chaos_from_macroeconomic_mode_interaction/links/5789dd4908ae59aa6676bfe6.pdf

 

 

Mode‐locking and entrainment of endogenous economic cycles.

Haxholdt, C., Kampmann, C., Mosekilde, E., & Sterman, J. D.

System Dynamics Review, 11(3), 177-198.

(1995).

https://dspace.mit.edu/bitstream/handle/1721.1/48535/modelockingentra00haxh.pdf?sequence=1