TITLE

Deviations from uncovered interest rate parity: a Post Keynesian explanation

AUTHOR(S)
Harvey, John T.
PUB. DATE
September 2004
SOURCE
Journal of Post Keynesian Economics;Fall2004, Vol. 27 Issue 1, p19
SOURCE TYPE
Academic Journal
DOC. TYPE
Abstract
ABSTRACT
Finding satisfactory explanations of deviations from uncovered interest rate parity (UIRP) has proved to be a frustrating experience for Neoclassical economists. Studies have focused on the role of risk, but thus far no one has been able to put forward a source thereof that can account for the specific pattern of deviations from UIRP. This paper offers an alternative perspective that finally resolves the mystery. Drawing on the work of Marc Lavoie and John Smithin and extending it with some basic Post Keynesian propositions regarding endogenous money, uncertainty, and nonergodicity, it is shown that one can devise a comprehensive explanation of UIRP-an explanation that shows that much more than risk is responsible for deviations. In particular, it is argued that Keynes`s "confidence" is a vitally important and overlooked factor. This contention is supported by a regression analysis of the U.S.-German and U.S.- Japanese asset markets.
ACCESSION #
14636775

 

Related Articles

  • THE SPREAD OF KEYNESIAN ECONOMICS: A COMPARISON OF THE BELGIAN AND ITALIAN EXPERIENCES (1945-1970). MAES, IVO // Journal of the History of Economic Thought (Cambridge University;Dec2008, Vol. 30 Issue 4, p491 

    The article analyzes the spread of economic ideas based on a case study of the diffusion of Keynesian economics in two continental European countries, Belgium and Italy. It looks at the factors that determine the dissemination of economic ideas, distinguishing also between the academic world and...

  • Post Keynesyen Ekonominin Metodolojik Temelleri. ESEN, Ethem; YILDIRIM, Kemal // Optimum: Journal of Economics & Management Sciences / Ekonomi ve;Winter2020, Vol. 7 Issue 1, p147 

    Post Keynesian view, which has emerged as a new approach to the economy, evolves as an alternative approach to the economic policies of Orthodox economic thought. However, with its evolving methodological and comprehensive structure, it continues to develop as an original positive school of...

  • Homo economicus and the reconstruction of political economy: six theses on the role of values in economics. Tsakalotos, Euclid // Cambridge Journal of Economics;Nov2005, Vol. 29 Issue 6, p893 

    This paper argues for an explicit engagement of political economy with values, and presents a number of criticisms of the ethical limitations of both markets and neoclassical economics. Neoclassical theory is unlikely to be able to take on board this critique because of its commitment to Homo...

  • LEFT KEYNESIANISM AND CURRENT ANTIMARGINALISM. Osadchaia, I. // Problems of Economics;Sep77, Vol. 20 Issue 5, p3 

    Focuses on the economic theory of left keynesianism as an alternative to the prevailing neoclassical paradigm. Differentiations among the bourgeois political economy; Identification of left keynesianism as the theoretical platform of contemporary antimarginalism; Criticism on the neoclassical...

  • KEYNES AND THE MARSHALL-WALRAS DIVIDE. de Vroey, Michel // Journal of the History of Economic Thought;Jun99, Vol. 21 Issue 2, p117 

    Examines the relationship between the Marshallian and the Walrasian research programs on the interpretation of the Keynesian theory of economics. Characteristics of the Marshallian equilibrium concept; Observation of Keynes that wage earners cannot bargain on the real wage; Assessment of the...

  • Beneath "First Principles": Controversies Within the New Macroeconomics. DeMartino, George // Journal of Economic Issues (Association for Evolutionary Economi;Dec93, Vol. 27 Issue 4, p1127 

    Focuses on the debate on the economic theories of neoclassicism and Keynesianism. Investigation of the principles of Keynesianism; Examination of the ontological and epistomological positions taken in economic science; Discourse on the dynamic model of economic theory; Trajectory of the theory...

  • On the Need for New Economic Foundations: A Critique on Mainstream Macroeconomics. Hoffman, Robert // Cadmus;Oct2012, Vol. 1 Issue 5, Part 1, p74 

    The body of macroeconomic theory known as the neoclassical-Keynesian synthesis, hereafter mainstream macroeconomics, has dominated the practice of economics since the middle of the twentieth century and is largely unchallenged in institutions that teach economics. Not only does mainstream...

  • LA REVOLUCIÓN DE LOS NUEVOS CLÁSICOS: REDES, INFLUENCIA Y METODOLOGÍA. Salazar, Boris; Otero, Daniel // Revista de Economía Institucional;Primer Semestre 2015, Vol. 17 Issue 32, p39 

    The New Classical Revolution has been told as the story of a sudden and unstoppable assault on the Keynesian paradigm that attained immediate unanimity among macroeconomists due to its irresistible scientific method. After following the citation network of the seven articles on macroeconomic...

  • KEYNESIANSKI ELEMENTI V SLOVENSKI TRANZICIJI. Kračun, Davorin // Our Economy (Nase Gospodarstvo);2006 Supplement, Vol. 52, p64 

    Keynes has not been an explicit reference in the transition of Central and Eastern European countries. Ex-post analysis of transition models brings out significant PostKeynesian elements in many countries, especially in Slovenia. In the economic policy performed by Slovenia during transition,...

Share

Read the Article

Courtesy of THE LIBRARY OF VIRGINIA

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics