Macroeconomics, Trade, and Social Welfare.
This book develops new elementary methods of welfare comparison and comparative dynamics between distinct and discretely positioned (rather than continuously related) socio-economic situations. They are not only realistic but also uniquely relevant to important problems of economic policy. Using...
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Format: | Book |
Language: | English |
Published: |
Springer
2020
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Online Access: | http://dspace.uniten.edu.my/jspui/handle/123456789/15322 |
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Summary: | This book develops new elementary methods of welfare comparison and comparative
dynamics between distinct and discretely positioned (rather than continuously
related) socio-economic situations. They are not only realistic but also uniquely
relevant to important problems of economic policy. Using these methods, I comprised
the book to shed a new light to the theoretical analysis of Keynesian
economics, international trade and social welfare.
Three chapters in Part I illustrate the merits of these methods applying them to
the reconstruction of Keynesian economics, an important task in the current scene
of political economy. Chapter 1 reexamines the Keynesian multiplier theory focusing
on the concept of “public goods” as the object of government fiscal policy. The
distinction between public goods and private goods is blurred in the standard
multiplier theory spoiling its applicability considerably. In contrast, the government
is here supposed to dictate the provision of public goods democratically or dictatorially
while the amount of private goods (including labor services required for
production of public goods) is determined by the adjustment of income in the
market. Using the real general equilibrium model I show that the government is
capable of achieving full employment even when the public good is intrinsically
useless. It will, a fortiori, increase national economic welfare if the public good is
useful in some sense or another. Furthermore, I demonstrate by the use of “expansion
path” how the government can increase employment and welfare over time
depicting the dynamic adjustment path under rational expectatons. The ultimate
destination of the path is not the neoclassical synthesis suggested by Samuelson
(1954), but close to the neo-Keynesian synthesis advanced in General Theory
(1936). With fixed production technology and static resource endowment, however,
the steady state would degenerate to the long-run stagnation in the absence of
government intervention, or its growth strategy.
Chapter 3 extends the real general equilibrium model of Chap. 2 taking account
of firm-union transactions scheme introduced in Chap. 2. It develops the whole
story of Keynesian Economics in light of liquidity trap and IS LM equilibrium
originated by Hicks (1936). I explicitly consider the optimizing behavior of households, firms and the government to delineate the monetary transactions
between them and examine the effects of monetary policy in the short and long
runs in the name of the general theory of money, income and distribution, The
traditional monetary policy is well designed to realize the short-run effects on
employment, but not necessarily appropriate as the means of attaining the longrun
desirable effects on welfare and economic growth. In order to achieve such
long-run effects, we may have to invoke the inflation-targeting. The final goal of
Chap. 3 is to formulate inflation targeting rigorously and show how to switch from
the traditional monetary policy to inflation targeting on the path leading to the long
run steady state in some details.
I employed similar comparative methods in chapters in Part II to reexamine the
modern trade policy issues such as gains from trade, the theory of tariffs, free trade
agreements and the role of WTO. In Chap. 9, for instance, I reconsidered the role of
WTO in the face of propagating regional free trade agreements and argue that it is
high time to alleviate the restrictive stipulation of GATT Article 24 with a view to
promoting global welfare even beyond the Kemp-Wang theorem. Chapter 10
modifies the general equilibrium model of Chap. 4 to incorporate elements of
imperfect competition and variable returns to scale covering a related wide range
of topics on trade and welfare.
In Part III, I applied our elementary methods of welfare comparison to dissolve
modern controversies over welfare and efficiency in various socio-economic situations.
In Chap. 11, we challenged the popular view that the pursuit of efficiency
damages the realization of social values such as safety, health, environment,
fairness and what not. I considered several examples that suggest the seeming
existence of trade-offs between value and efficiency and reveal that trade-offs
exist between different values but not between values and efficiency. The common
fallacy stems from the neglect of cost required to realize value. The purpose of
Chap. 12 is to comprehend a number of problems of mixed economies such as
public goods, environments, peak load problems in a unified framework to deal
with externalities, elucidating the structure of socially optimal tax-subsidy policies.
I wish to express my gratitude to the board of editors, Professors Ryuzo Sato,
Hajime Hori, Kazuo Mino and Mariko Fujii for giving me the opportunity to
publish this book in the Springer series of Advances in Japanese Business and
Economics. Moreover, they freely gave me many searching comments which led to
substantial improvements of the draft.
I would also like to thank my teachers, Professor Ronald Jones, late Professors
Lionel McKenzie, Walter Oi at the University of Rochester, Professor Masao
Fukuoka, late Professor Noboru Yamamoto at Keio University, late Professor
Hirofumi Uzawa at the University of Tokyo, and Professor Murray Kemp at the
University of New South Wales for continued interest in my works and encouragement.
I am grateful to late Professors Kiyoshi Kojima, Miyohei Shinohara, Akira
Takayama and Akihiro Amano for their inspiring instructions. I thank Ryutaro
Komiya, Nobuo Minabe, Takashi Negishi, Koichi Hamada, Keimei Kaizuka,
Hideyuki Adachi, Wilfred Ethier, Elhanan Helpman, Yasuhiro Sakai, Masayoshi
Hirota, Walter Diewert, Makoto Ikema, Alok Ray, Anjan Mukherji, Shiro Yabushita, Alan Woodland, Kotaro Suzumura, Kazuo Nishimura, Takahiko Muto,
Ryuhei Okumura, Masao Satake, Masahiro Matsushita, Akiyoshi Horiuchi,
Masahiro Okuno, Katsuhito Iwai, Miyako Suda, Motoshige Ito, Toshihiro Ihori,
Hiroshi Yoshikawa, Nobuhiro Nakagawa, Toshihiro Ichida, and Hiroyuki Mizuta
for their instructive and constructive comments.
Moreover, I am indebted to my colleagues and former students at Keio University
for their helpful comments and advices on part of the papers collected in this
book. They are Kunio Kawamata, Hiroaki Osana, Kunikazu Karaki, Yoko Wake,
Keiichi Umada, Ryuhei Wakasugi, Miki Seko, Toru Maruyama, Kazuhito Ikeo, Eiji
Hosoda, Shuhei Shiozawa, Yasuhiro Nakagami, Atsuko Matsumura, Fukunari
Kimura, Sahoko Kaji, Yuri Okina, Shinichi Suda, Hiroshi Amari, Koji Ishibashi,
Yoshihiko Fukushima, Yoshimasa Shirai and Ichiroh Daitoh. Masatoshi Tsumagari
carefully read the draft of original chapters and cooperated for their improvement at
the last stage of its compilation.
Last but not least, I would like to thank the editorial staff at Springer Japan KK
for considerate and efficient preparation for this project in Springer’s Advances in
Japanese Business and Economics book series. |
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