Banks and Economic Growth: A Basic Disequilibrium Model with Five Rationing Regimes

In this paper, an inductive research methodology and the principle of parsimony are applied to reconsider a central issue in economics and macro-finance, namely the determinants of economic growth and the role of the financial sector. A simple framework is derived, characterised by information imperfections and the absence of market clearing. The literature on rationing has identified the need to consider differing rationing regimes but has not included a banking sector. Such a set-up is presented in this paper, which identifies the link between credit and economic growth under differing rationing regimes, with varying consequences for inflation. The familiar case of money creation resulting in inflation features as a special case within the general framework. Others are the possibility of asset price bubbles and collapses, non-inflationary growth despite full employment, and instability in banking systems. The model is consistent with empirical evidence that has been difficult to reconcile with conventional equilibrium models. It is found that within this simple rationing framework, banks, left to their own devices, do not necessarily deliver stable, non-inflationary growth, and there is no reason to expect their behaviour to optimise social welfare. Some implications for research and policy are discussed.

How Pigou Solved a Fundamental Theoretical Problem

In this paper, the author critically analysed a unique passage of Pigou's 1933 “The Theory of Unemployment”. Here he is faced with a fundamental theoretical problem in the definition of the national dividend or national income, which has far-reaching consequences on the comprehension of the circulation of money. Pigou is one of the few economists who have noticed this problem and discussed it in the history of economics. The problem can be stated as follows: the part of the value of output that makes up for depreciation; is or is not up for division? Does or does not it become income (that is, wages and profits) in the aggregate? The passage analysed in this paper is exceptional in the history of economics. It is so, first, because it faces the problem. Secondly, but no less important, because Pigou, despite his hesitations, holds the nowadays minoritarian position that the value of the part of the output that makes up for depreciation does not become income for any economic factor. This view implies that this part of the output is not up for division and, therefore, is not a part of aggregate income.

Lessons from Applying Sanctions and Blockades

From the geo-economic standpoint, a power may avail itself of a spectrum of constraining measures against a hostile or dangerous nation - measures ranging from sanctions, boycotts to embargos and blockades, which last represent the ultimate form of economic pressure to which an adversary may be subjected. Because they are an extreme type of economic banishment, their imposition reveals the physiognomy of the power struggle; and, because they obstruct the free flow of goods, they also appear to be an ephemeral anomaly within the Liberal world order. Yet, their incumbency in the game is a reflection of geo-economic complexity. Whether enacted to great fanfare or not, blockades freeze some transactions while generating business opportunities elsewhere. And while an activity momentarily stilled in one zone may be reshaped to the advantage of another, blockades still allow their instigators to zero in on key sectors of the enemy's economy without endangering the country's survival. Thus, we can see blockades as an economic and military measure serving imperial ends. This essay succinctly reviews the history of famous blockades and garners the core economic lessons one may learn from them.

Banking on the Underworld. A Strictly Economic Appreciation of the Chinese Practice of Burning (Token) Money

The custom of burning mock-money as a symbolic offering of nutrients and sustenance to one's ancestors in the Afterlife is here analysed in terms of its economic meaning and significance. The theme is treated from two different angles. One is that of the political economy of the gift, which concerns itself with the final uses to which society conveys its economic surplus. The other is that of monetary institutionalism, which seeks to understand what the practice itself actually represents in light of the monetary arrangements that rule the economic exchange within the community itself. The thesis is that, at a first remove, the custom appears to fall into the category of “wasteful expenditure,” in that it is not manifestly conducive to any augmentation of the system's efficiency. But on a subtler level, it is not precisely so for two orders of reasons. First, because the custom is habitually accompanied by subsidiary donations; second, because, in this donative moment, the custom importantly reveals, through its conversion of real cash into “sacrificial” token-money, a constitutive yet hidden, property of money, namely its perishability.

Infinite Capital Accumulation Through the Endless Harvesting of Limitless Dead Souls. Criminogenic Asymmetries, Structural Inequalities, Mimesis, and Parallel Oligarchies

This article is neither an empirical nor an analytical study; rather, it is a concise statement of a research paradigm that reflects the personal (and perhaps idiosyncratic) concerns of its author, which he wishes to continue and elaborate upon in much further detail at some point in the near future (if any). The general concern is with devising a functional criminological taxonomy of the multitudinous mutabilities migrating between neo-liberal political economy and organised and semi-organised criminality, here defined as criminogenic asymmetries. My central premise is this: although frequently associated in the scholarly literature with corruption, underdevelopment, anomie, and the breakdown of the brokerage of trust, neo-liberalism itself is the sufficient explanation for criminogenic asymmetries. As should be expected, the “moral panic” over the “death of democracy”, already part of our post-1989 history but currently symbolised by the “power crime” presidency of Donald J. Trump, w ill be utilised as the primary empirical example of these trends, both concurrent and convergent.

Oneiric Fascism. The Political Economy of Fernando Pessoa

Poet Fernando Pessoa (1888-1935), Portugal's literary glory, is also known to have penned a not inconsiderable corpus of sociological and politological reflections. This essay collates all such original material and glosses it with a view to uncovering Pessoa's religious true colours, and by so doing, goes on to argue that it is no accident, poetics aside, that western cultural intelligentsia finds it expedient to promote the literary output of personages like Pessoa who, in one form or another, preach an ultra-conservative gospel. Though he is not typically recognised as a thinker of the Right at all, the article's thesis is that Pessoa not only cuts a “fascist” figure in the conventional (Leftist) tenor of the epithet, but that the category itself of Fascism ought to be torn off its historical (pro-Liberal) contextualisation and radically reformulated as the default entomological categorisation of modern forms of society, and turned thereby into the norm against which exceptions need be counted, not the other way around. In light of this paradigmatic shift, Pessoa's considerations on selfishness, patriotism, and social dynamics afford an ulterior revelation of the anti-compassionate agenda of a type of System, ours, so keen on promoting thinkers of his ilk.

On Market Completions Approach to Option Pricing

Option pricing is one of the most important problems of contemporary quantitative finance. It can be solved in complete markets with non-arbitrage option price being uniquely determined via averaging with respect to a unique risk-neutral measure. In incomplete markets, an adequate option pricing is achieved by determining an interval of non-arbitrage option prices as a region of negotiation between seller and buyer of the option. End points of this interval characterise the minimum and maximum average of discounted pay-off function over the set of equivalent risk-neutral measures. By estimating these end points, one constructs super hedging strategies providing a risk-management in such contracts. The current paper analyses an interesting approach to this pricing problem, which consists of introducing the necessary amount of auxiliary assets such that the market becomes complete with option price uniquely determined. One can estimate the interval of non-arbitrage prices by taking minimal and maximal price values from various numbers calculated with the help of different completions. It is a dual characterisation of option prices in incomplete markets, and it is described here in detail for the multivariate diffusion market model. Besides that, the paper discusses how this method can be exploited in optimal investment and partial hedging problems.

Option Pricing under Randomised GBM Models

By employing a randomisation procedure on the variance parameter of the standard geometric Brownian motion (GBM) model, we construct new families of analytically tractable asset pricing models. In particular, we develop two explicit families of processes that are respectively referred to as the randomised gamma (G) and randomised inverse gamma (IG) models, both characterised by a shape and scale parameter. Both models admit relatively simple closed-form analytical expressions for the transition density and the no-arbitrage prices of standard European-style options whose Black-Scholes implied volatilities exhibit symmetric smiles in the log-forward moneyness. Surprisingly, for integer-valued shape parameter and arbitrary positive real scale parameter, the analytical option pricing formulas involve only elementary functions and are even more straightforward than the standard (constant volatility) Black-Scholes (GBM) pricing formulas. Moreover, we show some interesting characteristics of the risk-neutral transition densities of the randomised G and IG models, both exhibiting fat tails. In fact, the randomised IG density only has finite moments of the order less than or equal to one. In contrast, the randomised G density has a finite first moment with finite higher moments depending on the time-to-maturity and its scale parameter. We show how the randomised G and IG models are efficiently and accurately calibrated to market equity option data, having pronounced implied volatility smiles across several strikes and maturities. We also calibrate the same option data to the wellknown SABR (Stochastic Alpha Beta Rho) model.

About Some Risks Associated with Subjective Factors, and the Methodology for their Assessment

The authors propose a methodology for assessing the risk associated with subjective factors that may affect the achievement of the final goals of business projects, including ensuring information security. Such factors may include the level of salary, the level of professionalism, and others. At the same time, we propose carrying out the risk assessment by using the fuzzy logic method, which allows us to determine the dependence of the risk on various parameters under conditions of their uncertainty. According to the authors, the proposed methodology will help avoid some incorrect management decisions in the formation of author (working) teams, which could lead to negative consequences in the further implementation of the business project. These negative consequences can be expressed in delaying the implementation period, increasing the project’s cost, or even losing business due to critical information and personnel leakage. Also, this method allows you to increase the effectiveness of personnel policy in the organisation or the company. We noted that this method is applicable not only for individual enterprises but also for corporations and associations with complex network structures.

On Approximate Pricing of Spread Options via Conditional Value-at-Risk

It is widely accepted to use conditional value-at-risk for risk management needs and option pricing. As a rule, there are difficulties in exact calculations of conditional value-at-risk. In the paper, we use the conditional value-at-risk methodology to price spread options, extending some approximation approaches for these needs. Our results we illustrate by numerical calculations which demonstrate their effectiveness. We also show how conditional value-at-risk pricing can help with regulatory needs inspired by the Basel Accords.