I am an academic at the University of Sydney, Australia. I am trained in economics (conventional and heterodox), and specialize in political economy. My research projects delve into applications of political economy in order to create progressive policies for more socially just societies. Phone: +61 2 9351 3666 Address: Department of Political Economy
University of Sydney NSW 2006
Australia
After more than 30 years of existence the neoliberal paradigm is being questioned as a viable app... more After more than 30 years of existence the neoliberal paradigm is being questioned as a viable approach to economic and social policies. A key question is, if it were to be replaced, what could it be replaced by? To date this is a question that has generated considerable debate without a definitive answer. However, what seems clear is that, broadly speaking, there are two possible paths—an even greater reliance on ‘free’ markets or a shift towards greater social cooperation.
In the face of an ecological transition, central banks are finding conventional tools to manage t... more In the face of an ecological transition, central banks are finding conventional tools to manage the economic conditions are no longer adequate. Conventional tools manage short-term changes in demand, whereas climate change is a long-term phenomenon which will impact supply conditions. This article discusses the re-introduction of developmental monetary policies to provide liquidity to industries critical for social provisioning during an ecological transition. A potential new tool is central bank digital currencies (CBDCs). CBDCs could be lent and/or used to partially capitalize a system of community development banks. The article discusses the logistics and limitations of CBDCs as a developmental tool.
Covid-19 has prompted governments to spend heavily to support their economies and constituents. ... more Covid-19 has prompted governments to spend heavily to support their economies and constituents. As debt/GDP ratios rise, questions about sustainability of sovereign debt increase. Developed countries have fared better than developing countries. The former has received changes in outlook or warnings, whereas many of the latter have experienced sovereign debt downgrades. Downgrades for any country will affect access to new borrowing, rollover of existing debt and/or terms of funding. Achieving sustainable development goals will be more challenging if sovereigns’ ability to borrow is restrained. The introduction of a Multilateral Credit Rating Agency (MCRA) could fill an important void. Sovereigns cannot rate their own creditworthiness. The task has been essentially outsourced to private credit rating agencies (CRAs). CRAs are not without issues, such as the ability to exacerbate bouts of instability.
Abstract: Depending on one’s vision as to the inherent stability or instability of a market econo... more Abstract: Depending on one’s vision as to the inherent stability or instability of a market economy, credit either enhances stability or promotes instability. As such, credit either supports or retards social provisioning. Two representative approaches to the role of credit are compared: a DSGE framework and a modern variation of classical political economy. The implications of vision for methodological features are traced. The paper discusses empirical patterns for the American experience since the mid-1970s with respect to their consistency with the visions. If a market economy is inherently unstable, economic and financial stability requires more than monetary policy.
PurposeThe purpose of this study is to investigate why “financial fragility” carries different de... more PurposeThe purpose of this study is to investigate why “financial fragility” carries different definitions in the economic literature. This is a useful task as the detection of “financial fragility” depends, in part, upon how one defines it. According to Post Keynesian economists, financial fragility is a process that can culminate in financial instability (an event). For mainstream or New Keynesian economists, financial fragility has been traditionally defined as a state in which a shock can trigger instability. More recently, however, mainstream economists have recast their definition as a particular form of financial instability – an event. Each definition of financial fragility is intimately linked to the theoretical foundation upon which it rests. This carries important implications for the ability of policymakers to assess and manage the health of an economy.Design/methodology/approachThe different approaches to the definition and detection of financial fragility are compared ...
Green New Deals are being widely discussed as both a means to confront climate change and to impr... more Green New Deals are being widely discussed as both a means to confront climate change and to improve aspects of social well-being. An important facet of the discussion is how they should be financed. The negative impacts of Covid-19 on national budgets and sovereign debt question whether the implementation of Green New Deals is feasible if austerity needs to be introduced to achieve sustainability. This article assesses whether a wealth tax based upon the work of Michal Kalecki could help avoid austerity measures and facilitate the introduction of Green New Deals. While wealth taxes have traditionally been defined on net worth or assets to reduce wealth inequality, the formulation is meant to be equitable by applying to gross wealth or assets. Estimates are calculated for the United States and turn out to be quite modest. The approach not only generates revenue to cover expected net interest outlays on national debt, but additional revenue to pay down portions of it and/or support g...
Heterodox economics and International Political Economy (IPE) have each received increased attent... more Heterodox economics and International Political Economy (IPE) have each received increased attention in the wake of yet another round of criticism of mainstream economics. The recent global financial crisis, its uneven impact across economies and transmission into the real economy, has called into question dominant mainstream economic theories, such as the efficient market hypothesis and the analytical separation of the financial from the real productive sector. It has also led to calls for the curricula of economics courses to consider real-world topics, to include economic history and to cover heterodox schools of economic thought. On the other hand, the global financial crisis: laid bare some fundamental challenges for all contemporary IPE scholarship ... the depth and virulence of the crisis caught most scholars by surprise ... the majority of prominent international relations journals did not publish a single article on the financial crisis in the years 2008-2011 (Johnson et. a...
It has long been recognized that the state of economic theory, particularly modern macroeconomics... more It has long been recognized that the state of economic theory, particularly modern macroeconomics, is in disarray. With the release of Capitalism: Competition, Conflict and Crises, Anwar Shaikh attempts to place the discipline on a more secure footing. Without doubt, this is a very large and complex book. This review essay hopes to assist readers in unlocking its insights.
Purpose-The purpose of this study is to investigate why "financial fragility" carries different d... more Purpose-The purpose of this study is to investigate why "financial fragility" carries different definitions in the economic literature. This is a useful task as the detection of "financial fragility" depends, in part, upon how one defines it. According to Post Keynesian economists, financial fragility is a process that can culminate in financial instability (an event). For mainstream or New Keynesian economists, financial fragility has been traditionally defined as a state in which a shock can trigger instability. More recently, however, mainstream economists have recast their definition as a particular form of financial instability-an event. Each definition of financial fragility is intimately linked to the theoretical foundation upon which it rests. This carries important implications for the ability of policymakers to assess and manage the health of an economy. Design/methodology/approach-The different approaches to the definition and detection of financial fragility are compared using corresponding sets of indicators. Indicators for the Post Keynesian approach are derived from a simple cash-flow accounting framework, in the spirit of Hyman Minsky. The economy selected for study is New Zealand. Findings-According to the Post Keynesian approach, New Zealand has been in a financially fragile state for over three years, a period during which policymakers could have been creating ways to make New Zealand more resilient to the onset of instability. According to the New Keynesian approach, New Zealand may just now be experiencing fragility, giving policymakers much less time to react. Originality/value-This study traces the definitions of financial fragility to their underlying theoretical frameworks and draws the implications for the methods of detecting financial fragility.
The choice of value theory reflects one's vision of how markets function within a capitalist mark... more The choice of value theory reflects one's vision of how markets function within a capitalist market economy. This choice is crucial for understanding how pluralism will play a part in prompting a paradigm shift within the discipline of economics. What is lacking in recent discussions of pluralism is how the various theories of value and distribution relate to each other. Uniting heterodox economists in this way will support the development of criteria for teaching and research, both of which facilitate a paradigm shift. A consensus would avoid the methodological issues associated with analytical political economy which advocates mathematical modeling and applications for unifying the schools of thought. This article suggests a way to relate the theories of value and distribution, as reflective of the differences in vision of how markets function within a capitalist market economy and discusses a few of the challenges for creating a consensus.
How do private credit rating agencies reinforce global economic instability— and what we can do a... more How do private credit rating agencies reinforce global economic instability— and what we can do about it? Changes in credit ratings over the course of a cycle have a tendency to exacerbate both the upswings and downswings. How should credit risk be evaluated in the context of an ever-changing macroeconomic environment? One way is to assume a market economy is inherently stable and self-regulating. Credit risk is evaluated in the context of recent experience, with that context occasionally revisited for possible revision. Another way is to assume the economy is inherently unstable and not self-correcting. This is article explores the latter possibility and draws the implications.
In the wake of the global financial crisis (GFC), there have been calls for
changes in the credit... more In the wake of the global financial crisis (GFC), there have been calls for changes in the credit ratings industry. The American and European responses were new regulation and supervision of the rating agencies’ activities and resolving issues on an “as-needed” basis. Are these efforts enough? Building on the discussion in M. Ahmed Diomande, James Heintz and Robert Pollin (2009), this paper puts forth a template for a public credit ratings agency. This agency’s functions include the validation of the ratings of private rating agencies and the examination of the relationship between ratings changes and the business cycle. A public credit rating agency could be split into divisions, each of which focuses on particular types of borrowers: financial firms (banks and non-bank financial institutions), nonfinancial firms (corporations and SMEs) and households. These divisions could liaise with relevant agencies such as, for instance, the U.S. Securities and Exchange Commission. The paper concludes by arguing that national public credit rating agencies are not enough, and there needs to be an international credit rating agency, possibly housed at the United Nations, designed to validate sovereign ratings created by private agencies.
After more than 30 years of existence the neoliberal paradigm is being questioned as a viable app... more After more than 30 years of existence the neoliberal paradigm is being questioned as a viable approach to economic and social policies. A key question is, if it were to be replaced, what could it be replaced by? To date this is a question that has generated considerable debate without a definitive answer. However, what seems clear is that, broadly speaking, there are two possible paths—an even greater reliance on ‘free’ markets or a shift towards greater social cooperation.
In the face of an ecological transition, central banks are finding conventional tools to manage t... more In the face of an ecological transition, central banks are finding conventional tools to manage the economic conditions are no longer adequate. Conventional tools manage short-term changes in demand, whereas climate change is a long-term phenomenon which will impact supply conditions. This article discusses the re-introduction of developmental monetary policies to provide liquidity to industries critical for social provisioning during an ecological transition. A potential new tool is central bank digital currencies (CBDCs). CBDCs could be lent and/or used to partially capitalize a system of community development banks. The article discusses the logistics and limitations of CBDCs as a developmental tool.
Covid-19 has prompted governments to spend heavily to support their economies and constituents. ... more Covid-19 has prompted governments to spend heavily to support their economies and constituents. As debt/GDP ratios rise, questions about sustainability of sovereign debt increase. Developed countries have fared better than developing countries. The former has received changes in outlook or warnings, whereas many of the latter have experienced sovereign debt downgrades. Downgrades for any country will affect access to new borrowing, rollover of existing debt and/or terms of funding. Achieving sustainable development goals will be more challenging if sovereigns’ ability to borrow is restrained. The introduction of a Multilateral Credit Rating Agency (MCRA) could fill an important void. Sovereigns cannot rate their own creditworthiness. The task has been essentially outsourced to private credit rating agencies (CRAs). CRAs are not without issues, such as the ability to exacerbate bouts of instability.
Abstract: Depending on one’s vision as to the inherent stability or instability of a market econo... more Abstract: Depending on one’s vision as to the inherent stability or instability of a market economy, credit either enhances stability or promotes instability. As such, credit either supports or retards social provisioning. Two representative approaches to the role of credit are compared: a DSGE framework and a modern variation of classical political economy. The implications of vision for methodological features are traced. The paper discusses empirical patterns for the American experience since the mid-1970s with respect to their consistency with the visions. If a market economy is inherently unstable, economic and financial stability requires more than monetary policy.
PurposeThe purpose of this study is to investigate why “financial fragility” carries different de... more PurposeThe purpose of this study is to investigate why “financial fragility” carries different definitions in the economic literature. This is a useful task as the detection of “financial fragility” depends, in part, upon how one defines it. According to Post Keynesian economists, financial fragility is a process that can culminate in financial instability (an event). For mainstream or New Keynesian economists, financial fragility has been traditionally defined as a state in which a shock can trigger instability. More recently, however, mainstream economists have recast their definition as a particular form of financial instability – an event. Each definition of financial fragility is intimately linked to the theoretical foundation upon which it rests. This carries important implications for the ability of policymakers to assess and manage the health of an economy.Design/methodology/approachThe different approaches to the definition and detection of financial fragility are compared ...
Green New Deals are being widely discussed as both a means to confront climate change and to impr... more Green New Deals are being widely discussed as both a means to confront climate change and to improve aspects of social well-being. An important facet of the discussion is how they should be financed. The negative impacts of Covid-19 on national budgets and sovereign debt question whether the implementation of Green New Deals is feasible if austerity needs to be introduced to achieve sustainability. This article assesses whether a wealth tax based upon the work of Michal Kalecki could help avoid austerity measures and facilitate the introduction of Green New Deals. While wealth taxes have traditionally been defined on net worth or assets to reduce wealth inequality, the formulation is meant to be equitable by applying to gross wealth or assets. Estimates are calculated for the United States and turn out to be quite modest. The approach not only generates revenue to cover expected net interest outlays on national debt, but additional revenue to pay down portions of it and/or support g...
Heterodox economics and International Political Economy (IPE) have each received increased attent... more Heterodox economics and International Political Economy (IPE) have each received increased attention in the wake of yet another round of criticism of mainstream economics. The recent global financial crisis, its uneven impact across economies and transmission into the real economy, has called into question dominant mainstream economic theories, such as the efficient market hypothesis and the analytical separation of the financial from the real productive sector. It has also led to calls for the curricula of economics courses to consider real-world topics, to include economic history and to cover heterodox schools of economic thought. On the other hand, the global financial crisis: laid bare some fundamental challenges for all contemporary IPE scholarship ... the depth and virulence of the crisis caught most scholars by surprise ... the majority of prominent international relations journals did not publish a single article on the financial crisis in the years 2008-2011 (Johnson et. a...
It has long been recognized that the state of economic theory, particularly modern macroeconomics... more It has long been recognized that the state of economic theory, particularly modern macroeconomics, is in disarray. With the release of Capitalism: Competition, Conflict and Crises, Anwar Shaikh attempts to place the discipline on a more secure footing. Without doubt, this is a very large and complex book. This review essay hopes to assist readers in unlocking its insights.
Purpose-The purpose of this study is to investigate why "financial fragility" carries different d... more Purpose-The purpose of this study is to investigate why "financial fragility" carries different definitions in the economic literature. This is a useful task as the detection of "financial fragility" depends, in part, upon how one defines it. According to Post Keynesian economists, financial fragility is a process that can culminate in financial instability (an event). For mainstream or New Keynesian economists, financial fragility has been traditionally defined as a state in which a shock can trigger instability. More recently, however, mainstream economists have recast their definition as a particular form of financial instability-an event. Each definition of financial fragility is intimately linked to the theoretical foundation upon which it rests. This carries important implications for the ability of policymakers to assess and manage the health of an economy. Design/methodology/approach-The different approaches to the definition and detection of financial fragility are compared using corresponding sets of indicators. Indicators for the Post Keynesian approach are derived from a simple cash-flow accounting framework, in the spirit of Hyman Minsky. The economy selected for study is New Zealand. Findings-According to the Post Keynesian approach, New Zealand has been in a financially fragile state for over three years, a period during which policymakers could have been creating ways to make New Zealand more resilient to the onset of instability. According to the New Keynesian approach, New Zealand may just now be experiencing fragility, giving policymakers much less time to react. Originality/value-This study traces the definitions of financial fragility to their underlying theoretical frameworks and draws the implications for the methods of detecting financial fragility.
The choice of value theory reflects one's vision of how markets function within a capitalist mark... more The choice of value theory reflects one's vision of how markets function within a capitalist market economy. This choice is crucial for understanding how pluralism will play a part in prompting a paradigm shift within the discipline of economics. What is lacking in recent discussions of pluralism is how the various theories of value and distribution relate to each other. Uniting heterodox economists in this way will support the development of criteria for teaching and research, both of which facilitate a paradigm shift. A consensus would avoid the methodological issues associated with analytical political economy which advocates mathematical modeling and applications for unifying the schools of thought. This article suggests a way to relate the theories of value and distribution, as reflective of the differences in vision of how markets function within a capitalist market economy and discusses a few of the challenges for creating a consensus.
How do private credit rating agencies reinforce global economic instability— and what we can do a... more How do private credit rating agencies reinforce global economic instability— and what we can do about it? Changes in credit ratings over the course of a cycle have a tendency to exacerbate both the upswings and downswings. How should credit risk be evaluated in the context of an ever-changing macroeconomic environment? One way is to assume a market economy is inherently stable and self-regulating. Credit risk is evaluated in the context of recent experience, with that context occasionally revisited for possible revision. Another way is to assume the economy is inherently unstable and not self-correcting. This is article explores the latter possibility and draws the implications.
In the wake of the global financial crisis (GFC), there have been calls for
changes in the credit... more In the wake of the global financial crisis (GFC), there have been calls for changes in the credit ratings industry. The American and European responses were new regulation and supervision of the rating agencies’ activities and resolving issues on an “as-needed” basis. Are these efforts enough? Building on the discussion in M. Ahmed Diomande, James Heintz and Robert Pollin (2009), this paper puts forth a template for a public credit ratings agency. This agency’s functions include the validation of the ratings of private rating agencies and the examination of the relationship between ratings changes and the business cycle. A public credit rating agency could be split into divisions, each of which focuses on particular types of borrowers: financial firms (banks and non-bank financial institutions), nonfinancial firms (corporations and SMEs) and households. These divisions could liaise with relevant agencies such as, for instance, the U.S. Securities and Exchange Commission. The paper concludes by arguing that national public credit rating agencies are not enough, and there needs to be an international credit rating agency, possibly housed at the United Nations, designed to validate sovereign ratings created by private agencies.
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Papers by Susan Schroeder
changes in the credit ratings industry. The American and European responses were
new regulation and supervision of the rating agencies’ activities and resolving issues
on an “as-needed” basis. Are these efforts enough? Building on the discussion in M.
Ahmed Diomande, James Heintz and Robert Pollin (2009), this paper puts forth a
template for a public credit ratings agency. This agency’s functions include the
validation of the ratings of private rating agencies and the examination of the
relationship between ratings changes and the business cycle. A public credit rating
agency could be split into divisions, each of which focuses on particular types of
borrowers: financial firms (banks and non-bank financial institutions), nonfinancial
firms (corporations and SMEs) and households. These divisions could
liaise with relevant agencies such as, for instance, the U.S. Securities and Exchange
Commission. The paper concludes by arguing that national public credit rating
agencies are not enough, and there needs to be an international credit rating
agency, possibly housed at the United Nations, designed to validate sovereign
ratings created by private agencies.
changes in the credit ratings industry. The American and European responses were
new regulation and supervision of the rating agencies’ activities and resolving issues
on an “as-needed” basis. Are these efforts enough? Building on the discussion in M.
Ahmed Diomande, James Heintz and Robert Pollin (2009), this paper puts forth a
template for a public credit ratings agency. This agency’s functions include the
validation of the ratings of private rating agencies and the examination of the
relationship between ratings changes and the business cycle. A public credit rating
agency could be split into divisions, each of which focuses on particular types of
borrowers: financial firms (banks and non-bank financial institutions), nonfinancial
firms (corporations and SMEs) and households. These divisions could
liaise with relevant agencies such as, for instance, the U.S. Securities and Exchange
Commission. The paper concludes by arguing that national public credit rating
agencies are not enough, and there needs to be an international credit rating
agency, possibly housed at the United Nations, designed to validate sovereign
ratings created by private agencies.