In previous columns it is described how around 1930 the social-democracy experiences an identity crisis, especially in Germany and Italy, but also elsewhere in Europe. The theme of the socialization does not catch on, and the fascism dictates the order. The present column analyzes the recovery of the social-democracy in the following twenty years. The study consults three ideological works, that were published at the time. It concerns Ordening der wereldproductie by Wibaut, Ordening als socialistische etappe by Van den Tempel (Jr.), and International economic integration by Tinbergen .... Read more
29-12-2018: Notes for an open economy with variable prices
Author: E.A. Bakkum
In the book Economic policy: principles and design the well-known economist Jan Tinbergen shows that the state can develop a policy for controlling the economy. The policy consists of a set of goals, and the corresponding instruments. The present column describes two models with variable prices and foreign trade, which allow to analyze the policy. The price elasticities are also taken into account. Besides, the first model contains a system of taxes. The models are copied from the mentioned book .... Read more
27-12-2018: Three models with a money market
Author: E.A. Bakkum
The well-known Dutch economist Jan Tinbergen develops in his book Economic policy: principles and design three simple models, which take into account the behaviour of the money market and of banking. The first model addresses the financing of the public sector, and the importance of the capital positions. In the second model the money- and capital-flows are traced, with special attention for the banks. The third model includes the central bank, so that the money creation is analyzed at the micro-economic level .... Read more
20-12-2018: The Phillips curve and the AS-AD model
Author: E.A. Bakkum
For years the IS-Lm model was popular. However, it has the disadvantage, that the price inflation is not taken into account. Namely, the model assumes a constant price level. In order to understand inflation, it is useful to study the so-called Phillips curve. It turns out, that the unemployment must be kept at the NAIRU level. Thanks to such insights the IS-LM model can be transformed into the superior AS-AS model. Nowadays the AS-AD model has again become obsolete due to its serious faults .... Read more
01-12-2018: The IS-LM model
Author: E.A. Bakkum
This column presents the well-known IS/LM model, that tries to explain the interaction between the commodity market and the money market. The commodity market is dominated by the investment function. On the money market especially the speculation is relevant. The two markets affect each other by means of the rate of interest. Some believe that the IS/LM model is a synthesis of the neoclassical paradigm and the theory of Keynes .... Read more