REVISTA DE ECONOMÍA INSTITUCIONAL No. 39,
SECOND SEMESTER DE 2018
The causal explanation in economics
Luis Lorente S.-B. [pdf]
[Keywords: Accounting identity; statistical correlation; causal explanation; explanatory theory; macroeconomic analysis; economic policy; JEL: B41,E60,G23,O31]
Economic theory avoids explanations of causal type and adopts functional relationships and equilibrium solutions that suppose some form of symmetry between the variables involved. However, causality is an inherent assumption of any economic policy or decision, which is defended and adopted only because a certain effect is expected from it. The distrust stems from the fact that, in the absence of an experimental method that isolates phenomena from its environment and guarantees its repeatability, it is possible to imagine numerous causes, even teleological, that interfere with each other and offer an excess of alternative explanations, without a clear criterion to choose among them. However, there are circumstances that allow the deduction of regularities of causal type in a context of dynamic change, innovation and permanent imbalance. This article develops several simple examples that have important consequences for economic theory and suggest fundamental adjustments in some policies.
Albert Hirschman, Lauchlin Currie, "linkages" theory, and Paul Rosenstein Rodan's "big push"
Roger J. Sandilands[pdf]
[Keywords: Lauchlin Currie; Albert Hirschman; balanced growth; unbalanced growth; Great Impulse; linkages; JEL: E10,E14,E16]
This paper introduces an unpublished 1970 work written by the distinguished development economist Lauchlin Currie (1902-93) on Paul Rosenstein Rodan’s famous 1944 essay on the “Big Push” which led to the debate on balanced and unbalanced growth in which Albert Hirschman (1915-2012) was an important contributor. Both Currie and Hirschman had been key economic advisers to the Colombian government and here their respective views on development planning are contrasted. In particular, it is shown how Currie’s 1970 paper clarifies the theory that serves as the basis for Colombia’s 1971-74 National Plan, which he designed and helped execute, and whose institutional innovations have had a lasting impact on Colombia’s recent economic history.
The Big Push and balanced and unbalanced growth
[Keywords: Rosenstein-Rodan; Big Push; balanced growth; unbalanced growth; Albert Hirschman; linkages; JEL: B10,D31,D51]
This article, which is both a contribution to the history of economic thought and a clarification of the theory of economic development on which the Colombian Development Plan of 1970-1974 was based, The Four Strategies, discusses the proposal of Paul Rosenstein -Rodan to accelerate growth in developing countries, and criticizes Albert Hirschman’s views on the false problem of balanced growthunbalanced growth that, in the author’s opinion, wasted a lot of time and effort, and diverted attention from the real problems that should be the subject of development theory and policies to accelerate economic growth and exit from underdevelopment.
Time and financial capital in Marx's Capital
Boris Salazar [pdf]
[Keywords: Debt; financial titles; financial network; global crisis; Marx; absolute time; relational time; JEL: D85, E11,E44,G01,G15]
This article argues that the metamorphosis of debts into financial derivatives and securities, and of the latter back into debt, generates networks of assets and liabilities inducing the emergence of different times for capital, articulated into a complex system whose dynamics make possible the synchronization of those times in the form of global crisis. The crisis is treated as a change of state in a complex system, precipitated by the connectivity generated by increasing leverage. It is a development of the theories of the crisis and of socialization of the debt raised by Marx in Capital.
The "New History" and its predecessors
[Keywords: Scientific history: history and sociology; positivism; archives; observation and measurement; memory; JEL: B52,Z10]
This essay summarizes the characteristics of the so-called New History, the historiographical movement that left behind the traditional research of the past in Colombia. It describes its background at the end of the 19th century,when the project to make history a scientific discipline was discussed. It mentions its research, achievements and champions. It also points out the limitations of the New History, whose emphasis on the economic foundations of society and on the role of institutions tended to obscure the role of personalities and the presence of “imaginaries”. Likewise, it blurred the weight of ideas, attitudes and values; of religion, culture and ways of life.
State capacity and support for democracy: Challenges and opportunities for post conflict Colombia
Julián Arévalo Bencardino[pdf]
[Keywords: Support for democracy; democratization; state capacity; peace building; JEL: A12,D74,D78,H79,Z19]
Over the latest years, one of the major concerns with political systems around the world is what some authors have called the “democratic recession”. Some recent discussions on these issues focus on the capacity of the state to respond to the demands of its citizens. This paper studies the relationship between state capacity-understood as state performance on areas such as providing security, justice administration, tax collection and guaranteeing rights-, and support for democratic principles and Colombia’s regime. The empirical results show that lower levels of assessment of state’s capacity are associated to lower levels of support for democratic principles and performance. These results are discussed in the context of the peace agreements between the Colombian government and the FARC guerrillas, as well as the implications posed by this relationship in regards to the challenges and opportunities for post conflict Colombia.
Full employment and the legal framework of the macroeconomic policy
Jorge Armando Rodríguez[pdf]
[Keywords: Constitution; level of employment; macroeconomic policy; JEL: E24,E61,E63]
The Colombian Constitution of 1991 contains a mandate in favor of full employment. This article examines the place that this mandate occupies in the legal framework of macroeconomic policy, and the implications that derive from it for the purpose of compliance. The examination focuses on the assignment of functions within the State and on the control of the objectives and policy objectives and instruments of the fiscal authorities, in comparison with the mandate of price stability and the powers granted to the monetary authorities.
Low land taxes and ineffectiveness of the tax system
Edna Cristina Bonilla Sebá[pdf]
[Keywords: Fiscal policy; property tax; agricultural productivity; distribution of income and wealth; JEL: E61,E62,H25,H26]
This article shows that taxes on land, especially the property tax, are very low in Colombia, despite the fiscal potential of the municipalities. The appraisals are out of date and even so, the effective rate of property tax does not reach three per thousand. In addition, the structure of these taxes is very disorganized, and varies considerably among municipalities. It shows the slight relevance of taxes as an instrument to modify factorial relationships and improve the efficiency of production, especially in the countryside. Based on the data of the National Agricultural Census 2014, it finds a high concentration of land tenure, in terms of area and productive units, and the importance of small agricultural production. It also points out that the design of land taxes does not contribute to improving agricultural productivity.
Productivity and income distribution: Implications for the Colombian minimum wage, 2001-2016
Daniel Francisco Ossa Hernández[pdf]
[Keywords: Minimum salary, productivity, TFP, labor productivity, income distribution; JEL: J24,J30,O47,B40,E24]
This paper reviews the discussion on the most appropriate method for measuring productivity. It takes into account the TFP, the productivity of capital, and labor productivity, as well as its interpretations, scope, and relations. Additionally, it analyzes the impacts of this discussion on the evolution of the Colombian minimum wage over the period 2001-2016. Finally, it discusses the relationship between the growth of productivity and the distribution of income between capital and labor, proposing a critique of the neoclassical perspective.
The dynamics of building in Bogotá 1995-2013
Alex Smith Araque Solano y Yuly Paola Silva[pdf]
[Keywords: Real estate bubble, land prices; JEL: R11,R14,R31]
The trends in housing prices in Bogotá in the period 1995-2013 generated a debate among experts about the existence of a real estate bubble. This paper analyzes the determinants of the supply and demand of the construction sector, the associated markets, and the rate of growth of interest rates and land prices. The results show that there was no bubble in the market in 2012 and that the economic conditions of the 2010 decade caused the increase in housing prices. The increase of these prices throughout the country requires the evaluation of the territorial effects of the national housing policy, the role of local administrations, the use of land management instruments and the effect of these price pressures on quality and habitability of housing.