with Deepankar Basu and Cameron Haas in Review of Radical Political Economics 

Abstract: In this note, we provide a rejoinder to Rieu (2024), which had presented a critical commentary on our analysis of the intensification of labor in Basu, Haas, and Moraitis (2024). 

with Deepankar Basu and Cameron Haas in Review of Radical Political Economics 

Abstract: Does the intensification of labor increase the rate of exploitation? Does it produce absolute surplus value or relative surplus value? This article develops a framework to answer these questions by incorporating intensity of labor in the widely used linear model of production, both in its one- and two-department forms. We show that (a) an intensification of labor always leads to an increase in the rate of exploitation, and (b) the increase in the rate of exploitation takes the form of the production of absolute surplus value in all realistic situations. We also highlight, in the case of any model with more than one industry or sector, an interesting difference in short- and long-run changes in the rate and form of surplus value. 

with Duo Qin, Sophie van Huellen and Qing Chao Wang in Econometrics 

Abstract: Aggregate financial conditions indices (FCIs) are constructed to fulfil two aims: (i) The FCIs should resemble non-model-based composite indices in that their composition is adequately invariant for concatenation during regular updates; (ii) the concatenated FCIs should outperform financial variables conventionally used as leading indicators in macro models. Both aims are shown to be attainable once an algorithmic modelling route is adopted to combine leading indicator modelling with the principles of partial least-squares (PLS) modelling, supervised dimensionality reduction, and backward dynamic selection. Pilot results using US data confirm the traditional wisdom that financial imbalances are more likely to induce macro impacts than routine market volatilities. They also shed light on why the popular route of principal-component based factor analysis is ill-suited for the two aims.

with Sophie van Huellen, Duo Qin, Shan Lu, Huiwen Wang, and Qing Chao Wang in International Journal of Finance and Economics

Abstract: We apply a novel model-based approach to constructing composite international financial indices (CIFIs) as measures of opportunity cost effects that arise due to openness in money demand models. These indices are tested on the People’s Republic of China (PRC) and Taiwan Province of China (TPC), two economies which differ substantially in size and degree of financial openness. Results show that (a) stable money demand equations can be identified if accounting for foreign opportunity costs through CIFIs, (b) the monetary policy intervention in the PRC over the global financial crisis period temporarily mitigated disequilibrating foreign shocks to money demand, (c) CIFIs capture opportunity costs due to openness more adequately than commonly used US interest rates and (d) CIFI construction provides valuable insights into the channels through which foreign financial markets affect domestic money demand.

with Costas Lapavitsas and the ERENSEP Writing Collective

with Deepankar Basu (under review)

Abstract: In this paper, we explore two approaches to estimating classical prices of production: the Standard Interpretation and the New Interpretation of Marx’s value theory. Our study utilizes (a) a circulating capital model using harmonized input-output data from theWorld Input-Output Database (WIOD) for 37 countries for the period 2000–2014, and (b) a capital stock model for the US economy using input-output and other relevant data for the period 2017—2021. Across all models, we estimate labor values (direct prices), prices of production, and the uniform rate of profit. We test for deviations between direct prices, production prices, and market prices using various measures. Our analysis of the WIOD data reveals significant heterogeneity among countries and an advantage of the NI method over the SI. For the US case, our findings support the empirical relevance of direct prices in market price formation, but our estimated prices of production deviate significantly more from both market and direct prices than reported in the literature.

Abstract: Discretionary fiscal expansions may do more than smooth cycles: they can durably raise output. Using OECD panel data and a fiscal-rule identification of spending shocks combined with local projections, I find that expansions produce persistent output gains. The persistence is driven by supply-side improvements–capital deepening and higher productivity–with private demand responding without sustained inflation. Effects are state-dependent: they are stronger in recessions, weaker when indebtedness is high or trade openness is very large, and their transmission differs across exchange-rate regimes. Significant non-linearities concerning the size of the shock are also identified. Large expansions generate the durable effects, while small ones mostly smooth the cycle. The results imply that the scale and design of fiscal packages–as well as the macro-financial environment that supports investment and productivity–are pivotal for durable impacts.