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Time: 3.00pm - 5.00pm
Venue: Room 5006, John Galsworthy building, Penrhyn Road campus, Penrhyn Road, Kingston upon Thames, Surrey KT1 2EE
Speaker(s): Dr. Alberto Botta and Professor Antoine Godin
Please join us for this event as part of the Department of Economics Research Seminar Series.
'The Macroeconomics of Shadow Banking' by Alberto Botta (University of Greenwich)
In this paper, we propose a simple short-run post-Keynesian model in which the key aspects of shadow banking, namely securitization and the production of structured finance instruments, are explicitly formalized. At the best of our knowledge, this is the first attempt to broaden purely real-side postKeynesian models and their traditional focus on shareholder-value orientation, the financialization of non-financial firms, and the profit-led vs wage-led dichotomy. We rather put emphasis on the role of financial institutions and rentier-friendly environment in determining the predominance of specific growth and distribution regimes. First, we illustrate the macroeconomic rationale of shadow banking practices. We show how, before the 2007-8 crisis, securitization and shadow banking allowed for an increase in profitability for the whole financial sector, while apparently keeping leverage under control. Second, we define a variety of shadow-banking-led regimes in terms of economic activity, productive capital accumulation, and income distribution. We show that both an 'exhilarationist' and a 'stagnationist' regime may prevail, nevertheless characterized by a probable increase in income inequality between rentiers and wage earners.
'Introducing risk into a Tobin asset-allocation model' by Antoine Godin (Kingston University)
The Tobin asset-allocation model has become a standard component in stock-flow consistent (SFC) models. It relates asset returns to wealth allocation, and thereby to the value of assets as reflected in Tobin's q. The model is flexible, parsimonious, and intuitively appealing, but it suffers from a large number of independent coefficients and depends only on returns for the allocation. A truism from financial theory and practice is that allocations depend on both risk and return. In this paper we introduce risk into a Tobin model. We propose that allocations are a compromise between competing goals of low turnover and high return, constrained by the degree of risk that investors are willing to tolerate. In our model, the Tobin coefficients depend on asset-specific risk and a small number of independent parameters. The model also yields an expression for the q values of different assets as a function of risk and parameters reflecting market sentiment.
Dr. Alberto Botta is lecturer in economics at the International Business and Economics Department of the University of Greenwich. He also teaches development economics at the MA programme in Cooperation and Development of Institute of Advanced Studies of Pavia (Italy), and at the MA programme in Cooperation and Development in the Middle East held at Bethlehem University (Palestinian territories)â€‹. His main research interests are about structuralist macroeconomics, Dutch Disease, capital mobility and BoP crises in developing countries, financialization and macroeconomic instability. On these topics, he has published a series of articles on scientific journals such as Structural Change and Economic Dynamics, Metroeconomica, Journal of post-Keynesian Economics, International Journal of Political Economy and Economia Politica.
Antoine Godin is an Associate Professor of Economics at Kingston University. He holds a M.Sc. in applied mathematics engineering and a Ph.D. in economics. He has developed two modelling software: a R package to design, calibrate and simulate Stock-Flow Consistent (SFC) models and a java platform to design and simulate Agent-Based Stock-Flow Consistent (AB-SFC) models. Antoine has published numerous articles both on methodological and theoretical aspects, combining various strands of literature, and applied to diverse topics such as environmental, labour or innovation economics in journal such as the Journal of Evolutionary Economics, the Cambridge journal of Economics or the Journal of Economic Dynamics and Control. Antoine is frequently invited to teach advanced macro-modelling lectures on the SFC or AB-SFC approach.
For further information about this event:
Contact: Antoine Godin
Directions to Room 5006, John Galsworthy building, Penrhyn Road campus, Penrhyn Road, Kingston upon Thames, Surrey KT1 2EE: