Volume 44, Number 175,
October-December 2013

New Global Macroeconomics: Income Distribution, Employment and Growth, Guadalupe Mántey and Teresa López (coordinators), Mexico, unam, fes Acatlán and dgapa, 2013.

In recent decades, the world has experienced a series of financial and economic crises. Mainstream economic theory has proved unable to explain the origins and development of these crises, as old proposals for adjustments and solutions have only maximized the economic and social costs for the majority of the global population. In net terms, financial crises have led to shrinking investment and real production, resulting in high unemployment rates, more poverty and, in general, reduction in social welfare.

The current international crisis, which officially began in 2008, is still devastating national economic structures and public health and education systems, while international financial bodies, as well as central banks, refuse to accept that the existing monetary system is largely responsible for the situation at hand. They are still promoting monetary, financial and fiscal policies that only save and strengthen major financial institutions and banks.

As a result, this work, a collection of texts from different authors, is especially timely, as it combines extremely relevant topics to explore a variety of proposals and alternatives, all based on theoretically sound arguments and robust empirical analysis.

A brief review of the index, composed of 18 works divided into six thematic sections, reveals a set of renowned national and international authors, all of whom are experts in macroeconomic, financial and monetary topics. The titles also demonstrate a broad spectrum of macroeconomic themes related to monetary and financial policy, focused on the new features of labor markets and their repercussions on income distribution.

The structure is appropriate for the express objectives of this collection, which are as follows: 1) provide the basis upon which to build a theoretical construction of the historical behavior of financial liberalization, 2) propose policy measures that would correct the most negative effects of the current institutional framework based on empirical research, and3) indicate which reforms to current international monetary agreements would be desirable.

Due to space constraints, this review cannot cover all 18 works, but will rather go through each thematic section of the book and discuss some of the authors. The first topic is the increasing precariousness of employment and the deterioration of income distribution, where Fernando Noriega introduces a theoretical argument that describes the effect of gender differences in monetary, currency and fiscal policies in small and open economies. Another work, written by María Elena Cardero y Espinosa, studies the evolution of the Mexican labor market in light of increasing informal employment, demonstrating the high cost of the informal sector in social terms and examining gender gaps. This work, together with one by Jorge Feregrino on inflation policy and labor flexibility in Mexico, manages to explain the new stratification and precarious state of the Mexican labor market.

The second major topic is focused on the deflationary and redistributive effects of currency appreciation. Nora Ampudia explains the process of inflation in theoretical and empirical terms and the effects of inflation on income distribution among ocde member countries. Plinio Hernández uses a different analytical approach to examine changes to income distribution in Latin America. Mónica Mimbrera proposes an index to measure pressure on the currency market in Mexico.

The third section goes further in depth with contributions from the authors Arias, Bustamante and Sánchez as to the factors that determine consumption in Mexico, based on the negative behavior of salaries and repercussions on income concentration. Gabriel Gómez details the structure of the Mexican banking system and explains why consumer credit has become a real transfer of wealth.

Restrictions on fiscal policy in open and deregulated markets are covered in the fourth section of the book, which also sets forth a broad theoretical framework of fiscal policy, drawn mainly from the Post-Keynesian school of thought. It also contributes two specifications for econometric analysis from Eduardo Rosas, Teresa S. López and Eufemia Basilia. Luis A. Ortiz studies the relationship between capital flows and the evolution of the internal and external public debt since the 1982 crisis in Mexico. This work provides a detailed historical account of how these realms were managed in Mexico and how these methods have adjusted to monetary policy objectives, concluding that currently, management of this variable is a mechanism of monetary stabilization through sterilization.

The fifth part focuses on studying globalized financial markets and low productive investment. Guadalupe Mántey, with a controversial theoretical review, analyzes long-term growth possibilities for the global market using policies implemented by central countries and proposals from the International Monetary Fund. This contribution focuses on factors that determine investments in fixed capital, proposing a unique econometric specification using the features of economic policies, especially those of the so-called fiscally independent countries. This equation is tested for three groups of countries divided in the following way: 12 developing, seven from the Eurozone and 11 developed.

The sixth and final section is a consistent critique of the institutional framework, and broadly speaking, the macroeconomic framework on which the International Monetary System is based. Alma Chapoy analyzes the vulnerabilities of this system and suggests some alternative reforms that could ensure stability. The role of the dollar in this crisis and in destabilizing capital transactions between countries is also addressed. Carlo Panico and Francesco Purificato detail the decline of Europe in their work, "The Role of Institutional and Political Factors in the European Debt Crisis,” describing how the major financial institutions of Europe create policy, carry out interventions and function. The analysis is put into context with other political aspects of the region, especially considering the major role Germany plays as a hegemonic power. This contribution proposes an opinion on the lender of last resort role that the Central European Bank must take on in managing national debt, explaining the functioning of the European central bank system and the failure of national debt administration based on the policies adopted. It also provides a detailed account of the crisis in Greece, identifying the importance of the country risk concept in its downfall, as the nation’s ten-year bond interest rate went from 6.46% in 2010 to 25.9% in 2012.

Patricia Rodríguez
Institute of Economic Research - unam

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Published in Mexico, 2012-2017 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 193, April-June 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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