,Currencies, Capital Flows and Crises
Breaking from conventional wisdom, this book provides an explanation of exchange
rates based on the premise that it is financial capital flows and not international
trade that represents the driving force behind currency movements. John T. Harvey
combines analyses rooted in the scholarly traditions of John Maynard Keynes and
Thorstein Veblen with that of modern psychology to produce a set of new theories
to explain international monetary economics, including not only exchange rates
but also world financial crises.
In the book, the traditional approach is reviewed and critiqued and the alternative
is then built by studying the psychology of the market and balance-of-payments
questions. The central model has at its core Keynes’ analysis of the macroeconomy
and it assumes neither full employment nor balanced trade over the short or long
run. Market participants’ mental model, which they use to forecast future exchange
rate movements, is specified and integrated into the explanation. A separate but
related discussion of currency crises shows that three distinct tension points emerge
in booming economies, any one of which can break and signal the collapse. Each
of the models is compared to post-Bretton Woods history and the reader is shown
exactly how various shifts and adjustments on the graphs can explain the dollar’s
ups and downs and the Mexican (1994) and Asian (1997) crises.
Post Keynesians, Institutionalists, and other heterodox economists will find
much to admire in this volume, as will students and researchers engaged with ex-
change rate determination, international capital flows, and international financial
crises.
John T. Harvey is Professor of Economics at Texas Christian University.
,Routledge Advances in Heterodox Economics
Edited by Frederic S. Lee
University of Missouri-Kansas City
Over the past two decades, the intellectual agendas of heterodox economists have
taken a decidedly pluralist turn. Leading thinkers have begun to move beyond the
established paradigms of Austrian, feminist, Institutional-evolutionary, Marxian,
Post Keynesian, radical, social, and Sraffian economics – opening up new lines
of analysis, criticism, and dialogue among dissenting schools of thought. This
cross-fertilization of ideas is creating a new generation of scholarship in which
novel combinations of heterodox ideas are being brought to bear on important
contemporary and historical problems.
Routledge Advances in Heterodox Economics aims to promote this new
scholarship by publishing innovative books in heterodox economic theory, policy,
philosophy, intellectual history, institutional history, and pedagogy. Syntheses
or critical engagement of two or more heterodox traditions are especially
encouraged.
1 Ontology and Economics 2 Currencies, Capital Flows and
Tony Lawson and his critics Crises
Edited by Edward Fullbrook A Post Keynesian analysis of
exchange rate determination
John T. Harvey
This series was previously published by The University of Michigan Press and the
following books are available (please contact UMP for more information):
Economics in Real Time Socialism After Hayek
A theoretical reconstruction Theodore A. Burczak
John McDermott
Future Directions for Heterodox
Liberating Economics Economics
Feminist perspectives on families, Edited by John T. Harvey and
work, and globalization Robert F. Garnett, Jr.
Drucilla K. Barker and Susan F.
Feiner
, Currencies, Capital Flows and
Crises
A Post Keynesian analysis of exchange rate
determination
John T. Harvey
Breaking from conventional wisdom, this book provides an explanation of exchange
rates based on the premise that it is financial capital flows and not international
trade that represents the driving force behind currency movements. John T. Harvey
combines analyses rooted in the scholarly traditions of John Maynard Keynes and
Thorstein Veblen with that of modern psychology to produce a set of new theories
to explain international monetary economics, including not only exchange rates
but also world financial crises.
In the book, the traditional approach is reviewed and critiqued and the alternative
is then built by studying the psychology of the market and balance-of-payments
questions. The central model has at its core Keynes’ analysis of the macroeconomy
and it assumes neither full employment nor balanced trade over the short or long
run. Market participants’ mental model, which they use to forecast future exchange
rate movements, is specified and integrated into the explanation. A separate but
related discussion of currency crises shows that three distinct tension points emerge
in booming economies, any one of which can break and signal the collapse. Each
of the models is compared to post-Bretton Woods history and the reader is shown
exactly how various shifts and adjustments on the graphs can explain the dollar’s
ups and downs and the Mexican (1994) and Asian (1997) crises.
Post Keynesians, Institutionalists, and other heterodox economists will find
much to admire in this volume, as will students and researchers engaged with ex-
change rate determination, international capital flows, and international financial
crises.
John T. Harvey is Professor of Economics at Texas Christian University.
,Routledge Advances in Heterodox Economics
Edited by Frederic S. Lee
University of Missouri-Kansas City
Over the past two decades, the intellectual agendas of heterodox economists have
taken a decidedly pluralist turn. Leading thinkers have begun to move beyond the
established paradigms of Austrian, feminist, Institutional-evolutionary, Marxian,
Post Keynesian, radical, social, and Sraffian economics – opening up new lines
of analysis, criticism, and dialogue among dissenting schools of thought. This
cross-fertilization of ideas is creating a new generation of scholarship in which
novel combinations of heterodox ideas are being brought to bear on important
contemporary and historical problems.
Routledge Advances in Heterodox Economics aims to promote this new
scholarship by publishing innovative books in heterodox economic theory, policy,
philosophy, intellectual history, institutional history, and pedagogy. Syntheses
or critical engagement of two or more heterodox traditions are especially
encouraged.
1 Ontology and Economics 2 Currencies, Capital Flows and
Tony Lawson and his critics Crises
Edited by Edward Fullbrook A Post Keynesian analysis of
exchange rate determination
John T. Harvey
This series was previously published by The University of Michigan Press and the
following books are available (please contact UMP for more information):
Economics in Real Time Socialism After Hayek
A theoretical reconstruction Theodore A. Burczak
John McDermott
Future Directions for Heterodox
Liberating Economics Economics
Feminist perspectives on families, Edited by John T. Harvey and
work, and globalization Robert F. Garnett, Jr.
Drucilla K. Barker and Susan F.
Feiner
, Currencies, Capital Flows and
Crises
A Post Keynesian analysis of exchange rate
determination
John T. Harvey
