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on Post Keynesian Economics |
| By: | Engelbert Stockhammer (Kingston University); Walid Qazizada; Sebastian Gechert |
| Abstract: | The Great Recession 2007-09 has led to controversies around the role of fiscal policy. Academically this has translated into renewed interest in the effects of fiscal policy. Several studies have since suggested that fiscal multipliers are substantially larger in downswings or depressions than in the upswing. In terms of economic policy reactions countries have differed substantially in the fiscal stance. It is an important open question how big the impact of these policies on economic growth has been. The paper uses the regime-dependent multiplier estimates by Qazizada and Stockhammer (2015) and by Gechert and Rannenberg (2014) to calculate the demand effects of fiscal policy for Germany, USA, UK, Greece, Ireland, Italy, Portugal and Spain since 2008. This allows assessing to what extent fiscal policy explains different economic performances across countries. We find expansionary fiscal policy in 2008/09 in all countries, but since 2010 fiscal policies have differed. While the fiscal impact was roughly neutral in Germany, the UK, and the USA, it was large and negative in Greece, Ireland, Italy, Portugal, and Spain. |
| Keywords: | multiplier, fiscal policy, austerity, recession |
| JEL: | C36 E62 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp1607&r=pke |
| By: | Hein, Eckhard |
| Abstract: | Starting from a review of the main strands of orthodox and heterodox distribution and growth models and their distinguishing features, with the post-Kaleckian Bhaduri/Marglin (1990) (and Kurz 1990) model as a specific, but highly flexible variant of heterodox distribution and growth theories, we develop a simple modelling framework in which we can treat these different theories as different variants of model closure. In a simple closed private one-good economy model, each theory is presented drawing on the relationship between the rate of profit and the rate of growth, as well as on the consideration of one major adjusting variable allowing for the convergence of the endogenous variables of the model to their equilibrium values. This allows for a systematic comparison of exogenous and endogenous variables, of the 'logic' or the chain of causalities in each of the approaches, and of the generation of the long-run equilibrium positions of the system. It is finally shown that the post-Kaleckian model is able to cover many, but not all of the results generated by the old neoclassical growth model, new neoclassical growth theories, classical/Marxian distribution and growth approaches, and post-Keynesian Kaldor-Robinson and Kalecki-Steindl distribution and growth theories. |
| Keywords: | distribution,growth,model comparison,Bhaduri/Marglin model |
| JEL: | E21 E22 E25 O41 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ipewps:662016&r=pke |
| By: | Mark Setterfield (New School For Social Research,); Yun K. Kim (University of Massachusetts, Boston;) |
| Abstract: | We develop a neo-Kaleckian growth model that emphasizes the importance of consumption behavior. In our model, workers first make consumption decisions based on their gross income, and then treat debt servicing commitments as a substitute for saving. Workers’ borrowing is induced by their desire to keep up with the consumption standard set by rentiers’ consumption, reflecting an aspect of the relative income hypothesis. As a result of this consumption and debt servicing behavior, consumer debt accumulation and income distribution have effects on aggregate demand, profitability, and economic growth that differ from those found in existing models. We also investigate the financial sustainability of the Golden Age and Neoliberal growth regimes within our framework. It is shown that distributional changes between the Golden Age and the Neoliberal regimes, together with corresponding changes in consumption emulation behavior via expenditure cascades, suffice to make the Neoliberal growth regime unsustainable. |
| Keywords: | Consumer debt, emulation, income distribution, Golden Age regime, Neoliberal regime, expenditure cascades, growth |
| JEL: | E12 E44 O41 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:thk:wpaper:30&r=pke |
| By: | Thomas I. Palley |
| Abstract: | This paper explores zero lower bound (ZLB) economics. The ZLB is widely invoked to explain stagnation and it fits with the long tradition that argues Keynesian economics is a special case based on nominal rigidities. The ZLB represents the newest rigidity. Contrary to ZLB economics, not only does a laissez-faire monetary economy lack a mechanism for delivering the natural rate of interest, it may also lack such an interest rate. Moreover, the ZLB can be a stabilizing rigidity that prevents negative nominal interest rates exacerbating excess supply conditions. |
| Keywords: | zero lower bound (ZLB), stagnation, New Keynesianism, normal rigidities |
| JEL: | E0 E10 E12 E20 E40 E50 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:imk:wpaper:164-2016&r=pke |
| By: | Tim Jackson; Peter Victor; Asjad Naqvi |
| Abstract: | Modern western economies (in the Eurozone and elsewhere) face a number of challenges over the coming decades. Achieving full employment, meeting climate change and other key environmental targets, and reducing inequality rank amongst the highest of these. The conventional route to achieving these goals has been to pursue economic growth. But this route has created two critical problems for modern economies. The first is that higher growth leads (ceteris parabis) to higher environmental impact. The second is that fragility in financial balances has accompanied relentless demand expansion. The prevailing global response to the first problem has been to encourage a decoupling of output from impacts by investing in green technologies (green growth). But this response runs the risk of exacerbating problems associated with the over-leveraging of households, firms and governments and places undue confidence in unproven and imagined technologies. An alternative approach is to reduce the pace of growth and to restructure economies around green services (post-growth). But the potential dangers of declining growth rates lie in increased inequality and in rising unemployment. Some more fundamental arguments have also been made against the feasibility of interest-bearing debt within a post-growth economy. The work described in this paper was motivated by the need to address these fundamental dilemmas and to inform the debate that has emerged in recent years about the relative merits of green growth and post-growth scenarios. In pursuit of this aim we have developed a suite of macroeconomic models based on the methodology of Post-Keynesian Stock Flow Consistent (SFC) system dynamics. Taken together these models represent the first steps in constructing a new macroeconomic synthesis capable of exploring the economic and financial dimensions of an economy confronting resource or environmental constraints. Such an ecological macroeconomics includes an account of basic macroeconomic variables such as the GDP, consumption, investment, saving, public spending, employment, and productivity. It also accounts for the performance of the economy in terms of financial balances, net lending positions, money supply, distributional equity and financial stability. This report illustrates the utility of this new approach through a number of specific analyses and scenario explorations. These include an assessment of the Piketty hypothesis (that slow growth increases inequality), an analysis of the ‘growth imperative’ hypothesis (that interest bearing debt requires economic growth for stability), and an analysis of the financial and monetary implications of green investment policies. The work also assesses the scope for fiscal policy to improve social and environmental outcomes. |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:feu:wfewop:y:2016:m:3:d:0:i:114&r=pke |
| By: | Yoshihara, Naoki (Department of Economics, University of Massachusetts, Amherst); Kaneko, Soh (Faculty of Economics, Keio University) |
| Abstract: | As in Roemer (1982, chapter 1), this paper considers a simple international trade model and examines the existence and characterization of free trade equilibria involving the unequal exchange of labor (UE). The paper provides an almost complete characterization of the domain of economies in which free trade equilibria withincomplete specialization exist. Moreover, the necessary and sufficient conditions for free trade equilibrium to involve UE is identified. It suggests that the emergence of free trade equilibria with UE cannot be entailed by the competitive mechanism of markets and unequal distribution of wealth alone, but might be understood as an outcome of equilibrium selection on the basis of Nash bargaining between rich and poor nations. |
| Keywords: | Unequal exchange of labor, International division of labor, Subsistence international economies. |
| JEL: | D63 D51 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2016-04&r=pke |
| By: | White, Michael (Policy Studies Institute); Bryson, Alex (University College London) |
| Abstract: | Unions make differences to employee satisfaction that correspond to their effects on individual economic advantage. Panel data reveal how changes in economic circumstance and changes in job satisfaction are linked to changes in union coverage. When individuals move into a union covered job they receive a wage mark-up and express enhanced pay satisfaction. Conversely, those moving from a union covered job on average lose any mark-up and have significantly reduced satisfaction. Similar findings emerge for working hours. On average individuals prefer shorter hours, something they tend to (not to) achieve on moving into (out of) a unionized job, resulting in higher (lower) satisfaction. Switching into union coverage lowers satisfaction with job security, even though coverage has no effect on the risk of unemployment. This is because covered employees suffer greater costs of re-employment for a given level of unemployment risk, partly due to loss of the union mark-up. |
| Keywords: | trade unions, job satisfaction, pay, job security, hours |
| JEL: | J28 J51 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9876&r=pke |
| By: | Paul J Dunne and Nicholas Masiyandima |
| Abstract: | The study uses firm level data from the World Bank Enterprise Surveys and employs alternative techniques to identify and estimate the within and intra-industry productivity impact of firm foreign ownership in SADC. Using firm labour productivity and employing sector fixed effects to identify the impact of foreign firm ownership on productivity, we find results that strongly suggest the existence of positive within firm and intra-industry FDI productivity spillovers for both small and large firms in the region. The productivity gains are, however, larger for small firms than for large firms suggesting greater productivity spillover advantages for the relatively technologically backward small firms. Similarly, there is heterogeneity with regard to productivity spillovers across individual countries, with the relatively technologically advanced countries such as South Africa and Mauritius experiencing larger intra-industry spillovers while less technologically endowed countries enjoy larger within firm gains. |
| Keywords: | Growth; development; firm; technology; spillovers; productivity; FDI; SADC |
| JEL: | O33 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:596&r=pke |