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on Post Keynesian Economics |
| By: | Alberto Botta |
| Abstract: | This paper provides a critical analysis of expansionary austerity theory (EAT). The focus is on the "theoretical" weaknesses of EAT--the extreme circumstances and fragile assumptions under which expansionary consolidations might actually take place. The paper presents a simple theoretical model that takes inspiration from both the post-Keynesian and evolutionary/institutionalist traditions. First, it demonstrates that well-designed austerity measures hardly trigger short-run economic expansions in the context of expected long-lasting consolidation plans (i.e., when adjustment plans deal with remarkably high debt-to-GDP ratios), when the so-called "financial channel" is not operative (i.e., in the context of monetarily sovereign economies), or when the degree of export responsiveness to internal devaluation is low. Even in the context of non–monetarily sovereign countries (e.g., members of the eurozone), austerity's effectiveness crucially depends on its highly disputable capacity to immediately stabilize fiscal variables. The paper then analyzes some possible long-run economic dynamics, emphasizing the high degree of instability that characterizes austerity-based adjustments plans. Path-dependency and cumulativeness make the short-run impulse effects of fiscal consolidation of paramount importance to (hopefully) obtaining any appreciable medium-to-long-run benefit. Should these effects be contractionary at the onset, the short-run costs of austerity measures can breed an endless spiral of recession and ballooning debt in the long run. If so, in the case of non–monetarily sovereign countries debt forgiveness may emerge as the ultimate solution to restore economic soundness. Alternatively, institutional innovations like those adopted since mid-2012 by the European Central Bank are required to stabilize the economy, even though they are unlikely to restore rapid growth in the absence of more active fiscal stimuli. |
| Keywords: | Fiscal Policy; Expansionary Austerity Theory; Post-Keynesian Macro Models |
| JEL: | E12 E61 E62 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_878&r=pke |
| By: | John B. Davis (Marquette University; University of Amsterdam) |
| Abstract: | This paper explains the continuing relevance of Keynes’s philosophical thinking in terms of his anticipation of complexity thinking in economics. It argues that that reflexivity is a central feature of the philosophical foundations of complexity theory, and shows that Keynes employed an understanding of reflexivity in both his philosophical and economic thinking. This argument is first developed in terms of his moral science conception of economics and General Theory beauty contest analysis. The paper advances a causal model that distinguishes direct causal relationships and reflexive feedback channels, uses this to distinguish Say’s Law economics and Keynes's economics, and explains the economy as non-ergodic in these terms. Keynes’s policy activism is explained as a complexity view of economic policy that works like self-fulfilling and self-defeating prophecies. The paper closes with a discussion of the ontological foundations of uncertainty in Keynes's thinking, and comments briefly on what a complexity-reflexivity framework implies regarding his thinking about time. |
| Keywords: | Keynes, complexity, reflexivity, non-ergodic, policy activism, uncertainty, time |
| JEL: | E12 B41 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2016-36&r=pke |
| By: | Geoffrey C. Harcourt (School of Economics, UNSW Business School, UNSW) |
| Keywords: | Keynes, Versailles, King’s, lives of economists and scientists, life philosophy |
| JEL: | B10 B31 A31 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2016-10a&r=pke |
| By: | Kanbur, Ravi |
| Abstract: | The subject of this essay is formed from three classic pieces of writing: The End of Laissez-Faire by John Maynard Keynes, The End of History? by Francis Fukuyama, and The Structure of Scientific Revolutions by Thomas Kuhn. All three essays were concerned with the evolution of ideas, with Keynes and Fukuyama additionally arguing for the centrality of ideas and consciousness in determining material outcomes and government policy. I wish to argue that neither Kuhn’s nor Fukuyama’s “revolutionary” account fits the bill for the path of change in the ideas of political economy. Rather, despite the title of his essay, the gradual and multilayered process described in Keynes’s account of the emergence and then questioning of laissez-faire is a better guide to the likely path of the evolution of this key doctrine of political economy in the coming decades. |
| Keywords: | Research and Development/Tech Change/Emerging Technologies, |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:ags:cudawp:250013&r=pke |
| By: | Fernando Rugitsky |
| Abstract: | The aim of this paper is to explore a parallelism between two episodes in the history of economic thought in order to suggest that the interaction between them can contribute to the research on Kaleckian growth and distribution models. First, a brief summary of the theoretical development from Steindl’s stagnationist claims to the debate about demand regimes is offered. Then, a more detailed account is provided of the Latin American debate that began with Furtado’s stagnationist claims and resulted in the formulation of models of social articulation and disarticulation. Finally, an analytical classification of Kaleckian and Latin American growth and distribution models is provided, indicating the way in which sectoral heterogeneity and demand composition can act as a plausible link between growth and distribution. |
| Keywords: | income distribution; demand regimes; sectoral heterogeneity; demand composition; distributive schedule. |
| JEL: | E11 E20 O11 |
| Date: | 2016–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:spa:wpaper:2016wpecon26&r=pke |
| By: | Dean Baker |
| Abstract: | In May of 2016 the United States International Trade Commission (ITC) issued its assessment of the impact of the Trans-Pacific Partnership (TPP). This paper highlights the main findings of the ITC report and explains their derivation and implications. It also examines several issues that were explicitly excluded from analysis in the ITC report. |
| JEL: | F F1 F4 F10 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2016-20&r=pke |
| By: | Peter Spahn |
| Abstract: | Post Keynesian stagnation theory argues that slower population growth dampens consumption and investment. A New Keynesian OLG model derives an unemployment equilibrium due to a negative natural rate in a three-generations credit contract framework. Besides deleveraging or rising inequality, also a shrinking population is a triggering factor. In all cases, a saving surplus drives real interest rates down. In other OLG settings however, with bonds as stores of value, slower population growth, on the contrary, causes a lack of saving and thus rising rates. Moreover, the recent fall in market interest rates was brought about by monetary factors. |
| Keywords: | overlapping generations, zero lower bound, deflation equilibrium, natural versus market interest rates |
| JEL: | E12 E21 E43 J11 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:rmn:wpaper:201603&r=pke |
| By: | Dean Baker; Lara Merling |
| Abstract: | In the last decade, there was an unprecedented run-up in house prices in most parts of the country. It was easy to recognize this run-up as a bubble since there was no remotely corresponding increase in rents, which for the most part just tracked inflation during this period. There was also no evidence of a shortage of housing supply. Housing starts were at near record highs from 2002 to 2005. In addition, the vacancy rate as reported by the Commerce Department was at near record highs through most of this period. With weak job and wage growth throughout most of this period, it was possible to recognize the run-up as a bubble even without knowing anything about the proliferation of bad loans in the mortgage market. The run-up in real house prices in the bubble years was almost completely reversed in the subsequent crash. While the first-time homebuyers’ tax credit temporarily stopped and reversed the decline, house prices continued to fall until the spring of 2012. Since then, the market has recovered much of the lost ground. While it is still 20.1 percent below the bubble peaks of 2006 in real terms, inflation-adjusted house prices are now 37.7 percent above their level in 1996, before the beginnings of the bubble. While these prices may seem somewhat high, there is little basis for concern that the national market has again entered a bubble. |
| JEL: | E E3 E39 R R2 R21 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2016-21&r=pke |
| By: | Laura Valladão Mattos |
| Abstract: | It is argued that J.S.Mill’s position in the debate over the ‘Land Question’ in Ireland can be best understood from the viewpoint of his theory of institutions. He thought that, to be adequate, institutions should promote progress – that is, human improvement, a rise of economic productivity and the increase of social justice – without endangering social order. The prevalent form of land occupation in Ireland – the cottier system – did not fulfil any of these requisites, and was an important obstacle to amelioration. It was at the root of Ireland’s low state of moral and economic development and of the social and political tensions that endangered the social order. Thus, in Mill’s evaluation, it should be eliminated. The alternative of transposing to Ireland the ‘English model’ of capitalist agriculture was, notwithstanding, rejected. This institution could eventually solve the economic problem, but involved the unjust eviction of tenants (aggravating social and political tensions) and would not contribute to the desired regeneration of the Irish character. Given the historical, cultural and political particularities of Ireland, Mill endorsed peasant property as the most suitable form of land appropriation. Its introduction would, at once, improve the character of the people, enhance productivity and increase the degree of social justice of the system. It would also mitigate social and political conflicts that jeopardized social order |
| Keywords: | J.S.MILL; Ireland; land property; institutions; progress social |
| JEL: | B12 |
| Date: | 2016–10–21 |
| URL: | http://d.repec.org/n?u=RePEc:spa:wpaper:2016wpecon22&r=pke |
| By: | Alessandra Fogli (Minneapolis Federal Reserve Bank) |
| Abstract: | In this paper we develop a theory for the twilight of the American dream and explore its economic and social consequences. We model the American dream and its evolution over time as the outcome of a learning model in which individuals form beliefs about the return to human capital investment from the experience of their neighbors. Increasing inequality drives up segregation across communities in the U.S. and reduces interactions among different socioeconomic groups. In turn, less interaction translates into fewer shared success stories. As lower income Americans are increasingly surrounded by poverty and failure, they shy away from the American dream and invest less in their children than higher income parents. This gap widens over time reducing inter-generational mobility and feeding higher levels of inequality in the following generations. To investigate the empirical relevance of our theory, we use a new county-level data set to compare our calibrated model to the time-series and geographic patterns of education. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed016:1684&r=pke |
| By: | Scherrer, Christoph.; Beck, Stefan. |
| Keywords: | trade agreement, workers rights, working conditions, value chains, role of ILO |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:994937092502676&r=pke |
| By: | Joshua C. Hall (West Virginia University, Department of Economics); Alex Peck (Webster-Schroeder High School); Marta Podemska-Mikluch (Gustavus Adolphus College, Department of Economics and Management) |
| Abstract: | In this brief educational note, we provide several examples of directed classroom activities for the high school economics classroom using the long-running television show The Simpsons. In doing so, we provide an overview of the scholarly literature on using popular culture to teach economics. Our examples highlight how popular culture can be successfully employed at the secondary level to engage and teach students through active learning. We conclude with some thoughts for secondary social studies teachers looking to enhance economic instruction. |
| Keywords: | Economic Pedagogy, Student Engagement Techniques |
| JEL: | A22 D01 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:wvu:wpaper:16-19&r=pke |
| By: | Daniyal Khan (Department of Economics, Seeta Majeed School of Liberal Arts and Social Sciences, Beaconhouse National University) |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:new:wpaper:1611&r=pke |
| By: | Michael Insler (United States Naval Academy); Bryce McMurrey (United States Naval Academy); Alexander F. McQuoid (United States Naval Academy) |
| Abstract: | The recent expansion of police militarization in the US has led to a growing concern about the social impact from this development, and in particular, how militarized policing impacts minority communities. Nearly six billion dollars of military equipment has been transferred to local police departments through the Department of Defense Excess Property Program 1033 since its inception in 1997. In this paper, we study the impact of police militarization on civic engagement by studying charitable giving among households. Using an instrumental variables approach based on exposure to military culture through federal defense spending, we find that police militarization has a fragmenting effect on society. As police militarization increases, black households reduce the frequency and amount of charitable donations as well as the frequency of volunteering. Charitable donations to education and needy organizations are most strongly affected. Conversely, we find no such effects for white households. The results are robust to placebo and validity tests. Our estimates suggest that to offset the impact on charitable giving from increased police militarization, a black household would need to see income rise by nearly 50% on average. suspension rules. |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:usn:usnawp:53&r=pke |