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on Post Keynesian Economics |
| By: | Michalis Nikiforos |
| Abstract: | This paper presents a methodological discussion of two recent "endogeneity" critiques of the Kaleckian model and the concept of distribution-led growth. From a neo-Keynesian perspective, and following Kaldor (1955) and Robinson (1956), the model is criticized because it treats distribution as quasi-exogenous, while in Skott (2016) distribution is viewed as endogenously determined by a series of (exogenous) institutional factors and social norms, and therefore one should focus on these instead of the functional distribution of income per se. The paper discusses how abstraction is used in science and economics, and employs the criteria proposed by Lawson (1989) for what constitutes an appropriate abstraction. Based on this discussion, it concludes that the criticisms are not valid, although the issues raised by Skott provide some interesting directions for future work within the Kaleckian framework. |
| Keywords: | Kaleckian Model; Distribution-led Growth; Abstraction |
| JEL: | B22 B41 B50 E11 E12 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_879&r=pke |
| By: | Heise, Arne |
| Abstract: | [Introduction] Economics is in considerable disarray. Neoclassical orthodoxy still remains the ‘normal science’ standard procedure and provides the foundation for economic education. However, for some time now many economists have claimed that its scientific research programme as a problem-solving tool has been squeezed out and is no longer at the cutting-edge of research (see e.g. Colander/Holt/Rosser 2004, Holt/Rosser/Colander 2011, Arthur 2013). After the recent global financial crisis, the time seemed right for a scientific overhaul of the whole discipline of economics under the heading of ‘new economic thinking‘, an idea promoted as much by economists unhappy with the state of the discipline as by economics students unwilling to learn something apparently irrelevant for the real world and by economic and business practitioners and patrons who sponsored research that, in the past, few were willing to support financially. It seems obvious that heterodox economics – the part of the scientific community which had been critical of the state of the discipline long before the outbreak of the global financial crisis and which long before had demanded a ‘new economic thinking‘ - could have been seen as a natural candidate for a scientific research programme or paradigm that could assume the spotlight. However, heterodox economics is a blurred description of a scientific paradigm comprising quite different thought collectives and is based on very shaky analytical grounds (see e.g. Mearman 2012). In this contribution, we will take a closer look at a scientific research programme which has often been cited as the one whose time is about to come: complexity economics (see e.g. Buchanan 2004, Colander 2003, Beinhocker 2006, Davis 2008; Roos 2015). Before we attempt to describe the paradigmatic foundations of complexity economics and arrange them in the context of the orthodox/heterodox divide, we need to explain our understanding of the concept of a paradigm and clarify what makes a paradigm orthodox or heterodox and why it is important to classify a paradigm as either orthodox or heterodox. The paper will conclude with a statement about the paradigmatical position of complexity economics and its significance for the future of the economic discipline. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cessdp:58&r=pke |
| By: | Peter Skott (University of Massachusetts - Amherst) |
| Abstract: | A recent literature introduces autonomous demand as the driver of long-run economic growth and as a stabilizing force that tames Harrodian instability. The argument is unconvincing. The stabilizing effect is modest for plausible parameter values and, more importantly, it is questionable whether any components of aggregate demand can be viewed as autonomous in the long run. By contrast, models that include the supply side (the labor market) and/or economic policy can address Harrodian instability and produce level and growth effects that resemble those derived in the literature on autonomous demand. |
| Keywords: | supermultiplier, Harrodian instability, Kaleckian models |
| JEL: | E11 E12 O41 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2016-16&r=pke |
| By: | Ewa Karwowski (Kingston University); Mimoza Shabani; Engelbert Stockhammer |
| Abstract: | The financialisation literature has grown over the past two decades. While there is a generally accepted definition, effectively financialisation has been used to describe very different phenomena. This paper proposes a multi-faceted notion of financialisation by distinguishing between financialisation of non-financial companies, households and the financial sector and using activity as well as vulnerability measures of financialisation. We identify seven financialisation hypotheses in the literature and empirically investigate them in a cross-country analysis for 17 OECD countries for the 1997-2007 period. We find that different financialisation measures are only weakly correlated, which suggests the existence of distinct financialisation processes. There is strong evidence across all sectors that financialisation is closely linked to asset price inflation and correlated with a debt-driven demand regime. Financial deregulation encourages financialisation, especially in the financial and household sector. By contrast, there is limited evidence that market-based financial systems tend to be more financialised, meaning financialisation can occur with large banks. Foreign financial inflows do not seem to be a main driver. We do not find indication that a secular investment slowdown precedes financialisation. Overall, our findings suggest that financialisation should be understood as variegated process, playing out differently across economic sectors in different countries. |
| Keywords: | financialisation, cross country analysis, financial deregulation, property prices |
| JEL: | B50 B51 G10 G20 G30 P51 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp1619&r=pke |
| By: | Alejandro Toledo (Stanford University) |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:emf:glpapr:2016povertyineq&r=pke |
| By: | Deepankar Basu (Department of Economics, University of Massachusetts - Amherst) |
| Abstract: | In this paper, I investigate the phenomenon of long waves of capitalist development from two perspectives. First, I look for evidence of long waves of economic growth taking the dates for turning points of long waves from the historical literature (Mandel, 1995). Using historical data for 20 capitalist countries from the Maddison-Project, I find that the growth rate of real per capita GDP (and real GDP) is significantly higher in the upswing than in the downswing phase of long waves. I interpret this as evidence of long waves of economic activity. Second, I revisit the method used by Gordon, Weisskopf and Bowles (1983) to identify long waves, using historical data on the U.S. economy from Dumenil and Levy (2013). I use this definition of long waves to test their hypothesis that business cycle downturns are ‘reproductive’ during the upswing phase and ‘non- reproductive’ during the downswing phase of long waves. I find evidence in support of the hypothesis. |
| Keywords: | capitalism, long waves, expected profitability |
| JEL: | B14 B24 B51 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2016-15&r=pke |
| By: | Leon Podkaminer |
| Abstract: | The last 50 years have produced a series of revolutionary technological changes. These decades have also witnessed a truly revolutionary systemic change at the global level. The change started with step-wise internal liberalisations and deregulations in the major industrialised countries. The internal systemic changes have been synchronised with the consecutive waves of liberalisation of international economic relations. Advancing globalisation has been paralleled by the global economic growth becoming progressively slower and unstable. Using the standard tools of time series econometrics (VEC,Granger non-causality testing, ARDL) the paper suggests that trade has not been driving global economic growth (or even that expanding trade may have slowed down global output growth). Large and persistent trade imbalances which have become typical since the mid- 1970s are just one possible reason for trade no longer playing the positive role assigned to it in the trade theories. The second reason relates to the ‘race-to-thebottom’ tendencies with respect to the wage rate which have developed under globalisation. These tendencies may have been responsible for the persistent shortage of aggregate demand at the global level and – consequently – weakening global output growth. |
| Keywords: | world income, world trade, globalisation, wage-led growth, VEC, Granger causality |
| JEL: | F43 F15 F16 O47 O49 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:251&r=pke |
| By: | Betzelt, Sigrid; Santos, Ana C.; Lopes, Cláudia A. |
| Abstract: | The paper examines the interdependencies of financialisation and working conditions by exploring the comparative findings of a micro-level survey on household income, household debt, and working conditions which was conducted in five European countries representing different institutional and socio-economic contexts (Sweden, Germany, the UK, Portugal, Poland). Referring to different strands of debate in economics and sociology in a transdisciplinary way, four hypotheses on the impact of financialisation on the worker-consumer nexus are selected and tested: 1) the social inequality thesis, 2) the debt-income compensation thesis, 3) the cultural transformation thesis, and 4) the disciplinary thesis. The findings reveal that, notwithstanding differences across the five countries, living conditions have worsened after the Global Financial Crisis for many households, with declining household incomes, higher household indebtedness to cover living expenses, and deteriorated working conditions. Surprisingly, the finance-work nexus has been more detrimental to low-income and non-standard workers in Germany and Poland. Hence, it is concluded that the impact of financialisation on well-being cannot simply be read from the size of national financial systems or the extent of household engagement with finance, nor from mainstream welfare regime typologies. Instead, to better understand these impacts we need to consider the more indirect influence of financialisation on labour market polarization and income distribution. |
| Keywords: | EU,financialisation,inequality,household debt,working conditions,labour market segmentation |
| JEL: | D14 G01 I31 J50 J81 P16 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ipewps:772016&r=pke |
| By: | Vanda Almeida |
| Abstract: | This paper provides a detailed empirical assessment of the evolution of income inequality and the redistributive effects of the tax and transfer system following the 2007-2008 crisis. It focuses on the US case, drawing on data from the Current Population Survey for the period 2007-2012. Contrary to most existing studies, it uses of a wide range of inequality indicators and looks in detail at several sections of the income distribution, allowing for a clearer picture of the heterogeneous consequences of the crisis. Furthermore, it analyses the contribution of different types of taxes and transfers, beyond the overall cushioning effect of the system, which allows for a more refined assessment of its effectiveness. Results show that although the crisis implied income losses across the whole income distribution, the burden was disproportionately born by low to middle income groups. Income losses experienced by richer households were relatively modest and transitory, while those experienced by poorer households were not only strong but also highly persistent. The redistributive system had a crucial role in taming the increase in income inequality in the immediate aftermath of the crisis, and during the GR years, particularly cash transfers. After 2010, however, its effect became weaker and income inequality experienced a new surge. The findings of this paper contribute to a better understanding of the distributional consequences of aggregate crises and the role of tax and transfer policies in stabilising the income distribution in a crisis aftermath. |
| Keywords: | Crisis, Gini, Income, Inequality, Income tax, Low income, Personal Income Distribution, Redistribution, Safety net, Transfers |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:don:donwpa:096&r=pke |
| By: | Michel De Vroey (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)) |
| Abstract: | In this review, I argue that Forder makes a fine job in debunking the story told by Friedman in his Nobel prize lecture about the Phillips curve yet fails to assess the validity of Phelps’s and Friedman’s contributions to the Phillips curve theory. |
| Keywords: | Phillips curve, A.W. Phillips, M. Friedman, E. Phelps |
| JEL: | B22 B30 E24 E31 |
| Date: | 2016–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2016032&r=pke |
| By: | W. Walker Hanlon |
| Abstract: | While the Industrial Revolution brought economic growth, there is a long debate in economics over the costs of the pollution externalities that accompanied early industrialization. To help settle this debate, this paper introduces a new theoretically-grounded strategy for estimating the impact of industrial pollution on local economic development and applies this approach to data from British cities for 1851-1911. I show that local industrial coal use substantially reduced long-run city employment growth over this period. Moreover, a counterfactual analysis suggests that plausible improvements in coal use efficiency would have led to substantially higher urbanization rates in Britain by 1911. |
| JEL: | N13 N53 Q52 R11 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22921&r=pke |
| By: | Bjerkholt, Olav (Dept. of Economics, University of Oslo) |
| Abstract: | The paper is about Wassily Leontief’s path towards the discovery of input-output economics, published in the Review of Economic Statistics in 1936 and 1937 and in the 1941 monograph The Structure of American Economy, 1919-1929. The aim has more specifically been to look more closely into how Leontief’s discovery was rooted in earlier career and experience. The paper sets out an account of Leontief’s life from his childhood and youth in St. Petersburg, his study years in Berlin, his research experience at the Institute of World Economics in Kiel, and the circumstances that brought him to the United States in 1931 and to Harvard shortly afterwards. |
| Keywords: | Leontief; input-output |
| JEL: | B31 D57 |
| Date: | 2016–12–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2016_018&r=pke |