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on Post Keynesian Economics |
| By: | Flavia Dantas; L. Randall Wray |
| Abstract: | Aging demographics, "social shifts," and other supply-side and institutional factors have commonly been blamed for the fall in the US labor force participation rate. However, depressed labor force participation for prime-age workers is likely due to a combination of insufficient aggregate demand, weak job creation, and stagnant wages--all of which have been persistent problems over the past three or four decades. Although insufficient aggregate demand is the main problem, general "Keynesian" pump priming is not the answer. Stimulus needs to take the form of targeted job creation to tighten labor markets for less-skilled workers. |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levyop:op_53&r=pke |
| By: | Michalis Nikiforos; Gennaro Zezza |
| Abstract: | From a macroeconomic point of view, 2016 was an ordinary year in the post–Great Recession period. As in prior years, the conventional forecasts predicted that this would be the year the economy would finally escape from the "new normal" of secular stagnation. But just as in every previous year, the forecasts were confounded by the actual result: lower-than-expected growth--just 1.6 percent. The radical policy changes promoted by the new Trump administration dominated economic conditions in the closing quarter of the year and the first quarter of 2017. Markets have responded with exuberance since the November elections, on the expectation that the proposed policy measures would increase profitability by boosting growth and cutting personal and corporate taxes. However, an evaluation of the US economy’s structural characteristics reveals three key impediments to a robust, sustainable recovery: income inequality, fiscal conservatism, and weak net export demand. The new administration’s often conflicting policy proposals are unlikely to solve any of these fundamental problems--if anything, the situation will worsen. Our latest Strategic Analysis provides two medium-term scenarios for the US economy. The "business as usual" baseline scenario (built on CBO estimates) shows household debt and GDP growth roughly maintaining their moribund postcrisis trends. The second scenario assumes a sharp correction in the stock market beginning in 2017Q3, combined with another round of private sector deleveraging. The results: negative growth and a government deficit of 8.3 percent by 2020--essentially a repeat of the crisis of 2007-9. |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levysa:sa_apr_17&r=pke |
| By: | Jon D. Wisman |
| Abstract: | Over the past 40 years, inequality has exploded in the U.S. and significantly increased in virtually all nations. Why? The current debate typically identifies the causes as economic, due to some combination of technological change, globalization, inadequate education, demographics, and most recently, Piketty’s claim that it is the rate of return on capital exceeding the growth rate. But to the extent true, these are proximate causes. They all take place within a political framework in which they could in principle be neutralized or reversed. Indeed, this mistake is itself political. It masks the true cause of inequality and presents it as if natural, due to the forces of progress, just as in pre-modern times it was the will of gods. By examining three broad distributional changes in modern times, this article demonstrates the dynamics by which inequality is a political phenomenon through and through. It places special emphasis on the role played by ideology -- politics’ most powerful instrument -- in making inequality appear as necessary. |
| Keywords: | Political power; Distribution; Legitimation; Ideology |
| JEL: | D63 B00 Z18 N3 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:amu:wpaper:2017-06&r=pke |
| By: | Ebru Kongar; Mark Price |
| Abstract: | Using data from the 2003-14 American Time Use Survey (ATUS), this paper examines the relationship between the state unemployment rate and the time that opposite-sex couples with children spend on childcare activities, and how this varies by the socioeconomic status (SES), race, and ethnicity of the mothers and fathers. The time that mothers and fathers spend providing primary and secondary child caregiving, solo time with children, and any time spent as a family are considered. To explore the impact of macroeconomic conditions on the amount of time parents spend with children, the time-use data are combined with the state unemployment rate data from the US Bureau of Labor Statistics. The analysis finds that the time parents spend on child-caregiving activities or with their children varies with the unemployment rate in low-SES households, African-American households, and Hispanic households. Given that job losses were disproportionately high for workers with no college degree, African-Americans, and Hispanics during the Great Recession, the results suggest that the burden of household adjustment during the crisis fell disproportionately on the households most affected by the recession. |
| Keywords: | Economics of Gender; Time Use; Economic Crises; Unpaid Labor |
| JEL: | D13 J16 J64 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_888&r=pke |
| By: | Rodrik, Dani (University of Chicago) |
| Abstract: | The bulk of global inequality is accounted for by income differences across countries rather than within countries. Expanding trade with China has aggravated inequality in some advanced economies, while ameliorating global inequality. But the "China shock" is receding and other low-income countries are unlikely to replicate China's export-oriented industrialization experience. Relaxing restrictions on cross-border labor mobility might have an even stronger positive effect on global inequality. However it also raises a similar tension. While there would likely be adverse effects on low-skill workers in the advanced economies, international labor mobility has some advantages compared to further liberalizing international trade in goods. I argue that none of the contending perspectives--national-egalitarian, cosmopolitan, utilitarian--rovides on its own an adequate frame for evaluating the consequences. |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp17-003&r=pke |
| By: | Ambrosino, Angela; Fiori, Stefano (University of Turin) |
| Abstract: | The paper argues that in North’s theory the reciprocal influence between organizations and institutions, and between informal and formal norms, is interpretable as a continuous alternation of bottom-up and top-down processes. Bottom-up processes arise from shared beliefs, and they concern how informal norms engender formal norms. Top-down processes explain how formal norms influence informal norms. North does not exhaustively deal with this latter process, although he provides elements which go in this direction. The concept of ideology illustrates this problem. It is conceived as the outcome of bottom-up processes whereby shared interpretations of reality emerge, but not as a tool used by norm entrepreneurs to trigger top-down processes of change in informal norms. Since formal norms incorporate ideologies, these processes concern how formal norms give shape to informal norms. The paper suggests that theories of social construction – with specific attention to legal studies, international relations inquiries, and Schumpeterian approaches – can integrate North’s view. |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:uto:dipeco:201707&r=pke |
| By: | Kene Boun My (BETA - University of Strasbourg, 61 avenue de la Forˆet Noire - 67085 Strasbourg Cedex); Camille Cornand (Univ Lyon, CNRS, GATE L-SE UMR 5824, F-69130 Ecully, France); Rodolphe Dos Santos Ferreira (BETA-Strasbourg University, 61 avenue de la Forêt Noire - 67085 Strasbourg Cedex, France; Catolica Lisbon School of Business and Economics) |
| Abstract: | In Keynes’ beauty contest, agents make evaluations reflecting both an expected fundamental value and the conventional value expected to be set by the market. They thus respond to fundamental and coordination motives, respectively, the prevalence of either being set exogenously. Our contribution is twofold. First, we propose a valuation game in which agents strategically choose how to weight each motive. This game emphasises public information leads agents to favour the coordination motive. Second, we test the game through a laboratory experiment. Subjects tend to conform to theoretical predictions, except when fundamental uncertainty is low relative to strategic uncertainty. |
| Keywords: | dispersed information, public information, beauty contest, coordination, experiment |
| JEL: | D84 C92 E12 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1712&r=pke |
| By: | Bridges, Jonathan (Bank of England); Jackson, Christopher (Bank of England); McGregor, Daisy (Bank of England) |
| Abstract: | We investigate the role of private sector credit in shaping the severity of recessions. Using a sample of 130 downturns in 26 advanced economies since the 1970s, we assess whether the growth or level of credit is the better predictor of the severity of a recession. In addition to GDP we examine other metrics of severity, including unemployment and labour productivity. We find that a period of rapid credit growth in the immediate run-up to a recession predicts a deeper and longer downturn than when credit growth has been subdued, whether associated with a systemic banking crisis or not and whether that credit growth reflects borrowing by households or businesses. Credit growth is a more statistically and economically significant predictor of a recession’s severity than the level of indebtedness, though there is some evidence that the effect of a credit boom is greater when leverage is high. A build-up in credit predicts worse recessions in terms of lower GDP per capita, higher unemployment and lost labour productivity. |
| Keywords: | Recessions; productivity; local projections |
| JEL: | E51 G01 N10 |
| Date: | 2017–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0659&r=pke |
| By: | John A. Bishop (East Carolina University, U.S.A.); Jonathan Lee (East Carolina University, U.S.A.); Lester A. Zeager (East Carolina University, U.S.A.) |
| Abstract: | Questions about the adequacy of the official poverty measure led to the development of the Supplemental Poverty Measure, designed to be released concurrently with the official poverty measure. We raise two concerns with the Supplemental Poverty Measure: a discontinuity in the economies of scale implied by the equivalence scale and the adjustment for local prices using only housing costs. We propose corrections for both issues that can be applied by anyone using the public use files of the Current Population Survey. The changes we propose would have the greatest effect on poverty rates for the elderly and would reduce the difference in poverty rates by metro status. |
| Keywords: | supplemental poverty measure, equivalence scales, spatial price index. |
| JEL: | I32 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq201-429&r=pke |
| By: | Norris, Pippa (Harvard University) |
| Abstract: | The predominantly sunny end-of-history optimism about democratic progress, evident in the late-1980s and early-1990s following the fall of the Berlin Wall, has turned rapidly into a more pessimistic zeitgeist. What helps us to understand whether we have reached an inflection point--and whether even long-established European and American democracies are in danger of backsliding? This essay draws on Juan Linz and Alfred Stepan's Problems of Democratic Transition and Consolidation which theorizes that consolidation occurs when three conditions are met: Culturally, the overwhelming majority of people believe that democracy is the best form of government, so that any further reforms reflect these values and principles. Constitutionally, all the major actors and organs of the state reflect democratic norms and practices. Behaviorally, no significant groups actively seek to overthrow the regime or secede from the state. Evidence throws new light on the contemporary state of each of Linz and Stepan's conditions in Western democracies. Culturally the data suggests that, when compared with their parents and grandparents, Millennials in Anglo-American democracies express weaker support for democratic values, but this is not a consistent pattern across Western democracies and post-industrial societies. It is also a life-cycle rather than a generational effect. Constitutionally, trends from estimates by Freedom House and related indicators provide no evidence that the quality of institutions protecting political rights and civil liberties deteriorated across Western democracies from 1972 to end-2016. Most losses occurred under hybrid regimes. Behaviorally, the most serious contemporary threats to Western liberal democracies arise from twin forces that each, in different ways, seek to undermine the regime: sporadic and random terrorist attacks on domestic soil, which damage feelings of security, and the rise of populist-authoritarian forces, which feed parasitically upon these fears. |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp17-012&r=pke |