|
on Post Keynesian Economics |
| By: | Daniele Girardi (Department of Economics, University of Massachusetts, Amherst); Riccardo Pariboni (Department of Economics, Roma Tre University) |
| Abstract: | This paper looks at the effect of demand shocks on the investment share of the economy. Using panel data on 20 OECD countries, we show that the rate of growth of autonomous demand (exports, public spending and housing investment) is positively correlated with subsequent values of the share of business investment in GDP. By means of an instrumental-variables strategy, we confirm a positive effect of demand dynamics on the business investment share. We instrument autonomous demand with US demand for imports interacted with exposure to trade with the US, openness to trade of a country’s main export destinations, and military spending. A permanent 1% increase in autonomous demand growth raises the investment share by 1.5 to 1.9 percentage points of GDP in our preferred panel IV specification. Our results provide empirical support for the view that the influence of aggregate demand on capital accumulation can be a major source of hysteresis. Our results are inconsistent with the canonical New Keynesian 3-equations model, the Neo-Kaleckian model with flexible equilibrium utilization and Classical-Marxian growth models. A positive influence of autonomous demand on the investment share is instead compatible with demand-led models in which capacity adjusts to demand in the long-run. |
| Keywords: | Hysteresis, Investment, Demand-led Growth, Capacity Adjustment, Supermultiplier |
| JEL: | C26 E11 E12 E22 O41 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2018-18&r=pke |
| By: | Jan Kregel |
| Abstract: | Ten years after the fall of Lehman Brothers and the collapse of the US financial system, most commentaries remain overly focused on the proximate causes of the last crisis and the regulations put in place to prevent a repetition. According to Director of Research Jan Kregel, there is a broader set of lessons, which can be unearthed in the work of Distinguished Scholar Hyman Minsky, that needs to play a more central role in these debates on the 10th anniversary of the crisis. This insight begins with Minsky's account of how crisis is inherent to capitalist finance. Such an account directs us to shore up those government institutions that can serve as bulwarks against the inherent instability of the financial system--institutions that can prevent that instability from turning into a prolonged crisis in the real economy. |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levypn:18-5&r=pke |
| By: | Italo Pedrosa (Federal University of Rio de Janeiro); Dany Lang (Centre d'Economie de l'Université de Paris Nord (CEPN)) |
| Abstract: | In Minsky's Financial Instability Hypothesis (FIH), financial fragility of non-financial firms tends to increase endogenously over the cycle along with the macroeconomic leverage ratio. This analysis has been criticized for two main complementary reasons: firstly, it does not duly consider the aggregate pro-cyclicallity of profits; secondly, due to an overly aggregate analysis, some inferences about the relation between aggregate leverage and systemic fragility are potentially misleading. In this paper, we take these criticisms into account by building an agent-based stock-flow consistent model which integrates the real and financial sides of the economy in a fundamentally dynamic environment. We calibrate and simulate our model and show that the dynamics generated are in line with empirical evidence both at the micro and the macro levels. We create a financial fragility index and examine how systemic financial fragility relates to the aggregate leverage along the cycle. We show that our model yields both Minskian regimes, in which the aggregate leverage increases along with investment, and Steindlian regimes, where investment brings leverage down. Our key findings are that the sensitivity of financial fragility to aggregate leverage is not as big as assumed in the literature; and that the distribution of profits amongst firms does matter for the stability of the system, both statically (immediately for financial fragility) and dynamically (because of the dynamics of leverage). |
| Keywords: | financial fragility; firms; leverage; cash flow; distribution |
| JEL: | C63 D39 E32 G01 G32 O31 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:upn:wpaper:2018-11&r=pke |
| By: | Rogério Arthmar (Department of Economics, Universidade Federal do Espírito Santo); Michael McLure (Business School, The University of Western Australia) |
| Abstract: | This paper examines Keynes's relationship with Gustav Cassel and Eli Hecksher and puts together the events related to him being awarded the 1939 Söderström Gold Medal by The Royal Swedish Academy of Sciences. The correspondence between these economists during the interwar years is detailed, with emphasis on their personal approaches to economic theory and history. Cassel's and Heckscher's critical reviews of Keynes's General Theory are outlined as well. Lastly, an account is provided of the grounds for conferring the award on Keynes while also drawing attention to the conflict-laden proceedings within the Academy when the conferral of the ward was being contemplated. The final remarks ponder why Keynes received the prize in spite of the prevailing controversy within the Swedish School over the General Theory at the time. |
| Keywords: | European reconstruction, purchasing power parity, mercantilism, effective demand, history of science |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:uwa:wpaper:17-17&r=pke |
| By: | Matthieu Renault |
| Abstract: | Contrarily to standard accounts of the history of macroeconomics, recent research has increasingly paid attention to the Old Keynesians’ criticisms of the New Classical Economics. In this paper, I study another study case through Edmond Malinvaud’s criticisms of the New Classical Economics from the 1980s onwards. I argue that his opposition was radical in the sense that it was both multi-dimensional and systematic. I show, then, that the way he opposed reveals his own conception of macroeconomics, which owed much to the methodology and the practice of macroeconometric modeling. Finally, I suggest that the study of Malinvaud’s opposition to the New Classical Economics shed light on both the nature and rationale of the Old Keynesians’. |
| Keywords: | History of Macroeconomics; Edmond Malinvaud; Old Keynesians; Neoclassical Synthesis; The New Classical Economics; Macroeconometric modeling |
| JEL: | B22 B23 B31 B41 |
| Date: | 2018–11–29 |
| URL: | http://d.repec.org/n?u=RePEc:spa:wpaper:2018wpecon21&r=pke |
| By: | Ravagnani, Fabio |
| Abstract: | In two passages of Production of Commodities, Sraffa states very concisely that the analysis presented also applies to viable economic systems in which the means of production consumed are not fully replaced. This aspect of the book has been nearly ignored for a long time, and only in the last two decades have some scholars begun to discuss it in depth. Since these scholars basically rely on the terse references to non-self-replacing systems appearing in Sraffa’s published works, however, a question is left pending in their contributions—what exactly was Sraffa’s position as regards the nature and relevance of those systems? The present note seeks to shed light on this question by systematically examining the pertinent passages of Sraffa’s unpublished manuscripts. On the basis of this examination, the final section briefly comments on some debatable aspects of current renditions of Sraffa’s theory. |
| Keywords: | Sraffa; Production Systems; Modern Classical Approach |
| JEL: | B24 B51 E11 |
| Date: | 2018–11–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:90259&r=pke |
| By: | Mujcic, Redzo (University of Queensland); Oswald, Andrew J. (University of Warwick) |
| Abstract: | Nearly 100 years ago, the philosopher and mathematician Bertrand Russell warned of the social dangers of widespread envy. One view of modern society is that it is systematically developing a set of institutions - such as social media and new forms of advertising - that make people feel inadequate and envious of others. If so, how might that be influencing the psychological health of our citizens? This paper reports the first large-scale longitudinal research into envy and its possible repercussions. The paper studies 18,000 randomly selected individuals over the years 2005, 2009, and 2013. Using measures of SF-36 mental health and psychological well-being, four main conclusions emerge. First, the young are especially susceptible. Levels of envy fall as people grow older. This longitudinal finding is consistent with a cross-sectional pattern noted recently by Nicole E. Henniger and Christine R. Harris, and with the theory of socioemotional regulation suggested by scholars such as Laura L. Carstensen. Second, using fixed-effects equations and prospective analysis, the analysis reveals that envy today is a powerful predictor of worse SF-36 mental health and well-being in the future. A change from the lowest to the highest level of envy, for example, is associated with a worsening of SF-36 mental health by approximately half a standard deviation (p |
| Keywords: | envy, age, SF-36, mental health, well-being, life satisfaction, longitudinal data |
| JEL: | I18 I31 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11922&r=pke |
| By: | Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (University of South Africa, Pretoria, South Africa) |
| Abstract: | This study assesses human development thresholds at which mobile banking mitigates poverty and inequality in 93 developing countries for the year 2011. Mobile banking entails: ‘mobile used to pay bills’ and ‘mobile used to receive/send money’, while the modifying policy indicator is the human development index (HDI). The empirical evidence is based on interactive quantile regressions. A summary of the findings shows that with increasing human development: (i) ‘mobiles used to pay bills’ contribute to reducing inequality in countries at the bottom and top ends of the inequality distribution, while (ii) ‘mobiles used to receive/send money’ have an appealing role in promoting inclusive development in all poverty distributions, with the exception of the top-end or 90th decile. The modifying thresholds of the HDI vary from 0.542 to 0.632 and 0.333 to 0.705 in inequality and poverty specifications, respectively. The relevance of the findings is discussed in light of the current transition from Millennium Development Goals to Sustainable Development Goals. |
| Keywords: | Mobile banking, Quality of growth, poverty, inequality |
| JEL: | G20 O40 I10 I20 I32 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:afe:wpaper:18/019&r=pke |
| By: | Reynaud, Emmanuel. |
| Abstract: | This paper uses the United Nations Global Policy Model (GPM) to assess how increasing minimum wages might impact the South African economy by increasing the share of income going to workers (the ‘labour share’) – in contrast to the share that accrues to capital through profits and property income. We simulate the implementation of a national minimum wage through increasing labour compensation in a manner which sees real-wage growth ‘catching up’ to and then outstripping labour-productivity growth in the period 2015–2025; we refer to this as increasing ‘relative’ real wages. The results indicate that higher ‘relative’ real wage growth rebalances national income: the labour share increases since relative wages rise (by definition) and employment is roughly maintained (endogenous response). A rising labour share has in turn a positive effect overall on the South African economy in the model: consumption expenditure rises as national income shifts towards wage earners as a whole, who have a higher propensity to consume than profit earners. However, there are moderate or small negative effects as investment as a share of GDP falls marginally, as the profit rate falls (though the absolute level of investment is higher as GDP rises), employment declines marginally, and there is slight weakening of the current account. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:995005693502676&r=pke |