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on Post Keynesian Economics |
| By: | Thomas Palley (Economics for Democratic and Open Societies (US)) |
| Abstract: | This paper reconstructs the Keynesian income – expenditure (IE) model to include distinctions between government purchases of private sector output, government production, and government job guarantee program (JGP) employment. Analytically, including those distinctions transforms the model from a single sector model into a multi-sector model. It also surfaces the logic behind the automatic stabilizer property of JGP employment. The model is then extended to include Kaleckian income distribution effects which contribute to explaining why expenditure multipliers vary by type of fiscal expenditure. The Kaleckian version generates a new balanced budget multiplier driven by changed composition of government spending. It also illuminates some macroeconomic implications of privatization of government produced services. |
| Keywords: | Government spending, government production, balanced budget multiplier, automatic stabilizers, job guarantee program |
| JEL: | E10 E12 E62 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2107&r= |
| By: | Giovanni Dosi (Scuola Superiore Sant'Anna, Pisa (Italy)); Francesco Lamperti (Institute of Economics and EMbeDS, Scuola Superiore Sant'Anna; RFF-CMCC European Institute on Economics and the Environment); Mariana Mazzucato (Institute for Public Purpose and Policy, University College London (London, UK)); Mauro Napoletano (Author-Workplace-Name: Université Côte d'Azur, CNRS, GREDEG, France; SKEMA Business School; OFCE Sciences-Po); Andrea Roventini (Institute of Economics and EMbeDS, Scuola Superiore Sant'Anna; Sciences Po, OFCE) |
| Abstract: | We study the impact of alternative innovation policies on the short- and long-run performance of the economy, as well as on public finances, extending the Schumpeter meeting Keynes agentbased model (Dosi et al., 2010). In particular, we consider market-based innovation policies such as R&D subsidies to firms, tax discount on investment, and direct policies akin to the "Entrepreneurial State" (Mazzucato, 2013), involving the creation of public research-oriented firms diffusing technologies along specic trajectories, and funding a Public Research Lab conducting basic research to achieve radical innovations that enlarge the technological opportunities of the economy. Simulation results show that all policies improve productivity and GDP growth, but the best outcomes are achieved by active discretionary State policies, which are also able to crowd-in private investment and have positive hysteresis effects on growth dynamics. For the same size of public resources allocated to market-based interventions, "Mission" innovation policies deliver significantly better aggregate performance if the government is patient enough and willing to bear the intrinsic risks related to innovative activities. |
| Keywords: | Innovation policy, mission-oriented R&D, entrepreneurial state, agent-based modelling |
| JEL: | O33 O38 O31 O40 C63 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2021-25&r= |
| By: | Luke Petach; Daniele Tavani (Colorado State University (US)) |
| Abstract: | We study a two-class model of growth and the distribution of income and wealth at the intersection of contemporary work in classical political economy and the post-Keynesian tradition. The key insight is that aggregate demand is an externality for individual firms: this generates a strategic complementarity in production that results in equilibrium under- utilization of the economy’s productive capacity and hysteresis in real GDP per-capita in balanced growth. This equilibrium inefficiency reverberates into both the functional dis- tribution of income and the distribution of wealth: both the wage share and the workers’ wealth share would be higher at full capacity. Consequently, fiscal allocation policy that achieves productive efficiency also attains a higher labor share and a more equitable dis- tribution of wealth. Demand shocks also have permanent level effects. Extensions look at temporary growth and employment effects of fiscal policy with dynamic increasing re- turns, and employment hysteresis. These findings are useful as an organizing framework for thinking through the lackluster economic record of the so-called Neoliberal era, the sluggish recovery of most advanced economies following the Great Recession, and what to expect regarding the recovery from the Covid-19 shock. |
| Keywords: | Externalities, Capacity Utilization, Factor Shares, Wealth Inequality |
| JEL: | D31 D33 D62 E12 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2108&r= |
| By: | Oliver Richters |
| Abstract: | The analogies between economics and classical mechanics can be extended from constrained optimization to constrained dynamics by formalizing economic (constraint) forces and economic power in analogy to physical (constraint) forces in Lagrangian mechanics. In the differential-algebraic equation framework of General Constrained Dynamics (GCD), households, firms, banks, and the government employ forces to change economic variables according to their desire and their power to assert their interest. These ex-ante forces are completed by constraint forces from unanticipated system constraints to yield the ex-post dynamics. The flexible out-of-equilibrium model can combine Keynesian concepts such as the balance sheet approach and slow adaptation of prices and quantities with bounded rationality (gradient climbing) and interacting agents discussed in behavioral economics and agent-based models. The framework integrates some elements of different schools of thought and overcomes some restrictions inherent to optimization approaches, such as the assumption of markets operating in or close to equilibrium. Depending on the parameter choice for power relations and adaptation speeds, the model nevertheless can converge to a neoclassical equilibrium, and reacts to an austerity shock in a neoclassical or post-Keynesian way. |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2106.00483&r= |
| By: | Benest, Serge |
| Abstract: | Following World War II, the director of the Social Sciences Division at the Rockefeller Foundation, the industrial economist Joseph H. Willits, thought it important to extend its activities to Europe, especially France. His agenda was to strengthen institutional economics and to create modern research centers with a view to stabilizing the political situation. In the postwar decade, almost all economic research centers in France were funded by the Foundation, which helped provide greater autonomy to French economists within academia, but failed to reshape French economic training and research. |
| Date: | 2021–05–26 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:3gmf5&r= |
| By: | Miguel D. Ramirez (Department of Economics, Trinity College) |
| Keywords: | Absolute value; constant capital; fetishism; invariable standard;prices of production; profit; relative value; surplus-value; standard commodity; value; variable capital. |
| JEL: | B10 B14 B24 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:tri:wpaper:2101&r= |
| By: | Clive L. Spash |
| Abstract: | Ecological economics has developed as a modern movement with its roots in environmentalism and radical environmental economics. Divisions and conflicts within the field are explored to show why material claiming to fall under the title of ecological economics fails to be representative of progress or the vision which drove socio-economic specialists to interact with ecologists in the first place. The argument is then put forward that ecological economics, as a social science engaging with the natural sciences, is a heterodox school of modern political economy. This is a paper from the Socio-Economics and Environment in Discussion working paper series edited by Clive L. Spash which ran from 2007 to 2009. This particular paper appeared in June 2009 and a revised version was published as a journal article: Spash, C. L. 2011. ‘Social ecological economics: Understanding the past to see the future’. American Journal of Economics and Sociology 70 (2): 340-375. https://doi.org/10.1111/j.1536-7150.2011 .00777.x. |
| Keywords: | ecological economics, methodology, ideology, politics, history |
| JEL: | B55 B4 B29 Q5 Q57 P48 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwsre:sre-disc-2021_06&r= |
| By: | Assous, Michaël |
| Abstract: | Review of “Irving Fisher” by Robert W. Dimand |
| Date: | 2021–05–26 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:m5fbw&r= |
| By: | Khodaiji, Sharmin |
| Abstract: | Review of “Pluralistic Economics and Its History” edited by Ajit Sinha and Alex M. Thomas |
| Date: | 2021–05–26 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:qthmk&r= |