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on Post Keynesian Economics |
| By: | Valeria Jimenez; Ryan Woodgate |
| Abstract: | Despite the scientific consensus on the need to achieve net-zero greenhouse gas (GHG) emissions by 2050 as a key environmental goal, there is little consensus among economists on the best pathway to achieve this crucial goal. Particularly contentious is what achieving net zero in time implies for the growth rate of the global economy. In the search for a post-Keynesian answer, we first review the related literature showing the divide between degrowth/post-growth authors, who argue that net zero implies a need for negative or zero growth, and Keynesian green growth advocates, who argue that positive growth rates are required. Motivated by these controversies, we develop a simple Sraffian supermultiplier model of the global economy, where GHG emissions depend on the stock of capital in production and absorption depends on the stock of natural capital, from which we can formally demonstrate that the goal of net-zero GHG emissions implies a constraint on the growth rate of the global economy. Crucially, this “balance-of-emissions constraint” on growth depends on a number of key parameters that are influenced by public policy, such as the share of public spending on natural capital, the share of investment in low-emission production capital, and the parameters that enter the supermultiplier, which determine the size of the rebound effect. From this, we model different pathways to net zero and argue for an interventionist policy mix, which we show brings about net zero emissions much more rapidly than any laissez-faire alternative scenario, even one with utmost optimism about future green technology. |
| Keywords: | Degrowth, post-growth, green growth, net zero, structural change |
| JEL: | E12 O44 Q54 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2507 |
| By: | Michalis Nikiforos |
| Abstract: | This chapter discusses the “utilization controversy, ” the debate on whether or not demand plays a role in the determination of the rate of utilization in the long run. First, it explains why utilization has a central role in the various theories of growth and distribution. Second, it examines the theory of utilization and explains how the standard model does not recognize a role of demand and outlines recent theoretical advancements that justify an endogenous-to-demand long-run rate of utilization. Finally, it examines different estimates of utilization. It argues that the Federal Reserve measure of utilization, commonly employed in the debate, is inappropriate to capture long-run variations in utilization. Other measures such as the Average Workweek of Capital or the National Emergency Utilization Rate are better suited. These estimates provide empirical support for a utilization rate which is endogenous to demand in the long run. |
| Keywords: | Accumulation; Growth; Distribution; Utilization |
| JEL: | B22 D20 D30 O40 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2508 |
| By: | Emmanuel Caiazzo (University of Naples Federico II; Department of Economics and Statistics, University of Naples Federico II, CSEF, and MoFiR) |
| Abstract: | This paper provides an early warning exercise suggesting that in complex economies, characterized by the production of knowledge-intensive products, systemic banking crises are more frequent, even after considering standard predictors of crises. We relate our findings to standard contributions in development theory linking economic growth to structural transformation of the economy. In this perspective, we argue that while transitioning from a simple to a more complex productive structure can promote economic growth, it can also increase financial instability. |
| Keywords: | Financial fragility; Economic complexity Index; production Capabilities |
| JEL: | G01 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:anc:wmofir:190 |
| By: | Patrick T. Harker |
| Abstract: | In his opening remarks at today’s National Association of Economic Educators 2025 Spring Professional Development Conference, Federal Reserve Bank of Philadelphia President and CEO Patrick Harker stated that “there is no more pressing time for economic education than right now.” “It’s vital to have an educated society that understands how their decisions, as individuals, play a direct role in our economy, ” said Harker. “The more young people learn about the impacts of these decisions, the better it is for them as consumers and citizens, and the better it will be for our economy in the long run.” He emphasized the Philly Fed’s ongoing commitment to economic educators in continuing “to be a resource [they] can rely upon.” |
| Date: | 2025–03–06 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedpsp:99660 |