nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2013‒01‒07
fourteen papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  1. Technical change in a combined Classical - Evolutionary multi-sector economy: Causes, Effects and implications for economic and social policy By Rainer, A.
  2. Institutions and the Sectoral Organization of Production By Ana Fernandes
  3. Gender Control and Labour Input: Who Controls the Proceeds from Staple Crop Production among Zambian Farmers? By Shipekesa, Arthur M.; Jayne, Thomas S.
  4. Turing’s Economics-- A Birth Centennial Homage By K. Vela Velupillai
  5. Income distribution, profit, and real shares By Kakarot-Handtke, Egmont
  6. Crisis and methodology: some heterodox misunderstandings By Kakarot-Handtke, Egmont
  7. The common error of common sense: an essential rectification of the accounting approach By Kakarot-Handtke, Egmont
  8. "Primary and Secondary Markets" By Egmont Kakarot-Handtke
  9. The rhetoric of failure: a hyper-dialog about method in economics and how to get things going By Kakarot-Handtke, Egmont
  10. Money creation and financial instability: An agent-based credit network approach By Lengnick, Matthias; Krug, Sebastian; Wohltmann, Hans-Werner
  11. Outlook of China’s State-Owned Enterprises Transformation By hu, yi
  12. Per un’Interpretazione del Dualismo Italiano: Complementarità Istituzionale o Isteresi Congiunturale? By Nicolò Bellanca
  13. Formal and informal institutions:towards a deeper understanding of a complex relationship. Some cases in the labour market By Sebastiano Fadda
  14. Key sectors in the Moroccan economy: An application of input-output analysis By Tounsi, Said; Ezzahid, El Hadj; Alaoui, Aicha El; Nihou, Abdelaziz

  1. By: Rainer, A.
    Abstract: The causes and effects of technical change are investigated in a multi-sector economy. The underlying modelling framework is a hybrid of Classical economic thinking as introduced by Ricardo (1821) and formalised by Sraffa(1960), and of Evolutionary economics following Schumpeter (1934)and Nelson & Winter (1982). The special case of one sector is elaborated at length, leading to several implications concerning economic and legal policy in the presence of ongoing technical change. This includes technological unemployment and technologically induced wage inequalities which are either temporary or persistent, and also the problem of effective demand in a dynamic economic environment is discussed. Within the model business cycles as a consequence of innovative general purpose technologies with subsequent technical progress can be illustrated.
    Keywords: evolutionary economics; replicator dynamics; technical change
    JEL: B52
    Date: 2012
  2. By: Ana Fernandes
    Abstract: The impact of economic institutions on development is presently taken for granted but there is surprisingly scarce evidence on the channels through which institutions affect the organization of output. Imperfections in contractual enforcement, for example, could lead firms to adopt technologies that inefficiently minimize dependence on other sectors, thus going hand in hand with a reduction in productivity. Another channel would be the concentration of economic activity in sectors that have fewer interactions with other sectors. Using a dataset on manufacturing, this paper presents empirical evidence supporting both effects: better contractual enforcement raises relatively more the labor share of sectors that interact more with other sectors; further, good governance also boosts relatively more labor productivity in more complex subsectors of manufacturing. Both effects are strongest among countries whose labor productivity ranks in the second and third quartiles of the world productivity distribution and they are mute for the two extreme groups of poor and developed economies.
    Keywords: Sectoral organization of output; institutions; contractual enforcement; input-output; complexity
    JEL: O43 P16
    Date: 2012–12
  3. By: Shipekesa, Arthur M.; Jayne, Thomas S.
    Abstract: Because gender roles and relations are dynamic, programs built on a solid up-to-date understanding of how men and women share labor responsibilities and the proceeds from their agricultural activities have the potential to bring forth positive outcomes. Better information on gender-based constraints and intra-household power dynamics form the foundation for programs that can enhance gender equity.
    Keywords: Gender Control, Zambia, Food Security and Poverty, Labor and Human Capital,
    Date: 2012–09
  4. By: K. Vela Velupillai
    Abstract: In this paper, in homage to Alan Turing’s birth centennial, I try to develop what may be called Turing’s Economics. I characterize the contents of such an ‘economics’ in terms of the conceptual and mathematical tools developed by Alan Turing. It is shown, in more and less detail, how these concepts and tools could be used in core areas of economic theory to raise fundamental queries on claims of computability – and answer them precisely. The conclusion is that the field of Turing’s Economics would – should – contribute to a reorientation of economics in the direction of serious considerations of mathematical epistemology
    Keywords: Computability, Problem Solving, Undecidability, Epistemology, Computational economics
    JEL: B41 C63 C65 C68 D58
    Date: 2012
  5. By: Kakarot-Handtke, Egmont
    Abstract: This paper clarifies first the nature and significance of financial profit by applying the structural axiom set as consistent point of departure. As a crucial result the fundamental theorem of income distribution emerges. It states: profit is no factor income. Since the individual firm is blind to this structural fact it subjectively interprets profit as some kind of reward. As a matter of fact, firms do not ‘make’ profit, they only redistribute it among themselves. With profit consistently defined it is possible to determine the nominal and real shares of the elementary income categories wage income and distributed profit.
    Keywords: new framework of concepts; structure-centric; axiom set; financial profit; distributed profit; retained profit; key ratios; period core; invisible redistributor; nominal wage share; real wage share
    JEL: E25 E20
    Date: 2012–03–02
  6. By: Kakarot-Handtke, Egmont
    Abstract: Whether justified by the concrete circumstances or not, an economic crisis is, by simple association, taken as an implicit refutation of the invisible hand vision and the underlying theory. The fundamental heterodox critique locates the source of apparent theoretical difficulties at the level of methodology. Although acceptable in principle, this belief involves some actual misunderstandings with regard to the respective roles of deterministic laws and deductive reasoning. In order to clarify these, the present paper revisits some key episodes in the history of economic methodology.
    Keywords: financial crisis; intellectual crisis; power of ideas; material consistency; logical consistency; determinism; deductive method; failure of reason; common sense; domain of economics; Cournot’s Unfitness Proposition
    JEL: B10 B20 B41
    Date: 2012–06–13
  7. By: Kakarot-Handtke, Egmont
    Abstract: The present paper takes the explanatory superiority of the integrated monetary approach for granted. It will be demonstrated that the accounting approach could do even better provided it frees itself from theoretically ill-founded notions like GDP and other artifacts of the equilibrium approach. National accounting as such does not provide a model of the economy but is the numerical reflex of the underlying theory. It is this theory that will be scrutinized, rectified and ultimately replaced in the following. The formal point of reference is ‘the integrated approach to credit, money, income, production and wealth’ of Godley and Lavoie.
    Keywords: new framework of concepts; structure-centric; axiom set; primacy of theory; income; profit; distributed profit; money; flow; residual; transaction matrix; general complementarity
    JEL: E01 B41
    Date: 2012–08–20
  8. By: Egmont Kakarot-Handtke
    Abstract: The analytical starting point determines the course of a theoretical investigation and, ultimately, the productiveness of an approach. The classics took production and accumulation as their point of departure; the neoclassics, exchange. Exchange implies behavioral assumptions and notions like rationality, optimization, and equilibrium. It is widely recognized that this approach has led into a cul-de-sac. To change a theory means to change its premises; or, in Keynes's words, to "throw over" the axioms. The present paper swaps the standard behavioral axioms for structural axioms and applies the latter to the analysis of the emergence of secondary markets from the flow part of the economy. Real and nominal residuals at first give rise to the accumulation of the stock of money and the stock of commodities. These stocks constitute the demand-and-supply side of secondary markets. The pricing in these markets is different from the pricing in the primary markets. Realized appreciation in the secondary markets is different from income or profit. To treat primary and secondary markets alike is therefore a category mistake. Vice versa, to take a set of objective propositions as the analytical starting point yields a comprehensive and consistent theory of market exchange and valuation.
    Keywords: New Framework of Concepts; Structure-Centric; Axiom Set; Residuals; Real and Monetary Stocks; Money; Credit; Financial Saving; Nonfinancial Saving; Net Worth; Financial Profit; Nonfinancial Profit; Retained Profit; Appreciation; Wealth
    JEL: D40 D50
    Date: 2012–12
  9. By: Kakarot-Handtke, Egmont
    Abstract: All are agreed that orthodox economics is unsatisfactory but there is wide disagreement, especially among heterodox critics, whether the problems lie at the level of substantive theory or at the level of methodology. This paper gives first an overview of the methodological questions at issue. The frame of reference includes J. S. Mill, Jevons, Popper, Keynes, and Lawson. Drawing on the conclusions, the domain of economics is subsequently refocused. Human behavior is moved from the center to the periphery. From elementary systemic properties the relation of income and profit is then consistently derived. This solves the profit conundrum.
    Keywords: new framework of concepts; structure-centric; axiom set; income; profit; Mill’s Impossibility Proposition; Physicist’s Nonentity Proposition; Cournot’s Unfitness Proposition; Hudík’s Independence Proposition
    JEL: B10 B30 B20 E10
    Date: 2012–04–28
  10. By: Lengnick, Matthias; Krug, Sebastian; Wohltmann, Hans-Werner
    Abstract: The authors pick up the standard textbook approach of money creation and develop a simple agent-based alternative. They show that their model is well suited to explain the endogenous creation of money. Although more general, their model still contains the standard results as a limiting case. The authors also uncover a potential instability that is hidden in the standard approach but easily recognized within a strict individual-based and stock-flow consistent version. They show in detail how individual interactions build up systemic risk and how banking crises are triggered by the maturity mismatch of different cash-flows and spread by the depreciation of non-performing loans (e.g. interbank or government debt). --
    Keywords: financial instability,endogenous money,agent-based macroeconomics,stock-flow consistency,disequilibrium analysis
    JEL: E42 E51 C63 G01
    Date: 2012
  11. By: hu, yi
    Abstract: This paper created a framework for a dynamic institutional analysis. (1) Reduction of the conviction and motivation inside economic factors (We think that this is the inducing factors of system changes ), (2) system changes will be ultimately beneficial to the efficiently allocation of resources, (3) the typical economic factors. This is from the old institutional analysis framework, Mr. Frank Knight's economic thought and historical materialism. Based on this analytical framework, we researched Transformation of China's state-owned enterprises, we come to conclusion that it is the time for the market forces play an basic role in the allocation of resources.
    Keywords: dynamic institutional analysis; conviction; soft system
    JEL: B25
    Date: 2012–05–17
  12. By: Nicolò Bellanca (Dipartimento Scienze Economiche, Università degli studi di Firenze)
    Abstract: In questa nota si discutono le recenti ricerche quantitative sulla storia economica italiana post-unitaria. Si valutano, sulla base di tali ricerche, alcuni recenti contributi alla letteratura sul dualismo tra Nord e Sud d’Italia. Infine si propongono due schemi teorici, basati su categorie neo-istituzionaliste, che aiutino a spiegare la genesi e l’evoluzione del dualismo.
    Keywords: Economic dualism; Italy; New institutional economics.
    JEL: B52 O17 Z13
    Date: 2012
  13. By: Sebastiano Fadda (dpt. Economia)
    Abstract: 1. Redefining Institutions 2. Formal and informal institutions 3. The evolution of economic institutions and the interplay between “formal” and “informal” ones 4. Some cases in the labour market
    Keywords: formal and informal institutions, labour market, economic institutions
    JEL: B52 J01
    Date: 2012–03
  14. By: Tounsi, Said; Ezzahid, El Hadj; Alaoui, Aicha El; Nihou, Abdelaziz
    Abstract: The exploration of the structural features and sectoral interdependences of and in an economy is fundamental for the understanding of its modes of functioning and of its transformations over time. Input-output analysis is largely used to fulfill this objective. Furthermore, information provided by the Leontief inverse matrix is useful for the identification of key sectors. This identification may guide policy makers in setting an adequate industrial strategy. In this paper, the classification of productive sectors is performed by using the unweighted Rassmussen approach. The ordering of sectors depends on the intensity of their links with other sectors. Two results ought to be highlighted. First, key sectors of the Moroccan economy reduced to two sectors in 2007 instead of four sectors in 1998. Second, the ordering of sectors is highly sensitive to the precision of the data and to the year in which the classification is realized. --
    Keywords: input-output analysis,backward linkage,forward linkage,unweighted Rassmussen approach,Morocco
    JEL: C67
    Date: 2012

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