nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2014‒12‒24
nineteen papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Between Scylla and Charybdis: On the place of economic methods and concepts within ecological economics By Strunz, Sebastian; Klauer, Bernd; Ring, Irene; Schiller, Johannes
  2. The Growth in Inter-connectedness in the Scottish Economy 1998-2007; a disaggregated analysis. By Dewhurst, John
  3. Methodological Misconceptions in the Social Sciences. Rethinking social thought and social processes By Fusari, Angelo
  4. EU regional policy and its theoretical foundations revisited By Peter Schmidt
  5. The Sraffian Multiplier for the Greek Economy: Evidence from the Supply and Use Table for the Year 2010 By Mariolis, Theodore; Soklis, George
  6. Classical Theory of Investment. Panel Cointegration Evidence from Thirteen EU Countries By Alexiou, Constantinos; Tsaliki, Persefoni; Tsoulfidis, Lefteris
  7. The ‘new golden age of accumulation’, the new depression and the greek economy By Tsoulfidis, Lefteris
  8. The Status of Yemeni Women : From Aspiration to Opportunity By Nandini Krishnan
  9. Speaking of Corporate Social Responsibility By Liang, H.; Marquis, C.; Renneboog, L.D.R.; Li Sun, Sunny
  10. The Distribution Dynamics of Output Multipliers in Scotland 1998–2007 By Dewhurst, J. H. Ll.
  11. Systemic Complexity in Integrated Thinking By Erik Bjurstrom; Tadanori Yosano; Ulf Johanson
  12. Identifying key sectors using regional input-output model at sub-national level By Sunggoan Choi; Haemyoung Ji; Xiaoyun Zhao
  13. Determinants of success and failure in the internationalisation of the cork business: A tale of two Iberian family firms By João Lopes; Amélia Branco; Francisco Parejo; Jose Rangel
  14. Ethnosizing Immigrants: A Theoretical Framework By Gil S. Epstein; Odelia Heizler (Cohen)
  15. Gender Differences in Attitudes Toward Debt and Financial Position: The Impact of the Great Recession By Mary Eschelbach Hansen; Julie Routzahn
  16. Child and Household Deprivation. A Relationship beyond Household Socio-Demographic Characteristics By Elena Bárcena-Martín; Maite Blázquez; Santiago Budría; Ana I. Moro Egido
  17. The Short- and Long-Run Damages of Fiscal Austerity: Keynes beyond Schumpeter By Giovanni Dosi; Mauro Napoletano; Andrea Roventini; Tania Treibich
  18. The Great Depression, the New Deal, their Evaluation by Mainstream Economists and the Present Crisis of Europe By Stephan Schulmeister
  19. Will Europe’s industry survive the crisis? Competitiveness, employment and the need for an industrial policy By Valeria Cirillo; Dario Guarascio; Mario Pianta

  1. By: Strunz, Sebastian; Klauer, Bernd; Ring, Irene; Schiller, Johannes
    Abstract: Ecological Economics inherently faces a challenge akin to sailing between Scylla and Charybdis. In Greek mythology these are two monsters located on opposite sides of a narrow strait, and falling victim to one or other of them is unavoidable. In the recurring process of establishing and refining its conceptual foundations, Ecological Economics runs the risk of, on the one hand, losing important insights by trying to be radically different from mainstream economics and, on the other hand, becoming a redundant appendix to mainstream environmental economics by routinely applying its concepts and methods. We argue that avoiding both fallacies is possible by using Ecological Economics' orientation towards sustainability as a guiding principle. The scientist's power of judgment supports her decision concerning which methods are suitable for tackling a given sustainability problem. The intersubjective quality of judgment prevents the resulting methodological pluralism from drifting toward arbitrariness.
    Keywords: ecological economics,methodological pluralism,power of judgment,ontology,sustainability
    Date: 2014
  2. By: Dewhurst, John
    Abstract: The measurement of inter-connectedness in an economy using input-output tables is not new, however much of the previous literature has not had any explicit dynamic dimension. Studies have tried to estimate the degree of inter-relatedness for an economy at a given point in time using one input-output table, some have compared different economies at a point in time but few have looked at the question of how interconnectedness within an economy changes over time. The publication in 2010 of a consistent series of input-output tables for Scotland offers the researcher the opportunity to track changes in the degree of inter-connectedness over the seven year period 1998 to 2007. The paper is in two parts. A simple measure of inter-connectedness is introduced in the first part of the paper and applied to the Scottish tables. In the second part of the paper an extraction method is applied to sector by sector to the tables in order to estimate how interconnectedness has changed over time for each industrial sector.
    Keywords: Extraction method, Input-Output Analysis, Inter-connectedness, Scottish economy,
    Date: 2014
  3. By: Fusari, Angelo
    Abstract: Contemporary social teaching suffers from a grave deficiency: it is lacking rules of methodology and procedure suited to social reality that are, in particular, able to reconcile increasing creativity (implying irreversibility) with rationality, which are indispensable for the scientific judgement of theoretical ideas. Unfortunately, this lack is largely ignored, and eminent social scholars have even explicitly and emphatically theorized a rejection of method. This allows rhetorical and literary skills to prevail over the reasons of science, thereby promoting a deceptive instead of constructive pluralism, confusion in the study of contemporary societies and growing ineptitude in their government, what represents a main source of afflictions in the present world. Method is a two-edged sword: it offers powerful assistance in and enhances our capability of understanding and solving the problems of everyday life; but if the chosen method is inappropriate,it can seriously obstruct the advancement of knowledge. Significantly, the best contributions to social knowledge have been ad hoc studies that disregard method and simply apply common sense. But ad hoc studies suffer a lack of coordination, and the neglect of method makes it difficult to evaluate and select findings and results. As a consequence, ad hoc analyses have little chance of stimulating the cumulative growth of knowledge. However, the present study is intended as a contribution that prevents method from becoming a prison for the mind as opposed to a stimulant of creativity and knowledge.
    Keywords: none
    JEL: B4 B40 B50 B51 B52 B53 B59 Y90
    Date: 2013
  4. By: Peter Schmidt
    Abstract: This paper reconsiders the theoretical foundations of EU regional policy in economics. It begins with a discussion of the line of thought of its prevalent explanation in equilibrium economics which is focusing on market failures as its key underpinning and which is the major toolkit of economists for policy recommendations in this context. Subsequently, this view is contrasted with a non-equilibrium economics perspective on EU regional policy. Based on this, the existence of market failures and the relevance of equilibrium economics for a realistic understanding of and policy advice for EU regional policy are called into question. That is why, a more substantive politico-economic explanation and different policy conclusions for the regional policy of the EU are offered. The paper particularly focuses on the implications of the latter for the European Economic and Monetary Union in light of the persisting financial crisis and the vast economic disparities existing within it. Finally, the non-equilibrium economics perspective on EU regional policy is also animadverted, since market failure thinking still prevails in this branch of economics undermining its own criticism of equilibrium economics.
    Keywords: circular and cumulative causation; structural funds; non-equilibrium economics; increasing returns; EU regional policy; market failures
    JEL: B52 E62 F12 H53 O10 R00
    Date: 2014–11
  5. By: Mariolis, Theodore; Soklis, George
    Abstract: This paper estimates the ‘static Sraffian multiplier’ for the Greek economy using data from the Supply and Use Table for the year 2010. It is found that (i) an effective demand management policy could be mainly based on the service sector; and (ii) the whole economic system, and especially its industry sector, is heavily dependent on imports. The results seem to be in accordance with the observed deep recession of the Greek economy and, furthermore, suggest that a change in its intersectoral structure is necessary.
    Keywords: Greek economy; Joint production; Management of effective demand; Sraffian multiplier; Supply and Use Tables
    JEL: C67 D57 E11 E61
    Date: 2014–11–27
  6. By: Alexiou, Constantinos; Tsaliki, Persefoni; Tsoulfidis, Lefteris
    Abstract: In the realm of macroeconomic theory, is well established that investment decisions play an instrumental role in the determination of the level of output and employment; nevertheless, little progress has been made in relation to the theoretical aspects of these decisions. This paper, inspired by the classical approach to capital accumulation as well as the Keynesian theory of effective demand, attempts to enhance our empirical understanding of what determines investment decisions by exploring profitability, financial as well as demand factors. In so doing, a Fully Modified OLS panel cointegration framework, for a cluster of two distinct groups of EU countries classified as core and the peripheral economies, provides the platform upon which our econometric investigation takes place. The respective evidence generated from the estimation process is in line with the theoretical framework proposed in this study.
    Keywords: Investment demand, incremental rate of profit, panel data, European economies
    JEL: B51 C5 C51 C52 E20 E22
    Date: 2014–12–09
  7. By: Tsoulfidis, Lefteris
    Abstract: The purpose of this paper is to delve into the deeper causes of the current crisis and its detailed manifestation in the case of the Greek economy. The major argument of the paper is that the root cause of the crisis is fundamentally identified in the declining profitability which past a point leads to a stagnant mass of real net profits thereby discouraging investment spending and leading to rising unemployment. In the case of the Greek economy, this crisis of profitability has been aggravated by the contraction of its major productive activities, that is, manufacturing and agriculture. The contraction of these activities not only worsened the crisis but furthermore paved the way for the development of different forms of its expression; that is, mounting debt and unprecedented high rates of unemployment bringing the whole society into a stalemate.
    Keywords: falling rate of profit, unproductive activities, non-tradables, crisis, debt, Greek economy
    JEL: A10 B1 B14 B24 E11 O52
    Date: 2013–06–01
  8. By: Nandini Krishnan
    Keywords: Gender - Gender and Development Culture and Development - Anthropology Gender - Gender and Health Gender - Gender and Law Education - Primary Education
    Date: 2014–04
  9. By: Liang, H. (Tilburg University, TILEC); Marquis, C.; Renneboog, L.D.R. (Tilburg University, TILEC); Li Sun, Sunny
    Abstract: We argue that the language spoken by corporate decision makers influences their firms’ social responsibility and sustainability practices. Linguists suggest that obligatory future-time-reference (FTR) in a language reduces the psychological importance of the future. Prior research has shown that speakers of strong FTR languages (such as English, French, and Spanish) exhibit less future-oriented behavior (Chen, 2013). Yet, research has not established how this mechanism may affect the future-oriented activities of corporations. We theorize that companies with strong-FTR languages as their official/working language would have less of a future orientation and so perform worse in future-oriented activities such as corporate social responsibility (CSR) compared to those in weak-FTR language environments. Examining thousands of global companies across 59 countries from 1999-2011, we find support for our theory, and further that the negative association between FTR and CSR performance is weaker for firms that have greater exposure to diverse global languages as a result of (a) being headquartered in countries with higher degree of globalization, (b) having a higher degree of internationalization, and (c) having a CEO with more international experience. Our results suggest that language use by corporations is a key cultural variable that is a strong predictor of CSR and sustainability.
    Keywords: language; future-time-reference; categories; culture; Corporate social responsibility; sustainability
    JEL: G3 G28 Z10 Z11
    Date: 2014
  10. By: Dewhurst, J. H. Ll.
    Abstract: In an input-output context the impact of any particular industrial sector is commonly measured in terms of the output multiplier for that industry. Although such measures are routinely calculated and often used to guide regional industrial policy the behaviour of such measures over time is an area that has attracted little academic study. The output multipliers derived from any one table will have a distribution; for some industries the multiplier will be relatively high, for some it will be relatively low. The recentpublication of consistent input-output tables for the Scottish economy makes it possible to examine trends in this mdistribution over the ten year period 1998-2007. This is done by comparing the means and other summary measures of the distributions, the histograms and the cumulative densities. The results indicate a tendency for the multipliers to increase over the period. A Markov chain modelling approach suggests that this drift is a slow but long term phenomenon which appears not to tend to an equilibrium state. The prime reason for the increase in the output multipliers is traced to a decline in the relative importance of imported (both from the rest of the UK and the rest of the world) intermediate inputs used by Scottish industries. This suggests that models calibrated on the set of tables might have to be interpreted with caution.
    Keywords: Input-Output analysis, Output Multipliers, Intermediate imports,
    Date: 2013
  11. By: Erik Bjurstrom (School of Innovation, Design and Technology, Marlardalen University); Tadanori Yosano (Graduate School of Business Administration, Kobe University); Ulf Johanson (Graduate School of Business Administration, Kobe University)
    Abstract: In this article, we set out to understand and interpret the meaning of Japanese lenders perspective on non-financial, or soft, information of technology based small and medium sized enterprises (SMEs) and look for its implications for the IR agenda. To our surprise, the initial findings showed a focus on network relations, at the cost of just about any other item of soft information about corporate strategy, organizational structure, human resources, technologies and intellectual properties. However, a deeper factor-analysis found a strong correlation between the different factors, revealing a holistic thinking among lenders with regard to the companies' soft information. In other words, lenders have difficulties in measuring detailed soft items. In consequence, the details did not matter as much as the broader picture, in which detailed measures of different items were interpreted through the firms' credibility, revealed by their network relations. We further conceptually generalized this insight as an expression of the concrete character of the business reality of the companies, as interpreted through the lender-borrower relationship.
    Keywords: Integrated Reporting, Integrated Thinking, Network, Lender-borrower relationship, SME' s, Industry strategies
    Date: 2014–10
  12. By: Sunggoan Choi; Haemyoung Ji; Xiaoyun Zhao
    Abstract: Since key sectors have high backward and forward linkages with rest of the economy, investment in these sectors is expected to maximize the economic growth, which is extensively meaningful in undeveloped or developing countries with limited resources. Besides, it is considerably necessary and helpful to identify key sectors for analyzing the long-term structural change and economic development strategic policy, both at national and regional level. However, identification of the key sectors is somehow difficult to carry out in practice at regional level due to the absence of regional data at hand. In this study, we employ the traditional backward and forward linkages as indicators to identify the key sectors for sub-national regions, where the input-output (IO) tables are unavailable, along with non-survey techniques. The regional IO tables are produced from adjusting national IO tables with several non-survey techniques. To capture the performance of non-survey techniques on recognizing key sectors, then, the estimated regional backward/forward linkages are computed, which are represented by the output multipliers, and compared with the survey based benchmarks through the rank correlation coefficients. A big value of correlation indicates a high capability of the non-survey techniques on the identification of regional key sectors. At last, empirical study is given with Korean 2005 national and regional IO tables. Key words: Regional Input-Output model, Location quotients, Non-survey techniques, Key sectors, Linkage effect
    Date: 2014–11
  13. By: João Lopes; Amélia Branco; Francisco Parejo; Jose Rangel
    Abstract: The trajectories of internationalisation followed by family firms can be viewed from several theoretical approaches ? phases of the internationalisation process; international entrepreneurship, sociological perspective, family business theory. An historical perspective of the internationalised family firms, allowing the integration of these several approaches, is useful to a deep understanding of the internationalisation process of different sectors and countries. The main purpose of this paper is to identify the facilitating and the restricting factors during the internationalisation path of family firms, considering their competitive advantages, the ownership structure and management attitudes, innovation and intangible assets and other relevant factors, internal and/or external to the firm. It makes a long run analysis (more than one century) of two companies acting in the cork business in Spain and Portugal: Mundet and Amorim&Irmãos. One of these companies - Mundet ? has been closed in the 1980s and the other - Amorim&Irmãos ? became, and is by now, the leading company in the cork worldwide business. The careful comparison of these two stories, one of failure and the other of success, allows an accurate identification of the determinants of a successful internationalisation. In fact, it is useful for understanding several characteristics of both firms, some similar and other different, allowing the test of several hypothesis in the context of the theoretical approach to the internationalisation of family firms. First of all, both are family firms operating in the same business and since their origin orientated to foreign markets. Second, their story went along much of the twentieth century and so both faced similar national and international constraints but in the end both became leading firms in the cork business, although in different time periods. Third, their location choices were different and, although in both cases benefiting from agglomeration forces in certain phases of the business, they were also important determinants of the opposite destinies of these two emblematic Iberian cork family firms.
    JEL: F23 L73 N60 O14 R12
    Date: 2014–11
  14. By: Gil S. Epstein (Bar-Ilan University); Odelia Heizler (Cohen)
    Abstract: Recently, Constant, Gataullina, and Zimmermann (2009) established a new method to measure ethnic identity which they called the "ethnosizer". Using information on an individual's language, culture, social interactions, history of migration, and ethnic self-identification, the method classifies that individual into one of four states: assimilation, integration, separation or marginalization. A large body of literature has emerged examining the effects of immigrants' characteristics (age, gender, education, religion, etc.) on their ethnic identity using the ethnosizer. This note presents a basic theoretical framework to shed light on the vast collection of empirical results obtained on this topic.
    Keywords: Ethnosizer, Immigrants, Assimilation, Integration, Separation, Marginalization.
    Date: 2014–11
  15. By: Mary Eschelbach Hansen; Julie Routzahn
    Abstract: We use the 2007 and 2010 Surveys of Consumer Finances (SCF) and a difference-in-differences approach to investigate whether the Great Recession differentially affected the attitudes of men and women towards taking on debt, as well as whether it affected the relative financial position of women. In order to separate the influence of gender per se from the influences of household composition and intra-household bargaining, we compare never-married women to never-married men. We also compare never-married women to all households. We find that the Great Recession gave never-married women the confidence to use debt to mitigate short-term threats to living standards while making them more cautious about taking on debt for non-essentials. The financial position of women in 2010 improved relative to the position of men and relative to all households.
    Keywords: Gender, attitudes towards debt, household debt, Great Recession, feminist methods
    JEL: B54 D12 J16
    Date: 2014
  16. By: Elena Bárcena-Martín (Dpto. Estadística y Econometría, University of Málaga.); Maite Blázquez (Universidad Autonoma de Madrid.); Santiago Budría (ICADE, CEEAplA and IZA.); Ana I. Moro Egido (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: As recession and financial crisis spread across Europe an increasing number of people are at risk of poverty and social exclusion. Children are more exposed to the risk of poverty and social exclusion than the overall population of the EU. The current climate of economic downturn calls out for an urgent need to break the vicious circle of intergenerational transmission of poverty and social exclusion in order to improve the well-being of children in a systematic and integrated way. Using the EU-SILC 2009 module on deprivation, this paper aims to contribute to the literature on poverty and social exclusion by analysing the determinants of material deprivation among children. Special attention is given to the type of household children belong to, a characteristic that is strongly determined by adults’ behaviour. We find that the level of child deprivation varies among household types. Moreover, we confirm that even after controlling for the socio-economic characteristics of the household and parents, there still exist households with a lack of certain items that are strongly correlated to children with intense deprivation. Therefore, we can conclude that there exists an association between child deprivation and the household-deprivation profile that surpasses the socio-demographic characteristics of the household and parents.
    Keywords: Child deprivation, household deprivation, social exclusion, multilevel models
    JEL: I32 J13
    Date: 2014–11–05
  17. By: Giovanni Dosi; Mauro Napoletano; Andrea Roventini; Tania Treibich
    Abstract: In this work we analyze the short- and long-run effects of fiscal austerity policies, employing an agent-based model populated by heterogeneous, boundedly-rational firms and banks. The model, in line with the family of "Keynes+Schumpeter" formalism, is able to account for a wide array of macro and micro empirical regularities. In particular, it endogenously generates self-sustained growth patterns together with persistent economic fluctuations punctuated by deep downturns. On the policy side, we find that austerity policies considerably harm the economy, by increasing output volatility, unemployment, and the incidence of crises. In addition, they depress innovation and the diffusion of new technologies, thus reducing long-run productivity and GDP growth. Finally, we show that "discipline-guided" fiscal rules are self-defeating, as they do not stabilize public finances, but, on the contrary, they disrupt them.
    Keywords: agent-based model, fiscal policy, economic crises, austerity policies, disequilibrium dynamics
    Date: 2014–11–25
  18. By: Stephan Schulmeister (WIFO)
    Abstract: Roosevelt's New Deal stays in sharp contrast to the course followed by European policy since 2009. At first, Roosevelt focussed on fighting the generally pessimistic mood of the public, on strictly regulating the financial sector and on setting up investment and employment programmes. After that, structural reforms were carried out in order to strengthen confidence and social coherence. The most important measures were the introduction of unemployment insurance and of a public pension scheme as well as regulations to ensure "fair" labour conditions. The New Deal policy was successful: GDP expanded in the USA between 1933 and 1937 by 43 percent, mainly due to a boom in investments (+140 percent). By fighting the social-psychological depression and "speculation with other people's money", Roosevelt anticipated those two main messages of Keynes' "General Theory" (1936) which were later forgotten: first, the importance of the "state of confidence" and, second, the necessity to radically restrict financial speculation. The most influential thesis of Friedman – Schwartz (1963) according to which the Great Depression was primarily caused by a too restrictive monetary policy, i.e., by the state, turns out to be more based on ideology than on empirical facts. This holds even more true for the thesis of Cole – Ohanian (1999) and of Prescott (1999) according to which the depression was prolongued by New Deal policies. At present, a re-orientation of economic policy in Europe along Roosevelt's guidelines and, hence, a "New Deal for Europe" might help to lead the economy out of the persistent crisis.
    Keywords: Makroökonomische Politik, Depressionen, New Deal
    Date: 2014–11–17
  19. By: Valeria Cirillo (Department of Statistical Sciences, Sapienza University of Rome); Dario Guarascio (Sapienza University of Rome); Mario Pianta (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo")
    Abstract: This paper examines the state of Europe’s industry and competitiveness in the current crisis and provides the rationale for a new industrial policy at the European level. Section 1 documents the decline of EU industry and the losses in outpud resulting from the crisis started in 2008. Section 2 investigates the issue of competitiveness, an issue at the top of the EU Commission policy agenda. Competitiveness is seen at the heart of economic growth and in the current crisis much of the policy advice from Brussels has focused on ways to restore the competitiveness of weaker countries. Mainstream notions of wage-driven price competitiveness as a determinant of export success of EU countries are not convincing. Rather it is technology, product quality, immaterial capabilities and the characteristics of goods and sectors that are crucial factors explaining the dynamics of productivity and competitiveness in Europe. Section 3 is devoted to the employment dimension. During the recession the job creating potential of product innovation has been lost leaving space to process innovations and job losses that have hit hardest craft and manual workers. A process of skill, job and wage polarisation has characterised the European employment structure leading to increasing inequality and poverty. Not all European countries have been affected in the same way, leading to a cntre-periphery polarisation in terms of unemployment and productivity. Section 4 concludes with a specific proposal for a new European industrial policy that could orient structural change towards enironmental sustainability, ICT applications and health and welfare systems. In these fields the employment impact is likely to be significant also in terms of skills and wages of the workforce.
    Keywords: Competitiveness, Employment, Industrial Policy, Europe
    JEL: J3 L60 O25
    Date: 2014

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