nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2015‒01‒26
twenty-one papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. "Minsky on Banking: Early Work on Endogenous Money and the Prudent Banker" By L. Randall Wray
  2. On the existence and characterization of unequal exchange in the free trade equilibrium By Naoki Yoshihara; Soh Kaneko
  3. Complexity: A Review of The Classics By Bernardo Alves Furtado; Patrícia Alessandra Morita Sakowski
  4. The dynamics of exploitation and class in accumulation conomies By Jonathan F. Cogliano; Roberto Veneziani; Naoki Yoshihara
  5. Ethics in Relation to Islamic Finance Activities By Ismail, Abdul Ghafar; Zali, Nor Azmidah
  6. Invisible Women: Entrepreneurship, Innovation and Family Firms in France during Early Industrialization By B. Zorina Khan
  7. Doctrine of public good in banking versus state intervention By Piotr Masiukiewicz
  8. Import Dependency of Food Production By Knuuttila, Marja; Vatanen, Eero; Niemi, Jyrki; Jansik, Csaba
  9. The economics of the Food versus Biodiversity debate By Martinet, Vincent
  10. Multidimensional poverty and inequality By Rolf Aaberge; Andrea Brandolini
  11. Philanthrophy in Islam: A promise to Welfare Economics System By Ismail, Abdul Ghafar; Zaenal, Muhammad Hasbi; Shafiai, Hakimi
  12. "Why Does Brazil's Banking Sector Need Public Banks? What Should BNDES Do?" By Felipe Rezende
  13. ADB Brief No. 21: Gender Dimensions of the Social Protection Index: Results for Asia and the Pacific By Asian Development Bank (ADB); ; ;
  14. Integrating Zakah, Awqaf and Islamic Microfinance for Poverty Alleviation: Three Models Of Islamic Micro Finance By Mohamed Ali, Khalifa
  15. Financialisering en functionele inkomensverdeling By van de Klundert, T.C.M.J.
  16. The Italian Corporate System: SOEs, Private Firms and Institutions in a Network Perspective (1952-1983) By Leonardo Bargigli; Renato Giannetti
  17. Financial Thought as a Shield: Bogotá’s Stock Exchange and the Financial Ideas during its Foundation and Consolidation By Ramos-Toro, Diego
  18. Green, greener, grey: Disentangling different types of green growth By Rische, Marie-Christin; Röhlig, Andreas Marcus; Stöver, Jana
  19. Well-Paid Nurses are Good Nurses: An Analysis of Nursing Supply Based on Determinants of Work Motivation By Alessandro Fedele
  20. Between Free Market and State Capitalism: How Islamic Economics System Shape the Future Global Economy? By Ismail, Abdul Ghafar
  21. The review of theories of mainstream economics on the example of economic models By Grazyna Wolska

  1. By: L. Randall Wray
    Abstract: In this paper, I examine whether Hyman P. Minsky adopted an endogenous money approach in his early work--at the time that he was first developing his financial instability approach. In an earlier piece (Wray 1992), I closely examined Minsky's published writings to support the argument that, from his earliest articles in 1957 to his 1986 book (as well as a handout he wrote in 1987 on "securitization"), he consistently held an endogenous money view. I'll refer briefly to that published work. However, I will devote most of the discussion here to unpublished early manuscripts in the Minsky archive (Minsky 1959, 1960, 1970). These manuscripts demonstrate that in his early career Minsky had already developed a deep understanding of the nature of banking. In some respects, these unpublished pieces are better than his published work from that period (or even later periods) because he had stripped away some institutional details to focus more directly on the fundamentals. It will be clear from what follows that Minsky's approach deviated substantially from the postwar "Keynesian" and "monetarist" viewpoints that started from a "deposit multiplier." The 1970 paper, in particular, delineates how Minsky's approach differs from the "Keynesian" view as presented in mainstream textbooks. Further, Minsky's understanding of banking in those years appears to be much deeper than that displayed three or four decades later by much of the post-Keynesian endogenous-money literature.
    Keywords: Banks; Deposit Multiplier; Endogenous Money; Financial Innovation; Financial Instability Hypothesis; Horizontalists; Minsky; Originate to Distribute; Prudent Banking; Say’s Law; Securitization
    JEL: B3 B50 B52 E2 E4 E5
    Date: 2015–01
  2. By: Naoki Yoshihara (Hitotsubashi University); Soh Kaneko (Keio University)
    Abstract: As in Roemer (1982, chapter 1), this paper considers a Marxian Heckscher-Ohlin model of subsistence international economies with a simple Leontief production technique and examines the existence and characterization of free trade equilibria involving the unequal exchange of labor (UEL). The paper provides an almost complete characterization of the domain of economies in which free trade equilibria with incomplete specialization exist. Moreover, the necessary and sufficient condition for a free trade equilibrium to involve UEL is identified.
    Keywords: Unequal exchange of labor, Marxian Heckscher-Ohlin international economies, international division of labor
    JEL: D63 D51
  3. By: Bernardo Alves Furtado; Patrícia Alessandra Morita Sakowski
    Abstract: This text was written as part of the project Modelling of Complex Systems for Public Policy. It reviews the classical authors who jointly contributed to establish the elements of what could constitute a “science of complexity”. Based on the original writings of these authors, the text discusses the central concepts of complex systems: i) the interaction between (homogeneous or heterogeneous) agents and the environment; ii) emergence and self-organization; iii) the importance of nonlinearity and scales; iv) the determinism of rules; v) the emphasis on dynamics and feedback; and vi) the notions of adaptation, learning and evolution. Finally, contemporary criticisms are presented. They suggest that the arguments of complex systems do not support the epistemological establishment of a supposedly new science, but they do not reject the advances proposed by complexity studies.
    Keywords: complexity; emergence; dynamical systems; non-linearity; cellular automata; modelling; information theory; neural networks; evolution. Este texto está inserido no projeto Modelagem de Sistemas Complexos para Políticas Públicas e faz uma resenha dos autores clássicos que, em conjunto, contribuíram com os elementos do que seria uma “ciência da complexidade”. Com base no pensamento original destes autores, os conceitos centrais de sistemas complexos são discutidos, a saber: i) a interação entre agentes (homogêneos ou heterogêneos) e o ambiente; ii) as propriedades emergentes e a auto-organização; iii) a importância da não linearidade e das escalas; iv) as regras e seu determinismo; v) a ênfase na dinâmica e retroalimentação; e vi) as noções de adaptação, aprendizado e evolução. Por fim, críticas contemporâneas são apresentadas. Elas sugerem que os argumentos de sistemas complexos não sustentam epistemologicamente a constituição de suposta nova ciência, mas não rejeitam os avanços propostos nos estudos de complexidade.
    Date: 2014–12
  4. By: Jonathan F. Cogliano (Dickinson College); Roberto Veneziani (Queen Mary University of London); Naoki Yoshihara (Hitotsubashi University)
    Abstract: This paper analyses the equilibrium dynamics of exploitation and class in general accumulation economies with population growth, technical change, and bargaining by adopting a novel computational approach. First, the determinants of the emergence and persistence of exploitation and class are investigated, and the role of labour-saving technical change and, even more importantly, power is highlighted. Second, it is shown that the concept of exploitation provides the foundations for a logically coherent and empirically relevant analysis of inequalities and class relations in advanced capitalist economies. An index that identifies the exploitation level, or intensity of each individual can be defined and its empirical distribution studied using the standard tools developed in the theory of inequality measurement.
    Keywords: Exploitation, class, accumulation, simulation
    JEL: B51 D63 C63
  5. By: Ismail, Abdul Ghafar (The Islamic Research and Teaching Institute (IRTI)); Zali, Nor Azmidah (The Islamic Research and Teaching Institute (IRTI))
    Abstract: Ethics has been fundamental in organizations and in specific, Islamic financial institutions have selected ethics as their core competencies. Islam accepts ethics as a good value in enhancing company performance since ethics is grounded by Shariah rules. The ethical issues have been raised steadily in business and they do not seem to settle as a lot of companies have not been aware of its importance. There are a lot of theories of ethics that have been introduced but the number of unethical business activities does not seem to be reduced. This paper seeks to explain the conventional ethical theory and how Islamic ethical philosophy generates the ethical business activities. Later on, the study will produce an ethical model which is in accordance to the Islamic intellectual discourse , that will explain the relationship between ethics and Islamic finance activities and also discuss the screening criteria of financial activities . This study has the intention to contribute to the current knowledge of the business ethic’s field and to contribute its findings for further research in business ethics. This study will also bridge the gaps about how ethics can be a corporate identity to the Islamic financial institutions.
    Keywords: Ethics; Philosophy of Ethics; Ethical Theory; Business Ethics; Islamic Ethics
    Date: 2015–01–19
  6. By: B. Zorina Khan
    Abstract: Family firms are typically associated with negative characteristics, including lower tendencies towards innovation, a higher risk of failure, and inefficiencies deriving from nepotism among family members, criticisms which are even greater when the company is handed over to a female relative. Women in business have generally been presented as petty traders and passive investors, whose entrepreneurial activities were scarce because of such restrictions as limited human capital, culture, market imperfections, and institutional biases. The French economy has similarly been faulted for the prevalence of family firms during the nineteenth century, and for disincentives for the integration of women in the business sector. These issues are explored using an extensive sample of women who obtained patents and prizes at industrial exhibitions during early industrialization. The empirical evidence indicates that middle-class women in France were extensively engaged in entrepreneurship and innovation, and that their commercial efforts were enhanced by association with family firms. Their formerly invisible achievements suggest a more productive role for family-based enterprises, as a means of incorporating relatively disadvantaged groups into the market economy as managers and entrepreneurs.
    JEL: L2 L26 N13 N8 O14 O3
    Date: 2015–01
  7. By: Piotr Masiukiewicz (Warsaw School of Economics, Poland)
    Abstract: This article has a following thesis: changes in banking and a role of banks in real economy in last years, give an argument for treating banks as public good. Banks received a great support from governments as a result of the subprime crisis. G-20 and European Commission recommended new regulations for this sector after crisis. As consequence of banking development more than 90% of population use banking services in many countries. New social functions of banks appeared. Doctrines about recovery and government support for banks were changed in parallel (e.g. LoLR). Presently there are some arguments for recognition of public good doctrine in banking such as: a very big area for state regulation, state banking supervision, state system of deposits insurance, realization of task delegated by the state, social responsibility of banks and other. These arguments confirm that banks’ activity has a particular importance for society and economy and would be public good.
    Keywords: bankruptcy; bank; crisis; financial institution; public good
    JEL: G01 G21 H41
    Date: 2014–12
  8. By: Knuuttila, Marja; Vatanen, Eero; Niemi, Jyrki; Jansik, Csaba
    Abstract: Self-sufficiency figures based on the relationship between domestic production and consumption fail to take into account the fact that domestic production itself is dependent on imported resources. In this paper, an indicator for measuring the import content of food production industries is introduced. With the aid of Eurostat input–output tables, the total dependency on imports, comprising both direct as well as indirect imports of raw materials and intermediates, is calculated for Finland, Germany and Denmark. The results of agricultural and food manufacturing production are presented, indicating a growing trend in import dependency, including energy, chemicals, feed protein and services.
    Keywords: agriculture, food industry, imports, inputs, input-output model, Industrial Organization,
    Date: 2014–08
  9. By: Martinet, Vincent
    Abstract: Ecologists discuss the “food versus biodiversity” trade-offs in the fol- lowing terms: what is the land use configuration that minimizes biodiver- sity loss for a given food production target. This is, in economic terms, a cost-effectiveness approach related to the concept of Pareto-efficiency in the food-biodiversity outcomes map. This paper argues that economists should participate in this debate. A first set of results shows how the introduction of some basic micro-economic considerations modifies or reinforces the rec- ommendations of the ecological literature on how to preserve biodiversity while producing food. A second set of arguments emphasizes that it is not necessarily sensible, from an economic point of view, to set the debate in terms of food versus biodiversity. A wider, welfarist approach should be used.
    Keywords: Food production, Biological conservation, Trade-offs, Land use, Agricultural intensity, Soil heterogeneity, Environmental Economics and Policy,
    Date: 2014–08
  10. By: Rolf Aaberge; Andrea Brandolini (Statistics Norway)
    Abstract: This paper examines different approaches to the measurement of multidimensional inequality and poverty. First, it outlines three aspects preliminary to any multidimensional study: the selection of the relevant dimensions; the indicators used to measure them; and the procedures for their weighting. It then considers the counting approach and the axiomatic treatment in poverty measurement. Finally, it reviews the axiomatic approach to inequality analysis. The paper provides a selective review of a rapidly growing theoretical literature with the twofold aim of highlighting areas for future research and offering some guidance on how to use multidimensional methods in empirical and policy-oriented applications.
    Keywords: inequality; poverty; deprivation; multidimensional well-being; capabilities; functionings
    JEL: D3 D63 I30 I32
    Date: 2014–12
  11. By: Ismail, Abdul Ghafar (The Islamic Research and Teaching Institute (IRTI)); Zaenal, Muhammad Hasbi (The Islamic Research and Teaching Institute (IRTI)); Shafiai, Hakimi (The Islamic Research and Teaching Institute (IRTI))
    Abstract: Islamic presence is intended to meet all the demands of life (shumūl al-hayāh). In the economic sphere, Islam set rules comprehensively about the relationship between religion and economy, both should go hand in hand, such as philanthropy actions. Since the early days, philanthropy has become the basic Islamic economy, where philanthropy which means "love of people" had been successfully practiced by the Prophet and the companions accompanied by moral motivation to achieve the glory of Islam, social justice and remove economic oppression. Philanthropy in Islam has been based on a clear legal, either from the al-Qur'an also al-Hadith. However, the current discussion on the economics of philanthropy is very much clouded by conventional view which argues that the form of charitable gifts are motivated by government tax policy. Our view which is derived from Islamic law theory may deviate from such view in the sense that the motives, causes and influences of philanthropic behaviour are different. Therefore, this study this study will explore the economics of philanthropy which is adapted from the Islamic law. The end result, it might us to readjust the impact of philanthropic behavior on inter-generational transfers and the provisions of public and private goods.
    Keywords: philanthropy; altruism; welfare programs; economics of philanthropy; government policy;
    Date: 2015–01–19
  12. By: Felipe Rezende
    Abstract: The 2007-8 global financial crisis has shown the failure of private finance to efficiently allocate capital to finance real capital development. The resilience and stability of Brazil's financial system has received attention, since it navigated relatively smoothly through the Great Recession and the collapse of the shadow banking system. This raises the question of whether it is possible that the alternative approaches followed by some developing countries might provide an indication of more stable regulatory approaches generally. There has been much discussion about how to support private long-term finance in order to meet Brazil's growing infrastructure and investment needs. One of the essential functions of the financial system is to provide the long-term funding needed for long-lived and expensive capital assets. However, one of the main difficulties of the current private financial system is its failure to provide long-term financing, as the short-termism in Brazil's financial market is a major obstacle to financing long-term assets. In its current form, the National Economic and Social Development Bank (BNDES) is the main source of long-term funding in the country. However, BNDES has been subject to a range of criticisms, such as crowding out private sector bank lending, and it is said to be hampering the development of the local capital market. This paper argues that, rather than following the traditional approach to justify the existence of public banks--and BNDES in particular, based on market failures--finding an effective answer to this question requires a theory of financial instability.
    Keywords: Bond Market; Financial Market; Security Markets; Stabilization
    JEL: E00 E4 E6 G00 G1
    Date: 2015–01
  13. By: Asian Development Bank (ADB); (Regional and Sustainable Development Department, ADB); ;
    Abstract: This paper presents the findings from a research project on the Social Protection Index, which assesses the extent to which gender has been incorporated in social protection programs. The Social Protection Index is a measure of central government social protection expenditures relative to all potential beneficiaries assessed against poverty line expenditures in a country. It can be disaggregated in various ways to capture the magnitude, reach, and effectiveness of social protection programs. The objective of this paper is to provide analysis on the gender dimensions of social protection in Asia and the Pacific. This analysis will help policy makers consider and incorporate gender issues in developing and expanding social protection policies, strategies, and programs.
    Keywords: adb, asian development bank, asdb, asia, pacific, poverty asia, gender issues asia, social protection index asia, social protection programs asia, gdp asia, women's issues asia, social protection asian women, gender equality asia, asian women's access to social assistance
    Date: 2014–05
  14. By: Mohamed Ali, Khalifa (The Islamic Research and Teaching Institute (IRTI))
    Abstract: The objective of this paper is to present theoretical proposals for institutional structure in the context of Islamic Microfinance by first comparing Conventional and Islamic microfinance institutions and then by highlighting some of the pioneering work of conventional microfinance models that paved the way for Islamic Microfinance. In this paper, we review the literature of microfinance models that simultaneously deals with several facets of poverty by combining Waqf and Zakah principles together or individually. There are three models examined in this paper i.e Waqf-Based Islamic Microfinance Institutions, a Model of Zakah and Awqaf-based MF Organizations and an Integrated Awqaf and Zakah Model of Microfinance. Both Zakah and Waqf mechanisms are considered for Islamic microfinance not only because of their frameworks that are in accordance to the Shariah but they are the original concepts provided in Islam that serve people in need i.e the poor. In tandem with the doctrine of microfinance, Zakah and Waqf are seen as tools best suited to assist the poor who require financing and ultimately could be effective for poverty reduction. The paper derives recommendation for integrating microfinance models into the overall economic policy.
    Keywords: Waqf and Zakah; Islamic Microfinance; Regulatory systems
    Date: 2015–01–19
  15. By: van de Klundert, T.C.M.J. (Tilburg University, School of Economics and Management)
    Abstract: De arbeidsinkomensquote (AIQ) is na 1980 structureel gedaald in de rijke landen. De verklaring hiervoor verschilt. De neoklassieke theorie en de heterodoxe opvattingen van de economie schetsen verschillende wereldbeelden. In de neoklassieke theorie staat de relatieve schaarste van productiefactoren centraal. De daling van de AIQ wordt toegeschreven aan de technologische ontwikkeling en, in mindere mate, aan de globalisering. De heterodoxe theorie benadrukt financialisering als oorzaak van de gedaalde AIQ. Na de liberaliseringsgolf van de jaren tachtig van de vorige eeuw zijn financiële motieven doorslaggevend geworden bij beslissingen in het bedrijfsleven. Dit heeft consequenties gehad voor de functionele inkomensverdeling. Econometrisch onderzoek met betrekking tot de verklaring van de functionele inkomensverdeling heeft vooralsnog niet onomstotelijk kunnen aantonen welke visie het bij het rechte eind heeft.
    Date: 2014
  16. By: Leonardo Bargigli (Dipartimento di Scienze per l'Economia e l'Impresa); Renato Giannetti (Dipartimento di Scienze per l'Economia e l'Impresa)
    Abstract: How did business networks among Italian firms evolve over time? We address this question by analyzing the Italian corporate boards network in four years (1952, 1960, 1972, 1983) with network theoretical methods. We find some typical properties of these networks, such as sparsity and connectedness in the same large network component. At the same time, clustering and assortativity are relatively high and stable, while we observe, over time, an increase of the average distance coupled with a decrease of density and of the relative size of the largest component. This is an indication of a rarefaction of connections which is detected also in other national systems. In order to seek the determinants of this phenomenon, we perform a panel regression for the average nodal degree, finding that rarefaction is mostly related to a genuine time trend and only partially to cross-sectional variables. We argue that a possible explanation is a significant increase of concentration which we observe in our dataset, consistently with historical evidence. The network shows a substantial stability in some structures, such as core-periphery subdivision. Looking at the main actors we find a persistent centrality of banks and insurances, as well as of State Owned Enterprises (SOEs). These play a growing role in the community structure of the network, while communities themselves become more and more diversified by sector.
    Keywords: boards networks, network theory, Italian firms.
    JEL: N00 L20 C49
    Date: 2015
  17. By: Ramos-Toro, Diego
    Abstract: The document uses a historical approach to unveil the political nature of financial ideas generated by functionaries of Bogotá’s Stock Exchange in the years following its foundation. Particularly, it demonstrates how these ideas constituted interpretations that aimed at the consolidation of the entity in a dynamic historical and economic context that posed varying challenges to the institution. The interpretative discourse produced and transmitted by said Stock Exchange constituted an adaptive mechanism, which gradually refined so as to placate both existing and emerging social concerns regarding the role and the effects of an entity of the like.
    Keywords: Financial Ideas, Bogotá’s Stock Exchange, Social and Economic Realities, History of Economic Thought
    JEL: B0 B00 B26 N00 N2 N26
    Date: 2014–10
  18. By: Rische, Marie-Christin; Röhlig, Andreas Marcus; Stöver, Jana
    Abstract: The article proceeds with an introduction into the main definitions of green growth and related concepts and discusses their core defining features. Based thereon, the production framework is introduced and the essential aspects of our definition of green growth are presented. Subsequently, the distinction between green, greener, and grey growth is introduced and their defining features are explained. This is followed by a discussion of the implications from two main issues of the sustainability debate, namely rebound effects and the substitutability of different forms of capital, before we conclude.
    Date: 2014
  19. By: Alessandro Fedele (Free University of Bolzano‐Bozen, Faculty of Economics and Management)
    Abstract: Some recent health economics papers suggest that increasing wage in the nursing labor market with the aim of reducing shortage may yield a negative effect on the average productivity and/or the average motivation of applicants attracted. Some feminist economics papers criticize this inefficiency wage result on the grounds that nurses' motivation is modeled in an overly simplistic way. The current paper aims to address this criticism by considering explicitly determinants of work motivation. Relying on introductory concepts from organizational psychology and management literatures, the inefficiency wage result is shown to disappear. A pay raise turns out to have no negative effect both on the average productivity and the average motivation of applicants attracted.
    Keywords: Nurses' wage, nursing shortage, nurses' productivity, nurses' motivation, inefficiency wage result, determinants of work motivation
    JEL: I11 J32 B54
    Date: 2015–01
  20. By: Ismail, Abdul Ghafar (The Islamic Research and Teaching Institute (IRTI))
    Abstract: Free market economy is proposed to deliver on the promises of improving the standards of living of most citizens. However, the economic crisis that happen repeatedly failed to produce what was promised. Then, state capitalism has to step in. The state capitalism also fails in the sense that the free market economy with rules/policy in favour of rich countries or state capitalism provide more people worst-off than benefits. The question arises on how the Islamic economic system could shape the free markets and the future of the global economy. Therefore, our aim in this paper is to find out the answer(s) on how Islamic economics system shape the future global economy could. Our analysis shows that Islam has its own economic system. The free market could be developed by taking the free market of Rasulullah (saw) and free market in holding wealth. The government policy directed towards no interest and creating a welfare system is welcome.
    Keywords: free market; state capitalism; economic thought; economic system
    Date: 2015–01–19
  21. By: Grazyna Wolska (University of Szczecin, Poland)
    Abstract: Regardless of the fact that economics distinguishes itself from other social sciences by a high level of formal deductive modelling, it is a social science due to the essence of the economic process where a human is subject and object at the same time. In the recent years this issue has been more frequently emphasized by economists in ongoing discussions. In the discussions a good deal of time is devoted to economic models and, mainly, their relations with the socioeconomic reality and coherence of empirical evidence. The article presents a thesis that some mainstream economic theories have not always constituted the background to their practical applications, which led - and still can - to the dogmatic and inflexible use of model solutions for economic phenomena which are difficult to forecast in a non-variant rigid model. The aim is to critically analyse beliefs about usefulness of universal economic models in the economic reality advocated by mainstream economists and to prove that not all economic models have constituted the background to their practical applications.
    Keywords: economic model; economics; economic theories; economy
    JEL: E10
    Date: 2014–12

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