nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2017‒11‒26
eleven papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Regional development under socialism: evidence from Yugoslavia By Kukić, Leonard
  2. Causes and consequences of hysteresis : aggregate demand, productivity and employment By Giovanni Dosi; Marcelo C. Pereira; Andrea Roventini; Maria Enrica Virgillito
  3. Faraway, so close : coupled climate and economic dynamics in an agent based integrated assessment model By Francesco Lamperti; Giovanni Dosi; Mauro Napoletano; Andrea Roventini; Alessandro Sapio
  4. Inequality, Redistributive Policies and multipliers dynamics in an agent based model with Credit rationing By Elisa Palagi; Mauro Napoletano; Andrea Roventini; Jean-Luc Gaffard
  5. Measuring women’s economic empowerment: Lessons from South America By Susana Martínez-Restrepo; Laura Ramos-Jaimes; Alma Espino; Martin Valdivia; Johanna Yancari Cueva
  6. Between a rock and a hard place: social partners and reforms in the wage- setting system in Greece under austerity By Voskeritsian, Horen; Veliziotis, Michail; Kapotas, Panos; Kornelakis, Andreas
  7. Why is there resistance to works councils in Germany? An economic perspective By Müller, Steffen; Stegmaier, Jens
  8. From Wicksell to Le Bourva to Modern Monetary Theory: A Wicksell connection By Ehnts, Dirk; Barbaroux, Nicolas
  9. Agent-based model calibration using machine learning surrogates By Frencesco Lamperti; Andrea Roventini; Amir Sani
  10. Not for the Profit, but for the Training? Gender Differences in Training in the For-Profit and Non-Profit Sectors By Dostie, Benoit; Javdani, Mohsen
  11. The New Concept of Money: From Record-Of-Value (RoV) To Record-Of-Entropy (RoE) By Hegadekatti, Kartik

  1. By: Kukić, Leonard
    Abstract: This paper analyses the patterns of regional growth and development in Yugoslavia, under the most decentralised socialist system that ever existed. My analysis reveals that despite government efforts to the contrary, socialist economic development in Yugoslavia resulted in divergence rather than in convergence between the constituent regions. I find that regional income divergence was caused by the failure of the less developed regions to converge towards the employment rates and total factor productivities of the more developed regions. I interpret these failures as symptoms of a single underlying problem: a capital intensity bias inherent to the governing objective of labour-managed firms. Socialist Yugoslavia moved from having one central plan, to having many mutually competitive plans. While on aggregate this may have created a net positive productivity outcome compared to other socialist economies, it created unique distortions. The decentralisation policies were implemented with the aim of enhancing regional cohesion and social stability. They led, however, to exactly opposite outcomes
    Keywords: economic growth; regional development; economic history: Yugoslavia; socialism
    JEL: N0
    Date: 2017–10
  2. By: Giovanni Dosi (Scuola Superiore Sant'Anna, Pisa, Italy); Marcelo C. Pereira (Universita di Campinas, Campinas, Brazil); Andrea Roventini (Scuola Superiore Sant'Anna, Pisa, Italy); Maria Enrica Virgillito (Scuola Superiore Sant'Anna, Pisa, Italy)
    Abstract: In this work we develop an agent-based model where hysteresis in major macroeconomic variables (e.g. GDP, productivity, unemployment) emerges out of the decentralized interactions of heterogeneous firms and workers. Building upon the model in Dosi et al. (2016, 2017), we specify an endogenous process of accumulation of workers’ skills and a state-dependent process of entry, studying their hysteretic impacts. Indeed, hysteresis is ubiquitous. However, this is not due to market imperfections, but rather to the very functioning of decentralised economies characterised by coordination externalities and dynamic increasing returns. So, contrary to the insider-outsider hypothesis (Blanchard and Summers, 1986), the model does not support the findings that rigid industrial relations may foster hysteretic behaviour in aggregate unemployment. On the contrary, in line with the recent discussion in Ball et al. (2014), this contribution provides evidence that during severe downturns, and thus declining aggregate demand, phenomena like lower investment and innovation rates, skills deterioration, and declining entry dynamics are better candidates to explain long-run unemployment spells and lower output growth. In that, more rigid labour markets dampen hysteretic dynamics by supporting aggregate demand, thus making the economy more resilient.
    Keywords: Hysteresis, Aggregate demand, Multiple Equilibria, Skills deterioration, Market entry, Agent based model
    JEL: C63 E02 E24
    Date: 2017–03
  3. By: Francesco Lamperti (Scuola Superiore Sant'Anna, Pisa, Italy); Giovanni Dosi (Scuola Superiore Sant'Anna, Pisa, Italy); Mauro Napoletano (OFCE Sciences Po Paris France); Andrea Roventini (Scuola Superiore Sant'Anna, Pisa, Italy); Alessandro Sapio (Parthenope University of Naples, Naples, Italy)
    Abstract: In this paper we develop the first agent-based integrated assessment model, which offers an alternative to standard, computable general-equilibrium frameworks. The Dystopian Schumpeter meeting Keynes (DSK) model is composed of heterogeneous firms belonging to capital-good, consumption-good and energy sectors. Production and energy generation lead to greenhouse gas emissions, which affect temperature dynamics in a non-linear way. Increasing temperature triggers climate damages hitting, at the micro-level, workers’ labor productivity, energy efficiency, capital stock and inventories of firms. In that, aggregate damages are emerging properties of the out-of-equilibrium interactions among heterogeneous and boundedly rational agents. We find the DSK model is able to account for a wide ensemble of micro and macro empirical regularities concerning both economic and climate dynamics. Moreover, different types of shocks have heterogeneous impact on output growth, unemployment rate, and the likelihood of economic crises. Finally, we show that the magnitude and the uncertainty associated to climate change impacts increase over time, and that climate damages much larger than those estimated through standard IAMs. Our results point to the presence of tipping points and irreversible trajectories, thereby suggesting the need of urgent policy interventions
    Keywords: Climate change , agent-based models, integrated assessment, macroeconomics dynamics, climate damages.
    JEL: C63 Q40 Q50 Q54
    Date: 2017–04
  4. By: Elisa Palagi (Scuola Superiore Sant'Anna, Pisa, Italy); Mauro Napoletano (OFCE-Sciences PO, Paris); Andrea Roventini (Scuola Superiore Sant'Anna, Pisa, Italy); Jean-Luc Gaffard (Sciences PO OFCE, Paris)
    Abstract: We build an agent-based model populated by households with heterogenous and time-varying financial conditions in order to study how different inequality shocks affect income dynamics and the effects of different types of fiscal policy responses. We show that inequality shocks generate persistent falls in aggregate income by increasing the fraction of credit-constrained households and by lowering aggregate consumption. Furthermore, we experiment with different types of fiscal policies to counter the effects of inequality-generated recessions, namely deficit-spending direct government consumption and redistributive subsidies financed by different types of taxes. We find that subsidies are in general associated with higher fiscal multipliers than direct government expenditure, as they appear to be better suited to sustain consumption of lower income households after the shock. In addition, we show that the effectiveness of redistributive subsidies increases if they are financed by taxing financial incomes or savings.
    Keywords: Income inequality, fiscal multipliers,redistributive policies, credit-rationing, agent-based models.
    JEL: E63 E21 C63
    Date: 2017–01
  5. By: Susana Martínez-Restrepo; Laura Ramos-Jaimes; Alma Espino; Martin Valdivia; Johanna Yancari Cueva
    Abstract: Women face significant economic, social, and cultural challenges that limit their access to markets, quality jobs, and entrepreneurship and income-generation strategies. The big question among policy makers, development agencies, and researchers in the fi¬eld of women’s economic empowerment is how to effectively improve women’s economic empowerment through income-generation strategies, training, and social programs. Conventional measures of economic empowerment have used employment, income, and education as proxies. More recently, the research community has recognized the relevance of subjective dimensions such as decision-making power over purchases, bargaining power, subjective perceptions of well-being, and freedom of choice. In this context, the objective of this book is to provide empirical evidence from the South American countries of Colombia, Peru, and Uruguay about our experiences as researchers implementing existing methods and questionnaires used to explain and measure women’s economic empowerment in terms of individual outcomes. Our evidence focuses on the results, effects, impacts, and measurement of economic empowerment. To this end, the book explores both quantitative and qualitative methods to measure the usual proxies for empowerment—such as decision making and labor market participation—and the subjective dimensions of these measurements. In this book, we use the theoretical framework proposed by Naila Kabeer in her 1999 article "Resources, Agency, Achievements: Reflections on the Measurement of Women's Empowerment," which frames empowerment as a process rather than an outcome.
    Keywords: Mujeres, Empoderamiento Económico, Equidad de GéneroEvaluación de Impacto, Interseccionalidad, Medidas Subjetivas, Métodos Mixtos.
    JEL: I00 J01 O11 I38
    Date: 2017–11–14
  6. By: Voskeritsian, Horen; Veliziotis, Michail; Kapotas, Panos; Kornelakis, Andreas
    Abstract: The paper focuses on the reforms in the wage-setting system in Greece in the context of a severe recession and against the backdrop of EU bailout agreements.The analysis reveals that the reforms are also contested among key actors, and that the fault lines between social partners are not fully consistent with the notion of a binary pro-reform (from business associations) vs. anti-reform stance (from labour associations). Instead, our interview data expose hitherto hidden fractures in the employers’ camp. Employers’ representatives express –in varying degrees– their scepticism towards the efficacy of the institutional changes and generally towards technocratic solutions. More broadly this analysis reflects on the contested and controversial nature of the policy reforms on wage setting, for which there is no consensus either in the academic or policy literature, and delves deeper into the views and perspectives of key actors on the efficacy and consequences of the main institutional changes in wage setting
    Keywords: social partners; wage setting system; reforms; Greece; austerity; crisis
    JEL: N0
    Date: 2017–09
  7. By: Müller, Steffen; Stegmaier, Jens
    Abstract: Recent empirical research generally finds evidence of positive economic effects of works councils, for example with regard to productivity and - with some limitations - to profits. This makes it necessary to explain why employers' associations have reservations against works councils. On the basis of an in-depth literature analysis, we show that beyond the generally positive findings, there are important heterogeneities in the impact of works councils. We argue that those groups of employers that tend to benefit little from employee participation in terms of productivity and profits may well be important enough to shape the agenda of their employers' organisation and even gained in importance within their organisations in recent years. We also discuss the role of deviations from profit-maximising behaviour like risk aversion, short-term profit maximisation, and other non-pecuniary motives, as possible reasons for employer resistance.
    Keywords: employers' association,plant level employee participation,works council
    JEL: J5
    Date: 2017
  8. By: Ehnts, Dirk; Barbaroux, Nicolas
    Abstract: In the aftermath of the Great Financial Crisis (GFC), and within the context of significant macroeconomic imbalances in the world economy, economists have shown renewed interest in the way central banks and financial systems work. The rise of Modern Monetary Theory (MMT) has relied on the examination of balance sheets, which has led to advancements in the understanding of the nuts and bolts of the financial system and the fundamental role of taxes, reserves, and deposits. While the school is associated with Post-Keynesian economics, we make the case that it could just as well be called Post-Wicksellian. The aim is not to argue for or against some label, but to make explicit the Wicksellian connection. In doing this, we bring forward old discussions and insights, which can be integrated into recent debates. MMT authors emphasize the importance of endogenous money and the examination of assets and liabilities in balance sheets. In our inquiry, we demonstrate that a horizontalist approach - adopted by MMT scholars - was already present in Wicksell (1898) and in the writings of French economist Jacques Le Bourva (1959, 1962). We examine the essential publications of the two authors and compare their views with the insights of MMT. By doing this, we hope to show continuity in monetary thought. MMT should not be seen as an intruder from the outside of monetary theory, but rather as a continuation and expansion of certain ideas that have long been part of the discipline. Identifying areas of disagreement between the three views should help bring clarity to the issues that are still disputed.
    Keywords: central banking,monetary policy,discretionary practices,Wicksell,Modern Monetary Theory,MMT
    JEL: E4 E51 E58
    Date: 2017
  9. By: Frencesco Lamperti (Scuola Superiore Sant'Anna, Pisa, Italy); Andrea Roventini (Scuola Superiore Sant'Anna, Pisa, Italy); Amir Sani (Université Panthéon Sorbonne & CNRS Paris France)
    Abstract: Taking agent-based models (ABM) closer to the data is an open challenge. This paper explicitly tackles parameter space exploration and calibration of ABMs combining supervised machine-learning and intelligent sampling to build a surrogate meta-model. The proposed approach provides a fast and accurate approximation of model behaviour, dramatically reducing computation time. In that, our machine-learning surrogate facilitates large scale explorations of the parameter-space, while providing a powerful filter to gain insights into the complex functioning of agent-based models. The algorithm introduced in this paper merges model simulation and output analysis into a surrogate meta-model, which substantially ease ABM calibration. We successfully apply our approach to the Brock and Hommes (1998) asset pricing model and to the “Island” endogenous growth model (Fagiolo and Dosi, 2003). Performance is evaluated against a relatively large outof-sample set of parameter combinations, while employing different user-defined statistical tests for output analysis. The results demonstrate the capacity of machine learning surrogates to facilitate fast and precise exploration of agent-based models’ behaviour over their often rugged parameter spaces
    Keywords: Agent based model, calibration, machine learning; surrogate, meta-model
    JEL: C15 C52 C63
    Date: 2017–03
  10. By: Dostie, Benoit (HEC Montreal); Javdani, Mohsen (University of British Columbia, Okanagan)
    Abstract: We use Canadian linked employer-employee data to examine gender differences in probability, duration, and intensity of firm-sponsored training. We find that women in the for-profit sector are less likely to receive classroom training, and receive shorter classroom training courses. However, we find the reverse in the non-profit sector, with women being more likely to receive both classroom and on-the-job training, and also receiving longer classroom training courses. Our results suggest that women's worse training opportunities in the for-profit sector mainly operate within workplaces. We find no evidence that gender gaps in training in the for-profit sector are driven by lower probabilities of accepting training offers, child or family commitments, weaker labour market attachment, or worker self-selection. We also find that gender differences in expected changes in wages and training opportunities between the two sectors can explain a large portion of women's higher probability of employment in the non-profit sector. Finally, decomposition results suggest that gender differences in training explain some of the gender wage gap in the for-profit sector, which is twice as large than in the non-profit sector.
    Keywords: gender, non-profit, firm-sponsored training, linked employer-employee data, gender wage gap
    JEL: J24 L22 M53 O32
    Date: 2017–10
  11. By: Hegadekatti, Kartik
    Abstract: In this paper, we shall analyse the concept of Money. Presently money is viewed as Record-of-Value i.e. money is used to capture value created in any activity. We start by defining money. Then we discuss the way energy is spent in creating value is measured using money. We also assess the uses of money by viewing it as a Record-of-Value entity. We discuss about the parallel economy which impacts mainstream economy in various ways. Economic Entropy is then defined and discussed. An equation that relates Economic Entropy, value based money and other economic parameters is proposed. The various advantages of viewing money as a Record-of-Entropy are debated. Finally, the paper concludes as to which concept is best suited to present day and future economic scenarios.
    Keywords: Money, Value, Entropy
    JEL: C50 C51 C81 C82 D46 D51 P24 P44
    Date: 2016–11–28

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