nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2018‒01‒08
thirteen papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. A Unified Marxist Approach to Accumulation and Crisis in Capitalist Economies By Deepankar Basu
  2. To trust or to control: Informal value transfer systems and computational analysis in institutional economics By Claudius Graebner; Wolfram Elsner; Alexander Lascaux
  3. Inequality, Redistributive Policies and Multiplier Dynamics in an Agent-Based Model with Credit Rationing By Elisa Palagi; Mauro Napoletano; Andrea Roventini; Jean-Luc Gaffard
  4. Some issues in the measurement of profit Accountants versus economists By Hasan, Zubair
  5. A Short Walk on the Wild Side: Agent-Based Models and their Implications for Macroeconomic Analysis By Mauro Napoletano
  6. Time-varying fiscal multipliers in an agent-based model with credit rationing By Napoletano, Mauro; Roventini, Andrea; Gaffard, Jean Luc
  7. Informal versus Formal: A Panel Data Analysis of Earnings Gaps in Madagascar By Christophe Jalil Nordman; Faly Rakotomanana; François Roubaud
  8. When genesis shapes cluster life cycle? Applying mixed method on a French cluster case study By Bastien Bernela; Marie Ferru; Marc-Hubert Depret
  9. The Impact of Gender Inequality and Environmental Degradation on Human Well-Being in The Case of Pakistan: A Time Series Analysis By Bibi, Chan; Audi, Marc; Ali, Amjad
  10. A dynamic theory of economics: What are the market forces? By Dannenberg, Alia Asha; Estola, Matti; Dannenberg, Anna
  11. Trabajadoras domésticas y protección social en Argentina avances y desafíos pendientes By Pereyra, Francisca.
  12. Why is price useless to signal environmental quality ? By Alexandre Volle
  13. The Recursive Nature of Institutional Change: An Annales School Perspective By Durand, Rodolphe; Clemente, Marco; Roulet, Thomas J.

  1. By: Deepankar Basu (Department of Economics, University of Massachusetts - Amherst)
    Abstract: An economic crisis in capitalism is a deep and prolonged interruption of the economy-wide circuit of capital. Crises emerge from within the logic of capitalism’s operation, and are manifestations of the inherently contradictory process of capital accumulation. The Marxist tradition conceptualizes two types of crisis tendencies in capitalism : a crisis of deficient surplus value and a crisis of excess surplus value. Two mechanisms that become important in crises of deficient surplus value are the rising organic composition of capital and the profit squeeze; two mechanisms that are salient in crisis of excess surplus value are problems of insufficient aggregate demand and increased financial fragility. This paper offers a synthetic and synoptic account of the Marxist literature on capitalist economic crises.
    Keywords: capitalism, crisis, rising organic composition, profit squeeze, underconsumption, financial fragility
    JEL: B24 B51
    Date: 2017
  2. By: Claudius Graebner (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria); Wolfram Elsner (Institute for Institutional and Innovation Economics, University of Bremen, Germany); Alexander Lascaux (Russian Presidential Academy of National Economy and Public Administration, Moscow, Russia)
    Abstract: This paper illustrates the usefulness of computational methods for the investigation of institutions. As an example, we use a computational agent-based model to study the role of general trust and social control in informal value transfer systems (ITVS). We find that, how and in which timeline general trust and social control interact in order to make ITVS work, become stable and highly effective. The case shows how computational models may help (1) to operationalize institutional theory and to clarify the functioning of institutions, (2) to test the logical consistency of alternative hypotheses about institutions, and (3) to relate institutionalist theory with other paradigms and to practice an interested pluralism.
    Keywords: agent-based computational economics, evolutionary-institutional economics, informal value transfer systems, general trust, social control
    Date: 2017–12
  3. By: Elisa Palagi (Scuola Superiore Sant'Anna, Pisa (Italy)); Mauro Napoletano (OFCE Sciences-Po; SKEMA Business School); Andrea Roventini (University of Verona (Italy); Scuola Superiore Sant'Anna, Pisa (Italy)); Jean-Luc Gaffard (OFCE Sciences-Po; Université Côte d'Azur; GREDEG CNRS; Institut Universitaire de France)
    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 e ects 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: 2017–12
  4. By: Hasan, Zubair
    Abstract: This paper discusses a topic rarely addressed in the literature on profit theory over the decades. In empirical work on subjects like growth, efficiency and welfare in mainstream or Islamic economics business profits at times appear as one of the determinants. Such studies perforce use profit data reported in the accounting records. This data is invariably at variance in important ways with the economists’ theoretical view of profit. The cause of divergence is the cosmopolitan forward looking ex ante view of entrepreneurism the economists take in the matter as opposed to the narrow conservative ex post focus of the accountants needed to protect the interest of business proprietors who pay them for the job. There is a need to narrow this gap to improve the results of empirical explorations. This paper identifies and examines some issues like maintenance of capital, evaluation of inventories and the impact of conservatism as causes of divergence as focal points for reducing the gap. It concludes that the economists are obliged more to take cognizance of accounting compulsions than the other way round in the reconciliation process.
    Keywords: : Business profits, Efficiency, capital maintenance, inventory evaluation, Conservatism
    JEL: M0 M2 M4
    Date: 2017–04–18
  5. By: Mauro Napoletano (OFCE Sciences-Po; SKEMA Business School)
    Abstract: I discuss recent advances in agent-based modelling applied to macroeconomic analysis. I first present the building blocks of agent- based models. Furthermore, by relying on examples taken from recent works, I argue that agent-based models provide complementary or new lights with respect to more standard models on key macroeconomic issues like endogenous business cycles, the interactions between business cycles and long-run growth, and the role of price vs. quantity adjustments in the return to full employment. Finally, I discuss some limits of agentbased models and how they are currently addressed in the literature.
    Keywords: agent-based models, macroeconomic analysis, endogenous business-cycles, short and long-run dynamics, monetary and fiscal policy, price vs. quantity adjustments
    JEL: B41 B50 E32 E52
    Date: 2017–12
  6. By: Napoletano, Mauro; Roventini, Andrea; Gaffard, Jean Luc
    Abstract: The authors build a simple agent-based model populated by households with heterogenous and time-varying financial conditions in order to study how fiscal multipliers can change over the business cycle and are affected by the state of credit markets. They find that deficit-spending fiscal policy dampens the effect of bankruptcy shocks and lowers their persistence. Moreover, the size and dynamics of government spending multipliers are related to the degree and persistence of credit rationing in the economy. On the contrary, in presence of balanced-budget rules, output permanently falls below pre-shock levels and the ensuing multipliers fall below one and are much lower than the ones emerging from the deficit-spending policy. Finally, the authors show that different conditions in the credit market significantly affect the size and the evolution of fiscal multipliers.
    Keywords: fiscal multipliers,agent-based models,credit-rationing,balance-sheet recession,bankruptcy shocks
    JEL: E63 E21 C63
    Date: 2017
  7. By: Christophe Jalil Nordman (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine); Faly Rakotomanana (INSTAT - INSTAT Madagascar - INSTAT Madagascar); François Roubaud (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine)
    Abstract: In spite of its predominant economic weight in developing countries, little is known about informal sector income dynamics vis-à-vis the formal sector. Some works have been done in this field using household surveys, but they only consider some emerging Latin American countries (Argentina, Brazil, Colombia and Mexico; Gong et al., 2004; Perry et al., 2007; Bargain and Kwenda, 2011) and more recently South Africa, Ghana and Tanzania for Africa (Falco et al., 2010) and Vietnam for Asia (Nguyen et al., 2011). As a matter of consequence, there is still no way to generalize the (diverging) results to very poor part of the developing world. Taking advantage of the rich 1-2-3 Surveys dataset in Madagascar, in particular its four waves panel data (2000, 2001, 2003 and 2004), we assess the magnitude of various formal/informal sector earnings gaps while addressing heterogeneity issues at three different levels: the worker, the job (wage employment vs. selfemployment) and the earnings distribution. The questions asked are the following: Is there an informal sector job earnings penalty? Do some informal sector jobs provide pecuniary premiums? Which ones? Do possible gaps vary along the earnings distribution? Standard earnings equations are estimated at the mean and at various conditional quantiles of the earnings distribution. In particular, we estimate fixed effects quantile regressions to control for unobserved individual characteristics, focusing particularly on heterogeneity within both the formal and informal sector categories. Our results suggest that the informal sector earnings gap highly depends on the workers’ job status and on their relative position in the earnings distribution. Penalties may in some cases turn into premiums. By comparing our results with studies in other developing countries, we draw conclusions highlighting the Madagascar’s labour market specificity.
    Keywords: informal employment,earnings gap,transition matrix,quantile regressions,panel data,Madagascar
    Date: 2017–10–20
  8. By: Bastien Bernela (CRIEF - Centre de Recherche sur l'Intégration Economique et Financière - Université de Poitiers); Marie Ferru (CRIEF - Centre de Recherche sur l'Intégration Economique et Financière - Université de Poitiers); Marc-Hubert Depret (CRIEF - Centre de Recherche sur l'Intégration Economique et Financière - Université de Poitiers)
    Abstract: Adding to the growing literature on cluster life cycle (CLC), this paper gives new insights focusing on the crucial stage of genesis. We argue that the process by which clusters came into existence matters by structuring its further development. We conceptualize this dynamic process through an evolutionary perspective-considering the relevance of history-enriched by the relational and institutional ones, giving the structuring role of interpersonal ties and institutions. To implement this comprehensive approach of CLC, data availability becomes a great challenge since historical and relational materials are needed. We suggest using an original mixed method we apply on a French cluster. Whereas our understanding of the preexisting stages of the cluster official birth is only based on qualitative data, its evolution is derived from quantitative approach interpreted by qualitative one. The CLC appears to be driven by historical features which make it able to adapt over time.
    Keywords: Cluster life cycle,genesis,embeddedness,mixed method,cluster policy
    Date: 2017–10–15
  9. By: Bibi, Chan; Audi, Marc; Ali, Amjad
    Abstract: This study has investigated the impact of gender inequality and environmental degradation on human well-being in the case of Pakistan from 1980 to 2014. Augmented Dickey-Fuller unit root test is used for stationarity of the variables. Autoregressive Distributed Lag model (ARDL) is used for co-integration among the variables of the model. The results show that gender inequality has a negative and significant impact on human well-being in Pakistan, while gender equality encourages human well-being. The calculated results show that there is positive but insignificant relationship with environmental degradation and human well-being in case of Pakistan. The estimated results show that economic misery has a negative and significant impact on human well-being in case of Pakistan. The estimated results show that economic growth has a positive and significant relationship with human well-being in Pakistan. On the basis of estimated results, it is concluded that gender equality, economic misery and economic growth are playing an important role in determining human well-being in Pakistan. Therefore, in order to improve human well-being, government must reduce gender inequality and economic misery while enhancing in parallel the economic growth.
    Keywords: Gender inequality, environmental degradation, Human Well-being
    JEL: J1 O10 Q0
    Date: 2017
  10. By: Dannenberg, Alia Asha; Estola, Matti; Dannenberg, Anna
    Abstract: The main weakness in the neoclassical theory of economics is its static nature. By a static model one cannot explain the observed time paths of economic quantities, like the flows of production of firms, the flows of consumption of consumers, and the prices of goods. The error in the neoclassical framework is that economic units are assumed to be in their optimum state and thus not willing to change their behaviour. Therefore, in neoclassical models a static equilibrium prevails. In this paper, the authors change this assumption so that economic units are assumed to be willing to improve their current state that may not be the optimal one. In this way, one can explain economic dynamics where every economic unit is changing its behaviour towards improving its welfare. The authors define the economic forces acting upon the production of firms, the consumption of consumers, and the prices of goods are changing in time. They show that in this dynamic system, business cycles and bankruptcies of firms emerge in a natural way like in the real world.
    Keywords: econophysics,Newtonian economics,dynamic economics
    JEL: D11 D21 C63 C02
    Date: 2017
  11. By: Pereyra, Francisca.
    Abstract: En la última década, Argentina ha implementado una serie de políticas tendientes a mejorar lascondiciones laborales de las trabajadoras domésticas e incluirlas en el marco de la protección social. A lareparación histórica que implica la sanción de la nueva ley del sector (Ley 26.844 “Régimen Especial deContrato de Trabajo para el Personal de Casas Particulares”), se le han sumado campañas de informacióne incentivos fiscales que buscaron promover el registro. Si bien se han observado avances significativosen la materia, todavía persiste una mayoría de trabajadoras no registradas. El estudio indaga sobre lasrazones que subyacen a este fenómeno basándose en un abordaje cualitativo que incluyó entrevistas conempleadas, empleadoras e informantes clave. Los resultados evidencian las dificultades que experimentanlas trabajadoras –particularmente las no registradas– para hacer valer sus derechos. No obstante, y demanera promisoria, también se destaca que las políticas implementadas en los últimos años han logradoinstalar el tema del registro en el discurso de empleadas y empleadoras. El análisis de los argumentos y delas prácticas que se desarrollan en torno al tema de la formalización laboral –así como de los obstáculos,los temores y las expectativas que esta genera– busca proveer de elementos para nutrir la continuidad delas intervenciones públicas en la materia.
    Keywords: domestic worker, women workers, social protection, social security policy, Argentina
    Date: 2017
  12. By: Alexandre Volle (Laboratoire CEE-M, Université Montpellier)
    Abstract: The present paper investigates the pricing behavior of a green firm competing against a brown firm where the polluting quality is sell in a perfect competitive market. The distorsion of the price to signal a green product is too high to face any demand. Pooling price equilibria emerge as most plausible as long as the brown firm has the possibility to mimic the pricing behavior of the green firm. A green producer is thus constrained to practice uninformative prices which can conduct it to leave the market.
    Keywords: Environmental Quality, Asymmetric Information, Price Signaling
    JEL: D43 D82 Q5
    Date: 2017–12
  13. By: Durand, Rodolphe; Clemente, Marco; Roulet, Thomas J.
    Abstract: In this essay, we propose a recursive model of institutional change building on the Annales School, one of the 20th century’s most influential streams of historical research. Our model builds upon three concepts from the Annales — mentalities, levels of time, and critical events — to explore how punctual disruptions affect different dimensions of institutional logics and exert short- or long-range influences. On these bases, organizations make choices, from decoupling to more radical shifts in logics, leading to severe institutional changes that become a matter of history. As much as organizations are influenced by their times and the prevalent institutional logics, their choices trigger macro-level changes in a recursive manner. More broadly, we comment on how fruitful it our approach to historicize organization studies.
    Keywords: Annales School; Institutional change; Institutional Logics; Events
    Date: 2016–06–06

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