nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2018‒03‒05
fourteen papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. The reconstruction of capital theory: the true meaning of capital in a production function By Obregón, Carlos
  2. CLASSES, CAPITAL AND THE SOCIAL FORMS IN BETWEEN - On the political and intellectual organization of the contradiction By Leonardo Ferreira Guimarães
  3. The Consumption Function: A New Perspective By Foster, John
  4. A bottom-up, non-cooperative approach to climate change control: Assessment and comparison of Nationally Determined Contributions (NDCs) By Carraro, Carlo
  5. GVCS and centrality: Mapping key hubs, spokes and the periphery By Chiara Criscuolo; Jonathan Timmis
  6. Could Noise Spectra of Strange Attractors Better Explained Wealth and Income Inequalities? Evidence from the S&P-500 Index. By Dominique, C-Rene
  7. The impact of financialisation on the wage share. A theoretical clarification and empirical test. By Kohler, Karsten; Guschanski, Alexander; Stockhammer, Engelbert
  8. Women's Empowerment, the Gender Gap in Desired Fertility, and Fertility Outcomes in Developing Countries By Doepke, Matthias; Tertilt, Michèle
  9. XV. ve XIX. Yüzyıllar Arasında Osmanlı Para Vakıfları ve Modern Finans Kurumlarının Karşılaştırılması By Korkut, Cem; Bulut, Mehmet
  10. Immediate Causality Network of Stock Markets By Li Zhou; Lu Qiu; Changgui Gu; Huijie Yang
  11. Avoiding the Housewife Stigma: Self-Employment as a Female Career Choice By Bjuggren, Carl Magnus; Henrekson, Magnus
  12. Mission (im)possible? The role of innovation (and innovation policy) in supporting structural change & sustainability transitions By Jan Fagerberg
  13. Labour contracts and stepping-stone effect in Italy: A multinomial analysis By Bosco, Maria Giovanna; Valeriani, Elisa
  14. A Leverage-Based Measure of Financial Stability By Adrian, Tobias; Borowiecki, Karol Jan; Tepper, Alexander

  1. By: Obregón, Carlos
    Abstract: The purpose of the present article is to explore the possibilities of a reconstruction of a Theory of Capital capable of taking into account the Reswitching phenomenon. In Section 1 a new measure of capital-time, for neoaustrian processes of production, is introduced. The main outcome of the use of this proposed new measure of capital is this: it can be shown that, even when Reswitching occurs, there is still always an inverse relationship between the rate of interest or profit and the quantity of capital-time. In Section 2 the results of Section 1 are extended for the case of two good technologies examples. In Section 3 a surrogate production process is introduced. By developing this surrogate production process it can be shown that in general there is an inverse relationship between the interest rate and the quantity of surrogate capital per man, the surrogate capital/output ratio, and between the interest rate and the newly defined steady-state consumption per capita. Section 4 presents further comments on the results of the previous sections. Section 5 introduces numerical examples.
    Keywords: Reswitching; Capital; Capital theory; Theory of capital; Cambridge controversies; Summing Up; Capital Time; Neoclassical parables; Production Function
    JEL: A10 B0 C0 C00 D0 D00
    Date: 2018–01
  2. By: Leonardo Ferreira Guimarães
    Abstract: This working paper focusses on a rigorous and somewhat idiosyncratic exposition of the concepts of dialectics, determinations of reflection (or essentialities) and social forms, adopting a Marxist reading of Hegel’s Science of Logic. The objective of this focus is to address one of the elements highly common in debates between Marxists and post-structuralists e amongst Marxist themselves: the centrality of categories of the one (like Universality, necessity, identity and so on) or of the multiple (like particularity, contingency, difference etc). Hence, the focus of this work is on the centrality of reflexive or mutual determinations (essence, non-identical identity, contradictory unity and social forms). Initially, even though Marx and some Marxist authors had used the notion of social forms, none of them had this notion developed in itself. The specific developments of this notion: such as the value forms, commodity form, political and juridical social forms were explored by various authors and by Marx himself. But, in the literature review made for this research, it wasn’t found any conceptualization of the general notion. The concept of social form can be explored as a methodological resource to mediate those above-mentioned elements of the debates. For instance, to centralize the social forms is to centralize the negative and reflexive element when we discuss if it’s the capital and its tendency laws that make for the historical march or the class struggle and the political contingency. The focus is on the something that exists in-between, the objectivation process in itself, not in its extremes
    Keywords: Dialectics; Marxist method; Social Forms; Political Economy; Hegel-Marxrelation
    JEL: B40 B49 B51
    Date: 2017–12–22
  3. By: Foster, John
    Abstract: The behaviour of aggregate consumption is conventionally understood from the perspective of the permanent income and life cycle hypotheses. Both of these hypotheses are deduced from the theory of constrained optimization as applied to a ‘representative agent’ that consumes and saves. An alternative way of understanding aggregate consumption expenditure is to see it as primarily a systemic outcome of the adoption of widely upheld rules (‘meso-rules’) that enable trading and contracting in a complex economic system. Such systems require order to function but they must also adapt and evolve. Correspondingly, aggregate consumption can be viewed as being determined by two contrasting historical processes: one involves an aggregation of pre-committed, rule-bound choices and the other open-ended aspirational choices of novel products. Both of these processes are influenced by economic incentives. This is the domain of neoclassical economic theory and it is found that such theorising can tell us a great deal once it is set in its proper historical context. Although a modern complex system perspective derived from the natural sciences is adopted, it is embedded in economic thinking. For example, connections are made to the insights and intuitions of Alfred Marshall, Joseph Schumpeter, Simon Kuznets, Friedrich Hayek and Maynard Keynes. What we understand from them, along with modern complex system analysis, is that, although it is individual decisions that are fundamental in any economic system, it cannot be the case that what we observe at the aggregate level just reflects the optimization decision of a representative agent. As Hayek observed, the role of individual is much more complex and important than this. Using half a century of data, the US consumption function is modelled successfully on the presumption that the economy is a complex system in which there has been the diffusion of a ‘culture of consumerism’ in the post-war era. This has involved the increasing adoption of a particular bundle of meso rules and this has resulted in a steadily increasing ratio of consumption to GDP that has been tending towards a limit. It was found that variables and perspectives drawn from neoclassical economic theory are important in explaining variations in the growth of aggregate consumption.
    Keywords: consumption function, macroeconomics, US
    JEL: E0 E00 E1 E10 E2 E21 E6 E60
    Date: 2018–02–06
  4. By: Carraro, Carlo
    Abstract: International negotiations on climate change control are moving away from a global cooperative agreement (at least from the ambition to achieve it) to adopt a bottom-up framework composed of unilateral pledges of domestic measures and policies. This shift from cooperative to voluntary actions to control GHG emissions already started in Copenhagen at COP 15 in 2007 and became a platform formally adopted by a large number of countries in Paris at COP 21. The new architecture calls for a mechanism to review the nationally determined contributions (NDCs) of the various signatories and assess their adequacy. Most importantly, countries' voluntary pledges need to be compared to assess the fairness, and not only the effectiveness, of the resulting outcome. This assessment is crucial to support future, more ambitious, commitments to reduce GHG emissions. It is therefore important to identify criteria and quantitative indicators to assess and compare the NDCs.
    Keywords: Climate change negotiations; GHG emissions; mitigation; Paris agreement
    Date: 2018–01
  5. By: Chiara Criscuolo; Jonathan Timmis
    Abstract: This paper uses “centrality” metrics to reflect position with Global Value Chains (GVCs). Central sectors reflect those that are highly connected (both directly and indirectly) and influential within globalproduction networks, whereas peripheral sectors exhibit weak linkages and are less influential. Applying these metrics to OECD ICIO data, reveals there have been profound changes in the structure of GVCs over the period 1995-2011. Whilst some activities remain clustered around the same key hubs as was the case at the start of the period (e.g. motor vehicles), for others there have been dramatic changes in the geography of economic activity (e.g. IT manufacturing), whereas other activities have become more influential for value chains almost universally (e.g. IT services). Several emerging economies and their industries have become more central to global production networks. We find this is particularly true of most peripheral industries of Eastern European countries, with their growing importance coinciding with the timing of their EU accession. Asian value chains have also undergone substantial reorganisation. In particular, the centrality of Japanese industries has fallen from an initial position of being the key hub within Asian value chains and the bulk of this fall does not appear to be due to the decline in size of the Japanese economy over this period. This is in contrast with trends in foreign value added content of exports of these Japanese industries, which increased over the same time period, illustrating that the centrality measure does not seem to simply reflect features captured by existing GVC metrics.
    Keywords: centrality, global value chains, input-output tables, international trade, network analysis
    JEL: C67 F12 F14 O57
    Date: 2018–02–23
  6. By: Dominique, C-Rene
    Abstract: SUMMARY: Inequity in wealth and income distributions is ubiquitous and persistent in markets economies. Economists have long suspected that this might be due to the workings of a power law. But studies in financial economics have focused mainly on tail exponent while attempting to recover the Pareto and Zipf’s laws. The estimation of tail exponents from log-log plots, as in stock market returns, produces biased estimators and has little impact on policy. This paper argues that economic time series are output signals of a multifractal process driven by strange attractors. Consequently, estimating noise spectra thrown-up by strange attractors stands to produce a much richer set of information, including the lower and upper bounds of unequal income distribution.
    Keywords: noise spectra, singularity spectrum, correlation dimension, income distribution, fractal attractor, scale exponent.
    JEL: G1 G14
    Date: 2018–01–24
  7. By: Kohler, Karsten (Kingston University London); Guschanski, Alexander (University of Greenwich); Stockhammer, Engelbert (Kingston University London)
    Abstract: It is frequently asserted that financialisation has contributed to the decline in the wage share. This paper provides a theoretical clarification and a systematic empirical investigation. We identify four channels through which financialisation can affect the wage share: (1) enhanced exit options of firms; (2) rising price mark-ups due to financial overhead costs for businesses; (3) increased competition on capital markets and shareholder value orientation; and (4) the role of household debt in increasing workers’ financial vulnerability and undermining their class consciousness. The paper compiles a comprehensive set of empirical measures of financialisation and uses it to test these hypotheses with a panel regression of 14 OECD countries over the 1992-2014 period. We find strong evidence for negative effects of financial liberalisation and financial payments of non-financial corporations on the wage share that are in the same order of magnitude as the effects of globalisation.
    Keywords: financialisation; income distribution; political economy
    JEL: E25
    Date: 2018–02–25
  8. By: Doepke, Matthias; Tertilt, Michèle
    Abstract: We document evidence on preferences for childbearing in developing countries. Across countries, men usually desire larger families than women do. Within countries, we find wide dispersion in spouses' desired fertility: there are many couples whose ideal family size differs by five children or more. This disagreement between spouses suggests that the extent to which women are empowered should matter for fertility choices. We point to evidence at both the macro and micro levels that this is indeed the case. We conclude that taking account of household bargaining and women's empowerment in analyses of fertility is an important challenge for research.
    Keywords: desired fertility; marital bargaining; Women's Empowerment
    JEL: J12 J13 J16 O10
    Date: 2018–01
  9. By: Korkut, Cem; Bulut, Mehmet
    Abstract: Most of the services provided by modern states to their citizens today were provided by the waqfs during the Ottoman period. The fact that the influence of Islamic religion on the social life was high was one of the most important factors driving people to establish the waqfs. The waqfs founded by philanthropists financed such social needs as religious services, education and infrastructure. The cash waqfs (CWs) were one of the waqf types that financed the needs of the society. The CWs whose capital was cash money provided financial sources to entrepreneurs who were in need of cash according to Islamic methods. The CWs continued to function until the last period of the Ottomans. That the Ottomans used CWs to carry out the functions of the modern financial institutions of Europe is important to understand the Ottoman economic and financial mentality. By using the primary sources, this study aims to analyze the Ottoman economic mentality through studying CWs. In addition, the financial institutions operating in Europe in the same Günümüzde modern devletler tarafından vatandaşlara sağlanan çoğu hizmetler, Osmanlı döneminde vakıflar tarafından sağlanıyordu. İslâm dininin toplumsal hayat üzerindeki etkisinin yüksek olması insanları vakıf kurmaya iten önemli etkenlerin başında geliyordu. Hayırseverler tarafından kurulan vakıflar, dini hizmetler, eğitim, altyapı vb. toplumsal ihtiyaçları finanse etmekteydi. Para vakıfları, toplumun ihtiyaçlarını finanse eden vakıf türlerinden birisidir. Sermayesi nakit paradan oluşan bu vakıflar ihtiyacı olan girişimcilere İslâmî usullere göre finansman sağlamıştır. Para vakıfları Osmanlıların son dönemlerine kadar işleyişini devam ettiren kurumlar olmuştur. Osmanlıların, aynı dönemde Avrupa’daki modern finansal kurumların gelişmesine karşı para vakıfları ile bu kurumların işlevlerini yerine getirmesi, Osmanlı iktisadi ve finansal zihniyetini anlamak açısından önemlidir. Bu çalışmanın amacı birincil kaynaklarından incelenen para vakıfları ile Osmanlı iktisadi zihniyetini analiz etmektir. Ayrıca aynı dönemde faaliyet gösteren ve para vakıfları ile çağdaş olarak Avrupa’da faaliyet gösteren finansal kurumlar da incelenecek ve iktisadi zihniyetler arasında karşılaştırma yapılmaya çalışılacaktır.
    Keywords: cash waqfs, the economic mentality of Ottomans, Rumelia, modern financial institutions, Islamic economics and finance, para vakıfları, Osmanlı iktisadi zihniyeti, Rumeli, modern finans kurumları, İslam iktisadı ve finansı
    JEL: B12 B15 G23 N23 N25
    Date: 2017–12–12
  10. By: Li Zhou; Lu Qiu; Changgui Gu; Huijie Yang
    Abstract: A financial system contains many elements networked by their relationships. Extensive works show that topological structure of the network stores rich information on evolutionary behaviors of the system such as early warning signals of collapses and/or crises. Existing works focus mainly on the network structure within a single stock market, while a collapse/crisis occurs in a macro-scale covering several or even all markets in the world. This mismatch of scale leads to unacceptable noise to the topological structure, and lack of information stored in relationships between different markets. In this work by using the transfer entropy we reconstruct the influential network between ten typical stock markets distributed in the world. Interesting findings include, before a financial crisis the connection strength reaches a maxima, which can act as an early warning signal of financial crises; The markets in America are mono-directionally and strongly influenced by that in Europe and act as the center; Some strongly linked pairs have also close correlations. The findings are helpful in understanding the evolution and modelling the dynamical process of the global financial system.
    Date: 2018–02
  11. By: Bjuggren, Carl Magnus (Research Institute of Industrial Economics (IFN)); Henrekson, Magnus (Research Institute of Industrial Economics (IFN))
    Abstract: This paper investigates career choices of women who marry high-income men. We find that women married to men in the top of the income distribution are more likely to enter self-employment, which is also associated with a lower income. This can be interpreted as a career choice that produces a more flexible work schedule in return for lower income. In a Nordic welfare state where work is the norm for women, self-employment offers a way to avoid the stay-at-home stigma. It allows one to stay in the workforce while enjoying approval from society and being in control of one’s work schedule and personal demands.
    Keywords: Career choice; Entrepreneurship; Marriage; Self-employment; Women
    JEL: J12 J13 J16 J22 L26
    Date: 2018–02–12
  12. By: Jan Fagerberg (TIK Centre for Technology, Innovation and Culture, University of Oslo)
    Abstract: The topics addressed in this paper concern the (much-needed) transition to sustainability, the structural changes it entails and what role (innovation) policy can play in speeding up such changes. While it is easy to argue that innovation must play an important role in the transition towards sustainability, it is more challenging to provide good models for how policy may help in mobilizing innovation for this purpose. Such models, it is argued, needs to be based on the accumulated knowledge base on the role of innovation in social and economic change. The paper therefore starts by distilling some important insights on innovation from the accumulated research on this topic, and, with this in mind, discusses various policy approaches that have been suggested for influencing innovation and sustainability transitions. To allow for a more in-depth discussion the paper then goes into more detail about three cases in which policy arguably had a large impact, namely renewable energy in Denmark and Germany and electric cars in Norway. The final part of the paper sums up the discussion about the role of (innovation) policies in sustainability transitions.
    Date: 2018–02
  13. By: Bosco, Maria Giovanna; Valeriani, Elisa
    Abstract: Do short-term contracts facilitate the transition to permanent contracts? The authors use a rich administrative database for Italy to run a stepping stone analysis and evaluate which contractual agreements have more chances to lead to a permanent working position. They find that individual specific characteristics make it more likely for a worker to be employed with a specific contractual agreement and that the contribution toward more working stability varies with the previous contract. The authors conclude that fixed term positions act more as stumbling blocks than building blocks for open-ended contracts.
    Keywords: dependent labour,labour market institutions,careers analysis
    JEL: J20 J21 J41
    Date: 2018
  14. By: Adrian, Tobias (International Monetary Fund); Borowiecki, Karol Jan (Department of Business and Economics); Tepper, Alexander (Columbia University)
    Abstract: The size and the leverage of financial market investors and the elasticity of demand of unlevered investors define MinMaSS, the smallest market size that can support a given degree of leverage. The financial system's potential for financial crises can be measured by the stability ratio, the fraction of total market size to MinMaSS. We use that financial stability metric to gauge the buildup of vulnerability in the run-up to the 1998 Long-Term Capital Management crisis and argue that policymakers could have detected the potential for the crisis.
    Keywords: Leverage; financial crisis; financial stability; minimum market size for stability; MinMaSS; stability ratio; Long-Term Capital Management; LTCM
    JEL: G01 G10 G20 G21
    Date: 2018–02–07

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