nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2018‒08‒13
twenty-one papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Toward a New Microfounded Macroeconomics in the Wake of the Crisis By Eugenio Caverzasi; Alberto Russo
  2. Stabilizing an Unstable Complex Economy By Isabelle Salle; Pascal Seppecher
  3. The Geography of NGO Activism against Multinational Corporations By Sophie Hatte; Pamina Koenig
  4. Layering the developmental state away? The knock-on effect of startup promotion policies on the innovation bureaucracy in South Korea. By Pauline Debanes
  5. Le rendite improduttive e parassitarie: Claudio Napoleoni sul capitalismo italiano By Bellanca, Nicolo'
  6. Academic sociology: The alarming rise in predatory publishing and its consequences for Islamic economics and finance By Hasan, Zubair
  7. Global Market Power and its Macroeconomic Implications By Federico Diez; Daniel Leigh; Suchanan Tambunlertchai
  8. The Dynamics of Technology Transfer in a Catching-up Innovation System: Empirical Evidence and Actor Perceptions from the Estonian Biotechnology Sector By Margit Kirs; Veiko Lember; Erkki Karo
  9. Cultural Values, Family Decisions and Gender Segregation in Higher Education: Evidence from 26 OECD Economies By Zuazu Bermejo, Izaskun
  10. PENIMBUNAN BARANG PERSPEKTIF HUKUM EKONOMI ISLAM By Ariska, Riska; Albadri, Abdul Aziz Munawar
  11. Book review: Why Minsky matters, by L. Randall Wray, Princeton University Press, Princeton, NJ, 2015, £19.95 hardback, 288 pp. 9780691159126 By Goodhart, Charles
  12. Patience is a Virtue - In Value Investing By Thorsten Hens; Klaus Reiner Schenk-Hoppé
  13. Book Review - Endogenous Innovation The Economics of an Emergent System Property By Mohamed Buheji
  14. Social Accounting Matrix: A user manual for village economies By Gronau, Steven; Winter, Etti
  15. Is there green growth in OECD countries? By Pasche, Markus
  16. Towards equation of state for a market: A thermodynamical paradigm of economics By Burin Gumjudpai
  17. Alta Desigualdad en América Latina: desde cuándo y por qué By Rodríguez Weber, Javier
  18. Understanding child labour beyond the standard economic assumption of monetary poverty By Krauss, Alexander
  19. Being Stranded on the Carbon Bubble? Climate Policy Risk and the Pricing of Bank Loans By Manthos D. Delis; Kathrin de Greiff; Steven Ongena
  20. Innovation and the State: Towards an Evolutionary Theory of Policy Capacity By Erkki Karo; Rainer Kattel
  21. Is personality endogenous: evidence from Ireland By Irene Mosca; Robert E Wright

  1. By: Eugenio Caverzasi; Alberto Russo
    Abstract: The Great Recession that followed the financial crisis of 2007 is not only the largest economic crisis after the Great Depression of the 1930s, it also signals a crisis of economics as a discipline. This is not only the consequence of the inadequacy of mainstream macroeconomics, and specically the DSGE workhorse model, to forecast such a huge event, or at least to detect the worrying tendencies towards it. Even more relevant is the choice to explicitly avoid the modelling of large crises (that for someone is a motivation for not attacking pre-crisis DSGE models focused on the analysis of small deviations from the steady-state), so denying the intrinsic nature of capitalism, a system that necessarily proceeds through cycles and (extended) crises. The replies of the DSGE approach to critics have led to extensions regarding for instance the role of financial frictions, heterogeneous agents, and bounded rationality (though typically in the form of quasi-rational expectations). The alternative paradigm of Agent-Based Macroeconomics can take into account all these elements at once within an evolutionary modelling framework based on heterogeneity and interaction, so capable to endogenously reproduce complex dynamics, from small fluctuations to large crises, due to innovation and industrial dynamics, rising inequality and financial instability, and so on. The integration between Agent-Based Macroeconomics and the (post-Keynesian) Stock-Flow Consistent approach represents a promising way for the future development of this research field.
    Date: 2018–08–01
  2. By: Isabelle Salle (Utrecht School of Economics - Utrecht University [Utrecht]); Pascal Seppecher (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper analyzes a range of alternative specifications of the interest rate policy rule within a macroeconomic, stock-flow consistent, agent-based model. In this model, firms' leverage strategies evolve under the selection pressure of market competition. The resulting process of collective adaptation generates endogenous booms and busts along credit cycles. As feedback loops on aggregate demand affect the goods and the labor markets, the real and the financial sides of the economy are closely interconnected. The baseline scenario is able to qualitatively reproduce a wide range of stylized facts, and to match quantitative orders of magnitude of the main economic indicators. We find that, despite the implementation of credit and balance sheet related prudential policies, the emerging dynamics feature strong instability. Targeting movements in the net worth of firms help dampen the credit cycles, and simultaneously reduce financial and macroeconomic volatility, but does not eliminate the occurrence of financial crises along with high costs in terms of unemployment.
    Keywords: Agent-based modeling, Credit cycles, Monetary and Macroprudential policies, Leaning against the wind
    Date: 2017–05–25
  3. By: Sophie Hatte (UNIL - Université de Lausanne); Pamina Koenig (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, UNIROUEN - Université de Rouen Normandie - NU - Normandie Université, PSE - Paris School of Economics)
    Abstract: Non-governmental organizations (NGOs) regularly denounce the behavior of multinational corporations throughout the world, however their motivations for choosing the targets of their campaigns remain largely unknown. Using a new and rich dataset listing activists' campaigns towards multinational firms, we reveal important regularities in the geography and internationalization of advocacy NGOs activity. For example, 49\% of US NGOs select a foreign target firm, however, 75\% of campaigns targeting foreign firms involve an action taking place in the country of the NGO. We build on these facts to analyze the country-level determinants of NGOs campaigns, and estimate a triadic gravity equation for campaigns, involving the NGO, firm and action countries. Our variables of interest are the bilateral links between the country pairs, measuring how well the audience of the NGO identifies to the target of the campaign. Our results reveal a campaigning bias towards home firms and firms originating from familiar countries.
    Keywords: microeconomy of globalization,NGOs campaigns,multinational firms,gravity equation
    Date: 2017–05
  4. By: Pauline Debanes
    Abstract: The role of the state and public agencies has come to the fore again since the global financial crisis to spur innovation-led growth. Alimented by the success of global tech giants in particular, new policy rationales emerged in favor of government support for ICT startups. The paper addresses the crucial question of whether the corresponding organizational capabilities do exist to implement such policies. This article focuses on the case of South Korea, renowned at the same time for the strong capacities of the state and an institutional setting hostile to new ventures. The main contribution of the paper is to analyze institutional change within the Korean innovation bureaucracy and the evolution of its organizational capabilities, underpinning the startup promotion policies implemented since 2013. Under the appearance of continuity of state innovation capacities, the startup promotion policies foster a restructuring of the public infrastructure supporting the corporate sector. The results, drawn upon an extensive fieldwork in the Korean startup ecosystem, indicate that there is a loss of state capacities, which impede on the implementation of largescale promotion of the manufacturing industries.
    Date: 2017–11
  5. By: Bellanca, Nicolo'
    Abstract: Claudio Napoleoni’s reflection on the problems of the Marxist theory of value is not separate from that on the Italian economy. In particular, during the Sixties, his reexamination of the concepts of productive activities and rents allow him to argue that the social and political hegemony of the redistributive coalitions constitutes the greatest structural weakness of Italy and the most important cause of inequalities and lack of inclusion.
    Keywords: Marxist theory of value; Productive labour; Political economy; Italian economy; Claudio Napoleoni
    JEL: B24 D72 E11
    Date: 2018–06–27
  6. By: Hasan, Zubair
    Abstract: This study explores the causes and impact of predatory online publishing on Islamic economics and finance and takes a literature scan to identify the origin and expansion of predatory publishing, as references listed in the paper show. The personal experience and observation of the author over the decades of teaching at various universities endorses the evidence. Its originality lies in initiating discussion on an issue so far untouched in the field of Islamic economics and finance. It not only explores the impact of the affliction on the discipline but also suggests ways to curb the malady.
    Keywords: Predatory publishing; Econometric modeling; Islamic finance; Sociology of economics
    JEL: A2 C4 I23
    Date: 2017–09–15
  7. By: Federico Diez; Daniel Leigh; Suchanan Tambunlertchai
    Abstract: We estimate the evolution of markups of publicly traded firms in 74 economies from 1980-2016. In advanced economies, markups have increased by an average of 39 percent since 1980. The increase is broad-based across industries and countries, and driven by the highest markup firms in each economic sector. For emerging markets and developing economies, there is less evidence of a rise in markups. We find a positive relation between firm markups and other indicators of market power, such as profits or industry concentration. Focusing on advanced economies, we investigate the relation between markups and investment, innovation, and the labor share at the firm level. We find evidence of a non-monotonic relation, with higher markups being correlated initially with increasing and then with decreasing investment and innovation rates. This non-monotonicity is more pronounced for firms that are closer to the technological frontier. More concentrated industries also feature a more negative relation between markups and investment and innovation. The association between markups and the labor share is generally negative.
    Date: 2018–06–15
  8. By: Margit Kirs; Veiko Lember; Erkki Karo
    Abstract: Based on the case studies from the Estonian biotechnology sector, we explore the development trajectories of academic business ventures in a country where the formal and linear model of technology transfer and commercialization have been at the core of the innovation policy, but the exploitation and diffusion of knowledge generated through formal university-industry linkages has remained limited. We show that even in the area of biotechnology, where one could expect this model of technology transfer to be most visible, the model is not functioning in practice and the policy has had limited impact. The more systemic evolutionary approach to innovation and knowledge diffusion seems to better grasp the contextual aspects of technology transfer in catching-up context, while also providing more informative input for policy-making.
    Date: 2017–11
  9. By: Zuazu Bermejo, Izaskun
    Abstract: This paper examines the role of cultural values and family decision-making in the gender distribution of higher education on a panel database of 9 elds of study in 26 OECD countries over 1998-2012. The paper surmises an interplay between family-friendly policies and cultural values that might be associated with gender segregation. Using survey data from the World Value Survey, the results suggest that gender-egalitarian attitudes of females are negatively associated with gender segregation. However, attitudes of males are not associated with signi cant coe cients. Marriage market indicators, such as the age at rst marriage, are positively associated with gender segregation. Finally, family-friendly policies are found to display a positive association with segregation in societies that are attached to traditional gender roles in the labor market. To the contrary, the same policies are negatively associated with segregation in gender-egalitarian societies. These ndings are robust to country and eld-speci c levels of segregation, and remain using alternative speci cations and estimation techniques.
    Keywords: gender, segregation, higher, education, cultural, values, marriage, market, family, policies
    JEL: A13 I24 J16
    Date: 2018–06–11
  10. By: Ariska, Riska; Albadri, Abdul Aziz Munawar
    Abstract: Hoarding is one form of inner trade hoarding is none other than the sale of goods, which the seller did hoarding based on their stated objectives, one of which is for profit doubled, the sellers are willing to wait wares on sale when prices the market rose. It is part of buying and selling is prohibited caused harm to others and only benefit yourself only. In other words mentioned as Ihtikâr or monopoly. Therefore, in running a business or trade affairs should be looking for more good luck does not run fairly one-sided manner detrimental or beneficial unilaterally but by the way in the pleasure of Allah SWT. The aim of this study is to determine To know the effect of hoarding goods to economic stability. To determine what factors are causing the accumulation of goods. And to know how the basic concept of hoarding goods in general. The methodology used in this studyused a qualitative approach normative. From the research, hoarding of goods sold in the perspective of Islamic law which prohibited economy is in the form of hoarding staple foods. Economically sale of staple food stockpiled by the seller in the form of groceries may result in inflation, the rise in prices on the market resulting in buyers also feel difficulty to get the goods is nothing but a daily food needs. This can lead to famine which originated from the inability to buy goods or because of the scarcity of items needed. Therefore trade must also be fair.
    Keywords: Stockpiling Goods, Ihtikar, IslamicEconomic Law
    JEL: K12
    Date: 2018–07–19
  11. By: Goodhart, Charles
    Abstract: Yes, Minsky does matter! He had an extraordinarily acute understanding of the interactions between banking, and finance more generally, on one side and the real economy on the other. As the author parades Minsky’s monetary analysis, partly in well-chosen quotations, I was continuously struck by the freshness, even when several decades have elapsed since his death in 1996, and the originality of his monetary analysis
    JEL: N0
    Date: 2017–01
  12. By: Thorsten Hens (University of Zurich, Norwegian School of Economics and Business Administration, and Swiss Finance Institute); Klaus Reiner Schenk-Hoppé (University of Manchester and Norwegian School of Economics (NHH))
    Abstract: This note illustrates a simple but important insight for financial investment. In a heterogeneous agent-based evolutionary finance market model with long-lived assets, markets are stable if clients of fundamental ('value') investment funds are more patient than clients of other funds.
    Keywords: Financial market stability; delegated fund management; investor patience; agent-based modeling; evolutionary finance
    JEL: D53 G18 C63
    Date: 2018–03
  13. By: Mohamed Buheji (International Institute of Inspiration Economy)
    Date: 2018
  14. By: Gronau, Steven; Winter, Etti
    Abstract: The application of Social Accounting Matrices (SAM) is well established at the national level and provides a comprehensive economic framework. The procedure for developing national SAMs is extensively documented in literature. However, it can also be constructed for smaller economies, such as a village. Studies dealing with village SAMs are rare. In addition, there are hardly any guidelines for design. This gap will be addressed in this paper, which provides a manual for the construction of a village SAM. Theoretical principles and data requirements are discussed. A hypothetical village SAM is constructed by using numerical examples. Subsequently, the SAM of a real-world village case study from Zambia is analyzed. It is demonstrated how macroeconomic indicators can be calculated and microeconomic information obtained. Furthermore, a village SAM provides the database for scientific modelling approaches which are presented. Village SAMs are thus a useful management tool and support policy planning at local and regional level.
    Keywords: Social accounting matrix; user manual; village economies; management tool; policy planning
    JEL: A33 O21 R58
    Date: 2018–08
  15. By: Pasche, Markus
    Abstract: Taking the Ecological Footprint (EF) as a broad measure of environmental impact of economic activity, there is substantial progress in decoupling economic output from environmental impact. However, this progress has been too slow to compensate the negative environmental impact of economic growth. But since mid of 2000s the EF declines in the OECD countries, and the global EF increase is driven by emerging countries, i.e. China. However, the decline could be mainly explained by a GDP growth slowdown. To achieve a significant reduction (comparable to the goals of the Paris Agreement) a further slowdown could be necessary. Moreover, the paper investigates the role of globalization because the greening of production in OECD countries could be due to a shift of dirty industries to non-OECD countries. Thus OECD countries are net importers of the EF embodied in traded goods. However, the amount of net EF imports is too small and not correlated with the eco-productivity of production. As ecological productivity is strongly correlated with enforced environmental policy, globalization could be used as a vehicle to promote eco-productivity also in non-OECD countries.
    Keywords: Environmental Footprint, Carbon Footprint, green growth, degrowth, eco-productivity, globalization, environmental policy
    JEL: F18 Q53 Q56 Q58
    Date: 2018–07–03
  16. By: Burin Gumjudpai (IF Naresuan, ThEP, NIDA)
    Abstract: Foundations of equilibrium thermodynamics are the equation of state (EoS) and four postulated laws of thermodynamics. We use equilibrium thermodynamics paradigms in constructing the EoS for microeconomics system that is a market. This speculation is hoped to be first step towards whole pictures of thermodynamical paradigm of economics.
    Date: 2018–07
  17. By: Rodríguez Weber, Javier
    Abstract: In recent years, a dense and fruitful debate on the history of inequality in Latin America has developed. The central points of the debate are: 1) the origin of Latin American inequality; 2) the role of the region’s colonial legacy; 3) whether the continent went through a period of “levelling” between 1930 and 1980; and 4) the sustainability of the recent trend towards inequality reduction. In this context, this paper has two main objectives. First, to evaluate the merits and empirical base of different positions under debate. Second, and most important, to offer a brief history of income inequality in Latin America based on the best evidence available. Thus, the paper presents an analytical narrative centered on the linkages between peripheral capitalism -to which Latin American economies moved in nineteenth century- and the institutional heritage, much of it of colonial origin. The main argument is that both changes and persistent features of inequality can be explained by the way in which the price cycles of exports interact with a political-institutional framework.
    Keywords: Inequality, Latin America, Institutions, History, Peripheral capitalism
    JEL: B52 D63 N36 O1 O54
    Date: 2018–06–27
  18. By: Krauss, Alexander
    Abstract: Child labour is pervasive across sub-Saharan Africa. The common assumption is that monetary poverty is its most important cause. This paper investigates this hypothesis with empirical evidence by exploring structural, geographic, monetary, demographic, cultural, seasonal and school-supply factors simultaneously that can influence child labour. It is a first attempt in the literature to combine quantitative with qualitative methods to identify a broader range of potential factors—on the demand- and supply-side and at the micro and macro levels—for why children work in agrarian economies like Ghana. Interviews with the Minister of Education and with children enrich the multivariate regression results. The multiple sources of child labour appear to include, in particular, the structure of the economy, social norms and no returns to rural basic education. Policy responses are outlined especially on the demand side that are needed to help reduce harmful child labour that affects children’s education and later opportunities.
    Keywords: Child labour; Poverty; Agriculture; Africa; Child work; Ghana; Mixed methods; Methodology
    JEL: D13 I31 J23 J24
    Date: 2017–03–01
  19. By: Manthos D. Delis (Montpellier Business School); Kathrin de Greiff (University Zurich); Steven Ongena (University of Zurich, Swiss Finance Institute, KU Leuven, and Centre for Economic Policy Research (CEPR))
    Abstract: Does neglecting the possibility that fossil fuel reserves become “stranded” result in a “carbon bubble”, i.e., an overvaluation of fossil fuel firms? To address this question, we study whether banks price the climate policy risk. We hand collect global data on corporate fossil fuel reserves, match it with syndicated loans, and subsequently compare the loan rate charged to fossil fuel firms — along their climate policy exposure — to non-fossil fuel firms. We find that before 2015 banks did not price climate policy risk. After 2015, however, the risk is priced, especially for firms holding more fossil fuel reserves. We also provide some evidence that “green banks” charge marginally higher loan rates to fossil fuel firms.
    Keywords: Environmental Policy, Climate Policy Risk, Loan Pricing, Carbon Bubble, Fossil Fuel Firms, Stranded Assets
    JEL: G2 Q3 Q5
    Date: 2018–02
  20. By: Erkki Karo; Rainer Kattel
    Abstract: In this paper we propose an evolutionary analytical approach to policy capacity with a specific focus on policy domains, where uncertainty and need for policy innovations, or novelty creation, is a central concern for effective policies. From an evolutionary perspective, the core elements of policy capacity are: a) organizational routines and their varieties, b) search and selection and the endogenous and exogenous sources of novelty creation, c) selection and feedback environments. We operationalize these elements and illustrate the value of the evolutionary analytical perspective through discussing the evolution of science, technology and innovation (STI) policy capacities of three Asian Tigers.
    Date: 2016–09
  21. By: Irene Mosca (The Irish Longitudinal Study of Ageing, Trinity College Dublin); Robert E Wright (Department of Economics, University of Strathclyde)
    Abstract: There is a growing interest in economics in the role played by personality in explaining labour market behaviour. Research to date points to the Big-5 personality traits being a possible determinant of wages and employment. However, most of this research is based on the assumption that personality is exogenous. This paper examines the potential endogeneity of personality in the context of employment behaviour amongst Irish women. A quasi-experimental design, generated by implementation and abolition of the so-called “Marriage Bar†, is employed. The Marriage Bar was the legal requirement that women leave paid employment upon getting married in Ireland. Because this law was abolished only in the 1970s, many of the women affected are still alive and are among the respondents in The Irish Longitudinal Study on Ageing. The identification strategy is based on the comparison of two groups of women affected by the Marriage Bar. The comparison is between those who returned to employment after being forced to leave the labour market and those who did not. The analysis supports the view that researchers interested in the relationship between the Big-5 and labour market outcomes should not view the potential problem of “the endogeneity of personality†as a problem.
    Keywords: Bit-5 personality traits, labour market success, endogeneity
    JEL: J2 J4
    Date: 2018–02

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