nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2018‒12‒17
eleven papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. "Investment Decisions under Uncertainty" By Sunanda Sen
  2. The Financial Innovation Hypothesis: Schumpeter, Minsky and the sub-prime mortgage crisis By Eugenio Caverzasi; Daniele Tori
  3. Inter-Industry Wage Inequality: Persistent differences and turbulent equalization By Patrick Mokre; Miriam Rehm
  4. Women in Economics: Stalled Progress By Shelly Lundberg; Jenna Stearns
  5. Women in (and out of) artisanal mining: apposing policy and women's lived experiences in Lujinji B and Wakayiba mines, Mubende, Uganda By Muheki, Stella; Geenen, Sara
  6. The limits to profit-wage redistribution: Endogenous regime shifts in Kaleckian models of growth and distribution By Köhler, Kasper
  7. IFAD RESEARCH SERIES 19 - Measuring women's empowerment in agriculture: a streamlined approach By Garbero, A.; Perge, E.
  8. Trade Exposure and Firms Markup Dynamics in the Food Industry By Curzi, D.; Garrone, M.; Olper, A.
  9. Heterogeneity, distribution and financial fragility of non-financial firms: an agent-based stock-flow consistent (AB-SFC) model By Ítalo Pedrosa; Dany Lang
  10. Beyond a Methodological Reading, When Fama Meets Hayek on Information By Nathanael Colin; Thomas Delcey

  1. By: Sunanda Sen
    Abstract: Divergent trends, as observed, between growth in the financial and real sectors of the global economy entail the need for further research, especially on the motivations behind investment decisions. Investments in market economies are generally guided by call-put option pricing models--which rely on an ergodic notion of probability that conforms to a normal distribution function. This paper considers critiques of the above models, which include Keynes's Treatise on Probability (1921) and the General Theory (1936), as well as follow-ups in the post-Keynesian approaches and others dealing with "fundamental uncertainty." The methodological issues, as can be pointed out, are relevant in the context of policy issues and social institutions, including those subscribed to by the ruling state. As it has been held in variants of institutional economics subscribed to by John Commons, Thorstein Veblen, Geoffrey Hodgeson, and John Kenneth Galbraith, social institutions remain important in their capacity as agencies that influence individual behavior with their "informational-cognitive" functions in society. By shaping business concerns and strategies, social institutions have a major impact on investment decisions in a capitalist system. The role of such institutions in investment decisions via policy making is generally neglected in strategies based on mainstream economics, which continue to rely on optimization of stock market returns based on imprecise estimations of probability.
    Keywords: Uncertainty; Probability; Weights; Investment; Keynes; Institutional Economics
    JEL: B25 E02 E12 E22 G01 G11
    Date: 2018–12
  2. By: Eugenio Caverzasi; Daniele Tori
    Abstract: Neo-Schumpeterian economics inspired by the work of Schumpeter and the financial Keynesianism of Minsky are often regarded as unrelated theoretical strands. In this paper, we try to combine these two literatures building on a parallelism between non-financial and financial firms. We focus on recent financial innovations, highlighting how the evolution experienced by US financial institutions led them to transcend their traditional role of credit providers, shaping as 'producers' of financial products, through securitization. This allows on the one hand to broaden the application of Neo-Schumpeterian insights to the financial sector and, on the other, to provide an original explanation of the so-called sub-prime crisis by applying the Financial Instability Hypothesis of Minsky to the alternative context of financial production. We maintain that the 2007-8 crisis was not the result of an innovation in the real sector, but came from an innovation (or a series of innovations) intrinsic to the financial system itself, which fostered credit creation. We argue that this 'cluster of innovations' can be placed under the label 'securitization', defined as the business of packaging and reselling loans, with repo agreements as the main source of funds.
    Keywords: Minsky, Schumpeter, securitization, financial firms, Great Financial Crisis
    JEL: B52 G21 O33
    Date: 2018–12
  3. By: Patrick Mokre (Department of Economics, New School for Social Research); Miriam Rehm (AK Wien)
    Abstract: Persistent inter-industry wage differentials are an enduring puzzle for neoclassical economics. This paper applies the classical theory of ‘real competition’ to inter-industry wage differentials. Theoretically, we argue that competitive wage determination can be decomposed into equalizing, dispersing and turbulently equalizing factors. Empirically, we show graphically and econometrically for 31 U.S. industries in 1987-2016 that wage differentials, like regulating profit rates, are governed by turbulent equalization. Furthermore, we apply a fixed effects OLS as well as a hierarchical Bayesian inference model and find that the link between regulating profit rates and wage differentials is positive, significant and robust.
    Keywords: Wage inequality, industry wages, inter-industry wage differentials, incremental wages, real competition, convergence, gravitation, panel data, Bayesian econometrics
    JEL: B12 B51 B52 C11 D24 J31 J51 J52 J62 L20
    Date: 2018–12
  4. By: Shelly Lundberg (University of California Santa Barbara); Jenna Stearns (University of California, Santa Barbara)
    Abstract: In this paper, we first document trends in the gender composition of academic economists over the past 25 years, the extent to which these trends encompass the most elite departments, and how women’s representation across fields of study within economics has changed. We then review the recent literature on other dimensions of women’s relative position in the discipline, including research productivity and income, and assess evidence on the barriers that female economists face in publishing, promotion, and tenure. While underlying gender differences can directly affect the relative productivity of men and women, due to either differential constraints or preferences, productivity gaps do not fully explain the gender disparity in promotion rates in economics. Furthermore, the progress of women has stalled relative to that in other disciplines in the past two decades. We propose that differential assessment of men and women is one important factor in explaining this stalled progress, reflected in gendered institutional policies and apparent implicit bias in promotion and editorial review processes.
    Keywords: gender, economics, tenure and promotion practices, promotion, tenure, publishing
    JEL: J16 J71 J21
    Date: 2018–12
  5. By: Muheki, Stella; Geenen, Sara
    Abstract: This paper is situated within an emerging literature on women in mining. It seeks to understand the role of Ugandan women in artisanal and small-scale mining (ASM) as well as the impact of formalising ASM on these women. Using insights from research on social exclusion and adverse incorporation, the paper explores the challenges of integrating an informal economy into the formal economy, with an emphasis on the Ugandan Minerals and Mining Policy 2018. The study observes that the regulatory framework underpinning formalisation of ASM glosses over gender considerations and risks further marginalizing women. It suggests ways to mitigate likely impacts of this legislation and argues for real transformative change so as to make women’s participation in ASM more beneficial for them.
    Keywords: Uganda; artisanal mining; women
    Date: 2018–12
  6. By: Köhler, Kasper
    Abstract: A feature of Kaleckian models of distribution and growth that is often overlooked is that they describe a nonlinear relation between functional income distribution and demand and growth, because the size of the multiplier is affected by redistribution from wages to profits and vice versa. This paper addresses the nonlinearity of the standard post-Kaleckian model by examining its so-called IS-curves. It is found that changes in functional income distribution affect the "distribution-ledness" of an economy: redistribution towards wages reinforces the wage-led or profit-led character of an economy, while redistribution towards profits does the opposite. In addition, redistribution towards wages can turn an intermediate regime wage-led. A standard post-Kaleckian model with nonlinear investment behaviour is then presented. This model yields substantially different IS curves, such that an optimal functional income distribution can be derived. However, it is found that unlike in the standard model, this optimum is not the same for the different classes, such that true opposing interests appear in the model.
    Keywords: distribution,growth,nonlinearity,demand and growth regimes,Kaleckian models
    JEL: B59 E11 E12 E25 O40
    Date: 2018
  7. By: Garbero, A.; Perge, E.
    Abstract: The Women’s Empowerment in Agriculture Index (WEAI) can be a useful tool to measure the empowerment, agency and inclusion of women in the agriculture sector. However, computing the WEAI in its current form involves large data requirements, resulting in lengthy surveys with several questions on various dimensions and indicators within each dimension. This paper proposes a reduced version of the WEAI, or the R-WEAI, and examines two possible approaches to reduce the data requirements while ensuring comparability to the full WEAI.
    Keywords: Agribusiness
    Date: 2017
  8. By: Curzi, D.; Garrone, M.; Olper, A.
    Abstract: By examining the roles played by imports of intermediate inputs and final goods separately, this paper investigates the relationship between trade exposure, firm-level markups and industry markup dispersion. We exploit a rich micro-level dataset of French food companies from 2001 to 2013 and find a negative (positive) effect of an increased output (input) import competition on firm-level markups. This result is consistent with the recent predictions of the international trade literature. A similar pattern holds when considering the relationship between trade exposure and industry markup dispersion. We provide a theoretical intuition behind these findings, which represent an important insight introduced by our analysis. Acknowledgement :
    Keywords: International Relations/Trade
    Date: 2018–07
  9. By: Ítalo Pedrosa (Federal University of Rio de Janeiro - UFJR (.)); Dany Lang (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: In Minsky's Financial Instability Hypothesis (FIH), financial fragility of non-financial firms tends to increase endogenously over the cycle along with the macroeconomic leverage ratio. This analysis has been criticized for two main complementary reasons: firstly, it does not duly consider the aggregate pro-cyclicallity of profits; secondly, due to an overly aggregate analysis, some inferences about the relation between aggregate leverage and systemic fragility are potentially misleading. In this paper, we take these criticisms into account by building an agent-based stock-flow consistent model which integrates the real and financial sides of the economy in a fundamentally dynamic environment. We calibrate and simulate our model and show that the dynamics generated are in line with empirical evidence both at the micro and the macro levels. We create a financial fragility index and examine how systemic financial fragility relates to the aggregate leverage along the cycle. We show that our model yields both Min-skian regimes, in which the aggregate leverage increases along with investment, and Steindlian regimes, where investment brings leverage down. Our key findings are that the sensitivity of financial fragility to aggregate leverage is not as big as assumed in the literature; and that the distribution of profits amongst firms does matter for the stability of the system, both statically (immediately for financial fragility) and dynamically (because of the dynamics of leverage).
    Keywords: financial fragility,firms,leverage,cash flow,distribution
    Date: 2018–11–28
  10. By: Nathanael Colin (TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - CNRS - Centre National de la Recherche Scientifique); Thomas Delcey (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Hayek and Fama are sometimes seen as proposing a comparable theory of prices. Hayek proposes to understand prices as information conveyer from the process of competition, while Fama defines efficiency as the fact that all information in a market is integrated in assets prices. This close up ignores huge differences between the authors. This paper explains how a lineage between Hayek and the theory of informational efficiency of Fama can be illustrated while taking into account these differences. We introduce in order to defend this claim a distinction between methodology and epistemology: methodology is seen as the way an author operationalizes his broader conceptions whereas epistemology is defined as the core conception of his theory. We particularly emphasise a homogeneous shift in the epistemology of Hayek and the theory of efficiency. We conclude that this shift gives a content to what some authors called neoliberalism as a form of Weltanshauung.
    Keywords: Efficient Market Hypothesis,Information,Epistemology of Economics,Hayek,Fama,Price Theory,Neoliberalism
    Date: 2018–11–24
  11. By: Stéphanie Nguyen (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon); Sylvie Llosa (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon)
    Abstract: While the number of scientific articles related to the sharing economy (SE) and collaborative consumption (CC) has increased significantly over the past few years, many scholars still disagree on a shared definition. The scope itself of the phenomenon remains a subject for debate in the scientific community. Our objective is to compare existing definitions based on a list of different criteria. Recognizing that various interpretations exist throughout the literature, we suggest a different approach focused on the novelty and innovating features: what types of new practices have emerged, that did not exist previously? What are their characteristics and specificities? We propose to name these new types of exchanges ‘collaborative services'.
    Abstract: Alors que le nombre de publications scientifiques traitant de l'économie du partage et de la consommation collaborative a augmenté de façon très significative ces dernières années, aucun consensus clair sur une définition commune ne semble se dégager. Le périmètre même du phénomène reste sujet à de nombreux débats. Notre objectif est de comparer, à travers une revue de la littérature, les définitions existantes en fonction d'une liste de différents critères. A partir du constat qu'il existe une multitude d'acceptions et interprétations différentes, nous optons pour une approche différente basée sur le caractère innovant du phénomène: quels types de pratiques ont émergé récemment, qui n'existaient pas auparavant ? Quelles sont leurs caractéristiques et leurs spécificités ? Nous proposons de nommer ce nouveau type d'échanges ‘services collaboratifs'.
    Keywords: sharing economy,collaborative consumption,collaborative services,online platform,triad,économie du partage,consommation collaborative,services collaboratifs,plateforme web,triade
    Date: 2018–11–09

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