nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2021‒06‒14
twelve papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Theories of Consumption By Drakopoulos, Stavros A.
  2. Standing in the Way of Rigor? Economics’ Meeting with the Decolonizing Agenda By Ingrid Harvold Kvangraven; Surbhi Kesar
  3. Final Demand-Intermediate Demand Aggregation System of Japan's Producer Price Index By Moegi Inoue; Atsushi Kawakami; Ayako Masujima; Ichiro Muto; Shogo Nakano; Izumi Takagawa
  4. The Creation and Diffusion of Knowledge - an Agent Based Modelling Approach By Emmanuel P. de Albuquerque
  5. Groundwork for social-ecological transformations: The social contract, global governance and the meaning of time. Constructive criticism of the WBGU report world in transition - a social contract for a great transformation By Manstetten, Reiner; Kuhlmann, Andreas; Faber, Malte; Frick, Marc
  6. Self-sacrifice: an analysis of female economic behaviour in less developed countries through the lenses of Amartya Sen’s thought By Erasmo, Valentina
  7. How did they get it so wrong? Mindestlöhne und ihre Bedrohung für die Standardökonomie By Heise, Arne
  8. Green Budgeting Practices in the EU: A First Review By Elva Bova
  9. Innovative ideas and gender inequality By Koffi, Marlene
  10. “Salvation and Profit”: Deconstructing the Clean-Tech Bubble By Vincent Giorgis; Tobias Huber; Didier Sornette
  11. Suitability of Complexity Economics for Long-Term Agricultural Policy-Making By Wieliczko, Barbara
  12. Public Employment Programmes in the care economy the case of South Africa By Shai, Lerato.

  1. By: Drakopoulos, Stavros A.
    Abstract: This chapter explains the role of consumption expenditures in modern economies and their significance for the determination of the level of output and employment in an economy. It starts with a presentation of the theory of intertemporal choice that forms the basis of mainstream consumption functions. Next, it discusses Keynes’s approach to consumption, and particularly his criticism of the standard model of consumer behaviour, his emphasis on the role of consumption for the level of employment, and his analysis of aggregate consumption patterns. It also describes the main mainstream theories of consumption, which are the life cycle income hypothesis, the permanent income hypothesis and the random walk theory of consumption. Finally, the chapter explores the heterodox approaches to consumption, focusing mainly on the relative income hypothesis. Additionally, it shows the consequences of consumption theories for the effectiveness of economic policies towards unemployment and economic downturns.
    Keywords: Consumption expenditure; Fiscal policy; Keynesian consumption function; Life-cycle income hypothesis; Permanent income hypothesis; Relative income Hypothesis
    JEL: B0 B21 E21
    Date: 2021–06
  2. By: Ingrid Harvold Kvangraven (University of York, UK); Surbhi Kesar (Azim Premji University, India)
    Abstract: This paper critically engages with various aspects of the decolonization movement in economics and its implications for the discipline. We operationalize the insights from this engagement using a survey of 498 economists that explores how faculty across different kinds of departments, disciplines, geographies, and identities perceive the problems of economics teaching, how they think economics pedagogy should be reformed, if at all, and how they relate to decolonial critiques of economics pedagogy. Based on the survey findings, we conclude that the mainstream of the field’s emphasis on technical training and rigor, within a narrow theoretical and methodological framework, likely stands in the way of the very possibility for decolonizing economics, given its strong contrast to key ideas associated with the decolonization agenda, such as positionality, centering power relations, exposing underlying politics of defining theoretical categories, and unpacking the politics of knowledge production. Nonetheless, the survey responses clearly chart out the challenges that the field faces in terms of decolonizing pedagogy, which is a first step towards debate and change.
    Keywords: Economics teaching, economics pedagogy, decolonial theory, postcolonial theory, decolonizing economics
    JEL: A20 B40 B50 F54
    Date: 2021–05
  3. By: Moegi Inoue (Bank of Japan); Atsushi Kawakami (Bank of Japan); Ayako Masujima (Bank of Japan); Ichiro Muto (Bank of Japan); Shogo Nakano (Bank of Japan); Izumi Takagawa (Bank of Japan)
    Abstract: One of the main objectives of the producer price index (PPI) is to serve as an aggregation price index that appropriately represents the overall supply-demand condition regarding goods and services in an economy as a whole. In this respect, the current system of Japan fs PPI system is confronted with the following two challenges: (i) overall inflationary pressures in the entire economy cannot be tracked because the indexes for goods and services are separately constructed and published; and (ii) the effects of price changes in upstream stages in the production flow are exaggerated because the PPI is aggregated as the "all commodities index" in which prices of commodities in different demand stages are aggregated through weight-averaging by gross trade value. In order to overcome those challenges, we construct a price index of Final Demand-Intermediate Demand aggregation system of Japan fs PPI (the FD-ID price index) by assigning commodity-level Japanese PPI indexes for goods and services to the stage of final demand and the four stages of intermediate demand, in an optimal manner in accordance with the production flow in the Input-Output table and by aggregating the indexes in a way that eliminates multiple counting. The use of the FD-ID price index makes it possible to measure inflationary pressures in the entire Japanese economy, including both goods and services sectors. It also becomes possible to track the process of price changes being transmitted from upstream to downstream stages in the production flow across the sectors of goods and services. This study provides detailed explanations of the methodology for constructing the Japanese FD-ID price index and the characteristics of the constructed index.
    Keywords: Producer price index; FD-ID aggregation system; Input-Output table; Multiple counting problem.
    JEL: C82 E31
    Date: 2021–06–04
  4. By: Emmanuel P. de Albuquerque
    Abstract: In this paper I propose a novel abstract mechanism for the creation and diffusion of knowledge and use an agent based modelling approach to explore it. The mechanism takes into account the relation between the phenomena that agents attempt to explain and the stocks of knowledge available in a society, be it individually or collectively. I find that the aggregate number of knowledge units in a society increases more slowly, the more naive its inhabitants are. I also find that the proximity between phenomena plays an important role in how often the same knowledge unit can be used. A discussion on agent based models as a means of insight into society is offered.
    Keywords: Agent-based modelling; Cognitive distance; Exploitation; Exploration; Innovation; Knowledge creation; Knowledge diffusion; Learning
    JEL: B52 C63 D83 O33
    Date: 2021–05
  5. By: Manstetten, Reiner; Kuhlmann, Andreas; Faber, Malte; Frick, Marc
    Abstract: A decade ago, the German Advisory Council to the Federal Government on Global Environmental Change (Wissenschaftlichen Beirats der Bundesregierung für Globale Umweltveränderungen - WBGU) published its main report. This attempt to take stock in 2011 made an impact and provided orientation on both a national and international scale. The WBGU report did not hold back: It aimed to show the urgent need for change in terms of sustainable development through the interplay of politics, economy, society and nature. The central message was: We need a "social contract for a Great Transformation", and it must be implemented by 2021. How is the report to be assessed today? We will summarise the positions of the WGBU report, cite its merits, and comment on them critically and constructively. Our approach examines the five main themes of the report: the global social contract; global governance using the example of the Paris Climate Agreement; acceptance by those involved and affected; the urgency of economic, political and social action; and the concept of the Great Transformation. In our critique, we suggest ways to constructively elaborate on the ideas laid out in the WBGU report, ideas that were not thought through to the end. Our focus lies particularly on how to deal with time and the concept of the Great Transformation. In doing so, we will also address the significance of technical advances, innovation and our own ignorance. The title of the report uses the term "Great Transformation" which acts as a leitmotif throughout. Put forth by Karl Polanyi (1941/44), this term, as used in the WBGU's parlance, is intended to address the far-reaching changes that a regulatory state would have to undertake, along with the participation of the global citizenry, in order to overcome the ecological crisis of the coming decades. In our conclusion, we argue that the idea of a uniformly planned and comprehensively attainable transformation of the current situation is inadequate. Instead, we have observed that different actors in different places have worked at different speeds not on a Great Transformation but on a multitude of social-ecological transformation processes. The effectiveness of such movements - which often emerge spontaneously - has grown to the present day. This gives us hope.
    Keywords: Great Transformation,social-ecological transformation,global social contract,consensus,global governance,top-down/bottom-up approach,ignorance,temporal structures,technical progress,international climate policy,WBGU,Fridays for Future
    JEL: A00 A12 B12 B59 F64 H19 N50 O39 Q01 Q50 Q59
    Date: 2021
  6. By: Erasmo, Valentina
    Abstract: The paper shows how Sen admitted self-sacrifice, as opposite motive compared to self-interest, for describing female behaviour in less developed countries. During the Nineties, Sen referred specifically to some anthropological studies about women conditions (Kapur, 1999) in less developed countries: when these scholars had asked them whether they felt deprived, they said ‘no’. These women identify themselves with their family, in turn, their privileged economic motive is self-sacrifice at the goal of maximizing family welfare. In those cases only, Sen advocates selfishness as the ideal route for improving women’s well-being. These elements offer a more complex understanding of economic behaviour and an alternative compared to rational choice theory prevailing in those years, considering also those diversities deriving from gender specificities and geographical influences on decision-making. The main result of this paper is to have provided an extended reading of Sen’s analysis of economic behaviour where self-sacrifice and its related maximization of family welfare which might be considered typical female and “eastern” categories. These categories represent rural India’s women behaviour, while are absent in “Western” decision-making where gender specificities and geographic differences are not considered because they are not so stark.
    Keywords: diversity; rational choice theory; self-interest; self-sacrifice; women.
    JEL: B31 B59 D01 D64
    Date: 2021–05–24
  7. By: Heise, Arne
    Abstract: In der Wirtschaftsgeschichte hat es immer wieder Phänomene gegeben, die als unvereinbar mit der herrschenden Ökonomik erschienen. Wenn dies dennoch bis heute zu keinem Paradigmenwechsel in der Dogmengeschichte der Wirtschaftswissenschaften führte, so zeigt sich hierin die besondere Resilienz des herrschenden Paradigmas. In diesem Artikel geht es darum, mit Hilfe der Wissenschaftstheoretiker Thomas Kuhn, Imre Lakatos und, vor allem, Ludwik Fleck die Hintergründe, aber auch Gefahren dieser Resilienz aufzuzeigen und - unter besonderer Betrachtung der Forschungen zur Arbeitsmarktökonomik des Mindestlohnes - zu untersuchen, ob ein zwingend benötigter 'stilgemäßer Denkzwang' nicht doch unter Umständen zu einer 'Harmonie der Täuschungen' entarten kann und deshalb den empirische Anomalien größere Aufmerksamkeiten eingeräumt werden müsste?
    Keywords: Mindestlohn,Beschäftigung,Arbeitsmarkt,wissenschaftliche Revolution,Paradigma
    JEL: A11 B41 J30 J40 J42
    Date: 2021
  8. By: Elva Bova
    Abstract: As many Member States are moving towards a greening of their economy, this work investigates whether their budgetary practices are shaped in a way that supports the green transition. Based on a review of budgetary documents across the EU countries, this study presents green budgeting experiences in selected Member States. After discussing concepts related to green budgeting, expenditure and revenue, this paper reviews and compares the coverage, the methodology and the governance of the selected green budgeting practices. It also provides information on the transparency and accountability arrangements of these practices. Overall, the study shows an incipient development of green budgeting and large heterogeneity of practices across countries. It shows that this heterogeneity is partly explained by different underlying concepts and definitions regarding the environmental objectives and budgets’ contribution towards them.
    JEL: H5 H61 Q58 Q51
    Date: 2021–05
  9. By: Koffi, Marlene
    Abstract: This paper analyzes the recognition of women's innovative ideas. Bibliometric data from research in economics are used to investigate gender biases in citation patterns. Based on deep learning and machine learning techniques, one can (1) establish the similarities between papers (2) build a link between articles by identifying the papers citing, cited and that should be cited. This study finds that, on average, omitted papers are 15%-20% more likely to be female-authored than male-authored. This omission bias is more prevalent when there are only males in the citing paper. Overall, to have the same level of citation as papers written by males, papers written by females need to be 20 percentiles upper in the distribution of the degree of innovativeness of the paper.
    Date: 2021
  10. By: Vincent Giorgis (ETH Zürich); Tobias Huber (ETH Zürich); Didier Sornette (ETH Zürich - Department of Management, Technology, and Economics (D-MTEC); Swiss Finance Institute; Southern University of Science and Technology; Tokyo Institute of Technology)
    Abstract: From 2004 to 2008, a bubble formed in clean technologies, such as solar, biofuels, batteries, and other renewable energy sources. In this paper, we analyze this clean-tech bubble through the lens of the Social Bubble Hypothesis, which holds that strong social interactions between enthusiastic supporters weave a network of reinforcing feedbacks that lead to widespread endorsement and extraordinary commitment by those involved. We present a detailed synthesis of the development of the clean-tech bubble, its history, and the role of venture capital and government funding in catalyzing it. In particular, we dissect the underlying narrative that was fueling the bubble. As bubbles can be essential in the process of accelerating the development of emerging technologies and diffusion of technological innovations, we present evidence that the clean-tech bubble constituted an example of an innovation-accelerating process.
    Keywords: Financial Bubbles, Narrative Economics, Technological Innovation, Clean Tech, Energy, Venture Capital
    JEL: C54 D61 D70 F64 G01 O25
    Date: 2021–05
  11. By: Wieliczko, Barbara
    Abstract: The development of agricultural policy is becoming a more and more difficult task. The number of factors which should be taken into account continues to grow, while at the same time there is an increased diversification of agricultural needs as well as higher consumer and taxpayer expectations. In this situation, the approach to agricultural policy-making used so far does not function properly. The final shape of the Common Agricultural Policy (CAP) in the new multi- annual financing frameworks of the European Union has not been fully established yet. The work has been prolonged for many reasons. The current European Commission pays much attention to environmental and climate challenges, proposing the implementation of the European Green Deal strategy. One of the key elements of this development concept is the “Farm to Fork” strategy, which indicates the directions of transformation of food systems in the EU. A question arises whether the proposed shape of the EU strategy for agriculture is optimal in terms of challenges faced by this sector. Complexity economics may be an answer to this question, as it offers an approach to policy-making based on the recognition of the complexity of socio-economic systems and their specific dynamics requiring a specific shape of actions taken by the state. The aim of the article is to present the complexity economics as an appropriate approach to agricultural policy-making in the context of many challenges faced by this sector and to indicate to what extent the current agricultural policy takes the indications of the complexity economics into account.
    Keywords: Agricultural and Food Policy, Environmental Economics and Policy, Food Security and Poverty
    Date: 2020
  12. By: Shai, Lerato.
    Abstract: The COVID-19 pandemic and associated economic crisis have increased unemployment levels in the care economy, detrimental effects of which are felt by care workers, the majority of whom are women. The South African experience shows that Public Employment Programmes (PEPs) have contributed to the progressive realisation of decent work where as a first step in the trajectory, they have recognised and renumerated care related labour as work. This case study raises a series of questions for further consideration about the role of PEPs in this context, particularly their efficacy in the provision of direct care services.
    Keywords: care work, COVID-19
    Date: 2021

This nep-hme issue is ©2021 by Carlo D’Ippoliti. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.