nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2023‒05‒22
thirteen papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Glaserian Grounded Theory and Straussian Grounded Theory: Two Standard Qualitative Research Approaches in Social Science By Mohajan, Devajit; Mohajan, Haradhan
  2. Structural Change, Income Distribution and Unemployment Related to COVID-19: An Agent-based Model By Branimir Jovanović; Michael Landesmann; Oliver Reiter; Bernhard Schütz
  3. Property, wealth, and social change: Piketty as a social science engineer By Savage, Mike; Waitkus, Nora
  4. Income inequality, top shares of income and social classes in the 21st century By Luca Giangregorio; Davide Villani
  5. Energy efficiency policies in an agent-based macroeconomic model By Marco Amendola; Francesco Lamperti; Andrea Roventini; Alessandro Sapio
  6. The Generative Nature of the Firm By da Rocha Braga, Bruno
  7. Financialisation, Underemployment, & the Disconnected Greek Capitalism By Giorgos Gouzoulis; Panagiotis (Takis) Iliopoulos; Giorgos Galanis
  8. The Political Economy of AI: Towards Democratic Control of the Means of Prediction By Kasy, Maximilian
  9. The dynamic approach of modelling regional recovery investment policies using environmentally-extended SAM Matrix By Darlington Agbonifi
  10. Fiscal Transfers and Common Debt in a Monetary Union: A Multi-Country Agent Based-Stock Flow Consistent Model By Alessandro Caiani; Ermanno Catullo
  11. Assessing biodiversity-related financial risks: Navigating the landscape of existing approaches By OECD
  12. Was Smith a Stage Theorist? A response to Ahiakpor By Paganelli, Maria Pia
  13. A Comment on Maria Pia Paganelli’s Mistaken Treatment of Adam Smith’s “Four Stages” Theory of Economic Development By Ahiakpor, James C.W.

  1. By: Mohajan, Devajit; Mohajan, Haradhan
    Abstract: Grounded theory (GT) has appeared as a popular research approach in many branches of social science that acts for the well-being of society. It is an inductive methodology and focuses on the discovery of theory from data. Overtimes the original grounded theory of Barney Galland Glaser (1930-2022) and Anselm Leonard Strauss (1916-1996) has evolved, and two grounded theory variants: Glaserian grounded theory and Straussian grounded theory have emerged as qualitative approaches. When a novice qualitative researcher starts data collection on grounded theory; s/he cannot identify the differences between the two approaches. In this paper, some of the key differences and similarities between the two methods are illustrated. So, a confused researcher can easily select the desired grounded theory for his/her research version. In this study, an attempt has been taken to continue the grounded theory research smoothly when novice researchers face uncertainty during the research procedure.
    Keywords: Qualitative approach, Glaserian grounded theory, Straussian grounded theory, novice researcher
    JEL: A13 A14 B54 D6 I31
    Date: 2023–02–16
  2. By: Branimir Jovanović (The Vienna Institute for International Economic Studies, wiiw); Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Oliver Reiter (The Vienna Institute for International Economic Studies, wiiw); Bernhard Schütz (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: We study the distributional consequences of COVID-19 by using a stock-flow consistent agent-based model that captures some of the aspects of pandemic-related lockdowns. In particular, the model distinguishes between ‘essential’ and ‘non-essential’ industries, between jobs that can be done from home and jobs that must be carried out on site, and takes into account that firms need to hire a certain amount of overhead labour. Allowing for government-financed short-time working schemes and loan guarantees, we find that these policies significantly reduce the rise in firm liquidations and income inequality (the ‘Keynesian’ result). However, we also find that the absence of government policies leads to higher levels of productivity and GDP in the aftermath of the crisis, as it means that more of the less productive firms face liquidation during lockdowns (the ‘Schumpeterian’ result). The last finding must be taken with adequate caution as our model is designed to describe the short run, while statements about the long run would require the inclusion of additional features such as technological progress and the entry of new firms.
    Keywords: stock-flow consistent agent-based models, COVID-19, creative destruction, income inequality, short-time work, public loan guarantees
    JEL: E24 E25 E65
    Date: 2023–02
  3. By: Savage, Mike; Waitkus, Nora
    Abstract: This paper applauds the vision and originality of Piketty's Capital and Ideology. We draw attention to the distinctive methodological perspective which he adopts, which we liken to call “social science engineering.” This allows a problem oriented perspective on long-term global social change which sidesteps siloed disciplinary debates in social science and history about the meaning of modernity, the rise of capitalism, the formation of social groups, and the primacy of nations. We bring out how his theory of property permits him to take forward his overarching insight that economic growth leads to wealth accumulation. This, therefore, challenges long standing sociological perspectives by insisting that modernity is a conservative, rather than a revolutionary and transformative process. We build on this essential contribution by noting some areas where his work can push forward even further, notably that his focus on shifting relativities obscures qualitative historical changes, and more particularly means his analysis of the 20th century is not as provocative as that of the 19th century.
    Keywords: inequality; Matthew effect; Piketty; property & wealth
    JEL: J1
    Date: 2022–03–25
  4. By: Luca Giangregorio (Pompeu Fabra University); Davide Villani (Joint Research Center (EC))
    Abstract: This paper aims at providing new evidence about the link between personal and functional distribution and top-shares composition. We apply a novel class scheme based on two key features of contemporary capitalism i.e., individuals/households receiving multiple types of incomes, and the role of managers. The empirical application in Germany, Spain, and Italy over the period 2000-2017 reveals two main results. First, we observe a direct link between personal and functional distributions. In particular, a marginal increase in wages received by labourers would reduce inequality, whereas those received by capitalist households would increasing it. Second, we find that a significant portion of labour income at the top of the income distribution corresponds to wages received by capitalist households. We conclude that although the linear correspondence between income source and class location is more blurred today than it was 200 years ago, a class divide is still clear.
    Keywords: Income inequality, Functional income distribution, Personal income distribution, Social classes, Top shares of income
    JEL: E25
    Date: 2023–05
  5. By: Marco Amendola; Francesco Lamperti; Andrea Roventini; Alessandro Sapio
    Abstract: Improvements in energy efficiency can help facing the on-going climate and energy crises, yet the energy intensity of economic activities at the global level in recent years has decreased more slowly than it is required to achieve climate goals. Based on this premise, the paper builds a macroeconomic agent-based K+S model to study the effects of different policies on energy efficiency. In the model, energy efficiency of capital goods improves as the outcome of endogenous, bottom-up technical change. Public policies analysed range from indirect policies based on taxes, incentives, and subsidies, rooted in the traditional role of the State as fixing market failures, to direct technological policies, akin to the entrepreneurial state approach, in which a public research laboratory invests in R&D with the aim to establish a new technological paradigm on energy efficiency. Simulation results show that while most policies tested are effective in reducing energy intensity, the public research lab is extremely effective in promoting energy efficiency without deteriorating macroeconomic and public finance conditions. The superiority of the national lab policy, however, emerges on a relatively long time-horizon, highlighting the importance of governments that are patient enough to wait for the returns of that policy and the necessity to complement this strategy with more ''ready to use'' indirect measures. Additionally, results indicate that the macroeconomic rebound effect induced by most of the policies is rather small. Concerns about macroeconomic rebound effects are, therefore, most likely often overstated.
    Keywords: Energy efficiency policies; Sustainability; Rebound effect; Agent-based modelling.
    Date: 2023–05–09
  6. By: da Rocha Braga, Bruno
    Abstract: This paper discusses a meta-theoretical framework that aims to explain all forms of economic coordination using a computational complexity approach. Using a formal model inspired by Generative Grammar Theory, it establishes a demarca-tion criterion between markets and hierarchies (including hybrid forms). The hy-pothesized equivalence between economic coordination structures and linguistic structures makes it possible to explore any sequence of decision-making event outcomes, whether individual actions or social interactions, for patterns of causal relations in a way analogous to sentences in a language. This research concludes that patterns of decision-making events are categories of processes, and that eco-nomic coordination in organizational structures achieve a complexity level that is not possible in free market structures.
    Keywords: Critical Realism; Generative Grammar Theory; Social Ontology; Pragmatism; Theory of the Firm
    JEL: C63 D21 L21
    Date: 2022–12–29
  7. By: Giorgos Gouzoulis (University of Bristol, School of Magagement); Panagiotis (Takis) Iliopoulos (KU Leuven, Faculty of Economics and Business); Giorgos Galanis (Queen Mary, University of London, School of Business and Management)
    Abstract: Recent contributions within the disconnected capitalism literature argue that personal financial insecurity related to household indebtedness and pension fund financialisation is positively associated with underemployment. This is because financially insecure workers are more likely to accept worsening working conditions on the fear of losing their job and defaulting. Using quarterly data from the Eurostat for the period 2008Q3-2020Q4, this paper shows that the persistent rise of underemployment rates in post-crisis Greece is robustly associated with the household debt ratio and pension fund investments in financial derivatives. We also demonstrate that while the effects of financialisation are similar for men and women, the employment-tied and gendered nature of social benefits in the country has disproportionately induced underemployment for women in the context of austerity. The paper concludes that personal financial insecurity is a key missing factor behind rising employment precariousness in Greece since 2008
    Keywords: Financialisation, Labour Process, EU Integration, Underemployment, Greece
    Date: 2023–04
  8. By: Kasy, Maximilian
    Abstract: This chapter discusses the regulation of artificial intelligence (AI) from the vantage point of political economy, based on the following premises: (i) AI systems maximize a single, measurable objective. (ii) In society, different individuals have different objectives. AI systems generate winners and losers. (iii) Society-level assessments of AI require trading off individual gains and losses. (iv) AI requires democratic control of algorithms, data, and computational infrastructure, to align algorithm objectives and social welfare. I address several debates regarding the ethics and social impact of AI, including (i) fairness, discrimination, and inequality, (ii) privacy, data property rights, and data governance, (iii) value alignment and the impending robot apocalypse, (iv) explainability and accountability for automated decision-making, and (v) automation and the impact of AI on the labor market and on wage inequality. (Stone Center on Socio-Economic Inequality Working Paper)
    Date: 2023–04–19
  9. By: Darlington Agbonifi (Department of Economics (University of Verona))
    Abstract: This paper analyzes the socioeconomic and environmental dynamic impacts of an exogenous public-financed increases in infrastructure investments and modernization projects (CIS) of around EUR 1097 billion for the 2021-2026 period on industrial outputs, household employment and income distribution, in the Italian province of Taranto using an environmentally extended Social Accounting Matrix (ESAM) techniques for the year 2015. This method reconciles the analysis of the impact of an investment policy aiming at climate neutrality on a local economy. As well as an in-depth evaluation of the intersectoral production linkages through trade and multiplier analysis, with the cost-benefit (CB) analysis of a large-scale investment project. The evaluation of the dynamic impacts on the local economy produces a benefit/cost ratio of 5.63 that increases to 7.88 when the CB analysis of the project, and therefore the revenues generated during the operational period, are also included. The inclusion of environmental externalities associated with industrial greenhouse gas (GHGs) emissions reduces by about 16% the benefit/cost ratio in the construction period. In the operational period, when we assume that green production technologies are adopted, the reduction of the ratio is more consistent. The distributional impact of the investments on the annual income of households is also acceptably equitable.
    Keywords: Policy Impact Evaluation, Cost Benefit Analysis, Local Economic Development, SAM
    JEL: C67 D57 Q56 Q58 R11
    Date: 2023–04
  10. By: Alessandro Caiani; Ermanno Catullo
    Abstract: Using a refined version of the multi-country AB-SFC model of a Monetary Union already presented in Caiani et al. (2018a, 2019) the paper aims at providing a tentative assessment of the economic effects of transforming the European Monetary Union into an Intergovernmental Fiscal Transfer Union (IFTU) with its own fiscal capacity. Countries contribute proportionally to their GDP whereas funds are redistributed according to a mechanism that gives more funds to countries performing worse than the average of the Union in cyclical terms. Our simulations show that an IFTU inspired by such a redistribution principle acts as a stabilizer of international trade, allowing to stabilize and improve the Union GDP performance without affecting the stability of public finances. When the Union is allowed to borrow on capital markets, i.e. in a Fully-Fledged Fiscal Transfer Union (FFFTU), these effects are enhanced and a part of the public debt burden shifts from the national to the Union level, leaving the total burden almost stable. An interesting result to assess the political acceptability of the proposal is that 'core' countries eventually benefit the most from the introduction of this mechanism, despite being more frequently net contributors. Finally, we show that an FFFTU with common debt might help to soften the impact of an exogenous demand shock while, because of the fact that it mainly operates as a stabilizer of aggregate demand, it does not seem to provide beneficial effects when facing a supply shock to production.
    Keywords: Fiscal Transfer Union; Union Bonds; European Integration; Agent Based Macroeconomics; Stock Flow Consistent Models.
    Date: 2023–05–05
  11. By: OECD
    Abstract: Although measurements of biodiversity-related financial risks are in their infancy, several metrics and indicators are available to assess their impacts and dependencies in the financial system, and approaches are emerging to translate biodiversity risks into financial risks. This mapping paper provides a comprehensive catalogue and literature review of existing and emerging definitions, key metrics and indicators, measurement approaches, tools and practices for central banks, financial supervisors, and financial market participants to measure biodiversity-related financial risks.
    Keywords: biodiversity, biodiversity loss, central banks, ecosystem services, ecosystems, financial risk, financial system, nature
    Date: 2023–04–27
  12. By: Paganelli, Maria Pia
    Abstract: (Letter to the editor). James Ahiakpor claims I am incorrect in my reading of Smith when I suggest that Smith may not endorse, or may even reject, a four stages of development model, given his absence of historical example of any country that developed following the four stages, but rather his descriptions of different ages looks more likely like a taxonomy to describe different types of societies. I very much appreciate the time and energy Ahiakpor put on my work and I have no qualm about his reading of my paper. Since I was asked to reply to his detailed comments, I will. But only in a general, methodological, way.
    Date: 2023–04–20
  13. By: Ahiakpor, James C.W.
    Abstract: Paganelli (2022) casts doubt on whether Adam Smith argues a “Four Stages” theory or a “stadial model” of socio-economic development; she dismisses the usefulness of cross-section data to evaluate Smith’s theory of the evolution of economies; and she misinterprets several texts in the Wealth of Nations. Disregarding more accurate interpreters of Smith, she invites us to inquire again into the causes of the wealth of nations since Smith, in her judgment, has failed in that effort. But Smith’s Wealth of Nations, carefully read, is an essential guide to policy formulation to promote the efficient development of economies. My comment clarifies.
    Date: 2023–04–20

This nep-hme issue is ©2023 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.