nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2023‒09‒11
twelve papers chosen by
Carlo D’Ippoliti, Università degli Studi di Roma “La Sapienza”

  1. Capabilities, Institutions and Regional Economic Development: A Proposed Synthesis By Koen Frenken; Frank Neffke; Alje van Dam
  2. Export-led growth and the geopolitical hypothesis: Israel's regime change after the second Intifada By Krampf, Arie
  3. State crisis theory: A systematization of institutional, socio-ecological, demographicstructural, world-systems, and revolutions research By Hartley, Tilman
  4. Modern Monetary Theory: Revising Money Demand and Supply from Umer Chapra's Perspective By Umam Khoirul; Muhammad Atha Mahdi; Alfarid Fedro
  5. From extractivism to community resilience: the promise and perils of Sardinia’s energy transition By Fronteddu, Antonio
  6. Effective community mobilization: Evidence from Mali By Maria Laura Alzua; Juan-Camilo Cardenas; Habiba Djebbari
  7. The Politics of Academic Research By Ringgenberg, Matthew C.; Shu, Chong; Werner, Ingrid M.
  8. Rural roads infrastructure and women empowerment in India By Nandwani, Bharti; Roychowdhury, Punarjit
  9. Inflation stabilization and normal utilization By Michl, Thomas R.
  10. A novel approach for quantum financial simulation and quantum state preparation By Yen-Jui Chang; Wei-Ting Wang; Hao-Yuan Chen; Shih-Wei Liao; Ching-Ray Chang
  11. El acceso a servicios financieros de los hogares como mecanismo de suavización del consumo ante choques de violencia By Bermudez Sierra, Diego Alejandro
  12. Commitment to the truth creates trust in market exchange: Experimental evidence By Nicolas Jacquemet; Stéphane Luchini; Jason F. Shogren; Adam Zylbersztejn

  1. By: Koen Frenken; Frank Neffke; Alje van Dam
    Abstract: The capability framework in evolutionary economic geography views regional economic development as a process of related diversification through the acquisition of capabilities that render a regional economy more complex. Using this framework, we synthesize seven theoretical notions that hitherto remained rather disconnected: relatedness, complementarity, variety, complexity, diversification, agents of structural change, and related variety. We formulate a constructive critique of the capability framework, relaxing the overly restrictive assumption that the presence of capabilities in a region is both necessary and sufficient for complex products to be produced in a region. Instead, we argue that the complexity of a regional economy depends primarily on the institutions that support firms to coordinate production in complex value chains within and across regions. The augmented framework allows for closer integration of evolutionary and relational approaches in economic geography, providing new links between the literatures on clusters, innovation systems and global production networks.
    Keywords: diversification, relatedness, complexity, institution, value chain
    JEL: B52 O1 O43 R1
    Date: 2023–08
  2. By: Krampf, Arie
    Abstract: In recent decades, neo-mercantilism has become a fashionable trend. The appeal of an export-led growth regime is often explained based on the material interests of the domestic growth coalition. This article offers an alternative explanation based on the geopolitical territorial interests of the state. It argues that states may endorse an export-led growth model not because of the demands of social groups but because the political elite believes a neo-mercantilist strategy is more consistent with the state's geopolitical preferences. The article defines this claim as the geopolitical hypothesis of regime change. The geopolitical hypothesis does not imply that social groups are irrelevant to the process. Social groups, the article argues, can play the role of ex-ante transformative actors or of ex-post stabilizing actors. Whereas society-centered theories underline the ex-ante transformative role of social groups, the geopolitical hypothesis argues that social groups can also play an ex-post stabilizing role. Based on the case of Israel, the article argues that during the early 2000s, after the outbreak of the second Intifada, Israel shifted from a consumption-led growth regime to an export-led growth regime. The transition, the article argues, was driven by the hawkish political elite, which prioritized nationalist objectives associated with the continuation and expansion of the occupation. The article concludes by arguing that the case of Israel is exemplary and not unique and that the geopolitical hypothesis can explain the adoption of export-led growth models in other cases.
    Keywords: Export-led growth strategy, neo-mercantilism, growth coalition, territorial logic of capitalism
    JEL: O53 O43 N15 E12
    Date: 2023
  3. By: Hartley, Tilman
    Abstract: Today's ecological and political instability has stimulated interest in how similar problems have arisen in the past - and how they have been resolved. But this research has long been divided along different research traditions. I draw together five broad research strands: neo-institutionalism, socio- ecological systems, demographic-structural theories, world-systems approaches, and revolutions research. I begin by establishing that each of these five traditions proposes to explain state crisis, in the sense of a decisive turning point from which the state might not emerge in its current form. But each of the five strands proposes a slightly different set of central hypotheses, and draws on a slightly different set of cases in support. Systematizing these hypotheses, I draw attention to a neglected distinction between crises that take place in different ecological-economic conditions. This is because crises that occur in conditions of worsening scarcity are hypothesized to have very different causes and trajectories to crises that occur in conditions of sufficiency. But beyond this fundamental scarcity/sufficiency distinction, I find no other contradictions between different hypotheses. Systematizing these theories of state crisis thus establishes a framework for testing these competing, but compatible, hypotheses.
    Keywords: demographic-structural theory, institutions, revolutions, socio-ecological systems, state crisis, worldsystems analysis
    Date: 2023
  4. By: Umam Khoirul (UNIDA Gontor - University of Darussalam Gontor); Muhammad Atha Mahdi (UNIDA Gontor - University of Darussalam Gontor); Alfarid Fedro (UNIDA Gontor - Univerisity of Darussalam Gontor)
    Abstract: The global crisis and the COVID-19 pandemic have intensified the debate surrounding Modern Monetary Theory (MMT), particularly as nations resort to budget deficits. MMT economists argue that the central government, not constrained by fiscal limits, can maintain effective demand to achieve public goals like full employment and economic growth. However, economists remain skeptical about the permissiveness of MMT in generating new money. Extensive research is needed to explore the foundation of money supply and demand, examining if it truly achieves economic goals or leads to failure. Umer Chapra offers a profound monetary perspective, considering the demand and supply of money in the Islamic monetary system that aims for justice. This study aims to examine MMT's money demand and supply from Chapra's viewpoint, incorporating its economic goals. Employing a qualitative approach based on library research, this study finds that the endogenous MMT money demand model requires revision within Chapra's framework. To avoid misallocation and achieve economic objectives, the study suggests adopting Chapra's recommendations, such as eliminating bank interest in credit allocation and controlling unproductive and speculative money demand. This ensures that the MMT idea of endogenous money functions properly. However, further research is needed to address the techniques for avoiding money demand in the speculative sector, an area where Chapra's work lacks detail. Collaboration among Muslim economists can fill this gap and enrich the discussion. By bridging this gap, this study contributes to the ongoing discussion on monetary policy and provides valuable insights for policymakers and economists.
    Keywords: Modern Monetary Theory (MMT), Money Demand, Money Supply, Endogenous Money, Islamic Monetary System
    Date: 2023–12–12
  5. By: Fronteddu, Antonio
    Abstract: The pursuit of global carbon neutrality makes the energy transition process no longer procrastinable. The switch towards renewable-based energy systems is paving the way for new forms of energy governance that prioritise the role of commons by demarketising access to energy. However, governments’ strategies worldwide seem to prioritise innovation in the raw materials (sun, wind, etc.) rather than in governance – favouring the continued extraction of energy from resource-rich regions. This work will analyse the case of Sardinia as an example where these two phenomena intersect contradictorily, by comparing the bottom-up nature of energy communities (ECs) vis-á-vis the top-down nature of public-private initiatives, alongside their policymaking trajectories. The key insights that will stem from this thesis elucidate a continuum with prior top-down policies of economic extractivism operated by the Italian government in Sardinia. Such top-down policies are conceptualised thanks to core and energy periphery theories and can explain the current mainstream regime of energy transition. Alternative strategies to pursue policy are conceptualised thanks to the energy democracy theory. Such theory envisions an active citizen engagement alongside the sustainable consumption of renewable energy and resources within the realm of energy communities. Therefore, the thesis will conclude that although large-scale top-down policies are being operated in the island, with special reference to the energy transition, energy communities can forge bottom-up alternative examples of policymaking, enabling an energy transition that can cross-tackle long-standing problems of Sardinian society, such as a stagnant economy, depopulation, self-determination, issues of land, landscapes, and pollution.
    Date: 2023–05–07
  6. By: Maria Laura Alzua (Universidad de La Plata); Juan-Camilo Cardenas (Universidad de los Andes); Habiba Djebbari (Aix Marseille Université Économiques)
    Abstract: Experts argue that adoption of healthy sanitation practices such as handwashing and latrine use requires focusing on the whole community rather than on individual behaviors. According to this view, one limiting factor for ending open defecation lies in the capacity of the community for collective action: Each member of a community bears the private cost of contributing by washing hands and using latrines, but benefits through better health outcomes depend on whether other community members also opt out from open defecation. We rely on a community-based intervention carried out in Mali as an illustrative example (Community Led Total Sanitation or CLTS). Using a series of experiments conducted in 121 villages and designed to measure the willingness of community members to contribute to a local public good, we investigate the process of participation in a collective action problem setting. Our focus is on two types of activities: gathering of community members to encourage public discussion of the collective-action problem and facilitating the adoption of individual actions to attain the socially preferred outcome. When the facilitator starts by introducing a topic and a group discussion follows, can the facilitator further improve outcomes? Will a group discussion that follows facilitation improve, reduce, or have no effect on collective action? We find evidence that cheap talk raises public good provision and that facilitation by a community member does not improve upon open discussion.
    Date: 2023–08–11
  7. By: Ringgenberg, Matthew C. (U of Utah); Shu, Chong (U of Utah); Werner, Ingrid M. (Ohio State U)
    Abstract: We develop a novel measure of political slant in research to examine whether political ideology influences the content and use of academic research. Our measure examines the frequency of citations from think tanks with different political ideologies and allows us to examine both the supply and demand for research. We find that research in Economics and Political Science displays a liberal slant, while Finance and Accounting research exhibits a conservative slant, and these differences cannot be accounted for by variations in research topics. We also find that the ideological slant of researchers is positively correlated with that of their Ph.D. institution and research conducted outside universities appears to cater more to the political party of the current President. Finally, political donations data confirms that the ideological slant we measure based on think tank citations aligns with the political values of researchers. Our findings have important implications for the structure of research funding.
    JEL: G12 G14
    Date: 2023–05
  8. By: Nandwani, Bharti; Roychowdhury, Punarjit
    Abstract: The paper examines the impact of a rural roads construction program in India on women's outcomes. While spatial integration can provide women with increased education and employment opportunities, the extent of benefits might be limited by underlying gender norms. We identify the impact of the policy by exploiting the program rule that assigned roads based on the village population. Using a two-way fixed effect methodology, we find that increase in rural roads construction lowers mobility restrictions faced by women and improves norms around domestic violence. However, the result are mixed with respect to participation in other decision making and financial autonomy. Additionally, while we find positive impact on education, there is no impact on employment outcomes for females. We argue that a possible reason for a partial improvement in women outcomes could be gendered impact of the policy - men benefit more in terms of employment than women.
    Keywords: Gender Norms, India, Roads, Women Empowerment
    JEL: J16 O12
    Date: 2023
  9. By: Michl, Thomas R. (Department of Economics, Colgate University)
    Abstract: This paper presents a model of inflation and distribution that examines the relationship between the employment of labor and the utilization of capital. It features a structural difference between the wage Phillips curve and the price Phillips curve that gives rise to persistent changes in the real wage whenever the inflation-neutral level of activity fails to utilize the existing capital stock at its normal level. Assuming an inflation-targeting central bank that is obliged to run the system around its inflation-neutral level, these changes will reduce the gap between the inflation-neutral level and normal utilization by moving the system along a stable wage curve. In the end this implies that the inflation-neutral level of employment and full or normal utilization of capital will tendentially coincide, lending some support to the Duménil-Lévy thesis that monetary policy makes normal utilization a long-run center of gravity.
    JEL: E11 E12 E24 E31 E52
    Date: 2023–08–23
  10. By: Yen-Jui Chang; Wei-Ting Wang; Hao-Yuan Chen; Shih-Wei Liao; Ching-Ray Chang
    Abstract: Quantum state preparation is vital in quantum computing and information processing. The ability to accurately and reliably prepare specific quantum states is essential for various applications. One of the promising applications of quantum computers is quantum simulation. This requires preparing a quantum state representing the system we are trying to simulate. This research introduces a novel simulation algorithm, the multi-Split-Steps Quantum Walk (multi-SSQW), designed to learn and load complicated probability distributions using parameterized quantum circuits (PQC) with a variational solver on classical simulators. The multi-SSQW algorithm is a modified version of the split-steps quantum walk, enhanced to incorporate a multi-agent decision-making process, rendering it suitable for modeling financial markets. The study provides theoretical descriptions and empirical investigations of the multi-SSQW algorithm to demonstrate its promising capabilities in probability distribution simulation and financial market modeling. Harnessing the advantages of quantum computation, the multi-SSQW models complex financial distributions and scenarios with high accuracy, providing valuable insights and mechanisms for financial analysis and decision-making. The multi-SSQW's key benefits include its modeling flexibility, stable convergence, and instantaneous computation. These advantages underscore its rapid modeling and prediction potential in dynamic financial markets.
    Date: 2023–08
  11. By: Bermudez Sierra, Diego Alejandro (Universidad de los Andes)
    Abstract: Este artículo estudia cómo el impacto de la violencia en el consumo de los hogares esta mediado por el acceso a servicios financieros. Haciendo uso de un panel de datos con información de 3.354 hogares rurales en Colombia para los años 2010, 2013 y 2016, se estima el efecto que tiene la exposición a choques de violencia y cómo el acceso a servicios financieros media esta relación, a través de la implementación de un modelo de efectos fijos de hogar y tiempo. Mis resultados sugieren que los servicios financieros son mecanismos potenciales de cobertura ante choques de violencia. Se observa que un incremento de una desviación estándar en el número de ataques por parte de grupos armados llevan a una reducción de 4% en el consumo promedio de cada miembro del hogar. Sin embargo, para los hogares con acceso a servicios financieros no hay un efecto en el consumo producto de los choques de violencia.
    Keywords: Inclusión financiera; violencia; desarrollo económico; suavización de consumo; Colombia.
    JEL: G21 G51 I30
    Date: 2023–08–17
  12. By: Nicolas Jacquemet (Paris School of Economics and U. Paris 1 Panthéon-Sorbonne); Stéphane Luchini (Aix-Marseille U., CNRS, EHESS, Centrale Marseille, Aix-Marseille School of Economics); Jason F. Shogren (Department of Economics, U. Wyoming); Adam Zylbersztejn (Univ Lyon, Université Lyon 2, GATE UMR 5824, F-69130 Ecully, France; research fellow at Vistula University Warsaw (AFiBV), Warsaw, Poland)
    Abstract: Social norms like the mutual belief in reciprocity facilitate economic exchange. But this reciprocity norm requires trust among traders, which can be challenging to create among strangers even with communication. The honesty oath is a time-honored mechanism that societies use to overcome this challenge – taking a solemn oath to tell the truth sends a trustworthy signal of real economic commitment given incomplete contracts. Herein we explore how the truth-telling oath creates trust within the sequential reciprocity trust game with pre-play, fixed-form, and cheap-talk communication. Four key results emerge: (1) communication under oath creates more trust and cooperative behavior; but (2) the oath induces a selection effect – it makes people more wary of using communication as a signal. (3) Although the overall net effect on cooperation is positive, the oath cannot reverse a general decay of cooperation over time. (4) By comparing the oath's performance to mild and deterrent fines for deception, we find that the oath is behaviorally equivalent to mild fines. The deterrent fine induces the highest level of cooperation.
    Keywords: Trust game; cooperation; communication; commitment; deception; fine; oath
    JEL: C72 D83
    Date: 2023

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