nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2024‒04‒29
fourteen papers chosen by
Carlo D’Ippoliti, Università degli Studi di Roma “La Sapienza”

  1. Classical Competition and Equilibrium: An Agent-Based Analysis By Jonathan F. Cogliano and Roberto Veneziani
  2. Africa as Part of a New Non-neocolonial Global South: A Strategy for African Development beyond the East Asian Model in the 21st Century : Integrating Markets and the Enabling Developmental State By Khan, Haider
  3. Democracy, Neoliberalism, and Financial Oligarchy By Nardy Antunes, Davi José; Tunes Mazon, Marilia
  4. 'Morality and Political Economy' from the Vantage Point of Economics By Benjamin Enke
  5. Pathology of Public Policy Concerning Iran’s Cooperatives: Bridging Local Challenges and Global Alternatives By Amoozadeh Mahdiraji, Hanif
  6. The independence of central banks: a reductio ad absurdum By Ion Pohoață; Delia-Elena Diaconașu; Ioana Negru
  7. The Economic Possibilities of Technological Progress: Business Restructuring and the Labor Market in the 21st Century. By Nardy Antunes, Davi José; Tunes Mazon, Marilia; Cardoso de Mello, João Manuel
  8. Reinforcement Learning in Agent-Based Market Simulation: Unveiling Realistic Stylized Facts and Behavior By Zhiyuan Yao; Zheng Li; Matthew Thomas; Ionut Florescu
  9. Miss-Allocation: The Value of Workplace Gender Composition and Occupational Segregation By Rachel Schuh
  10. Baseline review of policies in India: Understanding the policy context for facilitating agroecological transition By Singh, Sonali; Maliappan, Sudarshan
  11. Not another SDG 5 booklet By STAMOS Iraklis
  12. DiffSTOCK: Probabilistic relational Stock Market Predictions using Diffusion Models By Divyanshu Daiya; Monika Yadav; Harshit Singh Rao
  13. What Makes Systemic Discrimination, "Systemic?" Exposing the Amplifiers of Inequity By David B. McMillon
  14. The economic impact of arms spending in Germany, Italy, and Spain By Stamegna, Marco; Bonaiuti, Chiara; Maranzano, Paolo; Pianta, Mario

  1. By: Jonathan F. Cogliano and Roberto Veneziani
    Abstract: In A Mathematical Formulation of the Ricardian System, Pasinetti (1960) lays out the foundations of what has been dubbed the canonical classical model. He proves the model to be logically consistent and determinate in all its macro-economic features, and derives the solutions for all key variables independently of demand conditions. The model thus provides macroeconomic foundations to the classical theory of distribution. This paper examines the decentralised, competitive mechanism underlying the macroeconomic outcomes. First, we model a classical economy with capitalists, workers, and landlords and define the notion of a Classical Competitive Equilibrium (CCE). A unique CCE exists in a large class of concave classical economies and the resulting income distribution is proved to coincide with that of Pasinetti’s canonical classical model. Second, we use an agent-based model in order to examine more explicitly the decentralised competitive mechanisms at play in the classical economy. We show that a realistic competitive interaction between boundedly rational agents with localised knowledge generates classical gravitational dynamics with the key distributive variables oscillating around their equilibrium values.
    Keywords: Luigi Pasinetti, Income distribution, Classical competition, Agent-based model.
    JEL: B51 C63 D50
    Date: 2024–04–09
  2. By: Khan, Haider
    Abstract: The main purpose of this paper is to explore African Development Strategy as part of a non-neocolonial Global South. For this purpose, I propose a fairly comprehensive strategy for development as freedom for Africa. Accordingly, I try to find a way to integrate useful markets with the key characteristics of the Enabling Developmental State for the 21st Century in order to build a growing ecologically sustainable economy with equity in terms of capabilities. This is both for theoretical clarification and for aiding the strategies of popular democratic movements. A few tentative steps are taken here to serve this dual purpose. Proceeding from a critical capabilities perspective that is fully grounded in social reality of deepening structural and ecological crises of the World Capitalist System, we discover that such a perspective leads to the need to include among the characteristics of the Enabling Developmental State for the 21st Century its capacity to build an ecologically sustainable egalitarian development strategy from the beginning. The specific theoretical approach I follow has been developed during the last few decades by ecological scientists and social scientists. My own particular version can be called Evolutionary Ecological Global Political Economy or EEGPE for short.In addition, democracy must be deepened from the beginning. For Africa in particular, a new cooperative community of African nations following their own rhythm to reach their own dynamic trajectories towards development as freedom will be possible if they cooperate regionally on the basis of equal sovereignty and mutual respect. One precondition is to pragmatically unite for a common economic strategy. For this a decolonization of the African mind is also necessary. I conclude with some further thoughts on extending the model to an information theoretic based fractal model of development.A mathematical model of integrated financial and real sectors on abstract function space is presented in the appendix that can be extended for this purpose.
    Keywords: Non-neocolonial Global South, Enabling Developmental State for Africa, Egalitarianism in Afrian Development, Ecological Crisis in Africa, World Capitalist System, Counterhegemonic movements, Nonlinearities, Multiple equilibria, Entropy and Information Theory
    JEL: O2 O5 O55
    Date: 2024–02–05
  3. By: Nardy Antunes, Davi José; Tunes Mazon, Marilia
    Abstract: The thesis of this paper is that the conception of liberal democracy developed by Schumpeter and consecrated by American political science has always been characterized by concealing existing power structures, presuming that the political system is impervious to pressures from the economy and society. The economic, social, political, and cultural transformations of recent decades have undermined the remaining assumptions that supported liberal democracy. A true simulacrum, the political system has become a dictatorship of the rich. This work highlights two aspects of this process. The unprecedented concentration of capital and power in the hands of a financial oligarchy has eliminated power alternatives, imposing its interests through control of the mass media and suppressing the debate on the great destinies of societies. At the same time, recent technological changes, along with neoliberal policies, have disorganized the labor market and the very structure of classes by eliminating numerous jobs and careers and turning work into an appendix of the social reproduction process, where jobs are intermittent and task-based. The result has been the re-emergence of a mass of rootless, undifferentiated, and depoliticized individuals with no capacity to understand contemporary political situations and organize in defense of their interests. These are the basis for the resurgence of fascist trends in contemporary societies.
    Keywords: Democracy, Neoliberalism, and Financial Oligarchy
    JEL: B31 N2
    Date: 2024–01
  4. By: Benjamin Enke
    Abstract: This article calls for a greater integration of moral psychology and political economy. While these disciplines were initially deeply intertwined, cross-disciplinary exchange became rare throughout the 20th century. More recently, the tide has shifted again – social scientists of different backgrounds recognized that morality and politico-economic outcomes influence each other in rich bi-directional ways. Because psychologists and economists possess distinct and complementary skill sets, part of this movement consists of productive ‘economic imperialism’ – economists leveraging their empirical toolkit to test and substantiate theories from moral psychology at scale or in the wild. To illustrate this, I present two case studies of recent economics research on prominent ideas in moral psychology. First, the theory that morality is ultimately economically functional – that it evolved as a form of ‘psychological and biological police’ to enforce cooperation in economic production and exchange. Second, that the structure of morality shapes political views and polarization, including on economic issues such as taxation and redistribution. I conclude from these case studies that economists have much to gain from integrating more ideas from moral psychology, and that moral psychologists will be able to make an even more compelling case that morality and politico-economic outcomes influence each other if they engage with research in economics.
    JEL: D01 D70
    Date: 2024–03
  5. By: Amoozadeh Mahdiraji, Hanif
    Abstract: The cooperative sector in Iran holds a distinctive position within the nation's constitutional framework and official documents. However, despite concerted efforts, it presents a duality in its performance. While demonstrating relative acceptability compared to peers within the Middle East, it remains notably distant from the prescribed standards delineated in foundational documents. Notably, in 2013, an amendment bill addressing the Cooperative Sector Law, aiming for substantial revisions, was presented by the Executive branch to Parliament. This Bill, however, failed to garner the necessary attention from stakeholders and legislative bodies, prompting a critical evaluation of its necessity. This evaluative process encompassed meticulous scrutiny of the sector's standing, involving an alignment of definitions with legal frameworks and a comprehensive assessment of goal achievement utilizing official statistical data. A systematic review of antecedent research on cooperatives was also conducted to unearth and comprehend the critical operational barriers. The findings of this comprehensive analysis unveiled a spectrum of challenges afflicting Iran's cooperative sector, ranging from ambiguity in defining cooperatives to inadequate competitiveness vis-à-vis private enterprises, lack of member awareness, deficiencies in human resources and administrative capacities, financial constraints, overreliance on governmental support, and inefficiencies within supervisory institutions. A series of strategic alternatives have emerged to address these multifaceted challenges effectively. These include redefining cooperatives in alignment with international benchmarks, harnessing the potential of New-Generation Cooperatives (NGCs), diversifying shareholding structures, deploying Crowdfunding tools, establishing Cooperatives Credit Unions, fortifying internal supervisory entities, revising founding member prerequisites, reinstating cooperative education within legal frameworks, integrating specialized expertise on cooperative boards, and rejuvenating cooperative management certifications.
    Date: 2024–03–27
  6. By: Ion Pohoață (UAIC - Alexandru Ioan Cuza University of Iași [Romania]); Delia-Elena Diaconașu (UAIC - Alexandru Ioan Cuza University of Iași [Romania]); Ioana Negru (ULBS - "Lucian Blaga" University)
    Abstract: This paper testifies to the fact that the proclaimed independence of central banks, as conceived by its founders, is nothing more than a chimera. We demonstrate that the hypothesis ‘inflation is a purely monetary phenomenon' does not substantiate the case for independence. Further, the portrayal of the conservative central banker, the imaginary principal-agent contract, the alleged financial autonomy, along with the ban on budgetary financing, amount to flawed logic in arguing for the independence of the central bank. We also highlight that the idea of independence is not convincing due to the absence of well-defined outlines in its operational toolbox and the system of rules it relies upon.
    Keywords: inflation, conservative banker, Principal-Agent contract, financial autonomy, budgetary financing
    Date: 2024–03–11
  7. By: Nardy Antunes, Davi José; Tunes Mazon, Marilia; Cardoso de Mello, João Manuel
    Abstract: The extraordinary technological progress in recent decades rekindles the questions raised by John M. Keynes in Economic Possibilities for Our Grandchildren, especially about its emancipatory potential. Economic development has rendered work almost irrelevant for social reproduction and wealth generation in the 21st century, by reducing its necessity to produce our existence. It has also made human emancipation possible, expanding freedom and leisure time, creating room for a good life – as Keynes had envisioned through the lens of the ancient Greeks – rich in love, friendship, beauty, and the pursuit of truth. However, overcoming the economic problem seems distant politically. This paper discusses two central issues. The first is the corporate restructuring that has taken place in recent decades, characterized by de-conglomeration and rentism, which has shaped a new international division of labor. Under the logic of “shareholder value”, large corporations have focused on their core business, reduced their productive investments, and prioritized the financial appreciation of their stocks and dividend distribution. Technological monopolization and its private appropriation have led to material abundance for only a small portion of the wealthy and their associates, driven by consumerism and waste, especially in affluent countries. The second issue is related to the impact of the development of productive forces on the rich countries’ labor markets, leading to the exclusion of increasingly larger segments of the population, subject to structural unemployment and deteriorating living conditions. In a neoliberal political order, technological advancement has pushed growing portions of the population into serving the wealthy, the only remaining activity that expands job opportunities while exacerbating social inequality.
    Keywords: technological progress; business restructuring; labor market
    JEL: O14
    Date: 2023–12
  8. By: Zhiyuan Yao; Zheng Li; Matthew Thomas; Ionut Florescu
    Abstract: Investors and regulators can greatly benefit from a realistic market simulator that enables them to anticipate the consequences of their decisions in real markets. However, traditional rule-based market simulators often fall short in accurately capturing the dynamic behavior of market participants, particularly in response to external market impact events or changes in the behavior of other participants. In this study, we explore an agent-based simulation framework employing reinforcement learning (RL) agents. We present the implementation details of these RL agents and demonstrate that the simulated market exhibits realistic stylized facts observed in real-world markets. Furthermore, we investigate the behavior of RL agents when confronted with external market impacts, such as a flash crash. Our findings shed light on the effectiveness and adaptability of RL-based agents within the simulation, offering insights into their response to significant market events.
    Date: 2024–03
  9. By: Rachel Schuh
    Abstract: I analyze the value workers ascribe to the gender composition of their workplace and the consequences of these valuations for occupational segregation, tipping, and welfare. To elicit these valuations, I survey 9, 000 U.S. adults using a hypothetical job choice experiment. This reveals that on average women and men value gender diversity, but these average preferences mask substantial heterogeneity. Older female workers are more likely to value gender homophily. This suggests that gender norms and discrimination, which have declined over time, may help explain some women’s desire for homophily. Using these results, I estimate a structural model of occupation choice to assess the influence of gender composition preferences on gender sorting and welfare. I find that workers’ composition valuations are not large enough to create tipping points, but they do reduce female employment in male-dominated occupations substantially. Reducing segregation could improve welfare: making all occupations evenly gender balanced improves utility as much as a 0.4 percent wage increase for women and a 1 percent wage increase for men, on average.
    Keywords: gender; labor; occupational choice
    JEL: J16 J24 J71
    Date: 2024–03–01
  10. By: Singh, Sonali; Maliappan, Sudarshan
    Abstract: The global discourse within the realm of agriculture has been dominated with challenges of food security (FAO, 2022), (HLPE, Food security and nutrition: building a global narrative towards 2030, 2020) loss of biodiversity, environmental pollution and resource degradation and climate change. In this context, various approaches have developed to address complex challenges and one of the most comprehensive concepts emerged is called agroecological systems. The emphasis on agroecology emanates from its holistic approach, integrating ecological principles into agricultural systems to foster resilience, enhance soil health, and mitigate the adverse environmental impacts associated with conventional farming. As agroecology spans over diverse themes, studies and experts argue policies at cross-cutting levels are critical for the promotion of agroecology, as they can provide the necessary incentives and support for its implementation. To ensure the large-scale adoption of agroecology, a multiscale systems approach is needed, considering economic, technological, and policy drivers.
    Keywords: agriculture; agroecology; biodiversity; climate change; food security; pollution; nutrition; policies; India; Southern Asia; Asia
    Date: 2024
  11. By: STAMOS Iraklis (European Commission - JRC)
    Abstract: The "Not Another SDG 5 booklet" presents an incisive exploration of SDG 5 - Gender Equality. It advocates for a comprehensive view of gender, recognizing a spectrum of identities and confronting systemic discrimination and violence. The booklet underscores the ambition of SDG 5, highlighting the need for dialogues on power sharing, leadership, and the intersectionality of social justice and human rights. Critical interlinkages between SDG 5 and other goals are examined, demonstrating gender equality's centrality to sustainable development. The booklet outlines the roles of pivotal actors such as UN Women and the European Institute for Gender Equality, and discusses key challenges communities face, including discrimination, violence, and economic and political inequality. Monitoring strategies are emphasized, focusing on the necessity of disaggregated data to target interventions effectively. The booklet compares UN and EU approaches to monitoring gender equality, emphasizing systematic and strategic methodologies. Local governments' contributions to implementing and monitoring SDG 5 are described, with an emphasis on adapting global targets to local realities. EU policy initiatives for combating gender inequality are outlined, alongside examples of local actions, such as support services for survivors of gender-based violence. The booklet critically assesses Europe's progress towards SDG 5, revealing slow advancements and calling for accelerated action to meet 2030 targets. It concludes with a vision beyond 2030, imagining a society founded on gender equality principles, where all individuals have the opportunity to succeed without gender-based barriers. The booklet serves as a vital tool for those engaged in gender equality, providing insights and guidelines for realizing the full potential of SDG 5.
    Date: 2024–03
  12. By: Divyanshu Daiya; Monika Yadav; Harshit Singh Rao
    Abstract: In this work, we propose an approach to generalize denoising diffusion probabilistic models for stock market predictions and portfolio management. Present works have demonstrated the efficacy of modeling interstock relations for market time-series forecasting and utilized Graph-based learning models for value prediction and portfolio management. Though convincing, these deterministic approaches still fall short of handling uncertainties i.e., due to the low signal-to-noise ratio of the financial data, it is quite challenging to learn effective deterministic models. Since the probabilistic methods have shown to effectively emulate higher uncertainties for time-series predictions. To this end, we showcase effective utilisation of Denoising Diffusion Probabilistic Models (DDPM), to develop an architecture for providing better market predictions conditioned on the historical financial indicators and inter-stock relations. Additionally, we also provide a novel deterministic architecture MaTCHS which uses Masked Relational Transformer(MRT) to exploit inter-stock relations along with historical stock features. We demonstrate that our model achieves SOTA performance for movement predication and Portfolio management.
    Date: 2024–03
  13. By: David B. McMillon
    Abstract: Drawing on work spanning economics, public health, education, sociology, and law, I formalize theoretically what makes systemic discrimination "systemic." Injustices do not occur in isolation, but within a complex system of interdependent factors; and their effects may amplify as a consequence. I develop a taxonomy of these amplification mechanisms, connecting them to well-understood concepts in economics that are precise, testable and policy-oriented. This framework reveals that these amplification mechanisms can either be directly disrupted, or exploited to amplify the effects of equity-focused interventions instead. In other words, it shows how to use the machinery of systemic discrimination against itself. Real-world examples discussed include but are not limited to reparations for slavery and Jim Crow, vouchers or place-based neighborhood interventions, police shootings, affirmative action, and Covid-19.
    Date: 2024–03
  14. By: Stamegna, Marco; Bonaiuti, Chiara; Maranzano, Paolo; Pianta, Mario
    Abstract: In the last ten years, military expenditures of NATO EU countries (according to NATO definitions and data) have increased by almost 50%, from €145 billion in 2014 to a budget forecast of €215 billion in 2023 (measured in constant 2015 prices). In this context, it is important to assess the economic consequences that the current increase in military spending is likely to have on Europe’s economies. We focus on Germany, Italy and Spain, and we concentrate on arms acquisitions. The article investigates the economic effect of military expenditure on growth and employment and compares it to the impact that could emerge from a similar expenditure for education, health and the environment. We use an input-output methodology – already adopted by several studies - to assess the relevance of imports and of demand towards different sectors providing intermediate inputs. We assess the likely impact on output and jobs of one billion euros of extra spending in arms, and compare it to the outcomes of the same amount spent in education, health and the environment. Our findings show that for all countries non-military public expenditures have a greater impact on the economy and employment than spending for arms acquisition.
    Keywords: Military expenditure; arms acquisition; input-output; economic impact; military jobs
    JEL: C67 D57 H50 H56 Q50
    Date: 2024–03

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