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on Heterodox Microeconomics |
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Issue of 2024‒08‒19
seventeen papers chosen by Carlo D’Ippoliti, Università degli Studi di Roma “La Sapienza” |
| By: | Gräbner-Radkowitsch, Claudius; Kapeller, Jakob |
| Abstract: | This entry discusses the concept of "systemism", elaborates how it implicitly underpinned most seminal works of evolutionary-institutional economics, and explains how future research would benefit from making the systemist nature of evolutionary economics more explicit. More precisely, the paper clarifies the ontological and epistemological claims associated with systemism, and describes how the explicit use of systemism can support a pluralist meta-paradigm in heterodox economics and political economy in general, and evolutionary-institutional economics research in particular. |
| Keywords: | Evolution, Institutions, Ontology, Epistemology, Models, Multi-Level Theorising, Emergence, Complexity |
| JEL: | B15 B25 B52 B55 C69 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifsowp:300520 |
| By: | Claudius Graebner Radkowitsch (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria; Department of Pluralist Economics, Europa-University Flensburg, Germany); Jakob Kapeller (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria; Institute for Socio-Economics, University of Duisburg-Essen, Germany) |
| Abstract: | This short paper discusses the concept of "systemism", elaborates how it implicitly underpinned most seminal works of evolutionary-institutional economics, and explains how future research would benefit from making the systemist nature of evolutionary economics more explicit. More precisely, the paper clarifies the ontological and epistemological claims associated with systemism, and describes how the explicit use of systemism can support a pluralist meta-paradigm in heterodox economics and political economy in general, and evolutionaryinstitutional economics research in particular. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:ico:wpaper:155 |
| By: | Hein, Eckhard |
| Abstract: | The principle of effective demand, and the claim of its validity for a monetary production economy in the short and in the long run, is the core of heterodox macroeconomics, as currently found in all the different strands of post-Keynesian economics (Fundamentalists, Kaleckians, Sraffians, Kaldorians, Institutionalists) and also in some strands of neo-Marxian economics, particularly in the monopoly capitalism and underconsumptionist school. In this contribution, we will therefore outline the foundations of the principle of effective demand and its relationship with the respective notion of a capitalist or a monetary production economy in the works of Marx, Kalecki and Keynes. Then we will deal with heterodox short-run macroeconomics and provide a simple short-run model, which is built on the principle of effective demand, as well as on distribution conflict between different social groups (or classes): rentiers, managers and workers. Finally, we will move to the long run and we will review the integration of the principle of effective demand into some variants of heterodox/post-Keynesian approaches towards distribution and growth, the Kaldor-Robinson, the Kalecki-Steindl and the Sraffian Supermultiplier model. |
| Keywords: | Effective demand, employment, distribution, growth, Marx, Kalecki, Keynes |
| JEL: | E20 E21 E22 E24 E25 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ipewps:300571 |
| By: | Claudius Graebner Radkowitsch (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria; Department of Pluralist Economics, Europa-University Flensburg, Germany); Jakob Kapeller (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria; Institute for Socio-Economics, University of Duisburg-Essen, Germany) |
| Abstract: | This short paper explains the theory of path dependence and clarifies its relation to concepts such as positive feedback or lock-in, arguing that path dependence is a core theoretical element of political economy in general, and institutional and evolutionary economics in particular. We first clarify the core conceptual elements of path dependence, show how it is relevant in a wide variety of problems and approaches, and situate these diverse applications in a common theoretical understanding that can be synthesized as a general mechanism. We then discuss the different ways in which path dependence has been theorized in evolutionary-institutional economics and related schools of thought. Finally, we present some archetypical models of path dependent processes. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:ico:wpaper:154 |
| By: | Gräbner-Radkowitsch, Claudius; Kapeller, Jakob |
| Abstract: | This short paper explains the theory of path dependence and clarifies its relation to concepts such as positive feedback or lock-in, arguing that path dependence is a core theoretical element of political economy in general, and institutional and evolutionary economics in particular. We first clarify the core conceptual elements of path dependence, show how it is relevant in a wide variety of problems and approaches, and situate these diverse applications in a common theoretical understanding that can be synthesized as a general mechanism. We then discuss the different ways in which path dependence has been theorized in evolutionary-institutional economics and related schools of thought. Finally, we present some archetypical models of path dependent processes. |
| JEL: | B15 B25 B52 B55 C69 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifsowp:300261 |
| By: | Patrick Mellacher (University of Graz, Austria) |
| Abstract: | I develop a simple Schumpeterian agent-based model where the entry and exit of firms, their productivity and markup, the birth of new industries and the social structure of the population are endogenous and use it to study the causes of rising inequality and declining “business dynamism†since the 1980s. My hybrid model combines features of i) the so-called Schumpeter Mark I (centering around the entrepreneur), ii) the Mark II model (emphasizing the innovative capacities of firms), and iii) Cournot competition, with firms using OLS learning to estimate the market environment and the behavior of their competitors. A scenario which is quantitatively calibrated to US data on growth and inequality replicates a large number of stylized facts regarding the industry life-cycle, growth, inequality and all ten stylized facts on “declining business dynamism†proposed by Akcigit and Ates (AEJ:Macro, 2021). Counterfactual simulations show that antitrust policy is highly effective at combatting inequality and increasing business dynamism and growth, but is subject to a conflict of interest between workers and firm owners, as GDP and wages grow at the expense of profits. Technological factors, on the other hand, are much less effective in combatting declining business dynamism in my model. |
| Keywords: | Agent-based economics, Joseph Schumpeter, Evolutionary economics, Innovation. |
| JEL: | B25 C63 D33 L11 O11 O33 O41 |
| Date: | 2023–05 |
| URL: | https://d.repec.org/n?u=RePEc:grz:wpaper:2023-04 |
| By: | Teresa Lackner (University of Graz); Luca E. Fierro (International Institute for Applied Systems Analysis (IIASA)); Patrick Mellacher (University of Graz) |
| Abstract: | The paper introduces an integrated approach, blending Opinion Dynamics with a Macroeconomic Agent-Based Model (OD-MABM). It aims to explore the co-evolution of climate change mitigation policy and public support. The OD-MABM links a novel opinion dynamics model that is calibrated for European countries using panel survey data to the Dystopian Schumpeter meeting Keynes model (DSK). Opinion dynamics regarding stringent climate policy arise from complex interactions among social, political, economic and climate systems where a household’s opinion is affected by individual economic conditions, perception of climate change, industry-led (mis-)information and social influence. We examine 133 pathways for climate change mitigation policies in the EU, integrating various carbon tax schemes and revenue recycling mechanisms. Our findings reveal that while effective carbon tax policies initially lead to a decline in public support due to substantial macroeconomic transition costs, they concurrently drive a positive social tipping point in the future. This shift stems from the evolving economic and political influence associated with the fossil fuel-based industry, gradually diminishing as the transition unfolds. Second, hybrid revenue recycling strategies that combine green subsidies with climate dividends successfully address this intertemporal tradeoff, broadening public support right from the introduction of the carbon tax. A decomposition of opinion dynamics into the different channels reveals the important role of social influence through which individual experience can propagate within social networks giving rise to rapid and non-linear opinion swings. |
| Keywords: | Climate change, mitigation policy, opinion dynamics, agent-based models, transition risks. |
| JEL: | C63 H31 Q43 Q50 |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:grz:wpaper:2024-07 |
| By: | Rafael Galvão de Almeida (Cedeplar/UFMG) |
| Abstract: | This article introduces to economic theology and to the studies of capitalism and religion the concept of the demonic, as understood by the theologian and philosopher Paul Tillich and the economic historian Fritz Redlich. The demonic is understood by Tillich as the “sacred antidivine”, a strength that creates through destruction and consumption of previous arrangements – what economists understand as creative destruction. Capitalist dynamism is possible due to demonic. Redlich applies the demonic to entrepreneurship, observing from the great 19th century American industrialists known as robber barons how their creativity led to disruption of society and reactions against them. The article concludes that entrepreneurship must become more self-aware, while promoting a creativity that is resistant to the demonic. |
| Keywords: | entrepreneurship, economics and religion, economic theology, Paul Tillich, Fritz Redlich, critical entrepreneurship studies, demonic |
| JEL: | B20 L26 Z12 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:cdp:texdis:td669 |
| By: | Theresa Hager (Johannes Kepler University Linz, Austria); Patrick Mellacher (University of Graz, Austria); Magdalena Rath (University of Graz, Austria) |
| Abstract: | We study the impact of gender norms on the distribution of paid and unpaid labor between women and men in an intra-household bargaining model featuring endogenous social norms. In contrast to the previous literature, which assumes a homogeneous social norm, agents are connected via explicitly modeled social networks and accordingly face heterogeneous perceptions of gender norms. In our model, social pressure to conform to gender norms exacerbates gender inequalities in the distribution of paid and unpaid labor that may result from a gender pay gap or gender-specific preferences. However, we show that the behavior of agents connected in different standardized social networks is significantly closer to a situation in which agents face no social pressure than in a scenario in which the whole of society perceives homogeneous gender norms. This is particularly true if agents are more likely to form connections to other agents that have similar preferences. |
| Keywords: | Intra-household bargaining, Social norms, Agent-based model, Social network. |
| JEL: | C63 C78 D13 J16 J22 |
| Date: | 2023–06 |
| URL: | https://d.repec.org/n?u=RePEc:grz:wpaper:2023-05 |
| By: | Luca TAUSCH; Guilherme MAGACHO |
| Abstract: | The low-carbon transition in developing countries requires large investments in new technologies. However, since capital goods production is concentrated mostly in more advanced economies, this transition will generate a high demand for imported Machinery and equipment in these countries, leading to a higher demand for foreign exchange and potentially creating negative macroeconomic pressures. To account for the important role of capital goods in this transition process, we endogenize fixed capital in the input-output (IO) framework, estimating capital use matrices for six developing and emerging countries in Latin America and the Caribbean within the Gloria sectoral framework from 1990 to 2020. Based on these estimates, we show how the endogenization of capital can offer a nuanced sectoral perspective on the multidimensional challenges faced by developing countries during their low-carbon transition, including the external and socio-economic dimensions. Our findings suggest that the inclusion of capital in the IO framework reveals a substantial deepening of the external constraint for developing countries. We find that for every dollar invested solely to maintain current productive capacity, on average more than 45% leaks directly and indirectly to foreign producers through imports. Some socio-economic benefits of green investment, such as employment generation, are absorbed by the rest of the world, rather than fostering domestic job creation. Essentially, with the growing demand for foreign-produced capital goods generated by the low-carbon transition, developing countries will face an increased external constraint and substantial socio-economic imbalances as they embark on their low-carbon trajectory. |
| JEL: | Q |
| Date: | 2024–07–16 |
| URL: | https://d.repec.org/n?u=RePEc:avg:wpaper:en16978 |
| By: | Pedro Elosegui (Banco Central de la República Argentina); Gabriel Michelena (MESi-Universidad de Buenos Aires); Marcos Herrera Gómez (CIANECO-CONICET/Universidad Nacional de Río Cuarto) |
| Abstract: | Multi-regional input-output (MRIO) matrices are an important tool for regional economic analysis, but compiling the data for them remains challenging, especially in developing countries like Argentina. There is no consistent, up-to-date, official national I-O table available for Argentina, and data at the provincial level is limited and fragmented across different sources. This paper develops a premier (limited information) multi-regional input-output matrix for Argentina 2019 making a dual contribution: (i) constructing the first MRIO table for Argentina using official and customized sources, and (ii) evaluating I-O multipliers, providing insights for future applications. The MRIO table includes 5 regions aggregating the 24 Argentinean provinces and 20 economic sectors. While only basic multipliers are presented the table provides a foundation for more in-depth input-output modeling and analysis of production, consumption, and trade linkages between regions and sectors in Argentina. We found a high concentration in the provinces of the Pampeana region in gross output, value added and regional internal inputs, although less in external inputs, confirming the asymmetric structure of the country. In addition, the analysis of multipliers allows us to detect some relevant links in the peripheral regions reflecting the interaction of spatial location and sector specialization in a federal and heterogeneous open developing economy. |
| Keywords: | MRIO tables; input–output analysis, regional trade |
| JEL: | C67 D57 R15 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:aoz:wpaper:332 |
| By: | Ellis, Peyton |
| Keywords: | International Development, Production Economics, Labor And Human Capital |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea22:343799 |
| By: | Martin Pomares Calero |
| Abstract: | Entropy is a very useful concept from physics that tries to explain how a system behaves from a point of view of the thermodynamics. However, there are two ways to explain entropy, and it depends on if we are studying a microsystem or a microsystem. From a macroscopically point of view, it is important to describe if the system is a reversible system or not. However, form the microscopically point of view, the concept of chaos is related to entropy. In such case, entropy measures the amount of disorder into the system. Otherwise, the idea of connecting at the same time the analysis of the macro and micro system with the use of entropy it is not very common. |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.00022 |
| By: | Guerriero, Arthur Zito; Kapeller, Jakob |
| Abstract: | This paper provides a comprehensive overview of the ongoing debate on global income inequality. It shows that global income inequality is a valuable analytical concept that significantly enhances our understanding of global economic dynamics. By addressing key methodological issues in the measurement of global income inequality, the paper compares different datasets used in the literature and conducts an exploratory analysis of recent trends. This analysis re-evaluates the relative impact of inequality between and within countries and highlights how growth and distributional dynamics in specific countries influence global income inequality. |
| Keywords: | income inequality, globalization, measurement of inequality, convergence |
| JEL: | D31 F01 F60 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifsowp:300260 |
| By: | Heng-fu Zou (The World Bank) |
| Abstract: | By integrating Michael Mann's sources of social power into Ronald Coase's analysis, we can achieve a more nuanced understanding of how firms, markets, and the law operate within broader social contexts. Ideological, economic, military, and political powers intersect with economic transactions, influencing the formation, operation, and regulation of firms and markets. This synthesis highlights the multifaceted nature of economic activities and the importance of considering power dynamics in economic theories. |
| Date: | 2023–03 |
| URL: | https://d.repec.org/n?u=RePEc:cuf:wpaper:633 |
| By: | Pierre-Alex Balland; Ron Boschma; ; ; |
| Abstract: | This paper proposes an evolutionary take on regional development traps. Our definition of regional traps centers around the structural inability of regions to develop new complex activities. We distinguish between several different traps. Using industry data, we follow European regions over time and provide evidence on which regions in the EU are trapped, and what kinds of traps they have fallen into. Our econometric analysis shows that being trapped has a negative impact on employment and wage growth in regions. We also find evidence that our development trap indicator explains well whether regions are stuck in a regional development trap, as defined by Iammarino et al. (2020). |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2420 |
| By: | Fève, Patrick; Cahn, Christophe; Matheron, Julien |
| Abstract: | This paper evaluates the long-run economic effects of a fiscal rebalancing reform, namely a policy consisting in increasing consumption taxes and simultaneously lowering payroll taxes, all this in a budget neutral way. To this end, we construct a heterogeneous-agent model and compare the pre- and post-reform steady states. The model is calibrated on French data to reproduce key characteristics of disposable income and net wealth distributions. We compare the outcomes of the reform under the benchmark model with those arising in its representative-agent version. Our results indicate that while the fiscal febalancing reform stimulates aggregate labor and capital, (i) it has a larger effect on capital in the heterogeneous-agent model than in its representative-agent counterpart; (ii) it also exacerbates wealth inequality, where wealthier households capture the whole macroeconomic increase in capital. The results are left unaffected by various perturbations around the baseline calibration. Taking into account the transition between the two stady states, a welfare analysis suggests that the reform entails a welfare cost even though a majority of agents would benefit from it. |
| Keywords: | Fiscal Policy; Fiscal rebalancing, Income & Wealth Distributions; Heterogeneous Agent Model |
| JEL: | E62 D31 C54 |
| Date: | 2024–07–08 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129469 |