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on Heterodox Microeconomics |
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Issue of 2025–04–14
eight papers chosen by Carlo D’Ippoliti, Università degli Studi di Roma “La Sapienza” |
| By: | Massimo Cervesato (Centre d'Economie de la Sorbonne, Université Paris 1 Panthéon-Sorbonne) |
| Abstract: | In this paper, we aim to shed new light on the methodology that Elinor Ostrom used to study real institutional situations by analyzing the specific theoretical influences that led her to mobilize the notion of complexity. We show the hitherto neglected decisive influence on her work of the "sciences of the artificial", a term coined by the political scientist, economist and precursor of systems thinking, Herbert A. Simon. On several occasions, Ostrom described Simon's book The Sciences of the Artificial as the precursor of a new methodology upon which she relied to understand the most complex system of all: human society. We thus demonstrate that the systems-engineering approach, in particular as established by Simon, played a greater role in Ostrom's work than is usually assumed. This way, we expect to provide a more precise understanding of the notion of complexity she used and the methodological choices that resulted from it. In so doing, we also illustrate how an interdisciplinary approach based on the notion of complexity can concretely be used in institutional economics |
| Keywords: | Ostrom (Elinor); complexity; Economic Methodology; Simon (Herbert A.); Systems Science; Institutional Analysis |
| JEL: | B25 B31 B41 B52 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:mse:cesdoc:25007 |
| By: | Leonardo Ciambezi (Université Côte D’Azur, CNRS, GREDEG and Institute of Economics and l’Embeds, Scuola Superiore Sant’Anna di Pisa); Mattia Guerini (Department of Economics and Management, University of Brescia, Fondazione Eni Enrico Mattei, Université Côte D’Azur, CNRS, GREDEG and Institute of Economics and l’Embeds, Scuola Superiore Sant’Anna di Pisa); Mauro Napoletano (Université Côte D’Azur, CNRS, GREDEG, OFCE - SciencesPo and Institute of Economics and l’Embeds, Scuola Superiore Sant’Anna di Pisa); Andrea Roventini (Institute of Economics and l’Embeds, Scuola Superiore Sant’Anna di Pisa and OFCE - SciencesPo) |
| Abstract: | We develop a macroeconomic agent-based model to study the role of demand and supply factors in determining inflation dynamics. Local interactions of heterogeneous firms and households in the labor and goods markets characterize the model. Asymmetric information implies that firm selection is imperfect and depends both on firms’ relative prices and on their size. We calibrate the model on EU data by using the method of simulated moments and show that it can generate realistic inflation dynamics and a non-linear Phillips curve in line with recent empirical evidence. We then find that the traditional demand-led explanation of inflation stemming from a tight labor market only holds when selection in the goods markets is mostly driven by relative prices in comparison to firm size. Finally, we study the response of inflation to shocks impacting consumption, labor productivity, or energy costs. The results indicate that only demand shocks lead to wage-led inflation surges. Productivity shocks are entirely passed through to prices without affecting the income distribution. Energy shocks, instead, induce sellers’ inflation after changes in both firms’ cost structure and profit margins. This is in line with the recent empirical evidence for the Euro Area. |
| Keywords: | Inflation, agent-based models, market structure, mark-up rates, sellers’ inflation |
| JEL: | E31 E32 C63 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:fem:femwpa:2025.10 |
| By: | Dabrowski, Cara |
| Abstract: | In this paper, I extend the Hein and Stockhammer model of distribution and inflation by incorporating structural trends of financialization through three Kaleckian channels: (1) sectoral recomposition, (2) financial overhead costs and rentiers' profit claims, and (3) the bargaining power of trade unions and workers. The model is calibrated to two scenarios that reflect the institutionalized fear experienced by workers under neoliberal income policies. Following a theoretical exploration of potential inflationary shocks, an empirical case study comparing Germany and Austria is conducted. The analysis validates the relevance of all three Kaleckian channels, though their individual strength varies. The findings indicate that while rising import prices triggered the initial inflationary shock, firms subsequently increased unit profits by keeping overall domestic prices high even though import prices decreased. An inflation decomposition suggests a more pronounced class conflict in Austria, potentially attributable to less severe labor market deregulation. |
| Keywords: | Inflation, conflict inflation, distribution, Kaleckian theory of distribution, financedominated capitalism, financialization, financial and economic crisis |
| JEL: | D33 D43 E31 Q43 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ipewps:312566 |
| By: | Mario Cassetti |
| Abstract: | This study uses Kalecki's profit equation to examine the changing composition of expenditures that drove profit realisation in the US economy over the last few decades (1961-2019). A clear result is that profits in the Consumer Age (1979-2008) were driven less by investment and 'external markets', - i.e. net ex- ports and government deficits - than by a general collapse in savings. Thereafter, public deficits have aided profits. Still, the support of capitalists' consumption, although reduced, has remained. The study argues that the decline in the rela- tive bargaining power of production workers in the labour market, together with financial innovations, is the root cause of the Consumer Age. Empirical support is sought for the hypothesis that income inequality resulting from wage stagnation has increased upper- and middle-class consumption, and household indebtedness, and thus, profits. These events suggest a debate about how the distribution-spending link, fairly stable in Kaleckian/Keynesian models, can be profoundly altered be- cause of institutional and cultural change, and more generally, a debate about how long an economy driven by consumerism and inequality can last. |
| Keywords: | Kalecki's profit determinants, Income distribution, Consumerism |
| JEL: | E11 E12 E21 E25 E65 O51 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2510 |
| By: | Jose Barrales-Ruiz (Center of Economics for Sustainable Development (CEDES), Faculty of Economics and Government, Universidad San Sebastian, Chile.); Ivan Mendieta-Muñoz (Department of Economics, University of Utah, USA); Codrina Rada (Department of Economics, University of Utah, USA); Rudiger von Arnim (Department of Economics, University of Utah, USA) |
| Abstract: | The literature on the empirical linkages between economic growth (or other measures of macroeconomic performance) and the functional distribution of income is copious on the short run. The sustained and simultaneous decline in average rates of real GDP growth and the labor share of income in the US in recent decades has led to renewed interest in the long run, in light of the hypothesis of inequality-induced secular stagnation. This paper employs a vector error correction model with time-varying parameters and stochastic volatility to estimate the long run interaction between real GDP growth, labor share and the unemployment rate. Our key result indicates that a lower labor share is associated with a decline in the growth rate: economic growth is wage-led in the long run. |
| Keywords: | Growth and distribution; stagnation; demand regime |
| JEL: | C32 E12 E25 E32 O40 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:new:wpaper:2505 |
| By: | Jose Luis Oreiro |
| Abstract: | The current article has two main objectives. The first one is to make a historical reconstruction of the debate between Keynes and Classical economists in the period just after the publication of the General Theory (1937-1939) in order to highlight the differences between Liquidity Preference and Loanable funds theory of interest rate determination. In opposition of what seemed to be a consensus in economic literature (See Oreiro, 2001), both theories had very different implications about the nature of the rate of interest and the role of money in economic process. The second objective is to build a simple Keynesian Stock-Flow consistent model for the funding stage of the process of capital formation, represented by the Finance-Investment-Saving-Funding circuit. This simple model makes clearly that long-term interest rate for corporate bonds is a strict monetary variable, being dependent of liquidity preference of households and the monetary policy conducted by the Central Bank. In such framework, an increase in the households´ s propensity to save will increase, rather then decrease, the long term interest rate over corporate debt since it will decrease corporate profits which are the main source of internal funding for firms´ s investment plans, forcing then to issue more corporate debt in order to get the money required for funding investment, thereby reducing the price of corporate bonds and hence increasing the rate of interest over corporate debt. |
| Keywords: | : John Maynard Keynes, Liquidity Preference, Capital Formation, Finance and Funding. |
| JEL: | E10 E12 E44 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2509 |
| By: | Heng-fu Zou |
| Abstract: | This paper develops a quantum field theoretic framework for understanding income and wealth distributions as emergent phenomena driven by the irreducible quantum structure of human ideas, abilities, and innovations. Unlike classical models that treat individuals as deterministic agents and inequality as a policy failure, we model each person as a probabilistic wavefunction over discrete wealth and ability states—quantus—evolving under cognitive Hamiltonians and interacting through tunneling, entanglement, and field potentials. Wealth and income outcomes arise not from aggregate laws like r > g, but from superposed life trajectories and quantum interference. We critique the deterministic assumptions of Piketty and redistributionist programs, showing that taxation and subsidies cannot alter the underlying structure of cognitive amplitudes. Inequality, in this framework, is not an anomaly to be eliminated, but a signal of quantum diversity in a dynamic economic field. Policy must be redesigned to respect this structure, enabling natural transitions rather than coercive flattening. |
| Date: | 2025–04–06 |
| URL: | https://d.repec.org/n?u=RePEc:cuf:wpaper:751 |
| By: | Garnier, Félix |
| Abstract: | To achieve social and environmental sustainability, humankind must balance satisfying human needs and preventing ecological collapse. The material footprint-the total materials required for production and consumption-plays a crucial role in this dynamic. This study uses data from 151 countries and a regression-based moderation approach to analyse how material footprints and human need satisfaction are influenced by socio-economic factors known as "provisioning factors."Countries with strong socioecological performance were characterized by factors such as democracy, rule of law, public health coverage, effective corruption control, access to electricity and clean fuels, trade and transport infrastructure, and urbanization. In contrast, weaker socio-ecological performance was often marked by extractivism and inequality. Improving provisioning systems could help countries reduce material use while enhancing need satisfaction. Yet, even under favorable conditions, the current economic system remains incompatible with socio-ecological sustainability, highlighting the need for more radical changes to meet human needs with minimal material consumption. |
| Keywords: | material footprint, human needs, provisioning systems, sustainability |
| JEL: | C51 C53 Q56 Q57 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:penwps:315198 |