|
on Heterodox Microeconomics |
|
Issue of 2025–11–24
thirteen papers chosen by Carlo D’Ippoliti, Università degli Studi di Roma “La Sapienza” |
| By: | Silvia Leoni; Marco Catola |
| Abstract: | The debate on environmental policy increasingly focuses on aligning private incentives with social objectives in imperfectly competitive markets. While traditional literature has centred on public-based mechanisms like taxes and subsidies, a growing strand emphasizes private-based mechanisms, particularly green consumerism, where consumer preferences can drive firms’ adoption of clean technologies. Recent game-theoretic analysis shows that consumers’ willingness-to-pay can lead to various market equilibria, from all-green to all-brown outcomes. This paper complements this analytical approach by developing an agent-based model (ABM) to study the dynamic evolution of a spatial market where firms, based on relative performance, decide whether to supply brown or green products to heterogeneous consumers. Our computational simulations confirm that all three market structures—all-brown, all-green, and mixed—can endogenously emerge depending on average green consumer preferences. Furthermore, we evaluate the effectiveness of three policy instruments: an environmental tax, a subsidy to green firms, and a subsidy to green consumers. We find that supply-side policies are more effective than demand-side subsidies. Specifically, an environmental tax ensures the fastest convergence to an all-green market, while a production subsidy is most effective at reducing the share of brown firms and consumers in mixed-market scenarios. By bridging game-theoretic insights with agent-based computational analysis, this paper provides a dynamic and policy-relevant perspective on the transition to sustainable markets. |
| Keywords: | agent-based modelling, pollution abatement, green technology, environmental policy |
| JEL: | C63 D43 H23 L13 L51 |
| Date: | 2025–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:pie:dsedps:2025/326 |
| By: | Jihyuan Liuh |
| Abstract: | This paper investigates the emergence of wealth inequality through a minimalist kinetic exchange model that incorporates two fundamental economic features: fixed-amount transactions and hard budget constraints. In contrast to the maximum entropy principle, which predicts an exponential Boltzmann-Gibbs distribution with moderate inequality for unconstrained wealth exchange, we demonstrate that these realistic trading rules drive the system toward a highly unequal steady state. We develop a self-consistent mean-field theory, deriving a master equation where agent income follows a Poisson process coupled to the poverty rate. Numerical solution reveals a stationary distribution characterized by a substantial pauper class, high Gini coefficient, and exponential tail--significantly deviating from the maximum entropy benchmark. Agent-based simulations confirm these findings. We identify the poverty trap as the key mechanism: the liquidity constraint creates asymmetric economic agency, where zero-wealth agents become passive recipients, unable to participate in wealth circulation. This work establishes that substantial inequality can emerge spontaneously from equal-opportunity exchanges under basic economic constraints, without requiring agent heterogeneity or multiplicative advantage, providing a mechanistic foundation for understanding poverty as an emergent property of exchange rules. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.08202 |
| By: | George Wheaton (Department of Economics, New School for Social Research, USA) |
| Abstract: | Vector auto-regressive (VAR) models remain highly influential in the macroeconomic literature regarding the existence and explanation of the macroeconomic Goodwin pattern – a counter-cyclical movement in capacity utilization × labor share space. The study by Barbosa-Filho and Taylor (2006), which provided the theoretical backbone of the neo-Goodwin model, demonstrated through vector auto-regression that the theoretically required profit-led nature of demand was empirically prevalent in the Goodwin pattern in the US, and further studies follow its approach. This is often cited in the debate about whether capitalism has profit-led or wage-led demand characteristics, with implications for macroeconomic policy. In this paper, I replicate the VAR approach and extend it to recent years. Through additional econometric techniques not currently employed in the literature, I demonstrate that the supposed profit-led demand derivatives are statistically insignificant. Noting further issues with robustness, I critically analyze the use of VAR models for this purpose, suggesting that other methods need be employed in the debate between profit-led and wage-led demand regimes and the Goodwin pattern. |
| Keywords: | Goodwin pattern, business cycles, profit-led demand, wage-led demand, vector auto-regression, delta method, Fieller’s theorem |
| JEL: | E11 E12 E32 E60 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:new:wpaper:2517 |
| By: | Taeger, Matthias; Stenström, Annika; Trapp, Torben; Liu, Felicia; Golka, Philipp |
| Abstract: | This essay argues for an integrative move in the investigation of the politics of ‘green’ finance. We suggest that approaching the politics of ‘green’ finance in the form of knowledge contestations can bring out complementarities and bridge divides between different levels of analysis and theoretical traditions. Our focus is motivated by the pivotal role of knowledge and ignorance in the organisation and governance of financial markets identified in economic sociology, political economy, and neighbouring disciplines. Drawing on this scholarship, we consider knowledge both a forum for and a means of politics. We then illustrate how this conceptualisation provides insights into the politics of ‘green’ finance on different levels of analysis and following different theoretical traditions: in the context of tracing elites in their dissemination of specific ideas shaping governance regimes; when following market devices which produce partial calculative representations of the world; in problematising how financial organisations both produce and accept certain types of knowledge to further their interests; and when examining the role of ideology and imaginative capture in stabilising financial capitalism during climate crisis. We conclude by identifying the connective tissue between these different analytical and theoretical approaches made visible by the integrative concept of politics as knowledge contestations. |
| Keywords: | climate change; elites; green finance; ideology; knowledge; market devices |
| JEL: | F3 G3 |
| Date: | 2025–11–13 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129797 |
| By: | Yusuke Takahashi (Bank of Japan); Kazuki Otaka (Bank of Japan); Naoya Kato (Bank of Japan) |
| Abstract: | In this article, we present some preliminary analyses in which Large Language Models (LLMs) are used as economic agents in simulations, as an example of utilizing Generative AI in economic analysis. Existing research reports that Generative AI provides responses consistent with predictions suggested in fields like behavioral economics. There are also some studies which have applied Agent-Based Models (ABM) by treating Generative AI as "players" in a market. However, even though Generative AI exhibits behavior similar to actual economic agents, in reality, it is merely outputting statistically consistent responses based on patterns found in its training data. Therefore, whether the results of simulations that treat Generative AI as economic agents are consistent with economic theory depends crucially on the AI's training data. In this article, we conduct simple ABM simulations to demonstrate how Generative AI can be applied, and examine whether its responses are aligned with intuition and economic theory. Our results are consistent with economic theory: (1) consumers adjust their spending in response to real wage fluctuations; and (2) firms find it easier to pass costs on to consumers in a monopoly market compared to a duopoly market. We conclude that it is necessary to continue verifying through other economic analyses whether simulations using Generative AI consistently lead to conclusions congruent with economic theory. |
| Keywords: | Generative AI; Agent-Based Model; Consumer Behavior; Price Setting Behavior |
| JEL: | C63 D11 D40 |
| Date: | 2025–11–13 |
| URL: | https://d.repec.org/n?u=RePEc:boj:bojlab:lab25e01 |
| By: | Julien Kervio (CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine); Magali Dubosson (HES-SO - Haute Ecole Spécialisée de Suisse Occidentale); Christophe Schmitt (CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine) |
| Abstract: | This paper proposes a renewed understanding of sustainability for services within the framework of Society 5.0. While sustainable services have long been defined by the Triple Bottom Line approach, i.e. simultaneously addressing economic, social, and environmental dimensions, this paradigm often neglects the transformative impact of digital technologies on service ecosystems. Building on an extensive literature review, we conceptualize sustainability as a dynamic, multi-dimensional construct shaped by emerging socio-technical systems. We integrate Service-Dominant Logic (SDL) and the IHIP characteristics of services to highlight how intangibility, co-creation, and relational dynamics uniquely position services to foster sustainable value. Our analysis distinguishes between weak sustainability, which relies on technological substitution to mitigate environmental degradation, and strong sustainability, which embeds ecological limits and human well-being at the core of service design. Within Society 5.0, advanced technologies such as AI, IoT, and cyber-physical systems offer opportunities to optimize resource use, enhance social inclusion, and regenerate ecosystems. However, true sustainability requires systemic changes in values and governance, challenging growth-oriented paradigms. We develop a conceptual framework that bridges ecological economics and service research, showing how services can evolve into human-centered, technologically enabled ecosystems that harmonize economic viability, social equity, and environmental resilience. This work contributes to advancing sustainable service theory by offering an integrative, future-oriented perspective that aligns digital transformation with strong sustainability principles. |
| Abstract: | Cet article propose une nouvelle conception de la durabilité des services dans le cadre de la Société 5.0. Si les services durables ont longtemps été définis par l'approche du triple résultat, c'est-à-dire la prise en compte simultanée des dimensions économiques, sociales et environnementales, ce paradigme néglige souvent l'impact transformateur des technologies numériques sur les écosystèmes de services. Sur la base d'une analyse approfondie de la littérature, nous conceptualisons la durabilité comme une construction dynamique et multidimensionnelle façonnée par les systèmes socio-techniques émergents. Nous intégrons la logique dominante des services (SDL) et les caractéristiques IHIP des services afin de mettre en évidence la manière dont l'intangibilité, la co-création et la dynamique relationnelle positionnent de manière unique les services pour favoriser la valeur durable. Notre analyse distingue la durabilité faible, qui repose sur la substitution technologique pour atténuer la dégradation de l'environnement, et la durabilité forte, qui intègre les limites écologiques et le bien-être humain au cœur de la conception des services. Dans le cadre de la société 5.0, les technologies avancées telles que l'IA, l'IoT et les systèmes cyber-physiques offrent des possibilités d'optimiser l'utilisation des ressources, d'améliorer l'inclusion sociale et de régénérer les écosystèmes. Cependant, une véritable durabilité nécessite des changements systémiques en matière de valeurs et de gouvernance, remettant en question les paradigmes axés sur la croissance. Nous développons un cadre conceptuel qui fait le pont entre l'économie écologique et la recherche sur les services, montrant comment les services peuvent évoluer vers des écosystèmes centrés sur l'humain et rendus possibles par la technologie, qui harmonisent la viabilité économique, l'équité sociale et la résilience environnementale. Ce travail contribue à faire progresser la théorie des services durables en offrant une perspective intégrative et tournée vers l'avenir qui aligne la transformation numérique sur les principes de la durabilité forte. |
| Keywords: | degrowth, sustainable services, services, society 5.0, strong sustainability, weak sustainability, Sustainability, services durables, Décroissance, société 5.0, Services, Durabilité faible, Durabilité forte, Durabilté |
| Date: | 2025–10–29 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05346673 |
| By: | Valerio Dionisi |
| Abstract: | Complementarities in intermediate inputs trigger the even transmission of asymmetric shocks in production networks. This paper linearly captures these complementarities through shared inter-sectoral trade relationships, and makes two novel contributions to the understanding of networked economies. First, it introduces a theoretical framework that distinguishes between factor input demand and factor input supply network distances, measuring economic distance between sectors based on common upstream sellers or downstream buyers. These horizontal interdependencies determine how sector-specific shocks transmit horizontally across the network, complementing and balancing the standard vertical (Leontief inverse) mechanism. Second, using sector-level U.S. employment data, the paper provides empirical evidence that positive employment shocks in closely demand- or supply-connected sectors are attenuated, whereas larger distances generate employment comovement. Together, these two contributions reveal that the horizontal geometry of a production network plays a critical role in understanding how sectoral interactions propagate micro-originated shocks in an Input-Output economy. |
| Keywords: | Input-Output economy, production networks, network distance, horizontal transmission, sectoral comovement, tools for policy design |
| JEL: | C67 D57 E32 F16 L14 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:mib:wpaper:559 |
| By: | Kob, Julius; Taeger, Matthias; Dittrich, Katharina |
| Abstract: | The financial industry has become increasingly entangled with environmental matters of concern, constituting the phenomenon of ‘green’ finance. In this Forum, we approach green finance as financial climate governance to highlight its claim on finance’s role as legitimate and capable steward of the planet’s climate. This claim to govern and its promise to achieve desirable environmental conditions have made green finance a crucial object of investigation. However, we observe a growing fragmentation of green finance research along various fault lines, such as levels of analysis, normative positions, or academic structures. Calling for reassembling green finance scholarship, we posit a need for more integrative approaches, motivating this Forum’s central question: what integrative moves across socioeconomic research can enhance our understanding and judgement of green finance? The Forum gathers three contributions focused on: (1) integrating macro- and micro-approaches in green finance studies; (2) examining the politics of green finance as knowledge contestations; and (3) confronting stasis in green finance by exploring researchers’ agencies, emotions, and normativities. By reassembling green finance scholarship through integrative moves, we suggest marking green finance as a shared concern and fostering collective perspectives to bring clarity and constructive critique to what has become a dominant pursuit in facing the socioecological crisis. |
| Keywords: | green finance; nature and climate; transdisciplinary research; financialization; climate governance |
| JEL: | F3 G3 |
| Date: | 2025–11–17 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:130255 |
| By: | Voigt, Stefan; von Jacobi, Nadia |
| Abstract: | The crucial importance of institutions for economic and social development has become part of the conventional wisdom in economics. In recent years, economists have become particularly interested in the potential role of informal institutions but measuring them remains a serious challenge. This paper collects more than three dozen variables depicting various informal institutions, meaning institutions whose non-compliance is sanctioned by members of society, in up to 180 countries. It draws on individual and collective measures elicited through different approaches such as surveys and lab experiments, but also family types and language traits. The resulting dataset can be used in many ways. We apply correlation network analysis to showcase which variables are more adequate for which type of empirical application. |
| Keywords: | informal institutions, internal institutions, culture, conventions, social norms, customs, institutional economics, correlation network analysis, system |
| JEL: | A13 D90 K00 O10 Z10 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ilewps:89 |
| By: | David Ellerman |
| Abstract: | Neoclassical economic theory presents marginal productivity (MP) theory using the scalar notion of marginal products, and takes pains, implicitly or explicitly, to show that competitive equilibrium satisfies the supposedly ethical principle: ``To each what he and the instruments he owns produces.'' This paper shows that MP theory can also be formulated in a mathematically equivalent way using vectorial marginal products--which however conflicts with the above-mentioned ``distributive shares'' picture. Vectorial MP theory also facilitates the presentation of modern treatment of the labor theory of property which on the descriptive side is based on the fact that, contrary to the distributive shares picture, one legal party gets the production vector consisting of 100 percent of the liabilities for the used-up inputs and 100 percent of the produced outputs in a productive opportunity. On the normative side, the labor theory of property is just the application of the usual juridical norm of imputation to the question of property appropriation. Keywords: marginal productivity theory, property theory, imputation of responsibility, vectorial marginal products JEL Classification]{D2, D3, D63, P14 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.08039 |
| By: | Catherine C. Eckel (Texas A&M University); Lata Gangadharan (Monash University); Philip J. Grossman (Monash University); Miranda Lambert (Texas A&M University); Nina Xue (WU Vienna University of Economics and Business,) |
| Abstract: | Motivated by the stereotype that women are more cooperative and less competitive, we investigate how the institutional environment impacts the gender leadership gap. An experiment tests leaders’ impact on earnings under competitive (“winner take all”) versus cooperative (equal earnings distribution) incentive schemes. All leaders enhance efficiency similarly, but a gender gap emerges in the competitive context where women receive lower evaluations for identical advice. This bias disappears in the cooperative context where female leaders are evaluated 50% higher, suggesting that congruence between the environment and gender stereotypes has important policy implications. Men are more willing to lead, regardless of context. |
| Keywords: | gender, leadership, institutio |
| JEL: | C92 D91 J16 J71 M14 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:mos:moswps:2025-17 |
| By: | Lauren Benjamin Mushro |
| Abstract: | This paper examines gender stratification in the Latin American data annotation gig economy, with a particular focus on the "triple burden" shouldered by women: unpaid care responsibilities, economic precarity, and the volatility of platform-mediated labor. Data annotation, once lauded as a democratizing force within the global gig economy, has evolved into a segmented labor market characterized by low wages, limited protections, and unequal access to higher-skilled annotation tasks. Drawing on an exploratory survey of 30 Latin American data annotators, supplemented by qualitative accounts and comparative secondary literature, this study situates female annotators within broader debates in labor economics, including segmentation theory, monopsony power in platform labor, and the reserve army of labor. Findings indicate that women are disproportionately drawn into annotation due to caregiving obligations and political-economic instability in countries such as Venezuela, Colombia, and Peru. Respondents highlight low pay, irregular access to tasks, and lack of benefits as central challenges, while also expressing ambivalence about whether their work is valued relative to male counterparts. By framing annotation as both a gendered survival strategy and a critical input in the global artificial intelligence supply chain, this paper argues for the recognition of annotation as skilled labor and for regulatory interventions that address platform accountability, wage suppression, and regional inequalities. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.07652 |
| By: | Aggela Papadopoulou; Giorgos Gouzoulis |
| Abstract: | This paper examines the Black-White pay gap in the United States from 1989 to 2024 using quarterly data from the Bureau of Labor Statistics and the Federal Reserve’s Distributional Financial Accounts. Building on existing political economy research, which suggests that personal debt reduces workers’ bargaining power by making them more risk-averse in wage negotiations - particularly when job loss threatens their ability to service debt - this study argues that racial discrimination in both personal credit markets and wage negotiations disproportionately disciplines racialized social groups. Regression analysis shows that rising household debt liabilities-to-assets ratios for Black households and a higher share of white business owners have crucially contributed to the persistent wage gap between Black and White Americans. Interestingly, interacting the two coefficients shows that a higher share of white businesses slightly mitigates the effect of debt held by Black workers on the black-white earnings gap. This potentially implies that, despite discriminatory practices, white businesses might represent a relatively more stable employment option for indebted Black workers, thereby reinforcing a vicious cycle of self-perpetuating racialized economic inequality. |
| Keywords: | Racial Pay Gap; Personal Debt; Household Financialization; United States |
| JEL: | B50 J15 J31 J70 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2523 |