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on Post Keynesian Economics |
| By: | David Laidler (University of Western Ontario) |
| Abstract: | The usual description of Keynes's macroeconomics as relying on the postulate of money wage stickiness to explain unemployment, and advocating fiscal policy as its cure, is largely mythical. Rather he was concerned with exploring the theoretical idea that an economy co- ordinated by monetary exchange is prone to market failures that create unemployment. The origins of this idea in what Keynes called "classical" economics can be traced back at least as far as John Stuart Mill, though he himself preferred to claim the much less orthodox Malthus as his antecedent. Be that as it may, Keynes's own emphasis on income and employment variations as both the result of and the "solution" to specifically inter-temporal failures was highly original. The idea that monetary exchange might involve co-ordinatioin failures of any sort has now largely disappeared from macroeconomics, under the influence of New-classical economics. |
| Keywords: | macroeconomics; Keynesian economics; markets; money; interest rates; unemployment; multiplier |
| JEL: | B12 B22 B31 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:uwo:epuwoc:20052&r=pke |
| By: | Prof John Foster (School of Economics, The University of Queensland) |
| Abstract: | Economics is viewed as a discipline that is mainly concerned with 'simplistic' theorizing, centered upon constrained optimization. As such, it is ahistorical and outcome focused, ie, it does not deal with economic processes. It is argued that all parts of the economy are inhabited by complex adaptive systems operating in complicated historical contexts and that this should be acknowledged at the core of economic analysis. It is explained how economics changes in fundamental ways when such a perspective is adopted, even if the presumption that people will try to optimize subject to constraints is retained. This is illustrated through discussion of how the production function construct has been used to provide an abstract representation of the network structures that exist in complex adaptive systems such as firms. It is argued that this has led to a serious understatement of the importance of rule systems that govern the connections in productive networks. The macroeconomics of John Maynard Keynes is then revisited to provide an example of how some economists in earlier times were able to provide powerful economic analysis that was based on intuitions that we can now classify as belonging to complex systems perspective on the economy. Throughout the paper, the reasons why a complex systems perspective did not develop in the mainstream of economics in the 20th Century, despite the massive popularity of an economist like Keynes, are discussed and this is returned to in the concluding section where the prospect of paradigmatic change occurring in the future is evaluated. |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uq2004:336&r=pke |
| By: | Nicolai J. Foss; Peter G. Klein |
| Abstract: | Ever since its emergence in the 1970s the modern economic or Coasian theory of the firm has been discussed and challenged by sociologists, heterodox economists, management scholars, and other critics. This paper reviews and assesses these critiques, focusing on behavioral issues (bounded rationality and motivation), process (including path dependence and the selection argument), entrepreneurship, and the challenge from knowledge-based theories of the firm. |
| Keywords: | Coasian theory of the firm; Bounded rationality; Motivation; Entrepreneurship |
| JEL: | B4 D23 L14 L22 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:aal:abbswp:05-03&r=pke |
| By: | Charlot, Sylvie; Gaigné, Carl; Robert-Nicoud, Frédéric; Thisse, Jacques-François |
| Abstract: | The objective of this Paper is to apply different welfare approaches to the canonical model developed by Krugman, with the aim of comparing the only two possible market outcomes, i.e. agglomeration and dispersion. More precisely, we use the potential Pareto improvement criteria, as well as the utilitarian and Rawlsian welfare functions. No clear answer emerges for the following two reasons: (i) in general, there is indetermination when compensation schemes are used and (ii) the best outcome heavily depends on societal values regarding inequalities across individuals. However, simulations undertaken for plausible values of the main parameters suggest that there might be excessive agglomeration. |
| Keywords: | agglomeration; compensation mechanism; economic geography; welfare |
| JEL: | F12 R13 |
| Date: | 2004–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4715&r=pke |
| By: | Bertocchi, Graziella |
| Abstract: | We illustrate the ongoing research line on Growth, History, and Institutions, which adds to economic growth analysis a historical and an institutional dimension, both at the theoretical and the empirical level. We present applications of this research strategy to the impact of colonization on growth, the extension of the franchise and the welfare state, the evolution of educational systems, the relationship between industrialization and democratization, and international migration. We propose a new standard, starting from 1870, as the future reference period for theoretical and empirical research on growth. We conclude with policy implications of the Growth, History, and Institutions research line. |
| Keywords: | growth; history; institutions |
| JEL: | H00 N00 O00 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4738&r=pke |
| By: | Chong, Alberto; Gradstein, Mark |
| Abstract: | This Paper presents theory and evidence on the relationship between inequality and institutional quality. We exhibit a model in which the two dynamically reinforce each other and set to test this relationship with a broad array of institutional measures. We establish the double causality between institutional strength and a more equal distribution of income and show its robustness to different data sources that cover various time-spans and to changes in specification. |
| Keywords: | causality; governance; inequality; institutions |
| JEL: | D70 O15 O17 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4739&r=pke |
| By: | Rodrik, Dani |
| Abstract: | Unlike what is commonly believed, the last two decades have not witnessed the twilight of industrial policy. Instead, incentives and subsidies have been refocused on exports and direct foreign investment, in the belief that these activities are the source of significant positive spillovers. The challenge in most developing countries is not to rediscover industrial policy, but to redeploy it in a more effective manner. This paper lays out an institutional framework for accomplishing this objective. A central argument is that the task of industrial policy is as much about eliciting information from the private sector on significant externalities and their remedies as it is about implementing appropriate policies. The right model for industrial policy is not that of an autonomous government applying Pigovian taxes or subsidies, but of strategic collaboration between the private sector and the government with the aim of uncovering where the most significant obstacles to restructuring lie and what type of interventions are most likely to remove them. |
| Keywords: | economic growth |
| JEL: | O10 O20 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:4767&r=pke |
| By: | Robert J. Shiller (Cowles Foundation, Yale University) |
| Abstract: | Behavioral economics has played a fundamental role historically in innovation in economic institutions, even long before behavioral economics was recognized as a discipline. Examples from history, notably that of the invention of workers’ compensation, illustrate this point. Though scholarly discussion develops over decades, actual innovation tends to occur episodically, particularly at times of economic crisis. Fortunately, some of the major professional societies, the Verein für Sozialpolitik, the American Economic Association and their successors, have managed to keep a broad discourse going, involving a variety of research methods including some that may be described today as behavioral economics, thereby maintaining an environment friendly to institutional innovation. Further, the broad expansion of behavioral economics that is going on today can be expected to yield even more such important institutional innovations. |
| Keywords: | Economic innovation, Invention, Psychological economics, Institutional economics, Social insurance, Workers’ compensation, American Economic Association, Germany, Verein fur Sozialpolitik |
| JEL: | B41 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1499&r=pke |