nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2005‒04‒16
nine papers chosen by
Karl Petrick
Leeds Metropolitan University

  1. "The Case for an Environmentally Sustainable Jobs Program" By Mathew Forstater
  2. "Manufacturing a Crisis: the Neocon Attack on Social Security" By L. Randall Wray
  3. "How Fragile is the U.S. Economy?" By Dimitri B. Papadimitriou; Anwar M. Shaikh; Claudio H. Dos Santos; Gennaro Zezza
  4. "The Transmission Mechanism of Monetary Policy: A Critical Review" By Greg Hannsgen
  5. "Visions and Scenarios: Heilbroner's Worldly Philosophy, Lowe's Political Economics, and the Methodology of Ecological Economics" By Mathew Forstater
  6. Path dependence, its critics and the quest for ‘historical economics’ By Paul A.David
  7. Announcement of availability: "Definition & Reality in the General Theory of Political Economy" 2nd edition 2005 By Thomas Colignatus
  8. Against Rigid Rules - Keynes's Economic Theory By Elke Muchlinski
  9. A Simplified Stock-Flow Consistent Post-Keynesian Growth Model By Claudio Dos Santos; Gennaro Zezza

  1. By: Mathew Forstater
    Abstract: The job numbers in the United States and around the globe continue to look bleak. Not only are the absolute numbers dismal, but also job growth has dragged on with no hope for a substantial change in prospects. This situation supports the view that we are facing a long-term problem that requires critical and creative problem-solving responses. Since unemployment is the major cause of poverty, many of our most pressing social problems are directly or indirectly related to joblessness. I argue that not only the quantity but also the quality of jobs is at issue.
    Date: 2005–01
  2. By: L. Randall Wray
    Abstract: For seven decades, the far right has never veered from its avowed mission to gut America’s most comprehensive, successful, and popular safety net: Social Security.While it had won a few small battles (most notably, the Greenspan Commission’s huge 1983 payroll tax hikes and two-year increase in the normal retirement age), its efforts never gained much political traction before 2000. Ironically, the Clinton administration provided some much-needed support to the conservative think tanks’ preposterous claim that Social Security faces financial Armageddon. And candidate Al Gore’s only significant campaign issue involved maintaining "lockboxes" to protect the trust fund by dedicating a portion of projected 15-year budget surpluses to the program.
    Date: 2005–02
  3. By: Dimitri B. Papadimitriou; Anwar M. Shaikh; Claudio H. Dos Santos; Gennaro Zezza
    Abstract: As we projected in a previous strategic analysis, the U.S. economy experienced growth rates higher than 4 percent in 2004. The question we want to raise in this strategic analysis is whether these rates will persist or come back down. We believe that several signs point in the latter direction. In what follows, we analyze the evidence and explore the alternatives facing the U.S. economy.
    Date: 2005–03
  4. By: Greg Hannsgen
    Abstract: Recently, many economists have credited the late-1990s economic boom in the United States for the easy money policies of the Federal Reserve. On the other hand, observers have noted that very low interest rates have had very little positive effect on the chronically weak Japanese economy. Therefore, some theory of how money affects the economy when it is endogenous would be useful. This paper pursues several such explanations, including the effects of interest rate changes on (1) investment; (2) consumer spending; (3) the exchange rate; and (4) financial markets. The theories of such authors as Kalecki, Keynes, Minsky, and J. K. Galbraith are discussed and evaluated, with an emphasis on the role of cash flow. Some of these theories turn out to be stronger than others when subjected to tests of logic and empirical evidence.
    Date: 2004–10
  5. By: Mathew Forstater
    Abstract: Ecological economics is a transdisciplinary alternative to mainstream environmental economics. Attempts have been made to outline a methodology for ecological economics and it is probably fair to say that, at this point, ecological economics takes a "pluralistic" approach. There are, however, some common methodological themes that run through the ecological economics literature. This paper argues that the works of Adolph Lowe and Robert Heilbroner can inform the development of some of those themes. Both authors were aware of the environmental challenges facing humanity from quite early on in their work, and quite ahead of time. In addition, both Lowe's <EM>Economics and Sociology</EM> (and related writings) and Heilbroner's "Worldly Philosophy" (itself influenced by this work of Lowe) recognized the endogeneity of the natural environment, the impact of human activity on the environment, and the implications of this for questions of method. Lowe and Heilbroner also became increasingly concerned with issues related to the environment over time, such that these issues became of prime importance in their frameworks. This work deals directly with ecological and environmental issues; both authors also dealt with other issues that relate to the environmental challenge, such as technological change. But it is not only their work that explicitly addresses the environment or relates to environmental challenges that is relevant to the concerns of ecological economists. Both Heilbroner's "Worldly Philosophy" and Lowe's "Political Economics" offer insights that may prove useful in developing a methodology of ecological economics. Ecological economists have taken a pluralistic approach to methodology, but the common themes in this work regarding the importance and nature of vision, analysis (including structural analysis), scenarios, implementation, the necessity of working backwards, the role for imagination, rejecting the positive/normative dichotomy, and so on, all are issues that have been elaborated in Lowe's work, and in ways that are relevant to ecological economics. The goal of the paper is actually quite modest: to make ecological economists aware of the work of the two authors, and get them interested enough to explore the possible contribution of these ideas to their methodological approach.
    Date: 2004–10
  6. By: Paul A.David (All Souls College, Oxford & Stanford University)
    Abstract: The concept of path dependence refers to a property of contingent, non- reversible dynamical processes, including a wide array of biological and social processes that can properly be described as 'evolutionary.' To dispell existing confusions in the literature, and clarify the meaning and significance of path dependence for economists, the paper formulates definitions that relate the phenomenon to the property of non-ergodicity in stochastic processes; it examines the nature of the relationship between between path dependence and 'market failure,' and discusses the meaning of 'lock-in.' Unlike tests for the presence of non-ergodicity, assessments of the economic significance of path dependence are shown to involve difficult issues of counterfactual specification, and the welfare evaluation of alternative dynamic paths rather than terminal states. The policy implications of the existence of path dependence are shown to be more subtle and, as a rule, quite different from those which have been presumed by critics of the concept. A concluding section applies the notion of 'lock-in' reflexively to the evolution of economic analysis, suggesting that resistence to historical economics is a manifestation of 'sunk cost hysteresis' in the sphere of human cognitive development.
    Keywords: path dependence, non-ergodicity, irreversibility, lock-in, counterfactual analysis
    JEL: N
    Date: 2005–02–10
  7. By: Thomas Colignatus (Thomas Cool Consultancy & Econometrics)
    Abstract: This paper gives the announcement that the 2nd edition of DRGTPE is available at Dutch University Press. The basic idea of the book is that Keynes's General Theory is generalised even further by including endogenous government in the model, so that we arrive at a truly general Political Economy. By including 'stagnation in economic policy making' in our analysis we arrive at a better understanding of the Great Depression and the Great Stagflation. The general theory also explains why it would be advisable for a democratic society to create an Economic Supreme Court as a separate constitutional power, next to the Legislative, Executive and Judicial branches. This book primarily gives theory and stylized facts, and it is primarily directed at my fellow economists. The colleagues specifically will need to learn to understand the Definition and Reality methodology before they will appreciate that my analysis is scientifically warranted. Much work remains to be done in practical research. And much work remains to be done by the other professions. It may be hoped, none the less, that the parliaments of our democratic nations investigate the issue too, so that there is more hope for improvement in the living conditions of the many victims of the current imbalance of powers.
    JEL: A00
    Date: 2005–02–25
  8. By: Elke Muchlinski (Freie Universitaet Berlin)
    Abstract: This paper provides textual evidence of Keynes´s position on monetary policy and shaping international monetary relations. One result of my contribution is that the famous dichotomy 'rules versus discretion' is of no relevance to his economic theory, because he used the term 'rules' not in the meaning of a formal brilliantly designed notion. He definitely made a distinction between non-rigidly-fixed-rules and discretion. I give an explanation why his economic theory is not compatible with principles of constructivism, empiricism and ontological realism by referring to a key term of his economic writings, i.e., discretionary decision.
    Keywords: Key words: History of Economic Thought since 1925, Methodology, Central Banking, International Monetary Arrangements and Institutions
    JEL: B22 B E58 F33
    Date: 2005–03–23
  9. By: Claudio Dos Santos (The Levy Economics Institute); Gennaro Zezza (The Levy Economics Institute & University of Cassino, Italy)
    Abstract: A Simplified Stock-Flow Consistent Post-Keynesian Growth Model Claudio H. Dos Santos* and Gennaro Zezza** Abstract: Despite being arguably the most rigorous form of structuralist/post-Keynesian macroeconomics, stock-flow consistent models are quite often complex and difficult to deal with. This paper presents a model that, despite retaining the methodological advantages of the stock-flow consistent method, is intuitive enough to be taught at an undergraduate level. Moreover, the model can easily be made more complex to shed light on a wealth of specific issues.
    Keywords: Post-Keynesian Growth, Stock-Flow Consistency, Real-Financial Interactions
    JEL: E12 E17 E44 E60
    Date: 2005–04–13

This nep-pke issue is ©2005 by Karl Petrick. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.