nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2005‒08‒13
five papers chosen by
Karl Petrick
Leeds Metropolitan University

  1. Keynesian Theory and the AD-AS Framework: A Reconsideration By Amitava K. Dutt; Peter Skott
  2. Culture and Institutions: Economic Development in the Regions of Europe By Guido Tabellini
  3. What do we do in Post-industrial Society? The Nature of Work and Leisure Time in the 21st Century By Jonathan Gershuny
  4. Agent Behaviour, Financial Market and Welfare Theory By Bernard Paranque; Walter Baets; Henry Pruden
  5. Behavioral Public Economics: Welfare and Policy Analysis with Non-Standard Decision-Makers By B. Douglas Bernheim; Antonio Rangel

  1. By: Amitava K. Dutt (University of Notre Dame); Peter Skott (University of Massachusetts Amherst)
    Abstract: Contrary to what has been argued by a number of critics, the AD-AS framework is both internally consistent and in conformity with Keynes’s own analysis. Moreover, the eclectic approach to behavioral foundations allows models in this tradition to take into account aggregation problems as well as evidence from behavioral economics. Unencumbered by the straightjacket of optimizing microfoundations, the approach can provide a useful starting point for the analysis of dynamic macroeconomic interactions. In developing this analysis, the AD-AS approach can draw on insights from the Post Keynesian, neo-Marxian and structuralist traditions, as well as from the burgeoning literature on behavioral economics. JEL Categories: E12, O11, B22, B41, B50
    Keywords: AD-AS, Keynes, New Keynesian theory, microeconomic foundations
    Date: 2005–08
  2. By: Guido Tabellini
    Abstract: Does culture have a causal effect on economic development? The data on European regions suggest that it does. Culture is measured by indicators of individual values and beliefs, such as trust and respect for others, and confidence in individual self-determination. To isolate the exogenous variation in culture, I rely on two historical variables used as instruments: the literacy rate at the end of the XIXth century, and the political institutions in place over the past several centuries. The political and social history of Europe provides a rich source of variation in these two variables at a regional level. The exogenous component of culture due to history is strongly correlated with current regional economic development, after controlling for contemporaneous education, urbanization rates around 1850 and national effects. Moreover, the data do not reject the over-identifying assumption that the two historical variables used as instruments only influence regional development through culture. The indicators of culture used in this paper are also strongly correlated with economic development and with available measures of institutions in a cross-country setting.
    Keywords: culture, economic development, trust, literacy, institutions
    JEL: F10 N13 O10 P10
    Date: 2005
  3. By: Jonathan Gershuny (Institute for Social and Economic Research)
    Abstract: There are three meanings of “industrial”, the first two taking industry as a concrete noun, the third as an abstract: • “industries” as a general term for branches of economic activity or production • “industry” as a particular branch, manufacturing • “industry” as a description of an approach to the activity of work. And there are (at least) three ways in which we have now passed beyond the “industrial” phase of economic development: • The emergence of “value chains” as a new form of economic organisations: the disaggregation of industrial structure and the growing importance of human capital versus industrial capital. • Self-servicing versus service industries: understanding technical change by thinking of “systems of provision for wants”, which combine production, reproduction and consumption. • Developing Veblen’s leisure theory: industry is progressively replaced by exploit as a core characteristic of paid work. The arguments that follow rely (mostly, for the moment) on empirical evidence from time diary studies.
    Keywords: 21, family, leisure
    Date: 2005–06
  4. By: Bernard Paranque (Euromed Marseille Ecole de Management); Walter Baets (Euromed Marseille Ecole de Management); Henry Pruden (Euromed Marseille Ecole de Management)
    Abstract: An important literature has pointed out the coordination problems faced by the agents, in particular the financial one when they have to manage risk and their portfolio. If we follow Kaldor and its definition of speculation, then we could point out that in this case agents are short term oriented because they have to face to an uncertain reality: uncertainty about the behaviour of their competitors at present time and in the future, and uncertainty about the future reality which will be built by their own decision and action. Then each agent tries to anticipate the behaviour of the others, on one hand to do the same (then in average it is a way to avoid lost), on another hand to try to find an opportunity which has not been seen by the other (the way to earn money, doing what the other can’t or may not do), that means mimetic versus opportunism (or free rider behaviour). In both case, we have a kind of reproduction of habits without any collective perspective. The latent hypothesis is that individual decision produces the people satisfaction, the social welfare. We thinks there are three reasons to disagree with this hypothesis ( cancelling that it does not work in reality): a lack of specific tool allowing us to anticipate change and communicate about it; a lack of understanding “what is the common reality”; a lack of an agreement on “what and how can we do together”. That means that we need to understand that rules are not a constraint like they could be in the contract theory but more a through out line to help us to coordinate a collective action
    Keywords: Financial behaviour , holism , agent , financial market , social welfare , value maximization , stakeholder
    JEL: C61 D6 D82 E44 G14 G30
    Date: 2005–08–01
  5. By: B. Douglas Bernheim; Antonio Rangel
    Abstract: This paper has two goals. First, we discuss several emerging approaches to applied welfare analysis under non-standard ("behavioral") assumptions concerning consumer choice. This provides a foundation for Behavioral Public Economics. Second, we illustrate applications of these approaches by surveying behavioral studies of policy problems involving saving, addiction, and public goods. We argue that the literature on behavioral public economics, though in its infancy, has already fundamentally changed our understanding of public policy in each of these domains.
    JEL: D0 D1 D6 D9 H0 H1 H4
    Date: 2005–08

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