nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2006‒01‒24
five papers chosen by
Karl Petrick
Leeds Metropolitan University

  1. Social Identity Strategies in Recent Economics By John B. Davis
  2. The Political Economy of Financial Fragility By Erik Feijen; Enrico Perotti
  3. Explaining the Aggregate Price Level with Keynes’s Principle of Effective Demand By Jochen Hartwig
  4. Keynes versus the Post Keynesians on the Principle of Effective Demand By Jochen Hartwig
  5. Scientific Revolution. A Farewell to EconWPA. By Alexander Harin

  1. By: John B. Davis (Faculty of Economics and Econometrics, University of Amsterdam)
    Abstract: This paper reviews three distinct strategies in recent economics for using the concept of social identity in the explanation of individual behavior: Akerlof and Kranton’s neoclassical approach, Sen’s commitment approach, and Kirman et al.’s complexity approach. The primary focus is the multiple selves problem and the difficulties associated with failing to explain social identity and personal identity together. The argument of the paper is that too narrow a scope for reflexivity in individual decision-making renders the problem intractable, but that enlarging this scope makes it possible to explain personal and social identity together in connection with an individual behavior termed comparative value-objective evaluation. The paper concludes with recommendations for treating the individual objective function as a production function.
    Keywords: identity; personal identity; reflexivity; individual objective function
    JEL: D63 Z13
    Date: 2005–08–10
  2. By: Erik Feijen (University of Amsterdam); Enrico Perotti (University of Amsterdam, World Bank, and CEPR)
    Abstract: While financial liberalization has in general favorable effects, reforms in countries with poor regulation is often followed by financial crises. We explain this variation as the outcome of lobbying interests capturing the reform process. Even after liberalization, market investors must rely on enforcement of investor protection, which may be structured so as to block funding for new entrants, or limit their access to refinance after a shock. This forces inefficient default and exit by more leveraged entrepreneurs, protecting more established producers. As a result, lobbying may deliberately worsen financial fragility. After large external shocks, borrowers from the political elite in very corrupt countries may successfully lobby for weak enforcement, and retain control of collateral. We provide evidence that industry exit rates and profit margins after banking crises are higher in the most corrupt countries.
    Keywords: Politics; Lobbying; Financial Development; Investor protection
    JEL: G21 G28 G32
    Date: 2005–12–15
  3. By: Jochen Hartwig (Swiss Institute for Business Cycle Research (KOF), Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: The conventional wisdom about Keynes’s Principle of Effective Demand is that it states something about quantities. It is widely held that the Principle determines the levels of output and employment in a world not governed by Say’s Law. This paper argues that the Principle of Effective Demand goes beyond this to explain not only ‘real’ activity levels but also the aggregate price level. A variant of the Post Keynesian D/Z-model is brought together with Marxian reproduction schemes to derive this result.
    Keywords: Effective demand, multiplier, Post Keynesianism, D/Z-model, reproduction schemes
    JEL: B14 B22 E20 E31
    Date: 2004–11
  4. By: Jochen Hartwig (Swiss Institute for Business Cycle Research (KOF), Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: The American Post Keynesians – those who attach importance to the ‘Big P’ and the absence of a dash between ‘post’ and ‘Keynesian’ – claim to be Keynes’s most literal interpreters, or the ‘truest’ Keynesians (HOLT ET AL., 1998, p. 17). This paper compares the Post Keynesian interpretation of the Principle of Effective Demand, i.e. the D/Z-model, with Keynes’s own presentation in Chapter 3 of the General Theory – and finds substantial differences. A reinterpretation of the D/Z-model is offered that would bring it into line with Chapter 3.
    Keywords: Effective demand, D/Z-model
    JEL: B22 E12 E20 E31
    Date: 2004–06
  5. By: Alexander Harin (Modern University for the Humanities)
    Abstract: This is a paper in honor of EconWPA and of those who have supported it. The role of EconWPA in creating and developing the feasible future scientific revolution in one or more fields of economic theory is reviewed.
    Keywords: scientific revolution, scientific evolution, bank, market, industry, development, investment, risk
    JEL: C D E G C7 D81
    Date: 2005–12–31

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