nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2006‒12‒09
four papers chosen by
Karl Petrick
University of the West Indies

  1. Convergence of Consumption Structure By Tomáš Cahlík; Tomáš Honzák; Jana Honzáková; Marcel Jiřina; Natálie Reichlová
  2. Three heuristics of search for a low price when initial information about the market is obsolete By Michal Skořepa
  3. The Social Assimilation of Immigrants By Domenico de Palo; Riccardo Faini; Alessandra Venturini
  4. On the other (invisible) hand ... By Anthony Brewer

  1. By: Tomáš Cahlík (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Tomáš Honzák (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Jana Honzáková (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Marcel Jiřina (Czech Technical University in Prague, Faculty of Electrical Engineering, Center of Applied Cybernetics, Prague, Czech Republic); Natálie Reichlová (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: Purpose of this paper is to analyze the convergence of the consumption structure, both at the empirical and the theoretical levels. The basic empirical result is that the consumption structure converges quite quickly. We feel that the income effect is not sufficient to explain this high speed. That is why we introduce some post-Keynesian motives of consumer behaviour. We present a model of the dynamics of consumption structure and describe different simulation experiments with this model. These experiments are based on the actual data about consumers in the Czech Republic and in Germany (in fact, we approximate by German consumers the old EU members’ consumers). The results of simulations show that the behavior of the model really leads to the convergence of the consumption structure in the Czech Republic and the old EU members, so the post-Keynesian motives of consumer behavior are among possible explanations of the empirical fact of convergence.
    Keywords: fiscal convergence; consumption; post-Keynesian theory; model; simulation
    JEL: C6 D1
    Date: 2005
  2. By: Michal Skořepa (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic; Czech National Bank, Prague, Czech Republic)
    Abstract: In traditional economics, buyer behaviour is usually modelled under the assumption of full information either on prices and their locations within the market or at least on the probability distribution of prices in the market. Neither of these assumptions seems appropriate in some cases such as when the buyer enters the specific market only very infrequently (e.g., markets for durables). This paper studies experimentally the search rules that buyers might use in this case of extreme lack of information on prices. The paper identifies three general search heuristics, derives three specific rules from the heuristics and, using data from a small-scale experiment, estimates parameters of the rules.
    Keywords: search; heuristics; aspiration level; experiment
    JEL: D12 D83
    Date: 2006–07
  3. By: Domenico de Palo (University of Rome Tor Vergata); Riccardo Faini (University of Rome Tor Vergata, CEPR and IZA Bonn); Alessandra Venturini (University of Turin, CHILD, FIERI and IZA Bonn)
    Abstract: Policy makers in migrant-receiving countries must often strike a delicate balance between economic needs, that would dictate a substantial increase in the number of foreign workers, and political and electoral imperatives, that typically result in highly restrictive immigration policies. Promoting integration of migrants into the host country would go a long way in alleviating the trade off between economic and political considerations. While there is a large literature on the economic assimilation of immigrants, somewhat less attention has been devoted to other " and equally crucial " dimensions of migrants’ integration, namely the process of social assimilation. The aim of this paper is to take a close look at migrants’ social integration into the host country. We rely on the European Community Household panel (ECHP), which devotes a full module to the role and relevance of social relations for both migrants and natives. An innovative feature of this analysis is that it relies on migrants perceptions about their integration rather than " as is typically the case in most opinion surveys " on natives attitudes toward migrants. The main results of the paper can be summarized as follows. First, migrants " particularly from non EU origins - are at a disadvantage in the fields of social relations. Even after controlling for their individual characteristics, such as age, education, family size, and employment status, they tend to socialize less than natives. Second, migrants tend to converge, albeit quite slowly, to the standard of natives. This finding highlights the risks of short term migration, where migrants tend to be constantly marginalized. Third, education has a significant impact on the type of social activities that individuals undertake. More educated people tend to relate somewhat less with their close neighbourhood, but quite intensively with the broader community. The implication for policy makers concerned about the creation of ethnic enclaves is to promote education among immigrants’ community.
    Keywords: immigration, assimilation, social relationships
    JEL: F22 J15
    Date: 2006–11
  4. By: Anthony Brewer
    Abstract: The invisible hand as it appears in the Theory of Moral Sentiments is commonly treated as an afterthought in discussions of the version in the Wealth of Nations, but it deserves attention in its own right. I will argue that there is an entirely coherent (if not entirely plausible) economic argument underpinning the invisible hand of the Theory of Moral Sentiments. It is quite different from the invisible hand argument of the Wealth of Nations, not because of any conflict but because they address different questions. The argument in the Theory of Moral Sentiments allowed Smith to maintain an ironic distance from the inequality and greed that he saw around him while arguing that it did no harm, and allowed him to resolve, at least to his own satisfaction, an age-old debate about the ethical and political consequences of luxury consumption. Some of these themes were further developed in the Wealth of Nations, but without the phrase 'invisible hand', which was switched to a different part of the argument.
    Keywords: Adam Smith, invisible hand
    JEL: B31
    Date: 2006–11

This nep-pke issue is ©2006 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.