nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2007‒01‒13
four papers chosen by
Karl Petrick
University of the West Indies

  1. Is Forbearance always Bad? How can we test whether its use lessened the incidence of crises? By Charles Goodhart
  2. The Political Economy of Entrepreneurship: An Introduction By Douhan, Robin; Henrekson, Magnus
  3. Structural Change and the Kaldor Facts of Economic Growth By Reto Foellmi; Josef Zweilmueller
  4. An institutionalist’s Journey into the Years of High Theory. John M. Clark on the Accelerator, the Multiplier, and their Interaction By Luca Fiorito

  1. By: Charles Goodhart
    Date: 2006–11
  2. By: Douhan, Robin (Department of Economics); Henrekson, Magnus (Research Institute of Industrial Economics)
    Abstract: In this introductory chapter to a collective volume dealing with the political economy of entrepreneurship,* we argue, based on a suggested unifying framework, that political economy is a fruitful approach to entrepreneurship. The importance of institutions in structuring such an analysis is also emphasized. The introduction also introduces the selected articles and puts them in context. Vital functions of the capitalist economy are ascribed to the productive entrepreneur, but the selected articles also show that the social value of entrepreneurship must be evaluated as it is realized. Three facets of entrepreneurship are claimed to be of particular importance from a political economy perspective: (i) Entrepreneurship is dynamic in the sense that it adapts to the politically determined institutional framework within which it acts. Under propitious circumstances, it can be a powerful engine of growth, but it can also be channelled in unproductive and destructive directions. (ii) Entrepreneurship enters directly into the political system. The close connection to property rights constitutes a link between entrepreneurship and private versus public ownership and redistribution. Under unfavourable institutional circumstances, rent-seeking and predatory entrepreneurship, via the political system, offer greater profit opportunities than the market. (iii) A political economy approach is necessary in order to understand how the political system shapes the institutional setup. Here, it is emphasized that the distribution of political power is partly determined by economic wealth. Hence, it is relevant to broaden the analysis to the effects on wealth creation and wealth redistribution stemming from entrepreneurial activity.
    Keywords: Entrepreneurship; Industrial Policy; Innovation; Property Rights; Regulation; Self-employment
    JEL: H32 L25 L50 M13 O31 P14
    Date: 2007–01–03
  3. By: Reto Foellmi (Institute for Empirical Research in Econ University of Zurich); Josef Zweilmueller
    Abstract: The model presented in this paper reconciles two of the most important features of the long-run growth process: the massive changes in the structure of production and employment; and the Kaldor facts of economic growth. Structural change occurs because Engel-curves are non-linear. Each new good goes through Engel's consumption cycle, i.e. starts out as a luxury with a high income elasticity and ends up as a necessity with a low income elasticity. The coexistence of stagnating and expanding industries imply a changing sectoral composition and a continuous reallocation of labor across sectors. Nonetheless macroeconomic aggregates grow at a constant rate, and the real interest rate and the labor share are constant. Our model also addresses the two-way causality between economic growth and structural change. Complementarities between aggregate and sectoral growth may give rise to multiple equilibria providing a possible explanation for development failures
    Keywords: Kaldor facts, Engel-curve, structural change, structural transformation, hierarchic preferences
    JEL: O40 O11 L16
    Date: 2006–12–03
  4. By: Luca Fiorito
    Abstract: This note deals with the origins of Samuelson's multiplier-accelerator model. In clarifying the historical background of the model, we will offer a brief reconstruction of John Maurice Clark’s contributions to the ideas underlying the accelerator, the multiplier, and their interaction. We will show that 1) Clark’s theoretical contributions were quite significant, and 2) that they emerged out of the intellectual movement known as American Institutionalism
    JEL: B22 B31 B25 E20
    Date: 2006–05

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