nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2007‒02‒10
seven papers chosen by
Karl Petrick
University of the West Indies

  1. The Demand for Endogenous Money: A Lesson in Institutional Change By Peter Howells
  2. Endogenous Money, Non-neutrality and Interest-sensitivity in the Theory of Long Period Unemployment By Peter Docherty
  3. A micro-meso-macro perspective on the methodology of evolutionary economics: integrating history, simulation and econometrics By Prof John Foster
  4. Power, productivity and profits By Peter Skott; Frederick Guy
  5. Power By Samuel Bowles; Herbert Gintis
  6. Behavioral Law and Economics By Christine Jolls
  7. Social Preferences and Public Economics: Are good laws a substitute for good citizens? By Samuel Bowles

  1. By: Peter Howells (School of Economics, University of the West of England)
    Keywords: Monetary Policy;
    JEL: E58
    Date: 2007–01
  2. By: Peter Docherty (School of Finance and Economics, University of Technology, Sydney)
    Abstract: This paper investigates the role played by endogenous money in models with interest-sensitive expenditures. In particular, it examines the impact of endogenous money on a baseline neoclassical model arguing against the frequently asserted claim that traditional neoclassical macroeconomics is compatible with endogenous money. It demonstrates firstly that endogenous money is a sufficient condition to render unstable a neoclassical model characterised by interest-sensitive expenditures, full employment and money neutrality. Secondly, it shows that the introduction of either money illusion on the part of workers or a Taylor rule governing monetary policy are alternative methods of stabilising models with interest-sensitive expenditures and endogenous money, though with different implications for the full employment and neutrality characteristics of the standard model. Thirdly, it raises questions about whether models which incorporate Taylor rules can be properly characterised as containing endogenous money and it provides an alternative interpretation of such models. The paper concludes by arguing that money supply endogeneity of the extreme or accommodationist type is of fundamental significance for the construction of a theory of long period unemployment but it identifies a set of remaining questions which need to be addressed in the advancement of this project.
    Keywords: endogenous money; money neutrality; unemployment; interest-sensitivity
    JEL: E40 E52 E58
    Date: 2006–05–01
  3. By: Prof John Foster (School of Economics, The University of Queensland)
    Abstract: Applied economics has long been dominated by multiple regression techniques. In this regard, econometrics has tended to have a narrower focus than, for example, psychometrics in psychology. Over the last two decades, the simulation and calibration approach to modeling has become more popular as an alternative to traditional econometric strategies. However, in contrast to the well-developed methodologies that now exist in econometrics, simulation/calibration remains exploratory and provisional, both as an explanatory and as a predictive modelling technique although clear progress has recently been made in this regard (see Brenner and Werker (2006)). In this paper, we suggest an approach that can usefully integrate both of these modelling strategies into a coherent evolutionary economic methodology.
    Date: 2007
  4. By: Peter Skott (University of Massachusetts Amherst); Frederick Guy (Birkbeck College)
    Abstract: New information and communication technologies, we argue, have been 'power-biased': in many industries they have allowed firms to monitor workers more closely, thus reducing the power of these workers. An efficiency wage model shows that 'power-biased technical change' in this sense may generate rising inequality accompanied by an increase in both unemployment and work intensity. JEL Categories: J31, O33
    Keywords: power-biased technical change, efficiency wages, inequality, work intensity.
    Date: 2007–01
  5. By: Samuel Bowles (Santa Fe Institute, University of Siena and University of Massachusetts); Herbert Gintis (Santa Fe Institute and Central European University)
    Abstract: We consider the exercise of power in competitive markets for goods, labour and credit. We offer a definition of power and show that if contracts are incomplete it may be exercised either in Pareto-improving ways or to the disadvantage of those without power. Contrasting conceptions of power including bargaining power, market power, and consumer sovereignty are considered. Because the exercise of power may alter prices and other aspects of exchanges, abstracting from power may miss essential aspects of an economy. The political aspect of private exchanges challenges conventional ideas about the appropriate roles of market and political competition in ensuring the efficiency and accountability of economic decisions. JEL Categories:
    Date: 2007–01
  6. By: Christine Jolls
    Abstract: Behavioral economics has been a growing force in many fields of applied economics, including public economics, labor economics, health economics, and law and economics. This paper describes and assesses the current state of behavioral law and economics. Law and economics had a critical (though underrecognized) early point of contact with behavioral economics through the foundational debate in both fields over the Coase theorem and the endowment effect. In law and economics today, both the endowment effect and other features of behavioral economics feature prominently and have been applied in many important legal domains. The paper concludes with reference to a new emphasis in behavioral law and economics on "debiasing through law" - using existing or proposed legal structures in an attempt to reduce people's departures from the traditional economic assumption of unbounded rationality.
    JEL: A12 B00 D30 D61 D63 D91 J70 K00 K12 K13 K41
    Date: 2007–01
  7. By: Samuel Bowles (Santa Fe Institute, University of Siena and University of Massachusetts)
    Abstract: Laws and policies designed to harness self-regarding preferences to public ends may fail when they compromise the beneficial effects of pro-social preferences. Experimental evidence indicates that incentives that appeal to self interest may reduce the salience of intrinsic motivation, reciprocity, and other civic motives. Motivational crowding in also occurs. The evidence for these processes is reviewed and a model of optimal explicit incentives is presented. JEL Categories: D64, D52, H41, H21, Z13, C92
    Keywords: Social preferences, implementation theory, incentive contracts, incomplete contracts, framing, behavioral experiments, motivational crowding out, ethical norms, constitutions
    Date: 2007–01

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