nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2008‒08‒31
eight papers chosen by
Karl Petrick
University of the West Indies

  1. Financial uncertainty and business investment By Engelbert Stockhammer; Lucas Grafl
  2. Is the Chinese Investment- and Export-Led Growth Model Sustainable? Some Rising Concerns By Arslan Razmi
  3. Theoretical and empirical shortcomings of the Kaleckian investment function By Peter Skott
  4. The Labour Theory of Value: A Marginal Analysis By Hagendorf, Klaus
  5. The Balance of Payments as a Constraint on Turkey’s Growth: 1960-2004 By Secil Pacaci Elitok; Al Campbell
  6. Colonial Heritage and Economic Development By Asoni, Andrea
  7. Creating Space for Effective Political Engagement in Development By Andrews, Matthew
  8. Reconfiguring Industrial Policy: A Framework with an Application to South Africa By Hausmann, Ricardo; Rodrik, Dani; Sabel, Charles F.

  1. By: Engelbert Stockhammer (Department of Economics, Vienna University of Economics & B.A.); Lucas Grafl (Department of Economics, Vienna University of Economics & B.A.)
    Abstract: The paper seeks to contribute to the empirical analysis of financial uncertainty and investment from a Post Keynesian perspective. The paper uses the volatility of the exchange rate, the volatility of the stock market index, and the real gold price as indicators for financial uncertainty. An increase in the volatility of a variable is a sufficient, but not a necessary condition for an increase in uncertainty (regarding this variable). The effects of changes in uncertainty on investment are investigated econometrically for the USA, the UK, the Netherlands, Germany, and France. Financial uncertainty has significant negative effects in the USA and the Netherlands.
    JEL: E12 E20 E22 E25 E61
    Date: 2008–08
  2. By: Arslan Razmi (University of Massachusetts Amherst)
    Abstract: China’s rapid growth and success in poverty reduction over the last three decades has inspired world-wide admiration. This paper uses a simple framework with a Kaleckian flavor to analyze structural developments in the Chinese economy, and to understand some of the distributional consequences. Some of the possible sources of these distributional developments are then further analyzed using a trade-theoretic approach. Other aspects of China’s investment- and export-led growth strategy are discussed along with the problems that the focused pursuit of such a strategy has raised. We conclude that China’s growth model may now have outlived its utility, both on economic and socio-political grounds. JEL Categories:
    Date: 2008–08
  3. By: Peter Skott (University of Massachusetts, Amherst)
    Abstract: The specification of the accumulation function is critical for the properties and implications of structuralist and post-Keynesian models. A large Kaleckian literat- ure assumes that investment is relatively insensitive to variations in the utilization rate of capital, and this extension of a standard short-run "Keynesian stability con- dition" to the long run has been defended by Lavoie and Dutt, among others. This paper examines the theoretical and empirical arguments for and against a Kaleckian specification. JEL Categories: E12, E32
    Keywords: Kalecki, Harrod, investment function, stability, post keynesian theory, utilization rate, excess capacity
    Date: 2008–08
  4. By: Hagendorf, Klaus
    Abstract: The difficulties of the classical and Marxian labour theory of value are overcome when labour is measured in terms of marginal labour value. Marginal labour value is the inverse of the marginal productivity of labour. Relative prices are equal to the ratio of marginal labour values. This article presents the marginal approach to the labour theory of value.
    Keywords: Exploitation; Labour Theory of Value; Marginal Analysis; Marxism;
    JEL: D0 B51 D46 D24
    Date: 2008–08–28
  5. By: Secil Pacaci Elitok; Al Campbell
    Abstract: The aim of this study is to test the existence of balance of a payments constraint on the long run economic growth of the Turkish economy. The balance of payments constrained growth (BPCG) model which was developed by Thirlwall (1979) and extended by Thirlwall and Hussain (1982) is tested over the period of 1960-2004 using OLS. Empirical findings of this paper support the BPCG model for the whole period under consideration. For the different sub-periods, there are either different essential economic relations or behaviors behind the BOP constraint.
    Keywords: Balance of payments constraint, Turkey, economic growth, international trade, elasticity, neo-liberalism
    JEL: F14 F15 F41 F43 E12
    Date: 2008
  6. By: Asoni, Andrea (Research Institute of Industrial Economics (IFN))
    Abstract: While the importance of institutions for explaining cross-country income differences is widely recognized, comparatively little is known about the origins of economic institutions. One strand of the literature emphasizes cultural differences while another points at exogenous environmental factors such as mortality and climate. Both are supported by some empirical evidence. I reconcile the two schools of institutional origins by proposing a theory of self-selection of colonists to different geographic destinations. Exogenous characteristics such as climate, mortality and factor differences determine which type of settler decides to move to a particular colony. Settler type, in turn, shapes the institutional quality of the new country. The model is used to confirm observed regularities reported by previous researchers. Furthermore, robust new evidence is presented in support of this selection process. The results suggest that any theory of colonial development that does not take selection into account will be incomplete.
    Keywords: Economic Development; Culture; Origins of Political Institutions
    JEL: N10 O11 O12 P16
    Date: 2008–08–05
  7. By: Andrews, Matthew (Harvard U)
    Abstract: Most members of the development community, and especially those in multilateral and bilateral organizations, agree that politicians are centrally important to development. Fewer agree, however, on how to ensure effective political engagement in development programs and reforms. It is questionable whether many practitioners or theoreticians even have clear ideas about what effective political engagement looks like. Terms like political will and political commitment lack clarity and operational import; it is unclear what they are and even more unclear how to foster them. This chapter attempts to shed light on why such a key issue is poorly understood and to suggest ideas for thinking about it.
    Date: 2008–03
  8. By: Hausmann, Ricardo (Harvard U); Rodrik, Dani; Sabel, Charles F. (Columbia u)
    Abstract: he main purpose of industrial policy is to speed up the process of structural change towards higher productivity activities. This paper builds on our earlier writings to present an overall design for the conduct of industrial policy in a low- to middle-income country. It is stimulated by the specific problems faced by South Africa and by our discussions with business and government officials in that country. We present specific recommendations for the South African government in the penultimate section of the paper.
    JEL: O25
    Date: 2008–06

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