nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2009‒02‒14
five papers chosen by
Karl Petrick
University of the West Indies

  1. Resurrecting Keynes to Stabilize the International Monetary System By Pietro Alessandrini; Michele Fratianni
  2. "After the Bust: The Outlook for Macroeconomics and Macroeconomic Policy" By Thomas I. Palley
  3. How much is enough? By Freeman, Alan
  4. "Long-Term Trends in the Levy Institute Measure of Economic Well-Being (LIMEW), United States, 1959-2004" By Edward N. Wolff; Ajit Zacharias; Thomas Masterson
  5. Political Institutions and Human Development Does Democracy Fulfill its 'Constructive' and 'Instrumental' Role? By Vollmer, Sebastian; Ziegler, Maria

  1. By: Pietro Alessandrini (Universit… Politecnica delle Marche, Department of Economics, MoFiR); Michele Fratianni (Indiana University, Kelly School of Business, Bloomington US, Univ. Plitecnica Marche - Dept of Economics, MoFiR)
    Abstract: We adapt the basic principles of the Keynes Plan and argue for the creation of a supranational bank money that would coexist along side national currencies and for the establishment of a new international clearing union (NICU). These principles remain timely because the fundamental causes of the instability of the international monetary system are as valid today as they were in the early Forties. The new international money would be created against domestic earning assets of the Fed and the ECB. The quantity of this supranational bank money would be demand driven and thus would differ from the helicopter-money Special Drawing Rights. NICU would not hold open positions in assets denominated in national currency and consequently would not bear exchange rate risk. NICU would be more than an office where to record credit and debit entries of the supranational bank money. The financial tsunami that has hit the United States in 2007-2008 provides a unique opportunity for a coordinated strategy.
    Keywords: Keynes Plan, exchange rates, external imbalances, international monetary system, key currency, supranational banl money
    JEL: E42 E52 F33 F36
    Date: 2008–10
  2. By: Thomas I. Palley
    Abstract: "Change" was the buzzword of the Obama campaign, in response to a political agenda precipitated by financial turmoil and a global economic crisis. According to Research Associate Thomas Palley, the neoliberal economic policy paradigm underlying that agenda must itself change if there is to be a successful policy response to the crisis. Mainstream economic theory remains unreformed, says Palley, and he warns of a return to failed policies if a deep crisis is averted. Since Post Keynesians accurately predicted that the U.S. economy would implode from within, there is an opportunity for Post Keynesian economics to replace neoliberalism with a more successful approach. Palley notes that there is significant disagreement among economic paradigms about how to ensure full employment and shared prosperity. A salient feature of the neoliberal economy is the disconnect between wages and productivity growth. Workers are boxed in on all sides by globalization, labor market flexibility, inflation concerns, and a belief in “small government” that has eroded economic rights and government services. Financialization, the economic foundation of neoliberalism, serves the interests of financial markets and top management. Thus, reversing the neoliberal paradigm will require a policy agenda that addresses financialization and ensures that financial markets and firms are more closely aligned with the greater public interest.
    Date: 2009–01
  3. By: Freeman, Alan
    Abstract: This article assesses the extent and nature of the stimulus that will be required to end the economic crisis that opened in 2008. It compares the present economic situation to that which opened in 1929 and studies the relation between state spending, investment, and employment.
    Keywords: Keywords: Credit Crunch; Investment; Liquidity Preference; Rate of Profit; State; Welfare State; War; Military Keynesianism
    JEL: E0 E12 E32
    Date: 2009–02–08
  4. By: Edward N. Wolff; Ajit Zacharias; Thomas Masterson
    Abstract: We use here a new measure of household economic well-being called LIMEW. LIMEW is different in scope from the official United States Census Bureau measure of gross money income (MI) in that it includes taxes, noncash transfers, public consumption, income from wealth, and household production. We analyze trends in LIMEW from 1959 to 2004, and find that median LIMEW grew by 0.7 percent per year while median MI increased by 0.6 percent per year. LIMEW grew much slower than MI from 1959 to 1982, and much faster than MI from 1982 to 2004. In 2004, measured inequality was lower in LIMEW than MI (a difference of 5.5 Gini points); similarly, the increase in inequality between 1959 and 2004 was higher in MI than LIMEW (6.2 versus 5.1 Gini points). Much of the difference in these measures can be traced to the role of net government expenditures. According to both measures, the racial gap narrowed from 1959 to 1989; it then widened somewhat from 1989 to 2004 according to LIMEW but continued to narrow according to MI. The difference in time trends can be traced mainly to the rising income from wealth of white households relative to nonwhite households. The gap in well-being between single females and married couples widened from 1959 to 1989 and then narrowed slightly between 1989 and 2004 according to LIMEW but increased rather steadily from 1959 to 2004 according to MI. The fortunes of the elderly relative to the nonelderly showed considerable improvement from 1959 to 2004 according to LIMEW, almost reaching parity in 2004. In contrast, according to MI, the relative position of the elderly was about the same in 2004 as in 1959. In this instance, the difference in time trends can be traced mainly to rising income from wealth and government transfers accruing to the elderly relative to the nonelderly.
    Date: 2009–01
  5. By: Vollmer, Sebastian (University of GAottingen); Ziegler, Maria (University of GAottingen)
    Abstract: Institutions are a major field of interest in the study of development processes. The authors contribute to this discussion concentrating our research on political institutions and their effect on the non-income dimensions of human development. First, they elaborate a theoretical argument why and under what conditions democracies compared to autocratic political systems might perform better with regards to the provision of public goods. Due to higher redistributive concerns matched to the needs of the population democracies should show a higher level of human development. In the following they analyze whether our theoretical expectations are supported by empirical facts. The authors perform a static panel analysis over the period of 1970 to 2003. The model confirms that living in a democratic system positively affects human development measured by life expectancy and literacy rates even controlling for GDP. By analyzing interaction effects they find that the performance of democracy is rather independent of the circumstances. However, democracy leads to more redistribution in favor of health provision in more unequal societies.
    Keywords: human development; democracy; political institutions; life expectancy; literacy; panel analysis
    JEL: H11 I10 I20
    Date: 2009–01–01

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