nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2010‒10‒02
five papers chosen by
Karl Petrick
University of the West Indies

  1. Mäki on Economics Imperialism By John B. Davis
  2. A Keynes-Kalecki Model of Cyclical Growth with Agent-Based Features By Mark Setterfield; Andrew Budd
  3. Austerity is Not a Solution: Why the Deficit Hawks are Wrong By Robert Pollin
  4. The Freetown Declaration: Countercyclical Policy for Africa By John Weeks
  5. How and why does history matter for development policy ? By Woolcock, Michael; Szreter, Simon; Rao, Vijayendra

  1. By: John B. Davis (University of Amsterdam and Marquette University)
    Abstract: This paper reviews Uskali Mäki’s epistemic analysis of economics imperialism formulated in terms of the science unification ideal and the three constraints on imperialism he develops. It then examines the phenomenon of ‘reverse imperialism’ associated with the influence of other fields on economics especially since 1980, and advances a core-periphery model of the identity of economics as a field made up of a collection of different research programs. The discussion returns to Mäki’s constraints framework to re-evaluate the ‘economics’ imperialism of individual research programs, and evaluates what we learn from Mäki’s three constraints. The paper concludes with a brief comment on the deductive top-down nature of Mäki’s epistemic model, and outlines a more historical approach to the subject of disciplinary imperialism that provides an alternative concept of constraints on research program extensions in terms of the idea of ‘resistances and accommodations.’
    Keywords: economics imperialism, epistemic account, ‘reverse imperialism,’ core-periphery model of economics
    JEL: B20 B41
    Date: 2010–09
  2. By: Mark Setterfield (Department of Economics, Trinity College); Andrew Budd (Sloan School of Management, MIT)
    Abstract: Throughout his career, Malcolm Sawyer has both encouraged and contributed to the development of a Kaleckian alternative to conventional macroeconomic theory. In the spirit of this endeavour, we construct a Keynes-Kalecki model of cyclical growth with agent-based features. Our model is driven by heterogeneous firms who, confronting an environment of fundamental uncertainty, revise their “state of long run expectations” in response to recent events. Model simulations generate fluctuations in the rate of growth that are aperiodic and of variable amplitude. We also study the size distribution of firms resulting from our simulations, finding evidence of a power law distribution that we have no reason to anticipate from the basic structure of our model. Finally, we reflect on the potential advantages of combining aggregate structural modelling with some of the methods and practices of agent-based computational economics.
    Keywords: Kaleckian model, growth, cycles, agent-based computational economics
    JEL: E12 E32 E37 O41
    Date: 2010–09
  3. By: Robert Pollin
    Abstract: Wall Street hyper-speculation brought the global economy to its knees in 2008-09.<span>  </span>To prevent a 1930s-level Depression at that time, economic policymakers throughout the world enacted extraordinary measures.<span>  </span>These included large-scale fiscal stimulus programs, financed by major expansions in central government fiscal deficits.<span>  </span>In the U.S., the fiscal deficit reached 9.9 percent of GDP in 2009, and is projected at 10.3 percent of GDP in 2010.<span>  </span>But roughly 18 months after these measures were introduced, a new wave of opposition to large-scale fiscal deficits has emerged.<span>   </span><p></p> This paper reviews the arguments developed by various leading deficit hawks.<span>  </span>In<span>  </span>fact, they are not advancing one main argument or even a unified set of positions, but rather four distinct claims:<span>  </span>1)<span>  </span>Large fiscal deficits will cause high interest rates, large government debts, and inflation; 2) Even if the current deficits have not caused high interest rates and inflation, they are eroding business confidence; 3) The multiplier for fiscal stimulus policies is always close to zero and has been so with the current measures; and 4) Regardless of short-term considerations, we are courting disaster in the long run with structural deficits that the recession only worsened.<span>  </span><p></p> This paper argues that none of these deficit hawk positions stand up to scrutiny.<span>  </span>I also argue that through critiquing the four deficit-hawk positions, we can also bring greater clarity toward developing a workable recovery program.<span>  </span>This will include fiscal deficits that can stabilize state and local government budgets; maintain sufficient funds for unemployment insurance; and continue support for long-term investments in traditional infrastructure and clean energy.<span>    </span>But such fiscal policies also need to combine with credit-market measures that are capable of ‘pulling on a string’—i.e. creating strong enough incentives for both lenders and borrowers to unlock credit markets.
    JEL: E60 E62 E50
    Date: 2010
  4. By: John Weeks
    Abstract: In August 2009 the African finance ministers issued the Freetown Declaration, in which they committed their governments to “implement fiscal stimulus measures” to counter the effects of the international financial crisis on their economies.<span>  </span>This paper analyzes the feasibility of realizing this commitment. It considers the availability of policy instruments in the sub-Saharan countries for countercyclical intervention.<span>  </span>On the basis of this, the paper proposes a fiscal stimulus tailored to the conditions and constrains of the countries of the region.<span>  </span>In a majority of the countries the fiscal expansion could be financed domestically, in other countries governments would require additional external funding, and only for a few countries would a stimulus not be appropriate.
    JEL: E3 E62 O11 O55
    Date: 2010
  5. By: Woolcock, Michael; Szreter, Simon; Rao, Vijayendra
    Abstract: The consensus among scholars and policymakers that"institutions matter"for development has led inexorably to a conclusion that"history matters,"since institutions clearlyform and evolve over time. Unfortunately, however, the next logical step has not yet been taken, which is to recognize that historians (and not only economic historians) might also have useful and distinctive insights to offer. This paper endeavors to open and sustain a constructive dialogue between history -- understood as both"the past"and"the discipline"-- and development policy by (a) clarifying what the craft of historical scholarship entails, especially as it pertains to understanding causal mechanisms, contexts, and complex processes of institutional change; (b) providing examples of historical research that support, qualify, or challenge the most influential research (by economists and economic historians) in contemporary development policy; and (c) offering some general principles and specific implications that historians, on the basis of the distinctive content and method of their research, bring to development policy debates.
    Keywords: Cultural Policy,Economic Theory&Research,Population Policies,Cultural Heritage&Preservation,Development Economics&Aid Effectiveness
    Date: 2010–09–01

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