nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2010‒11‒27
four papers chosen by
Karl Petrick
University of the West Indies

  1. Post-Keynesian Theory, Direct Action and Political Involvement By G.C. Harcourt
  2. Financial Economists, Financial Interests and Dark Corners of the Meltdown: It’s Time to Set Ethical Standards for the Economics Profession By Gerald Epstein; Jessica Carrick-Hagenbarth
  3. The Financial Crisis 2007-08 and Causality: A Hicksian Perspective By Fernandez-Pol, Eduardo
  4. DARWINIAN VERSUS NEWTONIAN VIEWS OF THE ECONOMY: Empirical tests of Schumpeterian and New Classical Theories By Kenneth I. Carlaw; Richard Lipsey

  1. By: G.C. Harcourt (Jesus College, Cambridge University and School of Economics, University of New South Wales)
    Abstract: In this paper I analyse how I became an economist and at the same time a democratic socialist and a Christian. I also explained how I became politically involved after my graduate studies at Cambridge in the late 1950s and started lecturing at Adelaide. When back in Cambridge, teaching in the 1960s this time, the war in Vietnam persuaded me to support direct action through the anti-war movement in South Australia when I returned to Adelaide in 1967. The 1960s and the events of the time did influence my approach to teaching and research. More concretely, I was persuaded that ideology and analysis were indissolubly mixed and that one’s stance should always be made explicit. How this influenced what I did in my years in Adelaide, and then from 1982 back in Cambridge, along with my earlier experiences, are all described in the paper.
    Keywords: Political Economy; Political and Religious Beliefs; Ideology and Analysis; Direct Action
    JEL: A0 A1 A2 B0 B2 B3
    Date: 2010–10
  2. By: Gerald Epstein; Jessica Carrick-Hagenbarth
    Abstract: Epstein and Carrick-Hagenbarth analyze the conflict of interest that exists when academic financial economists, acting in their roles as presumed objective experts in the media and academia on topics, such as financial regulation, fail to report their private financial affiliations. The authors analyze the linkages between academia, private financial institutions and public institutions of nineteen academic financial economists who are members of two groups who have put forth proposals on financial reform.<span> </span>In addition, they review media writings and appearances, as well as the academic papers of these economists between 2005 and 2009, to determine the portion of the time these economists identified their affiliations with private or public financial institutions when writing about or commenting on financial policy issues. The vast majority of the time, these economists did not identify these affiliations and possible conflicts of interest. In light of these and related findings the authors call for an economists’ code of ethics which would require academic economists to identify these connections in appropriate contexts.
    Keywords: Professional Ethics, Financial Regulation, Academic Economists, Codes of Ethics, conflicts of interest
    JEL: A11 A13
    Date: 2010
  3. By: Fernandez-Pol, Eduardo (University of Wollongong)
    Abstract: Almost everyone agrees on two general features displayed by the recent banking crisis, namely: the crisis was stupefyingly complex and the financial system was devoured by its own creations. Beyond these points of agreement, there are many questions that will be debated by academics and policymakers for decades. One of the outstanding questions is what caused the financial crisis 2007-08. To shed light on this question, the paper compiles a list of the tentative causes of the recent financial crisis, discusses their separability and attempts an appraisal of the separable causes using the Hicksian methodology for causality analysis. Specifically, this paper identifies three major separable causes of the recent banking crisis and brings into sharp focus the far-from-trivial requirements that are necessary in order to demonstrate that a particular set of events can indeed be the preponderant causes of the severe banking crisis 2007-08.
    Keywords: Financial crisis 2007-08, causality analysis, Hicksian methodology, separable causes
    JEL: B41 G10
    Date: 2010
  4. By: Kenneth I. Carlaw (University of British Columbia); Richard Lipsey (Simon Fraser University)
    Abstract: The modern Schumpeterian vision in which history matters is of a non-stationary, evolving economy driven by bursts of technological change initiated by agents facing uncertainty and producing long term, path dependent growth and shorter term non-random investment cycles. The New Classical vision in which history does not matter is of a stationary, ergodic process driven by rational agents facing risk and producing stable trend growth and shorter term cycles caused by random disturbances. We use Carlaw and Lipsey’s forthcoming simulation model of non-stationary, sustained growth driven by endogenous path dependent technological change under uncertainty, to generate artificial national accounts data. We first use an HP-filter to match these data to the RBC stylized growth facts. We then show that the raw simulation data pass standard tests for trend and difference stationarity, appearing to exhibit unit roots and cointegrating processes of order one. Thus, contrary to current belief, these tests do not establish that the real data are generated by a stationary process. Real data from six OECD countries are then used first to show that the hypothesis of a non-varying NAIRU is rejected for all six countries and then to estimate time varying NAIRU’s for each. The estimates are highly sensitive to the time period over which they are made. They also fail to show any relation between the difference between actual unemployment and the estimated NAIRU for each year and the acceleration in the inflation rate. Thus there is no tendency for the inflation rate to behave as required by the New Classical theory.
    Keywords: non-ergodic equilibria, stionarity, real business cycles, growth theory, NAIRU, general equilibrium macroeconomics
    JEL: E2 E3 E4 N1 O3 O4
    Date: 2010–11

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