nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2011‒04‒16
seven papers chosen by
Karl Petrick
University of the West Indies

  1. The Ryan Medicare Plan: Winners and Losers By Dean Baker; David Rosnick
  2. Monetary Union Stability: The Economics of the Phillips Curve: Formation of Inflation Expectations versus Incorporation of Inflation Expectations By Thomas I. Palley
  3. "It's Time to Rein In the Fed" By Scott Fullwiler; L. Randall Wray
  4. The Wage and Employment Impact of Minimum-Wage Laws in Three Cities By John Schmitt; David Rosnick
  5. Military Spending, Growth, Development and Conflict By J Paul Dunne
  6. Marx in 1869: Notebook B113, The Economist and The Money Market Review By João Antonio de Paula; Hugo E. A. da Gama Cerqueira; Alexandre Mendes Cunha; Carlos Eduardo Suprinyak; Leonardo Gomes de Deus; Eduardo da Motta e Albuquerque; Guilherme Habib Santos Curi; Marco Túlio Vieira
  7. Poverty, aspirations and wellbeing: afraid to aspire and unable to reach a better life – voices from Egypt By Solava Ibrahim

  1. By: Dean Baker; David Rosnick
    Abstract: Representative Paul Ryan's proposed 2012 budget has been lauded as a path to prosperity, with much attetion given to his overhaul of the medicare system. Using data from the CBO analysis of the Ryan plan, this issue brief demonstrates that any savings to the government under the revamped medicare system places the burden of rising healthcare costs more squarely on the shoulders of beneficiaries.
    Keywords: Medicare, Ryan budget
    JEL: E E6 E62 I I1 I18 H H5 H51 H6 H63 H68
    Date: 2011–04
  2. By: Thomas I. Palley (New America Foundation, Washington DC)
    Abstract: This paper examines the theory of the Phillips curve, focusing on the distinction between "formation" of inflation expectations and "incorporation" of inflation expectations. Phillips curve theory has largely focused on the former. Explaining the Phillips curve by reference to expectation formation keeps Phillips curve theory in the policy orbit of natural rate thinking where there is no welfare justification for higher inflation even if there is a permanent inflation - unemployment trade-off. Explaining the Phillips curve by reference to incorporation of inflation expectations breaks that orbit and provides a welfare economics rationale for Keynesian activist policies that reduce unemployment at the cost of higher inflation.
    Keywords: Phillips curve, formation of inflation expectations, incorporation of inflation expectations, backward bending Phillips curve.
    JEL: E00 E31 E52
    Date: 2011
  3. By: Scott Fullwiler; L. Randall Wray
    Abstract: Scott Fullwiler and Senior Scholar L. Randall Wray review the roles of the Federal Reserve and the Treasury in the context of quantitative easing, and find that the financial crisis has highlighted the limited oversight of Congress and the limited transparency of the Fed. And since a Fed promise is ultimately a Treasury promise that carries the full faith and credit of the US government, the question is whether the Fed should be able to commit the public purse in times of national crisis.
    Date: 2011–04
  4. By: John Schmitt; David Rosnick
    Abstract: This report analyzes the wage and employment effects of the first three city-specific minimum wages in the United States –San Francisco (2004), Santa Fe (2004), and Washington, DC (1993). We use data from a virtual census of employment in each of the three cities, surrounding suburbs, and nearby metropolitan areas, to estimate the impact of minimum-wage laws on wages and employment in fast food restaurants, food services, retail trade, and other low-wage and small establishments.
    Keywords: minimum wage, employment
    JEL: E E2 E24 E6 E64 E65 J J2 J21 J3 J31 J33 J38
    Date: 2011–03
  5. By: J Paul Dunne (University of the West of England and University of Cape Town)
    Abstract: This paper makes a contribution to the debate on the economic effects of military spending using a large cross country panel data set for 1988-2006. As well as providing a relatively up to date analysis, sub groups are created that allow the analysis to focus on groups of countries at different income levels and Sub Saharan Africa (SSA), an area which has seen a large number of damaging conflicts. Estimating the empirical growth model suggested in Dunne et al (2005) gives results that show variation across the subgroups, with the general picture of significant negative short run effect and insignificant long run effect of military burden on per capita GDP growth, not consistent across the different income groups. In addition, breaking down the SSA group into those involved in conflict and those that are not, provides some further intriguing findings that suggest the value of further work on the impact of conflict on growth.
    Keywords: Military expenditure; economic growth; conflict; development
    JEL: O11 H56
    Date: 2011–04
  6. By: João Antonio de Paula (Cedeplar-UFMG); Hugo E. A. da Gama Cerqueira (Cedeplar-UFMG); Alexandre Mendes Cunha (Cedeplar-UFMG); Carlos Eduardo Suprinyak (Cedeplar-UFMG); Leonardo Gomes de Deus (Cedeplar-UFMG); Eduardo da Motta e Albuquerque (Cedeplar-UFMG); Guilherme Habib Santos Curi (Cedeplar-UFMG); Marco Túlio Vieira (Cedeplar-UFMG)
    Abstract: This paper presents Notebook B113, one of Marx’s unpublished manuscripts, and suggests its importance for highlighting the monetary and financial issues which Marx was investigating after 1867. A combination of deciphering an index prepared by Marx and reading the 1868 editions of The Economist and The Money Market Review may help to improve the understanding of Part Five, Volume III of Capital. A preliminary investigation of Marx’s references to the crisis of 1866 in Notebook B113, and the lack of references to this same crisis in Volume III of Capital supports the conjecture of this paper.
    Keywords: Karl Marx; Friedrich Engels; MEGA
    JEL: B14 B31
    Date: 2011–04
  7. By: Solava Ibrahim
    Abstract: Poverty is usually associated with powerlessness, vulnerability and above all failure of aspirations. Poor people might not be able to achieve their capabilities, but this does not mean that they do not have aspirations they wish to fulfil. The concept of aspirations has been explored in the fields of economics, anthropology, psychology and philosophy, but not extensively in development studies. The aim of the paper is to present a conceptual framework for analysing aspirations based on the capability approach and to apply a new methodology to articulate these aspirations. Using Egypt as a case study, the voices of the poor reveal the interrelationships between failure of aspirations, which not only leads to a downward spiral, but also to an intergenerational transfer of aspirations’ failure. The paper concludes that identifying and addressing the causal relationship between poverty, aspirations and wellbeing could be the starting point for effective and more relevant development policies that help poor people to achieve their aspired but unfulfilled capabilities.
    Date: 2011

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