nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2011‒05‒30
eleven papers chosen by
Karl Petrick
University of the West Indies

  1. Where do prices come from? Sociological approaches to price formation By Beckert, Jens
  2. Imagined futures. Fictionality in economic action By Beckert, Jens
  3. Jamaica: Macroeconomic Policy, Debt and the IMF By Juan Montecino; Jake Johnson
  4. How Well Does the U.S. Government Provide Health Insurance? By Manan Roy
  5. Is Globalization Inevitable in the Marxian Paradigm? By Ramirez, Miguel D.
  6. Die Rezeption der John Maynard Keynes Manuskripte von 1904 bis 1911. Anregungen für die deutschsprachige Diskussion By Muchlinski, Elke
  7. A Fistful of Dollars: Lobbying and the Financial Crisis By Deniz Igan; Prachi Mishra; Thierry Tressel
  8. Classroom Games in Economics : A Quantitative Assessment of the `Beer Game' By McMahon, Michael
  9. Should Economists Listen to Educational Psychologists? : Some Economics of Student Motivation By Donze, Jocelyn; Gunnes, Trude
  10. From a “normal recession” to the “Great Depression”: finding the turning point in Chicago bank portfolios, 1923-1933 By Postel-Vinay, Natacha
  11. The Outlook for Financial Literacy By Annamaria Lusardi; Olivia S. Mitchell

  1. By: Beckert, Jens
    Abstract: The article provides an overview of the state of the art of sociological research on price formation. The dominant trait of the sociological approach to prices is to understand price formation not as the outcome of individual preferences but as the result of the social and political forces operating within the market field. The article proceeds from the concept of market fields and is organized around the three dominant approaches in economic sociology: the network approach, the institutional approach, and the cultural approach. -- Der Artikel gibt einen Überblick über den Forschungsstand zum Thema Preisbildung in der Soziologie. Ausgangspunkt der Betrachtung von Preisen aus soziologischer Perspektive ist, diese nicht als das Resultat individueller Präferenzen zu verstehen, sondern als Ausdruck der sozialen und politischen Kräfte in Märkten. Der Artikel orientiert sich an dem Konzept der Marktfelder und ist anhand der drei Hauptrichtungen der Wirtschaftssoziologie strukturiert: des Netzwerkansatzes, des institutionellen Ansatzes und des kulturellen Ansatzes.
    Date: 2011
  2. By: Beckert, Jens
    Abstract: Starting from the assumption that decision situations in economic contexts are characterized by fundamental uncertainty, the paper argues that the decision-making of intentionally rational actors is anchored in fictions. 'Fictionality' in economic action is the inhabitation in the mind of an imagined future state of the world and the beliefs in causal mechanisms leading to this future state. Actors are motivated in their actions by the imagined future and organize their activities based on these mental representations. Since these representations are not confined to empirical reality, fictionality is also a source of creativity in the economy. Fictionality opens up a way to an understanding of the microfoundations of the dynamics of the economy. The paper develops the notion of fictional expectations and applies it to investments, consumption and money. The last part relates the notion of fiction to calculation and social macrostructures as two other devices of decision-making and hints at the relevance of fictionality for the macrodynamics of capitalism. -- Entscheidungshandeln in wirtschaftlichen Kontexten findet unter Bedingungen fundamentaler Ungewissheit statt. Ausgehend von dieser Annahme argumentiert das Papier, dass Entscheidungen intentional rationaler Akteure in Fiktionen verankert sind. 'Fiktionalität' umfasst die Vorstellungen des zukünftigen Zustands der Welt und der kausalen Mechanismen, die zu diesem Zustand führen. Akteure werden durch diese Imaginationen der Zukunft motiviert und organisieren ihre Handlungen auf ihrer Grundlage. Da die Vorstellungen nicht an die empirische Realität gebunden sind, ist Fiktionalität auch eine Quelle der Kreativität. Fiktionalität eröffnet so einen Weg zum Verständnis der Mikrofundierung wirtschaftlicher Dynamik. Das Papier entwickelt das Konzept der fiktionalen Erwartungen und wendet es auf Investitionen, Konsum und Geld an. Im letzten Teil wird das Verhältnis von Fiktionen zur Rolle von Kalkulation und sozialen Makrostrukturen in der Entscheidungsfindung erörtert und die Relevanz von Fiktionalität für die Makrodynamik des Kapitalismus angedeutet.
    Date: 2011
  3. By: Juan Montecino; Jake Johnson
    Abstract: This paper looks at Jamaica’s recent history of indebtedness, its experience during the global economic downturn, and examines its current agreement with the International Monetary Fund (IMF). It finds that Jamaica’s economic and social progress has suffered considerably from the burden of an unsustainable debt; and that even after the debt restructuring of 2010, this burden remains unsustainable and very damaging. Pro-cyclical macroeconomic policies, implemented under the auspices of the IMF, have also damaged Jamaica’s recent and current economic prospects.
    Keywords: jamaica, imf, debt, JDX,
    Date: 2011–05
  4. By: Manan Roy (Southern Methodist University)
    Abstract: The debate over universal health insurance (HI) in the U.S., as well as the proper role of the government in the HI market, has been quite heated. Fueling this debate is the uncertainty pertaining to the benefits of HI in general, and the relative benefits of private versus public HI in particular. This uncertainty stems from non-random selection into different types of HI (private, public, or none) in combination with the absence of experimental data. Moreover, the lack of typical exclusion restrictions complicates identification of the causal effects of different HI types. Here, the aim is to assess the causal impact of private HI, relative to public HI, on the insured infant's health. To that end, this study employs the methodology proposed in Altonji et al. (2005) which trades off what can be learned in exchange for not requiring an exclusion restriction. Nonetheless, the method remains quite informative in the present context. Specifically, using data from the Early Childhood Longitudinal Survey, Birth Cohort (ECLS-B), along with several measures of infant health, the results suggest that while private HI is {\it associated}\ with improved infant health, this association disappears once selection on observables and unobservables is considered. In fact, the estimated effects of private HI are predominantly {\it negative}\ once both types of selection are admitted. Further analysis reveals that the likely beneficial effects of public HI are due to greater coverage for infants at a much lower cost.
    Keywords: Health Insurance, Children, Treatment Effects
    JEL: C21 I12 I18
    Date: 2011–05
  5. By: Ramirez, Miguel D. (Trinity College, Hartford, CT)
    Abstract: This paper examines Marx's views on globalization and its supposed inevitability, and contends that they underwent a substantial evolution and revision after the publication of the Communist Manifesto. In the case of China, a prime example of the Asiatic mode of production, Marx even doubted whether globalization (capitalism) would ever be able to accomplish its historical mission of developing the forces of production and creating the material conditions for a higher mode of production, viz., Communism. While in the Russian case, he seriously entertained the notion that it could bypass the hardships and vicissitudes of capitalism and forge its own unique path to socialism. If accepted, this interpretation represents a serious challenge to the universality and validity of Marx's materialist conception of history.
    JEL: B10 B14 B24
    Date: 2011–05
  6. By: Muchlinski, Elke
    Abstract: This paper provides textual evidence of Keynes's writing and composing on issues which are linked to philosophy, moral science and economics. As a philosopher Keynes was concerned with contemporary discussion on knowledge, probability, judgment and methods of reasoning. He participated in the Bloomsbury Group. He developed a distinct view on ethics, egoism, individual and conventional judgment, animal spirits and responsibility. He denied that expectations can be reduced to mathematical calculation. He developed ways to theorize about uncertainty, confidence and the future. The project Keynes as a philosopher is of great importance in English-and French-speaking discourses. Unfortunately it has not been received and recognized in German discourses. --
    Keywords: philosophy,ethics,theory of probability,theory of knowledge,animal spirits,Bloomsbury Group,uncertainty versus risk,economic methodology and language
    Date: 2011
  7. By: Deniz Igan; Prachi Mishra; Thierry Tressel
    Abstract: Has lobbying by financial institutions contributed to the financial crisis? This paper uses detailed information on financial institutions’ lobbying and mortgage lending activities to answer this question. We find that lobbying was associated with more risk-taking during 2000-07 and with worse outcomes in 2008. In particular, lenders lobbying more intensively on issues related to mortgage lending and securitization (i) originated mortgages with higher loan-to-income ratios, (ii) securitized a faster growing proportion of their loans, and (iii) had faster growing originations of mortgages. Moreover, delinquency rates in 2008 were higher in areas where lobbying lenders’ mortgage lending grew faster. These lenders also experienced negative abnormal stock returns during the rescue of Bear Stearns and the collapse of Lehman Brothers, but positive abnormal returns when the bailout was announced. Finally, we find a higher bailout probability for lobbying lenders. These findings suggest that lending by politically active lenders played a role in accumulation of risks and thus contributed to the financial crisis.
    JEL: G21 P16
    Date: 2011–05
  8. By: McMahon, Michael (University of Warwick)
    Abstract: Using an experiment, I compare the use of the `Beer Distribution' classroom game with the more traditional `chalk and talk' approach to teach students about inventories and the macroeconomy. My empirical results confirm and extend our understanding of the relative strengths and weaknesses of the use of classroom games : the game tends to improve interest and motivation on average, though some students dislike their use ; the game is e ective at driving home its key messages, but it may wrongly lead students to disregard other important factors ; the game is inferior where facts mastery or definitional learning is required. Rather than an endorsement or a criticism of classroom games, the conclusion is cautionary advice on how to best make use of games within an overall course. Key words: Classroom experiments and games ; motivation ; student learning outcomes JEL classification: A22 ; C90
    Date: 2011
  9. By: Donze, Jocelyn; Gunnes, Trude
    Abstract: This paper sheds light on the role of student motivation in the success of schooling. We develop a model in which a teacher engages in the management of student motivation through the choice of the classroom environment. We show that the teacher is able to motivate high-ability students, at least in the short run, by designing a competitive environment. For students with low ability, risk aversion, or when engaged in a long-term relationship, the teacher designs a classroom environment that is more focused on mastery and self-referenced standards. In doing so, the teacher helps to develop the intrinsic motivation of students and their capacity to overcome failures.
    Keywords: Education; Student Achievement; Intrinsic and Extrinsic Motivation; Effort; Goal Theory.
    JEL: I21
    Date: 2011–05–22
  10. By: Postel-Vinay, Natacha
    Abstract: This dissertation analyses the long-term behaviour of bank financial ratios from 1923 to 1933, focusing on a population of 193 Chicago state banks. These banks are divided into earlier and later failure cohorts. The main conclusion is that a turning point in banks’ vulnerability is identifiable before the first banking crises, between the end of 1928 and June 1930. A second, related conclusion is that this upsurge in vulnerability (as expressed by such variables as retained earnings and other real estate) is made even more significant when considering banks’ behaviour in the preceding decade. In almost all cases earlier failures behaved more riskily in the 1920s, which explains their earlier and higher vulnerability at the start of the depression.
    JEL: N0 F3 G3
    Date: 2011–03
  11. By: Annamaria Lusardi; Olivia S. Mitchell
    Abstract: As the world becomes more financially integrated and complex, average individuals and their families are increasingly faced with making highly sophisticated and all-too-often irreversible financial decisions. Nowhere is this more evident than with regard to retirement decision-making. Indeed, the global financial crisis suggests that poor financial decision-making can have substantial costs not only for individuals but also society at large. This paper focuses on key lessons for financial decision-making in the wake of that crisis, exploring how financial literacy can enhance peoples’ skills and abilities to make more informed economic choices.
    JEL: D91 E21
    Date: 2011–05

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