nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2011‒06‒25
six papers chosen by
Karl Petrick
University of the West Indies

  1. "Effective Demand in the Recent Evolution of the US Economy" By Julio Lopez-Gallardo; Luis Reyes-Ortiz
  2. 7 Things You Need to Know About the National Debt, Deficits, and the Dollar By Dean Baker; David Rosnick
  3. Portrait of the Economist as a Young Man: Raúl Prebisch’s evolving views on the business cycle and money, 1919-1949 By Matías Vernengo
  4. Developing Societal Progress Indicators: A Practical Guide By Dennis Trewin; Jon Hall
  5. Towards a Theory of Fair Interest Rates on Microcredit By Marek Hudon; Joakim Sandberg
  6. Rethinking industrial policy By Philippe Aghion; Julian Boulanger; Elie Cohen

  1. By: Julio Lopez-Gallardo; Luis Reyes-Ortiz
    Abstract: We present strong empirical evidence favoring the role of effective demand in the US economy, in the spirit of Keynes and Kalecki. Our inference comes from a statistically well-specified VAR model constructed on a quarterly basis from 1980 to 2008. US output is our variable of interest, and it depends (in our specification) on (1) the wage share, (2) OECD GDP, (3) taxes on corporate income, (4) other budget revenues, (5) credit, and the (6) interest rate. The first variable was included in order to know whether the economy under study is wage led or profit led. The second represents demand from abroad. The third and fourth make up total government expenditure and our arguments regarding these are based on Kalecki's analysis of fiscal policy. The last two variables are analyzed in the context of Keynes's monetary economics. Our results indicate that expansionary monetary, fiscal, and income policies favor higher aggregate demand in the United States.
    Keywords: Effective Demand; Wage Shares; Monetary Policy; Fiscal Policy; Model Evaluation
    JEL: C52 E12 E25 E52 E63
    Date: 2011–06
  2. By: Dean Baker; David Rosnick
    Abstract: This paper covers seven key points about the national debt, budget and trade deficits, and the dollar that the public needs to understand in order to be well-informed and prepared to choose among various policy options.
    Keywords: national debt, budget deficit, trade deficit, dollar
    JEL: H H6 H60 H61 H62 H63
    Date: 2011–06
  3. By: Matías Vernengo
    Abstract: This paper provides a rejoinder to Colander, Holt and Rosser (2010) strategy to win friends and influence mainstream economics. It is suggested that their strategy is counter-productive, and while it might gain them friends, it will not lead to increased influence of heterodox ideas within what they term the cutting edge of the profession. It is argued that their failure to understand the nature of heterodoxy, and the reason for the eclecticism of the mainstream, associated to the rise of vulgar economics, undermines their arguments.
    Keywords: Methodology, Heterodox Economics JEL Codes: B49, B59
    Date: 2011
  4. By: Dennis Trewin; Jon Hall
    Abstract: There is a broad recognition that the development of cross-cutting, high-quality, shared, and accessible information about a society’s progress is crucial to ensure that decision-making is simultaneously responsive and responsible at all levels. There is no single correct way to manage a project to measure societal progress - different projects will have different goals, audiences and resources. However, there are certain steps which most projects should consider when planning and implementing the process. This paper presents advice and practical guidelines for anyone who is considering running a societal progress indicators project. It identifies six key steps in the process, from defining the issue and selecting collaborators, through producing and disseminating the indicators, to ensuring they are used and remain relevant.<BR>Pour mesurer le progrès des sociétés, il est largement reconnu, l’importance cruciale de développer et de rendre accessible des informations transversales et de bonne qualité, afin d’assurer une prise de décision à la fois souple et responsable à tous les niveaux. Il existe plusieurs façons de gérer un projet sur les indicateurs de mesure du progrès de la société : chaque projet a son objectif propre, son public et ses ressources. Cependant, certaines étapes lors de la planification et la mise en oeuvre du processus devraient être envisagées pour la plupart des projets. Ce document présente des conseils et des directives pratiques pour quiconque envisage la réalisation d'un projet d'indicateurs de progrès sociétal. Il couvre six étapes principales du processus ; depuis la définition du problème et la sélection des collaborateurs, à travers la production et la diffusion des indicateurs, jusqu’ à l’assurance de leurs utilisations et du maintien de leurs pertinences.
    Date: 2010–11–17
  5. By: Marek Hudon; Joakim Sandberg
    Abstract: One of the most salient ethical debates concerning microcredit pertains to the unexpectedly high rates of interest charged on microloans. Microcredit is supposed to be to the advantage of borrowers in some of the poorest regions of the world, but at the same time commercial institutions need to cover their comparably high costs. This article seeks to find a theoretical basis for a more balanced way of setting prices on microcredit; i.e. a theory of fairness in interest rates. By drawing on both contemporary debates in the industry as well as more general philosophical ideas, the article discusses four main theoretical approaches. In the end the authors favour a combination of consequentialism and liberal egalitarianism which seems able to adequately balance the needs of the institutions with the needs of the clients. However it is also acknowledged that further research in the area is needed.
    Keywords: justice; microfinance; interest rate; usury
    JEL: L31 M54 O16 Q14
    Date: 2011–06
  6. By: Philippe Aghion; Julian Boulanger; Elie Cohen
    Abstract: Industrial policy has a bad name: â??picking winnersâ?? and thus distorting competition, while exposing government to capture by vested interests. But there are reasons for a rethink. First, climate change: without government intervention to jump-start massive private investment in clean technologies, governments, by default, encourage investment in dirtier technologies. Second, a new post-crisis realism: laissez-faire complacency by many governments has led to mis-investment in the non-tradable sector at the expense of growth-rich tradables. Third, China â?? and some other emerging economies â?? are big deployers of growth-enhancing sectoral policies. The challenge for Europe is how it can design and govern sectoral policies that are competition-friendly and thus growth-enhancing.
    Date: 2011–06

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