nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2011‒10‒15
eight papers chosen by
Karl Petrick
University of the West Indies

  1. Fiscal policy, eurobonds and economic recovery: some heterodox policy recipes against financial instability and sovereign debt crisis. By alberto, botta
  2. "The Measurement of Time and Income Poverty" By Ajit Zacharias
  4. Where are the poor in International Economics? By Luis Carvalho; Aurora A.C. Teixeira
  5. Cleaning the Bathwater with the Baby: The Health Co-Benefits of Carbon Pricing in Transportation By Christopher R. Knittel; Ryan Sandle
  6. A social constructivist analysis of the 2007 banking crisis: building trust and transparency through community currencies. By Breitstein, Lance; Dini, Paolo
  7. The Economic History of Banking By Richard S. Grossman
  8. Selection into Teaching: Evidence from Enseña Perú By Mariana Alfonso; Ana Santiago

  1. By: alberto, botta
    Abstract: In this paper, we propose a simple post-Keynesian model on the linkages between the financial and real side of an economy. We show how, according to the Minskyan instability hypothesis, financial variables, credit availability and asset prices in particular, may feedback each other and affect economic activity, possibly giving rise to intrinsically unstable economic processes. Through these destabilizing mechanisms, we also explain why governments intervention in the aftermath of the 2007 financial meltdown has been largely useless to restore financial tranquility and economic growth, but transformed a private debt crisis into a sovereign debt one. The paper ends up by looking at the long-run and to the interaction between long-term growth potential and public debt sustainability. We explicitly consider the Euro-zone economic context and the difficulties several EU members currently face to simultaneously support economic recovery and consolidate fiscal imbalances. We stress that: (i) financial turbulences may trigger permanent reductions in long-term growth potential and unsustainable public debt dynamics; (ii) strong institutional discontinuity such as Eurobond issuances may prove to be the only way to restore growth and ensure long-run public debt sustainability.
    Keywords: post-Keynesian models; financial instability; debt sustainability; Eurobonds
    JEL: E12 E44 H63
    Date: 2011–09
  2. By: Ajit Zacharias
    Abstract: Official poverty thresholds are based on the implicit assumption that the household with poverty-level income possesses sufficient time for household production to enable it to reproduce itself as a unit. Several authors have questioned the validity of the assumption and explored alternative methods to account for time deficits in the measurement of poverty. I critically review the alternative approaches within a unified framework to highlight the commonalities and relative merits of individual approaches. I also propose a two-dimensional, time-income poverty measure that accounts for intrahousehold disparities in the division of household labor and briefly discuss its uses in thinking about antipoverty policies.
    Keywords: Time Poverty; Household Production; Gender Disparities
    JEL: B54 I32 J16 J22
    Date: 2011–10
  3. By: Anna R. Haskins (University of Wisconsin-Madison)
    Abstract: Though sociologists have examined the consequences of mass imprisonment of African-American men on the incarcerated men, their families, and their communities, no study has considered its impact on racial disparities in educational achievement. Analyzing the Fragile Families and Child Wellbeing Study and its rich paternal incarceration data, this study asks whether children with fathers who have been in prison are less prepared for school both academically and behaviorally as a result, and whether racial disparities in imprisonment explain some of the gap in white and black children‘s educational outcomes. Using a variety of estimation strategies, I show that experiencing paternal incarceration by age 5 is associated with lower child school readiness in behavioral but not cognitive skills. While the main effect of incarceration does not vary by race, boys with incarcerated fathers in their early childhood years have substantially worse behavioral skills at school entry. Because of the negative effects of incarceration on boys‘ behavioral skills and the much higher exposure of black children to incarceration, mass incarceration facilitates the intergenerational transmission of male behavioral disadvantage, and plays a role in explaining the persistently low achievement of black boys.
    Keywords: imprisionment, families, boys, education, race, educational achievement
    JEL: D10 I39 J12 J13 I21
    Date: 2011–09
  4. By: Luis Carvalho (Faculdade de Economia, Universidade do Porto); Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto; OBEGEF)
    Abstract: Despite the fact that a very significant proportion of the human population is living with financial difficulties and other constraints typical of poverty, scientific studies in the areas of Economics and especially in International Economics that address the issue of poverty and of poor countries are very few. Using bibliometric techniques, we measured the attention paid by authors from the field of International Economics to poverty and poor countries. To this end, we sorted and analyzed all articles published in the most important journal in the field, the Journal of International Economics (JIE) over the last forty years. Evidence shows that the authors who have published articles in the JIE have mostly developed studies focused on ‘Meso (industry, region) and microeconomic policies and issues of ‘International Trade’ and ‘International Finances’, and are usually of the ‘Formal’ and ‘Formal and Empirical’ types, where the topic ‘Poverty’ is very marginal (only 13 articles published in the JIE, less than 1% of the total, address this matter in any of its dimensions). Furthermore, in the more empirical articles, no country among those included in the group ‘Less Developed Countries’ deserved particular attention. The neglect of poverty and of the poor contrasts (and is related to) with the significant weight of articles that make use of formalization (more than 80%). Despite the trend for a decrease in exclusively ‘Formal’ articles, without any applied/empirical component, the (still) excessive focus on ‘mathematical’ accuracy (i.e., formalization), and the concomitant limited capacity to deal with the (social) problems of the real world, is an effective challenge to authors in the field of international economics and, in particular, to those who publish in the JIE, which must be overcome if we do not want international economics to become a “cyborg” science.
    Keywords: International Economics; Poor Countries; Poverty; Bibliometrics
    JEL: I39 F00 C89
    Date: 2011–09
  5. By: Christopher R. Knittel; Ryan Sandle
    Abstract: Efforts to reduce greenhouse gas emissions in the US have relied on Corporate Average Fuel Economy (CAFE) Standards and Renewable Fuel Standards (RFS). Economists often argue that these policies are inefficient relative to carbon pricing because they ignore existing vehicles and do not adequately reduce the incentive to drive. This paper presents evidence that the net social costs of carbon pricing are significantly less than previous thought. The bias arises from the fact that the demand elasticity for miles travelled varies systematically with vehicle emissions; dirtier vehicles are more responsive to changes in gasoline prices. This is true for all four emissions for which we have data—nitrogen oxides, carbon monoxide, hydrocarbon, and greenhouse gases—as well as weight. This reduces the net social costs associated with carbon pricing through increasing the co-benefits. Accounting for this heterogeneity implies that the welfare losses from $1.00 gas tax, or a $110 per ton of CO2 tax, are negative over the period of 1998 to 2008 even when we ignore the climate change benefits from the tax. Co-benefits increase by over 60 percent relative to ignoring the heterogeneity that we document. In addition, accounting for this heterogeneity raises the optimal gas tax associated with local pollution, as calculated by Parry and Small (2005), by as much as 57 percent. While our empirical setting is California, we present evidence that the effects may be larger for the rest of the US.
    Date: 2011–08
  6. By: Breitstein, Lance; Dini, Paolo
    Abstract: This article examines the 2007 banking crisis from an interdisciplinary and, in particular, social constructivist perspective to identify its structural and systemic causes. After presenting and explaining a wide meta-theoretical framework that can accommodate different understandings of socio-economic action, it argues that some of the scale-invariant properties of community currency systems could usefully be applied to global finance. On this basis, it presents a concrete proposal for strengthening the democratic dimension of the banking system as a vital nexus between the real economy, government and society.
    Date: 2011–08–31
  7. By: Richard S. Grossman (Department of Economics, Wesleyan University)
    Date: 2011–06
  8. By: Mariana Alfonso; Ana Santiago
    Abstract: Having a good teacher is the most important school-related factor for student achievement, to the point of closing the gap between low and high-income students. However, the empirical literature is almost silent regarding teacher selection. This paper estimates a teacher selection model using recruitment data from Enseña Perú, a program that recruits top university graduates from all majors and places them in vulnerable schools. Our results suggest that candidates with volunteering experience and who finished their college degree in the top third of their class are significantly more likely to be selected into the program. Teacher recruitment policy that identifies these qualities, which might be related to leadership, high motivation, social commitment and deep content knowledge, could considerably improve the quality of the teaching force.
    Keywords: Education :: Teacher Education & Quality
    JEL: I20 I21
    Date: 2010–10

This nep-pke issue is ©2011 by Karl Petrick. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.