nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2011‒11‒14
nine papers chosen by
Karl Petrick
University of the West Indies

  1. The Wrong Type of Pluralism: Toward a Transdisciplinary Social Science By Dave Colander
  2. "Orthodox versus Heterodox (Minskyan) Perspectives of Financial Crises: Explosion in the 1990s versus Implosion in the 2000s" By Jesus Munoz
  3. A Race to the Bottom in Labour Standards? An Empirical Investigation By Ronald B Davies; Krishna Chaitanya Vadlamannati
  4. What has really happened to poverty and inequality during the growth process in developing countries? By Nomaan Majid
  5. From growth to green growth -- a framework By Hallegatte, Stephane; Heal, Geoffrey; Fay, Marianne; Treguer, David
  6. Capitalism at War By Harrison, Mark
  7. The Global Economic Crisis: Long-Term Unemployment in the OECD By Junankar, Pramod N. (Raja)
  8. The inequality trap A comparative analysis of social spending between 1880 and 1933 By Sergio Espuelas
  9. Knowledge is power: a theory of information, income, and welfare spending By Jo Thori Lind; Dominic Rohner

  1. By: Dave Colander
    Abstract: When heterodox economists talk of pluralism they generally are talking about pluralism within the economics professionÑthey are asking: how can we have a more pluralistic economics profession? This paper argues that another, perhaps more useful, way to think of pluralism and economics is from the perspective of all the social sciences. When looked in reference to the social science profession rather than in reference to the economics profession, the amount of pluralism increases significantly, since different social sciences follow quite different methodologies. But looking at pluralism from the social science perspective reveals a different type of pluralism problem in social science. While there may be plenty of pluralism within social science as a whole, there is a serious question about whether it is appropriately distributed. This paper argues that heterodox economistÕs agenda should be a greater blending of all the social science departments. It summarizes proposals to do so on both the undergraduate level and graduate level, and explains why supporting variations of these proposals would be a strategy that would further the objectives of most heterodox economists more so than would their current strategy of pushing for more pluralism in economics.
    Keywords: Pluralism; heterodox; social science; epistemic game theory
    JEL: A2 B4 B5
    Date: 2011–11
  2. By: Jesus Munoz
    Abstract: Orthodox and heterodox theories of financial crises are hereby compared from a theoretical viewpoint, with emphasis on their genesis. The former view (represented by the fourth-generation models of Paul Krugman) reflects the neoclassical vision whereby turbulence is an exception; the latter insight (represented by the theories of Hyman P. Minsky) validates and extends John Maynard Keynes's vision, since it is related to a modern financial world. The result of this theoretical exercise is that Minsky's vision represents a superior explanation of financial crises and current events in financial systems because it considers the causes of financial crises as endogenous to the system. Crucial facts in relevant financial crises are mentioned in section 1, as an introduction; the orthodox models of financial crises are described in section 2; the heterodox models of financial crises are outlined in section 3; the main similarities and differences between orthodox and heterodox models of financial crises are identified in section 4; and conclusions based on the information provided by the previous section are outlined in section 5. References are listed at the end of the paper.
    Keywords: John Maynard Keynes; Hyman P. Minsky; Paul Krugman; Financial Crises; Financial Fragility; Asset Bubbles; Speculation
    JEL: B00 B20 B30 B50 E0 E12 E13 E60 F0 F3 F4
    Date: 2011–11
  3. By: Ronald B Davies (University College Dublin); Krishna Chaitanya Vadlamannati (University of Heidelberg)
    Abstract: Among the many concerns over globalization is that as nations compete for mobile firms, they will relax labour standards as a method of lowering costs and attracting investment. Using spatial estimation on panel data for 148 developing countries over 18 years, we find that the labour standards in one country are positively correlated with the labour standards elsewhere (i.e. a cut in labour standards in other countries reduces labour standards in the country in question). This interdependence is more evident in labour practices (i.e. enforcement) than in labour laws. Further, competition is most fierce in those countries with already low standards.
    Keywords: Labour Standards, Competition for FDI, Spatial Econometrics
    Date: 2011–11–02
  4. By: Nomaan Majid (International Labour Office, Economic and Labour Market Analysis Department)
    Keywords: poverty / income distribution / poverty alleviation /economic growth / globalization / developing countries
    Date: 2011
  5. By: Hallegatte, Stephane; Heal, Geoffrey; Fay, Marianne; Treguer, David
    Abstract: Green growth is about making growth processes resource-efficient, cleaner and more resilient without necessarily slowing them. This paper aims at clarifying these concepts in an analytical framework and at proposing foundations for green growth. The green growth approach proposed here is based on (1) focusing on what needs to happen over the next 5-10 years before the world gets locked into patterns that would be prohibitively expensive and complex to modify and (2) reconciling the short and the long term, by offsetting short-term costs and maximizing synergies and economic co-benefits. This, in turn, increases the social and political acceptability of environmental policies. This framework identifies channels through which green policies can potentially contribute to economic growth. However, only detailed country- and context-specific analyses for each of these channels could reach firm conclusion regarding their actual impact on growth. Finally, the paper discusses the policies that can be implemented to capture these co-benefits and environmental benefits. Since green growth policies pursue a variety of goals, they are best served by a combination of instruments: price-based policies are important but are only one component in a policy tool-box that can also include norms and regulation, public production and direct investment, information creation and dissemination, education and moral suasion, or industrial and innovation policies.
    Keywords: Environmental Economics&Policies,Climate Change Economics,Economic Theory&Research,Transport Economics Policy&Planning,Energy Production and Transportation
    Date: 2011–11–01
  6. By: Harrison, Mark (University of Warwick)
    Abstract: The nineteenth century witnessed the triumph of capitalism; the twentieth century saw the bloodiest wars in history. Is there a connection? The paper reviews the literature and evidence. It considers first whether capitalism has lowered the cost of war; then, whether capitalism has shown a preference for war. Both questions are considered comparatively. Neither question receives a clear cut answer, but to simplify: Yes; No.
    Keywords: Capitalism; Corporate Political Action; Keynesianism; Public Finance; State Capacity; Trade; War.
    Date: 2011
  7. By: Junankar, Pramod N. (Raja) (University of New South Wales)
    Abstract: This paper analyses the impact of the global economic crisis on unemployment and long term unemployment in the OECD. It uses simple econometric models using panel data (quarterly) and time series data. In general, we find that long term unemployment increases with the unemployment rate, there is persistence in long term unemployment, and that the employment protection variable and the replacement rate are statistically insignificant. Overall, the findings of our research are that there are many differences between the impact of the Great Recession on different countries. Countries that faced a significant financial crisis and a collapse of the housing market bubble have had large increases in unemployment and long term unemployment. There was a big fall in employment in the (especially) construction and manufacturing industries. The financial collapse led to an increase in unemployment in the financial and business sector. As a result of these twin shocks labour mobility of the unemployed is likely to be affected: with negative equity in housing, unemployed workers are unlikely to move regionally. With a loss of wealth (in housing and financial assets, including superannuation) there will be a fall in consumer spending which will slow down the recovery of economies. This means that, especially for some countries, there will be a long period of high unemployment and long term unemployment.
    Keywords: long-term unemployment, global crisis, labour market policies, OECD
    JEL: E24 J60 J68 J69
    Date: 2011–10
  8. By: Sergio Espuelas (Universitat de Barcelona)
    Abstract: Using two alternative indicators of redistribution -social transfers and social spending- over the time-period 1880-1933 and using two alternative proxies for inequality -the percentage of non-family farms and the top income shares-, this paper shows that, contrary to what many studies on the origins of the welfare state appear to implicitly suggest, inequality did not favour the development of social policy even in its early stages. Since social policy developed more easily in countries that were previously more egalitarian, it seems that unequal societies were in a sort of inequality trap, where inequality itself was an obstacle to redistribution.
    Keywords: comparative economic history, inequality, social policy, redistribution
    JEL: N30 H50 D63
    Date: 2011
  9. By: Jo Thori Lind; Dominic Rohner
    Abstract: No voters cast their votes based on perfect information, but better educated and richer voters are on average better informed than others. We develop a model where the voting mistakes resulting from low political knowledge reduce the weight of poor voters, and cause parties to choose political platforms that are better aligned with the preferences of rich voters. In US election survey data, we find that income is more important in affecting voting behavior for more informed voters than for less informed voters, as predicted by the model. Further, in a panel of US states we find that when there is a strong correlation between income and political information, Congress representatives vote more conservatively, which is also in line with our theory.
    Keywords: Redistribution, welfare spending, information, income, voting, political economics
    JEL: D31 D72 D82 H53
    Date: 2011–10

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.