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on Post Keynesian Economics |
| By: | Bofinger, Peter |
| Abstract: | It is often said that after the crisis economic textbooks have to be rewritten. However, as surveys show, almost all professors continue using the standard IS-LM/AS-AD model as the workhorse for undergraduate training. This paper shows that the IS-LM/AS-AD model is not only full of obvious inconsistencies, e.g. using two aggregate demand and two aggregate supply curves, it also presents the economy as an inherently stable system which is only destabilized by wage rigidities and policy shocks. Thus, it cannot explain involuntary unemployment and it pretends that deflation is a self-stabilizing mechanism if an economy is affected by a negative demand shock. This paper shows that it is relatively easy to reinterpret the basic model in a way that inconsistencies can be avoided and the inherent instability of macroeconomic processes which underlies the Keynesian paradigm can be demonstrated. It also allows a discussion of monetary policy in a more topical way than the traditional LM-curve. -- |
| Keywords: | Keynesian economics,AS/AD model,economic crisis,cyclical unemployment |
| JEL: | A10 A11 A22 E12 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wuewep:86&r=pke |
| By: | Peter Skott (University of Massachusetts Amherst) |
| Abstract: | Mainstream macroeconomics has pursued .micro founded.models based on the explicit optimization by representative agents. The result has been a long and wasteful detour. But elements of the Lucas critique are relevant, also for heterodox economists. Challenging common heterodox views on microeconomics and formalization, this paper argues that (i) economic models should not be based purely on empirically observed regularities,(ii) heterodox economists must be able to tell an integrated story about goal-oriented micro behavior in a specific macro environment, and (iii)relatively simple analytical models have an essential role to play. JEL Categories: E1; B5 |
| Keywords: | micro foundations, pluralism, old Keynesian theory, Kaleckian investment function. |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2012-04&r=pke |
| By: | Charles J. Courtemanche; Daniela Zapata |
| Abstract: | In 2006, Massachusetts passed health care reform legislation designed to achieve nearly universal coverage through a combination of insurance market reforms, mandates, and subsidies that later served as the model for national health care reform. Using individual-level data from the Behavioral Risk Factor Surveillance System, we provide evidence that health care reform in Massachusetts led to better overall self-assessed health. An assortment of robustness checks and placebo tests support a causal interpretation of the results. We also document improvements in several determinants of overall health, including physical health, mental health, functional limitations, joint disorders, body mass index, and moderate physical activity. The health effects were strongest among women, minorities, near-elderly adults, and those with incomes low enough to qualify for the law’s subsidies. Finally, we use the reform to instrument for health insurance and estimate a sizeable impact of coverage on health. The effects on coverage were strongest for men, non-black minorities, young adults, and those who qualified for the subsidies, while the effects of coverage were strongest for women, blacks, the near-elderly, and middle-to-upper income individuals. |
| JEL: | I12 I18 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17893&r=pke |
| By: | Giorgio Gobbi (Bank of Italy); Enrico Sette (Bank of Italy) |
| Abstract: | This paper sheds new light on the value of relationship lending by studying whether, after Lehman's default, banks provided a steadier flow of credit and charged lower interest rates, to those firms they established a closer relation with. By exploiting the presence of multiple banking relationships, we are able to control for firms' and banks' unobserved characteristics. Results show that credit growth has been higher if: i) the lending relation was longer; ii) the distance between the bank and the firm shorter; iii) the bank held a larger share of total credit. Similarly, banks increased the cost of credit less to firms they had a longer relation with and they were closer to. We also explore whether the eÏect of relationship lending depended upon bank or firm characteristics, or on the concentration of the local credit market. Finally, we test whether the eÏect of relationship lending changed during the crisis with respect to a pre-crisis period. |
| Keywords: | cost of credit, credit supply, financial crisis, relationship lending |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wmofir:59&r=pke |
| By: | Giovanni Dosi; Giorgio Fagiolo; Mauro Napoletano; Andrea Roventini |
| Abstract: | This work studies the interactions between income distribution and monetary and fiscal policies in terms of ensuing dynamics of macro variables (GDP growth, unemployment, etc.) on the grounds of an agent-based Keynesian model. The direct ancestor of this work is the "Keynes meeting Schumpeter" formalism presented in Dosi et al. (2010). To that model, we add a banking sector and a monetary authority setting interest rates and credit lending conditions. The model combines Keynesian mechanisms of demand generation, a "Schumpeterian" innovation-fueled process of growth and Minskian credit dynamics. The robustness of the model is checked against its capability to jointly account for a large set of empirical regularities both at the micro level and at the macro one. The model is able to catch salient features underlying the current as well as previous recessions, the impact of financial factors and the role in them of income distribution. We find that different income distribution regimes heavily affect macroeconomic performance: more unequal economies are exposed to more severe business cycles fluctuations, higher unemployment rates, and higher probability of crises. On the policy side, fiscal policies do not only dampen business cycles, reduce unemployment and the likelihood of experiencing a huge crisis. In some circumstances they also affect positively long-term growth. Further, the more income distribution is skewed toward profits, the greater the effects of fiscal policies. About monetary policy, we find a strong non-linearity in the way interest rates affect macroeconomic dynamics: in one "regime" with low rates, changes in interest rates are ineffective up to a threshold beyond which increasing the interest rate implies smaller output growth rates and larger output volatility, unemployment and likelihood of crises. |
| Keywords: | agent-based Keynesian models, multiple equilibria, fiscal and monetary policies, income distribution, transmission mechanisms, credit constraints |
| JEL: | E32 E44 E51 E52 E62 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2012-5&r=pke |