nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2012‒03‒21
ten papers chosen by
Karl Petrick
University of the West Indies

  1. The Relationship Between Financial Transactions Costs and Economic Growth By Dean Baker; Helene Jorgensen
  2. Technical progress and maturity in a Kaleckian model of growth with an endogenous employment rate By Taro, Abe
  3. Politics, Public Expenditure and the Evolution of Poverty in Africa 1920-2009 By Sue Bowden; Paul Mosley
  4. The African Political Business Cycle: Varieties of Experience By Paul Mosley; Blessing Chiripanhura
  5. The two faces of Janus: a postcolonial problematization of the fair trade ambivalence By Vivien Blanchet
  6. How to Spend it: The organization of public spending and aid effectivenes By Collier, Paul
  7. Governments in economic crisis: What is the 99% and why does it exist? By Punabantu, Siize
  8. Corruption and the Efficiency of Capital Investment in Developing Countries By Conor M. O’Toole; Tarp, Finn
  9. Resource curse: new evidence on the role of institutions By Sarmidi, Tamat; Siong Hook, Law; Jafari , Yaghoob
  10. A practical approach on making use of case study research in economics By Teiu, Codrin-Marius; Juravle, Daniel

  1. By: Dean Baker; Helene Jorgensen
    Abstract: The opponents of financial transactions taxes (FTTs) have argued that the imposition of such taxes will slow economic growth by raising the cost of capital. The argument is that if the cost of buying and selling stock and other financial assets is higher, then it makes it more expensive for firms to raise capital. This is true even if the initial sale is exempted from the tax, since the fact that future sales will be subject to the tax will lower the price of stocks sold in the secondary market, which would mean that even initial offerings will command a lower price. However, there are reasons for believing that offsetting factors could mean that higher transactions costs do not have a negative impact on growth and could even have a positive impact. This paper reviews some of the arguments as to why higher transactions costs may actually lead to better working financial markets. It then examines the relationship between growth and transactions costs for a limited set of countries for which transactions cost data are available. It finds that for this group of countries that is a strong positive relationship, with higher transactions costs actually being associated with higher growth.
    Keywords: taxes, speculation, transactions, economic growth
    JEL: G G1 G18 G2 G24 G28 H H2
    Date: 2012–03
  2. By: Taro, Abe
    Abstract: We develop a Kaleckian model of growth with an endogenous employment rate and investigate the features following Cassetti(2003) which has considered bargaining power of workers and firms and technical progress. We assume that both of the target wage share and the technical progress depend on the rate of change of employment rate, and they become zero in steady state. We also assume that capital accumulation is a decreasing function in employment to consider maturity which defines the present capitalism society. From the above refinements, we get results different from Cassetti(2003). An increase in the saving rate does not make the growth rate decrease, but the utilization decrease. In addition to that, an increase in the rate of labor productivity exerts a positive impact on growth.
    Keywords: Income distribution; Bargaining; Growth; Technical progress; maturity
    JEL: E25 E12 E22
    Date: 2012–01
  3. By: Sue Bowden; Paul Mosley (Department of Economics, The University of Sheffield)
    Abstract: We investigate the historical roots of poverty, with particular reference to the experience of Africa during the twentieth century. Like the recent studies by Acemoglu et al (2001, etc) we find that institutional inheritance is an important influence on current underdevelopment; but in addition, we argue that the influence of policies on institutions is highly significant, and that in Africa at least, a high representation of European settlers in land ownership and policy-making was a source of weakness, and not of strength. We argue this thesis, using mortality rates as a proxy for poverty levels, with reference to two settler colonies – Zimbabwe and Kenya – and two peasant export colonies – Uganda and Ghana. Our findings suggest that in Africa, settler-type political systems tended to produce highly unequal income distributions and, as a consequence, patterns of public expenditure and investment in human and infrastructural capital which were strongly biased against smallholder agriculture and thence against poverty reduction, whereas peasant-export type political systems produced more equal income distributions whose policy structures and, consequently, production functions were less biased against the poor. As a consequence, liberalisation during the 1980s and 90s produced asymmetric results, with poverty falling sharply in the ‘peasant export’ and rising in settler economies. These contrasts in the evolution of poverty in the late twentieth and early twenty-first centuries, we argue, can only be understood by reference to differences between the settler and peasant export economies whose roots lie in political decisions taken a hundred years previously.
    Keywords: Africa, economic history, settler economies, peasant export economies
    JEL: O10 N0
    Date: 2012–01
  4. By: Paul Mosley (Department of Economics, The University of Sheffield); Blessing Chiripanhura
    Abstract: We seek to understand both the incidence and the impact of the African political business cycle in the light of a literature which has argued that, with major extensions of democracy since the 1990s, the cycle has both become more intense and has made African political systems more fragile. With the help of country-case studies, we argue, first, that the African political business cycle is not homogeneous, and is rarely encountered in so-called ‘dominant-party systems’ where a pre-election stimulus confers little political advantage. Secondly, we show that, in those countries where a political cycle does occur, it does not necessarily cause institutional damage. Whether it does or not depends not so much on whether there is an electoral cycle as on whether this calms or exacerbates fears of an unjust allocation of resources. In other words, the composition of the pre-election stimulus, in terms of its allocation between different categories of voter, is as important as its size.
    Keywords: business cycles, public expenditure, politics, Africa
    JEL: O10 H50
    Date: 2012–01
  5. By: Vivien Blanchet (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris IX - Paris Dauphine)
    Abstract: This article studies the ambivalence of the relation between fair trade and colonization, through a postcolonial reading inspired by the Homi Bhabha's work. I show FT is both a rupture and a perpetuation of the international order it criticises. In this respect, fair trade is redefined as a third-space which generates innumerable cultural encounters between the colonizer and the colonized. These encounters are understood as a colonial process. Analytically, it can be broken down into three stages. (i) Northern fair trade actors produce an Other: "the small producer". (ii) Then, they incite him to mimic Northern canons. (iii) Finally, mimicry implies hybridity. Each stage is ambivalent: this colonial process generates both domination and resistance. I use the Roman god Janus as a metaphor to capture this ambivalence. He is the god of gates and bridges. He is represented with two faces: one is turned to look at past and east, the other is turned to look at future and west. Thus, Janus symbolizes the interface between two contradictory worlds. This article aims to make three contributions. First, it breaks with the essentialist and binary view of fair trade which divides actors into geographical categories (North vs. South). Second, it makes the criticism addressed to globalization more reflexive. In this respect, this paper also highlights the postcoloniality of corporate social responsibility and sustainable development. Third, it points out the complicity of management in the colonial process.
    Keywords: Postcolonial ; Commerce équitable ; ambivalence ; mimétisme ; altérité ; hybridité ; responsabilité sociale de l'entreprise
    Date: 2011–07–06
  6. By: Collier, Paul
    Abstract: As aid diminishes in importance, donors need a capacity that enables governments to improve the quality of their public spending. In this study I suggest three such organizational innovations: independent ratings of spending systems, Independent Public Service Agencies, and Sovereign Development Funds. These constitute a new donor instrument of influencing the modalities of public spending, alongside the volume of aid. With an additional instrument donors can escape the dilemma of having more objectives than instruments. How aid is spent may become more important than how much of it is spent.
    Keywords: aid, public expenditure
    Date: 2012
  7. By: Punabantu, Siize
    Abstract: What is the 99% and why does it exist? In this paper an attempt is made to explain why socio-economic unrest remains a modern problem. An effort has to be made to understand the origins of strife in systemic design of modern economics. Without this knowledge it may not be possible to fix the very fundamental problems that lead to a broken society.
    Keywords: Scarcity; banking; credit creation; banks; resource creation; implosion; poverty; wealth; money; price; mark-up; cost plus pricing; rationality; operating level economics; economic growth; paradox
    JEL: A22 A23 A13 F02 A10 A11
    Date: 2012–03–12
  8. By: Conor M. O’Toole; Tarp, Finn
    Abstract: This paper considers the effect of corruption on the effciency of capital investment. Using firm-level level data from the World Bank enterprise surveys, covering 90 developing and transition economies, we consider whether the cost of informal bribe payments distorts the efficient allocation of capital by reducing the marginal return per unit investment. Using country estimates of fractionalization and legal origin as instruments, and controlling for censoring, we find that bribery decreases investment efficiency, as measured using both absolute and relative metrics of investment returns. The negative effect is strongest for domestic small and medium-sized enterprises while there is no significant effect on foreign and large domestic firms. We conclude that reducing the level and incidence of bribery by public officials would facilitate a more efficient allocation of capital. This in turn would support economic growth and development, particularly for small and medium-sized enterprises.
    Keywords: corruption, efficiency, rent-seeking, capital investmen
    Date: 2012
  9. By: Sarmidi, Tamat; Siong Hook, Law; Jafari , Yaghoob
    Abstract: This paper attempts to provide a probable answer to a longstanding resource curse puzzle; i.e., why resource-rich nations grow at a slower rate compared to less fortunate ones. Using an innovative threshold estimation technique, the empirical results reveal that there is a threshold effect in the natural resources – economic growth relationship. We find that the impact of natural resources is meaningful to economic growth only after a certain threshold point of institutional quality has been attained. The results also shed light on the fact that the nations that have low institutional quality depend heavily on natural resources while countries with high quality institutions are relatively less dependent on natural resources to generate growth.
    Keywords: Economic development; Natural resource curse; Institutions
    JEL: O11 Q32 O13
    Date: 2012–02
  10. By: Teiu, Codrin-Marius; Juravle, Daniel
    Abstract: This paper is assessing the intake that case study as a research strategy drives forward research in economics area. Development in research in economics field in the last decade together with the growth of information and communication technologies led to an internationalization of education. The first section of the paper defines and compares different types of case study research with other research strategies. The next two sections of the paper are of applicative nature: one of them explains how to build a case study research holistic design that can be used for researching on the dynamics of population migration phenomenon and the other explains how a case study embedded design is used to build a framework guiding decision making on software procurement.
    Keywords: research strategies; case study types; holistic design; embedded design; global learning
    JEL: B41
    Date: 2011–11–18

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