nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2012‒04‒23
six papers chosen by
Karl Petrick
University of the West Indies

  1. "Fiddling in Euroland as the Global Meltdown Nears" By James Felkerson
  2. Employement theory in the History of Economic thought: an overview By Antonella Stirati
  3. Evaluating Robert Frank’s ‘Economic Naturalist’ Writing Assignment By Wayne Geerling
  4. The World our Grandchildren Will Inherit: The Rights Revolution and Beyond By Daron Acemoglu
  5. Globalization, Institutions, and the Ethnic Divide: Recent Longitudinal Evidence By Wunnava, Phanindra V.; Mitra, Aniruddha; Prasch, Robert E.
  6. "Stage Theory of Capitalist Development and Principles of Political Economy" (in Japanese) By Michiaki Obata

  1. By: James Felkerson
    Abstract: The extraordinary scope and magnitude of the financial crisis of 2007–09 required an extraordinary response by the Federal Reserve in the fulfillment of its lender-of-last-resort (LOLR) function. In an attempt to stabilize financial markets during the worst financial crisis since the Great Crash of 1929, the Fed engaged in loans, guarantees, and outright purchases of financial assets that were not only unprecedented, but cumulatively amounted to over twice current US GDP as well. the purpose of this brief is to provide a descriptive account of the Fed's response to the recent crisis-to delineate the essential characteristics and logistical specifics of the veritable "alphabet soup" of LOLR machinery rolled out to save the world financial system. It represents the most comprehensive investigation of the raw data to date, one that draws on three discrete measures: the peak outstanding commitment at a given point in time; the total peak flow of commitments (loans plus asset purchases), which helps identify periods of maximum financial system distress; and, finally, the total amouunt of loans and asset purchases made between January 2007 and March 2012. This third number, which is a cumulative measure, reveals that the total Fed response exceeded $29 trillion. Providing this account from such varying angles is a necessary first step in any attempt to fully understand the actions of the central bank in this critical period—and a prerequisite for thinking about how to shape policy for future crises.
    Date: 2012–04
  2. By: Antonella Stirati
    Abstract: The theory of employment is clearly a central question in economic thought. Economists of all traditions and schools have always admitted short run fluctuations in aggregate employment levels associated with the business cycle and explained them with a variety of factors. Yet the central question is, of course, fluctuations around which long run level of employment? Focussing mainly on long run aspects of employment theory, this paper aims at providing an overview of different theoretical approaches that have been prominent in various phases in the history of economics up to the present. It necessarily summarizes and, hence, simplifies approaches and debates, but may be useful in suggesting that textbook accounts of past authors (including Keynes) and approaches may be wrong, or at least very controversial. It may thus stimulate a renewed interest in past authors and suggest the possibility of a different angle in reading past and present controversies.
    Keywords: Employment theory; History of Economics, Say’s law; schools of thought in macroeconomics
    JEL: B00 E00 E24 J01
    Date: 2012–04
  3. By: Wayne Geerling (School of Economics, La Trobe University)
    Abstract: This paper begins by asking a fundamental question: why do students who take Economics at an introductory level often leave the subject without understanding even the most basic economic principles? The superficial answer seems to be that courses try to cover too many concepts at the expense of mastering the important threshold concepts. Another issue is the way Economics is taught and assessed. I will evaluate an alternative pedagogical device pioneered by Robert Frank: ‘The Economic Naturalist Writing Assignment’, in which students are asked to pose an interesting question about some pattern of events or behaviour they have personally observed (a real life event) and to use basic economic principles to solve the question in no more than 500 words. In addition to being a useful means for teaching economics at an undergraduate level, this writing assignment has practical benefits for teaching economics through real world examples and/or to students who are non-specialists. I will conclude with a series of questions (and answers) posed by students when I piloted this writing assignment in a new subject of mine in 2010.
    Keywords: economic education, multimedia, student engagement, Robert Frank, everyday economics, pedagogy
    JEL: A22
    Date: 2011–03
  4. By: Daron Acemoglu
    Abstract: Following on Keynes’s Economic Possibilities for Our Grandchildren, this paper develops conjectures about the world we will leave to our grandchildren. It starts by outlining the 10 most important trends that have defined our economic, social, and political lives over the last 100 years. It then provides a framework for interpreting these trends, emphasizing the role of the expansion of political and civil rights and institutional changes in this process. It then uses this framework for extrapolating these 10 trends into the next 100 years.
    JEL: O10 O30 P16 P17
    Date: 2012–04
  5. By: Wunnava, Phanindra V. (Middlebury College); Mitra, Aniruddha (Middlebury College); Prasch, Robert E. (Middlebury College)
    Abstract: This paper investigates the determinants of economic growth emphasizing the role of institutional quality, social fragmentation, and increasing global integration on recent growth experience. Our longitudinal data consists of 103 countries covering the period 1992-2005. We find that democracies have significantly outperformed autocracies over the sample period and the security of property rights has played a critical role in promoting economic growth. Ethnic heterogeneity has been a significant impediment to growth but religious and linguistic heterogeneity have not. Further, while economic globalization has had a general beneficial impact on economic growth, societies marked by greater ethnic heterogeneity have actually gained more from global integration. This suggests the importance of globalization in redressing the detrimental impact of ethnic cleavages in society (Hegre et al, 2003; Bhagwati, 2004; Mousseau and Mousseau, 2008; Dreher et al, 2008).
    Keywords: ethnic heterogeneity, property rights, democracy, growth, globalization
    JEL: O47 O43 P14
    Date: 2012–03
  6. By: Michiaki Obata (Faculty of Economics, University of Tokyo)
    Abstract: Stage theory of capitalist development proposed by Kozo Uno(1897 - 1977) is a method to clarify the characteristics of imperial capitalism that started at the end of the 19th century typically in Germany. It is founded on the revise of Marx's "Capital". However, in order to depict the new rise of emerging capitalism at the end of the 20th century it is necessary to review the Uno's method, especially on the notion of the mercantilist stage, related to the stage of "development" and "origin" of capitalism. It leads us to replace the traditional "single origin theory" which assumes the capitalist development passes through three stages of rise, progress and decline with the "multiplex origin theory" of capitalism. The new stage theory requires another revise of political economy based on Uno's "pure capitalism" approach.
    Date: 2012–04

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