nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2012‒07‒29
four papers chosen by
Karl Petrick
University of the West Indies

  1. The Economics of Austerity By Konzelmann, S.
  2. Entrepreneurship, Evolution and Geography By Erik Stam
  3. The Challenges of Including Political Economy Research in Regional Economic History By Martin Eriksson
  4. Who believes in fiscal and monetary stimulus? By Amdur, David

  1. By: Konzelmann, S.
    Abstract: The 2007/8 financial crisis has reignited the debate about austerity economics and revealed that it is a highly contested yet poorly understood idea. This article locates the debate in its historical context, tracing it from the early 18th and 19th century Classical debates, which focused mainly on the means by which fiscal deficits should be financed. As capitalism evolved, so did ideas and theories about the economics of austerity. Following World War One, concerns about high levels of government debt produced the 1920s 'Treasury view' - that government deficits are economically damaging and austerity is required to rein them in. During the 1930s Great Depression, when unemployment was the main concern, this perspective was challenged by the 'Keynesian view' - that government deficits could be economically beneficial during the slump, when the private sector was unable to generate sufficient effective demand to pull the economy out of depression. From this perspective, austerity was the policy prescription for the top of the business cycle, to prevent the economy from over-heating and igniting inflation. The 'stagflationary' crises of the 1970s challenged this view; and during the decades preceding the 2007/8 crisis, austerity was considered to be a policy for the bottom of the business cycle, when the excesses of a bubble-inflated boom had been revealed by its collapse. In the aftermath of the 2007/8 financial crisis, however, austerity no longer has the economic objective of macroeconomic stabilization. Instead, it has become the objective itself - demanded by actors in the international financial markets as evidence that governments are serious about managing their deficits and paying back their debts, thereby protecting the financial interests of investors in sovereign debt. However, if austerity undermines economic growth - as it is doing at present - markets are unlikely to remain loyal to those countries suffering the effect. It is therefore important that policy-makers and political leaders learn the lessons of the 2007/8 financial crisis with regard to the economics of austerity - before it is too late.
    Keywords: Austerity, Macroeconomic Policy, Financial Crises, Business Cycles
    JEL: B22 E32 E44 N10
    Date: 2012–06
  2. By: Erik Stam
    Abstract: This paper is an inquiry into the role of entrepreneurship in evolutionary economic geography. The focus is on how and why entrepreneurship is a distinctly spatially uneven process. We will start with a discussion on the role of entrepreneurship in the theory of economic evolution. Next, we will review the empirical literature on the geography of entrepreneurship. The paper concludes with a discussion of a future agenda for the study of entrepreneurship within evolutionary economic geography.
    Date: 2011–09
  3. By: Martin Eriksson
    Abstract: Issues such as regional interest group mobilization and the projection of regional claims on the national political arenas often occur during critical junctures of regional economic development. In many cases they have such impact on the outcome of a development process that they deserve economic history research. My paper will focus on the challenges of including such issues in regional economic history writing. Departing from research on the historical political economy of the Swedish Norrland region, I will discuss a number of research design challenges that the regional historian will need to manage and reflect upon. One such challenge concerns the use of theory. I will discuss how interest group theories may be used (and abused) to capture decisive relations and linkages between regional interest group demands on one hand and government decision-making on the other hand. I will also point at the importance of a critical attitude towards those myths, discourses and interpretations that may dominate the regional debate on a research field. In this respect, concepts and language may influence historical explanation to such an extent that they distort the understanding of the past. The historian will therefore need to confront those myths through a scientifically adequate research process.
    Date: 2011–09
  4. By: Amdur, David
    Abstract: Does the public believe that fiscal and monetary stimulus reduce unemployment? I present survey evidence on this question from a random sample of Pennsylvania residents. Few respondents express a consistently Keynesian view of fiscal and monetary stimulus. In fact, the typical respondent believes that an increase in government spending makes unemployment worse. Views on monetary stimulus depend on how the question is framed. The typical respondent believes that Fed money creation worsens unemployment while a Fed interest rate cut improves it. I show how opinion varies by political party, educational attainment, income, and other demographic characteristics. Favorable opinions about government spending are strongly associated with support for President Obama's economic policies, even after controlling for political party and for respondents' opinions about the current state and trajectory of the economy.
    Keywords: Opinion survey; fiscal stimulus; monetary stimulus; unemployment; Keynesian economics
    JEL: E62 E12 A20 E52
    Date: 2012–07

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