nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2012‒09‒09
three papers chosen by
Karl Petrick
University of the West Indies

  1. "Diversity and Uniformity in Economic Theory as an Explanation of the Recent Economic Crisis" By Jan Kregel
  2. The costs of rebalancing the Euro area By Engelbert Stockhammer; Dimitris P. Sotiropoulos
  3. Back to the Future? A critical reflection on Neil Kearney’s mature systems of industrial relations perspective on the governance of outsourced apparel supply chains. By Doug Miller; Simon Turner; Tom Grinter

  1. By: Jan Kregel
    Abstract: Market economies and command economies have long been differentiated by the presence of alternative choice in the form of diversity. Yet most mainstream economic theory is premised on the existence of uniformity. This paper develops the implications of this contradiction for the theory of prices, income creation, and the analysis of the recent financial crisis, and provides a critique of traditional theory from an institutionalist perspective developed by J. Fagg Foster.
    Keywords: Financial Crisis; W. Petty; Markets; Equilibrium Prices; Financial Crisis
    JEL: B0 D01 D41 E01 E31 P00
    Date: 2012–08
  2. By: Engelbert Stockhammer (Kingston University); Dimitris P. Sotiropoulos (Kingston University)
    Abstract: This paper investigates the economic costs of Euro area rebalancing. Based on an old Keynesian model we estimate a current account equation, a wage-Phillips curve and an Okun’s Law equation. All estimations are carried out for a panel of eleven Euro area members (excluding Luxembourg). From the estimation results we calculate the output costs of reducing current account deficits. Greece, Ireland, Italy, Portugal and Spain (GIIPS) had, on average, current account deficits of 8.4% of GDP in 2007. To eliminate these current account deficits, it would necessitate a reduction of GPD by some 47%. These are staggering amounts and, indeed we think that such a reduction of GDP should not be imposed in the GIIPS group. Moreover, we doubt whether it would be politically feasible. In principle there are two ways that trade imbalances could be resolved: deflationary adjustment in the deficit countries or inflationary adjustment in the surplus countries. Presently, the burden of adjustment is exclusively on the deficit countries. Our results indicate that the economic costs of this adjustment to those countries are equivalent to the output loss of the Great Depression. An adjustment of the surplus countries would increase growth and it would come with higher inflation, but it would allow rebalancing without a Great Depression in parts of Europe.
    Keywords: Rebalancing, Euro area, current account, Phillips curve, Okun’s law
    JEL: E12 E6 F4
    Date: 2012–06
  3. By: Doug Miller; Simon Turner; Tom Grinter
    Abstract: Abstract As the auditing model for assuring social compliance in apparel commodity chains is called into question, the global quest continues for institutions, policies and governance structures which can contribute towards the protection of worker rights, the promotion of decent work and an upgrading of working conditions and competencies. One such model, promoted by Neil Kearney, the late General Secretary of the International Textile, Garment and Leather Workers’ Federation, calls for the implementation of mature systems of industrial relations (MSIR) based on trade union recognition, procedural agreements and collective bargaining. This working paper charts the origins of MSIR, deconstructs the approach into its constituent elements and critically assesses these against the backdrop of governance debates in outsourced apparel production. Some conclusions and recommendations are drawn for a future research agenda.
    Date: 2012

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