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on Post Keynesian Economics |
| By: | Yun Kim (Department of Economics, Trinity College) |
| Abstract: | We develop a stock-flow consistent neo-Kaleckian macro model which incorporates consumption emulation and consumer debt accumulation. Income distributional dimension is also incorporated via the conflict-claims approach of inflation. Using this model, we investigate the macroeconomic effects of lower income group's consumption emulation of higher income group through borrowing. We find that emulation could expand aggregate demand and hence generate a faster economic growth. Our results also indicate that consumption emulation could be a source of widening income inequality. |
| Keywords: | consumer debt, emulation, income distribution, growth |
| JEL: | E12 E44 O41 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:tri:wpaper:1208&r=pke |
| By: | Altman, Morris |
| Abstract: | This paper summarizes and highlights different approaches to behavioural economics. It includes a discussion of the differences between the “old” behavioural economics school, led by scholars like Herbert Simon, and the “new” behavioural economics, which builds on the work of Daniel Kahneman and Amos Tversky and is best exemplified by Richard Thaler and Cass Sunstein’s recent book, Nudge. These important currents in behavioural economics are also contrasted with the conventional economic wisdom. The focus of this comparative analysis is to examine the implications of these different approaches in behavioural economics for financial literacy. |
| Keywords: | Financial literacy, behavioral economics, imperfect information, heuristics, trust, nudging, decision-‐making environment, |
| Date: | 2012–05–04 |
| URL: | http://d.repec.org/n?u=RePEc:vuw:vuwecf:2195&r=pke |
| By: | Avner Offer (All Souls College, University of Oxford) |
| Abstract: | Bad ethics can make for bad economic outcomes. Bad ethics are defined hedonically as the infliction of pain on others for private advantage. The infliction of pain is often justified by ‘Just World Theories’, which state that everyone gets what they deserve. Market liberalism (and its theoretical underpinning in neoclassical economics) is one theory of this kind. As an example, the micro and macro underperformance of the American health system c. 1970-2010 is explained in terms of the shift in policy norms from the fiduciary norm "first do no harm" to the neo-liberal market norm of "let the buyer beware" (caveat emptor) since the 1970s. |
| Date: | 2012–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:nuf:esohwp:_102&r=pke |
| By: | Avner Offer (All Souls College, University of Oxford) |
| Abstract: | Adam Smith rejected Mandeville’s invisible-hand doctrine of ‘private vices, publick benefits’. In The Theory of Moral Sentiments his model of the ‘impartial spectator’ is driven by not by sympathy for other people, but by their approbation. Approbation needs to be authenticated, and in Smith’s model authentication relies on innate virtue, which is unrealistic. An alternative model of ‘regard’ is applied, which makes use of signalling and is more pragmatic. Modern versions of the invisible hand in rational choice theory and neo-liberalism are shown to be radical departures from the ethical legacy of Enlightenment and utilitarian economics, and are inconsistent with Adam Smith’s own position. |
| Date: | 2012–08–14 |
| URL: | http://d.repec.org/n?u=RePEc:nuf:esohwp:_101&r=pke |
| By: | DE KONING, Kees |
| Abstract: | Both the United States and the United Kingdom publish data on the balance sheet of Households and Non-profit organisations. Eurostat is studying the issue. The time series provide a unique tool to assess whether collectively the individual households are getting richer or poorer. They allow to establish the collective profit and loss account for a country: Its Country Profit or Loss level. The P/L data are more relevant than economic growth data as they include incomes and asset values at the same time. The P/L result is the true reflection of the interaction between assets ( financial and non-financial) and incomes -consumption spending, tax transfers and savings-. All funding sources in a country are directly or indirectly provided by the collective of individual households (sometimes from overseas). The managers of these assets are risk managers on behalf of the households.Only in the case of a home, owned by the individual, is the individual the personal risk manager. Risk managers can make mistakes. When banks made mistakes -like in the subprime mortgage debacle- risks were spread around the world. The multiplier effect was more than 10 for the U.S. as the whole subprime market size was U.S.$1.2trillion and the 2008 U.S. Country Loss was $12.7trillion. The collective households' reactions to these losses were to start paying off home mortgages and consumer loans, rather than incurring more debt. The effect was a relative decline in consumption levels, which led to higher unemployement levels. The banking crisis simultaneously led to sharp increases in government debt due to bail-outs.The effect was also a capital flight to safety, to preserve the principal sum of savings. On basis of these balance sheet data and the derived P/L accounts, some policy recommendations were formulated in the paper:one of a preventative nature to avoid future crises; the others to stimulate economic growth through economic easing using pension fund savings to turn such savings partially into cash and back into savings later. Also a possible solution for avoiding capital flight has been included as such actions harm Country Profit making both in the capital exporting as well as the importing country. For countries like Spain and Italy use of the European Financial Stability Fund could be a solution. Finally capitalism no longer works if it cannot solve the excesses of unemployment as are happening in some Eurozone countries. |
| Keywords: | economic crisis; financial crisis; government debt crisis; capital flight; balance sheet of households and non-profit organisations; Country Profit and Loss; collective liquidity; quantitative easing; economic easing; capitalism; risk management |
| JEL: | E58 E44 E21 E61 |
| Date: | 2012–09–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:41331&r=pke |