|
on Post Keynesian Economics |
| By: | Thomas I. Palley |
| Abstract: | This paper argues the euro zone crisis is the product of a toxic neoliberal economic policy cocktail. The mixing of that cocktail traces all the way back to the early 1980s when Europe embraced the neoliberal economic model that undermined the income and demand generation process via wage stagnation and widened income inequality. Stagnation was serially postponed by a number of developments, including the stimulus from German re-unification and the low interest rate convergence produced by creation of the euro. The latter prompted a ten year credit and asset price bubble that created fictitious prosperity. Postponing stagnation in this fashion has had costs because it worsened the ultimate stagnation by creating large build-ups of debt. Additionally, the creation of the euro ensconced a flawed monetary system that fosters public debt crisis and the political economy of fiscal austerity. Lastly, during this period of postponement, Germany sought to avoid stagnation via export-led growth based on wage repression. That has created an internal balance of payments problem within the euro zone that is a further impediment to resolving the crisis. There is a way out of the crisis. It requires replacing the neoliberal economic model with a structural Keynesian model; remaking the European Central Bank so that it acts as government banker; having Germany replace its export-led growth wage suppression model with a domestic demand-led growth model; and creating a pan-European model of wage and fiscal policy coordination that blocks race to the bottom tendencies within Europe. Countries, particularly Germany, can implement some of this agenda on their own. However, much of the agenda must be implemented collectively, which makes change enormously difficult. Moreover, the war of ideas in favor of such reforms has yet to be won. Consequently, both politics and the ruling intellectual climate make success unlikely and augur a troubled future. |
| Keywords: | Financial crisis, euro zone, neoliberalism |
| JEL: | E00 E24 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:imk:wpaper:111-2013&r=pke |
| By: | Olivier Allain (Centre d'Economie de la Sorbonne et Université Paris Descartes Sorbonne Paris Cité) |
| Abstract: | This article presents a Kaleckian model enriched by introducing autonomous public expenditure which grows at an exogenous rate. It shows that the usual properties are not affected in the short run: growth is wage-led. But long run properties are strongly affected: public expenditure plays a role as an automatic stabilizer so that the accumulation rate converges on the growth rate of public expenditure. The effect of a change in income distribution on the growth rate is then only transient. However, the impacts on the level of variables (output, capital stock, labor, etc.) remain permanent. The research here also shows that this theoretical framework can provide a solution (depending on the parameters) to the ‘second’ Harrod knife-edge problem. In this case, Kaleckian outcomes are consistent with the convergence of the current utilization rate on the ‘normal’ rate, a result which has not been found in the existing literature. |
| Keywords: | Kaleckian models, utilization rate, Harrod instability, income distribution, automatic stabilizers. |
| JEL: | E12 E2 E25 E62 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:13026&r=pke |
| By: | C.A.E. Goodhart |
| Abstract: | None |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fmg:fmgsps:sp219&r=pke |
| By: | C.A.E. Goodhart |
| Abstract: | None |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fmg:fmgsps:sp220&r=pke |
| By: | Michael Jacobs |
| Abstract: | The paper explores the concept of ‘green growth’ as it has emerged in international policy discourse over recent years. Identifying the core meaning of the concept and sister terms such as ‘green economy’, it relates green growth to the prior concept of sustainable development. The paper distinguishes between a ‘standard’ version of green growth which asserts the long-run economic benefit of environmental protection and a ‘strong’ interpretation which claims, more boldly, that environmental policy can be a driver for growth. Three different forms of this claim are identified and the evidence for them surveyed. The first is a Keynesian argument for short-term ‘green stimulus’ in times of recession. Second, a revision of standard growth theory identifies the contribution made to growth by investment in natural capital and the correction of a variety of market failures through environmental policy. Third, the theories of comparative advantage and long waves of capitalism emphasise the importance of technological innovation in generating growth. The paper offers some conclusions on the political economy of green growth and how likely it is to succeed in increasing the priority given to environmental policy. |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:lsg:lsgwps:wp92&r=pke |
| By: | Bent Flyvbjerg |
| Abstract: | This article examines five common misunderstandings about case-study research: (1) Theoretical knowledge is more valuable than practical knowledge; (2) One cannot generalize from a single case, therefore the single case study cannot contribute to scientific development; (3) The case study is most useful for generating hypotheses, while other methods are more suitable for hypotheses testing and theory building; (4) The case study contains a bias toward verification; and (5) It is often difficult to summarize specific case studies. The article explains and corrects these misunderstandings one by one and concludes with the Kuhnian insight that a scientific discipline without a large number of thoroughly executed case studies is a discipline without systematic production of exemplars, and that a discipline without exemplars is an ineffective one. Social science may be strengthened by the execution of more good case studies. |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1304.1186&r=pke |