nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2013‒07‒15
ten papers chosen by
Karl Petrick
Western New England University

  1. Kaldor's 1970 Regional Growth Model Revisited By A.P.Thirlwall
  2. Reading Keynes in Buenos Aires: Prebisch and the Dynamics of Capitalism By Esteban Pérez Caldentey; Matias Vernengo
  3. Civilizing capitalism: “good” and “bad” greed from the enlightenment to Thorstein Veblen (1857-1929) By Reinert, Erik S.
  4. Financialization, Labour Market Flexibility, Global Crisis and New Imperialism - A Marxist Perspective By Byasdeb Dasgupta
  5. Social Protection for Poverty Reduction in Times of Crisis By Youssouf KIENDREBEOGO; Kossi ASSIMAIDOU; Abdoulaye TALL
  6. On history and policy: Time in the age of neoliberalism By Boldizzoni, Francesco
  7. Escaping a Liquidity Trap: Keynes’ Prescription Is Right But His Reasoning Is Wrong By Harashima, Taiji
  8. Georg von Charasoff´s Theory of Value, Capital and Prices of Production By Thomas Huth
  9. Coping with Climate Change: A Food Policy Approach By Timmer, C. Peter
  10. How I learned to stop worrying and love the RET By Quiggin, John

  1. By: A.P.Thirlwall
    Abstract: Kaldor's 1970 paper 'The Case for Regional Policies' was republished in the sixtieth anniversary volume of the Scottish Journal of Political Economy. This paper reflects on the model after more than forty years, and argues that even though it has been criticised for its deterministic nature, it has lost none of its relevance. It predates the ideas of so-called 'new' growth theory, and the new economic geography of Krugman, and provides at least a partial explanation of why growth rates and levels of per capita income between regions and between countries can continue to persist and even widen in contrast to the predictions of orthodox equilibrium theory.
    Keywords: Regional Growth; Kaldor; Uneven Development; Cumulative Causation
    JEL: O18 R11
    Date: 2013–07
  2. By: Esteban Pérez Caldentey; Matias Vernengo
    Abstract: Keynes had a profound influence on Prebisch in terms of the diagnosis about the main failures of market economies and the need to pursue pro-active and anti-cyclical policies. However, Prebisch was critical of some aspects of Keynes’ General Theory of Employment, Interest and Money, in particular on the theory of interest and the multiplier. His attitude can be explained by a difference in the object and method of analysis. Prebisch interests focused on dynamics and the cycle, themes that were peripheral to Keynes’ central message. Prebisch’s Keynesian influence and his rejection of some aspects of Keynes magnum opus explains why at the same time that Prebisch is often described as the Latin American Keynes, he is portrayed as concerned mainly with the long-run development problem of Latin America and without proper consideration to demand factors as fundamental determinants of output and employment.
    Keywords: Business Cycles, Interest Rate, Multiplier, Center-Periphery JEL Classification: B22, E32, E40, F55
    Date: 2013
  3. By: Reinert, Erik S.
    Abstract: "As we look over the country today we see two classes of people. The excessively rich and the abject poor, and between them is a gulf ever deepening, ever widening, and the ranks of the poor are continually being recruited from a third class, the well-to-do, which class is rapidly disappearing and being absorbed by the very poor." Milford Wriarson Howard (1862-1937), in The American Plutocracy, 1895. This paper argues for important similarities between today’s economic situation and the picture painted above by Milford Howard, a member of the US Senate at the time he wrote The American Plutocracy. This was the time, the 1880s and 1890s, when a combination of Manchester Liberalism – a logical extension of Ricardian economics – and Social Darwinism – promoted by the exceedingly influential UK philosopher Herbert Spencer – threatened completely to take over economic thought and policy on both sides of the Atlantic. At the same time, the latter half of the 19th century was marred by financial crises and social unrest. The national cycles of boom and bust were not as globally synchronized as they later became, but they were frequent both in Europe and in the United States. Activist reformer Ida Tarbell probably exaggerated when she recalled that in the US “the eighties dripped with blood”, but a growing gulf between a small and opulent group of bankers and industrialists produced social unrest and bloody labour struggles. The panic on May 5, 1893 triggered the worst financial crisis in the US until then.
    Keywords: Capitalism; economic history; Thorstein Veblen
    JEL: N00 P10
    Date: 2013
  4. By: Byasdeb Dasgupta (Département d'économie - Jawaharlal Nehru University)
    Abstract: Financialization refers to the over-arching presence of the interest of global finance in every sphere of economic life - be it real or financial. Neo-liberalism, globalisation and financialization are three distinct yet mutually inter-related processes which at the present time are furthering the cause of global capitalism world over. The labour ultimately remains the risk-bearing factor in all these processes, which is obvious in terms of flexible labour regime. There is, on the one hand, de-regulation of finance and on the other, re-regulation of labour (through labour flexibility); and to our understanding global finance and its circuits of operation cannot be sustained without this flexible labour regime which ensures more and more transfer of surplus in the direction of finance. Global crisis is inherent in these processes of neoliberal globalisation and financialization through which present day global capitalism wants to thrive. So, an alternative needs to be sought in a pro-labour regime which would negate both financialization and neo-liberal globalization.
    Keywords: financialization; global finance; labour market; flexibility; neo-liberalism; neo-imperialism
    Date: 2013–06–01
  5. By: Youssouf KIENDREBEOGO; Kossi ASSIMAIDOU (-); Abdoulaye TALL
    Abstract: The recent global crisis has highlighted the need to protect the poor and people vulnerable to adverse macroeconomic shocks. Many countries have implemented various programmes to protect social spending and help poor people during periods of financial crisis. This paper uses the most comprehensive dataset on social spending compiled thus far, covering the period 1984-2010 for developing countries, and the unique cross-country database on poverty to explore the poverty-reducing role of social protection during financial crises. Using advanced panel data techniques to deal with endogeneity issues, we find that financial crises are associated with important increases in the growth rate of the poverty headcount and the poverty gap, 12 and 7 percent respectively. These devastating effects of crises on poverty are significantly lower --by 45 percent and 63 percent for the poverty headcount and for the poverty gap, respectively-- in countries with higher social spending, on average, suggesting the importance of social protection for poverty reduction in times of crisis and potential gains from policy intervention.
    Keywords: financial crisis, Poverty, Social Spending
    JEL: C23 I32 I38
    Date: 2013
  6. By: Boldizzoni, Francesco
    Abstract: It is often said that history matters, but these words are often little more than a hollow statement. In the aftermath of the Great Recession, the view that the economy is a mechanical toy that can be fixed using a few simple tools has continued to be held by economists and policy makers and echoed by the media. The paper addresses the origins of this unfortunate belief, inherent to neoliberalism, and what can be done to bring time back into public discourse. -- Es heißt, dass Geschichte wichtig sei, aber oft ist dies nicht mehr als eine Redensart. Ökonomen und Politiker halten mit Unterstützung der Medien auch nach der Großen Rezession an der Ansicht fest, dass die Wirtschaft ein mechanisches Spielzeug ist, das mit ein paar einfachen Werkzeugen repariert werden kann. In dem vorliegenden Papier betrachtet der Autor die Ursprünge dieses dem Neoliberalismus innewohnenden Irrglaubens und untersucht, wie geschichtlich-zeitliche Zusammenhänge zurück in den öffentlichen Diskurs gebracht werden können.
    Date: 2013
  7. By: Harashima, Taiji
    Abstract: Keynes’ original intention in introducing the concept of a liquidity trap was to explain the reason why persistent large amounts of unutilized resources were generated during the Great Depression. This paper shows that this type of phenomenon cannot be explained in the framework of a traditional competitive market equilibrium. Instead, it can be understood in terms of a Nash equilibrium consisting of strategies of choosing a Pareto inefficient transition path because a Nash equilibrium can conceptually coexist with Pareto inefficiency. Such a Nash equilibrium will be selected when an upwards time preference shock occurs. At this Nash equilibrium, monetary policies are useless but fiscal policies are very effective as Keynes argued, but for different reasons.
    Keywords: Liquidity trap; Monetary policy; Fiscal policy; Pareto inefficiency; Time preference
    JEL: E32 E52 E62
    Date: 2013–07–08
  8. By: Thomas Huth (Leuphana University Lueneburg, Germany)
    Abstract: The present paper on the now partly well known Russian mathematician and “amateur economist” v. Charasoff was originally written in 1987 together with H. Duffner three years after Charasoff’s remarkable contribution of 1910 “Das System des Marxismus” (The system of Marxism) had been rediscovered by the Italian economists Gilibert and Egidi. It was then the second mathematical formulation of Charasoff’s contribution on prominent but partly still unresolved topics in Marxian economics. However, though our paper circulated as mimeo it had not been published in a regular journal of economics. Meanwhile, several contributions on Charasoff appeared by such authors as Egidi, Gilibert, Kurz and Salvadori, Stamatis and Mori. But none of them seems to deal with Charasoff’s economics in an exhaustive manner. Therefore and nevertheless, the paper may be still of some interest to the, nowadays regrettably rather narrow, audience of economists specialized in linear models of production, Marxian economic theory and Neoricardianism.
    Keywords: Marxian economics, labor theory of value, transformation problem, prices of production
    JEL: B14 B51 C67 D24
    Date: 2013–06
  9. By: Timmer, C. Peter
    Abstract: The early drafts of Food Policy Analysis were stimulated by the attention to high food prices following the world food crisis in 1973-74, and the fears of a repeat in 1979-80. But by the fourth full draft, in 1982, it became apparent that surpluses were returning to world food markets. A volume predicated on a world running out of food would have been out of date before the ink was dry, and a full-scale revamping of the analytical messages was needed. After a nearly complete re-write, the new theme, which has stood the test of thirty years of market fluctuations, was the need for flexibility to cope with market instability. That message is even more relevant now, as we learn to cope with a new source of instability—climate change. Such flexibility is not a natural feature of domestic policy making, in the food sector or elsewhere, and providing the analytical tools for understanding how to create flexible responses turned out to be a real challenge. The task in this paper is to ask specifically how climate change would alter the basic message of Food Policy Analysis. Virtually all of the analysis was focused on national policies and domestic markets, an approach that seems problematical for preventing or mitigating climate change, but entirely appropriate for designing adaptation strategies. Climate change is imposing itself as a reality via the increased probability of extreme weather events in general, but also on both global and localized food security outcomes in particular. The ecosystem services provided by the climate are essential for all agricultural production. The most important effects of climate change on agriculture are likely to include a net global loss of agricultural land, changing crop suitability, an increase in the frequency of natural disasters, and greater temporal and geographic variance in production. It will also have negative effects on other areas of agriculture broadly interpreted--reducing the carrying capacity of many rangelands and posing threats to fisheries and aquaculture production systems. Climate change is expected to have highly variable effects on different regions; tropical and equatorial regions will bear the heaviest burdens, with some gains in yields and land availability in temperate regions. Since rural poverty is concentrated in tropical and, in South Asia, coastal areas, climate change is expected to have a disproportionate effect on the already vulnerable. The challenge is to design, analyze and implement in-country “climate-smart agriculture” adaptation projects and programs, which are now part of the food policy agenda, as well as improve the openness to trade in agricultural commodities to even out geographical instability. Designing appropriate policies for bio-fuels also needs to be on the analytical agenda.
    Keywords: Agricultural and Food Policy, Environmental Economics and Policy, Food Consumption/Nutrition/Food Safety,
    Date: 2013–02
  10. By: Quiggin, John
    Abstract: In this chapter, it is argued on the contrary that the RET is not merely complementary to the carbon market, but is a welfare-improving policy, even after the introduction of the carbon price. The central argument is that, because of political resistance to carbon pricing, the price has been set at a level that is below that of the optimal path, and must increase more rapidly than would be consistent with a Hotelling rule (Hotelling 1931). The relevant criterion for assessing the RET is not the cost of mitigation relative to the current carbon price but the cost relative to the true shadow price of CO2 emissions, which must be assessed in relation to abatement costs that must be incurred in the future if emissions are to be reduced in line with the government’s stated targets.
    Keywords: Renewable Energy Target, Carbon pricing, Environmental Economics and Policy, Resource /Energy Economics and Policy, Q52, Q42, Q48,
    Date: 2013–05

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