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on Post Keynesian Economics |
| By: | Brian S. Ferguson (Department of Economics, University of Guelph) |
| Abstract: | This paper puts John Maynard Keynes’ "The General Theory of Employment, Interest and Money" into its historical context, both in terms of economic history and in terms of the history of economics. It discusses the post-World War I period as background to the General Theory, looks at the influence of other economists of the period on the evolution of Keynes’ thought and considers the parallels between the post-World War period and the post-Napoleonic War period, when Ricardo and Malthus were debating issues very similar to the ones with which Keynes was wrestling. |
| Keywords: | Keynes, General Theory, Keynesian Economics, Classical Economics, Great Depression, Macro Modelling, Hawtrey, Pigou, |
| JEL: | B10 B12 B13 B22 B31 E12 N12 N14 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:gue:guelph:2013-06&r=pke |
| By: | Skouras, Thanos; Kitromilides, Yiannis |
| Abstract: | The appeal of the microfoundations project in economics is strongly supported by the considerable force of the discipline's "hard core" (in Lakatos' sense). This is especially the case, if the microfoundations metaphor is seen as a way of giving precedence to microeconomics in unifying economic theory rather than as requiring that all macroeconomic propositions are reduced to or derived from microeconomic ones. Given the micro-theoretical nature of the "hard core", the microfoundations project and professional respect for the "hard core" have become closely intertwined and the orientating and disciplining role of the latter is of crucial importancε in driving the former. Thus, questioning the microfoundations project is tantamount to confronting the "hard core". Maximization of utility and maximization of profit, which are the two most fundamental tenets of the "hard core", both suffer from serious weaknesses. Maximization of utility is not only contradicted by a lot of experimental and other empirical evidence but it is also neither necessary nor sufficient for establishing the "law" of demand. Profit maximization is falsified both on theoretical and empirical grounds, in the case of large corporations under managerial control, and is inconsistent or implausible in the case of small owner-run firms. Consequently, privileging micro over macro theory does not ensure sound foundations and the microfoundations project makes little sense. It follows that the search for consistency between microeconomics and macroeconomics should best be pursued in terms of the bridge metaphor. |
| Keywords: | microfoundations, "hard core", utility maximization, profit maximization, methodological individualism, fallacy of composition, "unity of science", professionalization of economics |
| JEL: | A14 B41 D01 |
| Date: | 2013–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:48372&r=pke |
| By: | Yefimov, Vladimir |
| Abstract: | The profession of economics does not fulfill its social function to provide people a correct understanding of economic phenomena. In other words, the institution of economics does not work properly. George Soros makes this conclusion in his lectures at the Central European University (Soros, 2010). He sponsored the creation of the Institute for New Economic Thinking (INET) with the objective to change this situation in economics. However activities of the INET are not oriented to change the institution of economics and most of participants in its activities are mainstream economists. This short paper summarizes my ideas in what way it is necessary to change the institution of economics. First, in order to make the profession of economists socially useful, it is necessary to reconsider the methodology and history of economics. At present the former leads the profession in a wrong way and the latter to a great extent justifies this wrong way. Secondly, it is necessary to reform the institution of economics. I define the notion of institution in the following way: an institution is a set of formal and informal rules, and also beliefs, that stand behind these rules, that orient the behaviour of members of a certain community. The rules of the institution of economics relate to the community of university professors and students of economics. These rules provide a framework for developing curricula and syllabi, as well as for the organization of examinations. They define the procedures and directions of economic research, and the criteria for publication of articles in academic economic journals. These rules include formal and informal rules of functioning of professional organizations of economists, such as the American Economic Association. Beliefs that underlie the rules of functioning of the community of academic economists are expressed in different answers to such questions as: What does it mean to undertake economic research? What is the purpose of economic research? What should economists study? How should they carry out the study? In what form should the results of the study be presented? What does it mean to teach economics? What kind of economics should we teach? The answers to these questions, along with formal and informal rules of behaviour based on the answers, together constitute the institutional knowledge of professional economists. Candidates for admission to the profession acquire most of this knowledge during the preparation and defense of PhD dissertations that many do in the framework of post-graduate studies. If someone becomes a member of the profession and does not have this knowledge, or refuses to follow its instructions, then sooner or later she/he will be rejected by the profession. To reform the profession of economists means to reform the institution of economics, i.e. to change their rules and beliefs. I think that the only way for economics to become a socially useful science is the transformation of economics from a kind of applied mathematics (mainstream economics) or social philosophy (heterodox economics) to something similar to social anthropology with its ethnographic method justified in the framework of the constructivist discursive methodology. The methodology that I prone can be expressed very shortly in the following way. The social-economic regularities result from the fact that people behave according to certain socially-constructed rules, and these rules are explained, justified, and kept in mind by telling themselves and others some stories. Taking this statement into consideration, we must agree with the fact that for the identification of social-economic regularities, we must explore and analyse these stories. Modern economics does not study the discourses of economic actors and thereby deprive itself of the ability to understand and predict economic phenomena. The study of discourse is not a deviation from the academic standards which are built into natural sciences, but rather an approximation to it, since almost all social interactions are mediated by language. |
| Keywords: | institution of economics, radical reform of the economic discipline, manipulative and cognitive functions of economics, new model of scientific research, interpretive paradigm (discursive economics) |
| JEL: | A11 A13 B4 B41 |
| Date: | 2012–03–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:48482&r=pke |
| By: | Dimitri B. Papadimitriou; Michalis Nikiforos; Gennaro Zezza |
| Abstract: | Employment in Greece is in free fall, with more than one million jobs lost since October 2008--a drop of more than 28 percent. In March, the "official" unemployment rate was 27.4 percent, the highest level seen in any industrialized country in the free world during the last 30 years. In this report, Levy Institute President Dimitri B. Papadimitriou and Research Scholars Michalis Nikiforos and Gennaro Zezza analyze the economic crisis in Greece and offer policy recommendations to restore growth and increase employment. This analysis relies on the Levy Institute's macroeconomic model of the Greek economy (LIMG), a stock-flow consistent model similar to the Institute’s model of the US economy. Based on the LIMG simulations, the authors find that a continuation of austerity policies would decrease GDP and increase unemployment. They find recent International Monetary Fund and European Commission projections for the Greek economy overly optimistic, and recommend a recovery strategy, similar to the Marshall Plan, to increase public consumption and investment—a strategy centered on an expanded direct public-service job creation program. |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levysa:sa_jul_13&r=pke |
| By: | Thomas Masterson |
| Abstract: | The quality of match of the statistical match used in the Levy Institute Measure of Time and Consumption Poverty (LIMTCP) estimates for Turkey in 2006 is described. The match combines the 2006 Zaman Kullanim Anketi (ZKA 2006) with the 2006 Hanehalki Bütçe Anketi (HBA 2006). These are the national time-use survey and household income and expenditure surveys, respectively. The alignment of the two datasets is examined, after which various aspects of the match quality are detailed. The match is of high quality, given the nature of the source datasets. The quality of the simulation of employment gains for Turkey in 2006 is then described. All eligible adults not working for pay, as employers, or as unpaid household workers were assigned jobs. In all households that included job recipients, the time spent on household production was imputed for everyone included in the time-use survey. Household consumption was then assigned to each household in the simulation containing a job recipient. The recipient group was compared to the donor group, both in terms of demographic similarity and in terms of the imputed usual hours, earnings, and household production generated in the simulation. In both cases, the simulations were of reasonable quality, given the nature of the challenges in assessing their quality. |
| Keywords: | Statistical Matching; Labor Force Simulation; Time Use; Household Production; Poverty; Levy Institute Measure of Time and Consumption Poverty; LIMTCP; Turkey |
| JEL: | C14 C40 D31 J22 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_769&r=pke |
| By: | Kliman, Andrew; Freeman, Alan; Potts, Nick; Gusev, Alexey; Cooney, Brendan |
| Abstract: | Michael Heinrich’s recent Monthly Review article claims that the law of the tendential fall in the rate of profit (LTFRP) was not proved by Marx and cannot be proved. Heinrich also argues that Marx had doubts about the law and that, for this and other reasons, his theory of capitalist economic crisis was only provisional and more or less in continual flux. This response shows that Heinrich’s elementary misunderstanding of the law––his belief that it is meant to predict what must inevitably happen rather than to explain what does happen––is the source of his charge that it is unproved. It then shows that a simple misreading of Marx’s text lies at the basis of Heinrich’s claim that the simplest version of the LTFRP, “the law as such,” is a failure. Marx’s argument that increases in the rate of surplus-value cannot “cancel” the fall in the rate of profit is then defended against Heinrich’s attempt to refute it. Finally, the paper presents evidence that Marx was indeed convinced that the LTFRP is correct and that he regarded the crisis theory of volume 3 of Capital as finished in a theoretical sense. |
| Keywords: | Crisis Theory;Marxist Economics;TSSI;Rate of Profit |
| JEL: | B4 E0 E22 |
| Date: | 2013–07–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:48535&r=pke |
| By: | Tausch, Arno |
| Abstract: | Our analysis, based on a variety of standard econometric techniques, aims to be a fairly comprehensive test of the hypotheses about long cycles, associated with the name of Kondratiev/Kondratieff. Our work tries to link the issue of long cycles with the issue of economic convergence and divergence in the world system, because there are very strong cyclical ups and downs of relative convergence in the world system, observable not just in the “national” growth rates and “national” economic cycles. Already the Japanese economist Kaname Akamatsu, who lived from August 7, 1896 to December 20, 1974, and who was a great admirer of Kondratiev/Kondratieff, hinted at this connection. His most well-known tribute to Kondratiev/Kondratieff (Akamatsu, 1961) specifically links the rise and decline of the global peripheries to the larger Kondratiev/Kondratieff cycle. His contribution, which is hardly ever mentioned nowadays in the framework of K-cycle research, is the starting point of our analysis. In fact, these “Akamatsu cycles”, analyzed in this work, are even stronger and seem to be more devastating than the “national Kondratiev/Kondratieff waves” and world systemic waves themselves, leading to the discovery of what might be even termed a “double-Tsunami wave structure”. Both our re-analysis of world industrial production growth data since 1741 as well as the global conflict data since 1495, presented in this article, cautiously support the earlier contentions of world system research with evidence, tested by spectral analysis and auto-correlation analysis. Using the well-known and now updated Maddison data base at http://www.ggdc.net/maddison/maddison-project/data.htm, Kondratiev/Kondratieff cycles of around 60 years duration at a nation state level are most clearly visible in Argentina, Canada, and Russia, with evidence on the existence of longer cycles of more than 35 years also in Belgium; Chile; Greece; Netherlands; India; New Zealand; Spain; and USA; while for the other countries of the Maddison data set, earlier negative spectral density analysis results reported in the ample literature surveyed in this article could not be falsified. By contrast, the evidence about strong long term cycles of convergence seems to be very convincing. Future research is recommended to realize that convergence processes in most nations of the world are discontinuous and of a cyclical nature, thus supporting the pessimism inherent in the writings by the world systems scholar Giovanni Arrighi on the subject. |
| Keywords: | Kondratieff; Long waves: Business cycles |
| JEL: | C65 E32 E37 |
| Date: | 2013–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:48356&r=pke |
| By: | M. H. Suryanarayana (International Poverty Centre) |
| Abstract: | Ever since UNDP started advocating for ?inclusive growth?, developing countries have set it as an avowed goal of their long-term strategies. However, there is no universally accepted definition of the concept or how to measure it, which are important considerations for policy formulation as well as evaluation. (?) |
| Keywords: | What is Inclusive Growth? An Alternative Perspective |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:ipc:opager:205&r=pke |
| By: | Yavni Bar-Yam; Marco Lagi; Yaneer Bar-Yam |
| Abstract: | High and volatile global food prices have led to food riots and played a critical role in triggering the Arab Spring revolutions in recent years. The severe drought in the US in the summer of 2012 led to a new increase in food prices. Through the fall, they remained at a threshold above which the riots and revolutions had predominantly occurred. Global prices at this level create conditions where an exacerbating local circumstance can trigger unrest. Global corn (maize) prices reached new highs, and countries that depend mostly on maize are more likely to experience high local food prices and associated pressures toward social unrest. Here we analyze the conditions in South Africa, which is a heavily maize-dependent country. Coinciding with increased consumer food indices this summer, massive labor strikes in mining and agriculture have led to the greatest single incident of social violence since the fall of apartheid in 1994. Worker demands for dramatic pay increases reflect that their wages have not kept up with drastic increases in the prices of necessities, especially food. Without attention to the global food price situation, more incidents of food-based social instability are likely to arise. Other countries that have manifested food-related protests and riots in 2012 include Haiti and Argentina. Moreover, these cases of unrest are just the most visible symptom of widespread suffering of poor populations worldwide due to elevated food prices. Policy decisions that would directly impact food prices are decreasing the conversion of maize to ethanol in the US, and reimposing regulations on commodity futures markets to prevent excessive speculation, which we have shown causes bubbles and crashes in these markets. Absent such policy actions, governments and companies should track and mitigate the impact of high and volatile food prices on citizens and employees. |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1307.5268&r=pke |
| By: | Babette Never (GIGA German Institute of Global and Area Studies) |
| Abstract: | The green power potential of a country is a central factor in the transformation to a green economy. This paper argues that green power will become a decisive factor for global change. Green power combines sustainability, innovation and power into one concept. By merging insights from political science, economics and innovation research, this paper develops a multidimensional, multilevel concept of green power that takes both resources and processes into account. A first empirical assessment of the current distribution of green power in global environmental governance shows that China and India, in particular, as well as Brazil and Costa Rica are catching up in clean technology and renewable energy. The European Union, Germany and the United States still dominate, but they are not fully maximizing their green power potential. In spite of their discursive power, the green power potential of the least developed countries is relatively small, making the jump toward a green economy unlikely. |
| Keywords: | climate change, power, global environmental governance, innovation, green economy. |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:gig:wpaper:226&r=pke |
| By: | Solis, Alex (Department of Economics) |
| Abstract: | Does limited access to credit explain some of the gap in schooling attainment between children from richer and poorer families? I present new evidence on this important question using data from two loan programs for college students in Chile. Both programs offer loans to students who score above a threshold on the national college admission test, enabling a regression discontinuity evaluation design. I find that students who score just above the cutoff have nearly 20 percentage points higher enrollment in first, second and third year than students who score just below, which represent relative increases of 100% , 213% and 446% respectively. More importantly, access to the loan program effectively eliminates the family income gradient in enrollment among students with similar test scores. |
| Keywords: | college enrollment; credit constraints; income gap; college dropout; Chile |
| JEL: | I22 I24 I28 |
| Date: | 2013–05–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uunewp:2013_012&r=pke |