nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2013‒09‒28
six papers chosen by
Karl Petrick
Western New England University

  1. Profit Sharing and its Effect on Income Distribution and Output: A Kaleckian Approach By Sasaki, Hiroaki
  2. Globalization and Democracy: A Short Introduction By Khan, Haider
  3. Keynesian Dominance in Crisis Therapy By Kristina Spantig
  4. Fiscal consolidation: Dr Pangloss meets Mr Keynes By Miller, Marcus; Zhang, Lei
  5. Re-Thinking Economic Development in the WTO By Bernard Hoekman
  6. Twentieth Century Growth By Crafts, Nicholas; O’Rourke Hjortshøj, Kevin

  1. By: Sasaki, Hiroaki
    Abstract: This paper investigates the effect of profit sharing on the economy by using a Kaleckian model. Unlike exiting studies, we endogenize the profit share. Our analysis shows that if the size of the productivity-enhancing effect of profit sharing is small, profit sharing decreases the equilibrium rate of capacity utilization whereas if the size is large, profit sharing increases the equilibrium rate of capacity utilization.
    Keywords: profit sharing, income distribution, regular and non-regular employment, wage-gap, cyclical fluctuations, demand-led growth
    JEL: E12 E24 E25 E32 J31 J33 J53 J82 J83
    Date: 2013–09
  2. By: Khan, Haider
    Abstract: The main purpose of this work is to address a puzzle and suggest strategies towards solutions that are freedom-enhancing. The puzzles: why is there such a tendency towards regionalization and even nationalist protectionism despite the rhetoric of globalization, the structural adjustment policies of the IFIs( International Financial Institutions), and the recognized merits of a rules-based global system? The main argument offered is that there is a contradiction in the heart of the current US and the IFIs-led globalization that stems from their seeming refusal to understand the implications of unevenness in the real world. This also has led to their neglect of some vital principles of global justice. By ignoring issues of equity, the current leaders of globalization now risk losing economic efficiency if the world becomes further fragmented. Using an extension of Sen’s capabilities approach---called the social capabilities approach--- the role of deepening democracy in the global political economy is shown to be crucial in this process.
    Keywords: globalization; democracy; social capabilities approach; unevenness; IFIs; freedom; global justice; global political economy
    JEL: A13 F3
    Date: 2013–08
  3. By: Kristina Spantig (Graduate Programme "Global Financial Markets")
    Abstract: This paper scrutinizes the debate of Keynes and Hayek concerning the adequate re- sponse to economic crises from a historical perspective. In a first step the develop- ment of the Keynesian economic theory, its ascent during the Great Depression and its use during financially sound times is analyzed. In a second step the Hayekian cri- tique to discretionary government intervention and its long run consequences is scru- tinized. In the last step it is analyzed why, in the wake of a crisis, short-run oriented Keynesian therapy dominates long-run Hayekian therapy as in the most recent crisis.
    Keywords: Keynes, discretionary fiscal policy, monetary policy
    JEL: B20 E12 E52 E62
    Date: 2013–08–22
  4. By: Miller, Marcus (University of Warwick); Zhang, Lei (University of Warwick)
    Abstract: A simple dynamic framework is used to show how consolidation plans that are robust and effective at capacity output can be undermined by demand failure. If the market panics and interest rates rise, the process can indeed become dynamically unstable. Tightening fiscal policy to reassure financial markets can lead to a low level “consolidation trap”, however. Better that the Central Bank acts to keep interest rates low; and that fiscal consolidation efforts be state contingent – allowing room for economic stabilisation. The pro-cyclicality of fiscal policy could also be reduced if, as Shiller has argued, debt amortization were state contingent, being indexed to GDP. Debt; Deficits; Fiscal Consolidation; Economic Stabilisation
    Date: 2013
  5. By: Bernard Hoekman
    Abstract: The disagreements between the old and new trade powers in the WTO on market access issues that have deadlocked the Doha Round are in part a reflection of the “special and differential treatment†that developing countries have historically pursued in the WTO. A re-thinking of that approach is in order. This paper argues for greater effort and new approaches to use the WTO as a mechanism to help developing countries to reduce the trade and transactions costs that prevent firms and farmers from benefitting from trade opportunities. What is needed are processes for regular dialogue, peer review and independent assessment of the impacts of domestic policies, with active participation by firms that operate in the country concerned, and a focus on identification of good practices and priorities for reform and public investment.
    Keywords: WTO, economic development, special and differential treatment, trade preferences
    Date: 2013–06
  6. By: Crafts, Nicholas (University of Warwick); O’Rourke Hjortshøj, Kevin (All Souls College, Oxford)
    Abstract: This paper surveys the experience of economic growth in the 20th century with a focus on technological change at the frontier together with issues related to success and failure in catch-up growth. A detailed account of growth performance based on historical national accounts data is given and is accompanied by a review of growth accounting evidence on the sources of economic growth. The key features of our analysis of divergence in growth outcomes are an emphasis on the importance of ‘directed’ technical change, of institutional quality, and of geography. We provide brief case studies of the experience of individual countries to illustrate these points.
    Keywords: catch-up growth; divergence; growth accounting; technical change
    Date: 2013

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