nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2013‒11‒29
seven papers chosen by
Karl Petrick
Western New England University

  1. Debunking Squared By Kakarot-Handtke, Egmont
  2. An Institutional Perspective on Externalities.The Nordic Wolf Re-Colonization By Jan Tore Solstad; Eivind Egeland Aronsen; Anders Skonhoft
  3. Ellsberg Rules and Keynes’s State of Long-Term Expectation: More Than an Accordance By Marcello Basili
  4. The Nature of Economic Development and the Economic Development of Nature By Partha Dasgupta
  5. "Hate at First Sight": Evidence of Consumer Discrimination Against African-Americans in the US By Morgane Laouénan
  6. Institution Building and Political Economy By Majumdar, Sumon; Mukand, Sharun W
  7. Welfare economics By Antoinette Baujard

  1. By: Kakarot-Handtke, Egmont
    Abstract: Steve Keen has debunked a good part of standard economics. However, he has left standing the theory of profit. This is unfortunate, because the theory of profit is the pivot of all of theoretical economics. This tightly focused paper clarifies the factual relation of profit and income, which should be helpful to put Keen’s alternative to the standard approach on sound foundations.
    Keywords: new framework of concepts; structure-centric; consumption economy; Profit Law; market clearing; budget balancing; error detection; four quadrant scheme
    JEL: B59
    Date: 2013–11–22
  2. By: Jan Tore Solstad (Trondheim Business School); Eivind Egeland Aronsen; Anders Skonhoft (Department of Economics, Norwegian University of Science and Technology)
    Abstract: The paper discusses and redefines the traditional concept of externalities. Inspired by J.R. Commons' theory of institutional evolution we define externalities as policy relevant institutional interdependencies. Our concept of externalities is more general and reflects institutional failure rather than market failure. We exemplify our institutional concept of externalities by discussing the conflicts associated with the re-colonization of wolves in Scandinavia. Pinpointing the conflict between wolf management and sheep farming, we identify externalities in the de jure property rights to the pastures, and discuss how they can be internalized.
    Date: 2013–11–26
  3. By: Marcello Basili
    Abstract: This paper advances an intuitive way to represent Keynes’s notion of long-term expectation. The epsilon-contamination approach is introduced and a rational and coherent decision rule is derived. The result is evidence that Ellsberg and Keynes share the notion of uncertainty and adopt the same class of decision rules.
    Keywords: Keynes, Ellsberg, expectation, consensus distribution, uncertainty, epsilon-contamination.
    JEL: B16 D81
    Date: 2013–09
  4. By: Partha Dasgupta
    Abstract: Contemporary models of growth and development are founded on a category error: they ignore nature as a form of productive capital. Using as backdrop two recent books on the Indian economy that are representative of the prevailing orthodoxy, I review and in part extend an emerging literature that integrates development and environmental thinking. Contributors to the literature have reworked the economics of the household, communities, and other non-market institutions, reframed national accounting, reconstructed the theory of macro-economic development and public and trade policy, and revised the theory of collective action. In this paper I focus on a small part of the literature: economic evaluation. I develop the notion of sustainable development and construct a unified language for sustainability and policy analyses. I show that by economic growth we should mean growth in wealth - which is the social worth of an economy's entire set of capital assets - not growth in GDP nor the many ad hoc indicators of human development that have been proposed in recent years. The concept of wealth invites us to extend the notion of capital assets and the idea of investment well beyond conventional usage. I also show that by sustainable development we should mean development in which wealth (per head) adjusted for its distribution does not decline. This has radical implications for the way national accounts are prepared and interpreted. I then provide an account of a recent publication that has put the theory to work by studying the composition of wealth accumulation in contemporary India. Although much attention was given by the study's authors to the measurement of natural capital, due to a paucity of data the value of natural capital is acknowledged by them to be under-estimated, in all probability by a large margin. The study reveals that the entire architecture of contemporary development thinking is stacked against nature. These are still early days in the measurement of the wealth of nations, but both theory and the few empirical studies we now have at our disposal should substantially alter the way we interpret the progress and regress of nations.
    Date: 2013–11–15
  5. By: Morgane Laouénan (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: The paper runs the customer discrimination test provided by Combes et al. (2013) on US data. This test is based on a two-sector matching model with racial sector-specific preferences or abilities, employer discrimination and customer discrimination. The strategy makes it possible to disentangle customer from employer discrimination. My results prove the existence of discrimination against African-Americans at job entry from both employers and consumers in the US. It also reports that racial prejudice has a quantitative effect on the relative employment and contact probabilities of blacks. A decrease in the intensity of discrimination by one standard deviation raises the raw employment rate of blacks by 15 percent and increases the proportion of blacks in jobs in contact with customers by 20 percent.
    Keywords: Customer Discrimination, Racial Prejudice, Search Model
    JEL: J15 J61 R23
    Date: 2013–11–20
  6. By: Majumdar, Sumon (Queens University); Mukand, Sharun W (University of Warwick)
    Abstract: The paper examines the role of policy intervention in engendering institutional change. We show that first order changes in the political structure (e.g. introduction of democracy) may be undermined by local political interests and result in persistence in institutions and the (poor) quality of governance. The paper identifies two effects of development policy as a tool for institutional change. One, by increasing political accountability, it may encourage nascent democratic governments to invest in good institutions – the incentive effect. However, we show that it also increases the incentive of the rentier elite to tighten their grip on political institutions – the political control effect. Which of these dominate determine the overall impact on institutional quality. Under some conditions, by getting the elite to align their economic interests with that of the majority, development policy can lead to democratic consolidation and economic improvement. However if elite entrenchment is pervasive, then comprehensive change may require more coercive means.
    Keywords: political structure
    Date: 2013
  7. By: Antoinette Baujard (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon)
    Abstract: This paper presents the Paretian Watershed and the fundamental theorems of welfare economics. It distinguishes the British approach (à la Kaldor-Hicks) from the American approach (à la Bergson-Samuelson) to new welfare economics. It develops the more recent domains of happiness economics, the comparative approach by Amartya Sen, and the theory of fair allocation by Marc Fleurbaey.
    Keywords: Welfare economics ; Kaldor-Hicks ; Social Welfare Function ; Pareto ; comparative approach ; happiness economics ; fair allocation
    Date: 2013–11–20

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