nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2014‒02‒02
seven papers chosen by
Karl Petrick
Western New England University

  1. "Integrating Time in Public Policy: Empirical Description of Gender-specific Outcomes and Budgeting" By Lekha Chakraborty
  2. "The Rational Expectations Hypothesis: An Assessment from Popper's Philosophy" By Ivan H. Ayala; Alfonso Palacio-Vera
  3. Every Breath You Take – Every Dollar You’ll Make: The Long-Term Consequences of the Clean Air Act of 1970 By Adam Isen; Maya Rossin-Slater; W. Reed Walker
  4. Can Employer Credit Checks Create Poverty Traps? By Dean Corbae; Andrew Glover; Daphne Chen
  5. Green Growth and Sustainability: Analysing Trade-offs in Climate Change Policy Options. By Alessandro Palma
  6. How Johnson Fought the War on Poverty: The Economics and Politics of Funding at the Office of Economic Opportunity By Martha J. Bailey; Nicolas J. Duquette
  7. A Critical Perspective on Economy, Modernity and Temporality in Contemporary Greece through the Prism of Energy Practice By Daniel M.Knight

  1. By: Lekha Chakraborty
    Abstract: Incorporating time in public policymaking is an elusive area of research. Despite the fact that gender budgeting is emerging as a significant tool to analyze the socioeconomic impacts of fiscal policies and thus identify their impacts on gender equity, the integration of time-use statistics in this process remains incomplete, or is even entirely absent, in most countries. If gender budgeting is predominantly based on the index-based empirical description of gender-specific outcomes, a reexamination of the construction of the gender (inequality) index is needed. This is necessary if we are to avoid an incomplete description of the gender-specific outcomes in budget policymaking. Further, "hard-to-price" services are hardly analyzed in public policymaking. This issue is all the more revealing, as the available gender-inequality index—based on health, empowerment, and labor market participation--so far has not integrated time-use statistics in its calculations. From a public finance perspective, the gender budgeting process often rests on the assumption that mainstream expenditures, such as public infrastructure, are nonrival in nature, and that applying a gender lens to these expenditures is not feasible. This argument is refuted by time budget statistics. The time budget data reveal that this argument is often flawed, as there is an intrinsic gender dimension to nonrival expenditures.
    Keywords: Unpaid Care Work; Fiscal Policy; Gender Budgeting; Time Use; Macro Policy
    JEL: D13 J22 H31
    Date: 2014–01
  2. By: Ivan H. Ayala; Alfonso Palacio-Vera
    Abstract: The rational expectations hypothesis (REH) is the standard approach to expectations formation in macroeconomics. We discuss its compatibility with two strands of Karl Popper's philosophy: his theory of knowledge and learning, and his "rationality principle" (RP). First, we show that the REH is utterly incompatible with the former. Second, we argue that the REH can nevertheless be interpreted as a heuristic device that facilitates economic modeling and, consequently, it may be justified along the same lines as Popper's RP. We then argue that, our position as to the resolution of this paradox notwithstanding, Popper's philosophy provides a metatheoretical framework with which we can evaluate the REH. Within this framework, the REH can be viewed as a heuristic device or strategy that fulfils the same function as, for instance, the optimizing assumption. However, we believe that the REH imparts a serious methodological bias, since, by implying that macroeconomic instability is caused exclusively by "exogenous" shocks that randomly hit the economy, it precludes the analysis of any sources of inherent instability caused by the making of (nonrandom) errors by individuals, and hence it favors the creation of an institutional configuration that may be ill suited to address this type of instability.
    Keywords: Popper; Knowledge; Rational Expectations; Learning; Trial; Error Elimination
    JEL: A12 B41 B50 D84
    Date: 2014–01
  3. By: Adam Isen; Maya Rossin-Slater; W. Reed Walker
    Abstract: This paper examines the long-term impacts of in-utero and early childhood exposure to ambient air pollution on adult labor market outcomes. We take advantage of a new administrative data set that is uniquely suited for addressing this question because it combines information on individuals' quarterly earnings together with their counties and dates of birth. We use the sharp changes in ambient air pollution concentrations driven by the implementation of the 1970 Clean Air Act Amendments as a source of identifying variation, and we compare cohorts born in counties that experienced large changes in total suspended particulate (TSP) exposure to cohorts born in counties that had minimal or no changes. We find a significant relationship between TSP exposure in the year of birth and adult labor market outcomes. A 10 unit decrease in TSP in the year of birth is associated with a 1 percent increase in annual earnings for workers aged 29-31. Most, but not all, of this effect is driven by an increase in labor force participation. In present value, the gains from being born into a county affected by the 1970 Clean Air Act amount to about $4,300 in lifetime income for the 1.5 million individuals born into these counties each year.
    JEL: H40 H51 I12 I14 J17 J18 J31 Q51 Q53 Q58
    Date: 2014–01
  4. By: Dean Corbae (University of Wisconsin); Andrew Glover (University of Texas at Austin); Daphne Chen (Florida State University)
    Abstract: According to a Survey by the Society for Human Resource Man- agement (2010), 60% of human resource representatives interviewed in 2009 indicated that the companies they worked for ran credit checks on potential employees. In this paper, we explore how credit checks (observable signals based on an agent’s unobservable type) may af- fect outcomes in a matching model of the labor market. We show that it may be individually optimal for employers to use such signals to make hiring/firing/compensation decisions. Such decisions how- ever may have important implications for household welfare inducing a poverty trap. The analysis can shed light on the consequences of a law (the Equal Employment for All Act (H.R. 3149)) prohibiting the use of credit information in employment decisions which currently sits before Congress.
    Date: 2013
  5. By: Alessandro Palma (Department of Economics, Roma Tre University)
    Abstract: In this paper we investigate the trade-offs between growth and low carbon targets for both developing and developed countries for the period to 2035. The issues examined include two policy options for being on track to meet the 450 ppm target: (a) national/regional targets without international trade in carbon permits and (b) a global market in permits. Policy options are evaluated with an original dynamic CGE model which relies on the static GTAP-E structure. The model focuses on bilateral trade flows and links between economies and sectors that capture the realistic economy-wide nature of a globalized world. The results show higher costs of meeting the target than the average of previous models, although there are some previous studies that have costs in the same range. We then go on to investigate options for reducing these costs that are broadly consistent with a green growth strategy of supporting low carbon development. A green carbon fund financed through a levy on carbon taxation can benefit all parties. Potential larger benefits are associated with the investment of the green fund to foster energy efficiency.
    Keywords: Dynamic CGE Model, Climate Change Policies, Green Carbon Fund, Energy Efficiency
    JEL: C68 H23 O44 Q54
    Date: 2013–12
  6. By: Martha J. Bailey; Nicolas J. Duquette
    Abstract: This paper presents a quantitative analysis of the geographic distribution of spending through the 1964 Economic Opportunity Act (EOA). Using newly assembled state and county-level data, the results show that the Johnson administration systematically directed funding toward poorer and more nonwhite areas. In contrast to the distribution of New Deal spending, short-term political considerations appear to have played a minor role in distributing EOA funds. Choosing to fight poverty and discrimination rather than playing politics may help explain some of the immediate backlash against the War on Poverty programs. It also suggests that the implementation of the War on Poverty may play an important role in explaining why it is remembered as a failure.
    JEL: H50 J08 N12
    Date: 2014–01
  7. By: Daniel M.Knight
    Abstract: During the Greek economic crisis a focus on energy practice highlights the temporal complexities of local coping strategies. Re-launched in 2011, the European Union supported solar energy initiative encourages installation of futuristic, high-tech photovoltaic panels on fertile agricultural land. Entangled with intricate notions of neo-colonialism and occupation, the solar program provides extra income for disenfranchised farmers and much needed local employment opportunities. However, winter 2012-13 witnessed a return en-mass to ‘archaic’ open fires and wood-burning stoves that locals associate with material poverty, pre-modernity, and pre-Europeanization. Energy practice provides a prism through which to discuss increased social suffering and reassess the place of Greece in a modern Europe.
    Keywords: Energy, Economic Crisis, Temporality, Modernity, Belonging
    Date: 2014–01

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