nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2014‒07‒05
six papers chosen by
Karl Petrick
Western New England University

  1. The Role of the Taylor Principle in the neo-Kaleckian Model when applied to an Endogenous Market Structure By OHNO, Takashi
  2. Income Inequality Developments in the Great Recession By Thomas Hellebrandt
  3. Can Aristotle Help Us Specify the Very Nature of Management Problem? By Marc Nikitin
  4. Horse trading? EU-African Economic Partnership Agreements (EPAs) By Kohnert, Dirk
  5. Dutch Disease in Latin American countries: De-industrialization, how it happens, crisis, and the role of China By Wong, Sara A.; Petreski, Marjan
  6. Do economists need virtues? By David Lipka

  1. By: OHNO, Takashi
    Abstract: This study examines the effect of using the neo-Kaleckian model to target inflation. Here, we assume the following: a model with monopolistic competition, a symmetric economy, the inflation conflict theory, the target profit share of firms depends on the number of firms, and free entry. Using the neo-Kaleckian model, we find the Taylor principle destabilizes the system, which means that an inelastic nominal interest monetary policy is a plausible way to ensure stability. In addition, we find that the Taylor principle is not compatible with the standard neo-Kaleckian results, including the effects of independent demand and income distribution in favour of workers.
    Keywords: neo-Kaleckian model, Taylor principle, free entry
    JEL: E24 E31
    Date: 2014–07
  2. By: Thomas Hellebrandt
    Abstract: The Great Recession has increased concerns over the fairness of the distribution of wealth and income in many societies. Using data on eight advanced economies (Germany, Greece, Ireland, Italy, Slovakia, Spain, the United Kingdom, and United States) between 2007 and 2010, I show how the Great Recession affected income inequality in different countries and how families and the state tried to mitigate its impact - though redistributing income within households and through the tax and benefit system. In most countries redistribution within household, through the social safety net and through direct taxes has been largely successful in offsetting the effect on income inequality of increased earnings inequality caused by the rise in unemployment in this pre-austerity period. I discuss some policy lessons that emerge from the varying experiences of different countries.
    Date: 2014
  3. By: Marc Nikitin (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR7322 - Université d'Orléans)
    Abstract: The question we address here is: "What is the very nature of managerial problems?". We first argue that real management problems, as opposed to technical problems, are those which do not have "a priori" solutions and for which the arguments for and against any important decision are more or less of equal weight. We then define managerial problems as recurrent dilemmas. Drawing on Aristotle's distinction between theoretical and practical sciences, we then try to analyze the consequences of the previous definition on an epistemological and a pedagogical point of view.
    Keywords: management ; managerial problem ; epistemology ; Aristotle
    Date: 2014–06–25
  4. By: Kohnert, Dirk
    Abstract: EU- Africa Economic Partnership Agreements (EPAs) are on the brink. In February 2014 West African leaders agreed in principle to conclude an agreement. However, last-minute objections of the heavy-weight Nigeria which wants to protect its infant industries as well as promising trade relations with new global players are likely to prevent the deal. Whether the ECOWAS EPA in its current form would really create a win-win situation for both partners as asserted by the EU is open to question. Scholarly evaluation of the EPAs reveal double-talk and significant barriers to a sustainable development of African economies. The growing preparedness of African states to challenge EU mercantile interest has been effectively backed by agitation of civil society organisations.
    Keywords: international trade, liberalization, West Africa, ECOWAS, EU, EPA, development, regional integration, civic agency
    JEL: F13 F53 F54 N17 N97 Z1
    Date: 2014–06–20
  5. By: Wong, Sara A.; Petreski, Marjan
    Abstract: This study investigates if and how different episodes of large net inflows – export boom, remittances, FDIs, or aid – caused Dutch disease in Latin American countries. We investigate this disease – i.e. the decline of manufacturing output – with special reference to the channels through which it works, to the crisis period and to the role of China for LAC. The study conducts analyses at the 3-digit International Standard Industrial Classification level for manufacturing industries. Our results robustly suggest that export, aid and remittances booms may indeed have an adverse impact on the rate of growth of exportable industries. The exchange rate overvaluation has proven to be the channel through which these capital booms induced decline of manufacturing output growth, but only after the work monetary and fiscal policies is considered. The crisis likely softened the Dutch disease effects in LAC. We find China exporting manufactures to some of the LAC does not significantly affect the manufacturing growth of other fellow LAC, but depending on the type of manufacture industry and country considered China may play a negative or positive role for LAC’s manufacturing through the work on third-market competition: Mexican manufacturing suffering significant negative impacts while for the rest of Latin American countries studied the effect of China may be positive.
    Keywords: Dutch disease, manufacturing value added, excess appreciation, Latin America
    JEL: N66 O14
    Date: 2014–06
  6. By: David Lipka
    Abstract: In many works Deirdre McCloskey criticizes professional economics for ignoring virtues. Even though I disagree with details of her analysis I concur with her general conclusions. In the paper I sketch my own perspective on how economists could profit from the virtue discourse as developed by Adam Smith. My argument is intended for economists who believe economics is about implications of individual choice. I distinguish behaviorist and mentalist interpretation and criticize the former. We all should be mentalists and admit the existence of the problem of interpretation. I briefly discuss neuroeconomics and evolutionary psychology as theories of interpretation and show that moral psychology can be viewed as one in morally relevant situations. I read Adam Smith’s Theory of Moral Sentiments as an important contribution to the moral psychology. I outline the Smithian system and show what economists can learn from it. They can improve their interpretive skills but also cultivate their general outlook of the world by understanding how knowledge of the market process shapes interpretation of the choice problem. Their general outlook can do better provided that it is balanced with the complete array of virtues. If not it may provide a distorted picture of reality.
    Keywords: Moral sentiments, Adam Smith, Virtue, Interpretation, mentalism, behaviorism
    JEL: B12 D01 D83
    Date: 2014–06

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