nep-pke New Economics Papers
on All new papers
Issue of 2014‒09‒08
eleven papers chosen by
Karl Petrick
Western New England University

  1. Stimulus and Fiscal Consolidation: The Evidence and Implications By Dean Baker; David Rosnick
  2. "A Decade of Flat Wages?" By Fernando Rios-Avila; Julie L. Hotchkiss
  3. Are We All Playing the Same Game? The Economic Effects of Constitutions Depend on the Degree of Institutionalization By German Caruso; Carlos Scartascini; Mariano Tommasi
  4. Milton Friedmans economics and political economy: an old Keynesian critique By Thomas I. Palley
  5. Towards an evolutionary perspective on regional resilience By Boschma, Ron
  6. The critics of modern money theory (MMT) are right By Thomas I. Palley
  7. "The Euro Treasury Plan" By Jorg Bibow
  8. Keynes and the Interwar Commodity Option Markets By Maria Cristina Marcuzzo; Eleonora Sanfilippo
  9. John Meynard Keynes : une synthèse biographique et bibliographique By Frederic Teulon
  10. John Kenneth Galbraith, un économiste hétérodoxe dans le siècle By Frederic Teulon
  11. Relire Marx (et les marxistes !) By Frederic Teulon

  1. By: Dean Baker; David Rosnick
    Abstract: This paper examines the evidence on the impact of stimulus and fiscal consolidation in the context of a severe economic slump like the Great Recession. The first part reviews some of the major works on this topic in the last decade. It notes that the research clearly points in the direction of stimulus increasing growth during a prolonged slump. The second part examines the impact of changes in government consumption and investment on growth, using data from advanced countries since 1980. Consistent with most prior literature it finds that increases in government spending during downturns lead to increases in growth. It then constructs simulations for the period since the Great Recession showing multipliers in the neighborhood of 1.5. The third part notes new evidence suggesting that potential GDP appears to have fallensharply as a result of the downturn. A full model of the impact of stimulus would have to incorporate this effect which is likely to be large relative to the size of the stimulus.
    Date: 2014
  2. By: Fernando Rios-Avila; Julie L. Hotchkiss
    Abstract: In the late 1990s low unemployment rates, increases in the minimum wage, and improvements in labor productivity contributed to a boost in wages, which translated into 12.4 percent cumulative growth in real wages from the late '90s until 2002. Real wages then stagnated despite continued growth in labor productivity. This period between 2002 and 2013 has become known as the decade of flat wages. However, over the same period there were significant changes in the composition of the labor market. In particular, the labor force has aged and become more educated. Increases in age, experience, and education could in fact be propping up observed real wages--meaning that wages of workers with a specific age and education profile may have actually declined over the decade. This is exactly what we uncover in this policy note: what appears to have been a decade of flat real wages was actually a decade of declining real wages within age/education worker profiles.
    Date: 2014–06
  3. By: German Caruso; Carlos Scartascini; Mariano Tommasi
    Abstract: The understanding of the economic effect of formal institutional rules has progressed substantially in recent decades. These formal analyses have tended to take for granted that institutional arenas such as Congress are the places where decision-making takes place. That is a good approximation in some cases (such as many developed countries today) but not in others. If countries differ in how institutionalized their policymaking is, it is possible that the impact of formal political rules on policy outcomes might depend on that. This paper explores that hypothesis and finds that some important claims regarding the impact of constitutions on policy outcomes do not hold for countries in which institutionalization is low. The findings suggest the need to develop a broader class of policymaking models in which the degree to which decision-making follows 'the rules' is also endogenized.
    JEL: D72 D73 D78 H20 H60 H62
    Date: 2013–07
  4. By: Thomas I. Palley
    Abstract: Milton Friedman's influence on the economics profession has been enormous. In part, his success was due to political forces that have made neoliberalism the dominant global ideology, but Friedman also rode those forces and contributed to them. Friedman's professional triumph is testament to the weak intellectual foundations of the economics profession which accepted ideas that are conceptually and empirically flawed. His success has taken economics back in a pre-Keynesian direction and squeezed Keynesianism out of the academy. Friedman's thinking also frames so-called new Keynesian economics which is simply new classical macroeconomics with the addition of imperfect competition and nominal rigidities. By enabling the claim that macroeconomics is fully characterized by a divide between new Keynesian and new classical macroeconomics, new Keynesianism closes the pincer that excludes old Keynesianism. As long as that pincer holds, economics will remain under Friedman's shadow.
    Keywords: Friedman, monetarism, new classical macroeconomics, new Keynesian, neoliberalism
    Date: 2014
  5. By: Boschma, Ron (CIRCLE, Lund University and Department of Economic Geography, Urban and Regional research centre Utrecht, Utrecht University)
    Abstract: This paper proposes an evolutionary perspective on regional resilience. We conceptualize resilience not just as the ability of a region to accommodate shocks, but we extend it to the long-term ability of regions to develop new growth paths. We propose a comprehensive view on regional resilience, in which history is key to understand how regions develop new growth paths, and in which industrial, network and institutional dimensions of resilience come together. Resilient regions are capable of overcoming a trade-off between adaptation and adaptability, as embodied in their industrial (related and unrelated variety), network (loosely coupled) and institutional (loosely coherent) structures.
    Keywords: regional resilience; related variety; networks; institutions; evolutionary economic geography
    JEL: B52 D85 L16 O18 R11
    Date: 2014–08–23
  6. By: Thomas I. Palley
    Abstract: Eric Tymoigne and Randall Wray's (T&W, 2013) defense of MMT leaves the MMT emperor even more naked than before (excuse the Yogi Berra-ism). The criticism of MMT is not that it has produced nothing new. The criticism is that MMT is a mix of old and new, the old is correct and well understood, while the new is substantially wrong. Among many failings, T&W fail to provide an explanation of how MMT generates full employment with price stability; lack a credible theory of inflation; and fail to justify the claim that the natural rate of interest is zero. MMT currently has appeal because it is a policy polemic for depressed times. That makes for good politics but, unfortunately, MMT's policy claims are based on unsubstantiated economics.
    Keywords: modern money theory, money financed budget deficits, fiscal policy
    JEL: E00 E02 E10 E12 E24 E40 E58 E62 E63
    Date: 2014
  7. By: Jorg Bibow
    Abstract: Contrary to German chancellor Angela Merkel's recent claim, the euro crisis is not nearly over but remains unresolved, leaving the eurozone extraordinarily vulnerable to renewed stresses. In fact, as the reforms agreed to so far have failed to turn the flawed and dysfunctional euro regime into a viable one, the current calm in financial markets is deceiving, and unlikely to last. The euro regime's essential flaw and ultimate source of vulnerability is the decoupling of central bank and treasury institutions in the euro currency union. In this public policy brief, Research Associate Jorg Bibow proposes a Euro Treasury scheme to properly fix the regime and resolve the euro crisis. The Euro Treasury would establish the treasury-central bank axis of power that exists at the center of control in sovereign states. Since the eurozone is not actually a sovereign state, the proposed treasury is specifically designed not to be a transfer union; no mutualization of existing national public debts is involved either. The Euro Treasury would be the means to pool future eurozone public investment spending, funded by proper eurozone treasury securities, and benefits and contributions would be shared across the currency union based on members' GDP shares. The Euro Treasury would not only heal the euro's potentially fatal birth defects but also provide the needed stimulus to end the crisis in the eurozone.
    Date: 2014–08
  8. By: Maria Cristina Marcuzzo (University of La Sapienza, Rome); Eleonora Sanfilippo (University of Cassino and Southern Lazio)
    Keywords: Keynes, speculation, commodity options, interwar financial markets
    JEL: B26 B31 N20 N50
    Date: 2014–08
  9. By: Frederic Teulon
    Abstract: L’économiste Keynes a marqué le XXe siècle de son empreinte. Son nom reste associé à la réhabilitation du rôle de l’Etat dans la conduite de la politique conjoncturelle. Il se fait connaître du grand public en 1919 avec la publication de son ouvrage sur les conséquences économiques de la paix. Suivent plusieurs oeuvres majeures qui vont marquer l’histoire de la pensée économique et les politiques publiques sur plusieurs décennies. Conseiller de plusieurs gouvernements, Keynes s’efforce d’influer sur l’issue de la conférence de Bretton Woods en proposant un plan de refonte du système monétaire international. Son influence atteint son apogée à la fin des années 1960.
    Keywords: Analyse keynésienne, Politique économique, Inde, Etalon-or, modèles DSGE (Dynamic Stochastics General Equilibrium)
    Date: 2014–08–29
  10. By: Frederic Teulon
    Abstract: John Galbraith est un économiste américain hétérodoxe dont les recherches portent avant tout sur la nature et les structures du capitalisme. Il a publié des travaux sur la crise de 1929, sur les oligopoles, sur la révolution managériale et sur la pauvreté. Favorable à l’intervention de l’Etat, sans s’engager aux côtés des marxistes, Galbraith a été marginalisé aux Etats-Unis par la puissance de l’économie dominante.
    Keywords: Crise de 1929, Filière inversée, John Galbraith.
    Date: 2014–08–29
  11. By: Frederic Teulon
    Abstract: On ne présente pas Karl Marx, pourtant sa pensée est aujourd’hui galvaudée et largement déformée. L’objectif de cet article est de rappeler les fondements de l’analyse marxiste. L’étude des travers du capitalisme faite par Marx reste aujourd’hui une référence du fait de l’accroissement des inégalités de revenu et de patrimoine, de la concentration du capital et de l’instabilité des marchés (notamment financiers).
    Keywords: Capitalisme, Inégalités, Marxisme.
    Date: 2014–08–29

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