nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2014‒11‒07
five papers chosen by
Karl Petrick
Western New England University

  1. Income Distribution and Economic Growth in a Multi-Sectoral Kaleckian Model By Hiroshi Nishi
  2. Finance-dominated capitalism and income distribution: a Kaleckian perspective on the case of Germany By Eckhard Hein; Daniel Detzer
  3. Factors generating and transmitting the financial crisis; Functional distribution of income. By Jo Michell
  4. Consumer Behaviour in a Social Context: Implications for Environmental Policy By Partha Dasgupta; Dale Southerton; Alistair Ulph; David Ulph
  5. Factors generating and transmitting the financial crisis: The role of incentives: securitization and contagion By Giampaolo Gabbi; Alesia Kalbaska; Alessandro Vercelli

  1. By: Hiroshi Nishi
    Abstract: This study builds an income distribution and growth model within a simple multi-sectoral Kaleckian framework. The model has heterogeneous features in each sector in that the responses of saving and investment to changes in macroeconomic performance differ sectorally, and there are also different sectoral shares of saving and investment. We consider the determinants that establish the economic growth regime (i.e. wage-led and profit-led) and the stable output growth rate adjustment within this framework. By doing so, we reveal the sectoral composition of saving and investment and that elasticity of saving and investment matter for the formation of a growth regime and the stability of the output growth rate at the aggregate level.
    Keywords: Multi-sectoral Kaleckian model; Income distribution; Sectoral heterogeneity
    JEL: B50 E12 O41
    Date: 2014–10
  2. By: Eckhard Hein (Berlin School of Economics and Law and Institute for International Political Economy); Daniel Detzer (Berlin School of Economics and Law and Institute for International)
    Abstract: We present an investigation into the long-run effects of financialisation on income distribution before the financial and economic crises for Germany, one of the major mercantilist export-led economies. The analysis builds on a Kaleckian approach towards the examination of the effects of financialisation on income distribution, as suggested by Hein (2014a). First, we show that Germany saw considerable re-distribution of income starting in early 1980s, which accelerated in the early 2000s, in particular. Examining the three main channels through which financialisation (and neo-liberalism) are supposed to have affected the wage or the labour income share, according to the Kaleckian approach, we provide evidence for the existence of each of these channels in Germany since the mid- 1990s, when several institutional changes provided the conditions for an increasing dominance of finance.
    Keywords: Finance-dominated capitalism; distribution of income; Kaleckian distribution theory, Germany
    JEL: D31 D33 D43
    Date: 2014–09–01
  3. By: Jo Michell (University of the West of England.)
    Abstract: The distribution of income between capital and labour has, until very recently, been ignored by the majority of the economics profession. At the same time, the rate of wage growth has systematically lagged the growth of productivity, leading to a fall in the share of wages in total income. This paper considers the links between shifts in the functional distribution of income, rising personal income inequality and the mechanisms which led to the financial crisis of 2007-2008. The paper argues that the most widespread explanation for increasing inequality - increasing demand for skilled labour due to technological change - is not convincing, and that political factors have played an important role. Mechanisms by which inceasing inequality feed through into financial instability are considered. These include debt as an insurance mechanism against greater income volatility; debt as an adjunct to emulative consumption behaviour; debt as a political tool to defuse the growing gap between wages and productivity; and debt as a way to overcome the stagnationary macroeconomic effects of rising inequality.
    Keywords: Aggregate Factor Income Distribution, Financial Crises
    JEL: E25 G01
  4. By: Partha Dasgupta (University of Cambridge and University of Manchester); Dale Southerton (University of Manchester); Alistair Ulph (University of Manchester); David Ulph (University of St Andrews)
    Abstract: In this paper we summarise some of our recent work on consumer behaviour, drawing on recent developments in behavioural economics, in which consumers are embedded in a social context, so their behaviour is shaped by their interactions with other consumers. For the purpose of this paper we also allow consumption to cause environmental damage. Analysing the social context of consumption naturally lends itself to the use of game theoretic tools, and indicates that we seek to develop links between economics and sociology rather than economics and psychology, which has been the more predominant field for work in behavioural economics. We shall be concerned with three sets of issues: conspicuous consumption, consumption norms and altruistic behaviour. Our aim is to show that building links between sociological and economic approaches to the study of consumer behaviour can lead to significant and surprising implications for conventional economic policy prescriptions, especially with respect to environmental policy.
    Keywords: consumer behaviour, social context, environmental policy, game theory, competitive consumption, consumption norms, altruism, moral behaviour, Kantian calculus
    JEL: D1 D6 H2 Q5 Z1
    Date: 2014–01–01
  5. By: Giampaolo Gabbi (University of Siena); Alesia Kalbaska (University of Siena); Alessandro Vercelli (University of Siena)
    Abstract: This contribution attempts to explain the recent financial crisis and the subsequent Great Recession from the point of view of incentives that change as a consequence of securitization and contagion processes. It provides a critical analysis of the basic principles of the Asymmetric Information Approach and its two branches that view differently the evolution of banking and the role of securitization in it. The former focuses on its impact on the traditional model of commercial banking, whereas the latter sees the role of securitization in the emergence of a parallel banking system (shadow banking). This divergence between the two approaches leads to different policy implications that can be drawn from the analysis of the crisis, advocating respectively the elimination (or heavy mitigation) of securitization and shadow banking, and the strict regulation of shadow banking and all the credit transfer processes. The paper is organized in three parts: the first finds out the crisis and the contagion within the financial system; the second is focused on the securitization process, describing the agents involved and the associated risks; finally, the third part is devoted to the theoretical analysis, particularly within the asymmetric information framework.
    Keywords: Financialisation, Great Recession, Financial Crisis, shadow banking, securitization
    JEL: D52 D53 D82 G21 G24
    Date: 2014–09–01

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