nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2014‒12‒08
eight papers chosen by
Karl Petrick
Western New England University

  1. "An Outline of a Progressive Resolution to the Euro-area Sovereign Debt Overhang: How a Five-year Suspension of the Debt Burden Could Overthrow Austerity" By Dimitris P. Sotiropoulos; John Milios; Spyros Lapatsioras
  2. Finance-dominated capitalism and income distribution: A Kaleckian perspective on the case of Germany By Hein, Eckhard; Detzer, Daniel
  3. Macro Micro Model with a Post-Keynesian Perspective in the banking industry By Hyejin Cho
  4. Micro and Macro Policies in Keynes+Schumpeter Evolutionary Models By Giovanni Dosi; Mauro Napoletano; Andrea Roventini; Tania Treibich
  5. Tackling the instability of growth: A Kaleckian model with autonomous demand expenditures By Olivier Allain
  6. Do the International Monetary and Financial Systems Need More than Short-Term Cosmetics Reforms? By Sau, Lino
  7. Behavioral Economics of Education By Koch, Alexander K.; Nafziger, Julia; Nielsen, Helena Skyt
  8. A First Step up the Energy Ladder? Low Cost Solar Kits and Household's Welfare in Rural Rwanda By Grimm, Michael; Munyehirwe, Anicet; Peters, Jörg; Sievert, Maximiliane

  1. By: Dimitris P. Sotiropoulos; John Milios; Spyros Lapatsioras
    Abstract: The present study puts forward a plan for solving the sovereign debt crisis in the euro area (EA) in line with the interests of the working classes and the social majority. Our main strategy is for the European Central Bank (ECB) to acquire a significant part of the outstanding sovereign debt (at market prices) of the countries in the EA and convert it to zero-coupon bonds. No transfers will take place between individual states; taxpayers in any EA country will not be involved in the debt restructuring of any foreign eurozone country. Debt will not be forgiven: individual states will agree to buy it back from the ECB in the future when the ratio of sovereign debt to GDP has fallen to 20 percent. The sterilization costs for the ECB are manageable. This model of an unconventional monetary intervention would give progressive governments in the EA the necessary basis for developing social and welfare policies to the benefit of the working classes. It would reverse present-day policy priorities and replace the neoliberal agenda with a program of social and economic reconstruction, with the elites paying for the crisis. The perspective taken here favors social justice and coherence, having as its priority the social needs and the interests of the working majority.
    Keywords: Euro Area; Sovereign Debt; European Central Bank; Unconventional Monetary Policies
    JEL: E58 E61 H12 H63
    Date: 2014–11
  2. By: Hein, Eckhard; Detzer, Daniel
    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
  3. By: Hyejin Cho (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)
    Abstract: This article introduces the cascaded individual model of Post-keynesian economics. This differs from the representative agent model of the old-keynesian model mathematically and methodologically. The model builds from five assumptions containing original concepts: cascaded individuals, a social planner vs a regulator, aggregate deposits (stock) vs pyroclastic deposits (flow). Mainly, this Macro-Micro approach of Post-keynesian concepts suggests the regulation of the money flow. Then, this paper articulates fundamental concepts to solve problems of a sudden "micro" financial shock in the short run with the long run "macro" stabilization with a balanced perspective between macroeconomics and microeconomics.
    Keywords: macro micro model; Post-keynesian; banking industry; general equilibrium; endogenous money creation; representative agents; cascaded individuals; aggregate deposits; pyroclastic deposits; social planner; regulator; moral hazard problem
    Date: 2014–05–22
  4. By: Giovanni Dosi; Mauro Napoletano; Andrea Roventini; Tania Treibich
    Abstract: This paper presents the family of the Keynes+Schumpeter (K+S, cf. Dosi et al, 2010, 2013, 2014) evolutionary agent-based models, which study the effects of a rich ensemble of innovation, industrial dynamics and macroeconomic policies on the long-term growth and short-run fluctuations of the economy. The K+S models embed the Schumpeterian growth paradigm into a complex system of imperfect coordination among heterogeneous interacting firms and banks, where Keynesian (demand-related) and Minskian (credit cycle) elements feed back into the meso and macro dynamics. The model is able to endogenously generate long-run growth together with business cycles and major crises. Moreover, it reproduces a long list of macroeconomic and microeconomic stylized facts. Here, we discuss a series of experiments on the role of policies affecting i) innovation, ii) industry dynamics, iii) demand and iv) income distribution. Our results suggest the presence of strong complementarities between Schumpeterian (technological) and Keynesian (demand-related) policies in ensuring that the economic system follows a path of sustained stable growth and employment.
    Keywords: agent-based model, fiscal policy, economic crises, austerity policies, disequilibrium dynamics
    Date: 2014–11–15
  5. By: Olivier Allain (Université Paris Descartes - Sorbonne Paris Cité - Faculté de Droit, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)
    Abstract: This article presents a Kaleckian model enriched by introducing autonomous public expenditure which grows at an exogenous rate. It shows that the usual properties are not affected in the short run: growth is wage-led. But long run properties are strongly affected: public expenditure plays a role as an automatic stabilizer so that the accumulation rate converges on the growth rate of public expenditure. The effect of a change in income distribution on the growth rate is then only transient. However, the impacts on the level of variables (output, capital stock, labor, etc.) remain permanent. The research here also shows that this theoretical framework can provide a solution (depending on the parameters) to the 'second' Harrod knife-edge problem. In this case, Kaleckian outcomes are consistent with the convergence of the current utilization rate on the 'normal' rate, a result which has not been found in the existing literature.
    Keywords: Kaleckian models; utilization rate; Harrod instability; income distribution; automatic stabilizers
    Date: 2013–03
  6. By: Sau, Lino (University of Turin)
    Abstract: The storm that has rocked our world has opened an interesting debate among economists and policy makers concerning with the need of a new international monetary and financial architecture. The monetary and financial regime that has been in force since the collapse of Bretton Woods (B-W), encourages indeed the persistence of unsustainable dynamics which spawn increasingly serious crises and it is unable of imparting an acceptable macro-economic discipline device to the world's economy. It became apparent that the global role of a key currency along with the deregulation of financial markets (neo-liberal paradigm) have acted as underlying conditions for the US financial crisis up to present situation and the following contagion to Europe. In this paper I point out the inadequacy of the institutional arrangements underlying the international monetary and financial regimes and I outline the relevance to the current debate of Keynes original plan, suggested rightly 70 years ago, that never born.
    Date: 2014–10
  7. By: Koch, Alexander K. (Aarhus University); Nafziger, Julia (Aarhus University); Nielsen, Helena Skyt (Aarhus University)
    Abstract: During the last decade knowledge about human behavior from psychology and sociology has enhanced the field of economics of education. By now research recognizes cognitive skills (as measured by achievement tests) and soft skills (personality traits not adequately measured by achievement tests) as equally important drivers of later economic outcomes, and skills are seen as multi-dimensional rather than one-dimensional. Explicitly accounting for soft skills often implies departing from the standard economic model by integrating concepts studied in behavioral and experimental economics, such as self-control, willingness to compete, intrinsic motivation, and self-confidence. We review how approaches from behavioral economics help our understanding of the complexity of educational investments and outcomes, and we discuss what insights can be gained from such concepts in the context of education.
    Keywords: non-cognitive skills, schooling, educational decision making, soft skills, behavioral economics
    JEL: D03 I20
    Date: 2014–09
  8. By: Grimm, Michael (University of Passau); Munyehirwe, Anicet (IB&C Rwanda); Peters, Jörg (RWI); Sievert, Maximiliane (RWI)
    Abstract: More than 1.3 billion people lack access to electricity. The UN have proclaimed the goal of providing electricity to all by 2030. In recent years, Pico-Photovoltaic kits have become a lower cost alternative to investment intensive grid electrification. Using a randomized controlled trial we examine uptake and impacts of a simple Pico-Photovoltaic kit that barely exceeds the benchmark of what the UN considers as modern energy. We find significant effects on households' budget, productivity and convenience. Despite these effects, the data shows that adoption will be impeded by affordability, suggesting that policy has to consider subsidized dissemination strategies.
    Keywords: energy access, household technology adoption, Sub-Saharan Africa, randomized controlled trial
    JEL: O13 O18 Q41
    Date: 2014–10

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