nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2015‒01‒14
nine papers chosen by
Karl Petrick
Western New England University

  1. "Liquidity Preference and the Entry and Exit to ZIRP and QE" By Jan Kregel
  2. Building on institutional failures: the European Treaty on Stability, Coordination and Governance By Benjamin Coriat
  3. Das Public Kapital: How Much Would Higher German Public Investment Help Germany and the Euro Area? By Selim Elekdag; Dirk Muir
  4. Costa Rica's outward-looking development: from ‘Agriculture of Change’ to food insecurity (1990-2008) By Elisa Botella Rodríguez
  5. A Macroeconomic Model of Biodiversity Protection By David Martin
  6. Sick of your Job? – Negative Health Effects from Non-Optimal Employment By Jan Kleibrink
  7. Sexual Orientation Discrimination in the United Kingdom's Labour Market: A Field Experiment By Drydakis, Nick
  8. Greening Household Behaviour: A review for Policy Makers By OECD
  9. Entrepreneurial Activities in Europe - Finance for Inclusive Entrepreneurship By Marco Marchese

  1. By: Jan Kregel
    Abstract: The Fed's zero interest policy rate (ZIRP) and quantitative easing (QE) policies failed to restore growth to the US economy as expected (i.e., increased investment spending a la John Maynard Keynes or from an expanded money supply a la Ben Bernanke / Milton Friedman). Senior Scholar Jan Kregel analyzes some of the arguments as to why these policies failed to deliver economic recovery. He notes a common misunderstanding of Keynes's liquidity preference theory in the debate, whereby it is incorrectly linked to the recent implementation of ZIRP. Kregel also argues that Keynes's would have implemented QE policies quite differently, by setting the bid and ask rate and letting the market determine the volume of transactions. This policy note both clarifies Keynes's theoretical insights regarding unconventional monetary policies and provides a substantive analysis of some of the reasons why central bank policies have failed to achieve their stated goals.
    Date: 2014–11
  2. By: Benjamin Coriat
    Abstract: The paper is devoted to an analysis of the Treaty on Stability Coordination and Governance (TSCG), also known as the "Fiscal Compact" Treaty signed between the EU member states in 2012. We argue than the TSCG, instead of helping to "repair" the institutional failures on which the Euro and the Eurozone are built, strengthens them and further weakens the construction on which the European member states operate. In this sense, the Treaty explains why the crisis in Europe is so deep and persistent, and why the member states of the Eurozone are having such difficulty in returning to a path of balance and growth. After defining the "core" of the Treaty more precisely, by describing the nature and significance of the new rules it has introduced in more detail, we explain why these rules create supplementary obstacles in the road to recovery.
    Keywords: Fiscal Compact, ECB, public debt, European crisis
    Date: 2014–12–16
  3. By: Selim Elekdag; Dirk Muir
    Abstract: Given the backdrop of pressing infrastructure needs, this paper argues that higher German public investment would not only stimulate domestic demand in the near term and reduce the current account surplus, but would also raise output over the longer-run as well as generate beneficial regional spillovers. While time-to-build delays can weaken the impact of the stimulus in the short-run, the expansionary effects of higher public investment are substantially strengthened with an accommodative monetary policy stance—as is typical during periods of economic slack. The current low-interest rate environment presents a window of opportunity to finance higher public investment at historically favorable rates.
    Keywords: Public investment;Germany;Euro Area;Demand;Economic growth;Capital productivity;Fiscal policy;Monetary policy;Econometric models;Fiscal policy, monetary policy accommodation, Germany, euro area, time-to-build delays
    Date: 2014–12–17
  4. By: Elisa Botella Rodríguez
    Abstract: Costa Rica has been a great example of the neoliberal approach to agricultural policy implemented during the last two decades in most Latin American countries. Costa Rica shifted from import substitution industrialisation (ISI) to export-led growth and what the government and international organisations called ‘Agriculture of Change’ in the early 1980s. A combination of an active state, stable democracy, high social investment and support for small and medium firms, including cooperatives, resulted in higher economic growth and better gender and income distribution than in neighbouring countries. Since 1990, Costa Rica accelerated trade liberalisation, foreign direct investment (FDI), and non-traditional agricultural exports (NTAEs) through agricultural conversion programmes. Since the early 1990s new patterns of agricultural development have promoted the regional specialisation of agricultural production. The new strategy shaped agriculture and rural development in different regions and cantons creating opportunities and challenges for small famers and rural inhabitants.
    Keywords: Costa Rica, outward-looking development, NTAEs, small farmers, agricultural conversion, Agriculture of Change
    JEL: N56 O13 Q15 Q18
    Date: 2014–12
  5. By: David Martin (Department of Economics, Davidson College)
    Abstract: Many biodiversity researchers have responded to the financial constraints faced by policy makers to develop models based upon the “Noah’s Ark” metaphor, implying that society can save only a limited amount of biodiversity. Unfortunately, as Herman Daly (Land Economics, 1991) pointed out, such microeconomic rules can allow an ark to sink albeit in some optimal fashion. So, I step back to look at the macroeconomic question, how big should the ark be? I start with Norgaard’s (Ecological Economics, 2010) framework, which is based upon the concept of a production possibility frontier combined with a sustainability criterion. I develop a model from that starting point by shifting to an isoquant framework while maintaining the strong sustainability criterion. I demonstrate how this model allows for identifying and addressing the key biodiversity protection policy criteria at the macroeconomic level. One key conclusion from this modeling is that Daly’s analysis remains remarkably prescient. Publication Status: Published in Theoretical Economics Letters, 2013, 3(5A):39-44.
    Keywords: Biodiversity Protection; Natural Capital; Conservation; Macroeconomics; Sustainable Development
    JEL: Q57
    Date: 2013–05
  6. By: Jan Kleibrink
    Abstract: In an empirical study based on data from the German Socio-Economic Panel, the effect of job quality on individual health is analyzed. Extending previous studies methodologically to estimate unbiased effects of job satisfaction on individual health, it can be shown that low job satisfaction affects individual health negatively. In a second step, the underlying forces of this broad effect are disentangled. The analysis shows that the effects of job satisfaction on health run over the channels of job security and working hours above the individual limit. Job quality not only has a strong impact on mental health but physical health is affected as well. At the same time, health-damaging behavior including smoking and being overweight is not affected.
    Keywords: Individual health; job satisfaction
    JEL: I14 J24 J28
    Date: 2014–10
  7. By: Drydakis, Nick (Anglia Ruskin University)
    Abstract: Deviations from heteronormativity affect labour market dynamics. Hierarchies of sexual orientation can result in job dismissals, wage discrimination, and the failure to promote gay and lesbian individuals to top ranks. In this paper, I report on a field experiment (144 job-seekers and their correspondence with 5,549 firms) that tested the extent to which sexual orientation affects the labour market outcomes of gay and lesbian job-seekers in the United Kingdom. Their minority sexual orientations, as indicated by job-seekers' participation in gay and lesbian university student unions, negatively affected their workplace prospects. The probability of gay (lesbian) applicants receiving an invitation for an interview was 5.0% (5.1%) lower than that for heterosexual male (female) applicants. In addition, gays (lesbians) received invitations for interviews by firms that paid salaries that were 1.9% (1.2%) lower than those paid by firms that invited heterosexual male (female) applicants for interviews. In addition, in male- (female-) dominated occupations, gay men (lesbians) received fewer invitations for interviews than their non-gay (non-lesbian) counterparts. Furthermore, gay men (lesbians) also received fewer invitations to interview for positions in which masculine (feminine) personality traits were highlighted in job applications and at firms that did not provide written equal opportunity standards, suggesting that the level of discrimination depends partly on the personality traits that employers seek and on organisation-level hiring policies. I conclude that heteronormative discourse continues to reproduce and negatively affect the labour market prospects of gay men and lesbians.
    Keywords: field experiment, heteronormativity, interviews, selection, sexual orientation, wage offers
    JEL: C93 J7 J82
    Date: 2014–12
  8. By: OECD
    Abstract: Personal behaviour and choices in daily life, from what we eat to how we get to work or heat our homes, have a significant – and growing – effect on the environment. But why are some households greener than others? And what factors motivate green household choices? <P>Answering these questions is vital for helping governments design and target policies that promote “greener” behaviour. The OECD’s Environmental Policy and Individual Behaviour Change (EPIC) survey is designed to do just that. This large-scale household survey explores what drives household environmental behaviour and how policies may affect household decisions. It focuses on five areas in which households have significant environmental impact: energy, food, transport, waste and water. This policy paper is based on the second round of the EPIC survey, carried out in 2011 (the first was in 2008). The survey collected information from more than 12 000 households in Australia, Canada, Chile, France, Israel, Japan, Korea, the Netherlands, Spain, Sweden and Switzerland.
    Date: 2014–12–17
  9. By: Marco Marchese
    Abstract: More than one-third of the European Union’s adult population would rather be self-employed than an employee if given the chance to choose, according to the 2012 Flash Eurobarometer survey. At the same time, there is a large entrepreneurial potential in social groups that are either disadvantaged in the labour market (e.g. youth, migrants, and the low-skilled) or underrepresented in the entrepreneurial population (e.g. women and seniors). Inclusive entrepreneurship policies aim to give the opportunity for people from these groups to start-up in business and self-employment both for economic reasons and to support the goal of social inclusion.
    Date: 2014–04

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