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on Post Keynesian Economics |
| By: | Mariana Mazzucato; Caetano C.R. Penna |
| Abstract: | Recent decades witnessed a trend whereby private markets retreated from financing the real economy, while, simultaneously, the real economy itself became increasingly financialized. This trend resulted in public finance becoming more important for investments in capital development, technical change, and innovation. Within this context, this paper focuses on the roles played by a particular source of public finance: state investment banks (SIBs). It develops a conceptual typology of the different roles that SIBs play in the economy, which together show the market creation/shaping process of SIBs rather than their mere "market fixing" roles. This paper discusses four types of investments, both theoretically and empirically: countercyclical, developmental, venture capitalist, and challenge led. To develop the typology, we first discuss how standard market failure theory justifies the roles of SIBs, the diagnostics and evaluation toolbox associated with it, and resulting criticisms centered on notions of "government failures." We then show the limitations of this approach based on insights from Keynes, Schumpeter, Minsky, and Polanyi, as well as other authors from the evolutionary economics tradition, which help us move toward a framework for public investments that is more about market creating/shaping than market fixing. As frameworks lead to evaluation tools, we use this new lens to discuss the increasingly targeted investments that SIBs are making, and to shed new light on the usual criticisms that are made about such directed activity (e.g., crowding out and picking winners). The paper ends with a proposal of directions for future research. |
| Keywords: | Development Banking; Market Failure; Mission-oriented Finance; Public Finance; State Investment Banks |
| JEL: | G20 L52 O16 O38 P16 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_831&r=pke |
| By: | Mark Setterfield (Department of Economics, New School for Social Research) |
| Abstract: | A Kaleckian growth model is modified to incorporate working households who borrow to finance some part of their consumption spending. The impact of this behavior on the sustainability of the growth process is then studied by means of a numerical analysis that captures various dimensions of increased income inequality in the US. The results show that the precise manner in which debtor households service their debts has important effects on the economy’s macrodynamics. |
| Keywords: | Consumer debt, emulation, income distribution, Golden Age growth regime, Neoliberal growth regime |
| JEL: | E12 E44 O41 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:new:wpaper:1403&r=pke |
| By: | Zeeshan Atiq; M. Emranul Haque |
| Abstract: | This paper argues that excessive liberalisation causes financial development to lose its effectiveness in generating economic growth. We investigate the hypothesis through a dynamic panel analysis for 88 countries for the period of 1973 - 2005 using a comprehensive financial development indicator constructed through principal component analysis of five different indicators used in the literature. For financial liberalisation, we use an aggregate index and its seven disaggregated components. The results indicate that the positive effect of financial development on long-run growth continues to decline as the financial sector becomes more liberalised. Our results are robust to changes in the financial development indicators and the disaggregation of the financial liberalisation index. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:man:cgbcrp:201&r=pke |
| By: | Alex Bryson; Rafael Gomez; Tobias Kretschmer; Paul Willman |
| Abstract: | We offer an explanation for the phenomenon of declining democratic engagement by assuming that what happens at work is the primary driver of what occurs outside of the workplace. If workers are exposed to the formalities of collective bargaining and union representation, they also perhaps increase their attachment to, and willingness to participate in, structures of democratic governance outside of the workplace as well. In order for this argument to hold, one first needs to test whether individual union members are more prone to vote and participate in civil society than non-members: Other research refers to this as the union voting premium. We find that the voice effect of unionism on democratic participation is significant and is larger for groups that are significantly under-represented when it comes to voting, namely those with fewer years of education, immigrants, and younger workers. We also discuss the legal implications of these findings. |
| JEL: | R14 J01 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:56970&r=pke |
| By: | Mark Setterfield (Department of Economics, New School for Social Research); Yun K. Kim (Department of Economics, University of Massachusetts, Boston); Jeremy Rees (Department of Economics, Trinity College) |
| Abstract: | We investigate the claim that the way in which debtor households service their debts matters for macroeconomic performance. A standard Kaleckian growth model is modified to incorporate working households who borrow to finance consumption that is determined, in part, by the desire to emulate the consumption patterns of more affluent households. The impact of this behavior on the sustainability of the growth process is then studied by means of a numerical analysis that captures various dimensions of income inequality. When compared to previous contributions to the literature, our results show that the way in which debtor households service their debt has both quantitative and qualitative effects on the economy’s macrodynamics. |
| Keywords: | Consumer debt, emulation, income distribution, Golden Age regime, Neoliberal regime, expenditure cascades, growth |
| JEL: | E12 E44 O41 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:new:wpaper:1404&r=pke |
| By: | Kakarot-Handtke, Egmont |
| Abstract: | The core problem of economics is that the representative economist never managed to keep political and theoretical economics properly apart. The mixture is toxic indeed. As Joan Robinson said about what parades as economics: Scrap the lot and start again. Yet, the question then arises where to start. To solve the Starting Problem - first formulated by J. S. Mill - is the all-dominant initial step of a paradigm shift. The most urgent task of a constructive Heterodoxy is to rethink pivotal concepts like market, Say's Law, profit, etcetera. The reconstruction of the theoretical superstructure from scratch is an absolute methodological necessity. |
| Keywords: | new framework of concepts; structure-centric; Law of Supply and Demand; market clearing; budget balancing; full employment; indifference |
| JEL: | B59 E10 |
| Date: | 2015–01–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:61670&r=pke |
| By: | Damiano de Felice |
| Abstract: | The publication of the Thun Group’s discussion paper The Guiding Principles on Business and Human Rights: An Interpretation for Banks represented a critical step on the way to delineate the relationship between the financial sector and human rights: the document lays the foundations for the adoption of the first ever comprehensive guide on how universal banks should operationalise their responsibility to respect human rights. As the arguments offered by the Thun Group are likely to influence the way in which numerous financial institutions integrate human rights into their operations, this article offers a critical assessment of the discussion paper. Notwithstanding several positive features, the Thun Group relies on a faulty subsidiary approach, avoids fundamental issues like access to effective remedy and downplays the importance of effective engagement with affected stakeholders. |
| Keywords: | banks; finance; Thun Group; Guiding Principles; business and human rights |
| JEL: | F3 G3 |
| Date: | 2014–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:58796&r=pke |
| By: | Luca Fiorito |
| Abstract: | The aim of this paper is to investigate in some detail the origins of Knight’s antipositism and to assess the main influences that brought him to a change in methodological perspective after 1921. As importantly, what follows is also an attempt to increase our general understanding of the methodological debates taking place during the early decades of the last century and to shed new light on the inherently pluralistic character of US interwar economics. This paper is organized as follows: the first section outlines Knight’s methodological views as presented in his early works; the second section discusses Knight’s “recantation” and his attack on behavioristic social science; the third section analyze Knight’s discussion of the nature and limitations of scientific economics; the fourth section offers a brief digression on Knight’s relationship with American institutionalism; the fifth section deals with the later developments of Knight’s antipositivism; the final section presents some conclusions |
| Keywords: | Knight, Frank; Economic methodology; Economics and physics; American institutionalism |
| JEL: | B31 B41 B40 B21 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:705&r=pke |
| By: | Graham Floater; Philipp Rode; Dimitri Zenghelis |
| Abstract: | Stockholm is a leading city for green economic growth. Despite the global downturn, the city’s low carbon economy remains highly competitive and well positioned for driving sustained growth in the medium to long term. This report, produced in partnership with the City of Stockholm, shows that Stockholm took early action to build a green economy – unlike most cities, environmental policies have been important to Stockholm for over 40 years. At the same time, early infrastructure investment such as building the city’s metro system in the 1950s, and development of district heating following the 1970s oil shocks has helped to build today’s lower carbon economy. Featuring a wealth of new research findings, the report shows how Stockholm benefits from a low-carbon energy system, a relatively compact centre with good public transport and an innovation-led economy for developing smart city solutions and export markets of the future. The report also examines the challenges that Stockholm faces in maintaining its position as a green economy leader internationally. The city’s ambitious goal to become fossil fuel free by 2050 will require strong policy action in the heating and transport sectors to avoid the long-term lock-in of high carbon infrastructure, systems and technology. The benefits of developing a dedicated clean-tech business cluster, alongside the smart innovation districts at Hammarby and Royal Seaport, are also examined. Produced by the Economics of Green Cities Programme at the London School of Economics and Political Science in partnership with the City of Stockholm. |
| JEL: | J1 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:59133&r=pke |
| By: | Ferreira, Pedro Cavalcanti; Pessôa, Samuel; Santos, Marcelo dos |
| Date: | 2014–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:fgv:epgewp:762&r=pke |
| By: | Anne Phillips |
| JEL: | J01 |
| Date: | 2013–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:48748&r=pke |
| By: | Andreas Ortmann (School of Economics, Australian School of Business, the University of New South Wales); Benoit Walraevens (Centre for Research in Economics and Management,Université de Caen Basse Normandie) |
| Abstract: | Analyzing the rhetorical structure of The Wealth of Nations (Smith WN) and its context, we make the case for the central importance of its Book V, "Of the Revenue of the Sovereign or Commonwealth”, which tends to be neglected in most accounts of Smith’s oeuvre (even, most recently, in the outstanding Phillipson 2010) but which in our reading is, rather than a general treatise on optimal taxation and spending, a book focused on the future of an empire being threatened by a Mercantilist system. The Empire in question was, of course, the British one. Book V follows Book IV, in which Smith -- after having documented the slow and unnatural progress of opulence in, among others, England and Scotland in Book III – had undertaken a “very violent attack” (Smith EPS p. 208; Smith Corr. p. 251) on those responsible for the low growth rates (“opulence”) in Scotland and, even more, England: manufacturers and merchants and those politicians who propagated Mercantilist philosophies and practices of the commercial class. Aware that those he targeted would not take kindly to the attack, Smith made his case against the Mercantilist system as well as its colonial policy by marshaling his earlier insights into rhetorical theory and practice. We explain why and how he organized his attack. |
| Keywords: | Adam Smith, The Wealth of Nations, rhetoric, rhetorical structure of The Wealth of Nations |
| JEL: | B10 B12 C70 C72 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2014-11a&r=pke |
| By: | José V. Gallegos (Peruvian Ministry of Development and Social Inclusion, Peru); Gaston Yalonetzky (University of Leeds, UK) |
| Abstract: | When measuring poverty with counting measures, are there conditions ensuring that poverty reduction not only reduces the average poverty score further but also decreases deprivation inequality among the poor more, thereby emphasizing improvements among the poorest of the poor? In the case of a non-anonymous assessment, i.e. when we can track poverty experiences of the same individuals or households using panel datasets, we derive three conditions whose fulfillment allows us to conclude that multidimensional poverty reduction is more egalitarian in one experience vis-à-vis another one, for a broad family of poverty indices which are sensitive to deprivation inequality among the poor, and from an ex-ante conception of inequality of opportunity. We illustrate these methods with an application to multidimensional poverty in Peru before and after the 2008 world financial crisis. |
| Keywords: | Pro-poorest poverty reduction, multidimensional poverty, transition matrices. |
| JEL: | I32 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2014-351&r=pke |