nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2015‒03‒13
eleven papers chosen by
Karl Petrick
Western New England University

  1. Frederic S. Lee’s Contributions to Heterodox Economics By Jo, Tae-Hee; Todorova, Zdravka
  2. Keynes, the Pope and the IMF By Mark Hayes
  3. Firm performance, macroeconomic conditions, and “animal spirits” in a Post Keynesian model of aggregate fluctuations By Shyam Gouri Suresh; Mark Setterfield
  4. A Veblenian Articulation of the Monetary Theory of Production By Zdravka Todorova
  5. The UTIP Global Inequality Datasets: 1963-2008 By Galbraith, James K.; Halbach, Beatrice; Malinowska, Aleksandra; Shams, Amin; Zhang, Wenjie
  6. Essentials of Constructive Heterodoxy: Profit By Kakarot-Handtke, Egmont
  7. The Budgetary Implications of Higher Federal Reserve Board Interest Rates By Dean Baker
  8. Behavioral Economics: A Maverick Guide By Hugh Schwartz
  9. Explicitly integrating institutions into bioeconomic modeling: By Swallow, Kimberly A.; Swallow, Brent M.
  10. How Should One Measure Economic Insecurity? By Lars Osberg
  11. The Political Economy of European Integration By Spolaore, Enrico

  1. By: Jo, Tae-Hee; Todorova, Zdravka
    Abstract: In this introduction we highlight Frederic Lee’s contributions to heterodox economics in terms of theory and community, which should be acknowledged and, more importantly, carried on by those who are concerned with the advancement of heterodox economics as an alternative critical theory to the status quo.
    Keywords: Frederic S. Lee, Heterodox Economics, Heterodox Microeconomics, Social Provisioning Process
    JEL: B0 B4 B5
    Date: 2015–02–24
  2. By: Mark Hayes (University of Durham)
    Abstract: This paper discusses Keynes’s surprisingly positive views on the medieval scholastic teaching on usury and draws upon his work to argue that the traditional view of usury (understood as the charging of rent for the use of money) as anti-social is well-founded. Keynes’s understanding of the nature of probability allows a clear distinction to be made between debt and equity finance which most economists dismiss. Rather than meriting remuneration, the demand for the security provided by money against an uncertain future imposes a social cost in one form or another. This proposition is illustrated with reference to the problems of the modern international financial and monetary system, specifically the role of deposit insurance and the obstacles to a renewed system of managed exchange rates, without which many regions appear doomed to enduring long-term austerity.
    Keywords: Interest, monetary system, commodity standard, deposit insurance
    JEL: E42 E52 G28
    Date: 2015–03
  3. By: Shyam Gouri Suresh; Mark Setterfield
    Abstract: We construct a multi-agent system (MAS) model of cyclical growth in which aggregate fluctuations result from variations in activity at firm level. The latter, in turn, result from changes in “animal spirits” or the state of long run expectations (SOLE) and their effect on firms’ investment behavior. We focus on the impact of publicly-available information about macroeconomic conditions – analogous to the press releases of national statistical agencies – on changes in the SOLE and hence the amplitude of aggregate fluctuations. Our results suggest that the amplitude of fluctuations is reduced by extremes of attention or inattention to aggregate economic performance, but that this relationship is subject to complicated (and possibly complex) phase transitions exhibiting extreme sensitivity to initial conditions.
    Keywords: Aggregate fluctuations, cyclical growth, animal spirits, state of long run expectations, sentiment, multi-agent systems
    JEL: C63 E12 E32 E37 O41
  4. By: Zdravka Todorova (Wright State University)
    Abstract: The artical presents a further articulation of the monetary theory of production inspired by the writings of Thorstein Veblen. Particularly I offer a formulation of the monetary theory of production as part of broader theorizing about social provisioning and the life process. This includes an analytical focus on non-commodities; an extension of the Veblenian dichotomy to non-market activities; discussion of Veblen's theory of social valuation in connection to monetary theory of production and class; delineation of as social process that constitute social provisioning and their commodity and non-commodity aspects. The goal is bridging the gap between monetary theory of production and analysis of 'the social'.
    Keywords: Monetary theory of production, Thorstein Veblen, capitalism, heterodox economics, social provisioning, class, political economy
    JEL: B15 B41 B52 B54 P16 Z13
    Date: 2015–03
  5. By: Galbraith, James K.; Halbach, Beatrice; Malinowska, Aleksandra; Shams, Amin; Zhang, Wenjie
    Abstract: This paper summarizes a comprehensive revision and update of UTIP.s work on the inequality of pay and incomes around the world, from 1963 to 2008. The new UTIP-UNIDO (University of Texas Inequality Project-United Nations Industrial Development Organizatio
    Keywords: income inequality
    Date: 2015
  6. By: Kakarot-Handtke, Egmont
    Abstract: The goal of theoretical economics is to explain how the actual economy works. Since Adam Smith economists have consistently failed to clarify the nature and magnitude of overall profit. No economist, though, would deny that profit is an important phenomenon. Yet, obviously economists are still mired in utter confusion about the most fundamental concept of their discipline. Hence, in the strict sense, there is no valid economics. From all this follows for a methodologically ambitious Constructive Heterodoxy that the accustomed foundations of Orthodoxy have to be replaced. In technical terms this is what a paradigm shift is all about.
    Keywords: new framework of concepts; structure-centric; Structural Law of Supply and Demand; monetary profit; distributed profit; Law of Overall Profit; economic stability; positive feedback
    JEL: B59 E10
    Date: 2015–03–08
  7. By: Dean Baker
    Abstract: This paper explores the potential impact of the Federal Reserve Board’s decision on interest rates on the budget deficit. The first part recounts the history of the 1990s surplus, correcting the widely held misunderstanding that this surplus was achieved by the Clinton administration’s tax increases and spending cuts. The second part examines the direct and indirect impact of Fed rate hikes on the federal budget deficit. The third part examines the impact of Fed rate hikes on state budgets.
    Keywords: jobs, employment, interest rates, unemployment, economic policy, Fed
    JEL: E E4 E5
    Date: 2015–03
  8. By: Hugh Schwartz (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: These are the notes from the first half of a course in behavioral economics offered in Uruguay in November 2014. This part of the course, entirely verbal, was aimed at outlining the essentials of behavioral economics. The principal assignments were from the second edition of Edward Cartwright’s Behavioral Economics. The second part of the course, taught by Dr. Martin Egozcue, is not included. It emphasized prospect theory, mental accounts and inter-temporal decision making, and featured substantial mathematical input.
    Keywords: behavioral economics, perception, heuristics, empirical verifications, prospect theory, visceral and emotional considerations
    JEL: C9 Y9 Z
    Date: 2014–12
  9. By: Swallow, Kimberly A.; Swallow, Brent M.
    Abstract: Bioeconomic models can provide powerful insights into the interactions between people and the natural ecosystems on which they depend. For example, bioeconomic models of fisheries have long been used to provide early warnings about the sustainability of harvest levels or the impacts of new technologies. Less progress has been made in explicitly incorporating inter-agent interactions and institutions in bioeconomic models. This paper offers guidance to future bioeconomic modelling efforts through a review of the ways that institutions are or could be explicitly integrated into bioeconomic models.
    Keywords: Governance, Developing countries, Mathematical models, intensification, systematic reviews, institutional change, social-ecological systems, sustainable intensification,
  10. By: Lars Osberg
    Abstract: People feel economically insecure when they perceive a significant hazard or danger looming in the future, which they are unable to insure against, avoid or ignore. While all OECD countries devote significant resources to mitigate economic insecurity, no consensus exists on the best way to measure it. The paper reviews the pros and cons of the main approaches proposed by the literature and identifies a number of criteria than an ideal measure of economic insecurity should satisfy. It advocates the construction of household level sub-indices for the hazards identified in the UN Universal Declaration of Human Rights (i.e. unemployment, illness, widowhood, disability and old age) and their aggregation to an over-all summary measure of economic insecurity, discussing what could be done with existing data and what additional information should be collected.
    Date: 2015–03–05
  11. By: Spolaore, Enrico (Tufts University)
    Abstract: This paper discusses the process of European institutional integration from a political economy perspective, linking the long-standing political debate on the nature of the European project to the recent economic literature on political integration and disintegration. First, we introduce the fundamental trade-off between economies of scale associated with larger political unions and the costs from sharing public goods and policies among more heterogeneous populations, and examine the implications of the trade-off for European integration. Second, we describe the two main political theories of European integration - intergovernmentalism and functionalism - and argue that both theories capture important aspects of European integration, but that neither view provides a complete and realistic interpretation of the process. Finally, we critically discuss the successes and limitations of the actual process of European institutional integration, from its beginnings after World War II to the current crisis.
    Date: 2015

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