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on Post Keynesian Economics |
| By: | Bill Gibson (University of Vermont); Mark Setterfield (Department of Economics, New School for Social Research) |
| Abstract: | Agent-based models are inherently microstructures - with their attention to agent behavior in a field context - and only aggregate up to systems with recognizable macroeconomic characteristics. One might ask why the traditional Keynes-Kalecki or structuralist (KKS) model would bear any relationship to the multi-agent modeling approach. This paper shows how KKS models might benefit from agent-based microfoundations, without sacricing traditional macroeconomic themes, such as aggregate demand, animal sprits and endogenous money. Above all, the integration of the two approaches gives rise to the possibility that a KKS system - stable over many consecutive time periods - might lurch into an uncontrollable downturn, from which a recovery would require outside intervention. As a by-product of the integration of these two popular approaches, there emerges a cogent analysis of the network structure necessary to bind real and financial agents into a integrated whole. It is seen, contrary to much of the existing literature, that a highly connected financial system does not necessarily lead to more crashes of the integrated system. |
| Keywords: | Systemic risk; crash; herding; Bayesian learning; endogenous money; preferential attachment; agent-based models. |
| JEL: | D58 E37 G01 G12 B16 C00 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:new:wpaper:1517&r=pke |
| By: | Corrado Di Guilmi; Laura Carvalho |
| Abstract: | This paper introduces heterogeneous microeconomic behavior into a demand-driven macroeconomic model in order to study the joint dynamics of leverage and capital accumulation. By identifying the links between firm level variables and aggregate quantities, the paper contributes toward a reformulation of the Minskyan formal analysis that explicitly considers the role of microeconomic factors in generating macroeconomic instability. The aggregation of heterogeneous agents is not only performed numerically, as in traditional agent-based models, but also by means of an innovative analytical methodology, originally developed in statistical mechanics and recently imported into macroeconomics. The distinctive feature is in that the joint analysis of the numerical and analytical solutions of the model sheds light on the effects of financial fragility at the firm level on the dynamics of the macroeconomy. In particular, the analysis of steady-state and stability properties of the system provide additional insights on the role of behavioral and size heterogeneity of firms for the stocks of aggregate debt and capital. |
| Keywords: | financial fragility; aggregate demand; agent-based model; master equation. |
| JEL: | E32 G01 |
| Date: | 2015–07–31 |
| URL: | http://d.repec.org/n?u=RePEc:spa:wpaper:2015wpecon15&r=pke |
| By: | Pedro Leao |
| Abstract: | This paper has two main objectives. The first is to propose a policy architecture that can prevent a very high public debt from resulting in a high tax burden, a government default, or inflation. The second objective is to show that government deficits do not face a financing problem. After these deficits are initially financed through the net creation of base money, the private sector necessarily realizes savings, in the form of either government bond purchases or, if a default is feared, "acquisitions" of new money. |
| Keywords: | Fiscal Policy; Functional Finance; Modern Monetary Theory; Monetary Policy; Public Debt Sustainability; Zero Interest Rates |
| JEL: | E12 E42 E52 E62 E63 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_843&r=pke |
| By: | Anderaos de Araujo, Fabio |
| Abstract: | An analysis of the invariable measure of prices proposed by the eminent Italian economist Piero Sraffa, who laid the foundations for a new approach in modern economics. Three mathematical appendices are also provided. The first one shows step by step the construction of the Standard Commodity, which is a consistent solution to the transformation of labour values into prices of production. Appendix II is a general numerical example of a price system with two industries which makes the understanding of the distribution of income between wages and profits easier. Using a software spreadsheet, for example, it is possible to make numerical simulations and make comparisons between the results obtained from the Sraffa price system with that obtained from Marx's. The third appendix regards a numerical example of changes in technical progress and its effects on distribution of income. There is also a fourth appendix on the inclusion of rent and interest in Sraffa's price system. This is revised version of the original paper written few years ago. |
| Keywords: | Sraffa, labour theory of value, Standard Commodity, prices of production, income distribution |
| JEL: | A1 A2 |
| Date: | 2015–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65891&r=pke |
| By: | Dominique, C-Rene |
| Abstract: | Summary: In a Hayek-Friedman-Lucas world, market economies are assumed to be natural, stable, and ergodic; hence, government policies are harmful to their efficiency. We develop a nonlinear dissipative dynamic model that shows that market economies instead live on the edge of chaos. We next appeal to the theory of differential equation to show that if they do not usually dissipate the totality of the information produced by their evolution it is due to a far-off self-organized equilibrium brought about by a spontaneous phase change originating in an optimal government policy. |
| Keywords: | Keywords: Unstable manifolds, Lyapunov Spectrum, information dimension, metric entropy, edge of chaos, self-organized equilibria, endogenous growth. |
| JEL: | C61 C62 C65 |
| Date: | 2015–08–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65945&r=pke |
| By: | Miguel Ramirez (Department of Economics, Trinity College) |
| Abstract: | This paper contends that, in Chapters XVII, XXIX, XXX, and XXXI of Volume III of Capital, Marx develops an incisive conceptual framework in which excessive credit creation, indebtedness, and speculation play a critical and growing role in the reproduction of social capital on an extended basis; however, given the decentralized and anarchic nature of capitalist production, the credit system does so in a highly erratic and contradictory manner which only postpones the inevitable day of reckoning. The paper also highlights Marx’s relatively neglected but highly important analysis of the separation of ownership from management in the advanced capitalism of his day, England, and its modern-day implications for excessive risk-taking and debt-fueled speculation up until the eve of the crash. More importantly, the paper argues that in Vols. II and III Marx implicitly connected the expanding role of credit [which he associated with the development of capitalism] to a significant reduction in the turnover period of capital, thereby boosting the rate of surplus-value, and countering in a highly erratic and contradictory manner, the fall in the rate of profit. The growing role of credit has been relatively ignored in the Marxian literature as an important counteracting factor to the law of the declining rate of profit. It is not mentioned at all by Marx in his famous Chp. XIV, Vol. III of Capital where he discusses other important counteracting forces, nor by Engels [in this particular context] who edited both Vols. II and III. |
| JEL: | B10 B14 B24 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:tri:wpaper:1507&r=pke |
| By: | David Green (Institute for Fiscal Studies and University of British Colombia) |
| Abstract: | I undertake a political economy exercise of a type described in John Rawls' A Theory of Justice; namely, one in which economic institutions are judged by how well they match the key principles in theories of distributive justice. My main contention is that such an exercise is integrally related not only to economics in general but to empirical economics in particular. I argue that most standard theories of justice place a large weight on self and social respect and that such respect has a lot to do with the position a person holds in the productive process - their wage and employment outcomes. That, in turn, means that assessments of justice in the real world hinge critically on how labour markets actually function in assigning wages and employment. The answers to these questions are ultimately empirical. I explore these ideas by examining one particular institution (the minimum wage) in relation to a set of the most prominent recent theories of distributive justice. This exercise leads to a different emphasis on what minimum wage related outcomes need study, and to a claim that minimum wage setting is related to standards of fairness. |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:14/24&r=pke |
| By: | Svetlana Andrianova; Badi Baltagi; Thorsten Beck; Panicos Demetriades; David Fielding; Stephen Hall; Steven Koch; Robert Lensink; Johan Rewilak; Peter Rousseau |
| Abstract: | We present a new database on financial fragility for 124 countries over 1998 to 2012. In addition to commercial banks, our database incorporates investment banks and real estate and mortgage banks, which are thought to have played a central role in the recent financial crisis. Furthermore, it also includes cooperative banks, savings banks and Islamic banks, that are often thought to have different risk appetites than do commercial banks. As a result, the total value of financial assets in our database is around 50% higher than that accounted for by commercial banks alone. We provide eight different measures of financial fragility, each focussing on a different aspect of vulnerability in the financial system. Alternative selection rules for our variables distinguish between institutions with different levels of reporting frequency. |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:15/18&r=pke |
| By: | Charles, Sébastien; Dallery, Thomas; Marie, Jonathan |
| Abstract: | The Great Recession has revived economic policy debates from the 1930s between the advocates of a balanced budget under all circumstances and the supporters of counter-cyclical fiscal policies. Since 2012, a consensus has emerged that fiscal policy is more effective in recessions that during periods of growth. Now, new studies have explained why fiscal multipliers are usually higher in times of recession. These results confirm the pressing need for fiscal stimulus in Europe. |
| Keywords: | Multiplier, Recession, Post-Keynesians |
| JEL: | E12 E62 F41 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65897&r=pke |
| By: | Bonginkosi Mamba (Department of Economics, University of Pretoria); André C Jordaan (Department of Economics, University of Pretoria); Matthew Clance (Department of Economics, University of Pretoria) |
| Abstract: | This paper is aimed at providing insights into the interplay between globalisation and conflicts through a theoretical literature review. The motivation is drawn from a large number of debates advocating globalisation as being a double edged sword. The main argument is drawn from the Liberal premise that globalization, through integration and economic interdependence dampens the likelihood of conflicts, whilst the opposite holds for Structuralist theorists. The key highlight from the study is that, different factors exist in determining the relationship between globalisation and conflicts hence furthering the study by means of conducting an evidence based research design is essential in interrogating and extending the current discourse. |
| Keywords: | Globalisation and Conflicts, Dyads Integration, Trade Agreements,Inter-State Wars, Intra-State Wars |
| JEL: | D74 F14 F18 F51 O19 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201555&r=pke |
| By: | CDP subgroup on Accountability |
| Abstract: | The success of the post-2015 development agenda depends on adopting global goals for sustainable development and on designing a robust accountability system. All stakeholders should be involved in the accountability framework. While sustainable development goals (SDGs) are universal in character, they need to be adapted to national contexts, according to specific sets of constraints and opportunities. Countries need also to specify their global commitments to create an enabling environment for sustainable development worldwide. The adaptation of global goals into national targets ensures ownership and facilitates answerability, thus promoting an accountability framework that is inclusive, transparent and participatory bottom-up process. |
| Keywords: | Accountability, post-2015 development agenda, sustainable development goals, global governance, peer reviews, international cooperation |
| JEL: | F53 F55 F59 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:une:cpaper:025&r=pke |
| By: | Simone M. Müller; Heidi J S Tworek |
| Abstract: | This article uses the example of submarine telegraphy to trace the interdependence between global communications and modern capitalism. It uncovers how cable entrepreneurs created the global telegraph network based upon particular understandings of cross-border trade, while economists such as John Maynard Keynes and John Hobson saw global communications as the foundation for capitalist exchange. Global telegraphic networks were constructed to support extant capitalist systems until the 1890s, when states and corporations began to lay telegraph cables to open up new markets, particularly in Asia and Latin America, as well as for strategic and military reasons. The article examines how the interaction between telegraphy and capitalism created particular geographical spaces and social orders despite opposition from myriad Western and non-Western groups. It argues that scholars need to account for the role of infrastructure in creating asymmetrical information and access to trade that have continued to the present day. |
| URL: | http://d.repec.org/n?u=RePEc:qsh:wpaper:284811&r=pke |
| By: | Asian Development Bank (ADB); Asian Development Bank (ADB) (Southeast Asia Department, ADB); Asian Development Bank (ADB) (Southeast Asia Department, ADB); Asian Development Bank (ADB) |
| Abstract: | Women’s economic empowerment is essential for more inclusive growth in Cambodia. This study takes stock of major gender issues in the Cambodian economy seen through the lens of women’s participation, benefit, and agency—the three prerequisites for a fairer distribution of growth benefits. It examines labor market trends and obstacles to women’s economic empowerment—particularly in agriculture, business development, and wage employment. Labor migration and vulnerability to shocks are highlighted as special themes. The study makes a series of policy recommendations, identifies areas for further research, and highlights how Asian Development Bank investments can promote women’s economic empowerment. |
| Keywords: | women, economic empowerment, poverty reduction, Cambodia, wage employment, labor migration |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:asd:wpaper:rpt146953&r=pke |