nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2015‒09‒11
sixteen papers chosen by
Karl Petrick
Western New England University

  1. A Keynesian Dynamic Stochastic Labor-Market Disequilibrium model for business cycle analysis By Christian Schoder
  2. Did Scarce Global Savings Finance the US Real Estate Bubble? The “Global Saving Glut” thesis from a Stock Flow Consistent Perspective By Fabian Lindner
  3. The Transatlantic Trade and Investment Partnership (TTIP): a controversial agreement and dangerous for workers By Claude Serfati (IRES)
  4. EDUCATION AND EMPIRE: Colonial Universities in Mexico, India and the United States By González, Cristina; Hsu, Funie
  5. The Political Economy of Liberal Democracy By Sharun Mukand; Dani Rodrik
  6. The New Economics of Religion By Iyer, Sriya
  7. An Insurance-Led Response to Climate Change By Anthony J. Webster; Richard H. Clarke
  8. From Market Fixing to Market-Creating: A New Framework for Economic Policy By Mariana Mazzucato
  9. The frontiers of the debate on payments for ecosystem services : a proposal for innovative future research By Van Hecken, Gert; Bastiaensen, Johan; Windey, Catherine
  10. Sustainable Development Goals (SDGs): Less is More! By Sergei Suarez Dillon Soares; Rafael Guerreiro Osório
  11. Social Protection Systems in Latin America and the Caribbean: A Comparative Perspective By Simone Cecchini; Fernando Filgueira; Claudia Robles
  12. The Way Out: Global Turmoil and Policy Recommendations By Turhan, Ibrahim M.
  13. Maximizing the Economic Impact of Cash Transfers: why Complementary Investment Matters By Stephanie Levy; Sherman Robinson
  14. Impacts of Climate Variability on Food Acquisition Programmes: Lessons from the Brazilian Semi-arid Region By Patricia S. Mesquita; Marcel Bursztyn
  15. THE LIBERAL ARTS AND THE UNIVERSITY* Tracing the Origins and Structure Of Undergraduate Education In the US and at the University Of California By Dirks, Nicholas B
  16. Brazil without Extreme Poverty: New Perspectives for Brazilian Social Protection By Tiago Falcão; Patricia Vieira da Costa

  1. By: Christian Schoder
    Abstract: A Dynamic Stochastic Labor-Market Disequilibrium (DSLMD) model is proposed for Keynesian business cycle analysis. It shares the type of micro-foundation known from neoclassical Dynamic Stochastic General Equilibrium (DSGE) models but characterizes economic mechanisms consistent with Traditional Post-Keynesian (TPK) models. Wage inflation is perceived as a non-market-clearing policy variable which may be subject to a collective Nash bargaining process with the state of the labor market affecting the relative bargaining power. The core insights are twofold: First, apart from assumptions regarding expectation formation, the DSGE-type of microfoundation is, to a considerable extent, consistent with the behavioral hypotheses underlying TPK models. Second, the economy characterized by the DSLMD model is post-Keynesian rather than neoclassical.
    Keywords: Dynamic stochastic labor-market disequilibrium, dynamic stochastic general equilibrium, post-Keynesian economics, micro-foundations
    JEL: B41 E12 J52
    Date: 2015
  2. By: Fabian Lindner
    Abstract: There is a consensus among the majority of economists that the credit supply is limited by current household saving. If governments or foreigners ran deficits, they would absorb this limited saving so that firms could not borrow any longer and had to reduce their investment. This is the "Loanable Funds'' theory. Ben Bernanke's "Global Saving Glut'' thesis is based on this view. According to Bernanke, the US depended on South East Asian and commodity exporting countries' scarce saving to finance the US real estate boom. Using simple accounting rules, the article shows however that credit is never limited by current saving. Often, the exact opposite it true: people can only save after others have taken on credit and paid incomes. This is also the case with the US and its trade partners and creditors: since non-Americans accept the US-Dollar as a means of payment - which only the US can produce - Americans give credit to themselves to finance their current account deficits. Each Dollar that non-Americans invest in the US has either been earned or borrowed in the US before. By their deficits, the US does not absorb scarce saving but allows other countries to increase their income and saving.
    Keywords: Investment, Finance, Saving, Current Account Imbalances, Credit Supply, Global Saving Glut, Loanable Funds Theory, Financial Crisis
    JEL: B2 B4 E2 E5 F3
    Date: 2015
  3. By: Claude Serfati (IRES)
    Abstract: This Working Paper on the Transatlantic Trade and Investment Partnership (TTIP) highlights the controversial benefits of speeding up free trade and puts the negotiations between the EU and the US in the context of the fall-out of the financial crisis.
    Keywords: Economic policy, Employment, Globalisation
    Date: 2015–09
  4. By: González, Cristina; Hsu, Funie
    Keywords: Education
    Date: 2014–07–01
  5. By: Sharun Mukand; Dani Rodrik
    Abstract: We distinguish between three sets of rights – property rights, political rights, and civil rights – and provide a taxonomy of political regimes. The distinctive nature of liberal democracy is that it protects civil rights (equality before the law for minorities) in addition to the other two. Democratic transitions are typically the product of a settlement between the elite (who care mostly about property rights) and the majority (who care mostly about political rights). Such settlements rarely produce liberal democracy, as the minority has neither the resources nor the numbers to make a contribution at the bargaining table. We develop a formal model to sharpen the contrast between electoral and liberal democracies and highlight circumstances under which liberal democracy can emerge. We discuss informally the difference between social mobilizations sparked by industrialization and decolonization. Since the latter revolve around identity cleavages rather than class cleavages, they are less conducive to liberal politics.
    JEL: P48
    Date: 2015–09
  6. By: Iyer, Sriya (University of Cambridge)
    Abstract: The economics of religion is a relatively new field of research in economics. This survey serves two purposes – it is backward-looking in that it traces the historical and sociological origins of this field, and it is forward-looking in that it examines the insights and research themes that are offered by economists to investigate religion globally in the modern world. Several factors have influenced the economics of religion: (1) new developments in theoretical models including spatial models of religious markets and evolutionary models of religious traits; (2) empirical work which addresses innovatively econometric identification in examining causal influences on religious behavior; (3) new research in the economic history of religion that considers religion as an independent rather than as a dependent variable; and (4) more studies of religion outside the Western world. Based on these developments, this paper discusses four themes – first, secularization, pluralism, regulation and economic growth; second, religious markets, club goods, differentiated products and networks; third, identification including secular competition and charitable giving; and fourth, conflict and cooperation in developing societies. In reviewing this paradoxically ancient yet burgeoning field, this paper puts forward unanswered questions for scholars of the economics of religion to reflect upon in years to come.
    Keywords: economics of religion
    JEL: Z12
    Date: 2015–08
  7. By: Anthony J. Webster; Richard H. Clarke
    Abstract: Climate change is widely expected to increase weather related damage and the insurance claims that result from it. This has the undesirable consequence of increasing insurance costs, in a way that is independent of a customer's contribution to the causes of climate change. This is unfortunate because insurance provides a financial mechanism that mitigates some of the consequences of climate change, allowing damage from increasingly frequent events to be repaired. We observe that the insurance industry could reclaim any increase in claims due to climate change, by increasing the insurance premiums on energy producers for example, without needing government intervention or a new tax. We argue that this insurance-led levy must acknowledge both present carbon emissions and a modern industry's carbon inheritance, that is, to recognise that fossil-fuel driven industrial growth has provided the innovations and conditions needed for modern civilisation to exist and develop. The increases in premiums would initially be small, and will require an event attribution (EA) methodology to determine their size. We propose that the levies can be phased in as the science of event attribution becomes sufficiently robust for each claim type, to ultimately provide a global insurance-led response to climate change.
    Date: 2015–09
  8. By: Mariana Mazzucato (SPRU (Science Policy Research Unit), School of Business, Management & Economics, University of Sussex, Brighton, BN1 9SL, U.K.)
    Abstract: Many countries are pursuing innovation-led ‘smart’ growth, which requires certain types of long-run strategic investments. This paper argues that such investments require public policies that aim to create markets, rather than just ‘fixing’ market failures (or system failures). Such ‘mission-oriented’ investments have led to men walking on the moon (which created spillovers across the economy) and are today catalyzing investments to tackle climate change around the world. In the two above-mentioned cases, public agencies not only ‘de-risked’ the private sector, but also led the way in terms of shaping and creating new technological opportunities and market landscapes. Only then was the private sector willing to invest. This paper considers four key questions that arise from a ‘market creating’ framework: (1) decision-making on the direction of change; (2) the nature of (public and private) organizations that can welcome the underlying uncertainty and discovery process; (3) the evaluation of mission-oriented and market-creation policies; and (4) the ways in which both risks and rewards can be shared so that ‘smart’ innovation-led growth can also result in ‘inclusive’ growth.
    Keywords: innovation policy, mission-oriented, market failures, system failures, directionality, smart growth, inclusive growth
    JEL: H1 L1 L2 O1
    Date: 2015
  9. By: Van Hecken, Gert; Bastiaensen, Johan; Windey, Catherine
    Abstract: This paper offers a review and analysis of the key issues and different perspectives in the Payments for Ecosystem Services (PES) debate. We discuss how the current debate has to a certain degree moved beyond ‘neoliberal’ vs. ‘non-neoliberal’ discussions, instead recognizing the variegated ways in which this policy tool plays out in the field. We argue, however, that despite this progress PES research remains weakly theorized in social and political terms, resulting in only superficial understanding of the role of culture, agency, social diversity and power relations in the shaping of PES institutions and their outcomes. Building on insights from other fields and disciplines in the social sciences –in particular critical institutionalism, social anthropology and political ecology-, we subject some of the common assumptions underlying mainstream and alternative conceptualizations of PES and identify the main issues that, we believe, deserve more attention in future research. More specifically, we explore three key challenges in current PES research related to the tendency (1) to assume that institutions can be designed in order to make them ‘fit’ specific human-nature problems; (2) to oversimplify culture and social diversity through the apolitical concept of ‘social capital’; and (3)to conceptualize human agency, collective action, and institutional change through either overly-rational or overlystructuralist models. We argue that an expanded actor-oriented, socially-informed and powersensitive conceptualization of PES can help generate novel insights in the power geographies underlying institutional logics, and thus the complex ways in which PES policies are shaped and experienced in the field.
    Keywords: Payments for Ecosystem Services (PES); neoliberal conservation; power; critical institutionalism; institutional bricolage; agency; environmental governance
  10. By: Sergei Suarez Dillon Soares (IPC-IG); Rafael Guerreiro Osório (IPC-IG)
    Abstract: "The Sustainable Development Goals (SDGs) can be seen as the latest incarnation of a movement that started with the launch of the first Human Development Report (HDR) in 1990. Long before the first HDR, many thinkers had already strongly argued that GDP size and growth should not be considered the sole yardstick of development. Nevertheless, there is no doubt that the HDR and its companion, the Human Development Index (HDI), played a great role in mainstreaming the notion that development should result in better lives for people, something which GDP sheds little light upon. Although we surely cannot establish how much, it is fair to consider that the Millennium Development Goals (MDGs) benefited from the consensus, quickly formed in the international community, over the people-centric notion of human development." (...)
    Keywords: Sustainable Development Goals
    Date: 2015–02
  11. By: Simone Cecchini (IPC-IG); Fernando Filgueira (IPC-IG); Claudia Robles (IPC-IG)
    Abstract: "National case studies on social protection systems in Latin America and the Caribbean, published by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), reveal that over the past 10 years social protection systems and, in general, social policies in the region have been transformed. This shift is very different than the nature of reforms in the 1980s and early 1990s. While that time period was characterised by the State pulling back from and limiting its role in social actions (reducing or freezing social spending, privatisation, restricted targeting), the new century has seen the State play a larger role in social issues (expanded coverage, partial or total re-nationalisation, increased social spending)."(...)
    Keywords: Social Protection Systems, Latin America, Caribbean, Comparative Perspective
    Date: 2015–04
  12. By: Turhan, Ibrahim M.
    Abstract: The world has been struggling with the economic and financial crisis for the last seven years and yet, in spite of all efforts several times we have so far witnessed hopes have been faded away. the level of financial integration of global markets, unprecedentedly high covariance between asset classes, interdependence of global systemically important financial institutions, and cross-border business models that has already created international or rather multinational companies and value chains aggravate the complexity of situation. Monetary policy being unsufficient to solve the problems, fiscal policy option deserves to be reconsidered. However the critical issue is the allocation of limited fiscal resources to promote growth in a sustainable way.
    Keywords: Crisis, market volatility, fiscal policy
    JEL: E6 G0 O3
    Date: 2015–09–07
  13. By: Stephanie Levy (IPC-IG); Sherman Robinson (IPC-IG)
    Abstract: Providing safety nets to the poor is part of the agenda of most developingcountries. When poverty incidence is high, providing a signiÿcant share ofthe population with social transfers implies substantial mobilization ofresources for the government. It also implies that a large injection of fundswill °ow into the economy and reach a population that will mostly consumethe transfers they receive. This increase in households consumption willincrease demand for all sorts of goods and services and will have varyingeconomic impacts depending on whether it reaches markets that havethe elasticity needed to respond eË›ciently and rapidly enoughto prevent prices from increasing.
    Keywords: Maximizing, Economic, Impact, Cash Transfers
    Date: 2014–07
  14. By: Patricia S. Mesquita (IPC-IG); Marcel Bursztyn (IPC-IG)
    Abstract: Besides tackling socio-economic vulnerabilities, social protection interventions can be an important tool in the field of climate change adaptation (Davies et al., 2008). Social protection programmes foster adaptive capacities through improvements in socio-economic variables (e.g. education, health etc.) but, on the other hand, can also be disrupted by climate change and variability. Nonetheless, not much attention has been paid to the impacts of climate or other environmental issues on the implementation and functioning of these strategies. Specifically for regions that are characterised by significant climatic variability (e.g. semi-arid regions), current shocks can serve as lessons for better planning and implementation of social protection programmes in the face of climate change.(…)
    Keywords: Impacts, Climate Variability, Food Acquisition Programmes, Brazilian Semi-arid Region
    Date: 2015–03
  15. By: Dirks, Nicholas B
    Keywords: Education
    Date: 2015–06–01
  16. By: Tiago Falcão (IPC-IG); Patricia Vieira da Costa (IPC-IG)
    Abstract: "Reducing poverty has been a signature of the Brazilian government for over a decade. The Bolsa Família (BF) conditional cash transfer programme, launched in 2003, enhanced the countrys existing social protection system, adding a new focus on poverty–especially poor children. Its success spurred the development of the Single Registry for Social Programmes, which made the characteristics and needs of the poorest populations in the country visible to the State for the first time, thus allowing federal, state and municipal governments to provide them with services."(...)
    Keywords: Brazil without Extreme Poverty, New Perspectives, Brazilian Social Protection
    Date: 2015–08

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