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on Post Keynesian Economics |
| By: | Mario Seccareccia (University of Ottawa); Marc Lavoie (University of Ottawa) |
| Abstract: | Fears of deflation and long-term stagnation have become more commonplace since the Great Recession. Yet, within the mainstream, economists are divided into two camps: those who see the benefits of downward wage and price adjustment, as a private sector stabilizer, and those who fear deflationary pressures because of their destabilizing consequences. This paper reviews this theoretical literature using a simple “New Consensus†framework of analysis and it also seeks to describe how mainstream and heterodox economists analyzing the consequences of deflationary pressures come to very different conclusions on the nature of private sector stabilizers in a recessionary environment. After reviewing the different perspectives, the paper undertakes a comparative analysis of the experience of both the Great Depression and the Great Recession by looking at the behavior of certain key variables in three countries: Canada, the United States and the United Kingdom. The paper concludes that, if it was not for the quick actions of governments in stabilizing the economy through activist macroeconomic policies during the Great Recession, private sector stabilizers were actually less significant during the recent crisis than they were during the 1930s. |
| Keywords: | Deflation, self-correcting mechanism, private/public sector stabilizers, Great Depression and Great Recession. |
| JEL: | B22 B5 E1 E3 E5 E6 |
| URL: | http://d.repec.org/n?u=RePEc:thk:wpaper:37&r=pke |
| By: | Dünhaupt, Petra |
| Abstract: | Since the 1980s, the financial sector and its role have increased significantly. This development is often referred to as financialization. Authors working in the heterodox tradition have raised the question whether the changing role of finance manifests a new era in the history of capitalism. The present article first provides some general discussion on the term financialization and presents some stylized facts which highlight the rise of finance. Then, it proceeds by briefly reviewing the main arguments in the Marxian framework that proposedly lead to crisis. Next, two schools of thought in the Marxian tradition are reviewed which consider financialization as the latest stage of capitalism. They highlight the contradictions imposed by financialization that disrupt the growth process and also stress the fragilities imposed by the new growth regime. The two approaches introduced here are the Social Structure of Accumulation Theory and Monthly Review School. The subsequent part proceeds with the Post-Keynesian theory, first introducing potential destabilizing factors before discussing financialization and the finance-led growth regime. The last section provides a comparative summary. While the basic narrative in all approaches considered here is quite similar, major differences stem from the relationship between neoliberalism and financialization and, moreover, from the question of whether financialization can be considered cause or effect. |
| Keywords: | Financialization,Crisis,Periods of Capitalism,Heterodox Economics |
| JEL: | E02 E11 E12 P16 P51 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ipewps:672016&r=pke |
| By: | Jon D. Wisman |
| Abstract: | Thorstein Veblen's theory of conspicuous consumption is one of his most powerful contributions to social science. Conspicuous consumption is undertaken in an attempt to maintain or increase social standing. But why do humans seek to acquire status through their consumption practices? Or more fundamentally, why do they seek status? Veblen does not present it as grounded in an instinct such as his instincts of parental bent, workmanship or idle curiosity, although he claims that "the propensity for emulation is probably the strongest and most alert and persistent of the economic motives proper… a pervading trait of human nature." But why? Had he read Darwin, or read him more carefully, he would have picked up on Darwin's concept of sexual selection and recognized it as the driving force behind conspicuous consumption as well as much other behavior intended to favorably impress others, if not the driving force behind all of his instincts. Sexual selection is a form of natural selection that works through mate selection as opposed to physical survival. How much an individual can consume signals an ability to command resources essential for successfully raising children. This article adds the Darwinian depth that Veblen missed to his important concept of conspicuous consumption, and in doing so adds clarity to humanity's prospects. |
| Keywords: | Darwin, sexual selection, status, inequality, evolution |
| JEL: | B15 B52 D11 P47 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:amu:wpaper:2016-03&r=pke |
| By: | Özlem Onaran (University of Greenwich) |
| Abstract: | This paper summarizes two main findings in the Post-Keynesian literature regarding the linkages between financialization, income distribution, accumulation and productivity. Firstly, at the core of secular stagnation lies the missing link between profits and investment. Secondly, rising inequality and financialization have been the main reasons for this missing link and hence the major brakes against capital accumulation and growth. The paper concludes with alternative progressive policies based on a coordinated policy mix of equality-led development and public investment. |
| Keywords: | wage share, inequality, wage-led growth, financialization, secular stagnation, public investment |
| JEL: | E12 E22 E25 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp1609&r=pke |
| By: | Gautam Rao; Leonardo Bursztyn; Stefano Fiorin; Bruno Ferman; Martin Kanz |
| Abstract: | Economists have long hypothesized that social status considerations are a powerful driver of consumption choices (Veblen 1899). But empirically identifying status goods is difficult, since status components of consumption are confounded by unobserved instrumental utility. We work with a large bank in Indonesia to market their widely-recognized platinum credit cards, typically restricted to high-income customers, to a marginally eligible population of customers. In a control group, customers are offered all the financial services and benefits of the platinum card, but as an included upgrade on their existing nondescript credit card. In two treatment groups, customers are instead offered the platinum card itself. We find that demand for the platinum card is substantially higher than demand for the instrumental benefits, providing evidence of the importance of image considerations. We provide evidence that the demand for the platinum card appears to be driven substantially by social image concerns, rather than self image or identity. We find that it is the less-rich (middle-class) individuals in the sample who show a demand for the social image aspect of the platinum card, rather than the very rich. An analysis of the utilization of the credit cards reveals that platinum card holders are causally more likely to use the card in social situations such as restaurants, bars and clubs, where the card may be visible to others. In contrast, there are no effects on more private uses of the card, such as online purchases. Finally, we provide evidence of "fashion cycles" in the marketing of elite credit cards, consistent with models of status goods (Pesendorfer 1995). |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:qsh:wpaper:396916&r=pke |
| By: | Carles Manera (Universitat de les Illes Balears) |
| Abstract: | The author argues in this work, the result of three years of research, that the Great Recession has the profile of a systemic crisis, in the sense that it is not only a single financial causes the trigger and at the same time, the crisis has questioned all the mechanisms of the system seemed to guarantee the impossibility of such severe as the crisis phenomenon since 2008. There are other factors to consider: crisis of accumulation, economic regulation and reduction of benefits, which point in this investigation and that, in turn, are the starting points for further work on the research agenda. |
| Keywords: | Great Recession, economic crises, globalization, American economy, Asian economy, European economy, economic history since 1945 |
| JEL: | N1 N2 B2 F4 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ubi:deawps:77&r=pke |
| By: | De Grauwe, Paul; Ji, Yuemei |
| Abstract: | Business cycles among industrial countries are highly correlated. We develop a two-country behavioral macroeconomic model where the synchronization of the business cycle is produced endogenously. The main channel of synchronization occurs through a propagation of “animal spirits†, i.e. waves of optimism and pessimism that become correlated internationally. We find that this propagation occurs with relatively low levels of trade integration. We do not need a correlation of exogenous shocks to generate synchronization. We also empirically test the main predictions of the model. |
| Keywords: | animal spirits; behavioral macroeconomics; Business Cycles |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11257&r=pke |
| By: | Humberto Barreto (Department of Economics and Management, DePauw University) |
| Abstract: | In 1960, George Stigler wrote that, “In 1830, no general work in economics would omit a discussion of population, and in 1930, hardly any general work said anything about population.” Today, the economics curriculum remains largely devoid of demography and this needs to change immediately. After witnessing a population explosion in the last half of the 20th century, fertility rates are crashing throughout the world. We are in the midst of another demographic sea change, slamming on the brakes right after accelerating faster than ever before. This has important consequences for economies everywhere. Instead of glibly tossing a dependency ratio onto a slide, this paper offers an easy way to improve demographic literacy in undergraduate economics students using population pyramids. Hypothetical data are used to explain the pyramid and teach its dynamic properties, then real-world data are used to provide historical context, current demographic snapshots, and a glimpse of the future. Throughout, Microsoft Excel is used and its ability to download data directly from the US Census Bureau’s International Data Base with a single click of a button provides a flexible, powerful tool to explore various countries. Download PopulationPyramid.xlsm from academic.depauw.edu/~hbarreto/working and follow along with the instructions provided in this paper. |
| Keywords: | teaching, pedagogy, education, cohort, ageing, demographics |
| JEL: | A1 A2 J1 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:dew:wpaper:2016-02&r=pke |
| By: | Andrea Farenga (Lake Erie College) |
| Abstract: | This paper is a narrative inquiry of Black male college students relative to their experiences at a small predominantly white liberal arts college. While the racial gap has narrowed in college enrollment, there remains a sizeable gap in graduation rate (Castleman, 2014). Black male college success is related to involvement in student life activities, use of student support services, mentoring and internships, personal perseverance, selectivity of the institution, and racial climate (Strayhorn, 2009). Racial climate may be influenced by myths (Toldson, 2012) about Black male school achievement. Participants discussed open ended questions in focus groups and personal interviews during which they described their college experience per factors related to collegiate success. |
| Keywords: | African-American Black Minority Male College Experience |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:3606144&r=pke |