nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2016‒06‒09
nine papers chosen by
Karl Petrick
Western New England University

  1. Trade and Jobs: Can We Trust the Models? By Dean Baker; David Rosnick
  2. Household Borrowing and the Possibility of “Consumption- Driven, Profit-Led Growth†By Mark Setterfield; Yun K. Kim
  4. Growth models, varieties of capitalism and macroeconomics By David Hope; David Soskice
  5. A Marx 'crises' model: The reproduction schemes revisited By Marco Veronese Passarella
  6. The challenge of fear to Economics By Cedrini, Mario A.; Novarese, Marco
  7. Ronald H. Coase and the Economics of Network Infrastructures By Claude Menard
  8. Inequality and the New Deal By Christian A. Belabed
  9. Gamblers and gentlefolk: money, law and status in Trollope's England By Nicola Lacey

  1. By: Dean Baker; David Rosnick
    Abstract: This paper notes the poor track record of CGE models like the ones used by the Peterson Institute and the International Trade Commission in projecting the changes in patterns of trade following recent trade deals. These models failed to project the large rise in the U.S. trade deficit with Mexico following the implementation of NAFTA or with South Korea following the implementation of KORUS. Past research has shown that these models also failed to correctly identify the winning and losing industries in trade with Mexico following NAFTA. This analysis shows that the ITC model similarly failed to identify winning and losing industries following the implementation of the KORUS.
    JEL: F F1 F4 F10
    Date: 2016–04
  2. By: Mark Setterfield (New School For Social Research); Yun K. Kim (University of Massachusetts, Boston)
    Abstract: We first show that, with a Kaleckian structure that is consistent with Pasinetti (1962), the relationship between distribution and growth is more robust than conventional wisdom suggests. Next, we extend our model by incorporating borrowing and emulation effects into workers’ consumption behavior, under different assumptions about how debt is serviced. Our results demonstrate that borrowing and emulation transform the relationship between distribution and growth, giving rise to the possibility of a “consumption-driven, profit-led†growth regime (Kapeller and Schütz, 2015) and what we call the “paradox of inequality.†A key conclusion is that the wage-or -profit led characteristics of the growth process, rather than being invariant, can be altered by social constructs such as borrowing and consumption norms that change over time.
    Keywords: Borrowing, saving, emulation, debt servicing, wage-led growth, profit-led growth
    JEL: E12 E44 O41
    Date: 2016
  4. By: David Hope; David Soskice
    Abstract: Lucio Baccaro and Jonas Pontusson make a significant contribution to comparative political economy with their approach to analyzing growth in advanced economies, which focuses on the demand side of the economy and distributive conflict. In contrast to Baccaro and Pontusson, however, we view their approach as reinforcing recent developments in varieties of capitalism rather than undermining them. We also believe that the type of modern macroeconomics used by (for instance) Carlin and Soskice is better placed than their post-Keynesian framework to analyze growth models, and that their approach is not inconsistent with it. Modern macroeconomic models incorporate, as they do not, a role for the state—including monetary and fiscal policy—and provide a coherent framework within which to analyze both the supply and demand sides of the economy; they also enable us to understand the interactions between economies and hence the role of growth models in global imbalances.
    Keywords: growth models; varieties of capitalism; macroeconomics; post-Fordist era
    JEL: N0
    Date: 2016
  5. By: Marco Veronese Passarella (University of Leeds)
    Abstract: This paper builds upon the Marxian reproduction schemes. It aims to test the impact of some of the most apparent 'stylised facts' which characterise the current phase of capitalism on an artificial two-sector growing economy. It is shown that, simplified though they are, the Marxian reproduction schemes allow framing a variety of radical and other ‘dissenting’ renditions of the recent economic and financial crises of early-industrialised countries with a flexible and sound analytical model.
    Keywords: Marx, Crisis, Reproduction Schemes, Post-Keynesian Economics
    JEL: B50 E11 E12
    Date: 2016–05
  6. By: Cedrini, Mario A.; Novarese, Marco
    Abstract: Until the advent of Behavioral and Neuroeconomics, Economics has generally tended to undervalue, on average, the importance of fear. Fear has traditionally been regarded as pertaining to an alternative domain with respect to rationality: it has thus been considered as triggering mechanism of anomalous, even irrational behavior. Conversely, the article speculates on the complexity of the concept of fear and of the social effects it is thought to produce. While discussing the eventual desirability of a freed-from-fear world and Western obsession with risk management and safety from the economic problem and other pressures, the paper provides a general introduction to the relevance of the relatively unexplored issue of fear to economics as discipline as well as to applied economics in public policy.
    Date: 2016–04
  7. By: Claude Menard (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The legitimate emphasis put on the two leading contributions from Ronald Coase, ‘The nature of the Firm’ and ‘The problem of social cost’, has its dark side: it has kept under the bushel the rich empirical investigations that provided the scaffolding of most Coasean analyses. With the possible exception of his often revisited assessment of the Federal Communications Commission (1959) and his economics of the lighthouses (1974), very little attention has been paid to the continuing investment that Coase made in the analysis of network infrastructures. Throughout his long intellectual life, Coase published over 30 notes, papers, books, and extensive reports on what we now identify as network infrastructures, mainly telecommunications and postal services, but also gas, electricity, or ‘public’ transportation. He started doing so very early, in a devastating review of a book on the institutional structure of public utilities (1938a) and continued to do so without major disruptions until his very last contributions. In this chapter, I propose an exploration of this abundant and rich material, with an emphasis on two major lessons: (1) the analyses developed by Coase remain particularly relevant for the modern analysis of network infrastructures; (2) they highlight an approach to regulation and policy a good deal more subtle than is often assumed.
    Keywords: Transaction costs, infrastructures, networks, institutions, meso-institutions
    Date: 2016
  8. By: Christian A. Belabed
    Abstract: There is a large body of literature analyzing the onset of the Great Depression or the factors influencing economic recovery in the 1930s, especially the New Deal. The role of income inequality before and during the Great Depression, however, has almost never been discussed thoroughly. This paper attempts to answer two questions. Firstly, was inequality perceived as a problem by the Roosevelt administration? Secondly, did the New Deal incorporate these concerns such that economic policy design did take seriously the problem of inequality? Using official documents such as transcripts of Roosevelt's inaugural speeches, fireside chats and press conferences, this paper finds that top-end inequality was not recognized as a major political topic. Restoring the purchasing power of workers and farmers, however, appears to have been a political goal of the administration. The impact of New Deal policies on top-end income inequality or the wage share, however, can only be considered as modest. Only World War II and the long-term legislation of the New Deal may be considered successful in reducing top income and wealth shares and raising the wage share.
    Keywords: Inequality, income and wealth distribution, new deal, Roosevelt, Great Depression
    JEL: D31 D33 E02 E21 E25 G01 N12 N22 N32 N62
    Date: 2016
  9. By: Nicola Lacey
    Abstract: This paper examines the range of very different conceptions of money and its legal and social significance in the novels of Anthony Trollope, considering what they can tell us about the rapidly changing economic, political and social world of mid Victorian England. It concentrates in particular on Orley Farm (1862) - the novel most directly concerned with law among Trollope’s formidable output - and The Way We Live Now (1875) - the novel most directly concerned with the use and abuse of money in the early world of financial capitalism. The paper sets the scene by sketching the main critiques of money in the history of the novel. Drawing on a range of literary examples, it notes that these critiques significantly predate the development of industrial let alone financial capitalism. Probably the deepest source of ambivalence about money in the novel has to do with ‘commodification’. As this concern unfolds in Trollope, it tells us a great deal about changing conceptions of property in a world in which industrial capitalism sat alongside practices of speculative investment geared simply to the multiplication of money. Trollope’s nostalgia for the world of land sits alongside an increasingly sharp critique of the power of money, and these novels illuminate the rapidly changing economic, political and social world of mid Victorian England. They also speak, as it were, volumes on the relative effectiveness of the different regulatory resources which can be brought to bear upon each form of wealth. And they open some fascinating windows on the gendering of both money and law as concepts in the later Victorian imagination.
    JEL: N0
    Date: 2016–02–10

This nep-pke issue is ©2016 by Karl Petrick. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.