nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2016‒08‒07
seven papers chosen by
Karl Petrick
Western New England University

  1. Reining in Wall Street to Benefit All Americans By Dean Baker
  2. Why ZLB Economics and Negative Interest Rate Policy (NIRP) are wrong By Thomas I. Palley
  3. "Unemployed, Now What? The Effect of Immigration on Unemployment Transitions of Native-born Workers in the United States" By Fernando Rios-Avila; Gustavo Canavire-Bacarreza
  4. Culture and Institutions By Alesina, Alberto Francesco; Giuliano, Paola
  5. Providing Advice to Job Seekers at Low Cost: An Experimental Study on Online Advice By Belot, Michèle; Kircher, Philipp; Muller, Paul
  6. China's New Lost Generation: The Casualty of China's Economic Transformation By Gary Jefferson
  7. "Face the Bullet, Spare the Rod?" Evidence from the Aftermath of the Shining Path Insurgency By Morales, Alvaro; Singh, Prakarsh

  1. By: Dean Baker
    Abstract: There has been considerable interest in financial transactions taxes (FTTs) in the United States and other wealthy countries in the years since the financial crisis. An FTT can be a way to both raise a large amount of revenue and also rein in the financial sector. This report examines the evidence on the potential for raising revenue through an FTT, its impact on the economy, and also the possibility of using the revenue to defray in particular the cost of higher education. This report was published by The Century Foundation's Bernard L. Schwartz Rediscovering Government Initiative.
    JEL: G G2 G28
    Date: 2016–07
  2. By: Thomas I. Palley
    Abstract: NIRP is quickly becoming a consensus policy within the economics establishment. This paper argues that consensus is dangerously wrong, resting on flawed theory and flawed policy assessment. Regarding theory, NIRP draws on fallacious pre-Keynesian economic logic that asserts interest rate adjustment can ensure full employment. That pre-Keynesian logic has been augmented by ZLB economics which claims times of severe demand shortage may require negative interest rates, which policy must deliver since the market cannot. Regarding policy assessment, NIRP turns a blind eye to the possibility that negative interest rates may reduce AD, cause financial fragility, create a macroeconomics of whiplash owing to contradictions between policy today and tomorrow, promote currency wars that undermine the international economy, and foster a political economy that spawns toxic politics. Worst of all, NIRP maintains and encourages the flawed model of growth, based on debt and asset price inflation, which has already done such harm.
    Keywords: Negative interest rate policy, zero lower bound
    Date: 2016
  3. By: Fernando Rios-Avila; Gustavo Canavire-Bacarreza
    Abstract: Although one would expect the unemployed to be the population most likely affected by immigration, most of the studies have concentrated on investigating the effects immigration has on the employed population. Little is known of the effects of immigration on labor market transitions out of unemployment. Using the basic monthly Current Population Survey from 2001–13 we match data for individuals who were interviewed in two consecutive months and identify workers who transition out of unemployment. We employ a multinomial model to examine the effects of immigration on the transition out of unemployment, using state-level immigration statistics. The results suggest that immigration does not affect the probabilities of native-born workers finding a job. Instead, we find that immigration is associated with smaller probabilities of remaining unemployed, but it is also associated with higher probabilities of workers leaving the labor force. This effect impacts mostly young and less educated people.
    Keywords: Immigration; Unemployment Duration; Labor Force Transition
    JEL: J1 J6
    Date: 2016–08
  4. By: Alesina, Alberto Francesco; Giuliano, Paola
    Abstract: A growing body of empirical work measuring different types of cultural traits has shown that culture matters for a variety of economic outcomes. This paper focuses on one specific aspect of the relevance of culture: its relationship to institutions. We review work with a theoretical, empirical, and historical bent to assess the presence of a two-way causal effect between culture and institutions.
    Date: 2015
  5. By: Belot, Michèle (University of Edinburgh); Kircher, Philipp (University of Edinburgh); Muller, Paul (University of Gothenburg)
    Abstract: We develop and evaluate experimentally a novel tool that redesigns the job search process by providing tailored advice at low cost. We invited job seekers to our computer facilities for 12 consecutive weekly sessions to search for real jobs on our web interface. For half, instead of relying on their own search criteria, we use readily available labor market data to display relevant alternative occupations and associated jobs. This significantly broadens the set of jobs they consider and significantly increases their job interviews. Effects are strongest for participants who otherwise search narrowly and have been unemployed for a few months.
    Keywords: online job search, occupational broadness, search design
    JEL: D83 J62 C93
    Date: 2016–07
  6. By: Gary Jefferson (Brandeis University)
    Abstract: China’s surge into global middle-income status over the space of three decades has been spectacular. However, a potentially large and burdensome cost has been imposed on a generation of adolescents and young adults who abandoned the countryside, and with it access to basic education, in order to seek the anticipated advantages of jobs in the country’s burgeoning urban-industrial sector. This large swath of off-farm migrants transformed China. It propelled China to the status of the “world’s factory” and created the scale and accumulated learning-by-doing enabling China’s transition to a “knowledge economy” that no longer depends on the labor of China’s new “Lost Generation.” As the Lost Generation and its left-behind children, who suffer from a chronic lack of schooling, thicken the lower tail of China’s income distribution, it may be the rising, prosperous urban middle class that ultimately incurs the social, economic, and political challenges associated with China’s generation of off-farm migrant households once essential for launching China’s economic ascent.
    JEL: J21 J24 J31 O15 O33
    Date: 2016–07
  7. By: Morales, Alvaro (Amherst College); Singh, Prakarsh (Amherst College)
    Abstract: We investigate whether violence occurring outside the confines of a home can alter intra-household violence inter-generationally. This paper is the first to explore whether exposure to violence from an armed conflict affects the later use of physical punishment as a child discipline method. Our identification strategy relies on the spatial and temporal variation of the Peruvian civil conflict that occurred between 1980 and 2000. We find that a mother exposed to an additional one hundred violent conflict-related events in her district is 3.4-3.8 percentage points less likely to physically punish her children. This effect is equivalent in magnitude to an additional 10 years of education. We find suggestive evidence that the conflict could have increased parenting knowledge and support. Communities that experienced higher levels of conflict violence saw greater increases in social spending and had more health resources in the post-conflict period. Additionally, we find women's conflict exposure is associated with a higher likelihood of accessing these resources.
    Keywords: domestic violence, civil conflict, physical child abuse, Peru
    JEL: J13 D1 J16
    Date: 2016–07

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