nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2016‒10‒23
twelve papers chosen by
Karl Petrick
Western New England University

  1. Reflections on Keynes's Essays in Biography By Geoffrey C. Harcourt
  2. Joan Robinson and MIT By Geoffrey C. Harcourt; Harvey Gram
  3. Escaping stagnation and restoring shared prosperity : a macroeconomic policy framework for job-rich growth By Palley, Thomas.
  4. Increased Shareholder Power, Income Distribution, and Employment in a Neo-Kaleckian Model with Conflict Inflation By Hiroaki Sasaki
  5. Thorstein Veblen's 1904 contributions to Q and insider/outsider analysis By Marion Dieudonné
  6. Sraffa on the Degeneration of the Notion of Cost By Fratini, Saverio M.
  7. Causality and interdependence in Pasinetti’s works and in the modern classical approach By Bellino , Enrico; Nerozzi, Sebastiano
  8. Global Firms By Andrew B. Bernard; J. Bradford Jensen; Stephen J. Redding; Peter K. Schott
  9. Piketty and the increasing concentration of wealth: some implications of alternative theories of dis-tribution and growth By Stirati, Antonella
  10. Marx, the Production Function and the Old Neoclassical Equilibrium: Workable under the Same Assumptions? With an Appendix on the Likelihood of Reswitching and of Wicksell Effects By Schefold, Bertram
  11. Mentalism Versus Behaviourism in Economics: A Philosophy-of-Science Perspective By Franz Dietrich; Christian List
  12. "Limited Attention" and Inflation Expectations of Households By Claudia R. Sahm; Jason A. Sockin

  1. By: Geoffrey C. Harcourt (School of Economics, UNSW Business School, UNSW)
    Keywords: Keynes, Versailles, King’s, lives of economists and scientists, life philosophy
    JEL: B10 B31 A31
    Date: 2016–10
  2. By: Geoffrey C. Harcourt (School of Economics, UNSW Business School, UNSW); Harvey Gram (Queens College, City University of New York)
    Date: 2016–10
  3. By: Palley, Thomas.
    Abstract: In this succinct piece, the author makes a compelling case for ‘structural Keynesianism’ as a way of responding to the current mix of unsatisfactory growth and uneven progress in reducing unemployment at the global level. Traditional or ‘cyclical’ Keynesianism is, according to the author, good at dealing with short-run shortfalls in aggregate demand, but less able to cope with the structural dimensions of slow growth and slack labour market conditions.
    Keywords: macroeconomics, economic policy, employment creation, structural change, globalization, economic growth, model, macroéconomie, politique économique, création d'emploi, changement structurel, mondialisation, croissance économique, modèle, macroeconomía, política económica, creación de empleos, cambio estructural, globalización, crecimiento económico, modelo
    Date: 2015
  4. By: Hiroaki Sasaki
    Abstract: By using a Kaleckian model with firms’ debt accumulation, we investigate how in- creased shareholder power defined by a decrease in firms’ retention ratio and a mone- tary policy defined by interest controlled by a central bank a?ect macroeconomic vari- ables. The long-run equilibrium can be stable even if the short-run equilibrium exhibits debt-burdened growth. In addition, the long-run equilibrium can be unstable even if the short run equilibrium exhibits debt-led growth. Increased shareholder power can increase both rentiers and workers’ income shares. A monetary easing policy has an expansionary e?ect on the economy. However, it decreases both workers and rentiers’ income shares and thus has a negative e?ect on income distribution.
    Keywords: financialization; income distribution; employment; firms’ debt
    JEL: E12 E21 E22 E32 E44
  5. By: Marion Dieudonné (LEDA-SDFi - LEDA-SDFi - Université Paris IX - Paris Dauphine, PSL - Université Paris-Dauphine)
    Abstract: The beginning of the 20th century saw the first steps in a tradition of leading economists explaining the link between corporate finance, investment and financial structure. The writings of John Maynard Keynes (1930), Gunnar Myrdal (1931, 1933) and James Tobin (1969) deal with the development of an investment theory based on the financial structure. In this context, we give a new presentation of Wicksellian and Keynesian theories. The initial impetus given by Knut Wicksell (1898) with his system of two interest rates must be emphasized (Schmidt, 1995). However, these studies do not mention Thorstein Veblen (1904, 1908, 1923), one of the founding fathers of institutionalism, who remains unknown, particularly in this tradition, although recent literature (Ganley, 2004; Gagnon, 2007; Cochrane, 2011; Mendez, 2012) considers that he made a real contribution to capital theory. He made an early American analysis of corporate governance structure, which emerged as a central issue in the early 20th century in light of the development of financial instruments, shareholder behavior and corporate equity valuation concerns. Our work is based on a critical review of the literature, which is guilty of omissions, lack of accuracy and errors of formalization. The theory of the non-neutrality of the financial structure remains wholly relevant today, so that in this paper, we focus on the reasons why Veblen’s corporate financial analysis should not be forgotten.
    Keywords: Keynes, goodwill, investment theory,capital valuation, corporate governance, financial structure, promoter’s profit, Myrdal’s Q, Tobin’s q, Veblen, Wicksell, windfall profits.
    Date: 2016–05–09
  6. By: Fratini, Saverio M. (Università degli Studi Roma Tre (University of Rome Tre))
    Abstract: The paper reconstructs the history of what Sraffa called the ‘degeneration of cost’ as emerges from his manuscripts of the late 1920s. In particular, Sraffa regards the Physiocrats as having the correct idea of cost as being the commodities that allow workers to subsist. The classical economists measured this bundle of commodi-ties in terms of labour, which they also ambiguously viewed as ‘toil and trouble’. Then, the idea of labour as ‘toil and trouble’ was indicated by neoclassical authors as an anticipation of their conception of cost as a sacrifice. Conferring also upon abstinence from consumption the nature of sacrifice, the neoclassical-marginalist theory understood wages and interest as compensation for the disutility of working and saving. Then, cost was ultimately seen as what induces workers and capitalists to produce. This completed the degeneration of cost from the objective-physical conception of the Physiocrats to the subjective-psychological view of the neoclassical school.
    Keywords: cost; economic methodology; Sraffa; Sraffa’s manuscripts
    JEL: B12 B13 B41 B51 D24
    Date: 2016–08
  7. By: Bellino , Enrico (Università Cattolica del Sacro Cuore (Catholic University of the Sacred Heart)); Nerozzi, Sebastiano (Università degli studi di Palermo (University of Palermo))
    Abstract: The formal representation of economic theories normally takes the shape of a model, that is, a system of equations which connect the endogenous variables with the values of the parameters which are taken as given. Sometimes, it is possible to identify one or more equations which are able to determine a subset of endogenous variables priory and independently of the other equations and of the value taken by the remaining variables of the system. The first group of equations and variables are thus said to causally determine the remaining variables. In Pasinetti’s works, this notion of causality has often been emphasized as a formal property having the burden of conveying a profound economic meaning. In this paper, we will go through those works of Pasinetti where the notion of causality plays a central role, with the purpose of contextualizing it within the econometric debate of the Sixties, enucleate its economic meaning, and show its connections with other fields of the modern classical approach.
    Keywords: causality; interdependence; modern classical approach; Ricardo distribution theory; Keynes’s analysis; ‘given quantities’; surplus approach; structural dynamics; vertical integration
    JEL: B00 B24 B51 C50 E12
    Date: 2015–01
  8. By: Andrew B. Bernard; J. Bradford Jensen; Stephen J. Redding; Peter K. Schott
    Abstract: Research in international trade has changed dramatically over the last twenty years, as attention has shifted from countries and industries towards the firms actually engaged in international trade. The now-standard heterogeneous firm model posits measure zero firms that compete under monopolistic competition and decide whether to export to foreign markets. However, much of international trade is dominated by a few “global firms,” which participate in the international economy along multiple margins and account for substantial shares of aggregate trade. We develop a new theoretical framework that allows firms to have large market shares and to decide simultaneously on the set of production locations, export markets, input sources, products to export, and inputs to import. Using U.S. firm and trade transactions data, we provide strong evidence in support of this framework's main predictions of interdependencies and complementarities between these margins of firm international participation. Global firms participate more intensively along each margin, magnifying the impact of underlying differences in firm characteristics, and increasing their shares of aggregate trade.
    JEL: F12 F14 L11 L21
    Date: 2016–10
  9. By: Stirati, Antonella (Università degli Studi Roma Tre (University of Rome Tre))
    Abstract: Thomas Piketty’s Capital in the Twenty-First Century has been spectacularly successful and a reason for this might be the fact that the theory that underlies his analysis is mainstream theory, with some adjustments or reservations on specific points, but never on the fundamentals. Thus, while Piketty’s empirical analysis often challenges received views and supports a non-apologetic view of capitalism’s dynamics, the book at the same time speaks a language which is common to mainstream economists around the world. This however is not always conducive to consistency and interpretative accuracy. A different theoretical perspective (and some empirical evi-dence) might lead to questioning some of the book’s central claims.
    Keywords: Piketty; inequality; income distribution; capitalist dynamics
    JEL: D31 E25 P10
    Date: 2016–03
  10. By: Schefold, Bertram (Goethe University, Frankfurt am Main)
    Abstract: A stochastic approach has been introduced to explain the empirically observed fact that wage curves calculated from input-output systems tend to be nearly linear and that the paradoxes of capital appear to be rare. The stochastic approach allows to justify the simplifying treatment of normal prices common to 19th and early 20th century authors as diverse as Marx (transformation problem), Wicksell (old neoclassical equilibrium), J.B. Clark (neoclassical production function). It is shown that the likelihood of reverse capital deepening is much lower than that of Wicksell effects. With this, the likely characteristics of the wage frontier obtained from a multiplicity of input-output tables are derived. The conclusion summarises what we know and do not know about the validity of the Cambridge critique of capital.
    Keywords: Capital theory; Random matrices; Aggregate Production Function; Transformation problem; Wicksell effects
    JEL: B13 B14 E25
    Date: 2016–04
  11. By: Franz Dietrich (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Christian List (LSE - London School of Economics and Political Science)
    Abstract: Behaviourism is the view that preferences, beliefs, and other mental states in social-scientific theories are nothing but constructs re-describing people's behaviour. Mentalism is the view that they capture real phenomena, on a par with the unobservables in science, such as electrons and electromagnetic fields. While behaviourism has gone out of fashion in psychology, it remains influential in economics, especially in 'revealed preference' theory. We defend mentalism in economics, construed as a positive science, and show that it fits best scientific practice. We distinguish mentalism from, and reject, the radical neuroeconomic view that behaviour should be explained in terms of brain processes, as distinct from mental states.
    Keywords: decision theory,scientific realism,Mentalism,behaviourism,revealed preference
    Date: 2016–04–21
  12. By: Claudia R. Sahm; Jason A. Sockin
    Abstract: In this note, we use the household-level data in the University of Michigan's Surveys of Consumers, including respondents' own changes in expectations, to document new signs that households pay limited attention to inflation developments.
    Date: 2016–10–19

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