nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2016‒10‒30
five papers chosen by
Karl Petrick
Western New England University

  1. Schumpeter, Veblen and Bourdieu on Institutions and the Formation of Habits By Bögenhold, Dieter; Michaelides, Panayotis G.; Papageorgiou, Theofanis
  2. The Solow Growth Model Revisited. Introducing Keynesian Involuntary Unemployment By Riccardo Magnani
  3. Path Dependence and Interdependence Between Institutions and Development By David Fadiran; Mare Sarr
  4. The role of Fairtrade certification for wages and job satisfaction of plantation workers By Krumbiegel, Katharina; Maertens, Miet; Wollni, Meike
  5. The Financialization of GDP and its Implications for Macroeconomic Debates By Jacob Assa

  1. By: Bögenhold, Dieter; Michaelides, Panayotis G.; Papageorgiou, Theofanis
    Abstract: As we know, Joseph Alois Schumpeter is one of the greatest economists of all times, while Thorstein Veblen is an economist and sociologist who made seminal contributions to the social sciences. Pierre Bourdieu, meanwhile, is one of the most famous structural sociologists, who has consistently worked on economic dynamics. These three scholars have laid the foundations of a socioeconomic perspective. However, several important aspects of their works remain less widely discussed, or even inadequately explored in a comparative manner. Of course, investigating the origins of their ideas in evolutionary and institutional economics and re-evaluating comparatively the influences that shaped their works is quite useful for promoting dialogue between Economics and Sociology. Within this framework, this essay focuses on the conceptual relationship between Schumpeter, Veblen and Bourdieu. Evolution and Change shape the economic life in their respective works and, in such a framework a central point of their analyses is the interdependence between the cultural, social and economic spheres. Furthermore, an economic sociology is built around the concept of habit formation. The three great authors’ systemic views focus on the various institutions and other aspects of cultural, social and economic life, where habits are formed and cover diverse fields and notions such as Consumption, Preferences, Art, Knowledge, Banking and even Capitalism. For instance, all three social scientists acknowledged the fact that the internal dynamics of capitalism introduce structural instabilities into the economic system. Also, they recognized that research and knowledge development is a collective social process. However, from a methodological perspective, their main emphasis is on the emerging dynamic evolution of habits, which is perceived as the interruption of already existing social norms and the conflict between routine and change. Several differences between Schumpeter, Veblen and Bourdieu are observed and analysed and ideas for future research are presented.
    Keywords: Schumpeter, Veblen, Bourdieu, Habits, Consumption, Capitalism
    JEL: B15 B25 B31
    Date: 2016
  2. By: Riccardo Magnani (CEPN - Centre d'Economie de l'Université Paris Nord - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In this paper we extend the Solow growth model by introducing a simple mechanism which allows to determine involuntary unemployment explained by the weakness in aggregate demand. In our base model, we introduce a simple investment function and we find that an increase in aggregate demand (due to a reduction in the saving rate or to an increase in public expenditures) stimulates real GDP and reduces unemployment. Then, we modify the investment function in order to take into account the crowding-in/crowding-out effect on investments. This allows us to build a class of models which are between neoclassical supply-driven models and keynesian demand-driven models depending on the value of a key parameter that measures the degree of the crowding-in/crowding-out effect on investments and which lies between zero (for keynesian models) and one (for neoclassical models). Estimations on six OECD countries show that our key parameter lies between 0.6 and 0.8, implying that the fiscal multiplier is between 1 and 2, which is quite consistent with the empirical evidence.
    Date: 2015–09–22
  3. By: David Fadiran; Mare Sarr
    Abstract: Path dependence theory, within the institutions context, means that the path of institutions promulgated within a system historically determines the nature of institutions that will ensue within the same system in the present and in the future. The paper makes use of a newly constructed index of institutions quality, and addresses three related questions; the existence of path dependence in institutions, the interdependence and causality between political and economic institutions, and lastly the interdependence between economic development and institutions. In addressing the first question, I use unit root tests to test the hypothesis that institutions promulgated during colonial times still influence institutions promulgated during the post colonial era. I also test for interdependence between institutions in Nigeria using an error correction model in analysing the extent of interdependence between political and economic institutions. Lastly, I test the critical juncture hypothesis—which argues that better institutions lead to economic development and the modernisation hypotheses—which argues that economic development leads to better institutions. The results show support for early path dependence in both political and economic institutions. I also find evidence in support of interdependence running from economic to political institutions. Lastly, there is evidence of a long-run association between institutions and economic development, with the evidence supporting the critical juncture hypothesis, more than the modernisation hypothesis.
    Keywords: institutions, Legislations, Persistence, Economic Growth and Development, Nigeria
    JEL: K00 K11 N00 N1 N47 O1 O11
    Date: 2016–10
  4. By: Krumbiegel, Katharina; Maertens, Miet; Wollni, Meike
    Abstract: Worker welfare and employment conditions in the agri-food producing and processing sectors in the global south have become an increasing concern for consumers. Sustainability standards, such as Fairtrade, play an important role in agri-food markets of horticultural produce and may be a tool to address these concerns. However, so far the implications of Fairtrade certification for extrinsic and intrinsic employment factors of hired labor on large-scale plantations remain hardly understood. In this paper we assess its effect on workers’ hourly wages and their level of job satisfaction with primary survey data from 325 randomly sampled workers from eight different export-oriented pineapple companies in Ghana. We apply a linear, linear mixed model and instrumental variable approach to take into account the multilevel characteristics of our data and possible selection bias. Our findings show that both hourly wages and job satisfaction are indeed higher on Fairtrade certified plantations. Factors of increased job satisfaction are likely driven by higher wages, permanent employment contracts, training opportunities, company services such as medical care and paid leave as well as established labor unions on Fairtrade certified plantations.
    Keywords: Fairtrade certification, horticultural employment, worker wages, job satisfaction, Agribusiness, Farm Management, Labor and Human Capital, J28, J31, Q13,
    Date: 2016–10
  5. By: Jacob Assa (United Nations - OHRLLS)
    Abstract: The large and growing literature on financialization has focused on identifying the expansion of the financial sector into various realms of economies and societies, as well as analysing its effects on economic growth, employment, inequality and democracy, among other variables. Most works in this literature, however, still use standard indicators such as Gross Domestic Product (GDP) for empirically defining and examining the scope of financialization or the extent of its impacts. This paper builds on recent research focusing on the financialization of GDP itself. While the original measure in the 1930s and 1940s was designed to capture the production of measurable output, subsequent updates to the national accounting framework shifted the production boundary (which determines what gets counted in GDP) to cover more services, including those for which there is no direct measure of output. In particular, the ‘value-added’ of financial services is imputed based on banks’ revenues and costs, and the inclusion of such income in GDP has caused a deterioration in its correlation with measures of employment and median income, as well as in its performance as a leading indicator. Using new data and treating financial revenues as a cost to the overall economy, a new measure – Final GDP – performs better than GDP on all three fronts. It also sheds light on several unresolved empirical debates in macroeconomics. First, the phenomenon of the Great Moderation of fluctuations in output appears to be a statistical artefact, as the inclusion of finance in GDP smooths over volatility as well as trends of secular stagnation. Second, the spurious breakdown of Okun’s Law also turns out to be a figment of the data, since GDP by construction has been diverging from employment and aggregate demand. Jobless growth recoveries thus turn out to be merely periods of stagnation when employment growth is naturally subdued. Finally, using in-sample forecasting, FGDP outperforms GDP as a leading indicator, foretelling the Great Recession earlier and more clearly than the standard measure. The paper concludes by assessing some broader implications of the finalization of GDP for economics and politics.
    Keywords: National accounts, finance, GDP, financialization, macroeconomics
    Date: 2016–10

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