nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2017‒01‒29
eight papers chosen by
Karl Petrick
Western New England University

  1. Financialization Is Marketization! A Study of the Respective Impacts of Various Dimensions of Financialization on the Increase in Global Inequality By Olivier Godechot
  2. Feminist Challenge to the Mainstream IR By Aydın, Gülşen
  3. Economics cannot isolate itself from political theory: a mathematical demonstration By Brendan Markey-Towler
  4. The Missing Bretton Woods Debate over Flexible Exchange Rates By Douglas A. Irwin
  5. The Cultural Foundations of Happiness. By Conzo, Pierluigi; Aassve, Arnstein; Fuochi, Giulia; Mencarini, Letizia
  6. Mathematics self-confidence and the "prepayment effect" in riskless choices By Lian Xue; Stefania Sitzia; Theodore L. Turocy
  7. Migration in Kenya : Beyond Harris-Todaro By Cem Oyvat; Mwangi wa Githinji
  8. Honduran Coffee Trade: Economic Effects of Fair Trade Certification On Individual Producers By Herrell, Kevin M.; Tewari, Rachna; Mehlhorn, Joey

  1. By: Olivier Godechot (Observatoire sociologique du changement)
    Abstract: In this article, I study the impact of financialization on the rise in inequality in 18 OECD countries from 1970 to 2011 and measure the respective roles of various forms of financialization: the growth of the financial sector; the growth of one of its subcomponents, financial markets; the financialization of non-financial firms; and the financialization of households. I test these impacts using cross-country panel regressions in OECD countries. I show first that the share of the finance sector within the GDP is a substantial driver of world inequality, explaining between 20 and 40 percent of its increase from 1980 to 2007. When I decompose this financial sector effect, I find that this evolution was mainly driven by the increase in the volume of stocks traded in national stock exchanges and by the volume of shares held as assets in banks’ balance sheets. By contrast, the financialization of non-financial firms and of households does not play a substantial role. Based on this inequality test, I therefore interpret financialization as being mainly a phenomenon of marketization, redefined as the growing amount of social energy devoted to the trade of financial instruments on financial markets.
    Keywords: Finance; Financialization; Income; Inequality
    Date: 2016–06
  2. By: Aydın, Gülşen
    Abstract: This study deals with the Feminist challenge to the Mainstream International Relations Discipline (IR) - rationalist theories, especially Realism - and the mainstream's responses to this challenge. It addresses the issue in five steps. Firstly, it sheds light on how Feminism is related to International Relations. Secondly, it examines how Feminist IR theorists criticize the Mainstream IR due to its state-centric approach and argue that being obsessed with anarchic international system prevented analysis of social relations, including gender relations. Thirdly, the study addresses how Feminism exposes the gender biases in central terms such as power, autonomy, rationality, security, and state. Fourthly, it examines how Feminist writing on IR challenges the dichotomies of the Mainstream IR. Fifthly, the study examines how the Mainstream has responded to that challenge. The conclusion argues that although Feminist challenge to mainstream IR cannot be deemed successful in reconstructing IR, Feminism still enriches our understanding of global politics.
    Keywords: International Relations (IR), Feminism, Realism, state, gender, power.
    JEL: J16 Z00
    Date: 2016–05
  3. By: Brendan Markey-Towler
    Abstract: The purpose of this paper is to provide a confession of sorts from an economist to political science and philosophy. A confession of the weaknesses of the political position of the economist. It is intended as a guide for political scientists and philosophers to the ostensible policy criteria of economics, and an illustration of an argument that demonstrates logico-mathematically, therefore incontrovertibly, that any policy statement by an economist contains, or is, a political statement. It develops an inescapable compulsion that the absolute primacy and priority of political theory and philosophy in the development of policy criteria must be recognised. Economic policy cannot be divorced from politics as a matter of mathematical fact, and rather, as Amartya Sen has done, it ought embrace political theory and philosophy.
    Date: 2016–10
  4. By: Douglas A. Irwin
    Abstract: The collapse of the gold standard in the 1930s sparked a debate about the merits of fixed versus floating exchange rates. Yet the debate quickly vanished: there was almost no discussion about the exchange rate regime at the Bretton Woods conference in 1944 because John Maynard Keynes and Harry Dexter White agreed that exchange rate stability through fixed but adjustable pegs was the right approach. In light of the difficult macroeconomic tradeoffs experienced under the gold standard a decade earlier, the outright rejection of floating exchange rates seems surprising. This paper explores the views of leading economists about the exchange rate provisions in the Bretton Woods agreement and examines why arguments for floating exchange rates were so quickly dismissed.
    JEL: B22 F31 F33
    Date: 2017–01
  5. By: Conzo, Pierluigi; Aassve, Arnstein; Fuochi, Giulia; Mencarini, Letizia (University of Turin)
    Abstract: The paper provides a framework for how culture affects happiness. According to self-determination theory, well-being is driven by the satisfaction of three basic psychological needs: autonomy, relatedness and competence. We assess if, and to what extent, generalized trust and the values of obedience and respect influence Europeans’ satisfaction of these needs, controlling for income and education. We find a positive and significant impact for generalized morality (high trust and respect, low obedience), which is robust to different checks for endogeneity, including instrumental variable regressions at country, regional and individual level and panel-data estimations.
    Date: 2017–01
  6. By: Lian Xue (University of East Anglia); Stefania Sitzia (University of East Anglia); Theodore L. Turocy (University of East Anglia)
    Abstract: We extend the analysis of a riskless choice experiment reported recently by Hochman et al. (2014). Participants select from among sets of standard playing cards valued by a simple formula. In some sessions, participants are given a prepayment associated with some of the cards, which need not be the earnings-maximizing ones. Hochman et al. find that participants choose an earnings-maximizing card less frequently when another card is prepaid. We replicate this result under the original instructions, but not with instructions which explain the payment process more explicitly. Participants who state they do not consider themselves good at mathematics make earnings-maximizing choices much less frequently. Prior experience with economics experiments in general improves performance only modestly. The results suggest that even when comparisons among choices require only simple quantitative reasoning steps, market designers and regulators may need to pay close attention to how the terms of offers are expressed, explained, and implemented.
    Keywords: loss aversion, prepayment, replication, mathematics self-confidence, lab rats
    JEL: C91 D83
    Date: 2016–09–20
  7. By: Cem Oyvat (University of Greenwich, International Business and Economics Department); Mwangi wa Githinji (University of Massachusetts - Amherst, Economics Department)
    Abstract: This paper examines the impact of agrarian structures on the migration behavior and destination of rural household heads and individuals in Kenya. To explore the complexity of migration we extend the standard Harris-Todaro framework to account for land inequality and size. In addition, we disaggregate urban destination into different types of urban centers and also consider rural-to-rural migration. Using logistic regressions, we show that Kenyan household heads born in districts with higher land inequality, smaller per capita land and lower per capita rural income are more likely to migrate. Hence, poverty and inequality in Kenyan rural districts are transmitted to other areas over time. Our estimates also show that, for peasants whose incomes are squeezed by larger land inequality, migration from villages to suburban Nairobi, smaller cities, and villages in different districts could be a preferable strategy to migrating to Metro Nairobi. The impact of land inequality is more significant for male migration than female migration. Moreover, the level of education, age, marital status, gender, religion and distance to Nairobi play a role in the migration behavior of rural dwellers. Classification-JEL: O15, Q15, O12, O55
    Keywords: migration, distribution, agrarian structures
    Date: 2017–01–24
  8. By: Herrell, Kevin M.; Tewari, Rachna; Mehlhorn, Joey
    Abstract: Global demand for coffee has increased significantly due to emphasis placed on value creation throughout the coffee supply chain, increased consumption in emerging economies, and changes in consumer preference. The specialty coffee industry, in particular, has highlighted the economic effects on individual participants from producers to consumers. In an attempt to encourage a more equitable income distribution along the supply chain, organizations such as Fair Trade Coffee have emerged to address the welfare of producers. A simple regression analysis can be used to determine the impact of Fair Trade Certification on producer premiums obtained through these non-traditional distribution channels. The Fair Trade Model will also be evaluated based on historical market data related to the evolution of the specialty coffee industry, including similar trade models that have emerged due to increased awareness brought about by Fair Trade Coffee. This preliminary study will serve as a platform for future studies that will determine the overall impact of Honduran Fair Trade Coffee Certification on producer welfare.
    Keywords: Coffee, Fair Trade, Income Distribution, Supply Chain, Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Crop Production/Industries, International Relations/Trade, Marketing, Risk and Uncertainty, Q13, Q17,
    Date: 2017–01–17

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