nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2017‒02‒12
eight papers chosen by
Karl Petrick
Western New England University

  1. Post Keynesian Dynamic Stochastic General Equilibrium Theory By Farmer, Roger E A
  2. Plurality in Teaching Macroeconomics By Azad, Rohit
  3. A comment to Fratini's “Rent as a share of product and Sraffa’s price equations” By Yoann Verger
  4. Technological Change and Employment: Were Ricardo and Marx Right? By Piva, Mariacristina; Vivarelli, Marco
  5. Old and new formulations of the neoclassical theory of aggregate investment : a critical review By Daniele Girardi
  6. Is Global Equality the Enemy of National Equality? By Rodrik, Dani
  7. An Institutional Approach to Trade Unions’ Density. The Case of Legal Origin and Political Ideology By Jacek Lewkowicz; Anna Lewczuk
  8. Secrecy and State Capacity : A Look Behind the Iron Curtain By Harrison, Mark

  1. By: Farmer, Roger E A
    Abstract: This paper explains the connection between ideas developed in my recent books and papers and those of economists who self-identify as Post Keynesians. My own work is both neoclassical and "old Keynesian". Much of my published work assumes that people have rational expectations and that "animal spirits" should be modeled as a new fundamental. I adopt a general equilibrium framework to model the macroeconomy. But although I write from a neo-classical tradition the themes I explore in my published writing have much in common with heterodox economics. This paper explains the common elements between these seemingly disparate traditions. I make the case for unity between Post-Keynesian and General Equilibrium Theory under the banner of Post-Keynesian Dynamic Stochastic General Equilibrium Theory.
    Keywords: Dynamic Stochastic General Equilibrium Theory; Post Keynesian Economics
    JEL: E12 E20
    Date: 2017–01
  2. By: Azad, Rohit
    Abstract: The current Great Recession, the worst crisis that capitalism has faced since the Great Depression, has failed, at least so far, to generate a change in the teaching and practice of Macroeconomics. This seems bizarre as if nothing has happened and the economists are just going about doing business as usual. In light of this, the current paper attempts to address how Macroeconomics ought to be taught to students at the advanced intermediate level, which gives them an overall perspective on the subject.
    Keywords: Macroeconomic Teaching, New Keynesian, Post Keynesian, Keynes-Kalecki
    JEL: A2 A22 B4 B50 E3 E4 E5
    Date: 2016–10–01
  3. By: Yoann Verger (INRA - Institut National de la Recherche Agronomique)
    Abstract: Abstract This comment from Fratini's article “Rent as a share of product and Sraffa's price equations” corrects Fratini's demonstration that rent as a share of the product and rate of profits could both increase at the same time. By doing so, this comment underlines the specificity of Sraffa's theory of value, and especially the need to only analyze systems of production where exchanges are needed to reproduce the system.
    Keywords: Sraffa, rent, rate of profits, self-reproducing process, theory of value
    Date: 2016–12–13
  4. By: Piva, Mariacristina (Università Cattolica del Sacro Cuore); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: The aim of this paper is twofold. On the one hand, the economic insights about the employment impact of technological change are disentangled starting from the classical economists to nowadays theoretical and empirical analyses. On the other hand, an empirical test is provided; in particular, longitudinal data – covering manufacturing and service sectors over the 1998-2011 period for 11 European countries – are used to run GMM-SYS and LSDVC estimates. Two are the main results: 1) a significant labour-friendly impact of R&D expenditures (mainly related to product innovation) is found; yet, this positive employment effect appears to be entirely due to the medium-and high-tech sectors, while no effect can be detected in the low-tech industries; 2) capital formation is found to be negatively related to employment; this outcome points to a possible labour-saving effect due to the embodied technological change incorporated in gross investment (mainly related to process innovation).
    Keywords: technological change, employment, sectoral analysis, EU
    JEL: O33
    Date: 2017–01
  5. By: Daniele Girardi (Department of Economics, University of Massachusetts, Amherst)
    Abstract: This paper surveys the neoclassical theory of aggregate investment and its criticisms. We distinguish four main formulations of this theory: the traditional Wicksellian investment function; the Fisherian array-of-opportunities approach (as Witte Jr. called it); the Jorgensonian model; the now prevailing adjustment-costs models. With respect to other papers criticizing the neoclassical theory of investment, we do not appeal to market imperfections. We instead argue that all four formulations present serious theoretical difficulties, even conceding free competition.
    Keywords: investment, neoclassical theory, Wicksell, Jorgenson, Fisher, adjustment-costs
    JEL: B22 E22 B13
    Date: 2017
  6. By: Rodrik, Dani
    Abstract: The bulk of global inequality is accounted for by income differences across countries rather than within countries. Expanding trade with China has aggravated inequality in some advanced economies, while ameliorating global inequality. But the 'China shock' is receding and other low-income countries are unlikely to replicate China's export-oriented industrialization experience. Relaxing restrictions on cross-border labor mobility might have an even stronger positive effect on global inequality. However it also raises a similar tension. While there would likely be adverse effects on low-skill workers in the advanced economies, international labor mobility has some advantages compared to further liberalizing international trade in goods. I argue that none of the contending perspectives -- national-egalitarian, cosmopolitan, utilitarian -- provides on its own an adequate frame for evaluating the consequences.
    Date: 2017–01
  7. By: Jacek Lewkowicz (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland); Anna Lewczuk (Faculty of Economic Sciences, University of Warsaw)
    Abstract: Which institutions may be important in terms of trade unions’ density and how significant they are? However, trade unions’ status is very different among states, they are still a very meaningful component of labor markets. In this paper we contribute to the debate on the institutions, which may affect the outcome of trade unions in different legal systems. Firstly, we draw on theoretical underpinnings of trade unions’ activity and density. Then, we conduct an empirical analysis of the relationships between trade union density in a particular country, its legal origin and government’s ideology. In this way the paper enriches an underexploited niche in institutional research devoted to labor market issues.
    Keywords: new institutional economics, institutions, political economy, trade unions, labor market, legal origin, parties’ ideologies
    JEL: J51 K31 K40 P16
    Date: 2017
  8. By: Harrison, Mark (Department of Economics, University of Warwick)
    Abstract: This paper reviews two decades of research on the political economy of secrecy, based on the records of former Soviet state and party archives. Secrecy was an element of Soviet state capacity, particularly its capacity for decisiveness, free of the pressures and demands for accountability that might have arisen from a better informed citizenry. But secrecy was double-edged. Its uses also incurred substantial costs that weakened the capacity of the Soviet state to direct and decide. The paper details the costs of secrecy associated with “conspirative” government business processes, adverse selection of management personnel, everyday abuses of authority, and an uninformed leadership.
    Keywords: abuse of authority ; adverse selection ; censorship ; military outlays ; secrecy ; state capacity ; transaction costs ; trust
    JEL: N44 P37
    Date: 2017

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