nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2017‒04‒16
nine papers chosen by
Karl Petrick
Western New England University

  1. "Inequality Update: Who Gains When Income Grows?" By Pavlina R. Tcherneva
  2. The effects of income distribution and fiscal policy on growth, investment and budget balance: the case of Europe By Thomas Obst; Özlem Onaran; Maria Nikolaidi
  3. A ‘Model’ Model: McCloskey and the Craft of Economics By Joshua C. Hall
  5. The Ideological Roots of Institutional Change By Murat Iyigun; Jared Rubin
  6. How much does military spending affect growth? Causal estimates from the World's non-rich countries By Giorgio d'Agostino; John Paul Dunne; Luca Pieroni
  7. Rising Inequality in Life Expectancy by Socioeconomic Status By Geoffrey T. Sanzenbacher; Anthony Webb; Candace M. Cosgrove; Natalia S. Orlova
  8. A Review of the Recent Literature on the Institutional Economics Analysis of the Long-Run Performance of Nations By Peter Lloyd; Cassey Lee
  9. La taxe carbone dans une économie keynésienne By Nicolas Piluso; Edwin Le Héron

  1. By: Pavlina R. Tcherneva
    Abstract: Since the 1980s, economic recoveries in the United States have been delivering the vast majority of income growth to the wealthiest households. This policy note updates the analysis in One-Pager No. 47 and Policy Note 2015/4 with the latest data through 2015, looking at the distribution of average income growth (with and without capital gains) between the bottom 90 percent and top 10 percent of households, and between the bottom 99 percent and top 1 percent of households. Little has changed when considering the distribution of average income growth in the current recovery (up to 2015) between the bottom 90 percent and top 10 percent of families, with or without capital gains. Although average real income for the bottom 90 percent of households is no longer shrinking, these families still capture a historically small proportion of that growth—only between 18 percent and 22 percent. The growing economy continues to deliver the most benefits to the wealthiest families.
    Date: 2017–01
  2. By: Thomas Obst; Özlem Onaran (University of Greenwich); Maria Nikolaidi
    Abstract: This paper develops a multi-country post-Kaleckian demand-led growth model that incorporates the role of the government. One novelty of this paper is to integrate cross-country effects of both changes in income distribution and fiscal policy. The model is used to estimate econometrically the effects of income distribution and fiscal policy on the components of aggregate demand in EU15 countries. The results show that a policy mix that combines the simultaneous implementation of a pro-labour wage policy, an expansionary fiscal policy and a progressive tax policy in all EU countries leads to a significant rise in the EU15 GDP. The impact of wage policies is positive but small; the overall stimulus becomes much stronger with fiscal expansion. This policy mix leads to an improvement in the budget balance in all the EU15 countries, suggesting that expansionary fiscal policy is sustainable when it is combined with wage and progressive tax policy.
    JEL: E12 E25 E62
    Date: 2017–04
  3. By: Joshua C. Hall (West Virginia University, Department of Economics)
    Abstract: In this essay, I highlight some of the contributions of Deirdre McCloskey to the practice of economics as a teacher and scholar. I highlight her influence on my teaching and scholarship in the areas of economic education and economic freedom.
    Keywords: rhetoric, economic freedom, storytelling
    JEL: A00 A11 A23 B31
    Date: 2017–04
  4. By: Akanksha Srivastava
    Abstract: Entrepreneurship refers to an individual’s ability to turn ideas into action. Entrepreneurship is a combination of mindsets, knowledge and skills. At higher education level, the primary purpose of entrepreneurship education should be to develop entrepreneurial capacities and mindsets. Crossing boundaries between disciplines, and multidisciplinary collaboration, are essential elements in building enterprising abilities. In terms of entrepreneurship, this socially formed world favors the masculine ideal over the feminine, and while the impact is powerful, most people are not aware of its creation, refreshment, and/or use. Social construction is not a deterministic process; it is perpetuated by institutions and institutional forces but what is socially constructed can change There is a need for greater flexibility in course design. Work placements, alternation between full- and part-time study, organization of intensive courses, and accreditation of informal and non-formal learning all have a role to play. Key Words: Women Entrepreneurship, Entrepreneurship Education, Teaching Methods Policy
    Date: 2017–03
  5. By: Murat Iyigun (University of Colorado); Jared Rubin (Chapman University)
    Abstract: Why do some societies fail to adopt more e¢ cient institutions in response to changing economic conditions? And why do such conditions sometimes generate ideological backlashes and at other times lead to transformative sociopolitical movements? We propose an explanation that highlights the interplayó or lack thereofó between new technologies, ideologies, and institutions. When new technologies emerge, uncertainty results from a lack of understanding how the technology will Öt with prevailing ideologies and institutions. This uncertainty discourages investment in institutions and the cultural capital necessary to take advantage of new technologies. Accordingly, increased uncertainty during times of rapid technological change may generate an ideological backlash that puts a higher premium on traditional values. We apply the theory to numerous historical episodes, including Ottoman reform initiatives, the Japanese Tokugawa reforms and Meiji Restoration, and the Tongzhi Restoration in Qing China.
    Keywords: Ideology, Institutions, Conservatism, Beliefs, Institutional Change, Technological Change, Uncertainty
    JEL: D02 N40 N70 O33 O38 O43 Z10
    Date: 2017
  6. By: Giorgio d'Agostino; John Paul Dunne (School of Economics and SALDRU, University of Cape Town); Luca Pieroni
    Abstract: While not always a concern for the general economic growth literature, the debate over the effects of military spending on growth continues to develop, with no consensus, but a deepening understanding of the limitations of previous work. One important issue that has not been adequately dealt with, is the endogeneity of military spending in the growth equation, mainly because of the difficulty of finding any variables that would make adequate instruments. This paper considers this issue, using an endogenous growth model estimated on a large sample of 109 non-high income countries for the period 1998-2012. The empirical analysis is framed within an instrumental variable setting that exploits the increase in military spending that occurs when unrest in a country escalates to turmoil. The estimation results show that endogeneity arising from reverse causality is a crucial issue, with the instrumental variable estimates providing a larger significant negative effect of military spending on growth than OLS would. This result is found to be robust to different sources of heterogeneity and different time periods.
    Keywords: Military spending, economic growth, reverse causality, instrumental variable, panel data.
    JEL: H00 O40 C26 C33
    Date: 2016
  7. By: Geoffrey T. Sanzenbacher; Anthony Webb; Candace M. Cosgrove; Natalia S. Orlova
    Abstract: Inequality in life expectancy is growing in the United States, but evidence is mixed regarding how much it has grown. Some studies have found that life expectancies have decreased for those with the lowest socioeconomic status (SES). Other studies have found that while inequality is rising, there have been life expectancy gains across the board. A primary difference in these studies is how SES is measured. Some studies use an absolute measure, such as years of school completed, while others use relative measures, such as a person’s ranking of years of school completed compared to others born at the same time. This study uses regression analysis to assign people a relative education ranking and, in doing so, attempts to isolate the changing relationship between SES and mortality from the fact that certain education-based groups, especially high school dropouts, actually have a lower SES level today than in the past. The study finds that when SES is defined in this way – relatively – inequality in mortality by SES is increasing but life expectancies have also increased across SES groups. The study also finds that white women in the bottom of the education distribution have experienced the least improvement of any group. This research suggests efforts to improve the finances of Social Security through higher retirement ages will have to reckon with the distributional effects of increasing inequality in mortality, but not with increases in mortality for large segments of the population.
    Date: 2017–04
  8. By: Peter Lloyd (University of Melbourne); Cassey Lee (ISEAS – Yusof Ishak Institute, Singapore)
    Abstract: This paper reviews the recent (post-2000) literature which assesses the importance of institutions as a factor determining cross-country differences in growth rates or in the contemporary level of “prosperity”. It first sketches how institutional economics has evolved. It then examines critically the methods of analysis employed in the recent literature. The paper finds that this literature has made a major contribution to the analysis of the causes of economic growth but the relative importance of institutions as a determinant of long-run growth and prosperity is still a wide open question.
    Keywords: institutions, policies, long-run performance, instruments
    JEL: O43 B52
    Date: 2016–01
  9. By: Nicolas Piluso (CERTOP - Centre d'Etude et de Recherche Travail Organisation Pouvoir - UT2 - Université Toulouse 2 - UPS - Université Paul Sabatier - Toulouse 3 - CNRS - Centre National de la Recherche Scientifique); Edwin Le Héron (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - Université Montesquieu - Bordeaux 4 - CNRS - Centre National de la Recherche Scientifique)
    Abstract: L'objet de cet article est d'analyser les effets conjoncturels d'une politique climatique de taxation des émissions polluantes ainsi que son impact sur l'efficacité des politiques de relance dans le cadre d'analyse d'une économie keynésienne. Les contributions empiriques et théoriques actuelles estiment qu'une taxation a le plus souvent un impact récessif. Par ailleurs, ces travaux montrent que l'efficacité des politiques publiques est entravée par l'exercice de la politique climatique et/ou l'existence d'une contrainte environnementale. Nous montrons ici à l'inverse que la politique climatique de taxation peut exercer, sous certaines conditions, un effet favorable sur la conjoncture et renforcer l'efficacité économique des politiques de relance budgétaire.
    Keywords: Taxe carbone, politique de relance, économie keynésienne.
    Date: 2017–02–03

This nep-pke issue is ©2017 by Karl Petrick. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.