nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2017‒06‒04
eleven papers chosen by
Karl Petrick
Western New England University

  1. "Stock-flow Consistent Macroeconomic Models: A Survey" By Michalis Nikiforos; Gennaro Zezza
  2. Inequality as Lack of Co-operation in Economic Thought By Monica Hernandez
  3. Policy and State in Complexity Economics By Elsner, Wolfram
  4. Plurality in Teaching Macroeconomics By Rohit Azad
  5. Jevons’s Ideal Role for Labor Unions as a Form of Co-operation By Monica Hernandez
  6. The Economic Commission for Latin America (ECLA) was right: scale-free complex networks and core-periphery patterns in world trade By Gala, Paulo; Camargo, Jhean Steffan Martines de; Freitas, Elton
  7. Animal Spirits, Financial Markets and Aggregate Instability By Wei Dai; Mark Weder; Bo Zhang
  8. IMF, Democracy and Economic Development: Review and Critique By Psofogiorgos, Nikolaos - Alexandros; Metaxas, Theodore
  9. Bilateral FDI from South Africa and Income Convergence in SADC By J. Paul Dunne; Nicholas Masiyandima
  10. The cultural context of contemporary understanding of socio-economic development By Michal Litwinski
  11. Concordian Economic Theory as a View of Various Sides of the Economic System By Gorga, Carmine

  1. By: Michalis Nikiforos; Gennaro Zezza
    Abstract: The stock-flow consistent (SFC) modeling approach, grounded in the pioneering work of Wynne Godley and James Tobin in the 1970s, has been adopted by a growing number of researchers in macroeconomics, especially after the publication of Godley and Lavoie (2007), which provided a general framework for the analysis of whole economic systems, and the recognition that macroeconomic models integrating real markets with flow-of-funds analysis had been particularly successful in predicting the Great Recession of 2007-9. We introduce the general features of the SFC approach for a closed economy, showing how the core model has been extended to address issues such as financialization and income distribution. We next discuss the implications of the approach for models of open economies and compare the methodologies adopted in developing SFC empirical models for whole countries. We review the contributions where the SFC approach is being adopted as the macroeconomic closure of microeconomic agent-based models, and how the SFC approach is at the core of new research in ecological macroeconomics. Finally, we discuss the appropriateness of the name "stock-flow consistent" for the class of models we survey.
    Keywords: Macroeconomic Models; Stock-flow Consistency; Financial Models; Economic Policy
    JEL: E1 E17 E50 E60 F41 G00
    Date: 2017–05
  2. By: Monica Hernandez (Department of Economics, New School for Social Research)
    Abstract: This study is about the notion of co-operation by economic thinkers of the 19th century in the United Kingdom. It presents a comparison and contrast of their ideas as well as an analysis of the relationship between co-operation and economic and social inequality. Two approaches of such relationship are identified. First, an economic-centered view, found in Charles Babbage and William Stanley Jevons, where the benefits of co-operation are linked to profit sharing, the increase of productivity and the expansion of the economic system. Second, Robert Owen’s and John Stuart Mill’s ideas on co-operation, even though with different implications, are mainly socially-oriented. Here, it is possible to see a broader social concern that led them to suggest reforms that could have implications in terms of social (e.g., education and gender), and not only economic inequality. Marx’s analysis of co-operation does not belong to any of these approaches. In his view, under capitalism, the effect of some forms of co-operation may generate or reinforce inequality.
    Keywords: Co-operation, inequality, Robert Owen, Charles Babbage, William Stanley Jevons, John Stuart Mill, Karl Marx, profit sharing, co-operatives, associations
    JEL: B1 B19 B3 B30 D6 D63 J5 J50 J51 J52 J53 J54
    Date: 2017–05
  3. By: Elsner, Wolfram
    Abstract: Complexity economics has developed into a powerful empirical, theoretical, and computational research program in the last three decades, advancing more realistic economics. It converges with long-standing heterodox schools, and its theoretical and empirical findings are consistent with older heterodox research interests and predictions. Economic complexity is characterized by path-dependence, idiosyncrasies, some self-organization capacity, structural emergence, and certain statistical distributions in economic topologies and motions, as complex economic systems move between building order and phases of sudden disorder. In agent-based systems, underlying “intentionality” of agents includes improving their performance, reducing perceived complexity, and generating social institutions. Boosted by the financial crisis 2008ff., a surge to explore complexity-economics’ policy implications has emerged. This chapter will briefly review the literature on economic Complex Adaptive Systems (CAS) and derive implications for economic-policy interventions and the state to act upon socio-economic complexity. From an “evolution-of-cooperation” perspective, we exemplarily derive some more specific policy orientations, specified “framework-policy” or “interactive-policy” approaches, embedded in a conception that we call “new meritorics”. We consider some required structures and capacities that a modern effective state, capable of a strong and persistent, but learning and adapting “complexity policy”, should have.
    Keywords: Complex adaptive systems (CAS),complexity,economic policy,emergence,evolution,institutions,networks,self-organization,group size,state structure,qualification
    Date: 2017
  4. By: Rohit Azad (Department of Economics, New School for Social Research)
    Date: 2017–05
  5. By: Monica Hernandez (Department of Economics, New School for Social Research)
    Abstract: This research examines the ideas about labor unions found in William Stanley Jevons's works. I focus on the collaborative role Jevons envisioned for these organizations as part of a broader cooperative vision between workers and capitalists. Even though Jevons was not a supporter of labor unions and regarded them as monopolies with limited power to increase wages, on the one hand, and with great potential for generating dead losses of wages due strikes, on the other, he did not consider indispensable their elimination as long as they were guided to co-operate with business. This study concludes that there is more than one form of co-operation in Jevons’s thought. One explicit, from capitalist to workers, via profit sharing, and a second one, implicit, through the collaboration of workers to capitalists via their participation in labor organizations different than traditional labor unions. A major implication of this scheme is that both forms of co-operation have to be present for it to be beneficial for both classes. The latter, however, would not ensure that they are equally beneficiated.
    Keywords: William Stanley Jevons, trade unions, profit sharing, co-operation
    JEL: B1 B19 B3 B31 J01 J08 J5 J51 J52 J53 J54
    Date: 2017–05
  6. By: Gala, Paulo; Camargo, Jhean Steffan Martines de; Freitas, Elton
    Abstract: The main purpose of this paper is to apply big-data and scale-free complex network techniques to the study of world trade, with a specific focus on the investigation of ECLA and structuralist ideas. A secondary objective is to illustrate the potentialities of the use of the new science of complex networks in economics, in what has been recently referred to as an econophysics research agenda. We work with a trade network of 101 countries and 762 products (SITC-4) which generated 1,756,224 trade links in 2013. The empirical results based on network analysis and computational methods reported here point in the direction of what ECLA economists used to argue; countries with higher income per capita concentrate in producing and exporting manufactured and complex goods at the center of the trade network; countries with lower income per capita specialize in producing and exporting non-complex commodities at the network’s periphery.
    Date: 2017–03–13
  7. By: Wei Dai (School of Economics, University of Adelaide); Mark Weder (School of Economics, University of Adelaide); Bo Zhang (School of Economics, University of Adelaide)
    Abstract: People's animal spirits are a significant driver behind the fluctuations of the U.S. business cycle. This insight is demonstrated within an estimated artificial economy with financial market frictions. Animal spirits shocks account for around 40 percent of output fluctuations over the period from 1955 to 2014. Financial friction and technology shocks are considerably less important with best point estimates for both near 20 percent. We also find that the Great Recession, for the most parts, was caused by adverse shocks to expectations.
    Keywords: Endogenous financial frictions, indeterminacy, animal spirits, business cycles, Bayesian estimation
    JEL: E32 E44
    Date: 2017–05
  8. By: Psofogiorgos, Nikolaos - Alexandros; Metaxas, Theodore
    Abstract: IMF was established as a financial institution for the promotion of world trade and international financial stability of members. However, IMF focused on assistance to developing countries and transition economies and as a result seems to have political implications. Many studies suggest that IMF lending programs undermine the quality of democracy in the countries which make use of the institution's resources. This conventional idea is rooted in two basic assumptions: First, when negotiations are made, the doors are closed. Secondly, the IMF programs impose strict limits on political power of borrowers that may result in power distribution consequences. Other studies result in a positive relationship between IMF programs and democracy. Maybe the presence of an IMF loan itself doesn’t affect the democracy, but high loan reforms required have negative impact on democratic practices. This effect depends on the type of reforms that are required by the loan.
    Keywords: IMF, democracy, reforms, political implications
    JEL: E02 F33 G01 O43
    Date: 2017
  9. By: J. Paul Dunne (School of Economics, University of Cape Town); Nicholas Masiyandima (School of Economics, University of Cape Town)
    Abstract: This study investigates whether bilateral foreign direct investment between a technology leader country and follower countries has technology and productivity externalities that speed up income convergence among the countries. The study is based the SADC region, in which South Africa is identified as both the technology leader and a major source of FDI for the other 14 developing countries in the region. Using countries’ per capita incomes time series over a period spanning from 1980 to 2011, the results of the study show that bilateral FDI between South Africa and countries in the region fosters income convergence in the region. Countries that have higher FDI stocks from South Africa exhibit higher rates of convergence towards both the regional average per capita income and South Africa’s per capita income, than those that host less FDI stocks.
    Date: 2017
  10. By: Michal Litwinski (Poznan University of Economics and Business; Niepodleglosci 10, 61-875 Poznan)
    Abstract: Research background: The way of understanding of development concept in economics has been changing since the beginning of the discipline: from economic growth, through economic development to socio-economic development. The author of the paper believes that identification of features of cultural context that shape understanding of this phenomenon will allow to understand appropriately contemporary definitions of this process. Purpose of the article: The purpose of the paper is to reconstruct features of socio-cultural context in which it has changed the way of understanding of development concept in economics. The specific objectives are as follows: identification of period in which it was recognised that development is something more than economic growth, identification of reasons and circumstances of evolution of development definition: from economic growth to socio-economic development. Methodology/methods: A basis for conclusions formulation will be a research of literature (mostly publications in English). Analysis will have interdisciplinary character as it relates sociological and economic dimensions of analysis of development. Findings & Value added: Division of economic development and economic growth took place in 1960s. Change of understanding of development concept was caused by the following factors: (1) influence of new sociological and philosophical ideas, (2) historical events, (3) growing meaning of formalism and scientism in economic considerations, (4) international cooperation for development.
    Keywords: socio-economic development; economic growth; social development; cultural context
    JEL: O10 O40 B10
    Date: 2017–05
  11. By: Gorga, Carmine
    Abstract: Concordian economic theory is composed of models that observe the economic system from the perspective of production, distribution, and consumption of wealth—as well as the system as a whole. These are specialized approaches that, studied separately, have tended to create separate schools of economic thought. Concordian economic theory does not only try to recover the core of wisdom that exists in every school of economic thought; it also lays the foundation for a commonality of language that will eventually allow for communication across the divide of the schools.
    Keywords: Concordian economics, macroeconomics, methodology, Keynes, Hayek.
    JEL: A1 B1 B4
    Date: 2017–05–30

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