nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2017‒07‒23
five papers chosen by
Karl Petrick
Western New England University

  1. "The Concert of Interests in the Age of Trump" By Jan Kregel
  2. Harrodian instability in decentralized economies: an agent-based approach By Emanuele Russo
  3. Towards a comprehensive approach to climate policy, sustainable infrastructure, and finance By Bak, Céline; Bhattacharya, Amar; Edenhofer, Ottmar; Knopf, Brigitte
  4. Technological change, inequality and the collapse of the liberal order By Lastra-Anadón, Carlos; Muñiz, Manuel Antonio
  5. Towards a Political Theory of the Firm By Luigi Zingales

  1. By: Jan Kregel
    Abstract: If the Trump administration is to fulfill its campaign promises to this age's "forgotten" men and women, Director of Research Jan Kregel argues, it should embrace the broader lesson of the 1930s: that government regulation and fiscal policy are crucial in addressing changes in the economic and financial structure that have exacerbated the problems faced by struggling communities. In this policy note, Kregel explains how overcoming the economic and financial challenges we face today, just as in the 1930s, requires avoiding what Walter Lippmann identified as an "obvious error": the blind belief that reducing regulation and the role of government will somehow restore a laissez-faire market liberalism that never existed and is inappropriate to the changing structure of production of both the US and the global economy.
    Date: 2017–07
  2. By: Emanuele Russo
    Abstract: This paper presents a small-scale agent-based extension of the so-called neo-Kaleckian model. The aim is to investigate the emergence of Harrodian instability in decentralized market economies. We introduce a parsimonious microfoundation of investment decisions. Agents have heteroge- neous expectations about demand growth and set idiosyncratically their investment expendi- tures. Interactions occur through demand externalities. We simulate the model under different scenarios. First, when heterogeneity is ruled out, Harrodian instability is showed to emerge as for the aggregate model. Instead, when heterogeneity is accounted for, a stable dynamics with endogenous fluctuations arises. At the same time, in this second scenario, all the Keynesian implications are preserved, including the presence of macroeconomic paradoxes. Sensitivity analysis confirms the general robustness of our results and the logical consistency of the model.
    Keywords: Harrodian Instability, Agent-Based Models, Coordination Failures, Heterogeneous Expectations, Neo-Kaleckian model
    Date: 2017–07–13
  3. By: Bak, Céline; Bhattacharya, Amar; Edenhofer, Ottmar; Knopf, Brigitte
    Abstract: The authors propose a policy package of low-carbon growth stimulation through a steep increase in sustainable infrastructure, mobilizing sustainable finance, and adoption of carbon pricing to simultaneously achieve the objectives of the Paris Agreement and the Sustainable Development Goals.
    Keywords: Paris Agreement,climate change,infrastructure,carbon pricing,green finance
    JEL: D62 E62 H21 H22
    Date: 2017
  4. By: Lastra-Anadón, Carlos; Muñiz, Manuel Antonio
    Abstract: We are witnessing the start of a deep and prolonged political convulsion. This convulsion is caused by the impact of technological change on how wealth is generated and distributed in our societies. Since the 1970s advanced economies have seen a strong productivity increase and stagnant labor income. We believe this should be described as a major breach of our social contract. It is leading to the stagnation of income of the Middle Class, growing inequality and, ultimately, a radicalization of our politics. Unless the cause of this is properly diagnosed and the underlying drivers addressed head on we are bound to see a worsening of the convulsion. Here the paper analyzes technological change, its key cause and propose a series of bold experiments that countries should undertake in order to develop a new social contract with its citizens. The risk of doing nothing involves a long period of uncertainty and convulsion as well as the likelihood that little is achieved in tackling the underlying problems.
    Keywords: automation,workforce polarization,basic income,public venture capital,vocational education
    JEL: J24 J31 D72
    Date: 2017
  5. By: Luigi Zingales
    Abstract: Neoclassical theory assumes that firms have no power of fiat any different from ordinary market contracting, thus a fortiori no power to influence the rules of the game. In the real world, firms have such power. I argue that the more firms have market power, the more they have both the ability and the need to gain political power. Thus, market concentration can easily lead to a “Medici vicious circle,” where money is used to get political power and political power is used to make money.
    JEL: G3
    Date: 2017–07

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