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on Post Keynesian Economics |
| By: | Engelbert Stockhammer; Rafael Wildauer (Kingston University) |
| Abstract: | The past decades have witnessed a strong increase in household debt and high growth of private consumption expenditures in many countries. This paper empirically investigates four explanations: First, the expenditure cascades hypothesis argues that an increase in inequality induced lower income groups to copy the spending behaviour of richer peer groups and thereby drove them into debt (‘keeping up with the Joneses’). Second, the housing boom hypothesis argues that increasing property prices encourage household spending and household borrowing due to wealth effects, eased credit constraints and the prospect of future capital gains. Third, the low interest hypothesis argues that low interest rates encouraged households to take on more debt. Fourth, the financial deregulation hypothesis argues that deregulation of the financial sector boosted credit supply. The paper tests these hypotheses by estimating the determinants of household borrowing using a panel of 11 OECD countries (1980-2011). Results indicate that real estate prices and low interest rates were the most important drivers of household debt. In contrast the data does not support the expenditure cascades hypothesis as a general explanation of debt accumulation across OECD countries. Our results are consistent with the financial deregulation hypothesis, but its explanatory power for the 1995-2007 period is low. |
| Keywords: | household debt, income distribution, property prices |
| JEL: | D31 E12 E51 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp1710&r=pke |
| By: | Tanweer Akram; Huiqing Li |
| Abstract: | This paper undertakes an empirical inquiry concerning the determinants of long-term interest rates on US Treasury securities. It applies the bounds testing procedure to cointegration and error correction models within the autoregressive distributive lag (ARDL) framework, using monthly data and estimating a wide range of Keynesian models of long-term interest rates. While previous studies have mainly relied on quarterly data, the use of monthly data substantially expands the number of observations. This in turn enables the calibration of a wide range of models to test various hypotheses. The short-term interest rate is the key determinant of the long-term interest rate, while the rate of core inflation and the pace of economic activity also influence the long-term interest rate. A rise in the ratio of the federal fiscal balance (government net lending/borrowing as a share of nominal GDP) lowers yields on long-term US Treasury securities. The short- and long-run effects of short-term interest rates, the rate of inflation, the pace of economic activity, and the fiscal balance ratio on long-term interest rates on US Treasury securities are estimated. The findings reinforce Keynes's prescient insights on the determinants of government bond yields. |
| Keywords: | Government Bond Yields; Long-term Interest Rates; Short-term Interest Rates; Monetary Policy; Central Bank; John Maynard Keynes |
| JEL: | E43 E50 E58 E60 G10 G12 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_894&r=pke |
| By: | Enrico Gabriele (LUMSA University) |
| Abstract: | This paper starts from Keynes’ General Theory to demonstrate the existence of a non-linear Keynesian multiplier on the grounds of cross-country data. Thus, we prove the effectiveness of short-run countercyclical exogenous stimuli during downturns. The role of fiscal spending is discussed in light of different schools of thought, including the well-known “expansionary fiscal contraction” theory. Moreover, we examine the European fiscal rules of convergence – aimed to sovereign debt sustainability – that affect the size of “fiscal space”. Empirical data from several Eurozone countries provide evidence of traditional multipliers. Furthermore, the Greek economy displays a non-linear case of multiplier. This leads to rejecting the assumption of a weak Keynesian setting, which supported instead the IMF-backed fiscal contraction. |
| Keywords: | Keynesian Multiplier; Expansionary Fiscal Contraction; Euro Sovereign Crisis |
| JEL: | E12 E17 E61 E63 E65 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:lsa:wpaper:wpc21&r=pke |
| By: | Giuliano, Paola (University of California, Los Angeles); Nunn, Nathan (Harvard University) |
| Abstract: | When does culture persist and when does it change? We examine a determinant that has been put forth in the anthropology literature: the variability of the environment from one generation to the next. A prediction, which emerges from a class of existing models from evolutionary anthropology, is that following the customs of the previous generation is relatively more beneficial in stable environments where the culture that has evolved up to the previous generation is more likely to be relevant for the subsequent generation. We test this hypothesis by measuring the variability of average temperature across 20-year generations from 500–1900. Looking across countries, ethnic groups, and the descendants of immigrants, we find that populations with ancestors who lived in environments with more stability from one generation to the next place a greater importance in maintaining tradition today. These populations also exhibit more persistence in their traditions over time. |
| Keywords: | cultural persistence, cultural change, tradition |
| JEL: | N10 Q54 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10930&r=pke |
| By: | Konstantakis, Konstantinos N.; Michaelides, Panayotis G. |
| Abstract: | The purpose of this paper is to deal with questions of instability and economic crisis, deriving theoretical arguments from Schumpeter’s works and presenting relevant empirical evidence for the case of the US economy by sector of economic activity in the time period 1957-2006, just before the first signs of the global recession made their appearance. More precisely, we make an attempt to interpret the economic fluctuations in the US economy by sector of economic activity and find causal relationships between the crucial variables dictated by Schumpeterian theory. In this context, a number of relevant techniques have been used, such as cointegration analysis, periodograms, Granger causality tests as well as stepwise bi-directional causality test a la Dufour and Renault. Our findings seem to give credit to certain aspects of the Schumpeterian theory of business cycles. The results are discussed in a broader context, related to the US sectoral economy. |
| Keywords: | Economic Crisis, US Sectoral Economy, Schumpeter, Business Cycles. |
| JEL: | C01 N0 O3 O4 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80636&r=pke |
| By: | Giuliano, Paola (University of California, Los Angeles) |
| Abstract: | Social attitudes toward women vary significantly across societies. This chapter reviews recent empirical research on various historical determinants of contemporary differences in gender roles and gender gaps across societies, and how these differences are transmitted from parents to children and therefore persist until today. We review work on the historical origin of differences in female labor-force participation, fertility, education, marriage arrangements, competitive attitudes, domestic violence, and other forms of difference in gender norms. Most of the research illustrates that differences in cultural norms regarding gender roles emerge in response to specific historical situations, but tend to persist even after the historical conditions have changed. We also discuss the conditions under which gender norms either tend to be stable or change more quickly. |
| Keywords: | gender, cultural transmission, historical persistence |
| JEL: | N0 Z1 J16 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10931&r=pke |