nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2017‒08‒27
four papers chosen by
Karl Petrick
Western New England University

  1. The Structure and Content of Das Kapital By Deepankar Basu
  2. The Gender Wage Gap among College Graduates in Italy By Daniela Piazzalunga
  3. Unemployment: Study of Causes and Possible Solutions By Thomas Pedro Eggarter
  4. Rethinking the Power of Forward Guidance: Lessons from Japan By Mark Gertler

  1. By: Deepankar Basu (Department of Economics, University of Massachusetts - Amherst)
    Abstract: Karl Marx’s magnum opus, Das Kapital, presents an analysis of the long run dynamics of a mature capitalist economy. The analysis is conducted at two primary levels of abstraction – ‘capital in general’ (where competition between individual capitals is abstracted from) and ‘many capitals’ (where the phenomenon of competition between individual capitals is introduced) – and the presentation is organized into three volumes. In terms of structure, the analysis in the first two volumes is located at the level of ‘capital in general’, and the analysis in the third volume is located at the level of ‘many capitals’. In terms of content, the first volume analyses the production and accumulation of surplus value, the second volume investigates the problems of realization of surplus value, and the third volume analyses the mechanisms that lead to the distribution of surplus value into income streams of different fractions of the ruling class – as profit of enterprise, commercial profit, interest and rent (and monopoly profit more generally). The three volumes together give a comprehensive picture of the workings of a mature capitalist economy and highlights its long run, contradictory tendencies.
    Keywords: value, surplus value, capital, reproduction schemes, prices of production, rent, interest, commercial profit
    JEL: B14 B24 B51
    Date: 2017
  2. By: Daniela Piazzalunga
    Abstract: The paper investigates the gender wage gap among recently graduated people, controlling for job and academic variables and for the field of study, as women lag in highly remunerative majors. The raw gender gap in hourly wages is 5.6%. Although including academic variables and the field of study, on top of job-related variables, slightly reduces the unexplained gap, the latter still accounts for most of the total difference. Using quantile decomposition, the paper shows that the unexplained gap increases along the wage distribution, indicating a glass ceiling effect. Heterogeneities arise across fields of study: the largest total gap emerges in Law, Political-Social sciences, and Economics-Statistics. In most disciplines, there is a significant unexplained gap – from 3.3% (Medicine), to 8.7% (Law), up to 9.6% (Agriculture) – which constitutes the largest share of the difference, confirming that most of the wage gap remains unexplained also by major. Finally, I use geographical differences to explore the influence of institutional and macro-economic variables, as well as of attitudes towards gender norms. Results indicate that childcare and part-time availability are correlated with lower gender wage gaps, while traditional gender norms are associated with higher gaps.
    Keywords: Gender wage gap, Oaxaca-Blinder decomposition, College graduates, Quantile decomposition, Field of study, Regional differences
    JEL: J16 J31 J71
    Date: 2017–08
  3. By: Thomas Pedro Eggarter
    Abstract: The following measures against unemployment are proposed: In the short term, to promote greater income for the poorest sectors. It is shown that this can be paid with the resulting increased production, without losing income to the other economic agents. In the mid term, the creation of ad-hoc companies for investment in projects profitable but long lasting. And in the long run, the abandonment of the competitive models. As these proposals go against current ideas (liberalisation, labour market flexibility, free market, etc.), the statements are rigorously demonstrated, even at the risk of making the lecture harder. Part 1 explores the problem and uses a simple model and others heuristic arguments to create familiarity with macroeconomic models. Part 2 is a simplified summary of Macroeconomic Theory textbook. It serves as a review to the reader whose knowledge in economy are out of date, or as a first approximation to the topic if he or she does not have them. In the light of the theory, economic policies are evaluated for the Argentine case in the 90's. The work accepts the Keynesian explanation of unemployment (insufficient demand), but we disagree on its solution (public expenditure). Finally, in Part 3 we elaborate and justify the proposals.
    Date: 2017–08
  4. By: Mark Gertler
    Abstract: In the spring of 2013 the Bank of Japan introduced a state-of-the-art monetary policy which included among other things inflation targeting and aggressive use of forward guidance. In contrast to the predictions of conventional macroeconomic theory, these policies have had only very limited success in reflating the economy. I argue that the disconnect between the Japanese experience and existing theory can be traced to the forward guidance puzzle (FGP). As recent literature suggests, the essence of the FGP is that existing models predict implausibly strong effects of expected future interest rate changes on the economy,.with the strength of the effect increasing with the expected horizon of the interest rate change. Accordingly, in this lecture I sketch a model meant to capture the challenge of reflation in Japan. As in recent literature I attempt to mute the power of forward guidance by stepping outside of rational expectations. In particular I introduce a hybrid adaptive/rational expectations belief mechanism. Most relevant to the Japanese experience is that individuals have adaptive expectations about trend inflation, which is consistent with the evidence. As Kuroda (2016) emphasizes, for an economy without a history of inflation being anchored by a target, individuals need direct evidence that the central bank is capable of moving inflation to target.
    JEL: E52 E58
    Date: 2017–08

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