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on Post Keynesian Economics |
| By: | Peter Skott (University of Massachusetts - Amherst); Leopoldo Gomez-Ramirez (Universidad del Norte, Colombia) |
| Abstract: | Pervasive credit constraints have been seen as major sources of slow growth in developing economies. This paper clarifies a mechanism through which an inefficient financial system can reduce productivity growth. Using a two-sector model, second, we examine the implications for employment and the distribution of income. Both classical and Keynesian versions of the model are considered; saving decisions are central in the classical version while firms’ investment and pricing decisions take center stage in the Keynesian version. We find that, although boosting the asymptotic rate of growth, a relaxation of credit constraints may reduce the share of the formal sector, increase inequality and underemployment, and have little or no effect on the medium-run rate of growth. |
| Keywords: | credit constraints, productivity growth, dual economy, underemployment, income distribution |
| JEL: | O11 O41 E2 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2017-13&r=pke |
| By: | Walter Paternesi Meloni |
| Abstract: | After focusing on fiscal indiscipline, the debate on the Eurozone crisis switched over persistent external imbalances among the European Monetary Union countries. Current account differentials were almost exclusively ascribed to the weak price competitiveness of deficit countries – neglecting demand-side factors – and consequently austerity measures have been imposed to peripheral countries in order to foster their competitiveness with the purpose of adjusting external imbalances through export growth. In this context, the contribution of this paper is twofold. Firstly, we identify this view as competitive austerity (in parallel with the expansionary austerity narrative), as the set of measures which, according to policy makers, would stimulate trade balance, output and employment. Secondly, we criticize this approach since fiscal restraints were proved to be counterproductive. We conclude by disproving the austerity-competitiveness linkage from a Keynesian perspective as well as by means of some macroeconomic evidence, and we provide an alternative recipe for the Eurozone issues. |
| Keywords: | austerity, competitiveness, European imbalances, current account, fiscal policy, aggregate demand |
| JEL: | E63 F32 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:rtr:wpaper:0223&r=pke |
| By: | Katherine A. Moos (Department of Economics, University of Massachusetts Amherst) |
| Abstract: | This paper proposes a theory of why the state enacted social policy that regulated the length of the working day in 19th century industrial England. This paper will argue that, far from being capable of self-regulation, the capitalist labor market during Britain’s industrial revolution is best conceptualized as consisting of two major social coordination problems resulting from conflicting interests between and within capital and labor. Left unregulated, this dual social coordination problem caused the overexploitation of labor, with dire consequences for both the capitalist and working classes. The reason why this coordination problem could not self-correct was because the wage-labor bargain contained the externality of unwaged household labor. The existence of this externality became deleterious to firms’ profitability and workers’ survival, especially given the high levels of female labor force participation. This social coordination problem justified and required state regulation into industrial relations. By conceptualizing protective policy as the solution to a dual social coordination problem caused by conflicting interests among heterogeneous firms and workers, this paper extends the Polanyian framework with an explicit theory of exploitation based on the classical theory of competition and a feminist emphasis on social reproduction and unwaged labor. |
| Keywords: | English Factory Legislation, Social Coordination Problem, Game Theory, Labor Policy, Regulation, Hours of Work, Child Labor, Female Labor Force Participation |
| JEL: | B54 C72 J88 N3 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2017-17&r=pke |
| By: | Daniele Girardi (University of Massachusetts Amherst); Samuel Bowles (Santa Fe Institute) |
| Abstract: | To study the effect of political and institutional changes on the economy, we look at share prices in the Santiago exchange during the tumultuous political events that characterized Chile in the early 1970s. We use a transparent empirical strategy, deploying previously unused daily data and exploiting two largely unexpected shocks which involved substantial variation in policies and institutions, providing a rare natural experiment. Allende's election and subsequent socialist experiment decreased share values, while the military coup and dictatorship that replaced him boosted them, in both cases by magnitudes unprecedented in the literature. |
| Keywords: | institutional shocks, natural experiment, share prices, Chile, socialism, military coup, elections |
| JEL: | P00 P16 D02 E02 N2 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2017-19&r=pke |
| By: | Rachid Mira (Centre d'Economie de l'Université de Paris Nord (CEPN)); Ahmed Hammadache (Centre d'Economie de l'Université de Paris Nord (CEPN)) |
| Abstract: | Numbers of economists of development consider that good governance, defined as the quality management and orientation of development policies has a positive influence on economic performance. The question is what content the literature gives to the concept of governance? According to the World Bank, good governance is evaluated by the implementation capacity of governance principles of a country, providing a framework for market development and economic growth. Several econometric studies (Kauffman et al. (1999, 2005), Knack et al. (1999) tested the relationship between good governance in the sense of ”market-enhancing governance” (stimulus institutions market) and showed a positive relationship between good governance and economic growth. However a good governance policy is allows developing countries to achieve minimum economic growth and political reforms in order to reach a level of development similar to that of industrialized countries? We focus on the definition and the work on the concept of good governance made by the World Bank and criticism formulated by Mushtaq Khan (2002.2004), who reconstructed the notion of governance in a broader sense, taking into account the capacity of states to drive structural change in institutional, political, economic and social fields, in order to ensure longterm economic growth. Is good governance can explain economic performance? Or according to the thesis of Mushtaq Khan (2002, 2004), reforms of economic structures and government capabilities are the first step to improve economic performance of developing countries, and in a second step to allow economic growth to enhance good governance? Following several works of neo-institutionalist economists on the relationship between economic growth and good governance (Kauffman D. and al.1999, 2005, Knack S. and Keefer P. 1997, Hall, R. Jones, C.1999, Clague, C. Keefer P., Knack S. and Olson M., 1997, Barro R., 1996, Rodrick D., 1995, 1997, and 2002) emerged two divergent theories of ”state failure” in developing countries: The first thesis (market Enhancing governance) defended by neo-institutionalist authors consider the state as a sovereign role and welfare state. Economically, the proper functioning of markets is correlated to the proper functioning of institutions through efficient practice of state governance, what is commonly called ”good governance”. Therefore, underdevelopment and low economic growth performance of countries could be explained by a ”state failure” and the components of good governance with the increase in corruption, instability of property rights, market distortions, and lack of democracy. The second thesis (growth Enhancing governance) developed in particular by Mushtaq Khan (1995, 2004, 2005, 2006) and partly by Dany Rodrik (1995,1997,2002), concerns the ability of the state to implement social change and a voluntary policy of economic development: The transition of developing countries towards a capitalist system comparable to that of developed countries, can not operate without the establishment of efficient institutions in relation with distribution of political power in these countries. Conversely, those countries would face a state failure, as a result of a mismatch between institutions and economic policy for development. Our research consists first to present the results of an empirical model that we have done based on a panel of developing countries chosen by region (MENA, Latin America, and Asia) and due to their natural resource endowment. The aim is to check if growth rate may or may not be correlated with good governance indicators as defined by the World Bank. The goal is to lead in a second time an analysis of criticism made by Mushtaq Khan on the definition of governance, the causes of state failure and barriers to economic development. Our contribution is to discuss the concept of good governance and the failure of states that take into account the level of development and governance capacity that is based on a structure and distribution of political power that evolves in time and may or may not be positive for growth. The assumption we make here is that the so-called good governance policies are relevant if countries reach a sound level of economic and social development that enable institutions of good governance to boost growth. |
| Keywords: | States Failures, Good Governance, Economic Growth, Development policy |
| JEL: | F59 N30 O10 O11 O17 O40 O53 P26 P45 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:upn:wpaper:2017-12&r=pke |
| By: | Dorothee Bohle |
| Abstract: | This paper is concerned with the development of housing finance in peripheral European states. Interestingly, the biggest mortgage and housing booms and busts prior to the Global Financial Crisis (GFC) have occurred in these countries, rather than in the core. This is surprising, given the comparatively low level of mortgage debt and the unsophisticated financial sectors in the periphery. The mortgage and housing booms and busts have also made these countries highly vulnerable to the fallout from the GFC, and have often been associated with severe banking and even sovereign debt crises. The paper asks why peripheral countries have been particularly vulnerable to housing and mortgage booms and busts; how these have shaped their exposure to the GFC, and how the GFC has affected peripheral housing finance. Building on literature on housing financialization and varieties of residential capitalism, the paper traces trajectories of housing-induced financialization before and after the GFC in four European peripheral countries: Hungary, Latvia, Ireland and Iceland. The paper argues that their differences notwithstanding, Europe’s East and peripheral Northwest have been characterized by high homeownership rates and unsophisticated mortgage markets. The evolving EU framework for free movement of capital and provision of financial services as well as the availability of ample and cheap credit has induced a trajectory of financialization, which has taken two major but not mutually exclusive forms: domestic financial institutions’ reliance on funding from wholesale markets, and direct penetration of foreign financial institutions. These two forms of financialization attest to a core-periphery relationship in the recent episode of housing financialization, whose hierarchical character played out in the crisis. Peripheral European countries experienced sudden stops and reversals of capital flows, which badly affected their banking systems. Unable to solve the looming banking crises on their own, they had to turn to creditors to gain access to much needed capital inflows. Different combinations of international conditionality, domestic policy responses and the original level of mortgage debt result in different trajectories in housing finance after the crisis. |
| Keywords: | comparative political economy, international political economy, housing, financialization, peripheral capitalism |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:eiq:eileqs:124&r=pke |
| By: | Rolf Aaberge (Research Department, Statistics Norway and ESOP, Department of Economics, University of Oslo); François Bourguignon (Paris School of Economics); Andrea Brandolini (DG Economics, Statistics and Research, Bank of Italy); Francisco H. G. Ferreira (Development Economics Research Group, The World Bank); Janet C. Gornick (LIS and The Graduate Center, City University of New York); John Hills (London School of Economics); Markus Jäntti (Swedish Institute for Social Research, Stockholm University); Stephen P. Jenkins (London School of Economics); Eric Marlier (Luxembourg Institute of Socio-Economic Research (LISER)); John Micklewright (University College London); Brian Nolan (University of Oxford); Thomas Piketty (Paris School of Economics); Walter J. Radermacher (Former Director General of Eurostat); Timothy M. Smeeding (University of Wisconsin-Madison); Nicholas H. Stern (London School of Economics); Joseph Stiglitz (Columbia University); Holly Sutherland (Institute for Social and Economic Research, University of Essex) |
| Abstract: | Tony Atkinson is universally celebrated for his outstanding contributions to the measurement and analysis of inequality, but he never saw the study of inequality as a separate branch of economics. He was an economist in the classical sense, rejecting any sub-field labelling of his interests and expertise, and he made contributions right across economics. His death on 1 January 2017 deprived the world of both an intellectual giant and a deeply committed public servant in the broadest sense of the term. This collective tribute highlights the range, depth and importance of Tony’s enormous legacy, the product of over fifty years’ work. |
| Keywords: | Anthony B. Atkinson, inequality, poverty, public economics, economic theory, economic policy |
| JEL: | A1 B32 D3 D6 H00 I3 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1138_17&r=pke |