nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2017‒10‒15
nine papers chosen by
Karl Petrick
Western New England University

  1. The general theory at 80: reflections on the history and enduring relevance of Keynes? economics By Thomas I. Palley
  2. Tony Lawson's Theory of the Corporation: Towards a Social Ontology of Law By Simon Deakin
  3. "Quantitative Easing and Asset Bubbles in a Stock-flow Consistent Framework" By Cameron Haas; Tai Young-Taft
  4. Academic rankings and pluralism : the case of Brazil and the new version of Qualis By Ian Coelho de Souza Almeida; Rafael Galvão de Almeida; Lucas Resende de Carvalho
  5. The fallacy of the globalization trilemma: reframing the political economy ofglobalization and implications for democracy By Thomas I. Palley
  6. Promoting structural transformation: Strategic diversification vs laissez-faire approach By Freire Junior, Clovis
  7. The Legacy of a Fractured Eurozone: the Greek Dra(ch)ma By John Hatgioannides; Marika Karanassou; Hector Sala; Menelaos Karanasos; Panagiotis Koutroumpis
  8. Rethinking fiscal policy lessons from the European Monetary Union (EMU) By Saraceno, Francesco.
  9. Economic diversification: Explaining the pattern of diversification in the global economy and its implications for fostering diversification in poorer countries By Freire Junior, Clovis

  1. By: Thomas I. Palley
    Abstract: This paper reflects on the history and enduring relevance of Keynes? economics. Keynes unleashed a devastating critique of classical macroeconomics and introduced a new replacement schema that defines macroeconomics. The success of the Keynesian revolution triggered a counter-revolution that restored the classical tradition and now enforces a renewed classical monopoly. That monopoly has provided the intellectual foundations for neoliberalism which has produced economic and political conditions echoing the 1930s. Openness to Keynesian ideas seems to fluctuate with conditions, and current conditions are conducive to revival of the Keynesian revolution. However, a revival will have to overcome the renewed classical monopoly.
    Keywords: Keynes, General Theory, Keynesian revolution, Classical economics, classical counter-revolution
    JEL: E0 E12 B1 B2
    Date: 2017
  2. By: Simon Deakin
    Abstract: In his account of the corporation as a 'community', Tony Lawson advances a materialist theory of social reality to argue for the existence of emergent social structures based on collective practices and behaviours, distinguishing his position from John Searle's theory of social reality as consisting of declarative speech acts. Lawson's and Searle's accounts are examined for what they imply about the relationship between social structures and legal concepts. It is argued that legal concepts are themselves a feature of social reality and that a consequence of the law's recognition of the 'reality' of the corporation is to open up the activities of business firm to a distinct form of normative ordering.
    Keywords: social ontology, the corporation, legal evolution
    JEL: B52 K22
    Date: 2017–06
  3. By: Cameron Haas; Tai Young-Taft
    Abstract: Ever since the Great Recession, central banks have supplemented their traditional policy tool of setting the short-term interest rate with massive buyouts of assets to extend lines of credit and jolt flagging demand. As with many new policies, there have been a range of reactions from economists, with some extolling quantitative easing's expansionary virtues and others fearing it might invariably lead to overvaluation of assets, instigating economic instability and bubble behavior. To investigate these theories, we combine elements of the models in chapters 5, 10, and 11 of Godley and Lavoie's (2007) Monetary Economics with equations for quantitative easing and endogenous bubbles in a new model. By running the model under a variety of parameters, we study the causal links between quantitative easing, asset overvaluation, and macroeconomic performance. Preliminary results suggest that rather than being pro- or countercyclical, quantitative easing acts as a sort of phase shift with respect to time.
    Keywords: Quantitative Easing; Stock-flow Consistency; Macroeconomics
    JEL: E12 E44 E58 E21
    Date: 2017–09
  4. By: Ian Coelho de Souza Almeida (Cedeplar-UFMG); Rafael Galvão de Almeida (Cedeplar-UFMG); Lucas Resende de Carvalho (Cedeplar-UFMG)
    Abstract: The paper approaches the theme of the relatively higher level of pluralism in Brazilian economics, when compared to the other countries, from a different approach used in the literature. Considering the Qualis as an instrument of great impact in the research of the Brazilian graduate education centers, mainly because of its impact in the CAPES evaluation of the centers, we analyze the abrupt change in the journal ranking that occurred in 2016. Before presenting this data, we first focused in understanding the metrics that are part of the Qualis, and how relevant the biases from other indexes than the Impact Factor are. Afterwards, we present a review of the national literature concerning the academic production in economics, showing how some problems due to incentives and structure still persist. We, then, present our results: we found out that the increase of journals in the higher strata of the Qualis without a research agenda bias, and with a great inclusion of specialized sub-fields of the discipline. Besides, the impact that this change will cause in the 2017 CAPES’ evaluation cannot be seen as favoring centers by their division in mainstream and non-mainstream. Having this in mind, we argue that the modifications keep incentives to pluralism, besides correcting many problems in the ranking.
    Keywords: Qualis, academic production, pluralism, bibliometrics, mainstream economics, heterodox economics
    JEL: A23 A14 B00
    Date: 2017–10
  5. By: Thomas I. Palley
    Abstract: This paper argues Rodrik?s (2011) globalization trilemma is analytically mistaken. Rather than a trilemma, globalization poses a dilemma between more globalization and reduced national policy space. Not only may globalization shrink policy space, it may also twist it. The character of the twist depends on the type of globalization. There is no inherent contradiction between globalization and the democratic nation state. However, globalization has significant implications for the content of democratic politics which it tends to restrict. Furthermore, globalization can generate policy lock-in (Palley, 2017) which permanently reduces policy space. That has enormous implications for democracy and future democratic policymaking.
    Keywords: Globalization, trilemma, dilemma, policy space, policy lock-in,democracy
    JEL: F0 F02 F50
    Date: 2017
  6. By: Freire Junior, Clovis (United Nations, Division for Sustainable Development, Department of Economic and Social Affairs, and UNU-MERIT, Maastricht University)
    Abstract: Economic development is associated with structural transformation and the increase of complexity of production and exports. This paper examines whether strategic diversification is required to increase economic complexity or whether market incentives would be sufficient to drive this process of catching-up. The paper applies empirical methods of the strand of the literature on economic complexity to examine how path dependency and the demand for potential new products affect economic diversification. It argues that strategic diversification is required in cases when demand factors are very likely to create incentives for diversification towards less complex products, which hinders the increase of productive capacities of countries. The paper presents the results of analysis considering 221 economies and shows that less diversified economies would not be able to rely on market incentives alone. They have to strategically diversify towards more complex products, which require the selective promotion of economic activities through the use of targeted industrial, infrastructure, trade, investment and private sector development policies.
    Keywords: Diversification, Structural Transformation, Productive Capacities, Industrial Policy, Economic Development
    JEL: O11 O14 O33 O38 O53 O57
    Date: 2017–09–05
  7. By: John Hatgioannides; Marika Karanassou; Hector Sala; Menelaos Karanasos; Panagiotis Koutroumpis
    Abstract: This paper addresses the acute Greek economic and social crisis that was inflicted on Greece since 2010 with the unleashing of the 3 consecutive bailout plans and the implementation of fierce austerity policies. We further scrutinise the composition of the soaring Greek debt and, most importantly, the unsettling utilisation of the Troika loans for the 2010-2015 period. We provide evidence that the vast bulk of the loans went overwhelmingly not to benefiting a "profligate" Greek state but to avoiding the write downs of bad loans made by reckless creditors (mainly, German and French banks) to the Greek government and private banks. We propose the temporary adoption of a parallel currency in the form of government IOUs, together with other drastic measures to reboot the ailing Greek economy inside the Eurozone.
    Keywords: Greek crisis, Eurozone, sovereign debt, austerity, parallel currency
    Date: 2017–09
  8. By: Saraceno, Francesco.
    Abstract: This paper challenges the ideological and empirical basis of the “New Consensus” to macroeconomic policy, which advocates limited government intervention to correct short-term deviations from the growth path constrained by a rules-based framework. Based on the recent experience of the United States and the Economic and Monetary Union of the European Union (EMU), the paper argues that the New Consensus has yielded a policy stance that is excessively “hands off”, slow to respond to economic downturns, and has led to premature austerity, all of which have stifled the recovery. This provides lessons for not only developed countries, but also developing and emerging economies seeking to design macroeconomic policy frameworks to cope with the economic cycle and spillovers from the globalized economy.
    Keywords: fiscal policy, macroeconomics, EMU, USA
    Date: 2017
  9. By: Freire Junior, Clovis (United Nations, Division for Sustainable Development, Department of Economic and Social Affairs, and UNU-MERIT, Maastricht University)
    Abstract: Economic diversification is very relevant for poorer developing countries to create jobs and foster economic development. That need has been recognised in key internationally agreed development goals. The empirical economic literature has identified several stylised facts about the pattern of diversification of economies, but the development of explanations for those patterns in general has been only loosely associated with economic theory on growth, trade, technology change and structural transformation. Making that connection is relevant because it could inform policymakers in developing countries in designing and implementing policies for promoting diversification. This paper presents a model of structural economic dynamics and endogenous technological change that is able to replicate empirical regularities related to economic diversification. The model is used to study strategies to foster diversification in poorer countries, which could help to better target action in the implementation of internationally agreed goals related to the economic diversification of these countries.
    Keywords: Diversification, Economic Complexity, Structural Transformation, Productive Capacities, Economic Development
    JEL: C61 C63 E12 O11 O30 O41
    Date: 2017–08–10

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