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on Post Keynesian Economics |
| By: | Goda, Thomas; Onaran, Özlem; Stockhammer, Engelbert |
| Abstract: | This article shows that the increase of income inequality and global wealth concentration was an important driver for the financial and Eurozone crisis. The high levels of income inequality resulted in balance of payment imbalances and growing debt levels. Rising wealth concentration contributed to the crisis because the increasing asset demand from the rich played a key role in the growth of the structured credit market and enabled poor and middle-income households to accumulate increasing amounts of debt. This analysis is the first that puts both income and wealth inequality to the epicentre of the recent crisis, and is crucial for social scientists researching on not just the effects but also the causes of the crisis related to inequality. Our findings strongly suggest that the policy response to the crisis must not be limited to financial regulation but should involve policies to address inequality by increasing the bargaining power of labour as well as redistributive tax policies. |
| Keywords: | Financial crisis; Eurozone crisis; distribution; income inequality; wealth concentration |
| JEL: | D31 E25 G01 |
| Date: | 2016–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:gpe:wpaper:14690&r=pke |
| By: | Guglielmo Forges Davanzati; Nicolò Giangrande |
| Abstract: | This paper deals with the Italian economic decline from a double perspective. First, it provides a reconstruction of the main Post Keynesian arguments explaining the bad macroeconomic performance of the Italian economy, starting from the end of the “economic miracle”. Second, it proposes a re-reading of the CGIL’s view, showing that is it consistent with a theoretical approach based on the fundamental assumptions and policy prescriptions of the Post Keynesian framework. |
| Keywords: | Italian economic decline, labour market, unions |
| JEL: | E60 J50 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp1801&r=pke |
| By: | Stockhammer, Engelbert; Wildauer, Rafael |
| 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 |
| Date: | 2017–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:gpe:wpaper:18276&r=pke |
| By: | Mauro Caminati; Serena Sordi |
| Abstract: | This paper contributes to the recent macro-dynamics literature on demand-led growth, that borrows insights from the idea expressed long ago by J. Hicks (1950) that Harrodian instability may be tamed by a source of autonomous expenditure in the economy. Contrary to the other contributions in this literature, autonomous expenditure is not exogenous, but is driven by a flow of profit-seeking R&D and innovation expenditures, that raise labour productivity through time. If the state of distribution, hence the wage share, is exogenously fixed and constant, the model gives rise to a macro-dynamics in a two dimensional state space, that may converge to, or give rise to limit cycles around, an endogenous growth path. An exogenous rise of the profit share exerts negative e¤ects on long-run growth and employment, showing that growth is wage led. |
| Keywords: | wage-led growth; endogenous autonomous expenditure; labour-saving technological progress: limit cycles |
| JEL: | E11 E12 O41 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:764&r=pke |
| By: | Caverzasi, Eugenio; Botta, Alberto; Capelli, Clara |
| Abstract: | Financialization is not just a phenomenon regarding the exponential growth of the financial sector with respect to the real side of the economy. This paper aims shedding some light on the nature and the systemic impact of new elements in the financial realm and particularly on the so-called shadow banking through a macroeconomic perspective. Our analysis shows how financial evolutions have had an impact on the monetary system and on the whole economy at multiple levels. It involved the channel through which money enters the economic system, the rise of new financial institutions and activities, the implementation of monetary policies, and the relation between the real and the financial sector. What we are witnessing is not the rise of a shady version of something old whereas the surge of new forms of financial accumulation. |
| Keywords: | endogenous money; securitization; shadow banking; inequality; financial instability; |
| JEL: | E12 E42 E44 E51 G21 |
| Date: | 2018–01–09 |
| URL: | http://d.repec.org/n?u=RePEc:gpe:wpaper:18527&r=pke |
| By: | Sergio Cesaratto |
| Abstract: | A paper by Peter Bofinger and Mathias Ries (2017a/b) strays from the recent rethinking in monetary analysis to criticise Summers’ “saving glut” explanation of the prevalence of low real interest rates. A similar critical perspective is held by Borio and Disyatat (e.g. 2011a/b, 2015), who are criticised, however, by Bofinger and Reis for their Wicksellian background. In this note, we compare and assess these two different views. Both Bofinger and Reis (B&R) and Borio and Disyatat (B&D) reject traditional “loanable fund theory” in favour of an endogenous money view of credit, but while B&R regard conventional marginalist (real) theory as inconsistent with the endogenous money view, B&D, following Wicksell, regard it as consistent. We sympathize with B&R’s criticism of conventional theory, especially their Keynesian view of the interest rate as a purely monetary phenomenon. Interestingly, B&R refer to the problems of marginalist capital theory as undermining the natural interest rate concept |
| Keywords: | Bofinger, Borio, Dysiatat, monetary theory, capital theory, Wicksell, natural interest rate |
| JEL: | B12 E11 E13 E4 E5 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:763&r=pke |
| By: | Yoann Verger (ECOSYS - Ecologie fonctionnelle et écotoxicologie des agroécosystèmes - AgroParisTech - INRA - Institut National de la Recherche Agronomique) |
| Abstract: | A rich literature exists about the way to handle non-renewable natural resources in the context of classical theory. This article sums up the different approaches that we could consider when we calculate the revenue of the owner of a non-renewable natural resource in a Sraffian framework. It clarifies the concepts of differential rent, depreciation of wasting assets, Hotelling rent, and rent as a share of the product, and links this last concept with some empirical facts about non-renewable natural resource extraction industries. |
| Abstract: | Une riche littérature existe concernant la façon de considérer les ressources naturelles non-renouvelables dans la théorie classique. Cet article résume les différentes approaches que nous pouvons considérer lorsque l'on calcule le revenu d'un propriétaire d'une ressource naturelle non-renouvelable dans un système Sraffien. Il clarifie les concepts de rente différentielle, dépréciation d'un actif décroissant, rente d'Hotelling, et rente comme partage du produit, et lie ce dernier concept avec quelques faits empiriques concernant les industries extrayant les ressources naturelles non-renouvelables. |
| Keywords: | non-renewable natural resource, rent, extractive industry,Sraffa, Hotelling,ressourcenaturelle non-renouvelable,rente,industrie extractive |
| Date: | 2017–09–27 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01596166&r=pke |
| By: | Gotoh, Reiko |
| Abstract: | This article is a revised version of the paper "From Liberal Paradox to Capability Approach: Amartya Sen's evolving concept of rights" presented at a special session 'Amartya Sen's Philosophy and its Policy Implications' in the 72nd conference of the Japan Economic Policy Association held at Kokushikan University in Tokyo on May 30-31, 2015. Hitotsubashi University Policy Forum and the 2nd Symposium on Normative Economics 'Illusion of the Self, Absence Others: Methodological Reflection on Economics' held at Hitotsubashi Hall on November 18th, 2015.) I sincerely thank its organizers and participants. I also benefited greatly from discussants at the research seminar |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:hit:rcnedp:1&r=pke |
| By: | Li, Li; Mak, Eric; Pivovarova, Margarita |
| Abstract: | Individuals engage in conspicuous consumption to signal their income to their own reference groups, defined in a fine manner by observable identifiers such as race, gender, education, and occupation. The more income inequality within a reference group, the less prior information concerning the income of an individual, and hence the more effective the conspicuous consumption signal. Therefore, within-group income inequality causes substitution from non-conspicuous consumption to conspicuous consumption. We find strong evidence supporting this prediction regarding aggregate conspicuous consumption for all income percentiles. Disaggregating into smaller consumption categories, most consumption items categorized by the previous literature as conspicuous and non-conspicuous using survey methods agrees with this prediction as well. |
| Keywords: | Conspicuous Consumption, Within-Group Income Inequality |
| JEL: | E21 |
| Date: | 2016–06–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:83338&r=pke |
| By: | Anwar Shaikh (Department of Economics, New School for Social Research) |
| Abstract: | The treatment of skills has always been a problem within the classical tradition. Smith, Ricardo and Marx explicitly note that labor of different qualities must be reduced to a common standard. On the argument that relative wages largely reflect the qualitative differences among types of labor, they all propose to use relative wages as proxies for qualities. Smith identifies two sets of factors underlying relative wages: those specific to the type of employment itself, and those arising from political interventions. The former case in turn contains compensation for the pleasantness or unpleasantness of the type of work, its risk and volatility, its required degree of trust, and the difficulty and cost of acquiring the necessary skills. This paper focuses on the skill issue alone in order to compare it to the orthodox notion of human capital as a principal factor in the determination of relative wages. |
| Keywords: | Skilled labor, Classical economics |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:new:wpaper:1801&r=pke |
| By: | Algan, Yann; Guriev, Sergei; Papaioannou, Elias; Passari, Evgenia |
| Abstract: | We study the implications of the Great Recession for voting for anti-establishment parties, as well as for general trust and political attitudes, using regional data across Europe. We find a strong relationship between increases in unemployment and voting for non-mainstream, especially populist parties. Moreover, increases in unemployment go in tandem with a decline in trust in national and European political institutions, while we find much attenuated effects of unemployment on interpersonal trust. The correlation between unemployment and attitudes towards immigrants is muted, especially for their cultural impact. To advance on causality, we extract the component of increases in unemployment explained by the pre-crisis structure of the economy, in particular the share of construction in regional value added, which is strongly related both to build-up and the burst of the crisis. Our results imply that crisis-driven economic insecurity is a substantial driver of populism and political distrust. |
| Keywords: | crisis; Europe; Immigration; industrial structure; populism; Trust; voting |
| JEL: | A13 E02 F02 F22 F33 J15 O43 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12444&r=pke |
| By: | Anton Korinek; Joseph E. Stiglitz |
| Abstract: | Inequality is one of the main challenges posed by the proliferation of artificial intelligence (AI) and other forms of worker-replacing technological progress. This paper provides a taxonomy of the associated economic issues: First, we discuss the general conditions under which new technologies such as AI may lead to a Pareto improvement. Secondly, we delineate the two main channels through which inequality is affected – the surplus arising to innovators and redistributions arising from factor price changes. Third, we provide several simple economic models to describe how policy can counter these effects, even in the case of a “singularity” where machines come to dominate human labor. Under plausible conditions, non-distortionary taxation can be levied to compensate those who otherwise might lose. Fourth, we describe the two main channels through which technological progress may lead to technological unemployment – via efficiency wage effects and as a transitional phenomenon. Lastly, we speculate on how technologies to create super-human levels of intelligence may affect inequality and on how to save humanity from the Malthusian destiny that may ensue. |
| JEL: | D63 E64 O3 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24174&r=pke |