nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2018‒02‒12
six papers chosen by
Karl Petrick
Western New England University

  1. The drivers of household indebtedness re-considered: an empirical evaluation of competing arguments on the macroeconomic determinants of household indebtedness in OECD countries By Glennie Lauren Moore; Engelbert Stockhammer
  2. The Institutionalist Theory of the Business Enterprise: Past, Present, and Future By Jo, Tae-Hee
  3. Economic Pluralism in the Study of Wage Discrimination: A Note By Drydakis, Nick
  4. Clower’s Dual-Decision Hypothesis is economics By Wu, Cheng
  5. On the Economics of Risk and Uncertainty: A Historical Perspective By Yasuhiro Sakai
  6. How polarized is the global income distribution? By Laurence Roope; Miguel Niño-Zarazúa; Finn Tarp

  1. By: Glennie Lauren Moore; Engelbert Stockhammer
    Abstract: Household debt is at a record high in most OECD countries and it played a crucial role in the recent financial crisis. Several arguments on the macroeconomic drivers of household debt have been put forward, and most have been empirically tested, albeit in isolation of each other. This paper empirically tests seven competing arguments on the macroeconomic determinants of household indebtedness together in one econometric study. The arguments are that residential house prices, upward movements in the prices of assets demanded by households, the income share of the top 1%, falling wages, the rolling back of the welfare state, the age structure of the population and the short-term interest rate drive household indebtedness. We test these arguments for a panel of 13 OECD countries over the period 1993 - 2011 using error correction models. We also investigate whether effects differ in boom and bust phases of the debt and house price cycles. The results show that the most robust macroeconomic determinant of household debt is real residential house prices, and that the phase of the debt and house price cycles plays a role in household debt accumulation.
    Keywords: household debt, house prices, cycles
    JEL: E19 E21 R20
    Date: 2018–02
  2. By: Jo, Tae-Hee
    Abstract: This paper examines the historical developments of the institutionalist theory of the business enterprise since early 1900s. We will examine the major contributions in order to find the theoretical characteristics of the institutionalist theory of the business enterprise vis-à-vis evolving capitalism. The paper begins with a discussion of the present state of the institutional theory, looks back on the original ideas of Veblen and Commons, and goes on to later contributions, such as Gardiner Means, John Kenneth Galbraith, William Dugger, and Alfred Eichner. The paper concludes with a discussion as to what should be done for the further development of the institutionalist theory of the business enterprise.
    Keywords: Theory of the business enterprise, institutional economics, evolution of capitalism
    JEL: B50 B52 D20
    Date: 2018–01–22
  3. By: Drydakis, Nick
    Abstract: Economic pluralism proposes that economists and social planners should consider alternative theories to establish a range of policy actions. Neoclassical, Feminist and Marxian theories evaluate well-grounded causes of wage discrimination. Racist attitudes, uncertainties regarding minority workers’ productivity and power relations in lower-status sectors might generate discriminatory wages. Each cause deserves corresponding policy action. Given pluralism, wage discrimination might be reduced by implementing equality campaigns, creating low-cost tests to predict workers’ productivity and abolishing power relations towards minority workers. Pluralism might be jeopardised if there is a limited desire to engage with less-dominant theoretical frameworks. Also, pluralism might be misled with rejection of dominant theories.
    Keywords: Economic Pluralism,Schools of economic thought,Wages,Discrimination
    JEL: B4 B5 B54 J71
    Date: 2018
  4. By: Wu, Cheng
    Abstract: Though Wu (2017) has shown Clower’s Dual Decision Hypothesis leading to Keynes’ change in saving (and disequilibrium) conclusion, it is important to compare Clower’s budget constraint approach with other models, including those found in Hall’s consumption theorem and similar approach. In Clower, by assuming that, consumers may not satisfy the budget constraint, one cannot automatically assume Hall’s consumption theorem to hold. And, by showing how households need to optimize contingent on the satisfaction of their budget constraint, Clower was, in effect, creating a feedback mechanism.
    Keywords: Keynes; Clower; Keynesian; disequilibrium; Dual Decision Hypothesis; consumption; martingale; saving; growth; income; trade; feedback
    JEL: A10 B20 C0 D1 E2 N0 O4 P0
    Date: 2018–01–21
  5. By: Yasuhiro Sakai (Faculty of Economics, Shiga University)
    Abstract: The economics of risk and uncertainty has a long history over 300 years. This paper aims to systematically summarize and critically reevaluate it, with special reference to John M. Keynes and Frank H. Knight, the two giants in modern times. In our opinion, there are the six stages of development, with each stage vividly reflecting its historical background. The first stage, named the Initial Age, corresponds to a long period before 1700, the one in which statistics was firmly established by B. Pascal as a branch of mathematics but economic theory per se was not well developed. The second stage, called the "B-A" Age, covers the period from 1700 to 1880, is characterized by the two superstars, Daniel Bernoulli and Adam Smith. The third stage from 1880 to 1940 may be named the "K-K" Age because it was dominated by J.M. Keynes and F.H. Knight. The fourth stage, called the "N-M" age, eyewitnesses the birth of game theory, with von Neumann and Morgenstern being its foundering fathers. The fifth stage from 1970 to 2000, named the "A-S" Age, is characterized by several distinguished scholars with their initials "A" or "S". Finally, in 2000 and onward, while many doubts have been raised about existing doctrines, new approaches have not emerged yet, thus being named the Uncertain Age. The relationship between Keynes and Knight is both complex and rather strange. It has a history of separating, approaching, separating again and approaching again. As the saying goes, a new wine should be poured into a new bottle. We would urgently need a Keynes and/or a Knight toward a new horizon of the economics of risk and uncertainty.
    Keywords: Economics of risk and uncertainty, Bernoulli, Keynes, Knight
    Date: 2018–01
  6. By: Laurence Roope; Miguel Niño-Zarazúa; Finn Tarp
    Abstract: The interest in the level of global inequality has surged in recent years. This paper complements existing estimates of global inequality by providing the first estimates of the level of bipolarization of the global income distribution. During 1975–2010, global bipolarization declined substantially according to ‘relative’ measures, while it increased according to ‘absolute’ measures. The results mirror trends in global inequality over the same period.
    Date: 2018

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