nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2018‒04‒09
seven papers chosen by
Karl Petrick
Western New England University

  1. "The Job Guarantee: Design, Jobs, and Implementation" By Pavlina R. Tcherneva
  2. Wage- versus profit-led growth in the context of globalization and public spending: the political aspects of wage-led recovery By Onaran, Özlem
  3. Marx's Analysis of Ground-Rent: Theory, Examples and Applications By Deepankar Basu
  4. Economic Growth, Income Distribution, and Climate Change By Armon Rezai; Lance Taylor; Duncan Foley
  5. Demand Drives Growth all the Way By Lance Taylor; Duncan Foley; Armon Rezai
  7. Categorizing Variants of Goodhart's Law By David Manheim; Scott Garrabrant

  1. By: Pavlina R. Tcherneva
    Abstract: The job guarantee (JG) is a public option for jobs. It is a permanent, federally funded, and locally administered program that supplies voluntary employment opportunities on demand for all who are ready and willing to work at a living wage. While it is first and foremost a jobs program, it has the potential to be transformative by advancing the public purpose and improving working conditions, people’s everyday lives, and the economy as a whole. This working paper provides a blueprint for operationalizing the proposal. It addresses frequently asked questions and common concerns. It begins by outlining some of the core propositions in the existing literature that have motivated the JG proposal. These propositions suggest specific design and implementation features. (Some questions are answered in greater detail in appendix III). The paper presents the core objectives and expected benefits of the program, and suggests an institutional structure, funding mechanism, and project design and administration.
    Keywords: Job Guarantee; Unemployment; Full Employment; Living Wage; Policy Design
    JEL: D6 E2 E6 H1 H3 H4 H5 J2 J3 J4
    Date: 2018–03
  2. By: Onaran, Özlem
    Abstract: This paper presents the empirical evidence about the impact of the simultaneous race to the bottom in labour’s share on growth after taking global interactions into account based on the Post-Kaleckian theoretical framework developed by Bhaduri and Marglin (1990). The world economy and large economic areas are likely to be wage-led; and parameter shifts in different periods are unlikely to make a difference in this finding. The effects that can come from a wage-led recovery on growth and hence employment are positive, however they are also modest in magnitude. We then present an alternative scenario based on a policy mix of wage increases and public investment. A coordinated mix of polices in the G20 targeted to increase the share of wages in GDP by 1%-5% in the next 5 years and to raise public investment in social and physical infrastructure by 1% of GDP in each country can create up to 5.84% more growth in G20 countries. The final section addresses the political aspects and barriers to a wage-led recovery.
    Keywords: Wage share; Wage-led growth; Globalization; Public investment;
    JEL: E12 E22 E25
    Date: 2016–10–01
  3. By: Deepankar Basu (Department of Economics, University of Massachusetts - Amherst)
    Abstract: This paper offers a unified analytical treatment of Marx’s theory of ground-rent, building on the analysis that is available in Volume Three of Capital. Since ground-rent is a transformation of surplus profit generated in agriculture, the main argument is developed in two steps. In the first step, I derive results on the existence of surplus profit in capitalist agriculture in the absence of landed property. In the second step, I used these results on surplus profit to arrive at the total ground-rent that is appropriated by the owners of land, and also decompose it into the three components that Marx highlighted: absolute rent, differential rent I, and differential rent II. I argue that the power of Marx’s analysis lies in the fact that it can be generalised far beyond the domain of agriculture, which he had analysed, and can illuminate the emergence of rent in any system of capitalist commodity production that uses privately owned non-produced resources that is limited in quantity. Hence, Marx’s analysis of ground-rent can be used to investigate many interesting issues in contemporary capitalism.
    Keywords: ground-rent, surplus value, Marx
    JEL: B51
    Date: 2018
  4. By: Armon Rezai; Lance Taylor; Duncan Foley (Schwartz Center for Economic Policy Analysis (SCEPA))
    Abstract: This paper explores how climate damage affects the long-run evolution of the economy. Climate change induced by greenhouse gas lowers profitability, reducing investment and cutting output in the short and long runs. Short-run employment falls due to deficient demand. In the long run, productivity growth is slower, lowering potential income levels. Climate policy can increase incomes and employment in the short and long runs, while a continuation of business-as-usual leads to a dystopian income distribution with affluence for few and high levels of unemployment for the rest.
    Keywords: climate change, economic growth, integrated assessment, demand and distribution, energy productivity, unemployment
    JEL: H21 Q51 Q54
    Date: 2017–10
  5. By: Lance Taylor; Duncan Foley; Armon Rezai (Schwartz Center for Economic Policy Analysis (SCEPA))
    Abstract: How does effective demand, productivity growth, income, and wealth distributions influence and constrain the economy? Authors use simulations to project the long-run growth rate at 2% per year and that the capitalist share of wealth may rise from about 40% to 70% percent.
    Keywords: economic growth, demand and distribution, effective demand
    JEL: E25 O47
    Date: 2017–10
    Date: 2018
  7. By: David Manheim; Scott Garrabrant
    Abstract: There are several distinct failure modes for overoptimization of systems on the basis of metrics. This occurs when a metric which can be used to improve a system is used to an extent that further optimization is ineffective or harmful, and is sometimes termed Goodhart's Law. This class of failure is often poorly understood, partly because terminology for discussing them is ambiguous, and partly because discussion using this ambiguous terminology ignores distinctions between different failure modes of this general type. This paper expands on an earlier discussion by Garrabrant, which notes there are "(at least) four different mechanisms" that relate to Goodhart's Law. This paper is intended to explore these mechanisms further, and specify more clearly how they occur. This discussion should be helpful in better understanding these types of failures in economic regulation, in public policy, in machine learning, and in Artificial Intelligence alignment. The importance of Goodhart effects depends on the amount of power directed towards optimizing the proxy, and so the increased optimization power offered by artificial intelligence makes it especially critical for that field.
    Date: 2018–03

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