nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2018‒04‒16
twelve papers chosen by
Karl Petrick
Western New England University

  1. Does the Steindl-Dutt Investment Function Rule Out Profit-Led Expansion? By Deepankar Basu
  2. On the Second Stage of the Cambridge Capital Controversy By Fratini, Saverio M.
  3. Explaining the growth of CSR within OECD countries: The role of institutional legitimacy in resolving the institutional mirror vs. substitute debate By Kinderman, Daniel; Lutter, Mark
  6. The Political Economy of Ideas By Mukand, Sharun W.; Rodrik, Dani
  7. Historical reasons for the focus on broad monetary aggregates in post-World War II Britain and the ‘Seven Years War’ with the IMF By Goodhart, Charles A. E.; Needham, Duncan J.
  8. Development governance. The philosophy of innovation and the ethical economy of Amartya Sen By Flavia Palazzi; Francesco Iury Forte
  9. Bringing the Household Back in. Comparative Capitalism and the Politics of Housing Markets By Greg Fuller; Alison Johnston; Aidan Regan
  10. Armand Hatchuel and the Refoundation of Management Research: Design Theory and the Epistemology of Collective Action By Blanche Segrestin; Franck Aggeri; Albert David; Pascal Le Masson
  11. Impact of Migration on Income Levels in Advanced Economies By Florence Jaumotte; Ksenia Koloskova; Sweta Chaman Saxena
  12. Speaking sociologically with big data: symphonic social science and the future for big data research By Halford, Susan; Savage, Mike

  1. By: Deepankar Basu (Department of Economics, University of Massachusetts - Amherst)
    Abstract: Bhaduri and Marglin (1990) had argued that an investment function which has the profit rate and the capacity utilization rates as the two determinants of investment imposes unwarranted restrictions on the macroeconomic model and rules out profit-led expansion. In this paper, I show that this critique only holds in a closed economy model. In an open economy model, such an investment function does not rule out profit-led expansion. I argue that the problem was less in the investment function itself than in the larger model within which it was embedded, in particular the saving behavior of the macroeconomy entailed by the model.
    Keywords: structuralist model, investment function, profit-led expansion
    JEL: E12 B51
    Date: 2018
  2. By: Fratini, Saverio M. (Roma Tre University)
    Abstract: The second stage of the Cambridge capital controversy concerns the neo-Walrasian theory of value and distribution. Since production is not understood in this theory as employing factors of production but rather commodities, i.e. goods and services with date and place of delivery, some scholars maintained that it is not affected by the problems that emerged, during the first stage of the controversy, as regards the conception of capital as a factor of production and the rate of interest as the price for its use. The reply of the ‘neo-Ricardians’ was based on two arguments. The first regarded the relevance of the new notions of equilibrium adopted in the neo-Walrasian approach, with particular reference to temporary and Arrow-Debreu equilibria, and the second the possibility that the phenomena of re-switching and reverse capital deepening, by affecting the working of the saving-investment market, could cause equilibrium multiplicity and instability also in a neo-Walrasian framework.
    Keywords: Cambridge capital controversy; neo-Walrasian theory; Arrow-Debreu equilibrium; saving-investment market
    JEL: B51 D33 D50
    Date: 2018–04
  3. By: Kinderman, Daniel; Lutter, Mark
    Abstract: Two strands of literature have emerged to explain the rise of a new form of private governance, Corporate Social Responsibility (CSR). One camp argues that CSR expansion is likely during periods of economic liberalization because CSR tends to substitute for growing institutional voids and a lack of social regulation. The other camp argues that CSR is likely to diffuse within coordinated economies because it mirrors these institutional settings. While both camps find empirical support for their arguments, no one has yet managed to combine both perspectives. In our study, we develop three hypotheses based on two (rationalist and constructivist/sociological) strands of institutional theory. Based on a new dataset comprising the corporate membership in business-led CSR organizations in over thirty countries from 1981 to 2008, we show that economic liberalization has a strong effect on CSR expansion when the legitimacy of CSR is low. However, when the practice has achieved substantial cultural acceptance, economic liberalization no longer drives CSR expansion. In this setting, CSR expansion is most likely to occur within socially regulated economic contexts.
    Keywords: corporate social responsibility,diffusion,institutions,legitimacy,liberalization,membership,privatization,neo-institutionalism,Institutionen,Legitimität,Liberalisierung,Privatisierung,Neo-Institutionalismus
    Date: 2018
    Date: 2018
    Date: 2018
  6. By: Mukand, Sharun W. (University of Warwick); Rodrik, Dani (Harvard University)
    Abstract: We develop a conceptual framework to highlight the role of ideas as a catalyst for policy and institutional change. We make an explicit distinction between ideas and vested interests and show how they feed into each other. In doing so the paper integrates the Keynes-Hayek perspective on the importance of ideas with the currently more fashionable Stigler-Becker (interests only) approach to political economy. We distinguish between two kinds of ideational politics { the battle among different worldviews on the efficacy of policy (worldview politics) versus the politics of victimhood, pride and identity (identity politics). Political entrepreneurs discover identity and policy `memes' (narratives, cues, framing) that shift beliefs about how the world works or a person's belief of who he is (i.e. identity). Our framework identifies a complementarity between worldview politics and identity politics and illustrates how they may reinforce each other. In particular, an increase in identity polarization may be associated with a shift in views about how the world works. Furthermore, an increase in income inequality is likely to result in a greater incidence of ideational politics. Finally, we show how ideas may not just constrain, but also `bite' the interests that helped propagate them in the rst instance.
    Date: 2018
  7. By: Goodhart, Charles A. E.; Needham, Duncan J.
    Abstract: The British monetary authorities have traditionally focused on broader monetary aggregates than their counterparts elsewhere. The reasons include: the willingness of UK banks to allow customers to make payments by drawing on time deposits, the particularities of the UK approach to managing the national debt and the foreign exchange reserves, and the flow-of-funds system of national accounts developed after World War II. This article outlines these reasons, and explores the implications for the UK's often fractious relationship with the International Monetary Fund during the 1950s and 1960s. It explains why IMF conditionality on loans to the UK focused on broad aggregates.
    JEL: N0
    Date: 2018–01–11
  8. By: Flavia Palazzi (UGA UFR ARSH - Université Grenoble Alpes - UFR Arts & Sciences Humaines - UGA - Université Grenoble Alpes); Francesco Iury Forte
    Abstract: The essay aims to analyze the phenomenon of corporate social responsibility, which originated in the United States in the fifties but became a reality widespread in recent decades, from a philosophical-economic point of view and as the Socratic question "how to live ? ", Reproposed by the Nobel Prize winner for economics Amartya Sen, as well as his reflections on the ethical origins of the economy, lead us to reflect on new ways through which the company influences social values. From crowdfunding to the experiences of free-form enterprises, where time and space are decentralized. The phenomenon is interesting from an economic point of view: in fact, new forms of competitiveness are sought in the knowledge that the ultimate goal of the company remains profit, but also and above all ethical and social where new ways of doing business are changing society , while society itself requires innovative models in the way of doing business in its liquid and globalized variability. The need to find new measures of quality of life is also linked to these reflections. In 2008, a commission set up by the then President Nicolas Sarkozy and composed of some Nobel prizes including Amartya Sen, Jean Paul Fitoussi and Joseph Stigltiz, despite not having had a large following, began studying alternative measures to GDP that took into account happiness and of the welfare of the population. The order of economic indices so far known is therefore to be confronted with the disorder of a society that is reorganizing according to renewed models and desperately seeking new certainty, in the economic and political fields; starting from the crisis of homo oeconomicus, of overcoming the mere rationality about human choices in the economic field, if the request of society is that of a greater attention to ethics, to the responsibility in the consumption of resources and in respect of human rights, the governments that in the future will have the objective of guiding the economy and, in turn, not being guided, will have to take it into account and identify new answers to these questions, in order to put the economy back to the full service of man.
    Abstract: Il saggio mira ad analizzare il fenomeno della responsabilità sociale d’impresa, che ha avuto origine negli Stati Uniti negli anni Cinquanta ma divenuta una realtà diffusa negli ultimi decenni, da un punto di vista filosofico-economico e come la domanda socratica «come bisogna vivere?», riproposta dal premio Nobel per l’economia Amartya Sen, nonché le sue riflessioni sulle origini etiche dell’economia, ci inducano a riflettere su nuove modalità attraverso cui l’impresa influenza i valori sociali. Dal crowdfunding alle esperienze della free-form enterprises, in cui il tempo e lo spazio sono decentrati. Il fenomeno è interessante da un punto di vista economico: si cercano infatti nuove forme di competitività pur nella consapevolezza che il fine ultimo dell’impresa resta il profitto, ma anche e soprattutto etico-sociale laddove i nuovi modi di fare impresa stanno cambiando la società, mentre la società stessa richiede, nella sua variabilità liquida e globalizzata, modelli innovativi nel modo di fare impresa. A queste riflessioni si collega anche la necessità di trovare nuove misure della qualità della vita. Nel 2008, una Commissione istituita dall’allora Presidente Nicolas Sarkozy e composta da alcuni premi Nobel tra cui Amartya Sen, Jean Paul Fitoussi e Joseph Stigltiz, malgrado non abbia avuto grande seguito, iniziò a studiare misure alternative al PIL che tenessero conto della felicità e del benessere della popolazione. L’ordine degli indici economici fino ad ora conosciuti si trova quindi a doversi confrontare con il disordine di una società che si sta riorganizzando secondo modelli rinnovati e che cerca disperatamente nuove certezze, in campo economico e politico; a partire dalla crisi dell’homo oeconomicus, del superamento della mera razionalità circa le scelte umane in ambito economico, se la richiesta della società è quella di una maggiore attenzione all’etica, alla responsabilità nel consumo delle risorse e nel rispetto dei diritti umani, i governi che in futuro avranno come obiettivo quello di guidare l’economia e, non esserne a loro volta guidati, dovranno tenerne conto e individuare nuove risposte a queste domande, al fine di porre di nuovo l’economia al pieno servizio dell’uomo.
    Date: 2018–03–19
  9. By: Greg Fuller (University of Groningen); Alison Johnston (Oregon State University); Aidan Regan (University College Dublin)
    Abstract: Households consume an increasing share of credit in developed economies; however, past and current comparative capitalism research has had very little to say on housing markets. This is an important blind spot. House prices have crucial implications for national economies. Unsustainable housing prices can cause significant macroeconomic instability, drive wealth inequality, and accelerate households’ accumulation of debt. Moreover, housing markets across the developed world fail to conform to traditional comparative political economy “typologies.” While the liberal economies of the UK and Ireland experienced rapid housing price growth between 1995 and 2008, the “egalitarian” Nordic countries were close behind. We argue that the study of comparative capitalism needs to bring the household back in, through an analysis of the largest financial liability they own - mortgages. To understand heterogeneity in housing inflation, it is vital to understand dynamics in two markets that determine homeownership. First, the labor market, which shapes households’ incomes (on which comparative capitalism and comparative political economy more broadly have a lot to say), and; second, the market for mortgages, which shapes households’ access to financial resources (on which comparative capitalism and comparative political economy have very little to say). We argue that the impact of labor market institutions on housing inflation is conditional on national regulatory frameworks that govern mortgage credit access. Using a panel analysis of 17 OECD economies from 1990 to 2007, we find that in permissive mortgage credit regimes, countries with coordinated labour market institutions that restrain income growth have lower housing inflation than countries with uncoordinated wage-setting. This is what the comparative capitalism literature would predict. However, in restrictive mortgage credit regimes (those which undermine households’ capacity to assume mortgage debt), the structure of labour market institutions have no effect on housing inflation.
    Date: 2018–03–28
  10. By: Blanche Segrestin (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Franck Aggeri (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Albert David (MLab - DRM - Dauphine Recherches en Management - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique); Pascal Le Masson (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Armand Hatchuel's work marks a turning point in management research and paves the way for a refoundation of management science. Hatchuel's research deals with organizational metabolism rather than organizational change, as he is concerned with the drivers of change and with the organization of innovative collective action. Several theoretical milestones can be put forward. First, Hatchuel offers a theory of the cognitive processes of generativity: while decision theory targets optimization by supporting the selection of a solution, " C-K theory " is a design theory. It accounts for the generation of new alternatives by expanding what is known, this process being driven by desirable unknowns. This theory has provided the theoretical cornerstone characterizing the rationality and organization of innovative or design-oriented collective action. Second, in Hatchuel's view, learning and organizational dynamics are tightly bound. Learning processes are hosted and supported by social relationships, which, in turn, are shaped by the distribution of knowledge. Hatchuel proposes a theory of collective action whereby knowledge and relationships are involved in a dynamic interplay: this theory shows that both markets and hierarchies are special and highly unstable forms of organization, because they imply that either knowledge or relationships are frozen. Management scholars contribute to the study of gener-ative forms of collective action: Hatchuel argues that management science, far from being applied economics or applied sociology, is a basic science devoted to the design and study of new models of collective action. He therefore opens up promising avenues for programs on post-decision paradigms and creative institutions.
    Keywords: Innovation management, Design theory ,Collective action,Management sciences, Innovation , Generativity
    Date: 2017
  11. By: Florence Jaumotte; Ksenia Koloskova; Sweta Chaman Saxena
    Abstract: The recent refugee surge has brought attention to the macro-critical policy issue of migration, including speculations that migration can be an unfavorable phenomenon for the receiving economies. A careful examination of the impact of migration on host economies is thus critical. Focusing on the economic impact, most of the academic discussion has centered on the effect of migration on labor markets and public finances. Much less is known about the long-term impact of immigration on the GDP per capita (or the standard of living) of host economies. This note makes three contributions to estimating this impact: it uses a restricted sample of advanced economies rather than a mixed sample of higher- and lower-income host countries, it examines whether the GDP per capita impact varies for different skill levels of migrants, and it goes beyond the aggregate impact of migration on GDP per capita to examine how broadly gains in this regard are shared across the population. In particular, it examines whether migration impacts the income levels of those both at the top and at the bottom of the earnings distribution, or whether gains are instead concentrated in a small group of high earners. It finds that immigration significantly increases GDP per capita in advanced economies, that both high- and lower-skilled migrants can raise labor productivity, and that an increase in the migrant share benefits the average income per capita of both the bottom 90 percent and the top 10 percent of earners, suggesting the gains from immigration are broadly shared.
    Keywords: Income;Labor productivity;Migration;Employment;GDP, advanced economies, migrant skill levels, regional migration, host economies, working-age population, old-age dependency ratio
    Date: 2016–10–24
  12. By: Halford, Susan; Savage, Mike
    Abstract: Recent years have seen persistent tension between proponents of big data analytics, using new forms of digital data to make computational and statistical claims about ‘the social’, and many sociologists sceptical about the value of big data, its associated methods and claims to knowledge. We seek to move beyond this, taking inspiration from a mode of argumentation pursued by Piketty, Putnam and Wilkinson and Pickett that we label ‘symphonic social science’. This bears both striking similarities and significant differences to the big data paradigm and – as such – offers the potential to do big data analytics differently. This offers value to those already working with big data – for whom the difficulties of making useful and sustainable claims about the social are increasingly apparent – and to sociologists, offering a mode of practice that might shape big data analytics for the future
    Keywords: big data; computational methods; sociology; symphonic social science; visualisation
    JEL: C1
    Date: 2017–12–01

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