nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2018‒05‒28
thirteen papers chosen by
Karl Petrick
Western New England University

  1. Keynes: ley de Say y demanda de dinero. By Barón Ortegón, Brayan Alexander
  2. Inequality and Instability By Bain, George Sayers
  3. Structural Change, Fundamentals, and Growth: A Framework and Case Studies By McMillan, Margaret; Rodrik, Dani; Sepulveda, Claudia
  4. The Finance Uncertainty Multiplier By Alfaro, Ivan; Bloom, Nicholas; Lin, Xiaoji
  5. Rentier-financier capitalism By Pereira, Luiz C. Bresser
  6. Development Finance in the age of Financial Mercantilism By Gianni Vaggi
  7. Towards a Critique of Neoclassical Economics: how to Neutralize and Radicalize our Understanding of the Postulate of Independence of Agents and Goods By Hoon Hong
  8. Populism and the Economics of Globalization By Rodrik, Dani
  9. Kann Karl Marx die Finanzkrise 2007/08 erklären? Eine Einordnung seiner Geld- und Kredittheorie By Neuberger, Doris
  10. Towards a Marxist theory of financialised capitalism By Powell, Jeffrey
  11. Climate in the 21st Century By Julia M. Puaschunder
  12. Thirlwall Law: Validity of the Law in Nigeria By Adesete, Ahmed; Osinloye, Adelanfe; Abolade, Modupeoluwa; Nwachukwu, Christian; Onyejeaka, Emmanuel; Ojo, Dolapo; Ogungbemi, Tosin; Phillips, Martins
  13. The causal links between renewable electricity generation and economic growth in South Africa By Hlalefang Khobai

  1. By: Barón Ortegón, Brayan Alexander
    Abstract: In this bibliographic review, the Keynes‘main arguments against the Say’s law are gathered, this law was thought to be a special case of a broader and general theory and therefore more powerful as economic policy is concerned. These insights are vital, to understand Keynesian economics and its subsequent contributions in economic theory and economic policy.
    Keywords: Keynes,Say's Law, Economic theory, demand for money, uncertainty,
    JEL: B0 B2 B22 B31 E12
    Date: 2017–05–14
  2. By: Bain, George Sayers
    Abstract: Inequality of wealth and income is currently a hotly debated subject not only in the academy but also in society more generally. The protagonists disagree about how inequality should be meeasured. But however they measure it - whether by Gini coefficients, the share of the total distribution earned by a particular group (e.g., the top one per cent), or other ways - they generally agree that inequality has greatly increased in a wode range of countries since the mid-1970s. Agreement does not exist, however, about what causes inequality, what problems result from it, and what might be done to solve them. This paper attempts to answer these questions by reviewing and assessing a diverse literature drawn from economic theory, political science, sociology,philosophy, and economic and financial history.
    Keywords: inequality; equality; economic and social instability; rent-seeking; capitalism; fairness; social mobility;
    JEL: P10
    Date: 2018–05–14
  3. By: McMillan, Margaret (Tufts University); Rodrik, Dani (Harvard University); Sepulveda, Claudia (World Bank)
    Abstract: Developing countries made considerable gains during the first decade of the 21st century. Their economies grew at unprecedented rates, resulting in large reductions in extreme poverty and a significant expansion of the middle class. But more recently that progress has slowed with an economic environment of lackluster global trade, not enough jobs coupled with skills mismatches, continued globalization and technological change, greater income inequality, unprecedented population aging in richer countries, and youth bulges in the poorer ones. This essay examines how seven key countries fared from 1990-2010 in their development quest. The sample includes seven developing countries--Botswana, Ghana, Nigeria, Zambia, India, Vietnam and Brazil--all of which experienced rapid growth in recent years, but for different reasons. The patterns of growth are analyzed in each of these countries using a unifying framework which draws a distinction between the "structural transformation" and "fundamentals" challenge in growth. Out of these seven countries, the traditional path to rapid growth of export oriented industrialization only played a significant role in Vietnam.
    JEL: O11
    Date: 2017–05
  4. By: Alfaro, Ivan (BI Norwegian Business School); Bloom, Nicholas (Stanford University); Lin, Xiaoji (Ohio State University)
    Abstract: We show how real and financial frictions amplify the impact of uncertainty shocks. We start by building a model with real frictions, and show how adding financial frictions roughly doubles the negative impact of uncertainty shocks. The reason is higher uncertainty alongside financial frictions induces the standard negative real-options effects on the demand for capital and labor, but also leads firms to hoard cash against future shocks, further reducing investment and hiring. We then test the model using a panel of US firms and a novel instrumentation strategy for uncertainty exploiting differential firm exposure to exchange rate and factor price volatility. Consistent with the model we find that higher uncertainty reduces firms' investment, hiring, while increasing their cash holdings and cutting their dividend payouts, particularly for financially constrained firms. This highlights why in periods with greater financial frictions--like during the global-financial-crisis--uncertainty can be particularly damaging.
    JEL: D22 E23 E44 G32
    Date: 2017–12
  5. By: Pereira, Luiz C. Bresser
    Abstract: Since the beginning of the twentieth century there are three basic social classes: the capitalist class or bourgeoisie, the working class and the professional class or technobureaucracy. In the first part of the century, the high technobureaucrats replaced the business entrepreneurs in the management of the corporations; from the 1980s, the rentier capitalist, most of them heirs, replaced the entrepreneurs in the ownership of such corporations. To manage their wealth a special class of professionals emerged, the financiers, bright people formed in the best universities, who assumed also the role of economic policymakers and of ideologues or organic intellectuals. They adopt the neoliberal ideology, and, as its justification, either the neoclassical, or the Austrian economics.
    Date: 2018–05
  6. By: Gianni Vaggi (Department of Economics and Management, University of Pavia)
    Abstract: On September 2015 the UN General Assembly approved a resolution sometimes called Agenda 2030, with 17 Sustainable Development Goals, SDGs, to be attained by 2030. The achievement of the SDGs could require hundreds of trillion dollars. Financial flows to developing have greatly increased since 2000, in particular Foreign Direct Investments and remittances, but also Portfolio flows. A lot of the money seems to be available in financial market. However today international finance is characterized by Financial Mercantilism, FM. There are many similarities between the operation of the seventeen century merchants and today financial intermediaries. Resorting to notions derived from history of economic ideas the paper identifies the elements which characterize FM and which portray the role of finance in the present phase of the capitalist system. Financial Mercantilism is not the ideal setting for long-term development finance and to channel funds towards developing countries, which could be hurt by a the debt crisis similar to that experienced in the eighties. The paper shows how to mitigate the possible negative impacts of Financial Mercantilism on development finance. Policy recommendations are hinted in the conclusive part of the paper. Financing for development cannot be left to international financial markets, but it requires some specific tools and instruments. The paper briefly discusses the case of indexed bonds and contends that development finance should take place on separate markets. It is a long paper and the reader might wish to focus on some issues. If you are interested on Financial Mercantilism go to sections 3 and 4. If you are interested on financing for development focus on sections 5 and 6. The index will help. Section 1 deals with the means of financing needs the Sustainable Development Goals and with the problem of how to finance developing countries Section 2 examines the lessons which could have be drawn from the debt of the eighties. Section 3 examines the evolution in of international finance since the seventies while in section 4 there is an analysis of the main features of Financial Mercantilism. Section 5 examines the role of sovereign bonds in development finance and section 6 presents three proposals to make development finance more sustainable and more equitable.
    Keywords: Development Finance, Financial Mercantilism, Sustainable Development
    Date: 2018–05
  7. By: Hoon Hong (School of Economics, Yonsei University)
    Abstract: In line with Marx¡¯s Zur Kritik der Politischen Okonomie, this paper intends to work towards laying the groundwork for a critique of neoclassical economics (NC). For this goal, this paper attempts at: conceptualization of objects of analysis; revelation of assumptions; concentration on qualitative aspects; systemization; contextualization and socialization. On the basis of the view that NC is built upon two pillars: price mechanism; individuals¡¯ rational choices, this exploration offers preliminary results about NC¡¯s postulate of independence. This postulate can be specified as: (i) independence among individuals as agents; (ii) quasi-independence among goods (and resources); (iii) independence between an individual and goods or things. In refutation of NC¡¯s strong version of methodological individualism, an increasing number of studies advocate the existence of social relations and interdependent self. Moreover, complementarity or interdependence among goods is to be conceded on the basis of behavioral economics. Furthermore, the so-called socio-materiality lays stress on interdependence between an agent and things. Lastly, the significance of social norm and of qualitative aspects of price is demonstrated.
    Keywords: Marx, neoclassical economics, independence, interdependence, social relations, dialectics, context, behavioral economics JEL Classification:
    Date: 2018–05
  8. By: Rodrik, Dani (Harvard University)
    Abstract: Populism may seem like it has come out of nowhere, but it has been on the rise for a while. I argue that economic history and economic theory both provide ample grounds for anticipating that advanced stages of economic globalization would produce a political backlash. While the backlash may have been predictable, the specific form it took was less so. I distinguish between left-wing and right-wing variants of populism, which differ with respect to the societal cleavages that populist politicians highlight. The first has been predominant in Latin America, and the second in Europe. I argue that these different reactions are related to the relative salience of different types of globalization shocks.
    Date: 2017–06
  9. By: Neuberger, Doris
    Abstract: Der ökonomische Mainstream steht seit Ausbruch der Finanzkrise 2007/08 vermehrt unter Kritik, hatten doch nur wenige Fachwissenschaftler die Krise vorhergesehen. In der entstandenen Debatte über Ausrichtung und Methoden in der Volkswirtschaftslehre wird auch eine Rückbesinnung auf nationalökonomische Klassiker gefordert, die der Mainstream aus den Lehrbüchern weitgehend getilgt hat. Hätte Karl Marx eine bessere Prognose zur Finanzkrise gestellt? Seine Geld- und Kredittheorie erschließt sich insbesondere aus der Lektüre des dritten Bandes des "Kapital", den Ökonomischen Manuskripten dazu (1863-1865) und den Londoner Heften (1850-1853). Der vorliegende Beitrag rekonstruiert diese aus dem Blickwinkel der herrschenden Ökonomik. In Aspekten wie Wesen und Erscheinungsformen des Geldes, Endogenität und Neutralität des Geldes, Rolle von Krediten, Zinsen und Krisen zeigt sich, dass Marx insbesondere durch seine Analysen zum Kreditgeld die Finanzkrise besser erklären kann als der ökonomische Mainstream. Es handelt sich dabei um eine Krise der Überakkumulation von Geldkapital, die weder einzigartig noch auf das Versagen einzelner Marktakteure zurückzuführen ist. Solche Krisen entstehen unweigerlich aus einem fundamentalen Widerspruch des kapitalistischen Wirtschaftssystems, wonach das endogene Kreditgeld zugleich Triebfeder der Produktion aber auch der Überproduktion und Überspekulation ist.
    Keywords: Finanzkrise,Geldfunktionen,Geldkapital,Kreditgeld,Verbriefung,Kapitalismus,financial crisis,money functions,money capital,credit money,securitization,capitalism
    JEL: B14 E1 E4 E5 G01
    Date: 2018
  10. By: Powell, Jeffrey
    Abstract: In the rapid growth of the literature on financialisation, the term risks becoming meaningless (‘take x, add finance’). This contribution first reviews this literature, highlighting characteristic empirical features at the macroeconomic level and their variegation across different institutional contexts, then turning to meso- and micro-level multidisciplinary studies of how processes of financialisation have manifest in the transformed behaviour of firms, states and households, as well as in the changing mode of provision of public services and the appropriation of the commons. Marxist attempts to theorize the essences of financialisation are examined and found wanting. Two proposals are made in the spirit of advancing this project. First, financialisation as cyclical process must be disentangled from financialised capitalism as secular stage. Second, it is argued that the emergence of financialised capitalism as a new stage within mature capitalism is linked with the central role played by finance in the internationalisation of the circuit of production.
    Keywords: Financialisation; Financialised capitalism; internationalisation; global production networks; Marxist theory;
    JEL: B51 F36
    Date: 2018–05–22
  11. By: Julia M. Puaschunder (The New School, Department of Economics)
    Abstract: Climate justice accounts for the most challenging global governance goal. In the current post- COP21 Paris agreement climate change mitigation and adaptation efforts, the financialization of the ambitious goals has leveraged into a blatant demand. In the weighting of the burden of global warming, the benefits of a warming earth have been neglected since recently. Following the introduction of the gains from climate change, this article proposes a model to distribute the benefits of a warming earth in a fair way based on which countries are losing and which countries are winning from a warming earth until 2100. A macroeconomic cost-benefit analysis thereby aids to find the optimum solution on how to distribute climate change benefits and burden within society. When unidimensionally focusing on estimated GDP growth given a warmer temperature, over all calculated models assuming linear, prospect or hyperbolic gains and losses, the world will be gaining more than losing from a warming earth until 2100.
    Keywords: Climate Change, Climate Change Bonds, Climate Change Gains, Climate Change Losses, Climate Justice, Europe, Macroeconomic Modelling, TaxBonds-Transfer Strategy, Taxation, United States, World
    Date: 2018–04
  12. By: Adesete, Ahmed; Osinloye, Adelanfe; Abolade, Modupeoluwa; Nwachukwu, Christian; Onyejeaka, Emmanuel; Ojo, Dolapo; Ogungbemi, Tosin; Phillips, Martins
    Abstract: The thirlwall law is also called the balance of payment constraints model. The basic model is anchored on the dynamic Harrod foreign trade multiplier, which is also known as Thirlwall law or the 45 degree rule, developed through the pioneer efforts of Thirlwall (1979). On the assumption of constant relative prices and absence of capital flows, the basic dynamic Harrod foreign trade multiplier postulates that the rate of growth of a country can be predicted by considering the ratio of the rate of growth of a country's exports volume to its income elasticity of demand for imports (that is growth rate of exports volume divided by income elasticity of demand for imports can be used as a basis for predicting a country's growth rate). Thereby this law concludes that the growth rate of a country is balance of payment constrained. The broad objective of this study is to test for validity of Thirlwall law on the Nigeria economy that is to check if this law is applicable to the economy of Nigeria as a whole . The specific objectives of the study are: to check if there is long run balance of payment equilibrium. to examine if Nigeria economic growth is balance of payment constrained. To determine elasticity of import and export of Nigeria. This law has been tested in several countries including developed and developing countries of the world but very few study has been done on it in Nigeria. Therefore, this study seeks to test if the Thirlwall law is relevant to Nigeria economy. This study also aims to fill the knowledge gap in that: is Nigeria balance of payment constrained ? is there a long run balance of payment equilibrium in Nigeria ? what is the elasticity of import and export of Nigeria ? This study employs a recently developed autoregressive distributed lag (ARDL) cointegration procedure by Pesaran and Shin (1999) and Pesaran et al to estimate the import function. The Wald test statistic and graphical plotting of the actual growth rate and predicted growth rate is used as the test for thirlwall hypothesis. Augmented dickey fuller test is used to test for stationarity of the series and variables are differenced in a case of non-stationarity of the series.
    Keywords: Thirlwall law, Autoregressive distributed lag(ARDL), Balance of growth contrained model, balance of payment contrained growth model
    JEL: E0 E1 E6 F4 N0 O4
    Date: 2018–03
  13. By: Hlalefang Khobai (Department of Economics, Nelson Mandela University)
    Abstract: Knowledge of the direction of causality between electricity generation from renewables and economic growth is essential if energy policies which will support economic growth of the country are to be devised. This study explores the causal relationship between electricity generated from the renewables and economic growth in South Africa using carbon dioxide emissions, employment and capital as the additional variables. The study uses the Johansen co-integration model to detect the long run relationship between the variables and the Vector Error Correction Model (VECM) to determine the direction of causality. The findings from Johansen co-integration evidenced a long run relationship between electricity generated from renewables, economic growth, carbon dioxide emissions, employment and capital. The VECM revealed unidirectional causality running from electricity generated from renewables to economic growth. The findings indicate that electricity generation from renewables enhance economic growth. Therefore, the government should make appropriate efforts to select energy policies that do not negatively affect economic growth.
    Keywords: Electricity generation, carbon dioxide emissions, economic growth
    JEL: C32 D04 Q47 Q42 Q01
    Date: 2018–05

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