nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2018‒06‒11
ten papers chosen by
Karl Petrick
Western New England University

  1. "Wage Employment and the Prospects of Women's Economic Empowerment: Some Lessons from Ghana and Tanzania" By Thomas Masterson; Ajit Zacharias
  2. An AB-SFC Model of Induced Technical Change along Classical and Keynesian Lines. By Lucrezia Fanti
  3. Balance-of-payments-constrained Cyclical Growth with Distributive Class Conflicts and Productivity Dynamics By Nishi, Hiroshi
  4. Micro and macro policies in the Keynes +Schumpeter evolutionary models By Giovanni Dosi; Mauro Napoletano; Andrea Roventini; Tania Treibich
  5. Household wealth structures and position in the income distribution – econometric analysis for the USA, 1989-2013 By Hanna Karolina Szymborska
  6. Theoretical and Methodological Context of (Post)-Modern Econometrics and Competing Philosophical Discourses for Policy Prescription By Jackson, Emerson Abraham
  7. Alexandre Lamfalussy and the monetary policy debates among central bankers during the Great Inflation By Ivo Maes; Piet Clement
  8. A Dynamic Analysis of Demand and Productivity Growth in a Two-sector Kaleckian Model By Nishi, Hiroshi
  9. The U.S.-China Trade Balance and the Theory of Free Trade: Debunking the Currency Manipulation Argument By Anwar Shaikh; Isabella Weber
  10. "Twenty Years after the Fall of the Berlin Wall: Rethinking the Role of Money and Markets in the Global Economy" By W. Lee Hoskins; Walker F. Todd

  1. By: Thomas Masterson; Ajit Zacharias
    Abstract: In this policy note, Thomas Masterson and Ajit Zacharias address the nexus between wage employment, consumption poverty, and time deficits in the context of Ghana and Tanzania. Based on a recently completed research project supported by the Hewlett Foundation, the authors apply the Levy Institute Measure of Time and Consumption Poverty (LIMTCP) to estimate whether the jobs that are likely to be available to potential employment-seeking, working-age individuals in consumption-poor households--who are predominantly female in both countries--can serve as vehicles of "economic empowerment." They investigate this question using two indicators of empowerment, asking (1) whether the individual would be able to move their household to at least a minimal level of consumption via the additional earnings from their new job and (2) whether the individual would be deprived of the time required to meet the minimal needs of care for themselves (personal care), their homes, and their dependents.
    Date: 2018–05
  2. By: Lucrezia Fanti (Sapienza University of Rome (IT))
    Abstract: This paper introduces the classical idea about the so-called `directed' and `induced' technical change (ITC) within a Keynesian demand-side and evolutionary endogenous growth model in order to analyze the interplay among technical change, long-run economic growth and functional income distribution. An ITC process is analyzed within an Agent-Based Stock-Flow Consistent (AB-SFC) model, wherein credit-constrained heterogeneous firms choose both the intensity and the direction of the innovation towards a labor- or capital-saving choice of technique. In the longrun, the model reproduces the so-called `Kaldor stylized facts' (i.e. with a purely labor-saving technical change), however during the transitional phase the model shows a labor-saving/capitalusing innovation pattern, as the aggregate output-capital ratio decreases until it stabilizes in the long-run, as well as declining labor share for long time periods and we can ascribe these evidences mainly to the directed technical change process. In order to stress the e ective role of the innovation bias on the model dynamics, we compare the baseline scenario with a `counterfactual' scenario wherein a `neutral ' technical progress is at work.
    Keywords: Agent-Based Macroeconomics, Stock-Flow Consistent Models, Induced Technical Change, Directed Innovation, Choice of Techniques, Labor Share, Growth and Distribution.
    JEL: E24 E25 O30 O41
    Date: 2018–05
  3. By: Nishi, Hiroshi
    Abstract: This study builds a dynamic balance-of-payments-constrained (BOPC) model that incorporates the endogenous determination of the economic growth rate, conflictive wage/price distribution, and employment rate. Following the Kaleckian--Marxian literature, wages and commodity prices are determined by the reserve army effect and employment is determined by the reserve army creation effect. The relative strength of these two effects generates different outcomes for the transitional dynamics and comparative statics analysis. In particular, the model shows stability, instability, and a cyclical nature, the latter of concurs with the evidence reported by previous empirical studies.
    Keywords: Balance-of-payments-constrained model, Conflictive income distribution, Cyclical growth
    JEL: E12 E24 E32 F43
    Date: 2018–04
  4. By: Giovanni Dosi (Laboratory of Economics and Management); Mauro Napoletano (Observatoire français des conjonctures économiques); Andrea Roventini (Laboratory of Economics and Management (LEM)); Tania Treibich (Maastricht University)
    Abstract: Abstract This paper presents the family of the Keynes+Schumpeter (K+S, cf. Dosi et al, J Econ Dyn Control 34 1748–1767 2010, J Econ Dyn Control 37 1598–1625 2013, J Econ Dyn Control 52 166–189 2015) evolutionary agent-based models, which study the effects of a rich ensemble of innovation, industrial dynamics and macroeconomic policies on the long-term growth and short-run fluctuations of the economy. The K+S models embed the Schumpeterian growth paradigm into a complex system of imperfect coordination among heterogeneous interacting firms and banks, where Keynesian (demand-related) and Minskian (credit cycle) elements feed back into the meso and macro dynamics. The model is able to endogenously generate long-run growth together with business cycles and major crises. Moreover, it reproduces a long list of macroeconomic and microeconomic stylized facts. Here, we discuss a series of experiments on the role of policies affecting i) innovation, ii) industry dynamics, iii) demand and iv) income distribution. Our results suggest the presence of strong complementarities between Schumpeterian (technological)
    Keywords: Keynes; Schumpeter; Evolutionary models
    Date: 2017–01
  5. By: Hanna Karolina Szymborska (Open University)
    Abstract: This paper empirically investigates the relationship between household wealth composition and income inequality in the USA between 1989-2013. Interactions between wealth accumulation and income are a vital driver of inequality in capitalist economies. But not enough is known about which types of wealth are more conducive to sustained improvements in household’s position in the income distribution. This paper contributes to the literature by estimating how accumulation of different forms of wealth influences income inequality. Using linear regression analysis and non-parametric median slope estimation with data from the U.S. Survey of Consumer Finances between 1989-2013, we find a statistically significant relationship between household balance sheet composition and position in the distribution of income relative to the median. Greater share of primary residence and low- yielding transaction accounts in total asset portfolio, and higher contribution of unsecured debt to overall debt holdings are found to push households away from the median towards the bottom of the income distribution. Higher relative accumulation of business equity, high-yielding financial investment assets, secured debt, retirement and insurance assets, and other property are found to pull households further away from the median towards the top of the income distribution. The latter effects are found not to be shared equally across gender, racial, and intergenerational groups.
    Keywords: Income inequality; Households Wealth; Linear regression; Non-parametric estimation
    JEL: C23 D14 D31 J15 J16
    Date: 2018–06
  6. By: Jackson, Emerson Abraham
    Abstract: This research article was championed as a way of providing discourses pertaining to the concept of "Critical Realism (CR)" approach, which is amongst many othe forms of competing postmodern philosophical concepts for the engagement of dialogical discourses in the area of established econometric methodologies for effective policy prescription in the economic science discipline. On the the whole, there is no doubt surrounding the value of empirical endeavours in econometrics to address real world economic problems, but equally so, the heavy weighted use and reliance on mathematical contents as a way of justifying its scientific base seemed to be loosing traction of the intended focus of economics when it comes to confronting real world problems in the domain of social interaction. In this vein, the construction of mixed methods discourse(s), which favour that of CR philosophy is hereby suggested in this article as a way forward in confronting with issues raised by critics of mainstream economics and other professionals in the postmodern era.
    Keywords: Theoretical,Methodological Intervention,Critical Realism,Postmodern,Econometrics
    JEL: A12 B50 C18
    Date: 2018
  7. By: Ivo Maes (National Bank of Belgium and Robert Triffin Chair, Université catholique de Louvain and ICHEC Brussels Management School, Boulevard de Berlaimont 14, 1000 Brussels, Belgium); Piet Clement (Bank for International Settlements.)
    Abstract: The 1970s were a turbulent period in postwar monetary history. This paper focuses on how central bankers at the Bank for International Settlements (BIS), especially Alexandre Lamfalussy, the BIS’s Economic Adviser, responded to the Great Inflation. The breakdown of Bretton Woods forced central bankers to look for new monetary policy strategies as the exchange rate lost its central role. Lamfalussy, in his early years a Keynesian in favour of discretionary policies, moved to a "conservative Keynesian" position, acknowledging that a medium term orientation and the credibility of monetary policy were important to break inflationary expectations. However, Lamfalussy never moved to “monetarist” positions. Lamfalussy certainly acknowledged that monetary targets could reinforce the credibility and independence of monetary policy. However, he rejected mechanical rules. In essence he aimed for a middle position: rules applied with a pragmatic sense of discretion. In the early 1980s, with the rise of financial innovations, Lamfalussy would stress even more the limitations of monetary targeting. His focus turned increasingly to systemic financial stability risks, preparing the ground for the macroprudential approach of the BIS. In Lamfalussy's view, central banking remained an art, not a science.
    Keywords: Great Inflation, monetary policy, central banking, Alexandre Lamfalussy, BIS
    JEL: B22 E58 F44
    Date: 2018–04
  8. By: Nishi, Hiroshi
    Abstract: This study extends a two-sector Kaleckian model of growth and income distribution by incorporating the dynamics of labour productivity growth. The economy is composed of investment goods and consumption goods producing sectors, with the sectoral demand and productivity growth interaction dynamically formalized. The study analyses the conditions for the cyclical demand and productivity growth phenomena in a two-sector economy. The model reveals that each sector may present a different response in capacity utilization rate to a change in sectoral income distribution. These phenomena are specific to two-sector models, and cannot be observed with a conventional aggregate growth model.
    Keywords: Kaleckian model, Two-sector economy, Effective demand, Productivity growth
    JEL: E25 E32 O41
    Date: 2018–04
  9. By: Anwar Shaikh (Department of Economics, New School for Social Research); Isabella Weber (Institute of Management Studies, Goldsmiths University of London)
    Abstract: The U.S.-China trade imbalance is commonly attributed to a Chinese policy of currency manipulation. However, empirical studies failed to reach consensus on the degree and kind of RMB misalignment. We argue that this is not a consequence of poor measurement but of theory. The conventional principle of comparative advantage suggests real exchange rates will adjust so as to balance trade. Therefore, the persistence of trade imbalances tend to be interpreted as arising from currency manipulation. In contrast, the Smithian-Harrodian theory explains trade imbalances as the outcome of free trade and sees unequal real competitiveness as the root cause of the U.S.-China trade imbalance.
    JEL: F10 F31 F32
    Date: 2018–05
  10. By: W. Lee Hoskins; Walker F. Todd
    Abstract: Many of the hopes arising from the 1989 fall of the Berlin Wall were still unrealized in 2010 and remain so today, especially in monetary policy and financial supervision. The major players that helped bring on the 2008 financial crisis still exist, with rising levels of moral hazard, including Fannie Mae, Freddie Mac, the too-big-to-fail banks, and even AIG. In monetary policy, the Federal Reserve has only just begun to reduce its vastly increased balance sheet, while the European Central Bank has yet to begin. The Dodd-Frank Act of 2010 imposed new conditions on but did not contract the greatly expanded federal safety net and failed to reduce the substantial increase in moral hazard. The larger budget deficits since 2008 were simply decisions to spend at higher levels instead of rational responses to the crisis. Only an increased reliance on market discipline in financial services, avoidance of Federal Reserve market interventions to rescue financial players while doing little or nothing for households and firms, and elimination of the Treasury's backdoor borrowings that conceal the real costs of increasing budget deficits can enable the American public to achieve the meaningful improvements in living standards that were reasonably expected when the Berlin Wall fell.
    Keywords: Too Big To Fail; Moral Hazard; Section 13(3); Credit Allocation; Domestic Price Level Stability
    JEL: E42 E52 E58 E61 E63
    Date: 2018–06

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