nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2018‒08‒13
eight papers chosen by
Karl Petrick
Western New England University

  1. Book review: Why Minsky matters, by L. Randall Wray, Princeton University Press, Princeton, NJ, 2015, £19.95 hardback, 288 pp. 9780691159126 By Goodhart, Charles
  2. Toward a New Microfounded Macroeconomics in the Wake of the Crisis By Eugenio Caverzasi; Alberto Russo
  3. Did Austerity Cause Brexit? By Fetzer, Thiemo
  4. Alta Desigualdad en América Latina: desde cuándo y por qué By Rodríguez Weber, Javier
  5. Le rendite improduttive e parassitarie: Claudio Napoleoni sul capitalismo italiano By Bellanca, Nicolo'
  6. Exporting murder: US deportations & the spread of violence By Ambrosius, Christian; Leblang, David
  7. 80 Economic Bestsellers before 1850: A Fresh Look at the History of Economic Thought By Erik S. Reinert; Kenneth Carpenter; Fernanda A. Reinert; Sophus A. Reinert
  8. Wealth inequality in the long run: A Schumpeterian growth perspective By Jakob B. Madsen; Antonio Minniti; Francesco Venturini

  1. By: Goodhart, Charles
    Abstract: Yes, Minsky does matter! He had an extraordinarily acute understanding of the interactions between banking, and finance more generally, on one side and the real economy on the other. As the author parades Minsky’s monetary analysis, partly in well-chosen quotations, I was continuously struck by the freshness, even when several decades have elapsed since his death in 1996, and the originality of his monetary analysis
    JEL: N0
    Date: 2017–01
  2. By: Eugenio Caverzasi; Alberto Russo
    Abstract: The Great Recession that followed the financial crisis of 2007 is not only the largest economic crisis after the Great Depression of the 1930s, it also signals a crisis of economics as a discipline. This is not only the consequence of the inadequacy of mainstream macroeconomics, and specically the DSGE workhorse model, to forecast such a huge event, or at least to detect the worrying tendencies towards it. Even more relevant is the choice to explicitly avoid the modelling of large crises (that for someone is a motivation for not attacking pre-crisis DSGE models focused on the analysis of small deviations from the steady-state), so denying the intrinsic nature of capitalism, a system that necessarily proceeds through cycles and (extended) crises. The replies of the DSGE approach to critics have led to extensions regarding for instance the role of financial frictions, heterogeneous agents, and bounded rationality (though typically in the form of quasi-rational expectations). The alternative paradigm of Agent-Based Macroeconomics can take into account all these elements at once within an evolutionary modelling framework based on heterogeneity and interaction, so capable to endogenously reproduce complex dynamics, from small fluctuations to large crises, due to innovation and industrial dynamics, rising inequality and financial instability, and so on. The integration between Agent-Based Macroeconomics and the (post-Keynesian) Stock-Flow Consistent approach represents a promising way for the future development of this research field.
    Date: 2018–08–01
  3. By: Fetzer, Thiemo (Department of Economics, University of Warwick)
    Abstract: Did austerity cause Brexit? This paper shows that the rise of popular support for the UK Independence Party (UKIP), as the single most important correlate of the subsequent Leave vote in the 2016 European Union (EU) referendum, along with broader measures of political dissatisfaction, are strongly and causally associated with an individual’s or an area’s exposure to austerity since 2010. In addition to exploiting data from the population of all electoral contests in the UK since 2000, I leverage detailed individual level panel data allowing me to exploit within-individual variation in exposure to specific welfare reforms as well as broader measures of political preferences. The results suggest that the EU referendum could have resulted in a Remain victory had it not been for a range of austerity-induced welfare reforms. Further, auxiliary results suggest that the welfare reforms activated existing underlying economic grievances that have broader origins than what the current literature on Brexit sug gests. Up until 2010, the UK’s welfare state evened out growing income differences across the skill divide through transfer payments. This pattern markedly stops from 2010 onwards as austerity started to bite.
    Keywords: Political Economy ; Austerity ; Globalization ; Voting ; EU
    JEL: H2 H3 H5 P16 D72
    Date: 2018
  4. By: Rodríguez Weber, Javier
    Abstract: In recent years, a dense and fruitful debate on the history of inequality in Latin America has developed. The central points of the debate are: 1) the origin of Latin American inequality; 2) the role of the region’s colonial legacy; 3) whether the continent went through a period of “levelling” between 1930 and 1980; and 4) the sustainability of the recent trend towards inequality reduction. In this context, this paper has two main objectives. First, to evaluate the merits and empirical base of different positions under debate. Second, and most important, to offer a brief history of income inequality in Latin America based on the best evidence available. Thus, the paper presents an analytical narrative centered on the linkages between peripheral capitalism -to which Latin American economies moved in nineteenth century- and the institutional heritage, much of it of colonial origin. The main argument is that both changes and persistent features of inequality can be explained by the way in which the price cycles of exports interact with a political-institutional framework.
    Keywords: Inequality, Latin America, Institutions, History, Peripheral capitalism
    JEL: B52 D63 N36 O1 O54
    Date: 2018–06–27
  5. By: Bellanca, Nicolo'
    Abstract: Claudio Napoleoni’s reflection on the problems of the Marxist theory of value is not separate from that on the Italian economy. In particular, during the Sixties, his reexamination of the concepts of productive activities and rents allow him to argue that the social and political hegemony of the redistributive coalitions constitutes the greatest structural weakness of Italy and the most important cause of inequalities and lack of inclusion.
    Keywords: Marxist theory of value; Productive labour; Political economy; Italian economy; Claudio Napoleoni
    JEL: B24 D72 E11
    Date: 2018–06–27
  6. By: Ambrosius, Christian; Leblang, David
    Abstract: Existing literature on cross-national variation in violence has paid little attention to the transnational transmission of crime. One such channel are the forced returns of migrants with a criminal record in their countries of temporary residence. Responding to this research gap, we study the effect of US deportations of convicts on levels of violent crime in deportees' countries of origin for a cross-country panel of up to 123 countries covering the years 2003 to 2015. We find a strong and robust effect of criminal deportations on homicide rates in countries of origin, that is to a large degree driven by deportations towards Latin America and the Caribbean. An additional inflow of ten deportees with a criminal history per 100,000 increases expected homicide rates by more than two. In addition to controlling for country-specific fixed effects, we provide evidence on a causal effect using an instrumental variable approach, that exploits spatial and time variation in migrant populations' exposure to state level immigration policies in the US.
    Keywords: Return Migration,Deportation,Homicide,Latin America
    Date: 2018
  7. By: Erik S. Reinert; Kenneth Carpenter; Fernanda A. Reinert; Sophus A. Reinert
    Abstract: 80 Economic Bestsellers before 1850: A Fresh Look at the History of Economic Thought
    Date: 2017–05
  8. By: Jakob B. Madsen; Antonio Minniti; Francesco Venturini
    Abstract: This paper extends Piketty’s analysis of the wealth-income ratio used as a proxy for wealth inequality, to allow for innovation. Drawing on a Schumpeterian (R&D-based) growth model that incorporates both tangible and intangible capital and using historical data for 21 OECD countries, we find the wealth-income ratio to be significantly and positively related to R&D intensity and the fixed capital investment ratio, but negatively related to income growth. Accounting for the innovation-induced counteracting growth-effect on the wealth-income ratio, we show that the net effect of R&D on wealth inequality is positive.
    Keywords: Wealth-income Ratio, Piketty's Second Law, Schumpeterian Growth.
    JEL: D30 E10 E20 O30 O40
    Date: 2018–07

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