nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2018‒09‒03
twelve papers chosen by
Karl Petrick
Western New England University

  1. Economic Analysis of Education in Post-War America: New Insights from Theodore Schultz and John Kenneth Galbraith By Alexandre Chirat; Charlotte Le Chapelain
  2. "Australian Government Bonds' Nominal Yields: An Empirical Analysis" By Tanweer Akram; Anupam Das
  3. Kaldor and Piketty's Facts: the Rise of Monopoly Power in the United States By Gauti Eggertsson; Jacob Robbins
  4. Understanding Brexit: Cultural Resentment versus Economic Grievances By Norris, Pippa
  5. Waste-to-energy innovations powering a circular economy By McCabe, Bernadette
  6. A Human Is Not a Resource By Ewan McGaughey; Centre for Business Research
  7. A Proof of Labor Theory of Value based on Marginalist Principle By Hiroshi Onishi
  8. Fragile New Economy: The Rise of Intangible Capital and Financial Instability By Ye Li
  9. Capabilities Accumulation and Development: What History Tells the Theory By Giovanni Dosi; Xiaodan Yu
  10. Waste not, warm not: poverty, hunger and climate change in a circular food system By Brooks, Karen
  11. The Double Crisis: In What Sense A Regional Problem? By Betsy Donald; Mia Gray; Centre for Business Research
  12. Beyond "Bounded Rationality": Behaviours and Learning in Complex Evolving Worlds By Giovanni Dosi; Marco Faillo; Luigi Marengo

  1. By: Alexandre Chirat (TRIANGLE, Université Lyon 2); Charlotte Le Chapelain (CLHDPP, BETA, Université Lyon 3)
    Date: 2018
  2. By: Tanweer Akram; Anupam Das
    Abstract: The short-term interest rate is the main driver of the Commonwealth of Australia government bonds' nominal yields. This paper empirically models the dynamics of government bonds' nominal yields using the autoregressive distributed lag (ARDL) approach. Keynes held that the central bank exerts decisive influence on government bond yields because the central bank's policy rate and other monetary policy actions determine the short-term interest rate, which in turn affects long-term government bonds' nominal yields. The models estimated here show that Keynes's conjecture applies in the case of Australian government bonds' nominal yields. Furthermore, the effect of the budget balance ratio on government bond yields is small but statistically significant. However, there is no statistically discernable effect of the debt ratio on government bond yields.
    Keywords: Government Bond Yields; Long-Term Interest Rate; Monetary Policy; Australian Government Bond Market; Commonwealth of Australia
    JEL: E43 E50 E60 G10 G12 O16
    Date: 2018–08
  3. By: Gauti Eggertsson (Brown University); Jacob Robbins (Brown University)
    Abstract: The macroeconomic data of the last thirty years has overturned at least two of Kaldor's famous stylized growth facts: constant interest rates, and a constant labor share. At the same time, the research of Piketty and others has introduced several new and surprising facts: an increase in the financial wealth-to-output ratio in the US, an increase in measured Tobin's Q, and a divergence between the marginal and the average return on capital. In this paper, we argue that these trends can be explained by an increase in market power and pure profits in the US economy, i.e., the emergence of a non-zero-rent economy, along with forces that have led to a persistent long term decline in real interest rates. We make three parsimonious modifications to the standard neoclassical model to explain these trends. Using recent estimates of the increase in markups and the decrease in real interest rates, we show that our model can quantitatively match these new macroeconomic facts.
    Date: 2018
  4. By: Norris, Pippa (Harvard U)
    Abstract: This study considers the evidence for 'demand-side' theories seeking to explain the outcome of the Brexit referendum and subsequent divisions in UK politics. Economic theories suggest that the Leave decision was driven mainly by the 'left-behinds' in jobs or wages, such as those living in struggling communities in the North of England, the Midlands, and Wales. By contrast cultural accounts emphasize political attitudes and values, including long-term British suspicion about the European Union project, public disgust with the political class at Westminster, anxiety about the effects of the refugee crisis and migration from other EU countries, and opposition to the government's austerity cuts. These theories can also be regarded as complimentary rather than rivals, for example if economic deprivation catalyzed resentment about immigrants and the rejection of open borders. To examine these issues, Part I sets out the electoral context and historical background in the run up to Brexit--and its implications for party competition in the UK. Drawing upon a larger book-length study, Part II sets out the arguments based on economic and cultural theories about the British electorate. Part III describes the evidence from the British Election Study panel surveys, which allows us to examine the factors dividing supporters in the Leave and Remain camps in the 2016 Brexit referendum, as well as those predicting support for UKIP from 2015-17. Part IV examines the impact of demographic control factors like age and sex, indicators of economic grievances, and the cultural profile of voters in their authoritarian and populist values, as well as their attitudes towards the Europe Union, immigration, and left-right ideology. The conclusion in Part V considers developments since Brexit and their implications for the future of populism in the UK. The main advocate of Brexit, UKIP, succeeded in attaining this goal, but then failed to achieve a decisive break through as a parliamentary party. Yet authoritarian-populism remains alive and well in post-Brexit Britain, absorbed into the bloodstream of the body politic, disrupting and dividing both major parties.
    Date: 2018–07
  5. By: McCabe, Bernadette
    Abstract: The benefits of better food waste management extend to community-building, liveability and poverty reduction in cities. Waste-to-energy (WtE) technologies provide elegant solutions for food waste management with tangible and usable products including energy and fertiliser, and attractive environmental and social benefits. When combined with food security they provide a powerful case for city and rural communities alike. The majority of waste-to-energy facilities in the world are in Europe, Japan, and the US. In developing countries such as African nations, a very limited share of waste is recovered and reused, and only major or capital cities have waste management systems. In a number of these countries the use of waste to generate electricity could have a significant impact. Waste can make a very high contribution to providing electricity to citizens and alleviating energy poverty, especially in countries with little access to electricity and low electricity consumption per capita. For isolated, rural and less wealthy populations, the benefits of an effective circular economy are even more direct than for a Western urban population. The production of biogas from organic waste via anaerobic digestion is one such technology that fits perfectly in a circular economy and engenders the energy independence needed by these communities. This case study presentation gives an overview of the different waste-to-energy technology options that exist, and highlights some key innovations across the globe. A particular focus is novel approaches that have been used in developing countries, and the impacts on food loss and waste, livelihoods and food security.
    Keywords: Resource /Energy Economics and Policy
    Date: 2016–08–29
  6. By: Ewan McGaughey; Centre for Business Research
    Abstract: The language of "human resource management" treats people as a means to an end. Three core tenets of human resource literature are that it is desirable to have (1) labour "flexibility" and "mobility" in a peripheral workforce, (2) individual (not social) responsibility for employment searching, and (3) a manager’s right to manage, without collective accountability. This article explores the cutting edge evidence, which show human resource theory harms productivity and human development. It explores the effects of "HR" in the UK, EU and international regulation on atypical work, full employment, and union voice. Where human resource beliefs have pervaded the most, the outcomes are the worst: lower productivity, higher unemployment, more inequality, less growth. To advance prosperity, economic risks must be distributed to the organisations best placed to bear them, people must have security to plan for the future, and people must have real votes at work through collective bargaining and corporate governance. Many people who themselves work in "HR" strongly disagree with the essential elements of their discipline. They support equality, security and democracy at work. Just as international law once affirmed that "labour is not a commodity", for social justice in the 21st century there must be a conviction that a human is not a resource. "HR" must change in name and substance, to advance human development and human rights.
    Keywords: Human Resource Management, Labour Is Not a Commodity, Social Justice, Job Security, Full Employment, Trade Unions, Votes at Work, Productivity, Human Rights
    JEL: J01 K31 L21 L22 L52 P1 P16 F16
    Date: 2018–03
  7. By: Hiroshi Onishi (Faculty of Economics, Keio University)
    Abstract: Because anti-Marxist's criticism against Fundamental Marxian Theorem(FMT) is based on an assertion that this proof can be understood as a "sun-power exploitation,"if we assume, for example, "Sun-power Theory of Value", we should prove not only exploitation but also Labor Theory of Value itself. Therefore, this paper aims to prove Labor Theory of Value mathematically by focusing on the historically conditional proportionality between labor input and amount of products which is assumed in Labor Theory of Value. By this proof of the conditional proportionality, we show that marginalist principle does not disturb Labor Theory of Value in capitalism at all. Furthermore, marginalist principle is important to show the labor process as a subjective optimization process which is not by the sun but only by human beings. In this way, we use anti-Marxist's marginal principle to object anti-Marxist criticism against Labor Theory of Value.
    Keywords: Fundamental Marxian Theorem, labor theory of value, marginalist principle, constant return to labor, machine-based production system
    JEL: B13 B14 B24
  8. By: Ye Li (The Ohio State University)
    Abstract: This paper studies financial instability in an economy where growth is driven by intangible investment. Firms' intangible investment creates new productive capital. Once created, capital can be sold to financial intermediaries. Since intangible investment is not pledgeable, firms carry cash, which is inside money issued by intermediaries (short-term safe debt). In good times, well capitalized intermediaries push up the price of capital. This motivates firms to create more capital, but to do so, they must build up cash holdings. As firms' money demand expands, the yield on inside money (i.e., intermediaries' debt cost) declines, so intermediaries increase leverage and push up capital price even further. This inside money channel generates several features shared with the U.S. economy before the Great Recession: rising corporate cash holdings, financial intermediaries growing through leverage, increasing asset prices, and declining interest rate. The model also generates endogenous risk accumulation: a longer period of boom and expansion of the financial sector predict a more severe crisis. In crises, the spiral flips, leading to sudden deleveraging of intermediaries, asset price collapse, and investment contraction.
    Date: 2018
  9. By: Giovanni Dosi; Xiaodan Yu
    Abstract: In this contribution we offer a broad overview of the technological, institutional and policy dynamics associated with the great transformation - borrowing Karl Polanyi (1944) expression - leading from traditional, mostly rural, economies to economies driven by industrial activities (and nowadays also advanced services), able to systematically learn how to implement and eventually how to generate new ways of producing and new products under conditions of dynamic increasing returns. Such a `great transformation' entails a major process of accumulation of knowledge and capabilities, both at the levels of individuals and organizations. Certainly, part of such capabilities builds on education and formally acquired skills (what in the economists' jargon often goes under the heading of `human capital'). However, at least equally important, capabilities have to do with the problem-solving knowledge embodied in organizations - concerning e.g. production technologies, the technical and social division of labor, labor relations as well as `dynamic capabilities' of search and learning. In turn, the rates and directions of knowledge accumulation during the catch-up process and the ensuing effects upon the patterns of production and trade are shaped by the economic and institutional framework in which such processes are embedded.
    Keywords: catching-up, capability accumulation, innovation, development, Great Transformation
    Date: 2018–08–26
  10. By: Brooks, Karen
    Abstract: Reduction of food loss and waste has received increased attention in recent years. Several spikes in food prices since 2008 have highlighted the hardship that poor people, and especially poor children, face when food is priced out of their reach. With as many as 800 million people still undernourished, of whom about 160 million are stunted young children, the fact that as much as 30% of food is lost or wasted appears unconscionable. Surely the loss could be recovered and channelled towards the hungry! Much of the discussion of food loss and waste has been predicated on this assumption, with the related conclusion that better management and distribution of existing supplies could substitute for investment in increased productive capacity. The assumption is in part borne out by empirical evidence but, as is often the case, the full picture is more complex. Moreover, discussion of food loss and waste in terms of feeding the hungry misses the environmental benefits associated with better management of existing production. Food systems that lose and waste less will generate fewer greenhouse gases and contribute less to global warming. The economics of reduced loss and waste creates both winners and losers, but the environmental calculus has only winners. The policy and institutional arrangements of food systems that generate less loss and waste would look quite different from our present systems.
    Keywords: Environmental Economics and Policy, Food Security and Poverty
    Date: 2016–08–29
  11. By: Betsy Donald; Mia Gray; Centre for Business Research
    Abstract: We are now facing Sayer’s 'diabolical double crisis' - which encompasses both a deep financial crisis and an environmental one. The scale, scope and nature of this double-crisis is downplayed in the regional studies literature, much of which still focuses on innovative growth models often divorced from broader social and ecological contexts. To help solve both crises we call for regional studies to explore new models that allow us to focus on the most important issues of our time. We illustrate this by focusing on the contradictions in the waste produced by contemporary regional economies - waste of abundance, labour, and resources.
    Keywords: inequality, climate change, precarious labour, waste, wealth, redistribution
    JEL: D63 E21 E24 O44
    Date: 2018–09
  12. By: Giovanni Dosi; Marco Faillo; Luigi Marengo
    Abstract: This work challenges the very notion of bounded rationality as dangerously too near to some "unbounded rationality" used as a benchmark. Should we assume that there is an "unbounded" rationality as a benchmark? Should one start, in order to describe and interpret human behaviour, from a model which assumes that we, human beings, have complete and well-defined knowledge of our preferences, all possible states of the world, all possible actions (our "technologies"), the mappings among them, and then look for possible "bounds" and "biases"? Our answer is negative. Rather, the question should be: how do human agents and organizations thereof actually behave in complex and changing environments? Answering this question, we suggest, entails also a significant departure from what is now accepted as behavioural economics, often meant as the analysis of more or less significant deviations from the "Olympic rationality". On the contrary, we suggest, human beings and human organizations behave quite distinctively from the prescriptive model derived from the axioms of rationality.
    Keywords: bounded rationality, heuristics, cognition, memory
    Date: 2018–08–26

This nep-pke issue is ©2018 by Karl Petrick. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.