nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2018‒09‒10
thirteen papers chosen by
Karl Petrick
Western New England University

  1. Neutral Technical Progress and the Measure of Value: along the Kaldor-Kennedy line By Up Sira Nukulkit
  3. The changing dynamics of short-run output adjustment By Korkut Alp Erturk; Ivan Mendieta-Munoz
  4. "The Sources and Methods Used in the Creation of the Levy Institute Measure of Economic Well-Being for the United States, 1959-2013" By Ajit Zacharias; Thomas N. Masterson; Fernando Rios-Avila
  5. "Twenty Years of the German Euro Are More than Enough" By Joerg Bibow
  6. The role of Fairtrade certification for wages and job satisfaction of plantation workers. Revised version By Krumbiegel, Katharina; Maertens, Miet; Wollni, Meike
  7. "Quality of Match for Statistical Matches Using the American Time Use Survey 2013, the Survey of Consumer Finances 2013, and the Annual Social and Economic Supplement 2014" By Fernando Rios-Avila
  8. Inequality and finance in a rent economy By Botta, Alberto; Caverzasi, Eugenio; Russo, Alberto; Gallegati, Mauro; Stiglitz, Joseph E.
  9. The Postwar British Productivity Failure By Crafts, Nicholas
  10. Is Envy Harmful to a Society’s Psychological Health and Wellbeing? A Longitudinal Study of 18,000 Adults By Mujcic, Redzo; Oswald, Andrew J.
  11. “Left behind?†Financialization and income inequality between the affluent, middle class, and the poor By Allen Hyde
  12. Fiscal Policy, State Building and Economic Development By Addison, Tony; Niño†Zarazúa, Miguel; Pirttilä, Jukka
  13. Is there a cult of statistical significance in Agricultural Economics? By Rommel, Jens; Weltin, Meike

  1. By: Up Sira Nukulkit
    Abstract: In this paper, I investigate the question of "the effect of progress upon distribution" based on the analyses of Hicks, Robinson, Harrod, Salter, Kaldor, Samuelson, and Kennedy. The paper aims to address a neglected and controversial theoretical argument on neutral technical progress related to the measure of value that preceded and then continued to the period of the Cambridge Capital Theory Controversy. I focus on Kennedy's writings and his solutions to the complications between the measure of value and technical progress. Important intuitions behind the measure of value are crucial to the formulation of neutral technical progress in both the post-Keynesian and the neoclassical-Keynesian endogenous growth models. The paper concludes with mathematical illustrations of neutral technical progress theories.
    Keywords: Neutral balanced growth, Capital controversy, Growth and distribution JEL Classification: B22, 033, E12
    Date: 2018
  2. By: Giovanni Scarano
    Abstract: Since 2013 various eminent mainstream economists have proposed reviving the doctrine of “secular stagnation”. According to these authors, the only explanation for this new trend could be a negative Wicksellian natural rate of interest, produced by an excess of saving over investment at any positive interest rate. But the idea that the real world economy has entered into a new stagnation trend is really the other side of the coin in explaining the extraordinary long-term growth that characterised the aftermath of World War II. This peculiar growth period has been the main research objective of Régulation Theory, which found accumulation regimes and corresponding modes of regulation as its major determinants. In the paper the theoretical explanations of the new secular stagnation theory are compared with those of Régulation theory and with the original Marxist approaches that initially inspired the French régulation theorists.
    Keywords: Equilibrium Interest Rate, Business Cycles, Crisis, Rate of Profit, Profitability
    JEL: B51 E11 E12 E32 E43
    Date: 2018–09
  3. By: Korkut Alp Erturk; Ivan Mendieta-Munoz
    Abstract: Much of macroeconomic theorizing rests on assumptions that define the short-run output adjustment of a mass-production economy. The demand effect of investment on output, assumed much faster than its supply effect, works through employment expanding pari passu with changes in capacity utilization while productivity remains constant. Using linear Structural VAR and Time-Varying Parameter Structural VAR models, we document important changes in the short-run output adjustment in the USA. The link between changes in employment, capacity utilization and investment has weakened, while productivity became more responsive following demand shifts caused by investment since the early 1990s.
    Keywords: Changes in short-run output adjustment, capacity utilization, employment, mass-production economy, post-Fordism. JEL Classification: B50, E10, E32
    Date: 2018
  4. By: Ajit Zacharias; Thomas N. Masterson; Fernando Rios-Avila
    Abstract: This paper documents the sources of data used in the construction of the estimates of the Levy Institute Measure of Economic Wellbeing (LIMEW) for the years 1959, 1972, 1982, 1989, 1992, 1995, 2000, 2001, 2004, 2007, 2010, and 2013. It also documents the methods used to combine the various sources of data into the synthetic dataset used to produce each year's LIMEW estimates.
    Keywords: Levy Institute Measure of Economic Wellbeing (LIMEW); Statistical Matching; Synthetic Datasets
    JEL: D31 C10 H23 I30
    Date: 2018–08
  5. By: Joerg Bibow
    Abstract: This paper reviews the performance of the euro area since the euro's launch 20 years ago. It argues that the euro crisis has exposed existential flaws in the euro regime. Intra-area divergences and the corresponding buildup of imbalances had remained unchecked prior to the crisis. As those imbalances eventually imploded, member states were found to be extremely vulnerable to systemic banking problems and abruptly deteriorating public finances. Debt legacies and high unemployment continue to plague euro crisis countries. Its huge current account surplus highlights that the euro currency union, toiling under the German euro and trying to emulate the German model, has become very vulnerable to global developments. The euro regime is flawed and dysfunctional. Europe has to overcome the German euro. Three reforms are essential to turn the euro into a viable European currency. First, divergences in competitiveness positions must be prevented in future. Second, market integration must go hand in hand with policy integration. Third, the euro is lacking a safe footing for as long as the ECB is missing a federal treasury partner. Therefore, establishing the vital treasury/central bank axis that stands at the center of power in sovereign states is essential.
    Keywords: Euro; Euro Crisis; Banking Crisis; Debt Crisis; Monetary Policy; Lender of Last Resort; Fiscal Policy
    JEL: E30 E44 E58 E61 E62 F34
    Date: 2018–08
  6. By: Krumbiegel, Katharina; Maertens, Miet; Wollni, Meike
    Abstract: Worker welfare and employment conditions in the agri-food producing and processing sectors in the global south have become an increasing concern for consumers. Sustainability standards, such as Fairtrade, play an important role in agri-food markets of horticultural produce and may be a tool to address these concerns. However, so far the implications of Fairtrade certification for extrinsic and intrinsic employment factors of hired labor on large-scale plantations remain hardly understood. In this paper we assess its effect on workers’ hourly wages and their level of job satisfaction with primary survey data from 325 randomly sampled workers from eight different export-oriented pineapple companies in Ghana. We apply a linear, linear mixed model and instrumental variable approach to take into account the multilevel characteristics of our data and possible selection bias. Our findings show that both hourly wages and job satisfaction are indeed higher on Fairtrade certified plantations. Factors of increased job satisfaction are likely driven by higher wages, permanent employment contracts, training opportunities, company services such as medical care and paid leave as well as established labor unions on Fairtrade certified plantations.
    Keywords: Agribusiness, Farm Management, Labor and Human Capital
    Date: 2017–07–04
  7. By: Fernando Rios-Avila
    Abstract: This paper describes the quality of the statistical matching between the March 2014 supplement to the Current Population Survey (CPS) and the 2013 American Time Use Survey (ATUS) and Survey of Consumer Finances (SCF), which are used as the basis for the 2013 Levy Institute Measure of Economic Well-Being (LIMEW) estimates for the United States. In the first part of the paper, the alignment of the datasets is examined. In the second, various aspects of the match quality are described. The results indicate that the matches are of high quality, with some indication of bias in specific cases.
    Keywords: Statistical Matching; American Time Use Survey; Survey of Consumer Finances; Levy Institute Measure of Economic Well-Being (LIMEW); United States
    JEL: C14 C40 D31
    Date: 2018–09
  8. By: Botta, Alberto; Caverzasi, Eugenio; Russo, Alberto; Gallegati, Mauro; Stiglitz, Joseph E.
    Abstract: The present paper aims at offering a contribution to the understanding of the interactions between finance and inequality. We investigate the ways through which income and wealth inequality may have influenced the development of modern financial systems in advanced economies, the US economy first and foremost, and how modern financial systems have then fed back on income and wealth distribution. We focus in particular on securitization and on the production of complex structured financial products. We analyse this topic by elaborating a simulated hybrid Agent-Based Stock-Flow-Consistent (AB-SFC) macroeconomic model, encompassing heterogeneous (i.e. households) and aggregate sectors. Our findings suggest that the increase in economic growth, favoured by the higher level of credit supply coming with securitization, may determine a more unequal and financially unstable economic system.
    Keywords: Inequality; securitization; rent economy; financial crisis; AB model; SFC approach
    Date: 2018–06–01
  9. By: Crafts, Nicholas
    Abstract: British productivity growth disappointed during the early postwar period. This reflected inadequate investment in equipment and skills but also entailed inefficient use of inputs. Weak management, dysfunctional industrial relations, and badly-designed economic policy were all implicated. The policy framework was partly the result of seeking low unemployment through wage restraint by appeasement of organized labour. A key aspect was weak competition. This exacerbated corporategovernance and industrial-relations problems in the British ‘variety of capitalism’ which sustained low effort bargains and managerial incompetence. Other varieties of capitalism were better placed to achieve fast growth but were infeasible for Britain given its history.
    Keywords: Financial Economics
    Date: 2017–11–11
  10. By: Mujcic, Redzo; Oswald, Andrew J.
    Abstract: Nearly 100 years ago, the philosopher and mathematician Bertrand Russell warned of the social dangers of widespread envy. One view of modern society is that it is systematically developing a set of institutions -- such as social media and new forms of advertising -- that make people feel inadequate and envious of others. If so, how might that be influencing the psychological health of our citizens? This paper reports the first large-scale longitudinal research into envy and its possible repercussions. The paper studies 18,000 randomly selected individuals over the years 2005, 2009, and 2013. Using measures of SF-36 mental health and psychological well-being, four main conclusions emerge. First, the young are especially susceptible. Levels of envy fall as people grow older. This longitudinal finding is consistent with a cross-sectional pattern noted recently by Nicole E. Henniger and Christine R. Harris, and with the theory of socioemotional regulation suggested by scholars such as Laura L. Carstensen. Second, using fixed-effects equations and prospective analysis, the analysis reveals that envy today is a powerful predictor of worse SF-36 mental health and well-being in the future. A change from the lowest to the highest level of envy, for example, is associated with a worsening of SF-36 mental health by approximately half a standard deviation (p <0.001). Third, no evidence is found for the idea that envy acts as a useful motivator. Greater envy is associated with slower -- not higher -- growth of psychological well-being in the future. Nor is envy a predictor of later economic success. Fourth, the longitudinal decline of envy leaves unaltered a U-shaped age pattern of well-being from age 20 to age 70. These results are consistent with the idea that society should be concerned about institutions that stimulate large-scale envy.
    Keywords: Financial Economics
    Date: 2018–02–02
  11. By: Allen Hyde
    Abstract: There is increasing scholarly evidence that financialization has contributed to rising income inequality, especially by concentrating income among the affluent and rich. There is less empirical research examining who is losing out to the affluent. This paper fills this gap by examining how three measures of financialization (finance, insurance and real estate or FIRE employment; credit expansion; and financial crises) affect upper-tail (measured as the ratio between the 90th and 50th income percentiles) and lower-tail (measured as the ratio between the 50th and 10th income percentiles) income inequality. Using concepts from economic sociology and the social stratification literature, I develop a perspective that links financialization to income inequality by creating more unequal market incomes while simultaneously reducing redistribution and social transfers. I analyze disposable household income data (after taxes and transfers) from the Luxembourg Income Study (LIS) and other public sources like the OECD from 16 affluent nations between the years 1980 to 2010, and I use an unbalanced panel design due to LIS data coverage. I find that both the middle class and poor are hurt by financialization (strongest evidence tied to FIRE employment); however, incomes of the poor are most sensitive to financialization.
    Date: 2018–08
  12. By: Addison, Tony; Niño†Zarazúa, Miguel; Pirttilä, Jukka
    Abstract: This article presents a synopsis of the contextual conditions, factors and challenges under which the recent evolution of tax systems has taken place, as an introduction to this United Nations University†World Institute for Development Economics Research Special Issue. The article, as the studies in this collection, gives especial emphasis to the role natural endowments, political economy, social structure and history, and the interplay between politics and tax revenues. These are relevant issues, considering that the Millennium Development Goals and now the Sustainable Development Goals have placed fiscal policy, and tax policy and revenue mobilisation in particular, at the centre of national and international development efforts. Delivering on the Sustainable Development Goals will require a level of state revenue mobilisation capacity in many ways unprecedented in the history of development policy.
    Keywords: Governance,
    Date: 2018
  13. By: Rommel, Jens; Weltin, Meike
    Abstract: In an analysis of articles published in ten years of the American Economic Review, Deirdre McCloskey and Stephen Ziliak have shown that economists often fail to adequately distinguish economic and statistical significance. In this paper, we briefly review their arguments and develop a ten-item questionnaire on the statistical practice in the Agricultural Economics community. We apply our questionnaire to the 2015 volumes of the American Journal of Agricultural Economics, the European Review of Agricultural Economics, the Journal of Agricultural Economics, and the American Economic Review. We specifically focus on the “sizeless stare” and the negligence of economic significance. Our initial results indicate that there is room of improvement in statistical practice. Empirical papers rarely consider the power of statistical tests or run simulations. The economic consequences of estimation results are often not adequately addressed. We discuss the implications of our findings for the publication process and teaching in Agricultural Economics.
    Keywords: Research Methods/ Statistical Methods
    Date: 2017–08–15

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.