nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2019‒01‒14
thirteen papers chosen by
Karl Petrick
Western New England University

  1. The fracturing of globalization: Implications of economic resentments and geopolitical contradictions By Thomas Palley
  2. Monetary theory and policy : the debate revisited By Jean-Luc Gaffard
  3. "Can Greece Grow Faster?" By Dimitri B. Papadimitriou; Michalis Nikiforos; Gennaro Zezza
  4. The politics of violence and populism in post-colonial democracy: The role of political society in South Africa By Koelble, Thomas A.
  5. Capital accumulation and corporate portfolio choice between liquidity holdings and financialisation By Giovanni Scarano
  6. The welfare state and liberal democracy: A political economy approach By Heise, Arne; Serfraz Khan, Ayesha
  7. Globalization and governmentality in the post-colony: South Africa under Jacob Zuma By Koelble, Thomas A.
  8. The Financial Alchemy that Failed By Miller, Marcus
  9. Capitalism's Deniers By Nitzan, Jonathan; Bichler, Shimshon
  10. The European Trust Crisis and the Rise of Populism By Yann Algan; Sergei Guriev; Elias Papaioannou; Evgenia Passari
  11. Spotting export potential and implications for employment in developing countries By Cheong, David.; Decreux, Yvan.; Spies, Julia.
  12. Poverty, Income Inequality and Growth in Bangladesh: Revisited Karl-Marx By Md Niaz Murshed Chowdhury; Md Mobarak Hossain
  13. For Good Measure: Advancing Research on Well-Being Metrics Beyond GDP By Joseph Stiglitz; Jean-Paul Fitoussi; Martine Durand

  1. By: Thomas Palley
    Abstract: The last forty years have witnessed a third wave of globalization which can be termed “neoliberal globalization”. Now, there are indications that the era of neoliberal globalization might be drawing to a close, as evidenced by the trade war between the US and China. This paper argues that the fracturing of neoliberal globalization reflects the growing impact of economic resentments and geopolitical contradictions. The paper presents a simple analytical framework that constructs the global economy in terms of a core consisting of the US, China, and the EU. It then examines how globalization creates economic resentments and geopolitical tensions within and between members of the core, thereby fracturing globalization. The rise of US – China geopolitical competition promises to twist the character of the global economic order, which stands to be shaped by strategically motivated economic integrations and recalibrations rather than generalized global economic integration. The paper then extends the analysis to non-core country blocs and examines how they are impacted by globalization and the rise of US – China geopolitical competition.
    Keywords: Neoliberal globalization, economic resentments, geopolitical contradictions.
    JEL: F02 F50 F59
    Date: 2019–01
  2. By: Jean-Luc Gaffard (Observatoire français des conjonctures économiques)
    Abstract: This paper is aimed at revisiting monetary analysis in order to better understand erroneous choices in the conduct of monetary policy. According to the prevailing consensus, the market economy is intrinsically stable and is upset only by poor behaviour by government or the banking system. We maintain on the contrary that the economy is unstable and that achieving stability requires a discretionary economic policy. This position relies upon an analytical approach in which monetary and financial organisations are devices that help markets to function. In this perspective, which focuses on the heterogeneity of markets and agents, and, consequently, on the role of institutions in determining overall performance, it turns out that nominal rigidities and financial commitment offer the means to achieve economic stability. This is because they prevent successive, unavoidable disequilibria from becoming explosive.
    Keywords: Inflation; Market; Money; Stability
    JEL: E31 E32 E5 E61 E62
    Date: 2018–11
  3. By: Dimitri B. Papadimitriou; Michalis Nikiforos; Gennaro Zezza
    Abstract: The Greek government has managed to exit the stability support program and achieve a higher-than-required primary surplus so as not to require further austerity measures to depress domestic demand. At the same time, the economy has started to recover, mainly due to the good performance of both exports of goods and tourism and modest increases in investment In this report, we review recent developments in the determinants of aggregate demand and net exports, and provide estimates of two scenarios: one which assumes business as usual and the other an alternate scenario simulating the medium-term impact of an acceleration in investment. We conclude with a discussion on the sustainability of Greek government debt, showing that it is crucial that the cost of borrowing remains below the nominal growth of national income.
    Date: 2018–11
  4. By: Koelble, Thomas A.
    Abstract: This paper argues that current levels of violence and populism in post-colonial spaces such as South Africa are a consequence of a socio-history of violent dispossession, exploitation and impoverishment and is perpetuated by the continuation of the socio-economic and political conditions rooted in that history of exceptional violence, inequality and injustice. A switch in the political system does not reduce violence by itself. The disposition towards violence can only be shifted by a fundamental shift away from the economics and politics of the apartheid era. Since such a shift is unlikely to occur under current conditions, the perpetuation of violence and populist politics are likely to remain key features and consti-tutive elements of post-apartheid democracy.
    Date: 2018
  5. By: Giovanni Scarano
    Abstract: Most models of investment decisions utilised in macroeconomic models take free or perfect competition as explicit or implicit assumption. However, the oligopolistic structure of most real markets lead to corporate strategic behaviours that can produce very different results. Strategic decisions, connected with agency problems, can play a major role in producing financialisation and timing the rhythms of real investment. The paper deals with both mainstream and heterodox contributions that analyse the effects of corporate governance and strategic behaviours on portfolio management and investment decisions in big corporations, seeking to determine how these effects might play a major role in producing growing liquidity holdings and financialisation. The main objective is to understand whether these models can explain the tendency to place growing shares of social surplus in speculative financial channels, thereby contributing to long-term real stagnation.
    Keywords: Investment theory, Interest Rate, Corporate Savings, Financialisation,Financial Crises
    JEL: B51 E11 E12 E32 G35
    Date: 2019–01
  6. By: Heise, Arne; Serfraz Khan, Ayesha
    Abstract: This paper attempts to shed some light on the developments of welfare states in highly developed nations since WW2 within the context of a narrative which seeks to combine institutional distinctions, termed 'varieties of capitalism', with the historical regimes of regulation theory in a political economy perspective which puts interested political actors at centre stage. It will be argued that in a liberal democracy, the elite has the framing and agenda-setting power to 'manufacture a political will' according to its interests. The welfare state is not the result of a long social struggle on the part of the needy; rather, it results in its general features from the minimal state of meritocratic exigencies. Under the very peculiar circumstances of the post-WW2 era, this even translated into a rise in social welfare spending to more than a third of national income. The particular design of welfare state organisation was the subject-matter of political conflict, and a clear distinction between liberal and coordinated market economies can be attributed to cultural differences and institutional settings. Yet the core of the welfare state conception serves the interest of the meritocracy as much as those who benefit from social programmes and re-distribution. And the neoliberal attack on the welfare state since the 1980s is not a necessary re-calibration due to changing economic conditions or a growing lack of solidarity among the people but an expression of a modified cost-benefit analysis from the elite's perspective.
    Keywords: Welfare State,Keynesian National Welfare State,Schumpeterian Competition State,Elite,Agenda Theory
    JEL: B59 I31 P16 P31
    Date: 2018
  7. By: Koelble, Thomas A.
    Abstract: This paper addresses two twin questions - what accounts for the deep political and eco-nomic crisis in South Africa? The answer this paper develops is that both desired outcomes - a thriving capitalist economy and a solid democracy - were based on Western models and assumptions about the South African developmental trajectory that did not take into account the fact that few of the prerequisites for either outcome existed. By critically applying the work of Partha Chatterjee, I make the argument that around 60 per cent of South Africa's population is marginalized from both the capitalist economy and its democratic processes. As a result, this large population views both democracy and capitalism with disdain and mistrust. The "politics of the governed", as Chatterjee refers to it, is about access to scarce government-controlled resources and based on rules of exception where those who protest in the most effective (often violent) manner obtain access whereas those who occupy less strategic positions are ignored and forgotten. The politics of the governed takes place in a global setting in which the state is no longer economically sovereign and less able to distribute resources to achieve public goods. The combination of a large political society governed in a more or less democratic system and an open, capitalist economy produces a distinctive style of populist politics, corruption and violence.
    Date: 2018
  8. By: Miller, Marcus (University of Warwick and CAGE)
    Abstract: With his conception of successive ‘Ages of Capitalism’, Anatole Kaletsky provides a canvas broad enough to encompass the banking crisis of 2008 and much more. After briefly outlining the Four Ages he identifies, we focus on the period of the Great Moderation when Inflation Targeting seemed to have solved the problem macroeconomic management – until it ended in spectacular failure. The rapid growth of cross-border banking – with securitized assets funded by wholesale money – evidently posed threats to financial stability that had been ignored by a regime targeting consumer prices. We look at three: the pecuniary externalities exerted by asset price changes on investment banking; information failures leading to an exaggerated banking boom; and the risk of insolvency in the subsequent ‘bank run’. The financial system pre-crash was, it seems, flawed by two Fallacies of Composition: by regulation that reckoned making individual banks safe guaranteed systemic stability; and a business model that reckoned securitization ensured liquidity whenever necessary. Finally, we discuss how, in different countries, the law has variously been invoked to handle reckless banking.
    Keywords: JEL Classification:
    Date: 2019
  9. By: Nitzan, Jonathan; Bichler, Shimshon
    Abstract: A new, capitalism-denying book is on the shelves, and it makes a stunning discovery: ‘Capitalism without competition is not capitalism’! Capitalist crisis, like climate change, tends to breed ‘capitalism deniers’. The problem, argue the deniers, lies not in capitalism but in its ‘distortions’. In its pure form, they maintain, capitalism is the best of all possible worlds. But to the deniers’ chagrin, contemporary capitalism is no longer pristine. Unlike its original, once-upon-a-time version, its current one is subject to distorting ‘imperfections’, ‘shocks’ and ‘exogenous’ events. And it is these aberrations – rather than capitalism itself – that should be blamed for the system’s misfortunes.
    Keywords: capitalism,competition,fundamentalism,ideology,neoclassical economics
    JEL: L L1 P
    Date: 2019
  10. By: Yann Algan (Département d'économie); Sergei Guriev (Département d'économie); Elias Papaioannou (London Business School (LBS)); Evgenia Passari (Université Paris-Dauphine)
    Abstract: We study the implications of the Great Recession for voting for antiestablishment parties, as well as for general trust and political attitudes, using regional data across Europe. We find a strong relationship between increases in unemployment and voting for nonmainstream parties, especially populist ones. Moreover, unemployment increases in tandem with declining trust toward national and European political institutions, though we find only weak or no effects of unemployment on interpersonal trust. The correlation between unemployment and attitudes toward immigrants is muted, especially for their cultural impact. To explore causality, we extract the component of increases in unemployment explained by the precrisis structure of the economy, in particular the share of construction in regional value added, which is strongly related both to the buildup preceding and the bursting of the crisis. Our results imply that crisis-driven economic insecurity is a substantial determinant of populism and political distrust.
    Date: 2017
  11. By: Cheong, David.; Decreux, Yvan.; Spies, Julia.
    Abstract: Access to information about untapped export opportunities at the sectoral and product levels can help governments design policies and strategies that use export development as a means to foster inclusive and sustainable growth. By identifying products and markets for which a country has underutilized export potential, a country can seize export opportunities that have been missed and, in some cases, remove the bottlenecks that prevent the country’s firms from realizing their export potential. The International Trade Center (ITC) has developed a methodology to compute the extent of unrealized export potential at the sectoral and product levels given data on supply, demand, and trade costs. This paper, which is an outcome of an ILO-ITC collaboration, extends the methodology to measure how the utilization of a country’s export potential would translate into the expansion and upgrading of employment by population groups (e.g., women, youth, high- versus low-skilled workers, etc.). Such projections could inform a country’s development strategies as they provide information on the sectors and products that promise more of both export revenue and jobs.
    Keywords: export promotiion, development, developing country
    Date: 2018
  12. By: Md Niaz Murshed Chowdhury; Md Mobarak Hossain
    Abstract: This study tries to find the relationship among poverty inequality and growth. The major finding of this study is poverty has reduced significantly from 2000 to 2016, which is more than 100 percent but in recent time poverty reduction has slowed down. Slower and unequal household consumption growth makes sloth the rate of poverty reduction. Average annual consumption fell from 1.8 percent to 1.4 percent from 2010 to 2016 and poorer households experienced slower consumption growth compared to richer households.
    Date: 2018–12
  13. By: Joseph Stiglitz (Columbia Business School); Jean-Paul Fitoussi (Département d'économie); Martine Durand (Organisation de Coopération et de Développement Économiques (OCDE))
    Abstract: The 2009 Commission on the Measurement of Economic Performance and Social Progress (“Stiglitz-Sen-Fitoussi” Commission) concluded that we should move away from over-reliance on GDP when assessing a country’s health, towards a broader dashboard of indicators that would reflect concerns such as the distribution of well-being and sustainability in all of its dimensions. This book includes contributions from members of the OECD-hosted High Level Expert Group on the Measurement of Economic Performance and Social Progress, the successor of the Stiglitz-Sen-Fitoussi Commission, and their co-authors on the latest research in this field. These contributions look at key issues raised by the 2009 Commission that deserved more attention, such as how to better include the environment and sustainability in our measurement system, and how to improve the measurement of different types of inequalities, of economic insecurity, of subjective well-being and of trust. A companion volume Beyond GDP: Measuring What Counts for Economic and Social Performance presents an overview by the co-chairs of the High Level Expert Group, Joseph E. Stiglitz, Jean-Paul Fitoussi and Martine Durand of the progress accomplished since the 2009 report, of the work conducted by the Group over the past five years, and of what still needs to be done.
    Date: 2018–11

This nep-pke issue is ©2019 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.
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