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on Post Keynesian Economics |
| By: | Hiroshi Nishi; Engelbert Stockhammer |
| Abstract: | This study analyses the interaction of demand, income distribution, and natural output level in a dynamic Kaleckian model with output hysteresis. Hysteresis means that the natural output level depends on the path of the demand-driven actual output level. We consider wage-led and profit-led demand regimes and goods market-led and labour market-led income distribution regimes. We find that the stability of the steady state is closely related to hysteresis in certain regimes. Limit cycles can arise when the strong flexibility of either prices or wages to the output gap is combined with a moderate degree of natural output hysteresis. We make the persuasive case that a Kaleckian model with a wage-led demand regime and anticyclical profit share is less unstable and that pseudo-Goodwin cycles can arise in the profit-led demand regime with a procyclical profit share. |
| Keywords: | Hysteresis, Natural output level, Demand regime, Income distribution |
| JEL: | D33 E12 E32 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp1902&r=all |
| By: | Vicente Ferreira |
| Abstract: | This paper addresses the evolution of evolutionary thought in economics as an alternative to the dominant static view of the economy. A short history of the earlier institutional approach, announced by Thorstein Veblen’s 1898 paper ‘Why is economics not an evolutionary science?’, is presented alongside a discussion of its key methodological and philosophical aspects. Veblen’s critiques of neoclassical economics are also discussed. Then the role of evolutionary concepts in economics throughout the twentieth century is analysed, from later institutionalists to recent complexity and chaos theories. It is argued complexity approaches are developed in line with Veblen’s institutional theory, and may be incorporated in an evolutionary theoretical framework which constitutes a necessary alternative to the neoclassical paradigm, as it better describes and studies real-world socio-economic phenomena. |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:ise:isegwp:wp012019&r=all |
| By: | Nitzan, Jonathan; Bichler, Shimshon |
| Abstract: | This paper clarifies a common misrepresentation of our theory of capital as power, or CasP. Many observers tend to box CasP as an ‘institutionalist’ theory, tracing its central process of ‘differential accumulation’ to Thorstein Veblen’s notion of ‘differential advantage’. This view, we argue, betrays a misunderstanding of CasP, Veblen or both. First, we are not Veblenians and certainly not institutionalists: Veblen’s theory was evolutionary, while CasP is deeply dialectical, and institutionalism, particularly its ‘new’ varieties, emphasizes and often promotes what holds capitalism together, whereas CasP critically examines both the underpinnings of capitalized power as well as the forces that threaten and undermine it. Second, CasP’s notion of differential accumulation is not only different from, but also diametrically opposed to Veblen’s differential advantage. Veblen, who wrote at the turn of the twentieth century, before the appearance of business indices and financial benchmarks, emphasized the absolute drive for ‘maximum profit’ and saw strategic sabotage merely as a power means to an economic end. By contrast, CasP, which was developed at the end of the twentieth century, sees power not only as a means of accumulation, but also – and perhaps more importantly – as its ultimate purpose. Accumulators, it argues, are conditioned and driven to augment not their profits and assets as such, but their relative power, and this means that, as symbolic bearers of power, these profits and assets should be measured not absolutely, but relatively to those of others – hence the imperative of differential accumulation. |
| Keywords: | capital as power,differential accumulation,differential advantage,evolutionary economics,institutionalism,power,Thorstein Veblen |
| JEL: | P16 B15 B25 B52 L P22 E23 D3 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:capwps:201901&r=all |
| By: | Hossein Sabzian; Mohammad Ali Shafia; Ali Maleki; Seyeed Mostapha Seyeed Hashemi; Ali Baghaei; Hossein Gharib |
| Abstract: | Nowadays, we are surrounded by a large number of complex phenomena ranging from rumor spreading, social norms formation to rise of new economic trends and disruption of traditional businesses. To deal with such phenomena,Complex Adaptive System (CAS) framework has been found very influential among social scientists,especially economists. As the most powerful methodology of CAS modeling, Agent-based modeling (ABM) has gained a growing application among academicians and practitioners. ABMs show how simple behavioral rules of agents and local interactions among them at micro-scale can generate surprisingly complex patterns at macro-scale. Despite a growing number of ABM publications, those researchers unfamiliar with this methodology have to study a number of works to understand (1) the why and what of ABMs and (2) the ways they are rigorously developed. Therefore, the major focus of this paper is to help social sciences researchers,especially economists get a big picture of ABMs and know how to develop them both systematically and rigorously. |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1901.08932&r=all |
| By: | Tommaso Ciarli (SPRU, University of Sussex, UK); Maria Savona (SPRU, University of Sussex, UK) |
| Abstract: | We discuss how different models assessing climate change integrate aspects of structural change that are crucial to improve understanding of the relation between changes in the environment and in the economy. We identify six related aspects of structural change, which have significant impact on climate change: sectoral composition, industrial organisation, technology, employment, final demand, and institutions. Economic models vary substantially with respect to the aspects of structural change that they include, and how they model them. We review different modelling families and compare these differences: integrated assessment models (IAM), computable general equilibrium (CGE) models, structural change models (SCM), ecological macroeconomics models in the Keynesian tradition (EMK) and evolutionary agent based models (EABM). We find that IAM and CGE address few of the aspects of structural change identified; SCM focus on the sectoral composition; and EKM study final demand and employment structure. But all these models are aggregate and omit the complexity of the interactions between structural and climate change. EABM have explored a larger number of aspects of structural change, modelling their emergence from the interaction of microeconomic actors, but have not yet exploited their potential to study the interactions among interrelated aspects of structural and climate change. |
| Keywords: | Strucural change, climate change, economic modelling |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:sru:ssewps:2019-01&r=all |
| By: | Giovanni Dosi (Laboratory of Economics and Management); Marcelo C. Pereira (Universidade Estadual de Campinas); Andrea Roventini (Observatoire français des conjonctures économiques); Maria Enrica Virgillito (Scuola Superiore Sant'Anna) |
| Abstract: | In this work we discuss the research findings from the labour-augmented Schumpeter meeting Keynes (K+S) agent-based model. It comprises comparative dynamics experiments on an artificial economy populated by heterogeneous, interacting agents, as workers, firms, banks and the government. The exercises are characterised by different degrees of labour flexibility, or by institutional shocks entailing labour market structural reforms, wherein the phenomenon of hysteresis is endogenous and pervasive. The K+S model constitutes a laboratory to evaluate the effects of new institutional arrangements as active/passive labour market policies, and fiscal austerity. In this perspective, the model allows mimicking many of the customary policy responses which the European Union and many Latin American countries have embraced in reaction to the recent economic crises. The obtained results seem to indicate, however, that most of the proposed policies are likely inadequate to tackle the short-term crises consequences, and even risk demoting the long-run economic prospects. More objectively, the conclusions offer a possible explanation to the negative path traversed by economies like Brazil, where many of the mentioned policies were applied in a short period, and hint about some risks ahead. |
| Keywords: | Labour market ; Policy evaluation; Agent based model |
| JEL: | C63 E24 H53 J88 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/5rtilga41c899ab0rctd3cp2r3&r=all |
| By: | Giovanni Dosi (Laboratory of Economics and Management); Marcelo C. Pereira (Universidade Estadual de Campinas); Andrea Roventini (Observatoire français des conjonctures économiques); Maria Enrica Virgillito (Scuola Superiore Sant'Anna) |
| Abstract: | This work analyses the effects of labour market structural reforms by means of the labour-augmented ‘Schumpeter meeting Keynes’ (KþS) Agent-Based model. We introduce a policy regime change characterized by a set of structural reforms on the labour market. Confirming a recent IMF report, the model shows how structural reforms reducing workers’ bargaining power and compressing wages tend to increase (a) unemployment, (b) functional income inequality and (c) personal income inequality. We further undertake a global sensitivity analysis on key variables and parameters which corroborates the robustness of our findings. |
| Keywords: | Labor market; Structural reforms; Income distribution; Inequality; Unemployment; Growth |
| JEL: | C63 E02 E12 E24 O11 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/3kbkotqp1b85pa2lu2puri38p6&r=all |
| By: | Picciotto, Sol |
| Abstract: | This paper traces the history of international corporate taxation, discusses how transnational corporations (TNCs), through their tax advisers, have helped to shape the system, and suggests that this is important in understanding the development of TNCs. It argues that a key competitive advantage of TNCs is their ability to exploit differences in corporate tax rules, as a form of regulatory arbitrage, which is facilitated by the inadequate coordination of those rules. It focuses on the divergence between the understanding in business, economics and international studies that TNCs are unitary firms and the principle which has increasingly hardened in international tax rules, especially on transfer pricing, that the various affiliates of TNCs in different countries should be treated as if they were independent entities dealing with each other at arm’s length. It argues that this facilitates tax avoidance, which is one of the strategies of the exploitation of regulatory differences, or regulatory arbitrage, which has contributed to the growth and oligopolistic dominance of large TNCs. While claiming that they merely obey the laws of each country where they do business, TNCs have taken advantage of their global reach to mould laws and normative practices, and develop structures taking maximum advantage of the loose coordination of global governance regimes. |
| Keywords: | Finance, Globalisation, Governance, |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:idq:ictduk:14295&r=all |
| By: | J.Tomas Hexner (President of Hex, Inc. Founder and director, Science Initiative Group at the Institute for Advanced Study at Princeton, New Jersey); Arthur MacEwan (Professor Emeritus of Economics at the University of Massachusetts Boston) |
| Abstract: | The New Fiscal Plan for Puerto Rico, issued by the Fiscal Oversight and Management Board on April 19, 2018, is deeply flawed. It is based on two incompatible goals: establishing a foundation for growth of the Puerto Rican economy and assuring that the Puerto Rican government will move quickly toward meeting its debt obligations. As result of this incompatibility, the Plan is deeply flawed and should be abandoned. The Plan imposes an austerity program, which will undermine possibilities for growth, harm the well-being of the populace, and likely undermine the government’s ability to meet debt obligations. Also, the plan makes unrealistically optimistic assumptions about positive impacts of the structural reforms it imposes on economic relations in Puerto Rico. This paper: (1) explains the austerity nature of the Plan and its negative impacts; and (2) discusses the Plan’s proposed structure reforms—labor reforms, tax reforms, education and human capital reforms, and government regulations and the organization of government agencies. |
| Keywords: | New Fiscal Plan for Puerto Rico,PROMESA, Puerto Rico debt, level playing field austerity |
| JEL: | E62 E63 O23 O24 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:qed:dpaper:408&r=all |
| By: | Helene Naegele |
| Abstract: | Fairtrade certification aims at transferring wealth from the consumer to the farmer; however, coffee passes through many hands before reaching final consumers. Bringing together retail, wholesale, and stock market data, this study estimates how much more consumers are paying for Fairtrade-certified coffee in US supermarkets and finds estimates around $1 per lb. I then assess how this price premium is split between the different stages of the value chain: most of the premium goes to the roaster's profit margin, while the retailer surprisingly makes smaller absolute profits on Fairtrade-certified coffee, compared to conventional coffee. The coffee farmer receives about a fifth of the price premium paid by the consumer, but it is unclear how much of this (quantity-dependent) benefit goes toward the payment of (quantity-independent) license fees. |
| Keywords: | Coffee, Fairtrade, Price premium, Value chain, Voluntary sustainability standards |
| JEL: | L15 L31 L66 O13 Q01 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1783&r=all |
| By: | Wilson, Ryan |
| Abstract: | The current ascendancy of right-wing populists across western democracies is a concerning trend, and so far, the left has not managed to mount an effective counterstrategy to arrest its momentum. Much of the rhetoric of these right-wing populists has focused on evoking fear and suspicion, verging on hatred, of outsiders and fellow countrymen and women with opposing political ideologies, to great effect. The importance of understanding why certain rhetoric is effective cannot be understated, and the works of George Lakoff, Jonathan Haidt, and Drew Westen that illuminate the moral and emotional factors behind how individuals interpret and respond to inputs of a political nature are reviewed and synthesised. Individuals' underlying moral mental structures and the emotional responses that they can trigger must be understood in order to generate political messaging that resonates strongly with its target audience and consequently increases the likelihood of their actuation to vote. The recent phenomenon of individualisation, stemming from the current era of reflexive modernity is analysed within the context of divergent conservative and liberal moral matrices, and is found to be disproportionately ailing the liberal side of politics. In delineating the key elements of liberal and conservative morality, the existence of liberal moral tenets that are discordant with longstanding liberal communitarian ideals were revealed. In contrast, conservative morality appears to exhibit an inherent coherence that may contribute to conservatism's resilience in the face of reflexive modernity and disparate policy priorities of its constituents. The importance of understanding the moral and emotional foundations of political cognition is emphasised not only for its potential to bolster the efficacy of left-wing political parties, but also to provide an avenue by which the increasing hostility across the political spectrum can be subdued. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wus009:6802&r=all |
| By: | Carlo Altomonte; Gloria Gennaro; Francesco Passarelli |
| Abstract: | We leverage on important findings in social psychology to build a behavioral theory of protest vote. An individual develops a feeling of resentment if she loses income over time while richer people do not, or if she does not gain as others do, i.e. when her relative deprivation increases. In line with the Intergroup Emotions Theory, this feeling is amplified if the individual identifies with a community experiencing the same feeling. Such a negative collective emotion, which we define as aggrievement, fuels the desire to take revenge against traditional parties and the richer elite, a common trait of populist rhetoric. The theory predicts higher support for the protest party when individuals identify more strongly with their local community and when a higher share of community members are aggrieved. We test this theory using longitudinal data on British households and exploiting the emergence of the UK Independence Party (UKIP) in Great Britain in the 2010 and 2015 national elections. Empirical findings robustly support theoretical predictions. The psychological mechanism postulated by our theory survives the controls for alternative non-behavioral mechanisms (e.g. information sharing or political activism in local communities). |
| Keywords: | electoral behaviour, protest vote, populism, relative deprivation, community cohesion, UK Independence Party |
| JEL: | A00 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7463&r=all |