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on Post Keynesian Economics |
| By: | Antoine Monserand (Centre d'Economie de l'Université de Paris Nord (CEPN)) |
| Abstract: | Situated at the interface between post-Keynesian and ecological economics, this article investigates the theoretical possibilities for a degrowth transition to take place while preserving macroeconomic stability. More precisely, the objective is to find whether in a neo-Kaleckian model of growth and distribution an equilibrium with a zero or even negative rate of accumulation can coexist with the Keynesian stability condition being verified. Our results are threefold. First, we confirm that adding the rate of depreciation to the canonical model allows for such an equilibrium to exist, but argue in favor of considering animal spirits rather than the depreciation factor as a potential policy variable for the management of the degrowth transition. Second, other elements such as overhead labour, a tax on capital, an autonomous component in consumption expenditures and a budget deficit can all give this result and provide more 'space' for the equilibrium with a negative rate of accumulation. Finally, we use the mechanism of the Sraffian supermultiplier to illustrate that combined political action and adoption of a more ecological mode of living can be the drivers of a stable degrowth transition. After the transition is completed, the stabilisation of aggregate consumption maintains the economy in a stationary state, at an ecologically sustainable level. |
| Keywords: | Neo-Kaleckian, Degrowth, Transition, Stability, Autonomous consumption, Supermultiplier |
| JEL: | E12 E21 E23 O44 Q01 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:upn:wpaper:2019-01&r=all |
| By: | S Devrim Yilmaz (AFD - Agence française de développement, CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique); Engelbert Stockhammer (Kingston University [London]) |
| Abstract: | While there exists a substantial literature on different business cycle mechanisms, there is little literature on economies with more than one business cycle mechanism operating and the relation of stability of these subsystems with the stability of the aggregate system. We construct a model where a multiplier-accelerator subsystem in output-investment space (a real cycle) and a Minskyian subsystem in investment-debt space (a financial cycle) can generate stable/unstable cycles in 2D in isolation. We then derive a theorem showing that if two independent cycle mechanisms that generate stable closed orbits in 2D share a self-destabilizing common variable and the true representation of the system is a fully-coupled 3D system where a weighted average of the common variable is in effect, then the 3D system will generate locally stable closed orbits in 3D if and only if the subsystems have the same frequencies and/or the self-destabilizing effects of the common variable evaluated at the fixed point are equal in both subsystems. Our results indicate that in the presence of multiple cycle mechanisms which share common variables in an economy, the stability of the aggregate economy crucially depends on the frequencies of these sub-cycle mechanisms. Abstract While there exists a substantial literature on di¤erent business cycle mechanisms, there is little literature on economies with more than one business cycle mechanism operating and the relation of stability of these subsystems with the stability of the aggregate system. We construct a model where a multiplier-accelerator subsystem in output-investment space (a real cycle) and a Minskyian subsystem in investment-debt space (a …nancial cycle) can generate stable/unstable cycles in 2D in isolation. We then derive a theorem showing that if two independent cycle mechanisms that generate stable closed orbits in 2D share a self-destabilizing common variable and the true representation of the system is a fully-coupled 3D system where a weighted average of the common variable is in e¤ect, then the 3D system will generate locally stable closed orbits in 3D if and only if the subsystems have the same frequencies and/or the self-destabilizing e¤ects of the common variable evaluated at the …xed point are equal in both subsystems. Our results indicate that in the presence of multiple cycle mechanisms which share common variables in an economy, the stability of the aggregate economy crucially depends on the frequencies of these sub-cycle mechanisms. |
| Keywords: | Business cycles,Minsky models,Multiplier-accelerator |
| Date: | 2019–02–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cepnwp:hal-02012724&r=all |
| By: | Robert Blecker |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:amu:wpaper:2018-06&r=all |
| By: | Korkut Alp Erturk |
| Abstract: | The paper explores how elites can develop capacity for collective agency through coordination. Elites’ challenge is to simultaneously deter the state from abusing power while at the same time relying on it to discipline defectors in their midst. The basic insight holds that the credibility of the state’s threats depends on the cost of carrying them out, which elites can have control over if they can act in tandem. Elites can coordinate in being compliant when the ruler’s threats serve their collective interest which raises the threats’ credibility, while lowering that of those they dislike by their coordinated noncompliance making them costly to carry out. |
| Keywords: | elite collective agency, state power, coordination, credible threats, subgame imperfect equilibrium |
| JEL: | C72 D72 D02 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:uta:papers:2019_04&r=all |
| By: | Michalopoulos, Stelios; Xue, Melanie Meng |
| Abstract: | Folklore is the collection of traditional beliefs, customs, and stories of a community, passed through the generations by word of mouth. This vast expressive body, studied by the corresponding discipline of folklore, has evaded the attention of economists. In this study we do four things that reveal the tremendous potential of this corpus for understanding comparative development and culture. First, we introduce and describe a unique catalogue of folklore that codes the presence of thousands of motifs for roughly 1,000 pre-industrial societies. Second, we use a dictionary-based approach to elicit group-specific measures of various traits related to the natural environment, institutional framework, and mode of subsistence. We establish that these proxies are in accordance with the ethnographic record, and illustrate how to use a group's oral tradition to quantify non-extant characteristics of preindustrial societies. Third, we use folklore to uncover the historical cultural values of a group. Doing so allows us to test various influential conjectures among social scientists including the original affluent society, the culture of honor among pastoralists, the role of family in extended kinship systems and the intensity of trade and rule-following norms in politically centralized group. Finally, we explore how cultural norms inferred via text analysis of oral traditions predict contemporary attitudes and beliefs. |
| Keywords: | Culture; Development; Folklore; History; Values |
| JEL: | O10 Z1 Z10 Z13 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13425&r=all |
| By: | Francesco Saraceno (Observatoire français des conjonctures économiques) |
| Abstract: | The New Consensus that has dominated macroeconomics since the 1980s was based on a fundamentally neoclassical structure: efficient markets that on their own converged on a natural equilibrium with a very limited role for macroeconomic (mostly monetary) policy to smooth fluctuations. The crisis shattered this consensus and saw the return of monetary and fiscal activism, at least in academic debate. The profession is reconsidering the pillars of the Consensus, from the size of the multipliers to the implementation of reform, including the links between business cycles and trends. It is still too soon to know what macroeconomics will look like tomorrow, but hopefully it will be more eclectic and open. |
| Keywords: | Economic crisis; Budget policy; Reform; New consensus |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/6qk99khogd86non732alvigmuq&r=all |
| By: | Benner, Maximilian |
| Abstract: | This paper discusses the nexus between economically-driven tourism development and broader societal aspects of social, cultural and ecological sustainability. The paper argues that similar to the discussion on the limits to growth in industrial development that started in the 1970s, the currently debated phenomenon of overtourism calls for a parallel discussion in tourism development. Similar to the argument that industrial development needs to be driven by qualitative, not quantitative growth, tourism development has to reorient itself away from the goal of ever-increasing tourist arrivals towards broader objectives of socially, culturally and ecologically sustainable qualitative growth. This argument leads to two policy implications. First, policymakers should consider which forms of tourism to encourage and which ones to discourage. Second, tourism policy should set incentives and disincentives accordingly. Institutional approaches from human geography can serve to analyze the prospects of these incentives and disincentives, and insights from behavioral economics such as the nudging approach can serve to shape policies accordingly. The paper takes the cases of two cities on the Adriatic sea, Venice and Dubrovnik, as examples. |
| Keywords: | tourism development, overtourism, qualitative growth, institutions, behavioral economics, Venice, Dubrovnik |
| JEL: | L83 Q56 |
| Date: | 2019–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92213&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 develop an agent-based model where hysteresis in major macroeconomic variables (e.g., gross domestic product, productivity, unemployment) emerges out of the decentralized interactions of heterogeneous firms and workers. Building upon the “Schumpeter meeting Keynes” family of models (cf. in particular Dosi et al. (2016b, 2017c)), we specify an endogenous process of accumulation of workers’ skills and a state-dependent process of firms entry. Indeed, hysteresis is ubiquitous. However, this is not due to market imperfections, but rather to the very functioning of decentralized economies characterized by coordination externalities and dynamic increasing returns. So, contrary to the insider–outsider hypothesis (Blanchard and Summers, 1986), the model does not support the findings that rigid industrial relations may foster hysteretic behavior in aggregate unemployment. On the contrary, this contribution provides evidence that during severe downturns, and thus declining aggregate demand, phenomena like decreasing investment and innovation rates, skills deterioration, and declining entry dynamics are better candidates to explain long-run unemployment spells and reduced output growth. In that, more rigid labor markets may well dampen hysteretic dynamics by sustaining aggregate demand, thus making the economy more resilient. |
| Keywords: | Computational techniques; Employment; Institutions |
| JEL: | E24 E02 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/4h9cnu4n2k8tfri093jil1d739&r=all |
| By: | Jean-Luc Gaffard (Observatoire français des conjonctures économiques) |
| Abstract: | This article aims to contrast modern macroeconomic analysis with a nonWalrasian or evolutionary macroeconomics. This debate, which returns to the forefront with each major economic crisis, concerns the nature of coordination problems and the means of resolving them. While modern macroeconomic models describe the inter-temporal optimization behaviour of consumers who are perfectly adapted to their environment and cleared markets, evolutionary macroeconomics focuses on market imbalances that require adaptive behaviours. This contrast affects monetary and fiscal policy as well as the nature of any structural reforms to be carried out. It also affects the type of modelling to be developed |
| Keywords: | Imperfect knowledge; Short term; Equilibrium; Flexibility; Long term; Structural reforms; Rigidity |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/1cgtnskg398lbrjva1dhgfkgv8&r=all |
| By: | Crafts, Nicholas |
| Abstract: | Conventional estimates suggest that the 2007-9 financial crisis reduced UK potential output by 3.8 to 7.5 per cent of GDP. This implied a need for fiscal tightening as the structural budget deficit had increased considerably. The austerity that followed led to the rise of UKIP, the EU referendum and the vote for Brexit. Brexit will reduce potential output by somewhere between 3.9 and 8.7 per cent of GDP. Thus, it can be argued that the total fall in UK potential output due to the banking crisis is approximately double the conventional estimate. |
| Keywords: | austerity; Brexit; financial crisis; Potential Output |
| JEL: | F15 G01 H12 O47 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13428&r=all |
| By: | Höpner, Martin |
| Abstract: | Germany is an undervaluation regime, a regime that steers economic behavior towards deterioration of the real exchange rate and thereby towards export surpluses. This regime has brought the eurozone to the brink of collapse. But it is much older than the euro. It was established during the Bretton Woods years and has survived all subsequent European currency orders. The regime operates in two steps: competitive disinflation against trading partners; and resistance against correcting revaluations. The Bretton Woods order provided perfect conditions for the establishment and perpetuation of the regime: it was flexible enough for sufficient macroeconomic policy autonomy to bring about differential inflation rates, and sticky enough to delay and minimize revaluations. |
| Keywords: | current account surpluses,exchange rate policy,inflation,political economy,undervaluation,varieties of capitalism,Inflation,Leistungsbilanzüberschüsse,Politische Ökonomie,Spielarten des Kapitalismus,Unterbewertung,Wechselkurspolitik |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:mpifgd:191&r=all |
| By: | Atkinson, Anthony B.; Jenkins, Stephen P. |
| Abstract: | This paper scrutinizes the conventional wisdom about trends in UK income inequality and also places contemporary inequality in a much longer historical perspective. We combine household survey and income tax data to provide better coverage of all income ranges from the bottom to the very top. We make a case for studying distributions of income between tax units (i.e. not assuming the full income sharing that goes with the use of the household as the unit of analysis) for reasons of principle as well as data harmonization. We present evidence that income inequality in the UK is as least as high today as it was just before the start of World War 2 |
| Keywords: | inequality; tax unit; household; Gini coefficient; income tax data; household survey data; HBA1; SPI |
| JEL: | C46 C81 D31 |
| Date: | 2019–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:100114&r=all |
| By: | Zhao, Bo (Federal Reserve Bank of Boston) |
| Abstract: | Public higher education produces many benefits that are vital to the New England economy, but it is increasingly at risk following years of state budget cuts. States have reduced funding for higher education to address short-term budget gaps caused by recessions and long-term budget gaps attributed to the growing costs of Medicaid and public pensions. Research in this report shows that reductions in state appropriations have resulted in higher tuition and fees, greater student loan debt, decreased resources for education and research, and fewer graduates and approved patent applications from public colleges and universities. This report recommends that policymakers provide robust financial support for public higher education, particularly community colleges, which are the most vulnerable to the negative consequences of state disinvestment. |
| Keywords: | New England; higher education; fiscal policy; regional economy |
| Date: | 2019–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbcr:19-1&r=all |
| By: | Lewis, David |
| Abstract: | The life history method can be used to historicise the study of social and public policy. Reviewing the life and work of Pakistani social entrepreneur A.H. Khan provides a useful reminder that what Jyoti Sharma recently termed ‘the neoliberal takeover of social entrepreneurship’ is a relatively recent phenomenon. While Khan’s achievements across the public and non-governmental (NGO) sectors continue to be debated amongst scholars and activists in South Asia, his life and work – which is not well known in the Global North as it perhaps should be – highlights a much broader and more inclusive way of thinking about the social entrepreneur as an organiser of change |
| Keywords: | social entrepreneurship; non-governmental organisations (NGOs); community development; public administration; rural development; life history |
| JEL: | N0 |
| Date: | 2019–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:100113&r=all |