nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2019‒07‒22
nine papers chosen by
Karl Petrick
Western New England University

  1. A Keynes + Schumpeter model to explain development, speculation and crises By Giancarlo Bertocco; Andrea Kalajzić
  2. Commanding Nature by Obeying Her: A Review Essay on Joel Mokyr’s A Culture of Growth By Enrico Spolaore
  3. Política industrial moderna: fundamentos e importancia para el crecimiento económico y la igualdad By Álvaro Moreno Rivas; Gonzalo Cómbita Mora; Andrés Felipe Mora Cortés
  4. Ethics out of Economics: The Futile Attempt of Rendering Economics a Neutral Science. By Guglielmo Chodi
  5. Disarticulation as a Constraint to Wage-led Growth in Dual Economies By Adam Aboobaker
  6. Job polarisation and the middle class: New evidence on the changing relationship between skill levels and household income levels from 18 OECD countries By Andrea Salvatori; Thomas Manfredi
  7. The politics of the globalization backlash: Sources and implications By Jeffry Frieden
  8. The pattern of economies green growth: The role of path dependency in Green Economy expansion By Seyyedmilad Talebzadehhosseini; Steven R. Scheinert; Amirarsalan Rajabi; Mostafa Saeidi; Ivan Garibay
  9. Workers' falling share of firms' profits By Brian Bell; Pawel Bukowski; Stephen Machin

  1. By: Giancarlo Bertocco (University of Insubria (IT)); Andrea Kalajzić
    Abstract: Recently, Dosi and his co-authors have developed a ‘Keynes+Schumpeter’ model which “endogenously generates self-sustained growth patterns together with persistent economic fluctuations ...”. The aim of this work is twofold. First, to show that the K+S model developed by Dosi and his co-authors does not allow to explain the instability that characterizes a capitalist economy. This limitation is due to the fact that the model overlooks some key elements of Schumpeter’s analysis. The second objective is to show that a solid K+S model can be built starting from the elements of Schumpeter’s theory neglected by Dosi and his co-authors.
    Keywords: bank money, innovations, crisis
    JEL: O11 O16 O42
    Date: 2019–07
  2. By: Enrico Spolaore
    Abstract: Why is modern society capable of cumulative innovation? In A Culture of Growth: The Origins of the Modern Economy, Joel Mokyr persuasively argues that sustained technological progress stemmed from a change in cultural beliefs. The change occurred gradually during the seventeenth and eighteenth century and was fostered by an intellectual elite that formed a transnational community and adopted new attitudes toward the creation and diffusion of knowledge, setting the foundation for the ethos of modern science. The book is a significant contribution to the growing literature that links culture and economics. This review discusses Mokyr’s historical analysis in relation to the following questions: What is culture and how should we use it in economics? How can culture explain modern economic growth? Will the culture of growth that caused modern prosperity persist in the future?
    JEL: N0 N13 N33 O3 O52 Z1
    Date: 2019–07
  3. By: Álvaro Moreno Rivas; Gonzalo Cómbita Mora; Andrés Felipe Mora Cortés
    Abstract: Este capítulo presenta las virtudes, requerimientos, vigencia y potencialidades de una política de desarrollo industrial para Colombia. Inicialmente se señalan los pasos necesarios para implementar una política de desarrollo industrial exitosa. Expone este trabajo, además, los enfoques teóricos que sustentan un modelo heterodoxo de política industrial. Entre ellos se destacan las propuestas de Young-Currie-Kaldor, que muestran el vínculo de esta política con el crecimiento acelerado e inclusivo en términos de generación de empleo y mejoras en la distribución del ingreso. A lo largo del documento se presentan las evidencias empíricas de países que muestran las mencionadas potencialidades de la política industrial. El artículo explica cómo Colombia puede responder al objetivo de una paz estable y duradera a partir de una estrategia de crecimiento económico inclusivo que busque el pleno empleo como objetivo fundamental y que, sustentada en una mayor diversificación, complejidad y sofisticación de su estructura productiva, permita avanzar hacia la construcción de una sociedad más igualitaria. *** This chapter presents the virtues, requirements, validity and potential of an industrial policy for Colombia. The article shows how to implement a successful industrial policy and exposes the theoretical approaches behind a heterodox model of industrial policy. Among them is possible to point out the proposals of Young-Currie-Kaldor that show the link between industrial policy, accelerated economic growth, employment and income distribution. The document presents evidence of countries that have exhibited the potential of industrial policy. It also explains how to achieve the objectives of peacebuilding and social justice in Colombia based on an inclusive and full employment model of economic growth. To achieve those goals, a model of economic development based on a greater diversification, complexity and sophistication of the economic structure is necessary.
    Keywords: política industrial moderna, crecimiento económico, igualdad, Colombia
    JEL: O11 O14 O15 O25 O40
    Date: 2019–07–05
  4. By: Guglielmo Chodi (Department of Social Sciences and Economics, Sapienza University of Rome (IT).)
    Abstract: Over the last century, and several times until recently, mainstream economics has been criticized from different viewpoints. Most of the critiques highlighted the weakness of its methodological and logical structure, not to mention its inadequate capacity of tackling with the new problems posed by globalization. However, mainstream economics has always shown itself strong enough as to stand up victoriously most of the times, notwithstanding those critiques, which quite often turned out to be even devastating from the logical point of view. The object of my report will be mainly focused on highlighting one of the most important reason for which mainstream economics should be considered altogether inadequate for tackling with many problems of the real world. And that reason essentially lies in the very fact that mainstream economics has since long put any ethical aspect completely outside its basic framework. One the most important consequences of that operation has been that of rendering economic theory perilously free of any value-judgment and therefore uncontaminated by any possible social and political change in society, even by the most significant ones. The report will then briefly reconstruct the most significant steps through which that process was accomplished, by bringing about, at the same time, the severe drawbacks of that futile attempt of rendering economics neutral in its analysis and its policy prescriptions.
    Keywords: Ethics, Classical Political Economy, Orthodox Economic Theory, Robbins, Sraffa.
    JEL: A11 A12 A13 B1 B2 B5
    Date: 2019–07
  5. By: Adam Aboobaker (Department of Economics, University of Massachusetts Amherst)
    Abstract: Much of the recent interest in the relationship between growth and distribution has focused on advanced economies and neglected issues of development and structural transformation. The purpose of this paper is to make a contribution to this gap by arguing that, even in the short-run, some of the conclusions from neo-Kaleckian models may not be robust to developing country contexts with extreme income inequality and correspondingly polarized patterns of consumption. This argument is supported by a review of, amongst other, Kalecki's writing on development and a two-sector model building on Razmi et al (2012). The paper can be interpreted as a call for greater consideration of structural heterogeneity in extending the analysis of advanced economies to developing economies and as a caution against calls for general aggregate demand policy, in this case shifts in income distribution, to address structural transformation problems.
    Keywords: Growth and distribution; Kaleckian models; Development; Structural change; Kalecki
    JEL: O1 O4 E1 B3
    Date: 2019
  6. By: Andrea Salvatori; Thomas Manfredi
    Abstract: Labour markets across the OECD have polarised in recent decades, as the share of middle skill occupations has declined relative to that of both high- and low skill occupations. This paper shows that, contrary to what is often assumed in the public debate, job polarisation has not resulted in a decline in the share of households with middle-income across 18 OECD countries. Most of the changes in the share of middle-income households result instead from changes in the propensity of workers in different occupations to be in it. In fact the results point to a change in the relationship between occupational skill levels and household income as both middle and high skill jobs increasingly fail to deliver on the promise of the relative income status traditionally associated with their skill level. These changes might help explain some of the social frustration that has been at the centre of the political debate in recent years.
    Keywords: job polarisation, living standards, middle class
    JEL: J01
    Date: 2019–07–19
  7. By: Jeffry Frieden (Harvard University)
    Abstract: A backlash against globalization has led to widespread political movements hostile both to economic integration and to existing political institutions throughout the advanced industrial world. Openness to the movement of goods, capital, and people has had important distributional effects. These effects have been particularly marked in communities dependent upon traditional manufacturing, some of which have experienced a downward spiral from the direct economic effects of foreign competition through broader economic decline to serious social problems. Those harmed by globalization have lashed out both at economic integration, and at the elites they hold responsible for their troubles. Political discontent is in part due to failures of compensation – insufficient provision of social safety nets for those harmed by economic trends. It is also due to failures of representation – the belief that prevailing political parties and politicians have not paid adequate attention to the problems faced by large groups of voters. Countries vary on both dimensions, as do national experiences with the populist upsurge. Previously dominant socio-economic interests and political actors may act to try to address this dissatisfaction, but the path faces serious economic and political obstacles.
  8. By: Seyyedmilad Talebzadehhosseini; Steven R. Scheinert; Amirarsalan Rajabi; Mostafa Saeidi; Ivan Garibay
    Abstract: Existing research argues that countries increase their production baskets based on the available capabilities, adding products which require similar capabilities to those already produced, a process referred to as path dependency. Expansions to include goods that use divergent capabilities from those currently in the economy requires a structural change in available capabilities. Structural changes in existing capabilities contributes to countries economic growth and development. Economic development increases environmental risks from higher consumption of energy and natural resources. Managing that risk is critical and a transition to a green economy can help. The main objective of this research is to determine if structural changes or path dependency drives the expansion in production of green economy products. We consider a dataset with 138 countries over the period of 2008 to 2017, with a focus on specific case study examples, including all countries in the world and China. The results of this research show countries increased their green production baskets based on their available capabilities following path dependency as well as by expanding to products that path dependency does not predict. This suggests that, while path dependency may explain some expansion in green economies, additional theories are needed to fully explain observed green economic expansion.
    Date: 2019–06
  9. By: Brian Bell; Pawel Bukowski; Stephen Machin
    Abstract: To what extent do UK companies share their profits with employees? Brian Bell, Pawel Bukowski and Stephen Machin find that rent-sharing is on a much smaller scale today than during the 1980s and 1990s - and that the decline coincides with a rise in firms' product market power alongside a fall in workers' bargaining power.
    Keywords: rent sharing, inclusive growth
    JEL: J30
    Date: 2019–07

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