nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2019‒09‒02
eight papers chosen by
Karl Petrick
Western New England University

  1. The equalizing spiral in early 21st century Brazil: a Kaleckian model with sectoral heterogeneity By Clara Brenck; Laura Carvalho
  2. "Evolving International Monetary and Financial Architecture and the Development Challenge: A Liquidity Preference Theoretical Perspective" By Jorg Bibow
  3. Heterodox economics and Economic Anthropology: reflections prompted by two books By Sergio Cesaratto
  4. Animal spirits and household spending in Europe and the US By Bahar Öztürk; Ad Stokman
  5. Pockets of effectiveness: The contributions of critical political economy and state theory By Giles Mohan
  6. A Survey on the Washington Consensus and the Beijing Model: Reconciling Development Perspectives By Simplice A. Asongu; Paul N. Acha-Anyi
  7. The politics of state capacity and development in Africa - Reframing and researching ‘pockets of effectiveness’ By Sam Hickey
  8. The difficult relationship between historical ordoliberalism and Adam Smith By Horn, Karen

  1. By: Clara Brenck; Laura Carvalho
    Abstract: The relative success of the Brazilian and other South American economies in combining higher growth rates with a reduction of income inequality in the 2000s can be better understood through the study of the relationship between wage distribution, consumption patterns and the composition of employment. By starting from the Neo-Kaleckian framework, this paper builds a two-sector open economy model with two types of workers. An unstable cumulative causation mechanism through which a reduction in wage inequality increases consumption of non-tradable goods, leading to higher demand for low-skilled labor and a further reduction in inequality may arise.
    Keywords: growth, distribution, wage inequality, employment composition, Kaleckian model
    JEL: C62 E12 E25 O38 O54
    Date: 2019–08–19
  2. By: Jorg Bibow
    Abstract: This paper investigates the peculiar macroeconomic policy challenges faced by emerging economies in today's monetary (non)order and globalized finance. It reviews the evolution of the international monetary and financial architecture against the background of Keynes's original Bretton Woods vision, highlighting the US dollar's hegemonic status. Keynes's liquidity preference theory informs the analysis of the loss of policy space and widespread instabilities in emerging economies that are the consequence of financial hyperglobalization. While any benefits promised by mainstream promoters remain elusive, heightened vulnerabilities have emerged in the aftermath of the global crisis.
    Keywords: Emerging Economies; Hyperglobalization; Liquidity; Liquidity Preference Theory; Reserve Accumulation; US Dollar Hegemony
    JEL: B22 E43 E44 F02 F36 G12
    Date: 2019–08
  3. By: Sergio Cesaratto
    Abstract: This paper has been long ago inspired by Jared Diamond (1997) and, in particular, by his extensive use of the concept of economic surplus as the key to the development of civilization. Unfortunately, Diamond does not even mention the origin of the concept in classical and pre-classical economics. Moreover, Diamond does not pay any consideration to the long debates in economic anthropology on the role of economic analysis in studying primitive and ancient economic formations. These debates are instead the object of a more recent book by Cedrini & Marchionatti (2017), who context the neoclassical “imperialist” attempt to occupy the territory of economic anthropology. They rely, however, upon the frail institutionalist background provided by Karl Polanyi and his school and by other anthropologists of similar inspiration. In so doing, they fail to provide a robust economic basis to institutional change, by firmly anchoring it around the changing modes of generation and distribution of the economic surplus. These notes are explorative, as also shown by a post-scriptum. Comments welcome.
    Keywords: Surplus approach, Economic anthropology, Marx, Sraffa, Polanyi
    JEL: A12 B51 B52 Z13
    Date: 2019–07
  4. By: Bahar Öztürk; Ad Stokman
    Abstract: We investigate whether consumer confidence has an independent effect on household spending. First, we control for a common set of factors that drive both consumer confidence and household spending. Next, we interpret the non-systematic residuals in the country consumer confidence equations as a proxy for animal spirits, "a spontaneous urge to action rather than inaction" in Keynes' words, and subsequently include this proxy in the spending equations as an additional explanatory variable. Our results suggest that animal spirits exist and may have a considerable impact on spending growth in Europe and the US.
    Keywords: animal spirits; private consumption
    JEL: E21
    Date: 2019–08
  5. By: Giles Mohan
    Abstract: The pockets of effectiveness (PoEs) debates and political settlements literature are rooted in particular forms of political economy analysis. At one level, this is a positive contribution to the mainstream development policy literature, and allows us to characterise political systems and their power relations, as well as forcing us to pay close attention to the dynamics of state institutions. Yet, these literatures are disconnected from a tradition of more critical political economy analysis and state theory. This brief review is a first attempt to connect these bodies of theory, largely in an African context. We find some promising new (and old) avenues of inquiry to connect critical political economy to PoE work, largely in terms of various meso-level theories of how states function, which move us away from all-encompassing metatheories of the state. Such meso-level theories enable us to theorise the more fine-grained and developmentally positive institutions that constitute PoEs, since much of the meta-theory tends to be both broad brush as well as causally pessimistic, insofar as African states are rarely seen to engender positive developmental outcomes. These meso-level theories can also be more easily elaborated methodologically, which is vital, since most of the claims about state capacity and function require contextual empirical analysis.
    Date: 2019
  6. By: Simplice A. Asongu (Yaoundé/Cameroon); Paul N. Acha-Anyi (Walter Sisulu University, South Africa)
    Abstract: Reconciling the two dominant development models of the Washington Consensus (WC) and Beijing Model (BM) remains a critical challenge in the literature. The challenge is even more demanding when emerging development paradigms like the Liberal Institutional Pluralism (LIP) and New Structural Economics (NSE) schools have to be integrated. While the latter has recognized both State and market failures but failed to provide a unified theory, the former has left the challenging concern of how institutional diversity matter in the development process. We synthesize perspectives from recently published papers on development and Sino-African relations in order to present the relevance of both the WC and BM in the long-term and short-run respectively. While the paper postulates for a unified theory by reconciling the WC and the BM to complement the NSE, it at the same time presents a case for economic rights and political rights as short-run and long-run development priorities respectively. By attempting to reconcile the WC with the BM, the study contributes at the same to macroeconomic NSE literature of unifying a development theory and to the LIP literature on institutional preferences with stages of development. Hence, the proposed reconciliation takes into account the structural and institutional realities of nations at different stages of the process of development.
    Keywords: Economic thought; Development; Beijing model; Washington Consensus; Africa
    JEL: B10 O11 O19 O55
    Date: 2019–01
  7. By: Sam Hickey
    Abstract: The role of bureaucratic ‘pockets of effectiveness’ (PoEs) in driving development is generating renewed interest within development studies and, to an extent, development policy. Existing research on PoEs emphasises that politics plays a leading role in shaping the emergence and sustainability of high-performing public sector organisations. However, the field as yet lacks a clear sense of the conditions under which this happens. This paper sets out the conceptual and methodological underpinnings of a new project that seeks to address this problem within the context of sub-Saharan Africa. Drawing on an alignment of political settlements analysis with critical theories of state power and African politics, the paper argues that PoEs are both shaped by, and help to reproduce, particular forms of politics and institutions in sub-Saharan Africa. This means that PoEs can reveal a good deal about how the competing logics of regime survival, state-building and democratisation are playing out in Africa, and the implications for development. The paper proposes a methodological approach for identifying and exploring PoEs and summarises the results of expert surveys undertaken in Ghana, Rwanda, Uganda and Zambia. These surveys resulted in our project focusing mainly on the economic technocracy as the key domain within which PoEs have flourished, particularly in terms of ministries of finance, central banks and revenue authorities, along with some other interesting outliers and underlying processes of state-building. Further papers from this project will include in-depth case studies of these specific PoEs and processes in each country, synthesised country analyses and comparative overviews.
    Date: 2019
  8. By: Horn, Karen
    Abstract: Ever since the global financial crisis of 2008, interpreted by some observers as a foreseeable failure of "unfettered" capitalism, the German intellectual tradition of ordoliberalism has been meeting with increased interest. Its emphasis on good government, appropriate rules and institutions makes it attractive. Welcome as this may be, however, that trend may impact the reception of the works of Adam Smith in a problematic way, since the key historical figures of ordoliberalism reject his theory vigorously, even though, from today's perspective, their concerns and policy recommendations look very parallel to his. Their common hope is human flourishing. Just like the Scot, the broad scope of their vision encompasses society as a whole, not just the market; they are concerned with ethics, not just economics. But what, then, can solve the puzzle of this implausible rejection, by which the ordoliberals contribute to a deep-rooted prejudice against Smith? In this paper, Karen Horn takes stock of their concrete criticisms, which turn out to be based on a narrow understanding of Smith's work. She suggests that it is religion that stands at the root of the explanation, though situational elements may also play a role. The essential contentious point seems to be what the ordoliberals take for the Scot's naïve belief in natural harmony, the sources of which they see in his stoicism and possible deism. The deeper problem for them with Smith is the pagan flavour and the systematic normative relativism of an essentially evolutionary approach to human values.
    Keywords: Ordoliberalism,Adam Smith,History of economic thought,Natural harmony
    JEL: B12 B3
    Date: 2019

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