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

  1. "Fiscal Reform to Benefit State and Local Governments: The Modern Money Theory Approach" By L. Randall Wray
  2. Capitalist corruption leading to global socio-economic collapse By Jakhotiya, Girish
  3. Patterns of Economic Growth in Dependent Market Economies: The Case of Central Eastern Europe By Krisztina Soreg

  1. By: L. Randall Wray
    Abstract: This paper will present the Modern Money Theory approach to government finance. In short, a national government that chooses its own money of account, imposes a tax in that money of account, and issues currency in that money of account cannot face a financial constraint. It can make all payments as they come due. It cannot be forced into insolvency. While this was well understood in the early postwar period, it was gradually "forgotten" as the neoclassical theory of the household budget constraint was applied to government finance. Matters were made worse by the development of "generational accounting" that calculated hundreds of trillions of dollars of government red ink through eternity due to "entitlements." As austerity measures were increasingly adopted at the national level, fiscal responsibility was shifted to state and local governments through "devolution." A "stakeholder" approach to government finance helped fuel white flight to suburbs and produced "doughnut holes" in the cities. To reverse these trends, we need to redevelop our understanding of the fiscal space open to the currency issuer--expanding its responsibility not only for national social spending but also for helping to fund state and local government spending. This is no longer just an academic debate, given the challenges posed by climate change, growing inequality, secular stagnation, and the rise of Trumpism.
    Keywords: Modern Money Theory; Budget Deficits; State and Local Government Finance; Devolution; Generational Accounting; Stakeholder Approach
    Date: 2019–09
  2. By: Jakhotiya, Girish
    Abstract: In a recently conducted business conclave, the powerful corporate bosses agreed that capitalism should serve the purpose of social equity. While forming the World Trade Organization (WTO), it was expected that the economies world-wide would promote an entrepreneurial culture to create ‘wealth for all’. In reality, it is the crony capitalists who exploited most of the global opportunities of growth even at the cost of their home countries. We observe a systematic capitalist approach to the conduct of corruption across the globe, denying even base-line opportunities of prosperity to the common people. Corruption by the crony capitalists has been either structurally supported by ideological corruption or systemically promoted by the so-called administrative reforms instituted by the corrupt politicians. Although, communism too ultimately promotes corruption through the ranks and files of socio-political structures, crony capitalism has almost destroyed the confidence of common people in global economic cooperation. Therefore, countries after countries and their political leaders are now resorting to the gimmicks of excessive nationalism to impress the masses with short-term gains. It is high time that we wisely think about curtailing capitalist corruption to create an atmosphere of equal opportunity through equity.
    Keywords: Crony capitalism, Communism, Imbalanced Growth, Income Inequality, Ideological Corruption, WTO
    JEL: P1 P2
    Date: 2019–08–29
  3. By: Krisztina Soreg (University of Sopron, Alexandre Lamfalussy Faculty of Economics)
    Abstract: The development pattern of certain Central Eastern European Countries has always represented a special case within Europe?s overall economic growth as well as social progress. Current paper examines the main growth tendencies of the so-called dependent market economies (DMEs) and also provides an extended definition for latter model. In frames of the comparative analysis, the research is based on investigating the relationship between the presence and activity of TNCs and MNCs through their FDI inflow contribution to the destination countries, the performance of the main investor economies and trading countries and also the GDP growth of the DMEs. According to the evidence, in certain countries ? e.g. Hungary ? a dual economic structure has emerged strongly relying on the multinational sector successfully being integrated into the world economy and a weak domestic sector that is in most cases, not capable of selling its goods and services in a global market. The lack of high value added production and the constant reliance on cheap labour force may further deepen the diverging tendency compared to the developed economies. Our main hypothesis assumes that integrated peripheries ? due to certain asymmetric interdependencies ? are not likely to produce significant long-term economic convergence to the centre economies with the current conditions of global capitalism and a strongly FDI based growth path they have developed.
    Keywords: dependent market economies, economic growth, development economics, Central Eastern European Countries, varieties of capitalism
    JEL: F10 O11 P12
    Date: 2019–07

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