nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2019‒11‒04
six papers chosen by
Karl Petrick
Western New England University

  1. The Credit Cycle and the Financial Fragility Hypothesis: An Evolutionary Population Approach By JORGE OMAR RAZO-DE ANDA; ANA CECILIA PARADA-ROJAS; SALVADOR CRUZ-AKÉ
  2. Modern Money Theory is a hoax as its arguments are contradictory, based on irrational propositions, and impractical By Naba Kumar Adak
  3. Towards Legal Empirical Macrodynamics: A Research Agenda By Julia M. Puaschunder
  4. Between communism and capitalism: long-run inequality in Poland By Pawel Bukowski; Filip Novokmet
  5. Inequality and the Economic Participation of Women in Sub-Saharan Africa: An Empirical Investigation By Simplice A. Asongu; Nicholas M. Odhiambo
  6. The Political Economy of Testing in Latin America and Sub-Saharan Africa By Barbara Bruns; Maryam Akmal; Nancy Birdsall

    Abstract: Minsky's idea of triggering a financial crisis is the adoption of risky financial positions by companies and their relationship with the financial system through banks and the credit they provide. The present work seeks to provide an explanation from a microeconomic point of view through the behavior of agents and their decision making under a Theory of evolutionary games, especially population games. The great advantage of this type of games is that it allows us to obtain proportions of the different decisions that a population or subpopulation is taking and how their interaction promotes equilibrium and the dynamics towards (or around) them.This allows us to determine the dynamics and equilibria of the credit cycle, following Minsky's idea of financial fragility. Additionally, the dynamics of the replicator allows transforming the differential equations in a Lotka-Volterra system, from which it can be concluded that both companies and banks adopt a predatory prey relationship in order to survive.
    Keywords: Capital Structure, Evolutionary Games, Financial crises
    JEL: C73 G02 G01
    Date: 2019–07
  2. By: Naba Kumar Adak (Sabang Sajanikanta Mahavidyalaya)
    Abstract: The purpose of this paper is to apprise the readers of the MMT?s misconception misrepresentation relating origin and character of money, monetary policy, fiscal policy and to explain that these concepts and theories of MMT are hypothetical and have no connection with how present economy is functioning and that if the suggestion of MMT for increasing budget-deficit without provisioning how that deficit will be redeemed then this policy of increasing deficit heedlessly will lead the economy as a whole to a catastrophe and collapse. This is a conceptual/ theoretical paper that addresses various definitions, concepts, theories and practices that the MMT believes to be prevalent in the present economics studies and economic activities are unrealistic and their suggestions are unhelpful for smooth function of the economy. Based scholarship, I make an argument that these need to be corrected or re-addressed. Bolstered by published research in this domain, I further argue that this exercise is necessary in order to eliminate the negative effects of the MMT theories on the economy at large. The other purpose of this paper is to make suggestions about how and why money originated and how the present monetary and fiscal policies are being framed and followed and how those policies can be corrected to facilitate smooth functioning of the economy and to achieve sustainable economic growth. To make economy function properly and to make sure that the economy does not face any austerity or unemployment or ineffective production and distribution system, the faults or defects with the MMT that is gaining ground among economists should be explained clearly and conclusively so that economists do not fall in the trap of MMT?s imaginary and hypothetical theory of ?functional finance? and ?a government that issues its sovereign currency can never go default?. And finally, grounded in scholarly literature, I also argue that other notions relating to monetary, fiscal and financial policies also need to be clearly understood to make those policies viable and efficient for the economy to have a balance between production and distribution.
    Keywords: functional finance, hierarchy of money, Modern Money Theory, credit theory of money, state theory of money, printing money, theory of consolidation between government and central bank, full employment, High powered money
    Date: 2019–07
  3. By: Julia M. Puaschunder (The New School, Department of Economics)
    Abstract: Legal scholarship exists since the beginnings of science. Attempts to quantify the economic consequences of legal codifications have been made in the vibrant interdisciplinary field of law and economics. The socio-economic calculus of public policies has been addressed in new public management. Behavioral economics has entered the legal scientific discourse in the emerging field of empirical legal studies backed by ample evidence of the effect of law on socio-dynamics retrieved from manifold field and laboratory experiments. Behavioral insights is the most recent Nobel Prize crowned development to understand human decision making in the legal and public fields to help civil servants and legal executives foster the socio-economic outcomes of their work. All these variant interdisciplinary approaches aim at enlightening at legal codifications’ socio-economic outcomes to improve public collectives. In all these cases, empirics derived from quantitative and qualitative research help gain inferences for legal theory building and the strengthening of public policy implementations. This article argues that the time is ripe to dare the next step in legal empirical analyses by drawing from insights retrieved from big data and algorithmic machine learning but also introduce the use of optimal control macrodynamic modelling—a methodology originating in physics that entered macroeconomics and related disciplines to quantify and optimally control economic theory and practice. Given the ongoing big data revolution and exponentially rising data transfer coupled with unprecedented computational power advancements, the means are now available—for the first time—to push for empirical legal studies embracing novel tools—such as hierarchical modelling Bayesian statistics as well as optimum control sophistications—to derive inferences on how to improve legal theory and practices in innovative ways as never before possible. On the brink of artificial intelligence entering the labor force at a large scale, legal scholarship can now adapt to the novel market opportunities with acknowledging unprecedented computational power and methodological sophistication in deriving insights from big data. Heralding a new age of legal empirical macrodynamics also serves the legal community in light of the predicted heightening demands for creativity as future valuable asset of humanoid legal practitioners and scholars in comparison to repetitive tasks likely soon being outsourced to AI and machine learning.
    Keywords: Artificial Intelligence, Behavioral Economics, Behavioral Political Economy, Big Data, Governance, Machine Learning, New Public Management, Legal Scholarship, Optimal Control, Social Credit Score
    Date: 2019–08
  4. By: Pawel Bukowski; Filip Novokmet
    Abstract: How has inequality in Poland evolved between communism and capitalism to reach one of the highest levels in Europe today? Pawel Bukowski and Filip Novokmet chart a century of data on Polish inequality, 1892-2015, to examine the key causes. Their work illustrates the central role of policies and institutions in shaping long-run inequality.
    Keywords: income inequality, transformation, poland
    JEL: D31 E01 J3 N34
    Date: 2019–11
  5. By: Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: This study investigates the effect of inequality on female employment in 42 countries in sub-Saharan Africa for the period 2004-2014. Three inequality indicators are used, namely, the: Gini coefficient, Atkinson index and Palma ratio. Two indicators of gender inclusion are also employed, namely: female employment and female unemployment rates. The empirical analysis is based on the Generalised Method of Moments (GMM).The following main findings are established. First, inequality increases female unemployment in regressions based on the Palma ratio. Second, from the robustness checks, inequality reduces female employment within the frameworks of the Gini coefficient and Palma ratio.
    Keywords: Africa; Gender; Inclusive development
    JEL: G20 I10 I32 O40 O55
    Date: 2019–01
  6. By: Barbara Bruns (Center for Global Development); Maryam Akmal (Center for Global Development); Nancy Birdsall (Center for Global Development)
    Abstract: Most countries in sub-Saharan Africa have not implemented testing of children’s learning that can be benchmarked regionally or globally. In contrast, in the last two decades, almost all countries in Latin America have participated in regionally and globally benchmarked testing initiatives. Our analysis of the political economy of cross-national learning measurement in Latin America suggests that policymakers perceive the risks of exposing their education system’s performance by joining cross-national assessments, but they also value the quality of the data generated, the strengthening of domestic technical capacity, and the political benefits in using comparative results to argue for reforms or to advertise progress. We document that in Ecuador and Peru cross-national tests played an important role in both stimulating and justifying reforms that have produced major improvements in learning. In sub-Saharan Africa, no cross-national test has been implemented as consistently or widely as the Latin American regional test. The context in Africa makes regional cooperation on cross-national testing more daunting—countries are poorer and more linguistically diverse than in Latin America, raising the relative costs of developing and administering cross-national tests. The experience of Latin America suggests that a coordinated and efficient application of resources in implementing cross-national tests in Africa, on the part of countries and with support of the international community, could help build countries’ national capacity, strengthen focus on learning, support better research, and help diffuse reforms that raise learning.
    Date: 2019–09–12

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