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on Post Keynesian Economics |
| By: | Jo, Tae-Hee |
| Abstract: | Critics have repeatedly claimed that heterodox economics has failed in that it has limited acceptance by the mainstream of the economics profession and little influence on other approaches and policies. They blame heterodox economists for their own failure. I subject this claim to critical examination from the perspective of Veblen’s evolutionary methodology. Veblen’s theory of the business enterprise will be used as an example, which exemplifies the case that a ‘blasphemous’ theory is ignored and marginalized even though it provides rich insights into economy and society. Heterodox economics has shown a similar path. It is also argued that social science does not follow the biological principle of natural selection. What survives does not necessarily mean the fittest in the social realm. The history of science is replete with paradoxical incidents that an incoherent, irrelevant, or even wrong theory becomes dominant and widely accepted because it is one that serves the vested interests in academia and society. Economics is no exception. |
| Keywords: | Thorstein Veblen, Evolution, Business Enterprise, Heterodox Economics |
| JEL: | B15 B25 B50 D21 |
| Date: | 2019–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:97720&r=all |
| By: | Philip Arestis; Jesus Ferreiro; Carmen Gómez |
| Abstract: | For mainstream economics, rigidities in the labour market are a key determinant of the labour market results in terms of employment and unemployment. Thus, mainstream economics recommends full flexibility in the labour markets. Following these prescriptions, most European countries have introduced labour market reforms that have affected affect the conditions to hire and fire permanent workers and the constraints to the use of temporary employment contracts. However, the empirical evidence clearly shows that a conclusion about the impact of labour market reforms on total employment cannot be reached. Indeed, recent empirical evidence, argues that a higher flexibility in the employment protection has a negative impact on employment. This implies that a higher labour flexibility is associated with a higher labour segmentation, characterized by a rising share of temporary workers but not with a higher total employment |
| Keywords: | Employment protection legislation, employment, unemployment |
| JEL: | E24 J21 J41 J48 J68 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:ast:wpaper:0048&r=all |
| By: | Dimitri B. Papadimitriou; Michalis Nikiforos; Gennaro Zezza |
| Abstract: | This Strategic Analysis examines the US economy's prospects for 2020-23 and the risks that lie ahead. The baseline projection generated by the Levy Institute's stock-flow consistent macroeconomic model shows that, given current fiscal arrangements and the slowdown in the global economy, the pace of the US recovery will slacken somewhat, with a growth rate that will average 1.5 percent over the next several years. The authors then point to three factors that can derail this already weak baseline trajectory: (1) an overvalued stock market; (2) evidence that the corporate sector's balance sheets are more fragile than they have ever been in the postwar period; and (3) risks in the foreign sector stemming from the slowdown of the global economy, an overvalued dollar, and the current administration's erratic trade policy. |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levysa:sa_jan_20&r=all |
| By: | Julia M. Puaschunder (The New School, Department of Economic, USA); Martin Gelter (Fordham University School of Law and Center on European Union Law) |
| Abstract: | Political economy concerns historical, legal and heterodox economics analysis of complex systems. This article attempts to analyze the current state of the European Union from historical, legal and interdisciplinary economics perspectives. Historically, the ancient Athenian democracy, the Holy Roman Empire and the early formation of the United States serve as examples of early innovative legal constructs of their times that were sui generis and share key features with the current European Union. Regarding legal developments, this paper discusses the bicameral parliamentary structure, electoral processes and populist pressures. The future of the European Union economy is likely to see an AI (r)evolution shaping markets and rising big data revenues. This develop necessitates the creation of a fifth fundamental freedom of data transfer within the European Union, as well as taxation of growth generated by big data. Heterodox economic growth theories will increasingly have to account for this growth. |
| Keywords: | Ancient Athenian democracy, Artificial Intelligence, Bicameral parliament, Big data, Electoral system, European Union, Holy Roman empire, market disruption, political economy, Populist pressures, Taxation, United States |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:smo:ipaper:001jp&r=all |
| By: | Tanweer Akram; Anupam Das |
| Abstract: | Keynes argued that the short-term interest rate is the main driver of the long-term interest rate. This paper empirically models the relationship between short-term interest rates and long-term government securities yields in Canada, after controlling for other important financial variables. The statistical analysis uses high-frequency daily data from 1990 to 2018. It applies both the cointegration technique and Granger causality within the vector error correction (VEC) framework. The empirical results suggest that the action of the monetary authority is an important determinant of Canadian government securities yields, which supports the Keynesian perspective. These findings have important implications for investors, financial analysts, and policymakers. |
| Keywords: | : Canadian Government Bond Yields; Long-Term Interest Rate; Short-Term Interest Rate; Monetary Policy; Cointegration; Granger Causality |
| JEL: | E43 E50 E60 G10 G12 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_944&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/hiaqa97n684boj041a440irqd&r=all |
| By: | Giovanni Dosi (Laboratory of Economics and Management); Mauro Napoletano (Observatoire français des conjonctures économiques); Andrea Roventini (Observatoire français des conjonctures économiques); Tania Treibich (Observatoire français des conjonctures économiques) |
| Abstract: | In this work we study the granular origins of business cycles and their possible underlying drivers. As shown by Gabaix (Econometrica 79:733–772, 2011), the skewed nature of firm size distributions implies that idiosyncratic (and independent) firm-level shocks may account for a significant portion of aggregate volatility. Yet, we question the original view grounded on “supply granularity”, as proxied by productivity growth shocks – in line with the Real Business Cycle framework–, and we provide empirical evidence of a “demand granularity”, based on investment growth shocks instead. The role of demand in explaining aggregate fluctuations is further corroborated by means of a macroeconomic Agent-Based Model of the “Schumpeter meeting Keynes” family Dosi et al. (J Econ Dyn Control 52:166–189, 2015). Indeed, the investigation of the possible microfoundation of RBC has led us to the identification of a sort of microfounded Keynesian multiplier. |
| Keywords: | Business cycles; Granular residual; Granularity hypothesis; Agent-based models; Firm dynamics ; Productivity growth; Investment growth |
| JEL: | C63 E12 E22 E32 O4 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/1p3k1810c89k3b4gg6n2nuc0m4&r=all |
| By: | Lambert, Thomas; Velardo, Tristan |
| Abstract: | Joseph Schumpeter’s writings on entrepreneurship and innovation have had a profound impact on economic theory and economic thought. Schumpeter initially saw the small entrepreneur as the source of innovation and economic growth within an economic system but later saw large corporations as the source of much innovation. Because large corporations, and in modern times many governments and universities as well, play such a large role in funding research and development and new innovations, much of the bank financing of innovation is done by smaller banks for small entrepreneurs and their ideas. Venture capitalists and self-financing are the other two major forms of small entrepreneur/small business financing. Meanwhile, the financial markets (stocks and bond markets) only indirectly play a role in funding the innovation of large corporations via changes in these firms’ stock prices. Changes in stock prices reflect an estimate of the large firms’ research and development efforts and their prospects for profitable, future innovation. Much corporate research and development is financed internally within the organization as an expense of doing business. Meanwhile, government and university funding through tax dollars and non-profit sources indirectly subsidize corporate innovation because governmental entities and universities take on risks that the private sector will often not tolerate. Yet, large corporations are often the beneficiaries of such governmental and university financing of research and development efforts. In today’s times, Schumpeter would be impressed with the success of large firms regarding innovation but probably would be disappointed about the marginalization of the small entrepreneurial firm and the banking system and their diminished roles in innovation. This paper summarizes Schumpeter’s views on how the banking system and financial markets could play a role in innovation and explains how a modern day monopoly capital system (Baran and Sweezy 1966) and its financial system have transformed entrepreneurship and innovation away from small business and innovation by the small entrepreneur. Baran, Paul A, and Paul M Sweezy. 1966. Monopoly Capital: An Essay on the American Economic and Social Order. New York: Monthly Review Press. |
| Keywords: | banking, innovation, small business, big business |
| JEL: | B26 B31 B51 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:97742&r=all |
| By: | Giraud, Yann (Université de Cergy-Pontoise) |
| Abstract: | Textbooks are both neglected and at times overused as objects in the history of economics. They are neglected because most historians, borrowing from Kuhn, tend to regard them as passive receptacles of past knowledge, yet they are also overused as shortcuts to study the state of economic doctrine at a certain point in time. Looking at the existing historical literature that studies or uses textbooks, this chapter shows how a better understanding of the specific pedagogical and institutional environments in which textbooks operate can help build thicker and more accurate histories of the role they have played, not just in disseminating, but also in creating and transforming economic knowledge. |
| Date: | 2018–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:j9tkf&r=all |
| By: | Kolev, Stefan |
| Abstract: | Vincent Ostrom's legacy is revisited in this paper along three dimensions: Ostrom's contributions as a historian of politico-economic thought, as a complexity theorist, and as an epistemologist. All three dimensions are captured from a perspective which has seldom been studied systematically before: The paper reconstructs Ostrom as a reader and interpreter of German politico-economic thought, especially of Max Weber's theory of bureaucracy and of Walter Eucken's theory of social and epistemic orders. The systems of these two German social scientists embody for Ostrom the two types of social order central to his own typology. The paper incorporates archival sources from the Elinor and Vincent Ostrom Papers, including unpublished papers and correspondence with German social scientists he met during the Ostroms' 1981/1982 stay at Bielefeld University's Center for Interdisciplinary Research (ZiF). Overall, this narrative focuses on what Ostrom called in his reception of the Freiburg School "Eucken's challenge": A set of inquiries about the relevance of political economy for the study of polycentric orders. |
| Keywords: | Bloomington School,Freiburg School,political theory,history of economics,economic sociology,polycentricity,epistemology |
| JEL: | A12 B25 B41 D73 H11 H41 Z13 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:aluord:1906&r=all |
| By: | Dimick, Matthew; Library, Cornell |
| Abstract: | Cornell Journal of Law and Public Policy: Vol. 26 : Iss. 1 , Article 1 What should be done about rising income and wealth inequality? Should the design and adoption of legal rules take into account their effects on the distribution of income and wealth? Or should the tax-and transfer system be the exclusive means to address concerns about inequality? A widely-held view argues for the latter: only the tax system, and not the legal system, should be used to redistribute income. While this proposition comes in a variety of normative arguments and has support across the political spectrum, there is also a well-known law-and economics version. This argument, known as the “double-distortion” argument, is simply stated. Legal rules that redistribute income only add to the economic distortions that are already present in the tax system. It would therefore be better for everyone, and especially the poor, to instead adopt an efficient, nonredistributive legal rule, and increase redistribution through the tax system. This Article challenges the double-distortion argument from a law and-economics perspective. There are two main arguments, in addition to several other subsidiary points. First, in the abstract, there is no reason to believe that legal rules that have redistributive effects will always reduce efficiency; indeed, they can sometimes increase efficiency. Examples from the regulation of product markets, labor markets, and financial markets underscore this claim. In these cases, legal redistribution is more efficient than redistribution through the tax system. Second, legal rules are likely to be more attractive than taxation precisely in cases where inequality itself or normative concern about inequality is high. Under the optimal tax policy, higher inequality or greater concern about inequality will justify larger tax distortions. Therefore, a particular legal rule is more likely to be more efficient than the optimal tax policy under these circumstances. The ultimate conclusion is that a mix of legal rules and taxation, rather than taxation exclusively, will be the best way to address economic inequality. |
| Date: | 2018–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:osf:lawarx:eusrw&r=all |
| By: | Séverine Deneulin and Jhonatan Clausen |
| Abstract: | This paper provides an overview of Sen's revised edition of Collective Choice and Social Welfare (London: Penguin Books, 2017) and examines the relevance of its arguments in the context of Peru. It focuses on three main points: 1) a social choice approach for addressing global problems; 2) an expanded informational basis for making judgments; and 3) a public reasoning view of collective decision-making. The paper then discusses these points in relation to development policy in Peru. It critically analyses the human-social development strategy followed by the Peruvian government in recent years and, in particular, the capacity of public reasoning to reflect and sustain the priorities of the poorest and marginalized in the public policy agenda |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:qeh:ophiwp:ophiwp113.pdf&r=all |