nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2020‒02‒24
ten papers chosen by
Karl Petrick
Western New England University

  1. Liquidity preference, capital accumulation and investment financing: Fernando Carvalho’s contributions to the Post-Keynesian paradigm By José Luis Oreiro; Luiz Fernando de Paula; João Pedro Heringer Machado
  2. House prices, private debt and the macroeconomics of comparative political economy By James Wood; Engelbert Stockhammer
  3. "Ages of Financial Instability" By Mario Tonveronachi
  4. "A Labor Market-Augmented Empirical Stock-Flow Consistent Model Applied to the Greek Economy" By Christos Pierros
  5. Ethique et globalisation économique By Jacques Fontanel
  6. Critique du capitalisme et différend salarial : Lyotard lecteur kantien de Marx By Richard Sobel
  7. Journal of the History of Economic Thought Preprints – Edmond Malinvaud's Criticisms of the New Classical Economics: Restoring the Nature and the Rationale of the Old Keynesians' Opposition By Renault, Matthieu
  8. The Origins of Creativity: The Case of the Arts in the United States since 1850 By Karol J. Borowiecki
  9. The probability of multidimensional poverty in the European Union By Paolo Liberati; Giuliano Resce; Francesca Tosi Tosi
  10. "The Relationship between Technical Progress and Employment: A Comment on Autor and Salomons" By Jesus Felipe; Donna Faye Bajaro; Gemma Estrada; John McCombie

  1. By: José Luis Oreiro (None); Luiz Fernando de Paula; João Pedro Heringer Machado
    Abstract: This paper assesses the main theoretical contributions by Fernando Cardim de Carvalho to the Post-Keynesian Economics Paradigm: his elucidation of the fundamental principles that define the concept of a monetary production economy; his analysis of decision-making under non-probabilistic uncertainty; his development of a portfolio choice theory in which the decision to invest is regarded as one of possible wealth accumulation strategies; his liquidity preference theory, including its application to banks’ portfolio allocations under uncertainty; and finally his analysis of the finance-funding circuit and its implications for the functioning of monetary economies.
    Keywords: Post-Keynesian theory; Keynes; monetary economics
    JEL: B59 E12 E44
    Date: 2020–02
  2. By: James Wood; Engelbert Stockhammer
    Abstract: Prevailing Comparative Political Economy accounts conceptualise the macroeconomic role of the financial sector in advanced economies either through the Varieties of Capitalism’s (VoC) emphasis on corporate finance or on the growth model perspective’s focus on household debt to support consumption. As neither framework accounts for the important macroeconomic influence of house prices and mortgage credit, we suggest the prevailing Comparative Political Economy accounts of the financial sector remain underdeveloped. Through an econometric evaluation of 18 advanced economies from 1980 to 2017, we demonstrate that household debt has larger and more statistically significant effects on GDP growth than business debt, and household debt volumes are largely determined by house price inflation. These results are consistent across the varieties of capitalism and advanced banking systems, suggesting the VoC’s focus on corporate finance is misplaced and the macroeconomic effects of household debt and house prices are underappreciated, especially in non-Anglo-American advanced economies.
    Keywords: Comparative political economy, macroeconomics; household debt, house prices
    JEL: N10
    Date: 2020–02
  3. By: Mario Tonveronachi
    Abstract: Starting from the mid-nineteenth century, this paper analyzes two periods of financial instability connected with financial globalization. The first culminates with the 1929 crisis, while the second characterizes the more recent experience starting from the 1970s. The period in between is divided into two subperiods. The first goes up to World War II and sees a retrenchment from globalization and the affirmation of a statist approach to national policy autonomy in pursuing domestic goals, for which we take as examples the New Deal, financial regulation, and the new international cooperative approach finally leading to Bretton Woods. The second subperiod, marked by the new international monetary order and limited globalization, although appearing as a relatively calm interlude, conceals the seeds of a renewed push toward financial fragility. The above periods are synthetically analyzed in terms of the development and mutual fertilization of theories, institutions, and vested public and private interests. The narrative is based on two interpretative keys: the Minskyan theory of financial fragility and changes in the public-private partnership, mainly with reference to the financial sector for which the role of the State as guarantor of last resort necessarily ensues. The lesson that can be derived is that a laissez-faire approach to globalization strengthens asymmetric powers and necessarily leads to overglobalization, as well as to financial and economic instability, rendering it extremely difficult and socially costly for the State to comply with its role of financial guarantor.
    Keywords: Financial Instability; Financial Fragility Theory; Globalization; International Cooperation; Financial Regulation; Public-Private Partnership
    JEL: B00 E1 E31 E32 E4 F33 G18
  4. By: Christos Pierros
    Abstract: This paper extends the empirical stock-flow consistent (SFC) literature through the introduction of distributional features and labor market institutions in a Godley-type empirical SFC model. In particular, labor market institutions, such as the minimum wage and the collective bargaining coverage rate, are considered as determinants of the wage share and, in turn, of the distribution of national income. Thereby, the model is able to examine both the medium-term stability conditions of the economy via the evolution of the sectoral financial balances and the implications of functional income distribution on the growth prospects of the economy at hand. The model is then applied to the Greek economy. The empirical results indicate that the Greek economy has a significant structural competitiveness deficit, while the institutional regime is likely debt-led. The policies implemented in the context of the economic adjustment programs were highly inappropriate, triggering private sector insolvency. A minimum wage increase is projected to have a positive impact on output growth and employment. However, policies that would enhance the productive sector's structural competitiveness are required in order to ensure the growth prospects of the Greek economy.
    Keywords: Stock-Flow Consistent; Labor Market Institutions; Internal Devaluation; Functional Income Distribution; Greece
    JEL: E25 F47 J08
  5. By: Jacques Fontanel (CESICE - Centre d'études sur la sécurité internationale et les coopérations européennes - UPMF - Université Pierre Mendès France - Grenoble 2 - UGA - Université Grenoble Alpes)
    Abstract: Summary: Economics calls no morals or ethics. It claims to be science and it affirms that the proper functioning of individual interest constitutes the best economic and social solution for all economic agents. Any measure aimed at modifying the relentless and fair game of the market leads to perverse effects, such as unemployment, public debt or capital transfers, which will strain the future horizons of collective well-being. In this context, economic globalization constitutes major social progress. Heterodox economists question this sketchy concept of man. Concretely, the deviations from hypotheses compared to reality are numerous, such as the existence of competitive monopolies or oligopolies, the necessary political, strategic and sovereign interventions of the States, economic crises, growing inequalities, all the problems collective pollution and the excessive exploitation of the Earth that the particular economic interests can easily neglect to the detriment of the world community.
    Abstract: Résumé : La science économique n'appelle aucune morale ou éthique. Elle se veut science et elle affirme que le bon fonctionnement de l'intérêt individuel constitue la meilleure solution économique et sociale pour l'ensemble des agents économiques. Toute mesure tendant à modifier le jeu implacable et juste du marché conduit à des effets pervers, comme le chômage, l'endettement public ou les transferts de capitaux, qui grèveront les futurs horizons du bien-être collectif. Dans ce contexte, la globalisation économique constitue un progrès social majeur. Les économistes hétérodoxes s'interrogent sur cette conception sommaire de l'homme. Concrètement, les entorses des hypothèses par rapport à la réalité sont nombreuses, comme l'existence de monopoles ou d'oligopoles concurrentiels, les interventions politiques, stratégiques et régaliennes nécessaires des Etats, les crises économiques, les inégalités croissantes, l'ensemble des problèmes de pollution collective, notamment le réchauffement climatique, et l'exploitation excessive de la Terre, notamment de l'oekoumène, que les intérêts économiques particuliers peuvent aisément négliger au détriment de la collectivité mondiale.
    Keywords: ethics,globalization,economic crises,monopolies,pollution,Earth exploitation,State.,Economics,monopoles,Science économique,globalisation,crises économiques,exploitation de la Terre,Etat
    Date: 2020
  6. By: Richard Sobel (CLERSE - Centre Lillois d’Études et de Recherches Sociologiques et Économiques - UMR 8019 - Université de Lille - ULCO - Université du Littoral Côte d'Opale - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The present study aims at providing an analysis of Jean-François Lyotard's criticism of Marx theory of the wage-capital conflict, as it is presented in The Differend: Phrases in Dispute (1983). We uphold that Lyotard's analysis is important and original in many respects. First, it introduces into philosophical criticisms of Marx some considerations on the theory of language. Second, it deals with the wage-capital conflict as a Kantian Idea, made of some irreducible part—"an intractable wrong" done by one party (the Capital) to another (the Workers—, which cannot be expressed within a common language. The article reflects on the nature and consequences of Lyotard's criticism for Marxist studies.
    Abstract: Dans cet article, nous revenons sur la critique de la théorie marxiste du salariat par Jean-François Lyotard dans Le Différend(1983). Nous y soutenons que l'analyse de Lyotard est importante à plusieurs titres. D'abord parce que Lyotard introduit dans la critique philosophique du marxisme des considérations sur le langage. Ensuite parce que Lyotard théorise le rapport salarial comme «tort intraitable» infligé par une partie (le capital) sur une autre (le travail), identifiant donc le «différend» salarial à une Idée au sens kantien. L'article propose une réflexion sur la nature et les conséquences de la critique de Lyotard pour les études marxistes.
    Keywords: Lyotard (Jean-François),differend,post-modernism,language,wage labor,capitalism,différend,post-modernité,langage,salariat,capitalisme
    Date: 2019
  7. By: Renault, Matthieu
    Abstract: Unlike standard accounts, recent research in the history of macroeconomics has given increasing attention to the Old Keynesians’ criticisms of the New Classical Economics. In this paper, I address the case of Edmond Malinvaud, who began opposing the latter from the early 1980s and did so throughout the following thirty years. This study shows that his opposition was radical, i.e., multidimensional and systematic, and owes to the methodology and the practice of macroeconometric modeling. In turn, this twofold result sheds light on the nature and the rationale of the Old Keynesians’ opposition to the New Classical Economics from the 1970s onwards, which can be interpreted along the same lines.
    Date: 2019–12–31
  8. By: Karol J. Borowiecki (Department of Business and Economics, University of Southern Denmark, Odense, Denmark)
    Abstract: This research illuminates the historical development of creative activity in the United States. Census data is used to identify creative occupations (i.e., artists, musicians, authors, actors) and data on prominent creatives, as listed in a comprehensive biographical compendium. The analysis rst sheds light on the socio-economic background of creative people and how it has changed since 1850. The results indicate that the proportion of female creatives is relatively high, time constraints can be a hindrance for taking up a creative occupation, racial inequality is present and tends to change only slowly, and education plays a signi cant role for taking up a creative occupation. Second, the study systematically documents and quanti es the geography of creative clusters in the United States and explains how these have evolved over time and across creative domains. Third, it investigates the importance of outstanding talent in a discipline for the local growth of an artistic cluster.
    Keywords: Creativity, artists, geographic clustering, agglomeration economies, urban history
    JEL: R1 N33 Z11
    Date: 2019–03
  9. By: Paolo Liberati (Università degli Studi Roma Tre, Dipartimento di Economia); Giuliano Resce (Consiglio Nazionale delle Ricerche, Istituto di Fisiologia Clinica - Pisa); Francesca Tosi Tosi (Alma Mater Studiorum Università di Bologna, Dipartimento di Scienze Statistiche Paolo Fortunati)
    Abstract: This paper evaluates multidimensional poverty in European countries introducing two main novelties compared with the previous literature: first, the dimensions of poverty are selected on the basis of the shared values included in the Charter of Fundamental Rights of the European Union; second, the whole space of feasible weights is used to summarise the multidimensional information, in order to remain agnostic about the importance given to the different deprivations. Using data from four waves of EU-SILC, the methodological innovations introduced here have allowed to produce a family of measures that capture the individual probability of being multidimensionally poor. Individual probabilities are then used to analyse the within and between distribution of multidimensional poverty in ten countries. Finally, they get combined with the generalised Lorenz dominance techniques in order to derive socially preferred distributions with the minimum load of value judgments. The novel methods proposed in this analysis allow to move from a dual definition of poverty, where poor and non-poor individuals are classified in a mutually exclusive context, to a continuous measure of deprivation, which allows to capture both the extensive and intensive margin of multidimensional poverty.
    Keywords: Multidimensional Poverty; Charter of Fundamental Rights; Hierarchy Stochastic Multicriteria Acceptability Analysis; Povertà multidimensionale; Carta dei Diritti Fondamentali; Analisi Stocastica di Accettabilità Multicriterio
    Date: 2020
  10. By: Jesus Felipe; Donna Faye Bajaro; Gemma Estrada; John McCombie
    Abstract: We show that Autor and Salomons' (2017, 2018) analysis of the impact of technical progress on employment growth is problematic. When they use labor productivity growth as a proxy for technical progress, their regressions are quasi-accounting identities that omit one variable of the identity. Consequently, the coefficient of labor productivity growth suffers from omitted-variable bias, where the omitted variable is known. The use of total factor productivity (TFP) growth as a proxy for technical progress does not solve the problem. Contrary to what the profession has argued for decades, we show that this variable is not a measure of technical progress. This is because TFP growth derived residually from a production function, together with the conditions for producer equilibrium, can also be derived from an accounting identity without any assumption. We interpret TFP growth as a measure of distributional changes. This identity also indicates that Autor and Salomons' estimates of TFP growth’s impact on employment growth are biased due to the omission of the other variables in the identity. Overall, we conclude that their work does not shed light on the question they address.
    Keywords: Employment; Labor Productivity; Technical Progress; Total Factor Productivity
    JEL: E24 O30 O47

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