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on Post Keynesian Economics |
| By: | Filippo Gusella (None); Engelbert Stockhammer |
| Abstract: | This paper proposes an empirical test for Minskyan financial cycles in asset prices, driven by the interaction of fundamentalist and momentum traders. Both price strategies are unobserved and can be modelled in a state space model. We use the Kalman filter to identify the two pricing strategies and evaluate whether the conditions for the existence of cycles hold. The model is estimated for four major OECD countries, the UK, France, Germany and the USA, for equity and housing prices for the period 1970-2017 using annual data. We find evidence of cycles in the equity market for all four countries and for housing prices, in the UK, France and the USA but not in Germany. Our results provide empirical support for the existence of endogenous financial cycles on asset markets. |
| Keywords: | Financial cycles, Minsky, Momentum traders, Kalman filter |
| JEL: | C32 E32 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2009&r=all |
| By: | Mark Setterfield (Department of Economics, New School for Social Research) |
| Abstract: | This paper outlines endogenous money theory (EMT) and the contributions of Basil J. Moore to EMT. It then describes the various papers that will appear in Volume 17, Issue 3 (2020) of the European Journal of Economics and Economic Policies: Intervention. Coolectively, these papers explore the monetary economics of Basil J. Moore – its origins, substance, and application – in light of its status as an ongoing and still-developing research project. |
| Keywords: | Basil J. Moore, monetary economics, horizontalism |
| JEL: | E43 E51 E52 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:new:wpaper:2002&r=all |
| By: | Lambert, Thomas |
| Abstract: | In his book, the Political Economy of Growth (1957), and in an article he wrote several years earlier (1953), the economist Paul A. Baran noted how in an economic system characterized by a hierarchy of classes and where economic and political power are concentrated in the top class of such a system, the amount of output and income above what is consumed by most people (e.g., food, clothing, housing, public safety, education) mostly goes to the top class. This extra amount is what he called the economic surplus, a form of savings or income left over after consumption. In a feudalistic system, there is little incentive to use the proceeds of this type of surplus to buy more tools and equipment for more production of output and income. The lord or baron has little incentive to lend or give serfs money because he may not benefit from any increased productivity by them. It is with capitalism that such incentives to re-invest in production become important. This paper uses recently published and estimated historical data to illustrate Baran’s observations and thoughts on feudalism. It is shown that during the 13th and 14th centuries in England that the economic surplus declined, and this decline helps to explain the “crisis of feudalism” that started in the 13th century. It is not until several centuries later when capitalism becomes the dominant economic system that the economic surplus begins to rise on a consistent basis probably due to the reinvestment of a portion of the surplus into productive activities and a greater ratio of capital income to rental income and a greater ratio of investment to economic surplus. However, and somewhat surprisingly, by the 19th Century the surplus still does not attain levels reached in the 13th Century. |
| Keywords: | Keywords: Baran ratio, Dobb-Sweezy debate, economic surplus, capitalism, feudalism, GDP, national income |
| JEL: | B24 B51 N13 |
| Date: | 2020–03–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:99128&r=all |
| By: | Marwil J. Dávila-Fernández; Serena Sordi |
| Abstract: | This article makes two contributions to the literature on growth and structural change. First, we estimate the multisectoral version of Thirlwall's law and provide some empirical evidence on the stratification mechanism proposed in Dávila-Fernández et al. (2018). Second, we develop two models of structural change which assume that the capacity of adaptation of the economy is a function of attitudes towards change. Societies whose past experiences condition them to regard innovative change with antipathy are in sharp contrast to those whose heritage provide them with favourable attitudes. The models are used to discuss the experiences of Latin America and Asia since the 1960s. They highlight how a complex economy is likely to be associated with a better distribution of political and economic power. Our resulting nonlinear dynamic systems are shown to admit multiple equilibria. A Hopf-Bifurcation analysis establishes the possibility of persistent and bounded cyclical paths, allowing the investigation of further insights on the nature of structural and institutional change. |
| Keywords: | Structural change; Institutions; Attitudes towards change; Hopf bifurcation; Path dependence. |
| JEL: | E12 E32 O40 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:809&r=all |
| By: | Sartorello Spinola, Danilo (UNU-MERIT) |
| Abstract: | This research investigates the causes of endogenous volatility in Latin America by expanding the La Marca (2010) model. The expansion consists in study: (I) Price-neutrality, (II) stability of the external sector, and (III) fixed income distribution. We also add (IV) an evolutionary supply-side in which productivity is at the centre of the economic dynamic through international technology transfer and the Kaldor-Verdoorn effect. The results show that (1) Latin American parameter values increase the endogenous oscillatory adjustment. (2) In all cases the model converges. (3) The price-neutrality assumption and external sector stability depend on specific parameter values to show either a cyclical or a monotonic convergence pattern. (4) Fixed income distribution lead to a monotonic trajectory, reducing oscillations. (5) The inclusion of the productivity dynamics generates new sources of volatility in the relationship between productivity, capacity utilization, and net external assets. |
| Keywords: | Economic Cycles, Structuralism, Macroeconomic Dynamics. |
| JEL: | E32 F44 O11 O30 |
| Date: | 2020–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2020002&r=all |
| By: | , Stone Center (The Graduate Center/CUNY); Ranaldi, Marco |
| Abstract: | The purpose of this paper is twofold. First, it introduces a novel inequality concept, named income composition inequality. Second, it constructs an indicator for its measurement. This paper argues that the study of income composition inequality across the income distribution allows for (i) novel political economy analysis of the evolution of economic systems and (ii) the technical assessment of the relationship between the functional and personal distribution of income. Following an empirical application on six European countries, this paper discusses possible avenues for future research on the matter, ranging from development issues to public finance. (Stone Center on Socio-Economic Inequality Working Paper) |
| Date: | 2020–03–09 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:365ct&r=all |
| By: | Marcello Basili; Alain Chateauneuf; Giuseppe Scianna Author-Email giuseppe.scianna@unisi.it |
| Abstract: | This paper advances an intuitive representation of Keynes’s notion of long-term expectation. We introduce the epsilon-contamination approach and represent the conventional judgment by the Steiner point of agents’ common probability set. We anticipate a change in conventional judgment by updating the Steiner point. |
| Keywords: | Keynes, long-term expectation, epsilon contamination, uncertainty, multiple priors. |
| JEL: | D81 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:808&r=all |
| By: | Sartorello Spinola, Danilo (UNU-MERIT) |
| Abstract: | This paper expands the Dutt (2002) version of the Balance of Payments Constrained Model (BPCM). We question the assumption of price-neutrality and the incompatibility between the BPCM and the Prebisch-Singer hypothesis (PSH) in terms of the long-run terms-of-trade dynamics. The research focuses on three main elements: (1) the long-run behaviour of the terms of trade in a Structuralist framework. (2) The cyclical endogenous dynamics in the relationship between economic activity and income distribution à la Goodwin. (3) Productivity gap and catching-up. This article adds to the Dutt(2002) model (a) a productivity gap dynamics in which the south has a catching-up element; (b) labour market by including a Phillips Curve for the relationship between employment rate and economic activity; (c) labour supply dynamics that considers the labour transfer issue between traditional and modern sectors. We find that the Structuralist/evolutionary arguments hold in the BPCM framework with these changes. |
| Keywords: | Balance of Payments constrains, Terms of Trade, Economic Cycles, Latin American Structuralism |
| JEL: | E22 E32 O41 |
| Date: | 2020–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2020003&r=all |
| By: | Sartorello Spinola, Danilo (UNU-MERIT) |
| Abstract: | This article challenges the main assumptions of the Balance of Payments Constrained Model (BPCM, aka Thirlwall model) related to the long-run: (1) equilibrium of the trade balance. (2) Stability of price-effects. (3) Foreign income growth positively affecting domestic income. Some authors raise the argument that the BP is rarely observed in equilibrium (Alonso & Garcimartín, 1998); price effects, through the real exchange rate, do affect the long-run (Rodrik, 2008); and foreign income has no effect (or negative) on domestic income (Razmi, 2016). The BPCM is based on its assumptions to defend the existence of a long-run growth rate compatible with a stable growth of the balance of payments, in which the effective growth rate converges to avoid external constrains (McCombie & Thirlwall, 1994; Thirlwall, 1979). In order to challenge the assumptions of the BPCM, we apply a time series co-integration Vector Error Correction Model (VECM) using the BPCM related variables to Argentina, Brazil, Colombia, and Mexico, the larger countries in Latin America. The data source is the Penn World Tables (PWT) for 1950-2014. We apply impulse-response and permanent shocks in selected variables, observing their effects on Real Exchange Rate, GDP, and Trade Balance. The results are compared to the assumptions raised in this research; we empirically find that the BPCM assumptions are not empirically robust for the selected countries. This offers an invitation to more empirical work that can strength the arguments of the BPCM model |
| Keywords: | Balance of Payments Constrains, Latin America, Economic Development |
| JEL: | O11 F41 E12 |
| Date: | 2020–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2020001&r=all |
| By: | Mario Cimoli; Giovanni Dosi; Xiaodan Yu |
| Abstract: | This work discusses the role of industrial policies within an evolutionary view of innovation and learning as drivers of economic development. Building on the notions of technological paradigms and trajectories, it links the processes of catching-up with the dynamics of capability accumulation within and across firms. In turn such processes are embedded in broader national systems of innovation wherein industrial policies play a pivotal role. |
| Keywords: | Technological paradigms; Catching up; Theory of production; Absolute and Comparative Advantages; National systems of innovation; Industrial Policies; Economic Evolution and Development. |
| Date: | 2020–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2020/08&r=all |
| By: | Michaël Assous (Université Lyon 2, CNRS, Triangle); Muriel Dal Pont Legrand (Université Côte d'Azur, CNRS, GREDEG, France); Sonia Manseri (Université Paris 1 Panthéon-Sorbonne, Phare) |
| Abstract: | Samuelson (1952: 60) introduced the term «neoclassical synthesis” and used it later in the 1955 3rd edition of Economics: An Introductory Analysis to refer to a “consensus” among American economists. In the 1960s when growth theory emerged as a major issue, Samuelson modified his view and in the 6th edition of Economics, the term assumed a specific meaning. As long as it was assumed that the economy was managed on a Keynesian-basis in the short-run, the neoclassical growth model was considered the most appropriate tool to analyze full-employment growth. This “new” approach of the synthesis was challenged in debates on income distribution dynamics and expectations, opposing the protagonists in the Cambridge controversy. We draw on original archival material from Duke University and Cambridge University in the UK to try to clarify some of the hidden dimensions of Samuelson's synthesis and the debates it triggered. |
| Keywords: | Samuelson, Sen, Kaldor, Neoclassical Synthesis, Instability, growth, expectations |
| JEL: | A1 B2 B3 D5 E1 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2020-12&r=all |
| By: | , Stone Center (The Graduate Center/CUNY); Lindh, Arvid; McCall, Leslie (The Graduate Center, City University of New York (CUNY)) |
| Abstract: | In many high-income countries today, scholarly interest in the politics of class has coincided with growing economic inequality, rising support for non-mainstream political parties and candidates, and increasing flows of immigration. We review social science research on the views of different class segments vis-à-vis economic, political, and sociocultural issues, finding greater scholarly attention to the interdependence of economic, social, and political concerns and preferences than arguably was the case even a few years ago. Our main aim is to synthesize and critically evaluate this rapidly expanding literature, but we also provide empirical data on class differences and similarities in political opinion across eighteen countries, and we pinpoint several areas of research that are in need of further empirical, methodological, and theoretical inquiry. (Stone Center on Socio-Economic Inequality Working Paper) |
| Date: | 2020–03–09 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:wt5qx&r=all |
| By: | Partha Sen |
| Abstract: | Macroeconomics deals with economics at the aggregate level. This could be at a national level or the interaction between nations. Production of output necessarily involves pollution and degrading the environment. Therefore, environmental issues enter inevitably. Some problems that have been highlighted in the literature are surveyed here. It has been argued that a poor country deliberately lowers its environmental standards that enables it to steal jobs from other countries. What is the theoretical underpinning and the evidence for this assertion? The evidence is very weak in support of this. Also, in the fight against climate change, the poorer countries claim exemption from tightening their emissions norms, because of their poverty. Although equity demands this, it could pose serious challenges to fighting climate change – oil producers would pump oil faster, if they foresee it becoming useless. A piecemeal approach is thus infeasible. A more basic question is how to introduce natural resource use in national income accounts to give meaning to the notion of sustainability? National income accounts do not take into account non-market activities. Some progress has been made in the theory and empirical implementation of sustainability by including non-market activities. A lot of work has been done but a lot more still needs to be done here. |
| Keywords: | macroeconomics and environment, trade and environment, green paradox, genuine saving, comprehensive wealth |
| JEL: | Q50 F10 F20 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8159&r=all |
| By: | Hernando Matallana |
| Abstract: | Esta nota considera la lógica monetaria del salario relativo para el caso de trabajo homogéneo, la incidencia tributaria del impuesto sobre las diversas formas del ingreso funcional y la lucha por el salario relativo en el caso de trabajo heterogéneo en la economía monetaria de producción. La discusión advierte que el salario relativo disponible y con ello la condición económica de los trabajadores en el sistema de los mercados, se ajustan al interés particular de la clase funcional de los propietarios de riqueza. |
| Keywords: | distribución del ingreso, economía monetaria de producción, incidencia tributaria, salario relativo, salarios diferenciales |
| JEL: | B21 D33 E12 H22 J31 |
| Date: | 2020–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:col:000178:018061&r=all |