nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2020‒04‒27
eight papers chosen by
Karl Petrick
Western New England University

  1. "Pandemic of Inequality" By Luiza Nassif-Pires; Laura de Lima Xavier; Thomas Masterson; Michalis Nikiforos; Fernando Rios-Avila
  2. "Notes on the Accumulation and Utilization of Capital: Some Theoretical Issues" By Michalis Nikiforos
  3. Labour markets in a Post-Keynesian growth model: the effects of endogenous productivity growth and working time reduction By Stefan Ederer; Armon Rezai
  4. Price-Value Deviations and the Labor Theory of Value. Evidence from 42 Countries, 2000-2017 By B. Güney Işıkara; Patrick Mokre
  5. The productivity puzzle and the Kaldor-Verdoorn law: the case of Central and Eastern Europe By Hubert Gabrisch
  6. A paradigm of the circular economy: the end of cheap nature? By Jean Pierre Doussoulin
  7. Fiddling around the edges: mainstream policy responses to the housing crisis since 2016 By Robbins, Glyn
  8. A Rational Theory of Producer’s Equilibrium in Fifteen Principles By Jael, Paul

  1. By: Luiza Nassif-Pires; Laura de Lima Xavier; Thomas Masterson; Michalis Nikiforos; Fernando Rios-Avila
    Abstract: The costs of the COVID-19 pandemic--in terms of both the health risks and economic burdens--will be borne disproportionately by the most vulnerable segments of US society. In this public policy brief, Luiza Nassif-Pires, Laura de Lima Xavier, Thomas Masterson, Michalis Nikiforos, and Fernando Rios-Avila demonstrate that the COVID-19 crisis is likely to widen already-worrisome levels of income, racial, and gender inequality in the United States. Minority and low-income populations are more likely to develop severe infections that can lead to hospitalization and death due to COVID-19; they are also more likely to experience job losses and declines in their well-being. The authors argue that our policy response to the COVID-19 crisis must target these unequally shared burdens--and that a failure to mitigate the regressive impact of the crisis will not only be unjust, it will prolong the pandemic and undermine any ensuing economic recovery efforts. As the authors note, we are in danger of falling victim to a vicious cycle: the pandemic and economic lockdown will worsen inequality; and these inequalities exacerbate the spread of the virus, not to mention further weaken the structure of the US economy.
    Date: 2020–04
  2. By: Michalis Nikiforos
    Abstract: This paper discusses some issues related to the triangle between capital accumulation, distribution, and capacity utilization. First, it explains why utilization is a crucial variable for the various theories of growth and distribution--more precisely, with regards to their ability to combine an autonomous role for demand (along Keynesian lines) and an institutionally determined distribution (along classical lines). Second, it responds to some recent criticism by Girardi and Pariboni (2019). I explain that their interpretation of the model in Nikiforos (2013) is misguided, and that the results of the model can be extended to the case of a monopolist. Third, it provides some concrete examples of why demand is a determinant for the long-run rate of utilization of capital. Finally, it argues that when it comes to the normal rate of utilization, it is the expected growth rate of demand that matters, not the level of demand.
    Keywords: Accumulation; Growth; Distribution; Utilization
    JEL: B22 O4 D3 D2
  3. By: Stefan Ederer (Austrian Institute of Economic Research (AT)); Armon Rezai
    Abstract: We study endogenous employment and distribution dynamics in a Post-Keynesian model of Kalecki-Steindl tradition. Productivity adjustments stabilize employment and the labour share in the long run: technological change allows firms to replenish the reserve army of workers in struggle over income shares and thereby keep wage demands in check. We discuss stability conditions and the equilibrium dynamics. This allows us to study how legal working time and its reduction affect the equilibrium. We find that a demand shock is likely to lower the profit share and increase the employment rate. A supply shock in contrast tends to have detrimental effects on employment and income distribution. Labour market institutions and a working time reduction have no long-term effect on growth, distribution and inflation in the model. The effects on the level of capital stock and output however are positive in a wage-led demand regime. Furthermore, an erosion of labour market institutions dampens inflation temporarily. The model provides possible explanations as to the causes of several current economic phenomena such as secular stagnation, digitalisation, and the break-down of the Philips curve.
    Keywords: Post-Keynesian economics, productivity, technological change, income distribution, employment
    JEL: D33 E12 E24 O40
    Date: 2020–04
  4. By: B. Güney Işıkara (New York University, Liberal Studies); Patrick Mokre (Department of Economics, New School for Social Research)
    Abstract: The relationship between prices and labour values has been the source of fruitful controversy since the earliest Classical Political Economists. The alleged refutation of the labour theory of value was an integral part of the marginalist attack against Classical and Marxist analysis. However, statistical analysis of price-value relationships made possible by the data available since the later 20th century suggest considerable empirical strength of the labour theory of value. We trace the intellectual history of the price-value relationship and its inseparable link to capitalist competition through Smith, Ricardo, Marx and Sraffa. Following Shaikh and Ochoa, we present an empirical model of testing their hypotheses that (1) labour values regulate prices of production and (2) serve as gravitational centers for market prices. The analysis of a large dataset of 42 countries and 15 years reveal only small and stable deviations and thus lend support to the Classical Political Economic analysis. With a sample of over 36,000 price vectors, we provide the most comprehensive empirical application of its class and generalize the results that have been established in the relevant literature.
    Keywords: Price, value, input-output, classical political economics, labour theory of value
    JEL: B12 B51 C67 O57 P16
    Date: 2020–04
  5. By: Hubert Gabrisch (Wiesbaden Institute for Law and Economics (WILE))
    Abstract: This study attempts to identify the short- and long-run components of the Kaldor-Verdoorn (KV) law in empirical economics. The law claims that demand dynamics drive productivity dynamics. The law is tested with a panel of ten Central and Eastern-European countries, where labour productivity and demand growth have been slowing since 2004/2006 and where fears of an end of convergent growth are spreading. Meanwhile, the gradual slowing of output and productivity growth applies not only to the region considered in this study, but it is also a global phenomenon that is occurring despite remarkable technical progress and that is referred to as the so-called productivity puzzle. However, this puzzle would be solved in light of the KV law. To test for the short-term and long-term properties of this law, least squares and autoregressive distributed lag (ARDL) models are applied. Our results confirm the law for the region; slower productivity growth is not due to 'adverse technological progress' but to weakening external and domestic demand.
    Keywords: Productivity conundrum, Kaldor-Verdoorn law, panel autoregressive distributed lag (ARDL) model, Eastern Europe.
    JEL: C23 E24 O47
    Date: 2020
  6. By: Jean Pierre Doussoulin (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - UNIV GUSTAVE EIFFEL - Université Gustave Eiffel)
    Abstract: This article proposes a new definition of the circular economy following analysis and comparison of the most prominent concepts of the biosphere: Sraffa's value theory and Moore's dialectical method. Our paper helps to identify the positions of each of these concepts with regard to free disposal, waste treatment and surplus distribution value. Thus, we are able to show that the mechanisms of the circular economy function simultaneously as part of the appropriation system and as part of the system for the protection of nature. This study enriches the literature on the circular economy by providing analysis of various scenarios of waste disposal. Finally, areas of application and policy implications of the small wins theory are explored in order to guide future research on the circular economy.
    Keywords: Sraffa's value theory,capitalism,environment,political economy
    Date: 2019–12–18
  7. By: Robbins, Glyn
    Abstract: Despite widespread recognition that housing is a serious social concern, policy responses have tended to be inadequate. After a brief review of the magnitude of the problem, this paper focuses on recent experience in the UK where, during a period of political volatility, housing has been the subject of significant government interventions, which in turn have provoked noteworthy reactions. However, the paper argues that all current mainstream housing policy proposals are limited by their adherence to the failed market model. Instead, a more radical agenda is proposed which draws on the UK’s successful record of public housing. The paper summarises some of the key Conservative government housing policies since 2016 - including the influence of the Grenfell fire - and discusses the Labour Party’s response. It particularly critiques the policies of London Mayor Sadiq Khan which relegate traditional council housing in favour of more income-targeted provision. A high-profile report by the housing charity Shelter is also considered because of its apparent reluctance to include explicit reference to council housing within its recommendations, at a time when, it is argued, there is renewed interest in non-market housing alternatives.
    Keywords: council housing; Housing policy; Sadiq Khan; Shelter; the Labour Party
    JEL: R14 J01
    Date: 2020–01–22
  8. By: Jael, Paul
    Abstract: The marginalist theory of producer’s equilibrium has been a cornerstone of mainstream economics for a long time. This theory has been challenged more than once in the twentieth century, without losing its predominance. A lot of critics and many ideas have been ventured. My conclusion is that there is room and there is a need for alternative microeconomics. Approaching heterodox microeconomics may seem entering a labyrinth. For this reason, I propose a presentation of my conception about producer’s equilibrium in a structured and concise way: fifteen principles in a logical and instructive order. The principles are founded on a hypothesis shared by neoclassical economics: rationality of agents. Each behaviour must be compatible with the pursuit of self-interest.
    Keywords: market structure; competition; pricing
    JEL: D21 D40
    Date: 2020–04

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