nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2020‒05‒25
seven papers chosen by
Karl Petrick
Western New England University

  1. Gender issues in Kaleckian distribution and growth models: On the macroeconomics of the gender wage gap By Hein, Eckhard
  2. Have Macroeconomic Models Lost Their Connection with Economic Reality? By Tom van Veen
  3. Expectations and Full Employment: Hansen, Samuelson and Lange By Michaël Assous; Olivier Bruno; Vincent Carret; Muriel Dal Pont Legrand
  4. From the Entrepreneurial to the Ossified Economy: Evidence, Explanations and a New Perspective By Naudé, Wim
  5. Industrial Disaster and Corporate Irresponsibility: Rana Plaza Debacle By Thomas Simon
  6. Comportamiento de los salarios reales en el sector industrial colombia 2000-2016. Una aplicación del modelo de kaldor By John Michael, Riveros Gavilanes
  7. Inequality, a scourge of the XXI century By Jos\'e Roberto Iglesias; Ben-Hur Francisco Cardoso; Sebasti\'an Gon\c{c}alves

  1. By: Hein, Eckhard
    Abstract: We introduce a gender wage gap into basic one-good textbook versions of the neo-Kaleckian distribution and growth model and examine the effects of improving gender wage equality on income distribution, aggregate demand, capital accumulation and productivity growth. For the closed economy model, reducing the gender wage gap has no effect on the profit share, and a gender equality-led regime requires the propensity to save out of female wages to fall short of the propensity to save out of male wages. For the open economy model this condition is modified by the effects of improved gender wage equality on exports and - through changes of the profit share - on domestic demand. Finally for the open economy with productivity growth we find an unambiguously expansionary effect of narrowing the gender wage gap on long-run equilibrium capital accumulation and productivity growth if the demand growth regime is gender equality-led. A gender equality-burdened demand growth regime, however, may generate different long-run effects of improving gender wage equality on capital accumulation and productivity growth: expansionary, intermediate or contractionary.
    Keywords: gender wage gap,distribution,growth,Kaleckian model
    JEL: E11 E21 E22 O40 O41
    Date: 2020
  2. By: Tom van Veen
    Abstract: Macroeconomic theory has developed into increasingly sophisticated mathematical models. In the words of Mankiw, macroeconomics has developed from engineering into science. The Global Financial Crisis (GFC) revealed that the empirical relevance and the usefulness of these models is debatable. Why has this occurred? Who have been the key players in this development? What have been the policy implications of this development? This paper addresses these points by providing an overview of the development of macroeconomic theory over the past 40 years. The focus is on the main lines of thinking and the story behind the models more so than on the mathematical details of these models. I argue that crises have been the main driver of changes in macroeconomic theory and that the current debates after the GFC will be the start of a more plural approach to macroeconomics, in which engineers will regain their place.
    Keywords: macroeconomic theory, Keynes, Friedman, Lucas
    JEL: B22 E12 E60
    Date: 2020
  3. By: Michaël Assous (Université Lyon 2, CNRS, Triangle); Olivier Bruno (Université Côte d'Azur, CNRS, GREDEG, France; Skema Business School); Vincent Carret (Université Lyon 2, CNRS, Triangle); Muriel Dal Pont Legrand (Université Côte d'Azur, CNRS, GREDEG, France)
    Abstract: From the outset, expectations were a central part of the first macrodynamic models and early growth theories. In the 1940s, a third line of research emerged which questioned the capacity of an economy to reach full-employment equilibrium. Starting with Alvin Hansen (1938) and culminating with Oskar Lange (1944), the crux of the debate evolved from the existence of full employment equilibrium to analysis of its stability, suggesting an increased role for expectations and finally challenging the economic system's global stability. The present paper traces those debates through the contributions of Hansen, Paul Samuelson and Lange. Using archives materials, we show that while Samuelson's analysis of instability remained implicit, his correspondence reveals that he encouraged Oskar Lange to examine it more carefully. Lange's results are presented in his 1944 Cowles Commission Monograph. We point out that his contribution cannot be understood in isolation either from his exchanges with Samuelson or the way that Keynesian ideas were being interpreted in the United States. The paper finally questions Samuelson's view on instability and expectations.
    Keywords: expectations, (in-)stability, full-employment, wages dynamics, Hansen, Samuelson, Lange
    JEL: B2 B22 B3 D5
    Date: 2020–05
  4. By: Naudé, Wim
    Abstract: Entrepreneurship in advanced economies is in decline. This comes as a surprise: many scholars have anticipated an upsurge in entrepreneurship, and expected an "entrepreneurial economy" to replace the post-WW2 "managed" economy. Instead of the "entrepreneurial economy" what has come into being may perhaps better be labelled the "ossified economy." This paper starts by document the decline. It then critically presents the current explanations offered in the literature. While having merit, these explanations are proximate and supply-side oriented. Given these shortcomings, this paper contributes a new perspective: it argues that negative scale effects from rising complexity, as well as long-run changes in aggregate demand due to inequality and rising energy costs, are also responsible. Implications for entrepreneurship scholarship are drawn.
    Keywords: Entrepreneurship,start-ups,development,economic complexity,growth theory
    JEL: O47 O33 J24 E21 E25
    Date: 2020
  5. By: Thomas Simon (Johns Hopkins University)
    Abstract: Although the indirect (Bilateral Investment Treaties (BITs), arbitral decisions, and Corporate Social Responsibility (CSR)) and direct (Accord, Alliance) responses to the Rana Plaza and similar disasters, eventually, made improvements for workers in the Ready Made Garment (RMG) industry, they ultimately have proven unsatisfactory because they do not challenge the fundamental and structural impediment, namely, the dominance of the economic investment regime over human rights. A new paradigm anchored in health law creates an entirely new and fresh framework for rethinking the problems. Within that health paradigm, a ban on workplace smoking can provide a wedge for opening the door for workers to begin to make fundamental changes in their well-being. Health, for far too long, has remained at the bottom of the human rights hierarchy. Putting health first actually makes it more likely that safety issues will be adequately addressed in a systematic and meaningful way. Giving priority to health rights creates opportunities to radically change the terms of the debates. Using a ban on workplace smoking provides a wedge and the first step to effecting this radical transformation.
    Keywords: corporate social responsibility, bilateral investment treaties, industrial disasters, right to health, workers rights
    JEL: K32 K31 K33
    Date: 2020–02
  6. By: John Michael, Riveros Gavilanes
    Abstract: The present paper aims to test empirically the theory of Kaldor during 2000-2016 in Colombia from his three laws of economic endogenous growth in order to provide a study of the industrial sector, observing the theory of distribution of income and the intuitive relations from the kaldorian model indicating the behavior of the benefits and wages in the industrial sector. The methodology uses a panel data regression in a departmental level. The results confirm the theory in general however Chocó, Caquetá, Quindío, Sucre and La Guajira the first law gets rejected, it is confirmed the presence of increasing returns in scale of the industrial sector and the wages presents a lower elasticity than the benefits in the industrial output.
    Keywords: Kaldor; Wages; Growth; Returns; Industry
    JEL: E24 F14 L16 O41
    Date: 2018–11
  7. By: Jos\'e Roberto Iglesias; Ben-Hur Francisco Cardoso; Sebasti\'an Gon\c{c}alves
    Abstract: Social and economic inequality is a plague of the XXI Century. It is continuously widening, as the wealth of a relatively small group increases and, therefore, the rest of the world shares a shrinking fraction of resources. This situation has been predicted and denounced by economists and econophysicists. The latter ones have widely used models of market dynamics which consider that wealth distribution is the result of wealth exchanges among economic agents. A simple analogy relates the wealth in a society with the kinetic energy of the molecules in a gas, and the trade between agents to the energy exchange between the molecules during collisions. However, while in physical systems, thanks to the equipartition of energy, the gas eventually arrives at an equilibrium state, in many exchange models the economic system never equilibrates. Instead, it moves toward a "condensed" state, where one or a few agents concentrate all the wealth of the society and the rest of agents shares zero or a very small fraction of the total wealth. Here we discuss two ways of avoiding the "condensed" state. On one hand, we consider a regulatory policy that favors the poorest agent in the exchanges, thus increasing the probability that the wealth goes from the richest to the poorest agent. On the other hand, we study a tax system and its effects on wealth distribution. We compare the redistribution processes and conclude that complete control of the inequalities can be attained with simple regulations or interventions.
    Date: 2020–05

This nep-pke issue is ©2020 by Karl Petrick. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.