nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2020‒06‒29
six papers chosen by
Karl Petrick
Western New England University

  1. Modigliani Meets Minsky: Inequality, Debt, and Financial Fragility in America, 1950-2016 By Bartscher, Alina; Kuhn, Moritz; Schularick, Moritz; Steins, Ulrike
  2. Trade Policy and National Identity: Why Keynes Was Opposed to Protectionist Policies? By Elise S. Brezis
  3. Patterns of growth in structuralist models: The role of the real exchange rate and industrial policy By Porcile, Gabriel; Sartorello Spinola, Danilo; Yajima, Giuliano
  4. Work and Wellbeing: A Conceptual Proposal By Nicolai Suppa
  5. Covid-19: Testing Inequality in New York City By Schmitt-Grohé, Stephanie; Teoh, Ken; Uribe, Martin
  6. Black Lives Matter Protests, Social Distancing, and COVID-19 By Dave, Dhaval M.; Friedson, Andrew I.; Matsuzawa, Kyutaro; Sabia, Joseph J.; Safford, Samuel

  1. By: Bartscher, Alina; Kuhn, Moritz; Schularick, Moritz; Steins, Ulrike
    Abstract: This paper studies the secular increase in U.S. household debt and its relation to growing income inequality and financial fragility. We exploit a new household-level dataset that covers the joint distributions of debt, income, and wealth in the United States over the past seven decades. The data show that increased borrowing by middle-class families with low income growth played a central role in rising indebtedness. Debt-to-income ratios have risen most dramatically for households between the 50th and 90th percentiles of the income distribution. While their income growth was low, middle-class families borrowed against the sizable housing wealth gains from rising home prices. Home equity borrowing accounts for about half of the increase in U.S. household debt between the 1970s and 2007. The resulting debt increase made balance sheets more sensitive to income and house price fluctuations and turned the American middle class into the epicenter of growing financial fragility.
    Keywords: financial fragility; Household Debt; Household portfolios; inequality
    JEL: D14 D31 E21 E44
    Date: 2020–04
  2. By: Elise S. Brezis (Bar-Ilan University)
    Abstract: The views of Keynes on Trade policy are clear: Protectionism as well as hoarding a surplus in the balance of payment are wrong. This paper analyzes the optimality of protectionist policies and having a surplus in the context of the international political system. I show that in the situation of a hegemonic country, all classes – the working class as well as the elite – opt for free trade. But, in a balance of power context, wherein no single actor on the international scene possesses hegemonic status, the working class will choose protectionism, having a surplus, asking for harsh reparations, while the transnational elite and Keynes will not.
    Keywords: Balance of Power, Carthaginian Peace, Hegemony, Reparations, National Sovereignty, Trade Policy
    JEL: E12 F30
    Date: 2020–02
  3. By: Porcile, Gabriel (ECLAC and UFPR); Sartorello Spinola, Danilo (UNU-MERIT, Maastricht University); Yajima, Giuliano (Department of Social Sciences and Economics, Sapienza University of Rome.)
    Abstract: This paper presents a Balance-of-payments (BOP)-constrained growth model in which the interaction between the real exchange rate (RER) policy and industrial policy result in the emergence of different patterns of growth and income distribution. The paper relies on cumulative causation à la Kaldor and path-dependency to relate both types of policies. The transition from one equilibrium level of the RER to a new equilibrium level generates a process of learning that transforms the income elasticity of exports and hence the BOP-constrained rate of growth in the long run. The model produces a variety of outcomes that help explain the contradictory results that emerge from the empirical literature on the impact of the real exchange rate on economic growth in the long run.
    Keywords: Real Exchange Rate, Structural Change, Growth models, Structuralist models, Balance-of payments, BOP-constrained growth, Industrial policy
    JEL: D50 O25 O33 O40 O41
    Date: 2020–06–08
  4. By: Nicolai Suppa
    Abstract: Labour is of utmost importance for human wellbeing. Yet a comprehensive framework that can reflect the empirical diversity of labour activities along with each activities' manifold effects on human wellbeing is still lacking. An additional challenge for any such framework is to adequately handle fundamental moral ambiguities, which are inherent to many forms of work. This paper argues that a conceptualisation of labour within the capability approach can meet these requirements. Specifically, I argue that labour can be conceived as a characteristic-providing activity, where obtained characteristics are then transformed into functioning achievements, while accounting for both individual and societal heterogeneity. Additionally, paying adequate attention to unfreedoms experienced by agents turns out to be vital for a comprehensive account. Finally, the paper discusses policy handles, offers suggestions for particular applications, and identifies several other benefits for labour economics.
    Date: 2019–10
  5. By: Schmitt-Grohé, Stephanie; Teoh, Ken; Uribe, Martin
    Abstract: Motivated by reports in the media suggesting unequal access to Covid-19 testing across incomes, we analyze zip-code level data on the number of Covid-19 tests, test results, and income per capita in New York City. We find that the number of tests administered is evenly distributed across income levels. In particular, the test distribution across income levels is significantly more egalitarian than the distribution of income itself: The ten percent of the city's population living in the richest zip codes received 11 percent of the Covid-19 tests and 29 percent of the city's income. The ten percent of the city's population living in the poorest zip codes received 10 percent of the tests but only 4 percent of the city's income. At the same time, we find significant disparity in the fraction of tests that come back negative for the Covid-19 disease across income levels: moving from the poorest zip codes to the richest zip codes is associated with an increase in the fraction of negative Covid-19 test results from 38 to 65 percent.
    Keywords: Coronavirus; Covid-19 testing; Gini coefficient; health; income distribution; inequality; Lorenz curves
    JEL: I14 R1
    Date: 2020–04
  6. By: Dave, Dhaval M. (Bentley University); Friedson, Andrew I. (University of Colorado Denver); Matsuzawa, Kyutaro (San Diego State University); Sabia, Joseph J. (San Diego State University); Safford, Samuel (San Diego State University)
    Abstract: Sparked by the killing of George Floyd in police custody, the 2020 Black Lives Matter protests have brought a new wave of attention to the issue of inequality within criminal justice. However, many public health officials have warned that mass protests could lead to a reduction in social distancing behavior, spurring a resurgence of COVID-19. This study uses newly collected data on protests in 315 of the largest U.S. cities to estimate the impacts of mass protests on social distancing and COVID-19 case growth. Event-study analyses provide strong evidence that net stay-at-home behavior increased following protest onset, consistent with the hypothesis that non-protesters' behavior was substantially affected by urban protests. This effect was not fully explained by the imposition of city curfews. Estimated effects were generally larger for persistent protests and those accompanied by media reports of violence. Furthermore, we find no evidence that urban protests reignited COVID-19 case growth during the more than two and a half weeks following protest onset. We conclude that predictions of broad negative public health consequences of Black Lives Matter protests were far too narrowly conceived.
    Keywords: urban protests, social distancing, coronavirus, COVID-19
    JEL: H75 I18
    Date: 2020–06

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