nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2020‒08‒24
eight papers chosen by
Karl Petrick
Western New England University

  1. Political Aspects of ‘Buffer Stock’ Employment: A Reconsideration By Peter Kriesler; Joseph Halevi; Mark Setterfield
  2. Women's Empowerment and Economic Development: A Feminist Critique of Storytelling Practices in "Randomista" Economics: a feminist critique of storytelling practices in “randomista” economics By Kabeer, Naila
  3. Modigliani Meets Minsky: Inequality, Debt, and Financial Fragility in America, 1950-2016 By Alina K. Bartscher; Moritz Kuhn; Moritz Schularick; Ulrike I. Steins
  4. Why Does Globalization Fuel Populism? Economics, Culture, and the Rise of Right-wing Populism By Dani Rodrik
  5. BRICS and Global Restructuring: Notes for the Near Future By Vlados, Charis; Chatzinikolaou, Dimos
  6. Desk review study on Employment Impact Assessment (EmpIA) potential of Natural Resource Management (NRM) investments on employment creation By Payen, J.; Lieuw-Kie-Song, M.
  7. COVID-19, Race, and Redlining By Bertocchi, Graziella; Dimico, Arcangelo
  8. Institutional Dynamics and Economic Development in Greece: An Acemoglian Approach By Vlados, Charis; Chatzinikolaou, Dimos

  1. By: Peter Kriesler (School of Economics, University of New South Wales); Joseph Halevi (International University College of Turin); Mark Setterfield (Department of Economics, New School for Social Research)
    Abstract: Advocates of Job Guarantee (JG) or Employer of Last Resort (ELR) schemes have suggested that if the state provides ‘buffer stock’ employment to workers displaced from private employment, then full employment can be maintained over the course of the business cycle. Kalecki was sceptical about the prospects for maintaining full employment in capitalist economies, without fundamental institutional change that would alleviate certain political constraints on the maintenance of full employment. We argue that in and of themselves, JG/ELR schemes do not create the fundamental institutional change required to address Kalecki’s concerns and so ensure that full employment becomes achievable as a permanent state.
    Keywords: Employer of last resort, job guarantee, buffer stock employment, political aspects of full employment
    JEL: E12 E61 J64 J68
    Date: 2020–08
  2. By: Kabeer, Naila
    Abstract: The 2019 Nobel Prize in economics was awarded to three scholars on the grounds that their pioneering use of randomized control trials (RCTs) was innovative methodologically and contributed to development policy and the emergence of a new development economics. Using a critical feminist lens, this article challenges that conclusion by interrogating the storytelling practices deployed by “randomista” economists through a critical reading of a widely cited essay by Esther Duflo, one of the 2019 Nobel recipients, on the relationship between women’s empowerment and economic development. The paper argues that the limitations of randomista economics have given rise to a particular way of thinking characterized by piecemeal analysis, ad hoc resort to theory, indifference to history and context, and methodological fundamentalism. It concludes that the randomista argument that broad-based economic development alone–without focused attention to women’s rights–will lead to gender equality has not been borne out by recent data. HIGHLIGHTS Despite claims of impartiality, Duflo’s interpretations of evidence and the language she uses indicate that the randomista method and narrative is not objective or impartial. The randomistas’ treatment of preferences as random and idiosyncratic ignores what feminists have long espoused: that the formation of preferences derives from entrenched social constructions. The randomistas' claims to methodological superiority result in a discounting or dismissal of findings from nonexperimental studies in favor of experimental studies that report the same findings. Duflo's main argument discussed in this paper is that while gender equality is desirable in its own right, it is better achieved through gender-neutral policies because gender-affirmative policies “distort” the allocative process and lead to efficiency costs. Yet, these so-called distortions stem from historical structures that have curtailed women's productive potential and protected male privilege. In other words, patriarchal discrimination introduces structural costs that are unlikely to be visible when the focus is on individual economic actors.
    Keywords: development; economic development; Empowerment
    JEL: O10
    Date: 2020–05–13
  3. By: Alina K. Bartscher (University of Bonn); Moritz Kuhn (University of Bonn, CEPR, and IZA); Moritz Schularick (Federal Reserve Bank of New York and University of Bonn, CEPR); Ulrike I. Steins (University of Bonn)
    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: household debt, inequality, household portfolios, financial fragility
    JEL: E21 E44 D14 D31
    Date: 2020–07
  4. By: Dani Rodrik
    Abstract: There is compelling evidence that globalization shocks, often working through culture and identity, have played an important role in driving up support for populist movements, particularly of the right-wing kind. I start with an empirical analysis of the 2016 presidential election in the U.S. to show globalization-related attitudinal variables were important correlates of the switch to Trump. I then provide a conceptual framework that identifies four distinct channels through which globalization can stimulate populism, two each on the demand and supply sides of politics, respectively. I evaluate the empirical literature with the help of this framework, discussing trade, financial globalization, and immigration separately. I conclude the paper by discussing some apparently anomalous cases where populists have been against, rather than in favor of trade protection.
    JEL: F1 F3 F6
    Date: 2020–07
  5. By: Vlados, Charis (Democritus University of Thrace, Department of Economics); Chatzinikolaou, Dimos (Democritus University of Thrace, Department of Economics)
    Abstract: The multipolar cooperation between Brazil, Russia, India, China, and South Africa (BRICS countries) seems to be a significant development in the current phase of restructuring of globalization. This article explores the relationship between the emerging radical readjustment of the world hegemony equilibrium with the past and future dynamics of the global socioeconomic system. It examines the relation of the ongoing institutionalization by the BRICS with the established international institutions and the relation of BRICS to the promotion of global economic development. After presenting a structured interpretation of the actual emergence of a “new globalization,” the article focuses on the aspects of BRICS evolution and dynamics that contribute to the discussion of the rise of a more balanced and more democratic multipolar global regime. It notices that multipolar cooperation at the international level should be more democratic as the BRICS claim, although these countries (China and Russia, in particular) face increasing concerns for their liberal rights and democratization domestically. In conclusion, it seems that a new and relatively stable global system now requires a repositioned conception of capitalism as an evolutionary socioeconomic phenomenon, in which innovation is the central and predominant organic process within all organizations.
    Keywords: BRICS; Global restructuring; Multipolarity; Innovational capitalism; New globalization
    JEL: B52 F53 F63 F69
    Date: 2020–05–15
  6. By: Payen, J.; Lieuw-Kie-Song, M.
    Abstract: Employment is a key driver for development as it constitutes a bridge between economic growth and poverty reduction. People and households get out of poverty most often by moving into more productive and decent jobs or improving existing jobs. Placing the aim of achieving full and productive employment at the heart of development policy is therefore critical for reducing and eventually eliminating poverty, reducing inequality and addressing informality. This is also globally recognized with the adoption of Sustainable Development Goal (SDG) 8: “Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.” The European Commission (EC) and the International Labour Organization (ILO) both recognize that, in order to achieve SDG 8, it is critical that full and productive employment be at the heart of development policy. In this regard, the EC and ILO have jointly initiated a project entitled “Strengthening the Impact on Employment of Sectoral and Trade Policies”. This innovative project includes developing methods and capacities to determine the effects of infrastructure investments on employment. This series of project publications aims to capture the tools, methods, and processes developed under this project, as well as the findings from implementing these in the ten partner countries. By doing so, the experience and learning of the project can be disseminated to other countries and partners for their benefit, thus supporting the integration of global and national employment objectives into sectoral and trade policies and consequently supporting the elevation of the global employment agenda and achievement of SDG 8.
    Keywords: employment creation, employment policy, rural development
    Date: 2020
  7. By: Bertocchi, Graziella; Dimico, Arcangelo
    Abstract: Discussion on the disproportionate impact of COVID-19 on African Americans has been at center stage since the outbreak of the epidemic in the United States. To present day, however, lack of race-disaggregated individual data has prevented a rigorous assessment of the extent of this phenomenon and the reasons why blacks may be particularly vulnerable to the disease. Using individual and georeferenced death data collected daily by the Cook County Medical Examiner, we provide first evidence that race does affect COVID-19 outcomes. The data confirm that in Cook County blacks are overrepresented in terms of COVID-19 related deaths since|as of June 16, 2020|they constitute 35 percent of the dead, so that they are dying at a rate 1.3 times higher than their population share. Furthermore, by combining the spatial distribution of mortality with the 1930s redlining maps for the Chicago area, we obtain a block group level panel dataset of weekly deaths over the period January 1, 2020-June 16, 2020, over which we establish that, after the outbreak of the epidemic, historically lower-graded neigh- borhoods display a sharper increase in mortality, driven by blacks, while no pre- treatment differences are detected. Thus, we uncover a persistence in uence of the racial segregation induced by the discriminatory lending practices of the 1930s, by way of a diminished resilience of the black population to the shock represented by the COVID-19 outbreak. A heterogeneity analysis reveals that the main channels of transmission are socioeconomic status and household composition, whose in uence is magnified in combination with a higher black share.
    Keywords: COVID-19,deaths,blacks,redlining,vulnerability,Cook County,Chicago
    JEL: I14 J15 N32 N92 R38
    Date: 2020
  8. By: Vlados, Charis (Democritus University of Thrace, Department of Economics); Chatzinikolaou, Dimos (Democritus University of Thrace, Department of Economics)
    Abstract: The evolution of institutions is a theoretical field of increasing interest today. Socio-economic development in the institutional approach results mainly from the historical unfolding and quality of institutions. This paper aims to highlight Daron Acemoglu’s institutional approach, which appears to be gaining prominence gradually, and propose a new theoretical perception of the developmental process of the Greek socio-economic system. It first analyses Acemoglu’s theoretical contribution, it then compares the ‘Acemoglian’ to other approaches and suggests that the analysis of inclusive and extractive institutions based on historically-significant virtuous and vicious circles has value for the Greek case. While several studies tend to focus on the macroeconomic and macro-financial symptoms of the Greek crisis, an evolutionary approach of the deeper institutional dynamics seems to offer a required reposition. We describe and recommend the development and underdevelopment process in terms of an ‘institutionally adaptive socio-economic system’ and ‘competitiveness web’. These findings indicate that development takes place over historically-significant periods, through complex processes of selection and diffusion of institutional restructurings, and that civil societies are responsible for the political forces who represent them, at least in democratic regimes. In the case of Greece, the proposal to utilise an approach of an ‘institutionally adaptive socio-economic system’ can give a repositioned theoretical perception, especially nowadays when the institutional and evolutionary socio-economic analytical classes seem to be gaining interest and prominence.
    Keywords: Daron Acemoglu; Greek crisis; why nations fail; socio-economic development; institutionally adaptive socio-economic system; institutional innovations; competitiveness web
    JEL: B15 B52 F63
    Date: 2020–03–06

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