nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2021‒03‒08
five papers chosen by
Karl Petrick
Western New England University

  1. "Has Japan Been Following Modern Money Theory Without Recognizing It? No! And Yes." By Yeva Nersisyan; L. Randall Wray
  2. "The Empirics of Long-Term Mexican Government Bond Yields" By Tanweer Akram; Syed Al-Helal Uddin
  3. The social psychology of economic inequality By Matthew J. Easterbrook
  4. COVID-19, Race, and Redlining By Graziella Bertocchi; Arcangelo Dimico
  5. Widespread race and class disparities in surface urban heat extremes across the United States By Benz, Susanne A.; Burney, Jennifer

  1. By: Yeva Nersisyan; L. Randall Wray
    Abstract: Modern Money Theory (MMT) economists have used Japan as an example of a country that demonstrates that high deficits and debt do not lead to insolvency, high interest rates, or inflation. MMT insists that governments that issue their own sovereign currency cannot be forced into insolvency, that they can make all payments as they come due, and that they do not really spend tax revenue or borrow in their own currency--with Japan serving as an example of a country that does not face financial budget constraints as normally defined. In this paper we evaluate whether Japan is the poster child of MMT and argue that policy-wise Japan is not following MMT recommendations; in fact, it is generally adopting policies that are precisely the opposite of those proposed by MMT, consistently adopting the path of stop-go fiscal measures and engaging in inadequate and temporary fiscal stimuli in the face of recessions, followed by austerity whenever the economy has seemed to recover.
    Keywords: Modern Money Theory; Budget Deficits; Sovereign Debt; Japanese Government Debt; MMT Policy
    JEL: E12 E32 E42 E58 H62 H63
    Date: 2021–02
  2. By: Tanweer Akram; Syed Al-Helal Uddin
    Abstract: This paper presents empirical models of Mexican government bond (MGB) yields based on monthly macroeconomic data. The current short-term interest rate has a decisive influence on MGB yields, after controlling for inflation and growth in industrial production. John Maynard Keynes claimed that government bond yields move in lockstep with the short-term interest rate. The models presented in the paper show that Keynes's claim holds for MGB yields. This has important policy implications for Mexico. The empirical findings of the paper are also relevant for ongoing debates in macroeconomics.
    Keywords: Mexican Government Bonds; Long-Term Interest Rate; Short-Term Interest Rate; Monetary Policy; Banco de México (BdM); Banxico
    JEL: E43 E50 E58 E60 G10 G12
    Date: 2021–02
  3. By: Matthew J. Easterbrook
    Abstract: In this review, I provide an overview of the literature investigating the social psychology of economic inequality, focusing on individuals' understandings, perceptions, and reactions to inequality. I begin by describing different ways of measuring perceptions of inequality, and conclude that absolute measures?which ask respondents to estimate inequality in more concrete terms?tend to be more useful and accurate than relative measures.
    Keywords: Inequality, Economic inequality, Psychological aspects (Economics), Inequality measurement, review
    Date: 2021
  4. By: Graziella Bertocchi; Arcangelo Dimico
    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 di erences are detected. Thus, we uncover a persistence influence 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 influence is magnified in combination with a higher black share.
    Keywords: COVID-19, deaths, blacks, redlining, vulnerability, Cook County, Chicago.
    Date: 2020
  5. By: Benz, Susanne A.; Burney, Jennifer
    Abstract: Here we use 1000-m satellite land surface temperature anomaly measurements to explore the distribution of the United States' urban heating burden, both at high resolution (within cities or counties) and at scale (across the whole contiguous United States). While a rich literature has documented neighborhood-level disparities in urban heat exposures in individual cities, data constraints have precluded comparisons across locations. Here, drawing on extreme summer urban heat measurements from all 1056 U.S. counties with more than 10 developed census tracts, we find that the poorest tracts (and those with lowest average education levels) within a county are significantly hotter than the richest (and more educated) neighborhoods for 76% of these counties (54\% for education); we also find that neighborhoods with higher Black, Hispanic, and Asian population shares are hotter than the more White, non-Hispanic areas in each county. This holds in counties with both large and small spreads in these population shares, and for 71% of all counties the significant racial urban heat disparities persist even when adjusting for income. Although individual locations have different histories that have contributed to race- and class-based geographies, we find that the physical features of the urban environments driving these heat exposure gradients are fairly uniform across the country. Systematically, the disproportionate heat exposures faced by minority communities are due to higher population density, more built-up neighborhoods, and less vegetation.
    Date: 2021–02–13

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