nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2021‒05‒31
twelve papers chosen by
Karl Petrick
Western New England University

  1. John Tomer's Reconceptualization of the Concept of Human Capital By John B. Davis
  2. How the West is Underdeveloping Itself By Samaha, Amal
  3. Mission-Oriented Policies and the "Entrepreneurial State" at Work: An Agent-Based Exploration By Giovanni Dosi; Francesco Lamperti; Mariana Mazzucato; Mauro Napoletano; Andrea Roventini
  4. Globalization and Nationalism: Retrospect and Prospect By Obstfeld, Maurice
  5. COVID-19, Race, and Redlining By Bertocchi, Graziella; Dimico, Arcangelo
  6. Ricardo Through the Looking Glass: (Mis)adventures of Comparative Advantage in Developing Economies By Spirin, Victor
  7. The Long Recession and the Economic Consequences of the Pandemic By Tsoulfidis, Lefteris; Tsaliki, Persefoni
  8. Effective Demand Failures and the Limits of Monetary Stabilization Policy By Woodford, Michael
  9. Institutional Aspects of Capital in Joan Robinson's 'Rules of the Game': Rentier versus Entrepreneurs in Managerial Capitalism By Yara Zeineddine
  10. Some policy lessons from medical/therapeutic responses to the COVID-19 Crisis: A rich research system for knowledge generation and dysfunctional institutions for its exploitation By Giovanni Dosi
  11. Measuring financial inclusion and financial exclusion By Ozili, Peterson K
  12. The Design of Disease Maps Shapes Perceptions of Threat and Public Policy Preferences By Engel, Claudia; Rodden, Jonathan; Tabellini, Marco

  1. By: John B. Davis (Department of Economics Marquette University)
    Abstract: This chapter examines John Tomer’s contributions to our understanding of the concept of human capital. Tomer criticized the standard mainstream view of the concept as narrowly focused on education and training and as seeing investments in human capital as having “an individual, cognitive, and machine-like nature.” A broader concept included attention to the people’s noncognitive development, and employed both social capital and personal capital concepts. This produces a more expansive view of human development, allows for a humanistic psychological perspective, and supports a multi-dimensional, Maslovian understanding of the hierarchy of human needs. Tomer framed his policy thinking regarding investments in human capital in terms of the goal of helping people become ‘smart’ persons. He recognized that a barrier to accomplishing this is high levels of economic inequality. The chapter thus goes on to discuss how socially stratified societies generate economic inequality in regard to human capital investments, and how thinking in terms of people’s capabilities can help us advance progressive economic and social policies agendas.
    Keywords: human capital, human development, social capital, personal capital, inequality, capabilities
    JEL: A12 A13 B31 B55 J24
    Date: 2021–05
  2. By: Samaha, Amal
    Abstract: This essay deals with the history of development discourse, recurring problems, and its present day manifestations. It argues that the deindustrialisation of the core and concomitant hollowing-out of political institutions belies several truisms of development discourse, and that a new "relational" model of development is required. This relational model recognises two distinct forms of development: autogenous (that which requires the exploitation of domestic workers) and parasitic (that which depends on unequal exchange and export specialisation). Finally it is argued that a socialist development programme must be ambivalent to "growth," and instead the core and periphery must pursue different forms of development together.
    Keywords: Development; Growth; Socialism; Underdevelopment; Walter Rodney; Imperialism
    JEL: B24 F19 N1 O1
    Date: 2021–05–13
  3. By: Giovanni Dosi; Francesco Lamperti; Mariana Mazzucato; Mauro Napoletano; Andrea Roventini
    Abstract: We study the impact of alternative innovation policies on the short- and long-run performance of the economy, as well as on public finances, extending the Schumpeter meeting Keynes agent- based model (Dosi et al., 2010). In particular, we consider market-based innovation policies such as R&D subsidies to firms, tax discount on investment, and direct policies akin to the "Entrepreneurial State" (Mazzucato, 2013), involving the creation of public research-oriented firms diffusing technologies along specific trajectories, and funding a Public Research Lab conducting basic research to achieve radical innovations that enlarge the technological opportunities of the economy. Simulation results show that all policies improve productivity and GDP growth, but the best outcomes are achieved by active discretionary State policies, which are also able to crowd-in private investment and have positive hysteresis effects on growth dynamics. For the same size of public resources allocated to market-based interventions, "Mission" innovation policies deliver significantly better aggregate performance if the government is patient enough and willing to bear the intrinsic risks related to innovative activities.
    Keywords: Innovation policy; mission-oriented R&D; entrepreneurial state; agent-based modelling.
    Date: 2021–05–24
  4. By: Obstfeld, Maurice
    Abstract: Recent events have highlighted areas of conflict between economic integration with the outside world and the demands of domestic electorates. Historically, the tradeoffs have always become sharper in periods of crisis, such as the present. After reviewing the U-shaped progress of globalization since the nineteenth century, this essay reconsiders John Maynard Keynes's views on "national self-sufficiency" in the early 1930s. I argue that the postwar Bretton Woods system he helped to create evolved from those views as a balanced middle ground between market forces and governments' desires for domestic economic stability. The gradual erosion of that balance in favor of the market has helped produce discontent over globalization and more nationalism in politics. Enhanced multilateral cooperation in key areas offers the hope of supporting globalization while better meeting voters' aspirations. Despite daunting political obstacles to global cooperation these days, collective action challenges in areas like climate, cybersecurity, and health â?? alongside economic policy â?? are only becoming more pressing over time.
    Keywords: deglobalization; Globalization; multilateralism; Nationalism; populism
    JEL: F52 F53 F60 N20 N40
    Date: 2020–07
  5. 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 neighborhoods display a sharper increase in mortality, driven by blacks, while no pre-treatment differences 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: blacks; Chicago; Cook County; COVID-19; deaths; redlining; Vulnerability
    JEL: I14 J15 N32 N92 R38
    Date: 2020–07
  6. By: Spirin, Victor
    Abstract: Suppose two countries, A and B, manufacture aircraft components – engines and tires. Suppose country A has a comparative advantage in engine manufacturing, perhaps for a simple reason of being situated closer to a source of titanium which is used in fan blade manufacturing. And suppose that country B has comparative advantage in tires, perhaps because of being geographically closer to an oil resource. According to the Ricardian theory, country A should specialize in engines and country B should focus solely on tires. But suppose that a set of engines costs ten million dollars, while a set of tires, including all replacement tires needed over the service life on an aircraft, costs less than one hundred thousand. Will country B benefit from this Ricardian specialization? We aim to provide the simplest possible two-country two-commodity model with the smallest possible set of assumptions, that shows that the specialization does not always benefit all trade participants. Instead, one of the participants may get a disproportionate benefit from trade at the expense of the other.
    Keywords: Comparative Advantage, Developing Economies
    JEL: F6 F62 F63
    Date: 2021–05–17
  7. By: Tsoulfidis, Lefteris; Tsaliki, Persefoni
    Abstract: ABSTRACT In this article, we argue the rate of profit in combination with the movement of the real net profits determines the phase-change of the economy in its long cyclical pattern. Since WWII, the US and the world economy have experienced two such long cycles. The pandemic COVID-19 has deepened a recession that has been already underway since 2007. The growth rates in the first post-pandemic years are expected to be high; however, soon after, the economies will find themselves back to their old recessionary growth paths. The onset of a new long cycle requires the restoration of profitability, which can be sustained only through the introduction of ‘disruptive’ innovations backed by suitable institutional arrangements Long recession, secular stagnation, pandemic, long cycles, institutional changes, disruptive innovations
    Keywords: Long recession, secular stagnation, pandemic, long cycles, institutional changes, disruptive innovations
    JEL: B5 D33 E1 N12 O51
    Date: 2021–05–18
  8. By: Woodford, Michael
    Abstract: The COVID-19 pandemic presents a challenge for stabilization policy that is different from those resulting from either "supply" or "demand" shocks that similarly affect all sectors of the economy, owing to the degree to which the necessity of temporarily suspending some (but not all) economic activities disrupts the circular flow of payments, resulting in a failure of what Keynes (1936) calls "effective demand." In such a situation, economic activity in many sectors of the economy can be much lower than would maximize welfare (even taking into account the public health constraint), and interest-rate policy cannot eliminate the distortions --- not because of a limit on the extent to which interest rates can be reduced, but because monetary stimulus fails to stimulate demand of the right sorts. Fiscal transfers are instead well-suited to addressing the fundamental problem, and can under certain circumstances achieve a first-best allocation of resources without any need for a monetary policy response.
    Keywords: circular flow; Covid-19 pandemic; Fiscal Transfers; Network structure
    JEL: E12 E52 E63
    Date: 2020–08
  9. By: Yara Zeineddine (PHARE - Philosophie, Histoire et Analyse des Représentations Économiques - UP1 - Université Paris 1 Panthéon-Sorbonne)
    Date: 2021–05–19
  10. By: Giovanni Dosi
    Abstract: This note discusses the medical/therapeutical responses to the COVID-19 pandemic and their "political economy" context. First, the very quick development of several vaccines highlights the richness of the basic knowledge waiting for therapeutical exploitation. Such knowledge has largely originated in public or non-profit institutions. Second, symmetrically, there is longer-term evidence that the private sector (essentially Big Pharma) has decreased its investment in basic research in general, and has long been uninterested in vaccines in particular. Only when flooded with an enormous amount of public money it became eager to undertake applied research, production scale-up and testing. Third, the "political economy" of the underlying public-private relationship reveals a profound dysfunctionality with the public being unable to determine the rates and direction of innovation, but at the same time confined to the role of payer of first and last resort, with dire consequences for both advanced, and more so, developing countries. Fourth, on normative grounds, measures like ad hoc patent waivers are certainly welcome, but this will not address the fundamental challenge, involving a deep reform of the Intellectual Property Rights regimes and their international protection (TRIPS Agreements).
    Keywords: Covid-19 pandemic; vaccines; Intellectual property rights; TRPS; innovation; public goods.
    Date: 2021–05–25
  11. By: Ozili, Peterson K
    Abstract: Achieving high levels of financial inclusion has been a policy priority for policy makers in many countries as policy makers seek to reduce the level of financial exclusion to low levels. There have also been increased interest in financial inclusion research by academics. This paper proposes some index and ratios of financial inclusion and financial exclusion. The proposed index, measures and ratios are easy to compute and are comparable across countries. Policy makers, analysts and academics will find it useful.
    Keywords: Financial inclusion, financial exclusion, poverty, access to finance, index, inclusive growth, development
    JEL: G00 G21 O17
    Date: 2021
  12. By: Engel, Claudia (Stanford University); Rodden, Jonathan (Stanford University); Tabellini, Marco (Harvard Business School)
    Abstract: Choropleth disease maps have become the main tool for communicating information about the geography of health threats to the public. These maps have the potential to shape perceptions of threat, preferences about policy, and perhaps even behavior, but they are unfortunately often poorly designed and misleading. In a large survey of residents of the U.S. state of Georgia conducted in June 2020, we randomly assigned respondents to view one of two maps produced in the spring of 2020 by the Georgia Department of Public Health. The first is a map of county-level COVID case counts, which generated the false perception that the COVID threat was concentrated almost exclusively in the Atlanta metro area. The second is a map of the case rate per 100,000 people, which clarified that the virus was widespread in much of Georgia. Those who saw the second map were less likely to consider the virus as an urban problem, and more likely to perceive it as a concern for Georgia and its economy. Moreover, respondents from non-metro areas who saw the case rate map were more concerned that they, their friends, or community members might contract the virus. Respondents who saw the case rate map also expressed greater support for policies aimed at mitigating the virus – an effect driven by self-identified Republicans, who were far more skeptical about public health measures to mitigate the spread of the virus in general.
    Keywords: COVID-19, policy, maps, public health
    JEL: I18 I38
    Date: 2021–05

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