nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2021‒10‒04
four papers chosen by
Karl Petrick
Western New England University

  1. Why the Flow of Funds Don’t Explain the Flow of Funds: Sectoral Balances, Balance Sheets, and the Accumulation Fallacy By Roth, Steve
  2. How Do We Choose? Towards an Alternative Theory of Consumer Behavior By Kyle Glenn
  3. Economic Growth and the Rate of Profit in Colombia 1967-2019: A VAR Time-Series Analysis By Duque Garcia, Carlos Alberto
  4. Social Labor vs Human Capital: Competing Theories of Skills By Kyle Glenn

  1. By: Roth, Steve
    Abstract: This paper highlights and unpacks a little-known reality about the Financial Accounts of the United States: the Flows matrix on page 1 of the Federal Reserve’s quarterly Z.1 report does not explain period-to-period changes in the Levels matrix on page 3. The same is true of the sectoral Flow and Levels tables underlying those matrixes. Nor do those tables provide balance-sheet-complete accounting of household or national wealth accumulation. Measures of net saving/investment/capital formation and accumulation, and national wealth accumulation, diverge by tens of trillions of dollars. The discrepancy is explained and resolved by assembling a balance-sheet-complete empirical derivation of comprehensive U.S. “Haig-Simons” income, based on the Integrated Macroeconomic Accounts. The comprehensive measure is 23% higher than national accounts’ “primary” income. Relationships to the Piketty/Saez/Zucman Distributional National Accounts (DINAs) are discussed, along with implications for economic theory and empirical modeling, both mainstream and heterodox/Post-Keynesian.
    Keywords: wealth; flow of funds; capital; accumulation; integrated macroeconomic accounts; IMAs; income; gains; holding gains; capital gains; haig-simons
    JEL: B4 B5 E21 E22 E25
    Date: 2021–05
  2. By: Kyle Glenn (Department of Economics, Adams State University)
    Abstract: In this paper we explore how economists have addressed consumer behavior. We begin by analyzing the fundamental underpinning of neoclassical consumer behavior, utility maximization. We show how the contributions of behavioral economics, which prides itself on finding moments of nonconformity within the theory of consumer behavior, has put into question the validity of mainstream consumer choice modeling Accepting that the orthodox theory provides a poor model, the question remains: What alternative theories of consumer behavior exist? We discuss two alternative frameworks for consumer behavior: the endogenous preferences literature and the post-Keynesian notion of consumer choice. While both frameworks have provided valuable insights into consumer behavior, we argue that neither theory fully captures the complexities of consumer behavior. As such, we turn to literature in Business and Psychology surrounding how consumers actually behave. We find three common principles in the literature: consumer cannot process all information, preferences are malleable, and preferences are categorized eliciting varied behaviors dependent upon the category. We posit a basic neural network model that captures the three principles and illuminates some of the complexities of consumer behavior.
    Keywords: Consumer behavior, network models
    JEL: B50 D11 D90
    Date: 2021–09
  3. By: Duque Garcia, Carlos Alberto
    Abstract: In recent decades there has been a growing literature dealing with the empirical estimation of the rate of profit and other Marxian variables in several countries. Nonetheless, there has been a paucity of econometric research about the impact of those Marxian variables on the growth rate in developing countries. This paper seeks to evaluate the rate of profit and the rate of accumulation as determinants of the growth rate in Colombia during 1967-2019, using a VAR model. We find that both variables are statistically significant and, in concordance with Marxian theory predictions, affect positively the growth rate. We also identify direct impacts of growth rate over the profit rate and the accumulation rate as well as an inverse relationship between these last variables.
    Keywords: Marxian political economy; rate of profit; time-series analysis; Colombia
    JEL: B51 C32 O54
    Date: 2021–09–23
  4. By: Kyle Glenn (Department of Economics, Adams State University)
    Abstract: Wage theory has long relied upon Human Capital theory as an explanation of skilled wages with labor economists attempting to find the appropriate specification for the return to education. Shaikh and Glenn (2018) construct an alternative model of skilled wages called the Social Labor hypothesis. Instead of returns to education, the Social Labor hypothesis posits wages as a function of social costs of education. This paper tests the empirical validity of the Social Labor hypothesis comparing it against the Human Capital model, finding a remarkable fit to empirical data. The paper also provides a theoretical approach to, and empirical evidence of, labor market discrimination.
    Keywords: Skills, wage di erentials, classical theory, human capital theory
    JEL: B51 J24 J31
    Date: 2021–09

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