nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2021‒11‒22
seven papers chosen by
Karl Petrick
Western New England University

  1. Hilferding, Woytinsky and the fiscal orthodoxy of interwar social democracy By Engelbert Stockhammer
  2. Bank Money Creation and the Payments System By Biagio Bossone
  3. Racial Difference in Child Penalty By Li, Jiaqi
  4. Taxing the Residual Profit of Multinational Enterprises: A Critique of Formulaic Apportionment and a Proposal By Wolfram F. Richter
  5. Modeling to Inform Economy-Wide Pandemic Policy: Bringing Epidemiologists and Economists Together By Darden, Michael E.; Dowdy, David; Gardner, Lauren; Hamilton, Barton H.; Kopecky, Karen A.; Marx, Melissa; Papageorge, Nicholas W.; Polsky, Daniel; Powers, Kimberly; Stuart, Elizabeth; Zahn, Matthew V.
  6. Poverty: What is it and Why do we care? By John Micklewright; Andrea Brandolini
  7. The Effect of ACA Medicaid Expansions on Foster Care Admissions By Louis-Philippe Beland; Jason Huh; Dongwoo Kim

  1. By: Engelbert Stockhammer (King’s College London)
    Abstract: In 1931, when the Great Depression hit Germany, German social democrats discussed a proposal for a (proto-Keynesian) public-debt financed employment program, the so-called WTB plan drafted by Vladimir Woytinsky. But under the leadership of Rudolf Hilferding, the SPD’s main economics spokesperson (and a former finance minister), the SPD rejected the proposal. The paper argues, firstly, that Hilferding’s endorsement of the gold standard and fiscal austerity can be traced to his analysis in Das Finanzkapital. It, secondly, rejects purely ideational interpretation of social democracy’s hostility to public employment programs. This becomes apparent when considering the experience of other European countries. In the British case a non-Marxist labour government under Ramsey MacDonald also endorsed the gold standard and fiscal orthodoxy. The WTB plan represents a missed opportunity to develop a socialist Keynesianism that would have complemented the Austro-Marxist strategy of a democratic socialism well.
    Keywords: Keynesianism, Marxism, social democracy, economic policy, gold standard, Austro-Marxism
    JEL: B14 B24 B31 N14
    Date: 2021–11
  2. By: Biagio Bossone
    Abstract: This article investigates how the role that banks play in the payment system space affects their money creation power and process. In particular, the article analyzes how the payments market share of each bank affects its money creation power and how payment settlement technologies and rules determine the banks’ demand for funding and, hence, their money creation power. Also, as the power to create money enables money creators to extract extra-profits or rents ("seigniorage") from the economy, the article evaluates analytically how banks extract seigniorage through money creation and how bank seigniorage differs from profits from pure financial intermediation. By showing the central role that payment systems play in the context of such an important economics topic as money creation, the article seeks to emphasize the relevance of payment system analysis for macroeconomic theory and practice and points to the need for achieving better integration of the two disciplines.
    Keywords: Bank; Bank money creation; Central bank policy; Demand deposits; Financial intermediaries; Funding; Lending; Payment and settlement systems
    JEL: E51 E58 G21
    Date: 2021–11
  3. By: Li, Jiaqi (Department of Economics, The University of Warwick)
    Abstract: This paper documents large racial differences in the child penalty. Following first childbirth, Black women experience a significantly smaller reduction in labour supply, compared to white women. Most of the racial differences cannot be explained by economic and demographic variables, except household non-labour income. Furthermore, such racial difference widens when controlling for maternal years of schooling, occupation and industries. Finally, it shows that racial difference in child penalty is not correlated with the racial difference in gender norms.
    Keywords: Race ; Child Penalty ; Gender Norm ; Non-labour Income JEL Classification: J13 ; J15 ; J16 ; J22
    Date: 2021
  4. By: Wolfram F. Richter
    Abstract: According to plans put forward by the OECD/G20 Inclusive Framework on BEPS, a share of residual profit earned by eligible MNEs is to be taxed by market jurisdictions. For this purpose, revenue-based formulaic apportionment of residual profit is proposed. This note argues against the use of a rule requiring the multilateral assessment of MNEs’ worldwide profit and recommends an alternative method of sharing taxing rights with market jurisdictions. The proposed method relies on unilateral profit splitting and is suggested by the application of Shapley value theory to the fair and equitable division of taxing rights between cooperating jurisdictions.
    Date: 2021
  5. By: Darden, Michael E. (Tulane University); Dowdy, David (Johns Hopkins University); Gardner, Lauren (Johns Hopkins University); Hamilton, Barton H. (Washington University, St. Louis); Kopecky, Karen A. (Federal Reserve Bank of Atlanta); Marx, Melissa (Johns Hopkins University); Papageorge, Nicholas W. (Johns Hopkins University); Polsky, Daniel (Johns Hopkins University); Powers, Kimberly (North Carolina State University); Stuart, Elizabeth (Johns Hopkins University); Zahn, Matthew V. (Johns Hopkins University)
    Abstract: Facing unprecedented uncertainty and drastic trade-offs between public health and other forms of human well-being, policy makers during the Covid-19 pandemic have sought the guidance of epidemiologists and economists. Unfortunately, while both groups of scientists use many of the same basic mathematical tools, the models they develop to inform policy tend to rely on different sets of assumptions and, thus, often lead to different policy conclusions. This divergence in policy recommendations can lead to uncertainty and confusion, opening the door to disinformation, distrust of institutions, and politicization of scientific facts. Unfortunately, to date, there have not been widespread efforts to build bridges and find consensus or even to clarify sources of differences across these fields, members of whom often continue to work within their traditional academic silos. In response to this "crisis of communication," we convened a group of scholars from epidemiology, economics, and related fields (e.g., statistics, engineering, and health policy) to discuss approaches to modeling economy-wide pandemics. We summarize these conversations by providing a consensus view of disciplinary differences (including critiques) and working through a specific policy example. Thereafter, we chart a path forward for more effective synergy between disciplines, which we hope will lead to better policies as the current pandemic evolves and future pandemics emerge.
    Keywords: economics, epidemiology, public health, COVID-19, behavior modeling, health outcomes, health-wealth tradeoffs
    JEL: C8 H0 I1 J
    Date: 2021–11
  6. By: John Micklewright (University College London); Andrea Brandolini (Banca d'Italia)
    Abstract: We discuss the instrumental and intrinsic reasons for concern about poverty, its definition – absolute/relative, unidimensional/multidimensional – and the visual communication of what poverty really means.
    Keywords: Great poverty, income, consumption, multidimensional poverty, communication.
    JEL: C80 I32
    Date: 2021–11–01
  7. By: Louis-Philippe Beland (Department of Economics, Carleton University); Jason Huh (Department of Economics, Rensselaer Polytechnic Institute); Dongwoo Kim (Department of Economics, Texas Christian University)
    Abstract: Recent papers have documented positive externalities of Medicaid expansions on several nonhealth related variables, such as crime, financial stress, child support, and child abuse.
    Keywords: Affordable Care Act, Health Insurance, Foster Care, Child Abuse
    JEL: I13 I18 J13 K36
    Date: 2021–08–12

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