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on Post Keynesian Economics |
| By: | Mark Setterfield (Department of Economics, New School for Social Research) |
| Abstract: | This paper analyzes Neoliberalism in the US economy with a view to identifying the e ects of Neoliberalism on macroeconomic performance since 1990, underlying problems with the structure of the Neoliberal economy, and the e ects of Neoliberalism on the economic consequences of the COVID-19 pandemic. It is shown that Neoliberalism 'worked' from 1990-2007 by combining an 'incomes policy based on fear' that permitted non-inationary growth and low unemployment with a debt-financed, consumption-led demand regime that, as evidenced by the 2007-09 financial crisis and Great recession, was unsustainable. Since 2009 Neoliberalism has proved to be an entrenched but exhausted growth regime, producing only a 'depressed upswing' 2009-2019 that was terminated by the onset of the COVID-19 recession -- the response to which was neither efficient nor equitable. The paper concludes that at this juncture, the epithet 'build back better' must be applied to the entire US economy. |
| Keywords: | Neoliberalism, incomes policy based on fear, depressed upswing, COVID-19 recession |
| JEL: | B52 E12 E31 E32 E64 E66 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:new:wpaper:2120&r= |
| By: | Lilian N. Rolim; Carolina Troncoso Baltar, Gilberto Tadeu Lima |
| Abstract: | We investigate the effect of labor productivity growth and workers’s bargaining power on income distribution in a novel agent-based macroeconomic model mostly inspired by the post-Keynesian literature. Its main novelties are a wage bargaining process and a mark-up adjustment rule featuring a broader set of dimensions and coupled channels of interaction. The former allows nominal wages to be endogenously determined by interactions involving firms and workers, which are mediated by workers’s bargaining power. The latter assumes that firms also consider their position relative to workers (through their unit costs) to set their mark-up rates, thus linking the evolution of nominal wages in the bargaining process and labor productivity growth to the functional income distribution. This has implications for the personal income distribution through a three-class structure for households. The model reproduces numerous stylized facts, including those concerning the income distribution dynamics. By capturing the inherent social conflict over the distribution of income, our results show the importance of the coevolutionary interaction between workers’s bargaining power and productivity growth to the dynamics of income inequality and to its relationship with output. This leads to a policy dilemma between promoting productivity growth and improving income equality which can, nonetheless, be attenuated by combining policies and institutions that sustain workers’s strength with policies that stimulate technological innovation and productivity growth. |
| Keywords: | Agent-based modeling; labor productivity; wage bargaining; personal income inequality; functional income inequality |
| JEL: | C63 D31 D33 E2 |
| Date: | 2021–11–23 |
| URL: | http://d.repec.org/n?u=RePEc:spa:wpaper:2021wpecon27&r= |
| By: | Andrea Coveri; Claudio Cozza; Dario Guarascio |
| Abstract: | The paper applies the radical view of Monopoly Capitalism to the digital platform economy. Based on the seminal ideas of Hymer and Zeitlin that led Cowling and Sugden to define the large monopolistic firm as a means to plan production from a unique centre of strategic decision-making, we attempt to develop a framework where digital platforms are conceived as an evolution of large transnational corporations. Power and control in our Monopoly Capitalism view are then meant not only in terms of market relations, but rather as levers for coordinating global production and influencing world societies. Applying this framework to the Amazon case, we highlight the key analytical dimensions to be considered: not only Amazon dominates other firms and suppliers through its diversification and a direct control of data and technology; its power is also linked to global labour fragmentation and uneven bargaining power vis-Ã -vis world governments, as in the Hymer and Cowling's tradition. |
| Keywords: | Monopoly Capital; Monopoly Power; Digital Platforms; Amazon; Multinational corporation |
| JEL: | L12 L22 P12 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:sap:wpaper:wp209&r= |
| By: | Nicola Amendola (CEIS & DEF, University of Rome "Tor Vergata"); Giacomo Gabbuti (St.Antony’s College, University of Oxford); Giovanni Vecchi (CEIS & DEF, University of Rome "Tor Vergata") |
| Abstract: | We argue against the use of composite indices, such as the Human Development Index (HDI), in economic history. We show that the HDI can be interpreted as a formal representation of the analyst’s ethical system. We support our claim by introducing a new class of paternalistic social welfare functions (Graaff 1957, Mas-Colell, 1995) which encompasses all the HDI formulas put forth by the literature. The theoretical framework is illustrated by an empirical investigation of the long-run evolution of Italians’ living standards and civic liberties. We conclude that any history based on composite indices is one where both data and history play a minor role, if any. |
| Keywords: | Human development index,Economic wellbeing,Composite indices,Living standards,CES,Social welfare functions,Italy |
| JEL: | N01 N3 O15 |
| Date: | 2021–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:527&r= |
| By: | Julien Pinter (NIPE - University of Minho) |
| Abstract: | The Covid-19 crisis has revived an old heated debate on whether significant increases in the money supply -such as the ones accompanying central banks’ unconventional policies- ultimately lead to higher inflation. Some observers have alluded to the quantity theory of money for that purpose, sometimes in a misleading way in our view. Against this background, this paper seeks to clarify several aspects of the quantity theory of money and the so-called "monetarist" approach to it, useful to apply it fairly in the current world. First, we review and discuss the meaning of the velocity term in the quantity equation. We argue that it has no relevance as a behavioral concept: there is no such thing as a "desired velocity". Rather, income velocity should be seen as a reduced-form variable, obtained from a larger system of parameters and variables related to money demand, as the monetarist approach clearly puts it. Second, we clarify the practical relevance that the quantity theory approach can bear in the 21st century. We argue that although the quantity theory is unsuitable to explain conventional monetary policies, the mechanism on which it builds bears relevance in analyzing some recent unconventional monetary policies. Third, we review the channels and assumptions underlying the asserted quantity theory link between money growth and inflation. In light of our analysis, we conclude that the high money growth rates seen since the Covid-19 outbreak are not likely to automatically translate into higher inflation rates. |
| Keywords: | quantity theory of money; quantity equation; money growth; inflation; velocity of money |
| JEL: | B00 E41 E50 E58 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:14/2021&r= |
| By: | Hiroyuki TOSA (Graduate School of International Cooperation Studies, Kobe University) |
| Abstract: | This short essay aims to summarize issues related to the politics of human-induces climate change denial under the condition of high degree of uncertainty, which we notice in the United States, some European countries and even in Japan, from the viewpoint of cognitive psychology addressing cognitive bias problems. In addition, we scrutinize how the politics of climate change denial relates to the rightwing populism by focusing on the relation between cognitive bias and identity politics including belief-systems as well as campaigns operated by vested interest groups such as petroleum industry. In other words, the explanation that ideological aspects of right-wing populism are connected to climate change denial has significant overlap with the idea of cognitive bias, whereby inconvenient truths or facts that do not align with individual belief systems are rejected. This extreme form of cognitive bias also plays a role in the formation of conspiracy theories, which right-wing populism is often keen to embrace. Conspiracy theories cast environmentalists who advocate action on climate change as closet socialists plotting to turn the country Communist under the pretense of environmental protection. The natural environment of the homeland is of aesthetic, symbolic, and material value and thus worthy of being protected to the chauvinists, whereas the climate problem is a transnational phenomenon different in kind from the national landscape, and actors who attempt to solve the problem of climate change are, based on their cosmopolitan orientation, adversaries seeking to undermine their foundation of national sovereignty. |
| Keywords: | climate change denial, right-wing populism, cognitive bias, vested interests, belief systems, uncertainty |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:kcs:wpaper:39&r= |
| By: | Bengtsson, Erik (Department of Economic History, Lund University); Molinder, Jakob (Department of Economic History, Uppsala University) |
| Abstract: | Much of the income equalization that took place during the first half of the twentieth century was driven by shifts in the shares of the incomes of the rich, such as the top 1 percent. But the available studies using tabulated data have not been wholly able to account for the relative decline in top earners’ incomes. In this paper, we present the first evidence on the composition of the top groups from the Belle Epoque to the early post-WW2 period. Using information on 21,055 individual tax-payers in two elite areas in greater Stockholm, we show that the absolute top stratum (the richest 0.1 percent) was dominated by an economic elite of CEOs and bankers, while a remarkably large fraction of the top 1 percent consisted of professionals such as medical doctors and engineers. There was a distinction within the elite between capital-rich “rentiers” and those affluent whose income came from wages and business. The incomes of the top stratum were built on the ownership or leadership of companies producing mass consumption goods, machinery, or banking and insurance. We relate the peak of income inequality in the first quarter of the twentieth century to the historical circumstances of a globalized economy with growing mass markets in all the industrializing countries. These circumstances, jointly with an economic policy that was still relatively laissez faire allowed great fortunes to be accumulated. In the 1920s and 1930s policy turned away from globalization and to stronger regulation, at the same time as steeper competition and growing unionization undermined the super profits of the previous quarter- century. Increased state interventionism in the economy and an expansive education policy also undermined the high relative incomes of professionals; we document the declining advantages of professions such as medical doctors, pharmacists, and lawyers when compared with the average income throughout the period. |
| Keywords: | incomes; inequality; income distribution; Sweden; élites; tax data; Stockholm |
| JEL: | D31 N14 N34 |
| Date: | 2021–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:luekhi:0230&r= |
| By: | Davide Furceri; Pietro Pizzuto; Mr. Prakash Loungani; Mr. Jonathan David Ostry |
| Abstract: | Major epidemics of the last two decades (SARS, H1N1, MERS, Ebola and Zika) have been followed by increases in inequality (Furceri, Loungani, Ostry and Pizzuto, 2020). In this paper, we show that the extent of fiscal consolidation in the years following the onset of these pandemics has played an important role in determining the extent of the increase in inequality. Episodes marked by extreme austerity—measured using either the government’s fiscal balance, health expenditures or redistribution—have been associated with an increase in the Gini measure of inequality three times as large as in episodes where fiscal policy has been more supportive. We survey the evidence thus far on the distributional impacts of the COVID-19 pandemic, which suggests that inequality is likely to increase in the absence of strong policy actions. We review the case made by many observers (IMF 2020; Stiglitz 2020; Sandbu 2020b) that fiscal support should not be withdrawn prematurely despite understandable concerns about high public debt-to-GDP ratios. |
| Keywords: | impact of pandemic; pandemic event; severity of pandemic; pandemic case; pandemic dummy; COVID-19; Income inequality; Fiscal stance; Income; Health care spending; Global |
| Date: | 2021–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2021/120&r= |