nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2022‒01‒10
seven papers chosen by
Karl Petrick
Western New England University

  1. Economics as a Normative Discipline: Value Disentanglement in an 'Objective' Economics By Davis, John B.
  2. Growth theory and the growth model perspective: Insights from the supermultiplier By Guilherme Spinato Morlin; Nikolas Passos; Riccardo Pariboni
  3. Faith in Science: What Can We Learn from Michael Polanyi? By Agnès Festré; Stein Østbye
  4. An ECB’s Staff Narrative of Two Decades of European Central Banking: a critical review By Sergio Cesaratto
  5. Contemporary Class Analysis By Daniel Oesch
  6. Inequality and the Environment: The Economics of a Two-Headed Hydra By Moritz A. Drupp; Ulrike Kornek; Jasper N. Meya; Lutz Sager
  7. Financial Inclusion: Theory and Policy guide for fragile economies. By Tweneboah Senzu, Emmanuel

  1. By: Davis, John B. (Department of Economics Marquette University)
    Abstract: This chapter critically evaluates standard economics’ treatment of positive and normative, drawing on Putnam’s (2002) fact-value entanglement argument. It argues that economics is an inherently value-laden discipline but may still be an ‘objective’ one. The means of achieving this is to carry out a programme of value disentanglement that evaluates research approaches according to whether their different value structures are consistent. The method employed assumes that economics and social science disciplines are built around anchor values or normative ideals and additional sets of values concerning what most people in those disciplines see as most valuable and good about human society and characteristic of human nature from the perspective of their disciplines. Since the rise of neoclassicism, in economics the anchor value has been what I term an ‘individual realisation’ ideal. This normative ideal is coupled with values that interpret what individual well-being involves, based on additional values regarding what individuals are. The chapter evaluates the value structures of mainstream economics preferences/utility and the capability conceptions of individuals. The chapter concludes with discussion of different forms of interdisciplinarity and advances a general framework for ethics and economics in an ‘objective’ economics.
    Keywords: positive, normative, fact-value entanglement, individual realisation, capability, disciplinarity
    JEL: A13 B20 B41 B55
    Date: 2022–01
  2. By: Guilherme Spinato Morlin; Nikolas Passos; Riccardo Pariboni
    Abstract: Recently, demand-led growth theories reshaped the study of comparative political economy. Since the Baccaro and Pontusson critique of Varieties of Capitalism, a new wave of studies has sought to analyze national economies in terms of their main demand driver of growth. Post-Keynesian authors provided extensions to perfect the fit between demand-led growth theories and comparative political economy. We argue that the Sraffian supermultiplier provides a growth theory compatible with the growth model perspective advanced by Baccaro and Pontusson and has advantages over Kaleckian and New Keynesian approaches. The concept of the autonomous components of demand, which comprise government spending, export, and debt-financed consumption, is already central for the studies of growth models. The supermultiplier provides a theory that coherently understands the relation between the autonomous demand drivers and the other induced components of demand. We demonstrate our arguments by decomposing the growth of four advanced economies: the United States, Germany, Japan, and Sweden. The decomposition shows the importance of separating the autonomous from the induced components and highlights the relevance of public expenditures and exports as growth drivers in advanced economies.
    Keywords: Comparative Political Economy, growth models, Sraffian supermultiplier
    JEL: B52 E12 O47 O57 P52
    Date: 2021–12
  3. By: Agnès Festré (GREDEG CNRS; Université Côte d'Azur, France); Stein Østbye (University of Tromsø, Norway)
    Abstract: In this paper we revisit Michael Polanyi's overall contribution to the understanding of tacit knowledge and its implications in philosophy of science with a focus on experimental research in social sciences. We first review and discuss Polanyi's references to experiments in general. An extensive number of these experiments are summarised in tabular form in the Appendix, distinguishing between experiments on the phenomenon of tacit knowledge, discussed in Subsection 2.1, and experiments on the epistemological implications of tacit knowledge, discussed in Subsection 2.2 Secondly, we discuss tacit knowledge as a confounding factor and limitation to replicability in social science experiments (Subsection 3.1) and tacit knowledge as a phenomenon to be elicitated through controlled variation in experimental design (Subsection 3.2). In the concluding section, we call for rejuvenation of the study of social epistemology and the social construction of science, suggested to start with Polanyi and his generation, where attention now should be directed to social science rather than hard science.
    Keywords: philosophy of science, tacit knowledge, methodology, experiments, replication
    JEL: B25 B31 B41 B5 C9
    Date: 2021–12
  4. By: Sergio Cesaratto
    Abstract: Monetary Policy in Times of Crisis (Rostagno et al. 2021) has three relevant features. The first is its criticism of the absence of an adequate European fiscal policy during the financial crisis. This left the ECB on its own. The second feature concerns the explanation of the theoretical framework that guided the ECB's action. While it is interesting that the authors point out that monetary policy acts on the demand side (and is therefore neutral neither in the short nor in the long-run), a plain explanation of the channels through which the central bank can influence demand is absent. The third feature is the chronicle of events and of the clash of positions within the ECB. This aspect would have, however, gained from a bolder and less conventional interpretative scheme. The book thus appears to be lacking both in a clear exposition of the ECB's analytical background and its evolution during the crisis, and in a comprehensive explanation of its policies. It is likely that the authors' economic training based on the neo-Keynesian mainstream model has greatly conditioned them in a technically convoluted, but too often uninspiring interpretation of events and policies. It is also possible that the difficulty of demonstrating the effectiveness of the monetary policy measures undertaken by the ECB in the absence of a proactive fiscal policy contributed to the widespread technical laboriousness of the argument in many pages of the book. Especially for academic teaching, but also for the informed public debate, a more accessible level would have been advisable. An appendix seeks to explain T-LTRO operations, the logic of which the book fails to elucidate
    JEL: E11 E12 E52 E58 N14
    Date: 2021–12
  5. By: Daniel Oesch (University of Lausanne)
    Abstract: A popular thesis in social stratification argues that the middle class is declining. Our chapter argues that this thesis is flawed both conceptually and empirically. Conceptually, it mixes up the middle and working class and, empirically, misrepresents the trends that shape the class structure. Our chapter discusses the main concepts of class and proposes a model that grasps the class structure of contemporary Western societies. Based on clearer concepts, labour force surveys clearly show that the early 21st century did not see the demise, but the expansion of the (salaried) middle class. Never in history had so many people been working in managerial, professional and technical jobs. By contrast, over the last four decades, the working class experienced a massive employment decline – and this decline had far-reaching consequences. It has vastly reduced its political clout as shown in decreasing trade union density and strike activity as well as in rising income inequality. Moreover, it has led to a fundamental realignment of class voting and contributed to growing family instability. Rather than eroding the middle class, the last decades have put an end to the working-class century.
    Keywords: Social classes; Middle class; Employment structure; Working class
    Date: 2022–01
  6. By: Moritz A. Drupp; Ulrike Kornek; Jasper N. Meya; Lutz Sager
    Abstract: Preserving environmental quality and addressing economic inequality both feature prominently in public discourse. Neither of these two issues can be fully understood in isolation, and policies aiming at one issue will increasingly have to consider interactions with the other. We synthesize theoretical mechanisms that underpin inequality-environment interlinkages, and take stock of the empirical evidence. Our review is structured into four main blocks, describing, first, how the distribution of environmental amenities and dis-amenities is associated with income and wealth, second, how economic inequality affects environmental outcomes, third, how the cost of environmental policy is often borne unequally, and, fourth, how both the distribution of environmental quality and economic inequality shape welfare considerations underlying public policy appraisal. We argue that it is crucial to consider inequality-environment interlinkages even if one’s primarily concern is one or other of these issues, and close by highlighting a number of areas for future research.
    Keywords: environment, inequality
    JEL: D31 D33 E25 Q52 Q56
    Date: 2021
  7. By: Tweneboah Senzu, Emmanuel
    Abstract: It empirically argued that economic development depends on increasing productivity, mitigating income inequality, reducing dependency on natural resources, improving health outcomes, enhancing environmental quality, and importantly increasing economic growth. Which is complemented by the fact that, all requires a quality financial system, which collects information to facilitate the ex-ante evaluation and ex-post monitoring of investment opportunities to ease information asymmetry as a problem, and facilitates the allocation of resources to innovative projects and further produce complex products. The above postulation derives its core factor of achievement from sustainable financial inclusion, with the paper advancing a conceptual proposition towards an effective, and efficient financial inclusion in fragile economies, and its underlying policy architecture to sustain its performance efficiency, in medium and long term purpose.
    Keywords: Financial Inclusions, Financial ecosystem, Policy, Central Bank, Fragile Economy
    JEL: E2 E6 G23 G28 H5
    Date: 2021–12–09

This nep-pke issue is ©2022 by Karl Petrick. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.