nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2022‒01‒31
five papers chosen by
Karl Petrick
Western New England University

  1. Structural transformations and cumulative causation towards an evolutionary micro-foundation of the Kaldorian growth model By Lorentz, André; Ciarli, Tommaso; Savona, Maria; Valente, Marco
  2. Labor productivity, real wages, and employment: evidence from a panel of OECD economies over 1960-2019 By Manuel David Cruz
  3. Nicholas Kaldor’s Economics: a Review. By Gomes, Luiz
  4. Oskar Lange’s Economics and the Socialist Economy By Gomes, Luiz
  5. Policy brief on making the most of the social economy’s contribution to the circular economy By OECD; European Commission

  1. By: Lorentz, André (Université de Strasbourg, BETA, Université de Lorraine, CNRS); Ciarli, Tommaso (UNU-MERIT, Maastricht University, and SPRU, University of Sussex); Savona, Maria (SPRU, University of Sussex); Valente, Marco (University of L’Aquila)
    Abstract: We derive the Kaldorian cumulative causation mechanism as an emergent property of the dynamics generated by a micro-founded model. We build on an evolutionary growth model which formalises the endogenous relations between structural changes in the production, organisation and functional composition of employment and of consumption patterns (originally proposed by Ciarli et al, 2010). We discuss the main transition dynamics to a self- sustained growth regime in a two-stage growth pattern generated through the numerical simulations of the model. We then show that these mechanisms lead to the emergence of a Kaldor-Verdoorn law. Finally we show that the structure of demand shapes the type of growth regime emerging from the endogenous structural changes, fostering or hampering the emergence of the Kaldor Verdoorn law. This depends on the endogenous income distribution and heterogeneity in consumption behaviour
    Keywords: Structural change, economic growth, final consumption, technological change, cumulative causation, evolutionary economics, Kaldor-Verdoorn Law
    JEL: O14 O33 O41 L16 C63 E11
    Date: 2022–01–10
  2. By: Manuel David Cruz
    Abstract: This study empirically investigates the relationship between labor productivity (LP), average real wage (RW), and employment (EMP). The paper's main goal is to provide a test of competing theories of growth and income distribution. Standard theory predicts that real wages should increase following increases in labor productivity. Alternative theories and efficiency wage theories suggest that it is the distribution that causes changes in labor productivity. Theory delivers ambiguous predictions regarding the ultimate effects on employment, which can be either negative if factor substitution prevails or positive if higher wages and higher output per worker generate additional aggregate demand and, therefore, employment. I study a panel of 25 OECD economies over 1960-2019, using several approaches: 1) ECM, DOLS, FMOLS, and ARDL regressions with exogenous and endogenous variables, and 2) a VECM exercise as a robustness check. First, there is a long-run relationship between these variables when LP and RW are considered dependent variables. Second, EMP cannot be explained statistically by LP and RW in the long run: it is weakly exogenous, implying that OECD economies as a group have been, on average labor-constrained in the last six decades. Third, I find a positive two-way causality between LP and RW in both the long and short run, supporting the induced technical change, efficiency wages, and bargaining theories over the neoclassical theory. Fourth, concerning the LP-EMP nexus, in the long run, the results show a negative association, statistically significant for the single-equation estimates from EMP to LP in most specifications. Fifth, there is a positive effect running from EMP to RW in most specifications, statistically significant only in the single-equation. Sixth, both LP positively affects EMP, and RW negatively impacts EMP in the short run.
    Keywords: Labor productivity, real wages, employment, OECD
    JEL: E12 E24 O47 O50
    Date: 2022–01
  3. By: Gomes, Luiz
    Abstract: Considered one of the leading economists of the 20th century, Nicholas Kaldor contributed to the development of modern economic thought in several fields, from cobweb models to tax issues. Kaldor is recognized worldwide for his work on economic development, the theory of distribution and economic growth. Nicholas Kaldor's concerns were directed at practical problems in economic policy. This work aimed to briefly investigate the contributions of Nicholas Kaldor to economic science. In this paper, we succinctly reviewed Nicholas Kaldor's main works. As Nicholas Kaldor's bibliographic production was quite extensive, some parts had to be highlighted, especially the growth models of theoretical framework I, with full employment, and the economic models of theoretical framework II, without full employment. The article is divided into sections and it has a conclusion.
    Keywords: Nicholas Kaldor, Economics, Economic Growth, Theory of Distribution.
    JEL: B20
    Date: 2022–01
  4. By: Gomes, Luiz
    Abstract: Oskar Lange is generally known about his contribution in the debate on the feasibility of rational economic calculation under socialism. Although he is recognized as the theoretical "winner" of this debate, his contributions to economics extend over a wide range of topics and involve issues such as the economic organization of a society in transition to socialism, the relevance or not of econometrics, the meaning of Say's law and the use of cybernetics for economic planning. There are two points that are fundamental in Lange’s work, namely: (i) the economic viability of the socialist mode of production and (ii) the economics of the transition to socialism. The objective of the present article is to investigate Lange’s contributions in regard of these two points: the economic viability of socialism and the economics of the transition to socialism.
    Keywords: Oskar Lange, Socialism, Economic Planning, Law of Value, Market Socialism.
    JEL: B24
    Date: 2022–01
  5. By: OECD; European Commission
    Abstract: This policy brief on the social economy and its contribution to the circular economy was produced by the OECD and the European Commission. The brief defines concepts of both the circular and social economy and describes the potential of the social economy to support circular activities and related business models and to reinforce uptake of circularity in our economies and societies. It finally identifies policy orientations that build on the complementarity of the social and circular economies, and help the social economy support circularity and drive a green and inclusive transition.
    Keywords: Circular Economy, circular value chains, social economy, social enterprises, social inclusion
    Date: 2022–01–14

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