nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2022‒02‒21
nine papers chosen by
Karl Petrick
Western New England University

  1. When is the Long Run? – Historical Time and Adjustment Periods in Demand-led Growth Models By Ettore Gallo
  2. Why is World Money World Money? A View from the Functions of Money By Jeremy Srouji
  3. Industrial Feudalism and Wealth Inequalities By Hanna Szymborska; Jan Toporowski
  4. Structural change in the US Phillips curve, 1948-2021: the role of power and institutions By Mark Setterfield; Robert A. Blecker
  5. Factor Income Distribution and Capital Accumulation in Peru, 1940-2019 By César Castillo-García
  6. What’s so troubling about ‘voluntary’ in family planning anyway? A feminist perspective By Nandagiri, Rishita
  7. Resilience to shrinking as a catch-up strategy: a comparison of Brazil and Indonesia, 1964–2010 By Axelsson, Tobias; Martins, Igor
  8. Viewed from different Engels? Differences in reactions to “socialism” as a policy label By Ozer, Adam; Sullivan, Brian; Van, Douglas
  9. Resilience to economic shrinking as the key to economic catch-up: A social capability approach By Andersson, Martin; Julia, Juan P.; Palcio Ch., Andrés F.

  1. By: Ettore Gallo (Department of Economics, New School for Social Research)
    Abstract: In recent years, Post-Keynesian models of growth and distribution have substantially shifted their focus from short to long-run analysis. While many authors have focused on the convergence of demand-led growth models to a fully-adjusted equilibrium, relatively little attention has been given to the time required to reach this long-run position. In order to fill the gap, this paper seeks to answer the question of when is the long run in demand-led growth models. By making use of numerical integration, it analyses the time of adjustment from one steady-state to the other in two well-known demand-led growth models: the Sraffian Supermultiplier and the fully-adjusted version of the neo-Kaleckian model. The results show that the adjustment period is generally beyond an economically meaningful time span, suggesting that researchers and policy makers ought to pay more attention to the models’ predictions during the traverse rather than focusing on steady-state positions.
    Keywords: Neo-Kaleckian model, Sraffian Supermultiplier, time, adjustment period, traverse, effective demand, growth
    JEL: B51 E11 E12 B41
    Date: 2022–02
  2. By: Jeremy Srouji (Université Côte d'Azur, France; GREDEG CNRS; International Institute of Social Studies - Erasmus University Rotterdam)
    Abstract: The literature on currency internationalization, with its focus on the essential attributes of an international currency issuer, is largely inadequate for explaining what causes the currency of a country to be adopted and to remain as world money. This paper argues that embedded within the well-known framework of the functions of money – as a medium of exchange, unit of account and store of value – are fundamental assumptions about how Economics defines and understands money. Drawing on conventional and Post Keynesian approaches, it demonstrates that current theories of currency internationalization, and questions of international money more generally, are embedded in underlying theories of money that are very specific about the process through which currencies achieve and maintain an international position. It also finds that a better understanding of the functional approach to money can bring greater theoretical clarity to the positions of various authors on questions of international money. At the same time, it argues that shortfalls in both the conventional and Post Keynesian approaches to money are inevitably also transposed to the international level. These need to be addressed before a more comprehensive theory of currency internationalization can emerge.
    Keywords: international money, international reserves, US dollar, currency internationalization, cryptocurrency
    JEL: E12 E13 E42 E52
    Date: 2021–12
  3. By: Hanna Szymborska (Birmingham City University); Jan Toporowski (SOAS, University of London)
    Abstract: The possibility, first raised by Rudolf Hilferding, of stabilizing a capitalist economy through the operations of a 'general cartel', leaving only social and political 'contradictions' to disturb the functioning of the system, gave rise to a discussion among Marxists not only on whether such a stabilization was at all possible, but also on the nature and scope of those contradictions. This discussion had been anticipated in the 1890s in the work of the Polish Marxist Ludwik Krzywicki (1859 - 1941). He put forward the idea that, in a capitalist economy stabilized in this way, a state of 'industrial feudalism' would prevail, in which society would become stratified into social classes without the possibility of mobility between those classes. This analysis was extended in 1940s by Oskar Lange (1904-1965) as he attempted to make sense of the American New Deal and rediscovered in the 1950s by Tadeusz Kowalik (1926-2012). This paper explains the concept of industrial feudalism and argues that the main mechanism for such a stratification today is the unequal distribution of wealth, in the context of declining welfare provision.
    Keywords: Industrial feudalism; social mobility; wealth distribution; Ludwik Krzywicki; Oskar Lange; Tadeusz Kowalik
    JEL: B14 B15 N3 P1 P16
    Date: 2022–01–18
  4. By: Mark Setterfield (Department of Economics, New School for Social Research); Robert A. Blecker (Department of Economics, American University)
    Abstract: This paper provides an institutional-analytical account of changes in the structure of the US Phillips curve (PC) during the post-war period. It does so by restoring conflict and power to the forefront of macro theory and, in particular, the wage- and price-setting behaviour of workers and firms. The resulting account is consistent with the main stylized facts that characterize the evolution of the US PC since 1948: the disappearance and subsequent reappearance of a ‘standard’ PC (relating the level of the inflation rate, not the change in this rate, to the rate of unemployment); and the flattening of the PC since the 1990s.
    Keywords: Phillips Curve, inflation, unemployment, natural rate hypothesis, bargaining power, institutions
    JEL: E12 E24 E25 E31 N12
    Date: 2022–01
  5. By: César Castillo-García (Department of Economics, New School for Social Research)
    Abstract: A current problem with Latin American economies is the lack of long-run official statistical data for income shares. Nevertheless, several proposals attempt to present estimations to proxy the evolutionary patterns of income distribution in different countries of the region. This study focuses on the factor income distribution for the Peruvian economy. It aims to show time series for the wage, profit, and mixed-income shares for the period 1942-2019 as reconstructed in Castillo (2015). I also present a brief history of the Peruvian macroeconomic regimes. Hence, the evolution of the wage and profits shares relate to the structural transformations of the Peruvian economy and the impact of economic policy in the distributive cycles. The paper ends with the estimation of a Kaleckian model and evaluates the economic growth regime for different time periods. While the whole 1940-2019 is a wage-led growth regime, economic growth in the Neoliberal era 1990-2019 is profit-led because of Peruvian structural changes and 1990s adjustment policies.
    Date: 2022–02
  6. By: Nandagiri, Rishita
    Abstract: Voluntary family planning is a key mainstay of demographic work and population policies. The 1994 International Conference on Population and Development (ICPD) signalled a decisive shift away from a focus on fertility reduction and target-setting to an emphasis on voluntary family planning as a part of a broader reproductive health and women’s empowerment approach. Yet, criticisms of voluntary family planning programmes persist, particularly in interrogations of how ‘voluntariness’ is understood and wielded or assertions of the instrumentalization of women’s fertilities in the service of economic and developmental goals. In this paper, I reflect on these debates with the aim of contesting the notion of voluntary family planning as an unambiguous good that enables equitable empowerment and development for all. Drawing on literature from cognate disciplines, I highlight how voluntariness is linked to social and structural conditions, and I challenge the instrumentalization of voluntary family planning as a ‘common agenda’ to solve ‘development’ problems. Engaging with these interrogations of voluntariness can expand and contribute to understandings of key concepts (e.g. ‘voluntary’) and measurements (e.g. how we measure autonomy or voluntariness in family planning), strengthening the collective commitment to achieving the aims of the ICPD and contributing to reproductive empowerment and autonomy. Through this intervention, I aim to help demographers see why some critics call for a reconsideration of voluntary family planning and encourage a decoupling of interventions from fertility reduction aims, instead centring human rights, autonomy, and reproductive empowerment.
    Keywords: fertility; voluntary family planning; population policy; feminist demography; reproduction; T&F deal
    JEL: N0
    Date: 2021–12–13
  7. By: Axelsson, Tobias (Department of Economic History, Lund University); Martins, Igor (Department of Economic History, Lund University)
    Abstract: Development economics has long focused on growth patterns to explain countries’ ability to catch up and forge ahead. We argue, however, that resilience to economic shrinking matters more. Using the examples of Brazil and Indonesia, we propose that a framework consisting of social capabilities – namely structural transformation, autonomy, and inclusion – can explain why Indonesia is more resilient to economic shrinking than Brazil and why the country is more likely to be successful in its catching-up process.
    Keywords: economic shrinking; income convergence; natural states; social capabilities; Latin America; Asia
    JEL: N10 O20 O43
    Date: 2022–01–19
  8. By: Ozer, Adam; Sullivan, Brian; Van, Douglas
    Abstract: The supposed popularity of socialism among young Americans has been a trending topic in American political media and campaigns. While evidence from public opinion polls disagrees as to whether socialism is truly gaining in popularity, the use of the term “socialism” has had a profound impact on policy discussions in the media and has featured as a prominent Republican Party strategy in the 2020 election cycle. This gives rise to important questions: How do individuals react to the socialist label? Does the socialist label serve as an ideological or affective signal? Are attacks that frame policies as socialist effective in decreasing policy support? Using original observational and experimental survey data, we find that individuals have strong polarized affective reactions to the socialist label. However, framing popular social welfare policies as socialist is ineffective in undermining popular support. Implications suggest that while framing political policies as socialist may trigger affective polarization, it is likely an ineffective means of political persuasion. As a result, oversaturation of the term in the media may lead to misleading conclusions about both political ideology and individual political behavior.
    Keywords: affective polarization; socialism; policy support; framing; survey experiment; Sage deal
    JEL: B14 B24 P2 P3
    Date: 2022–01–24
  9. By: Andersson, Martin (Department of Economic History, Lund University); Julia, Juan P. (Unit for Economic History, University of Gothenburg); Palcio Ch., Andrés F. (Department of Economic History, Lund University)
    Abstract: Economic growth is usually considered the main driver of convergence – the attainment by developing countries of income levels similar to those of industrialised nations. Although it has been recognised that achieving economic growth is not the same as sustaining it, analyses of the role of economic shrinking in the catching-up process, and how to build resilience to shrinking, are in short supply. The objective of this paper is to understand how emerging economies can limit the frequency and magnitude of economic shrinking and thus increase the probability of catching up. To this end, we analyse the role of social capabilities as determinants of resilience to shrinking in 26 developing countries during the period 1964– 2018. As a representation of a broad spectrum of capabilities, we construct an Index based on five interrelated social and economic capabilities: (i) transformation of the economic structure, (ii) market inclusion, (iii) social stability, (iv) accountability and (v) autonomy of the state. We demonstrate that countries with better social capabilities are more resilient to shrinking than countries with poor capabilities. Poorly endowed countries do not necessarily lack the ability to generate growth, but their limited resilience prevents them from catching up. In addition, the paper shows that social capabilities are highly relevant in smoothing the negative effects of international trade shocks in developing countries. The main implication of the paper is that improvement of social capabilities should be regarded as a key instrument to promote long-term, sustainable economic development, and it should be emphasised over short-term maximization of economic growth. This could be done by conciliating socioeconomic transformation with other concerns, such as the sustainable use of natural resources.
    Keywords: economic shrinking; social capabilities; resilience; economic growth; catching up; developing countries
    JEL: O47 O57
    Date: 2021–12–20

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