nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2022‒04‒25
five papers chosen by
Karl Petrick
Western New England University

  1. "Financial Barriers to Structural Change in Developing Economies: A Theoretical Framework" By Francesco Zezza; Gennaro Zezza
  2. "Is It Time for Rate Hikes? The Fed Cannot Engineer a Soft Landing but Risks Stagflation by Trying" By Yeva Nersisyan; L. Randall Wray
  3. Modern services led growth and development in a structuralist dual economy: long-run implications of skilled labor constraint By Thakur, Gogol M
  4. Exploring the New in Politics at Work: A Temporal Approach of Managerial Agencies By François-Xavier de Vaujany; Aurélie Leclercq-Vandelannoitte
  5. Women who host: an intersectional critique of rentier capitalism on AirBnB By Gilchrist, Kate; Maier, George

  1. By: Francesco Zezza; Gennaro Zezza
    Abstract: Starting from the seminal works of Wynne Godley (1999; Godley and Lavoie 2005, 2007a, 2007b), the literature adopting stock-flow consistent (SFC) models for two or more countries has been flourishing, showing that consistently taking into account real and financial markets of two open economies will generate different results with respect to more traditional open economy models. However, few contributions, if any, have modeled two regions in the same country, and our paper aims at filling this gap. When considering a regional context, most of the adjustment mechanisms at work in open economy models--such as exchange rate movements, or changes in interest on public debt--are simply not present, as they are in control of "external" authorities. So, what are the adjustment mechanisms at work? To answer this question, we adapt the framework suggested in Godley and Lavoie (2007a) to consider two regions that share the same monetary, fiscal, and exchange rate policies. We loosely calibrate our model to Italian data, where the South (Mezzogiorno) has both a lower level of real income per capita and a lower growth rate than the North. We also introduce a fragmented labor market, as discouraged workers in the South will move North in hopes of finding commuting jobs. Our model replicates some key features of the Italian economy and sheds light on the interactions between financial and real markets in regional economies with "current account" imbalances.
    Keywords: Stock-Flow Consistent; Regional Labor Mobility; Regional Economic Activity and Development
    JEL: E12 J61 R12
    Date: 2022–04
  2. By: Yeva Nersisyan; L. Randall Wray
    Abstract: Roughly two years into the economic recovery from the COVID-19 crisis, the topic of elevated inflation dominates the economic policy discourse in the United States. And the aggressive use of fiscal policy to support demand and incomes has commonly been singled out as the culprit. Equally as prevalent is the clamor for the Federal Reserve to raise interest rates to relieve inflationary pressures. According to Research Scholar Yeva Nersisyan and Senior Scholar L. Randall Wray, this narrative is flawed in a number of ways. The problem with the US economy is not one of excess of demand in their view, and the Federal Reserve will not be able to engineer a "soft landing" in the way many seem to be expecting. The authors also deliver a warning: excessive tightening, combined with headwinds in 2022, could lead to stagflation. Moreover, while this recovery looks robust in comparison to the jobless recoveries and secular stagnation that have typified the last few decades, in Nersisyan and Wray's estimation there are few signs of an overheating economy to be found in the macro data. In their view, this inflation is not centrally demand driven; rather dynamics at the micro-level are playing a much more central role in driving the price increases in question, while significant supply chain problems have curtailed productive capacity by disrupting the availability of critical inputs. The authors suggest there is a better way to conduct policy—one oriented around targeted investments that would increase our real resource space. This will serve not only to address inflationary pressures, according to Nersisyan and Wray, but also the far more pressing climate emergency.
    Date: 2022–04
  3. By: Thakur, Gogol M
    Abstract: Motivated by the South Asian experience, this paper highlights the importance of the rate of expansion of skilled labor force for service-led growth and development in economies characterized by large populations and low average education and skill endowments using a dual economy model. The model economy consists of a skilled-labor intensive service sector and a skilled-labor indifferent industrial sector - both Kaleckian, in the sense that they maintain excess capacity and operate under conditions of imperfect competition. Labor market is fragmented. There is unlimited supply of unskilled labour but skilled labor is scarce and grows only at a finite rate. Growth of skilled labor supply is only fractionally explained by growth in real wage of skilled labor while the rest depends on education policy of the government. Since government policies take time to adjust to the needs of the private sector, we argue that effect of education policy on skilled labor supply growth can be treated as autonomous. The main result of this paper shows that the model economy can converge to a steady state characterized by balanced sectoral growth at a rate equal to the autonomous part of skilled labor growth. Also, increase in returns to skilled labor can drive up the output share of modern services as the two are positively related in the steady state. The model also shows that the supply side can determine growth in structuralist models despite persistence of unemployed resources.
    Keywords: developing economies, dual economy model, modern services, skilled labor, education policy
    JEL: I25 O14 O15 O41
    Date: 2022–03
  4. By: François-Xavier de Vaujany (Paris Dauphine University); Aurélie Leclercq-Vandelannoitte (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In this essay, we contend that new ways of working imply a crisis both of communities and politics in our societies. We introduce the concept of 'co-politicisation' to make sense of the potential highly transformative political power of managerial agency in society. In the context of ongoing work transformations, managerial agency increasingly seems to become a political agency, through its potential to transform society and the sense of togetherness. However, in the meantime, politics has entered into crisis. Each of us has the possibility to express their own, individual voice, but without building, in turn, any meaningful or resonant collective and community. We argue that a temporal approach is needed to understand such a crisis of community and of the politics. To that end, we introduce Paul Ricoeur (1985)'s thought on a ‘crisis of the present' that we apply to new ways of working. We conclude by suggesting that new ways of working may be missing practices likely to produce the extra-temporality that managerial agency needs to perform. Without this extra-temporality, the managerial agency of new ways of working just keeps weakening our sense of togetherness.
    Date: 2021–01
  5. By: Gilchrist, Kate; Maier, George
    Abstract: Scholarship on AirBnB has often brought critical focus to the advancement of rentier capitalism and gentrification through the sharing economy. In this article we draw upon in-depth interviews with women in London who host their shared living space on AirBnB, to present meaningful empirical examples of women utilizing the platform as a way of surviving. Often, women in our research turned to AirBnB after facing exclusion from traditional labor markets, based on gender, age and/or disability. Others relied on AirBnB to meet their own housing needs, for instance: subletting their own bed to meet rent payments. Rather than departing from a critical class analysis, we instead hope to nuance understandings of rentierism on AirBnB by focusing on these women as complex intersectional subjects of capitalism. While many hosts fall clearly into the category of rentier capitalists, making money through property ownership, the lived realities of hosting were often more complex. We therefore use these women's lived experiences to complicate understandings of class subjectivity in the “sharing economy”, drawing upon an intersectional perspective to showcase women who are hosting in order to subsist.
    Keywords: class; disability; gender; platform economy; sharing economy; Wiley deal
    JEL: R14 J01 J1
    Date: 2022–02–17

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