nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2022‒06‒13
five papers chosen by
Karl Petrick
Western New England University

  1. Care, Job Guarantee, and Revisiting “Socialization of Investment”: Insights from Institutional Economics By Zdravka Todorova
  2. The Impossible Quartet in a Demand Led Growth-Supermultiplier Model for a Small Open Economy By Jose Luis Oreiro; Julio Fernando Costa Santos
  3. Economic Interests, Worldviews and Identities: Theory and Evidence on Ideational Politics By Elliott Ash; Sharun Mukand; Dani Rodrik
  4. Marx after Okishio: Falling Rate of Profit with Constant Rate of Exploitation By Deepankar Basu; Oscar Orellana
  5. Offshoring via vertical FDI in a long-run Kaleckian model By Woodgate, Ryan

  1. By: Zdravka Todorova
    Abstract: The article discusses commitment to full employment in light of institutional theory and offers a renewed examination of Keynes’s "socialization of investment" concept. The discussion builds on Veblen's theory of human development, predation, and capitalism. It highlights contemporary institutional inquiry in a discussion of ongoing issues of care and social disparities. Based on this, the article formulates problems for a broader inquiry about socialization of investment. The article provides insights about Job Guarantee based on original institutional economics concepts.
    Keywords: job guarantee, care systems, Feminist Post Keynesian-Institutional economics, social stratification, socialization of investment, Modern Money Theory and institutions
    JEL: B52 B54 E12 P16 Z18
    Date: 2022–05
  2. By: Jose Luis Oreiro; Julio Fernando Costa Santos
    Abstract: The aim of this paper is to investigate the long run sustainability of a growth path led by multiple non-creating capacity autonomous expenditures in a demand led-supermultiplier model for a small open economy. Using two different models the results show that it is impossible to have in the same model long-term economic growth driven by the non-capacity creating component of domestic demand, exogenous income distribution, long-run balance between productive capacity and aggregate demand and balance of payments equilibrium. Economic viability of the balanced-growth path demands growth to be led by exports, at least for small open economies.
    Keywords: Post-Keynesian Economics, Growth and Distribution, Srafian Supermutiplier, Simulation Models
    JEL: E12 E37 P10
    Date: 2022–05
  3. By: Elliott Ash; Sharun Mukand; Dani Rodrik
    Abstract: We distinguish between ideational and interest-based appeals to voters on the supply side of politics, and integrate the Keynes-Hayek perspective on the importance of ideas with the Stigler-Becker approach emphasizing vested interests. In our model, political entrepreneurs discover identity and worldview “memes” (narratives, cues, frames) that shift beliefs about voters’ identities or their views of how the world works. We identify a complementarity between worldview politics and identity politics and illustrate how they may reinforce each other. Furthermore, we show how adverse economic shocks may result in a greater incidence of ideational politics. We use these results to analyze data on 60,000 televised political ads in U.S. localities over the years 2000 through 2018. Our empirical work quantifies ideational politics and provides support for the key model implications, including the impact of higher inequality on both identity and worldview politics.
    Keywords: economic interests, identity, narratives, ideational politics
    JEL: D72 P16
    Date: 2021
  4. By: Deepankar Basu; Oscar Orellana
    Abstract: Can cost-reducing, technical change lead to a fall in the long run rate of profit if class struggle manages to keep the rate of exploitation constant? In this paper we demonstrate, in a general circulating capital model, that if (a) the technical change is capital-using labor-saving (CU-LS), (b) the real wage bundle can change, and (c) the decline in the unit cost of production is bounded above by the change in the nominal labor cost associated with the new technique of production, then viable technical change can be consistent both with a constant rate of exploitation and a fall in the long run rate of profit. This result vindicates Marx's claim in Volume III of Capital, that if the rate of exploitation remains unchanged then technical change in capitalist economies can lead to a fall in the long run rate of profit.
    Date: 2022–05
  5. By: Woodgate, Ryan
    Abstract: This paper develops a two-country Kaleckian model in which "Northern" firms invest a fixed fraction of total investment in foreign affiliates in the low-wage "South" in order to offshore the production of intermediate goods over time and lower overall labour costs. On the back of this setup follows an analysis of the macroeconomic implications of offshoring in the short and long run. Offshoring through vertical FDI is found to lead to a falling wage share and a simultaneously falling price level and rising mark-up in the North, whereas the effect on equilibrium capacity utilisation may be positive or negative. Interestingly, however, regardless of the effect on capacity utilisation and firm profitability, we can show that the structural change implied by offshoring leads to lower rates of capital accumulation and employment in the North relative to the initial (pre-offshoring) values in the short run. The long-run effects on Northern employment and growth, on the other hand, depend crucially on the long-run accumulation rate of the Northern-owned multinational firms. However, the model shows that, if wages endogenously converge during the transition due to higher unemployment in the North and lower unemployment in the South, then the long-run Northern capacity utilisation and accumulation rates are increasingly likely to fall relative to pre-offshoring values. The model appears well suited to shed light on many real-world macroeconomic phenomena, such as rising FDI flows, falling wage shares, rising mark-ups in an era of low inflation, hysteresis, and secular stagnation.
    Keywords: offshoring,foreign direct investment,distribution,stagnation
    JEL: F62 F23 O41 E11 E12
    Date: 2022

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