nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2022‒10‒31
three papers chosen by
Karl Petrick
Western New England University

  1. A tale of housing cycles and fiscal policy, not competitiveness. Growth drivers in southern Europe By Engelbert Stockhammer; Andre Novas Otero
  2. Looking for growth imperatives under capitalism: money, wage labour, and market exchange By Cahen-Fourot, Louison
  3. Ecological Transition and Structural Change: A New-Developmentalist Analysis By Giulio Guarini; Jose Luis Oreiro

  1. By: Engelbert Stockhammer; Andre Novas Otero
    Abstract: Southern European countries are widely considered a distinct type of capitalism, but they have experienced a varied growth performance, both over time and across countries. This paper investigates the growth drivers in southern Europe since the mid-1990s. We consider a broad set of potential growth drivers derived from the literature on Mediterranean capitalism and Comparative Political Economy more broadly. On the demand side these include the role of house prices (as the main financial variable; highlighted in parts of the growth models approach); the ‘financial curse’ hypothesis (which posits that financial inflows caused house price booms and crowded out manufacturing activities); and Keynesian arguments on the impact of fiscal policy. On the supply side, these encompass the cost competitiveness argument (consistent with mainstream economics and the Varieties of Capitalism approach), research-led technological change; and neo-structuralist arguments regarding the productive capacity. We find strong evidence for the growth contributions of house prices and fiscal policy. While these findings are generally supportive of extant analysis of these economies as finance-led rather than export-led, they call for a more serious integration of house prices in growth model analysis and for a more systematic analysis of the growth impact of fiscal policy.
    Keywords: Comparative Political Economy, growth models, growth drivers, southern Europe, house price cycles, fiscal policy
    JEL: B20 B50 E12 O43 P51
    Date: 2022–10
  2. By: Cahen-Fourot, Louison
    Abstract: First, I update and wrap up the discussion on a monetary growth imperative, namely the argument that debt-money bearing interest triggers real GDP growth. I provide a detailed account of the different versions of the argument and show why none of them hold. In all cases, the argument is shown to be inconsistent in macro-accounting terms or to be at odds with the functioning of the monetary system. The general solution to the monetary growth imperative is that a sufficient share of wealth must be put back in circulation, for example via higher consumption out of wealth or taxation. Moreover, I show that a monetary growth imperative could equally well occur in an economy without debt-money or interest. However, the solution to the monetary growth imperative entails a sustainability paradox: more wealth put back in circulation allows to reach a stable full stationary state but may be environmentally unsustainable. I also highlight convergences between the critique of the monetary growth imperative and the monetary circuit literature. Second, I address the criticism that no net wealth accumulation is unrealistic. It requires to explain why there is accumulation in the first place. Building from post-Keynesian and institutionalist perspectives, I argue that we need to locate the analysis at the level of the definitional social relations of capitalism: market exchange and wage labour. Growth imperatives are emerging properties of these two social relations. I develop a critique of steadystate economics and underline the ontological difference between a zero-growth capitalism and a post-growth economy.
    Keywords: growth imperative,capitalism,paradox of profit,ecological macroeconomics,post-growth
    JEL: E21 E24 E43 B52 P1
    Date: 2022
  3. By: Giulio Guarini; Jose Luis Oreiro
    Abstract: The article aims to analyze the ecological transition and the structural change by considering the role of Medium-Income Trap (MIT) with respect to exchange rate overvaluation and (re)industrialization, according to the structuralist-New Developmentalist Approach. The ecological challenges can be faced by an ecological transition based on Ecological Technological Progress and Ecological Structural Change (ESC). The ESC can be represented by the increase of the share of green activities in output for increasing the environmental efficiency of the economy. The theoretical core of the new developmentalism is the tendency of overvaluation of real exchange rate for middle income countries whose sources are the Dutch disease (and the growth with external saving strategy). This fact generates the MIT concerning the negative impact of overvaluation real exchange rate on the industrial development. Thus, we analyze how the ESC interact with the drivers of overvaluation exchange rate by carrying out a post-Keynesian model based the Structuralist-New Developmentalist features. In this perspective, we integrate the issue of the achievement of the environmental targets as indicated by the Climate International Conferences and by the UN initiative of the Sustainable Developments Goals, to the structural change necessary for the economic catching-up of the middle income (and/or developing) countries.
    Keywords: Ecological Transition, Structural Change, Dutch-Disease, New-Developmentalism
    JEL: O11 O14 Q56 Q57
    Date: 2022–10

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