nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2022‒12‒05
seven papers chosen by
Karl Petrick
Western New England University

  1. The Taylor Rule and its Aftermath: Elements for an Interpretation along Classical-Keynesian lines By Levrero, Enrico Sergio
  2. Growth, cycles, and residential investment By Marcio Santetti, Michalis Nikiforos, Rudiger von Arnim
  3. Keynes, Ramsey and Pragmatism By Gerrard, Bill
  5. Government in the Money View: Sovereign Debt, Liquidity Preference, and the Fiscal-Monetary Nexus By Eichacker, Nina
  6. Sociological labour market theories: A German perspective on an international debate By Weingärtner, Simon; Köhler, Christoph
  7. The cost of managing impressions for black employees: an expectancy violation theory perspective By Wayne, Sandy J.; Sun, Jiaqing; Kluemper, Donald H.; Cheung, Gordon W.; Ubaka, Adaora

  1. By: Levrero, Enrico Sergio (Roma Tre University)
    Abstract: The aim of this paper is to assess to what extent the Taylor rule can be considered an appropriate representation of the tendency of central banks to react to price inflation. After an overview of the origin and use of the Taylor rule, the paper stresses some difficulties in its implementation according to the modern theory of central banking and the limits of its interpretation by the New Consensus models. Finally, an alternative interpretation of this rule along Classical-Keynesian lines is advanced. In this context, it has to be interpreted, as it is in actual fact, as a flexible and non-mechanical benchmark for monetary policies which are seen to affect income distribution between wages and profits.
    Keywords: Monetary policy; Taylor rule; Cost-push inflation
    JEL: E11 E12 E52 E58
    Date: 2022–10–31
  2. By: Marcio Santetti, Michalis Nikiforos, Rudiger von Arnim
    Abstract: The empirical literature on neo-Goodwinian models of growth and distribution still lacks an explicit treatment of capital accumulation. Further, and across different theoretical approaches, residential investment is seen as a critical driver of the business cycle. This paper addresses these two issues. First, through four- and five-dimensional Structural Vector Autoregressive (SVAR) models, cyclical trajectories derived from impulse-response functions confirm profit-led demand and profit-squeeze distribution regimes, in accordance with the cyclical stylized facts in the vein of Goodwin (1967). Second, aggregate investment is then split into its residential and nonresidential categories. Results confirm that residential investment leads the cycle, whereas nonresidential investment lags it. Finally, this study argues that residential investment is, in reality, undertaken by corporations—and not households—, and can therefore not be seen as autonomous to the business cycle, demographics, and financial variables.
    Keywords: Cyclical growth; Residential investment; Labor share of income. JEL Classification: E12; E22; E24; E25; E32
    Date: 2022
  3. By: Gerrard, Bill
    Abstract: In his recent paper in this journal, Bateman (2021) breaks with the “Standard View” of Ramsey’s influence on Keynes and argues that Ramsey’s pragmatist philosophical thought underpinned both Keynes’s acceptance of Ramsey’s subjective theory of probability, and Keynes’s adoption of a narrative theory of the role of confidence in economic fluctuations in the General Theory. In this paper it is argued that Bateman is right both in emphasizing the influence of Ramsey’s pragmatist philosophy on Keynes’s thought during the development of the General Theory and afterwards, and in arguing that the influence of Ramsey’s pragmatist philosophy partly explains Keynes’s emphasis on the importance of the state of confidence in Chapter 12 of the General Theory. However, it is argued that Ramsey’s pragmatist philosophy had a much greater influence on Keynes than acknowledged by Bateman. Furthermore, contra Bateman, Keynes’s move to a more pragmatist philosophical position does not imply that Keynes’s accepted Ramsey’s subjective theory of (measurable) probability.
    Date: 2022–07–26
  4. By: Brady, David
    Abstract: This chapter argues income and wealth are two paramount gradational measures of social stratification. The chapter makes this case while reviewing recent social science on income and wealth. First, I begin by explaining how income and wealth are essential for purchasing well-being. Second, I review the definition and measurement of income and wealth. This section is particularly critical because one of my overarching themes is that measurement is absolutely essential to studying income and wealth. Unfortunately, the field of social stratification – especially within the U.S. – has arguably problematically neglected measurement. Along the way, I provide empirical evidence demonstrating that measurement critically influences estimates of levels of inequality, intergenerational mobility, proxies for permanent income, and levels and trends in racial inequality. Third, I describe the levels of inequality in income and wealth. Fourth, I describe the intergenerational inheritance of or mobility income and wealth. Fifth, I show how income and wealth outperform other measures of social class as proxies of longer term resources, such as permanent income. Sixth, I demonstrate how income and wealth matter to stratification partly because they are mechanisms for other salient inequalities, including especially racial inequalities.
    Date: 2022–07–18
  5. By: Eichacker, Nina
    Abstract: In times of financial crisis, we expect monetary authorities to provide liquidity support to banks at risk of failure. However, governments often provide monetary support to banks at risk of failure through guarantees and direct lending to financial institutions, often in tandem with monetary authorities. At the same time, governments may require liquidity support in moments of crisis, when cyclical deficits rise, and bond market activity constrains access to funding. This paper introduces governments’ activity into both the Post-Keynesian theory of endogenous money as well as Mehrling’s ‘Money View’ of the economy. It demonstrates how government activity becomes more important during periods of heightened liquidity preference through its support of financial institutions, while governments may simultaneously become more vulnerable to private bondholders increased liquidity preference. Some governments are likely to face greater obstacles in providing liquidity and accessing funding in times of economic uncertainty, while others may find their ability to provide liquidity is bolstered by popular perceptions of their credit worthiness. Recent experiences during the Global Financial Crisis, the Eurozone Crisis, and the COVID-19 Crisis illustrate the importance of understanding the monetary and financial factors that may constrain governments’ abilities to fund deficits, especially given the importance of fiscal expenditure as a stabilizing economic force, or as a potential driver of economic development.
    Date: 2022–09–19
  6. By: Weingärtner, Simon; Köhler, Christoph
    Abstract: The defining characteristic of sociological labour market research today is the prevalence of empirical evidence over theory. In order to fill this gap, this contribution collects and compares selected approaches from a variety of social-theoretical traditions (e.g. rational-choice, neo-marxism, economic and sociological institutionalisms, field-theories). As a result, the existing (fragments of) sociological labour market theories are grouped into four distinct streams of thinking with a focus on economic or social operators, on the one hand and agency or structure, on the other. In the light of current developments of social closure and protectionism of nationally embedded employment systems, the authors opt for a political sociology of labour markets based on sociological field theories.
    Keywords: Labour Markets,Inequality,Political Sociology,Economic Sociology,Political Economy
    Date: 2021
  7. By: Wayne, Sandy J.; Sun, Jiaqing; Kluemper, Donald H.; Cheung, Gordon W.; Ubaka, Adaora
    Abstract: This study identifies a unique bias faced by Black employees which makes it challenging for this group to manage their professional image. Integrating research on racial backlash, image management, and expectancy violation theory, we argue that self-promotion by Black employees will result in detrimental outcomes for this group compared to White, Hispanic, and Asian employees. Due to negative racial stereotypes related to their job competence, we hypothesize that self-promotion by Black employees will be viewed by their White managers as a violation of stereotypically appropriate behavior and will result in a backlash in the form of lower job-related outcomes. We propose that the process by which these effects occur is through manager assessments of their employees on agentic and communal traits. Our hypothesized model was tested with a stratified sample of manager–employee dyads of a large financial institution. Results indicated that self-promotion by Black employees was associated with lower job performance and person–organization fit ratings, as well as fewer idiosyncratic deals with their immediate managers compared to White, Hispanic, and Asian employees. Implications of the divergent consequences of self-promotion for Black employees relative to other racial groups are discussed
    Keywords: expectancy violation theory; image management; racial backlash; racial stereotypes; selfpromotion
    JEL: J50
    Date: 2022–08–01

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