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

  1. On the Over-determination Problem in a Two Sector Neo-Kaleckian Model By Huang, Biao
  2. Consumer sovereignty in the digital society By Alexandre Chirat
  3. A Baseline Model of Behavioral Political Cycles and Macroeconomic Fluctuations By Corrado Di Guilmi; Giorgos Galanis; Christian R. Proaño
  4. The Keynesian nexus between the market for goods and the labour market By Guerrazzi, Marco

  1. By: Huang, Biao (Renmin University of China)
    Abstract: In this paper, we aim to solve the over-determination problem in two-sector neo-Kaleckian models raised by Park (1995) against Dutt (1990). After summarising the over-determination problem and existing solutions, we argue that the over-determination problem is not caused by the incompatibility of sectors’ investment functions and equalised rates of profit, but rather the incompatibility of profit rate equalisation and the arbi-trarily given mark-up rates of different sectors. We propose to solve the problem by introducing an endogenous variable, the relative mark-up ratio, which makes the model perfectly determined and more logically consistent. We also discuss the adjustment mechanism from the short-run to the long-run equilibrium.
    Keywords: Two-sector neo-Kaleckian model; equalised profit rate; mark- up pricing; free competition
    JEL: B51 E11 O41
    Date: 2022–07–07
  2. By: Alexandre Chirat
    Abstract: Do uses of digital technologies in the framework of early 21st century capitalism promote or reduce the expression of consumer sovereignty ? This paper addresses this question through the lens of John Kenneth Galbraith’s theory of consumption. First, I recall the main stakes of his theory. Second, I highlight the main differences between traditional advertising and online behavioral advertising. Third, I explain how online behavioral advertising strengthens the “dependence effect” and “revised sequence” depicted by Galbraith within the context of the industrial society. Fourth, I discuss some normative challenges raised by digital platform corporations to individual sovereignty. Lastly, I argue that platform capitalism appear as a mature form of the “new industrial state”, one important difference being that digital platform corporations, rather than traditional industrial corporations, largely preside over the allocation of resources in the economy.
    Keywords: Consumer sovereignty – online behavioral advertising - digital economics – platform capitalism
    JEL: B2 P1 M3 L2
    Date: 2022
  3. By: Corrado Di Guilmi; Giorgos Galanis; Christian R. Proaño
    Abstract: Although the rational choice approach remains the theoretical modeling paradigm in economics and political sciences, the relevance of behavioral factors such as heuristics and biases has been increasingly acknowledged in both fields over the last decades. Against this background, and in honor the lifetime work of Peter Flaschel, we set up a baseline political-macroeconomic model of the Keynes-Metzler-Goodwin (KMG) variety enhanced with endogenous political choices as in Di Guilmi and Galanis (2021). The mutual feedback between the political and the macroeconomic spheres, generated by our framework, gives rise to cyclical dynamics around moving long-term trends for certain parameter constellations. The results of both the stability analysis and the simulations illustrate the existence of multiple political equilibria in the presence of endogenous electoral presences resulting from the crucial role of income distribution not only as a determinant of aggregate investment and aggregate output, but also, of the political climate.
    Keywords: Behavioral Macroeconomics, Disequilibrium, Discrete Choices, Macroeconomic Fluctuations, Political Cycles, Polarization
    JEL: D5 E3 H2
    Date: 2022–11
  4. By: Guerrazzi, Marco
    Abstract: In this paper, I build on the Keynesian analysis of the market for goods to draw some implications on the behaviour of some typical labour market magnitudes. Specifically, without invoking the assumption of constant nominal wages but making instead the distinction between the aggregate expected demand function and the aggregate expenditure function, I discuss the implied "daily" adjustments of expected and actual real wages that allow to achieve a short-run equilibrium. In addition, I offer a microfoundation for equilibrium unemployment due to deficient demand grounded on modern searching-and-matching theory.
    Keywords: Keynesian economics; Expected demand; Expenditure function; Aggregate supply
    JEL: E12 E24 J31 J64
    Date: 2022–11–22

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