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on Post Keynesian Economics |
| By: | Fix, Blair |
| Abstract: | In my last post, I discussed the underwhelming relation between interest rates and unemployment. In this post, I’ll look at a better way to connect unemployment to interest income. It turns out that if you take US net interest and divide it by corporate profit, you get a ratio that closely tracks unemployment. It’s a measure that Jonathan Nitzan and Shimshon Bichler call the ‘maturity of capitalism’. If this language sounds odd, that’s because Nitzan and Bichler see capitalism differently than your average economists. So before we get to the data, let’s review some of their thinking. |
| Keywords: | income distribution, interest rate, maturity of capitalism, profit, sabotage, unemployment |
| JEL: | P00 P1 E24 J6 D3 E4 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:270869&r=pke |
| By: | Pierre Jacques (UCL - Université Catholique de Louvain = Catholic University of Louvain); Louis Delannoy (Inria Grenoble - Rhône-Alpes - Inria - Institut National de Recherche en Informatique et en Automatique, LJK - Laboratoire Jean Kuntzmann - Inria - Institut National de Recherche en Informatique et en Automatique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); Baptiste Andrieu (UGA - Université Grenoble Alpes, The Shift Project - Redesigning the Economy to Achieve Carbon Transition); Devrim Yilmaz (AFD - Agence française de développement); Hervé Jeanmart (UCL - Université Catholique de Louvain = Catholic University of Louvain); Antoine Godin (AFD - Agence française de développement) |
| Abstract: | The biophysical foundations of socio-economic systems are underrepresented in the vast majority of macroeconomic models. This lack is particularly troublesome when considering the links between energy, matter and the economy in the context of the energy transition. As a remedy, we present here a biophysical stock-flow consistent macroeconomic model calibrated at the global scale, that combines detailed bottom-up estimates for the high capital intensity of renewable energies and the decreasing energy return on investment (EROI) of fossil fuels. We find that the completion of a global energy transition scenario compatible with the 1.5 °C objective of the Paris Agreement leads to a decrease of the system's EROI and to high investment share, employment and inflation trends, characteristic of a "war economy". Our results further indicate that a slower growth rate eases the transition, and call for further work on post-growth scenarios studies. |
| Keywords: | Ecological macroeconomics, Stock-flow consistent modelling, Energy transition, Energy return on investment |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04087628&r=pke |
| By: | Fix, Blair |
| Abstract: | When I read about monetary policy, I have a rule of thumb. Every time I see the phrase interest rate, I replace it with the term wage rate. Then I ask myself whether the discussion still makes sense. Often, it does not. The reason I make this substitution is that in conceptual terms, the interest rate and the wage rate are similar: they are both rates of return. Wages are the return on employment. Interest rates are the return on credit. Now, the important thing about rates of return is that when we change them, we are toying with the distribution of income. Hike wages and we send more income to workers. Hike the rate of interest and we send more income to creditors. Sure, the specifics of this redistribution are open for inquiry. But by definition, rates of return are ‘distributional variables’ — they determine how the income pie gets divvied up. Back to my word substitution. When it comes to wages, the issue of distribution is typically front and center. That’s why talk of a minimum-wage hike prompts businesses (and many economists) to complain about reduced profits. But when creditors hike the rate of interest, talk of income distribution is curiously absent. Instead, we get a barrage of macroeconomic jargon — terms like the ‘natural rate of interest’ and the ‘non-accelerating inflation rate of unemployment’. Why the discrepancy? One possibility is that economists know something that we don’t. Perhaps they’ve looked at the evidence and concluded that interest rates have a ‘neutral’ effect on the distribution of income. Another possibility is that the macroeconomic jargon is mostly a distraction. In other words, like wages, the rate of interest is a ‘distributional variable’. But it’s one that mainstream economists prefer to ignore. So which option is true? In this post, I let the evidence speak for itself. Looking at cross-country evidence, I find that interest rates are decidedly non-neutral. As interest rates rise, three things happen: (1) the interest share of income increases; (2) the labor share of income decreases; (3) income inequality increases. In short, the evidence suggests that interest rates play a key role in the game of class warfare. And that makes sense. Interest, after all, is a rate of return. And when it comes to divvying up the income pie, rates of return are always zero sum. |
| Keywords: | credistors, distribution, interest rates, labour, wages |
| JEL: | E5 J3 E4 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:270866&r=pke |
| By: | Antonio Sánchez‐bayón (URJC - Universidad Rey Juan Carlos [Madrid]); Estrella Trincado-Aznar (UCM - Universidad Complutense de Madrid = Complutense University of Madrid [Madrid]); Francisco J Sastre (ESIC Business & Marketing School) |
| Abstract: | Contribution: This review offers a descriptive and explanatory study on the colonisation of the US West, under the hermeneutical turn from heterodox economic approaches, to deal with some current contradictions and anachronism in the mainstream view. Also, there is a systematisation of the American utopias, divided into religious and ideological experiments, with a comparison. |
| Keywords: | the United States of America (USA) religion & economics anarcho-capitalism Austrian School of Economics (Austrian Economics) new institutional approach colonisation communitarian farms utopias, the United States of America (USA), religion & economics, anarcho-capitalism, Austrian School of Economics (Austrian Economics), new institutional approach, colonisation, communitarian farms, utopias |
| Date: | 2023–01–24 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04056080&r=pke |
| By: | Yolande Francois (ISEOR - Institut de Socio-économie des Entreprises et des ORganisations - Institut de socio-économie des entreprises et des organisations, Laboratoire de Recherche Magellan - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon) |
| Abstract: | This article explores the synergy between philosophy, corporate finance, and corporate social responsibility (CSR), emphasizing the importance of interdisciplinarity in addressing the complex ethical, social, and environmental challenges faced by organizations today. By integrating the teachings of philosophy and ethical theories, companies can enrich their understanding and practice of ethical corporate finance and CSR, developing conceptual frameworks, critical thinking skills, and systematic approaches for ethical decisionmaking and problem-solving. Companies that adopt ethical and responsible practices can promote value creation for stakeholders, financial performance, and long-term sustainability, thereby contributing to the achievement of sustainable development goals and the creation of a more just, sustainable, and responsible world. |
| Abstract: | Cet article examine l'apport de la philosophie à la finance d'entreprise éthique et identifie les défis éthiques auxquels elle est confrontée. La philosophie peut fournir des cadres normatifs et des outils pour évaluer et justifier les décisions et les pratiques financières, ainsi que pour développer les compétences éthiques des professionnels de la finance. Les défis éthiques incluent les conflits d'intérêts, la manipulation et la fraude, la responsabilité sociale des entreprises, la gouvernance d'entreprise et l'innovation financière. Cette étude met en évidence la nécessité d'une approche réfléchie et intégrée pour résoudre ces défis éthiques. |
| Keywords: | Philosophy Corporate finance Corporate social responsibility (CSR) Ethics Interdisciplinarity Ethical decision-making Sustainability Sustainable development Financial performance Stakeholders, Philosophy, Corporate finance, Corporate social responsibility (CSR), Ethics, Interdisciplinarity, Ethical decision-making, Sustainability, Sustainable development, Financial performance, Stakeholders |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04081105&r=pke |
| By: | Kotecha, Meena |
| Abstract: | Mathematics Anxiety may sound like a trivial issue once school exams are over, but, argues Meena Mehta Kotecha, it has far-reaching consequences for both individuals and society. Her research explores its impact and identifies ways educators can help reduce unfavourable narratives about mathematics. |
| JEL: | C1 |
| Date: | 2023–03–23 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:118538&r=pke |
| By: | Gallo, Giovanni; Sconti, Alessia |
| Abstract: | This paper aims to identify the potential influence of financial literacy's marginal change on households' income (wealth) inequality levels both at the mean value and along with the distribution value. Using data from the Bank of Italy Survey of Households Income and Wealth (SHIW)'s 2016 wave - which includes the Big Three questions, a widely used measure of financial literacy - we show that replacing 10% of respondents reporting no correct answers with respondents reporting two correct answers out of three correct answers would increase the mean value of the household equivalized disposable income by 0.8% (160€ per year). Additionally, the mean value would increase by +1.5% (285€ per year) if we replace 10% of respondents reporting no correct answers with those reporting three correct answers. These results are not trivial. A lump sum leading to the same household income increase would cost on average EUR 4.1 to 7.3 billion per year in Italy. Finally, heterogeneous analysis reveals that an increase in financial literacy levels is expected to have different outcomes across the population, engendering often a greater reduction of inequality levels among the most vulnerable groups. As a natural policy implication, our results strongly support mandatory financial education in schools. |
| Keywords: | Financial literacy, Household finance, Wealth inequality, Income inequality, RIF regressions |
| JEL: | D31 D63 G53 G51 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:1266&r=pke |
| By: | Haelim Anderson; Adam Copeland |
| Abstract: | The collapse of Silicon Valley Bank (SVB) and Signature Bank (SB) has raised questions about the fragility of the banking system. One striking aspect of these bank failures is how the runs that preceded them reflect risks and trade-offs that bankers and regulators have grappled with for many years. In this post, we highlight how these banks, with their concentrated and uninsured deposit bases, look quite similar to the small rural banks of the 1930s, before the creation of deposit insurance. We argue that, as with those small banks in the early 1930s, managing the information around SVB and SB’s balance sheets is of first-order importance. |
| Keywords: | bank runs; information management; bank crises; banking crisis |
| JEL: | G21 G01 |
| Date: | 2023–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednls:96142&r=pke |