nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2023‒06‒26
seven papers chosen by
Karl Petrick
Western New England University

  1. The Kaldor-Verdoorn Law at the Age of Robots and AI. By Andrea Borsato; Andre Lorentz
  2. Labour market stability in a zero-growth economy By Jimenez, Valeria
  3. Resilience Leadership: Bouncing Forward with Efficiency By Julia M. Puaschunder
  4. All You Need to Know About Climate Change By Di Liberto, Yuri
  5. Stability and determinants of the public debt-to-GDP ratio: a Stock-Flow Consistent investigation By Lorenzo Di Domenico
  6. A baseline stock-flow model for the analysis of macroprudential regulation guidelines and policies for Latin America and the Caribbean By Pérez Caldentey, Esteban; Nalin, Lorenzo; Rojas Rodríguez, Leonardo
  7. Ecological Resources Depletion, Inequality and Poverty By Khan, Haider

  1. By: Andrea Borsato; Andre Lorentz
    Abstract: This paper contributes to the literature around the Kaldor-Verdoorn law and analyses the impact of robotisation on the channel through which the law shapes labour-productivity growth. We start with a simple evolutionary interpretation of the law that combines Kaldorian and Post-Keynesian arguments with the neo-Schumpeterian theory of innovation and technological change. Then we apply a GMM estimator to a panel of 17 industries in 25 OECD capitalist economies for the period 1990-2018. After elaborating on the general evidence of the Kaldor-Verdoorn law in the sample, we investigate the effect of increasing robotisation. The estimates suggest that for industries with a higher-than-average robot density, the increasing adoption of robots weakens, at least, the meso-economic channel that relates productivity growth to mechanisation. Yet, the higher degree of robotisation strengthens the mechanism that links labour productivity growth at the industrial level to the macro-level dynamic increasing returns to scale that emerge from a general expansion of economic activities through the many interactions between sectors. Such results are in agreement with the empirical literature that suggests different impacts from robotisation on the basis of the level of economic activity considered.
    Keywords: Labour productivity, Kaldor-Verdoorn law, Robotisation, GMM.
    JEL: J23 O33 O47
    Date: 2023
  2. By: Jimenez, Valeria
    Abstract: Although traditionally post-Keynesians tackle unemployment issues through the stimulation of aggregate demand, boosting demand indefinitely is no longer possible if we consider environmental constraints. In fact, according to several ecological economists, meeting the environmental targets of the Paris Agreement will involve a halt in economic growth or even degrowth. Within this context, important interventions in the labour market will be necessary to avoid rising unemployment. In this paper, we make use of a Kaleckian autonomous demand-led growth model to analyse the dynamic stability of the labour market in a zero-growth economy (ZGE) with productivity growth. In the model, net investment responds to deviations of capacity utilization from target utilization in the short run while in the long run it adjusts to firms' sales growth expectations determined by the growth rate in autonomous government expenditures. Hence, in the long run, the growth rate of the system is determined by the autonomous growth rate of government expenditures - set equal to zero - and the rate of capacity utilization converges towards the normal rate of capacity utilization. We examine the conditions under which the long-run convergence leads to a stable employment rate. In the basic model, we consider the feedback effects between productivity, distribution, and employment. However, the long-run conditions necessary for a stable employment rate are not met, suggesting, as already pointed out by ecological economists and several post-Keynesians, that policy interventions might be necessary for the stability of the labour market in a ZGE. Therefore, we consider whether the government can stabilize the labour market through a policy of working time reduction (WTR). Our findings suggest that a stable employment rate is possible in our model as long as the negative effect that labour productivity growth has on the employment rate is compensated for by the reduction in working hours.
    Keywords: zero-growth economies, socio-ecological transition, labour market stability, working time reduction
    JEL: E24 Q01 O44
    Date: 2023
  3. By: Julia M. Puaschunder (Columbia University, Graduate School of Arts and Sciences, USA)
    Abstract: The article is designed to aid academics and practitioners envisioning the future of resilient leadership in the finance world. In the aftermath of substantial crises, resilience is key for survival. The system dynamics of resilience are associated with fast-paced decision making under uncertainty, which predestines resilience more to be housed in a muddling-through approach rather than slow-thinking optimality control. Given the nature of resilience to gravitate towards satisficing crisis management, the marriage of resilience with leadership offers to imbue invaluable efficiency and rationality in market survival. Resilience leadership draws attention to leadership features in resiliency, such as clear goal attainment and rational execution plan strategy. This article provides an overview of resilience leadership in finance by the contemporary governmental, corporate and global governance efforts of three cases: 1. The Green New Deals as governmental resilience finance leadership; 2. Socially Responsible Finance as a corporate and financial sector resilience endeavor as well as 3. climate justice redistribution pledges as an international sustainable development strategy. The new age of resilience leadership in finance captures monetary means as a source of politics, diplomacy and international aid. Our new resilience leadership features the contemporary societal impact of the current outpouring of rescue and recovery funds and a boom in socially responsible investments that integrate environmental, social, and governance criteria in portfolio choices imbuing sustainable value of finance for society. Climate change resilience in redistribution funds serves as additional resilience leadership example at the forefront of sustainable development.
    Keywords: Comparative Corporate Social Responsibility, Social Justice, Coronavirus, COVID-19, Creative destruction, Economic growth, Economics, Environmental financialization, European Green Deal, Finance, Global governance, Goals, Government spending,
    Date: 2023–03
  4. By: Di Liberto, Yuri
    Abstract: What if I told you that they knew everything? And that they have known it for a very long time? On January 13 of this year, 2023, in the journal Science, perhaps the most important article to date on climate change was published. In political, social, and ethical terms, this article represents the equivalent of a nuclear bomb, despite the fact that (as is sadly obvious to expect) no one in mainstream news channels (and very few in academia) has mentioned it.
    Keywords: capital as power, climate, ExxonMobil, differential accumulation, sabotage
    JEL: P1 P18 Q4 Q5 Q54
    Date: 2023
  5. By: Lorenzo Di Domenico
    Abstract: This paper aims to outline the stability conditions and the determinants of the public debt-to-GDP ratio within a theoretical framework representing the main features of a monetary economy of production. To this end, we develop two macro – Stock Flow Consistent (SFC) models that, unlike traditional ones that are studied through simulations, are solved analytically. In detail, we firstly derive such conditions from a SFC model of a dynamic version of the traditional income-expenditure scheme with endogenous public debt service and only fiat money. Secondly, we extend the model to include investments and bank loans, thus considering both fiat and private money creation. Thereby, we develop an analytically solvable SFC model based on the Supermultiplier approach. Our main findings outline that: i) The steady-state value of the public debt-to-GDP ratio is determined by the saving rate, the growth rate of primary public spending, the tax rate, the capital intensity of the production process and the interest rate. Given these values, there exists a “natural” level of the public debt-to-GDP ratio towards which the system converges in the long-run. In particular, the public debt-to-GDP ratio depends positively on the saving rate and negatively on the tax rate and growth rate of autonomous spending, while the interest rate has a non-linear effect. This result calls into question the idea of imposing exogenously given thresholds for targeting budgetary rules independently from the very specific features of each economic system; ii) The necessary condition for the stability of the public debt-tp-GDP ratio is the absence of fiscal rules jointly to no full-hoarding of income from interest on public bonds. It becomes sufficient when one of the following is fulfilled: the growth rate of primary public expenditure or the interest rate or the propensity to consume out-of-wealth is higher than zero. Finally, we highlight that permanent expansions in the level of public expenditure have only a transitory effect on the public debt-to-GDP ratio, in the long-run its value goes back to the level determined by the above-mentioned parameters. The only fiscal manoeuvres that Government has at its disposal to lower the ratio are: a persistent increase in the growth rate of public spending or an increase in the tax rate.
    Keywords: Public debt-to-GDP ratio, Stability, Fiscal policy, Stock-Flow Consistent models
    JEL: E12 E17 E42 E43 E52 E62
    Date: 2022–08
  6. By: Pérez Caldentey, Esteban; Nalin, Lorenzo; Rojas Rodríguez, Leonardo
    Date: 2023–01–27
  7. By: Khan, Haider
    Abstract: In this paper, I develop a part of what I have been calling an ecological global political economy approach. I motivate the discussion by focusing on the links between ecological crisis and income distribution. I have chosen the concrete context of Bangladesh, a country likely to be affected severely by global warming and climate change to illustrate through simulation the theoretical results. Using a fairly neutral and conservative assumption of uniform distribution of loss it can be shown axiomatically that inequality increases when effective income is considered leading to ecologically adjusted income distributions. The simulations presented here for Bangladesh demonstrate that both inequality and poverty measured by some popular indexes increase significantly under even this mild assumption and the assumption of moderate income loss.
    Keywords: Ecological Global Political Economy; Axioms of Inequality Comparisons; Axioms of Poverty Comparisons; Bangladesh; Equality of Misfortune Assumption: Adverse Health Effects of Ecological Damage; Resource Depletion; Inequality; Poverty
    JEL: I1 I14 I15
    Date: 2023–05–28

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