nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2023‒09‒11
six papers chosen by
Karl Petrick, Western New England University

  1. Inflation stabilization and normal utilization By Michl, Thomas R.
  2. Capabilities, Institutions and Regional Economic Development: A Proposed Synthesis By Koen Frenken; Frank Neffke; Alje van Dam
  3. Modern Monetary Theory: Revising Money Demand and Supply from Umer Chapra's Perspective By Umam Khoirul; Muhammad Atha Mahdi; Alfarid Fedro
  4. State crisis theory: A systematization of institutional, socio-ecological, demographicstructural, world-systems, and revolutions research By Hartley, Tilman
  5. Teaching introductory economics: an interdisciplinary approach By Iqbal, Nabeel
  6. "Greening the Future: Mobilizing Environmental Finance for Sustainable Development in Developing Countries" By Yeboah, Samuel; Boateng Prempeh, Kwadwo

  1. By: Michl, Thomas R. (Department of Economics, Colgate University)
    Abstract: This paper presents a model of inflation and distribution that examines the relationship between the employment of labor and the utilization of capital. It features a structural difference between the wage Phillips curve and the price Phillips curve that gives rise to persistent changes in the real wage whenever the inflation-neutral level of activity fails to utilize the existing capital stock at its normal level. Assuming an inflation-targeting central bank that is obliged to run the system around its inflation-neutral level, these changes will reduce the gap between the inflation-neutral level and normal utilization by moving the system along a stable wage curve. In the end this implies that the inflation-neutral level of employment and full or normal utilization of capital will tendentially coincide, lending some support to the Duménil-Lévy thesis that monetary policy makes normal utilization a long-run center of gravity.
    JEL: E11 E12 E24 E31 E52
    Date: 2023–08–23
  2. By: Koen Frenken; Frank Neffke; Alje van Dam
    Abstract: The capability framework in evolutionary economic geography views regional economic development as a process of related diversification through the acquisition of capabilities that render a regional economy more complex. Using this framework, we synthesize seven theoretical notions that hitherto remained rather disconnected: relatedness, complementarity, variety, complexity, diversification, agents of structural change, and related variety. We formulate a constructive critique of the capability framework, relaxing the overly restrictive assumption that the presence of capabilities in a region is both necessary and sufficient for complex products to be produced in a region. Instead, we argue that the complexity of a regional economy depends primarily on the institutions that support firms to coordinate production in complex value chains within and across regions. The augmented framework allows for closer integration of evolutionary and relational approaches in economic geography, providing new links between the literatures on clusters, innovation systems and global production networks.
    Keywords: diversification, relatedness, complexity, institution, value chain
    JEL: B52 O1 O43 R1
    Date: 2023–08
  3. By: Umam Khoirul (UNIDA Gontor - University of Darussalam Gontor); Muhammad Atha Mahdi (UNIDA Gontor - University of Darussalam Gontor); Alfarid Fedro (UNIDA Gontor - Univerisity of Darussalam Gontor)
    Abstract: The global crisis and the COVID-19 pandemic have intensified the debate surrounding Modern Monetary Theory (MMT), particularly as nations resort to budget deficits. MMT economists argue that the central government, not constrained by fiscal limits, can maintain effective demand to achieve public goals like full employment and economic growth. However, economists remain skeptical about the permissiveness of MMT in generating new money. Extensive research is needed to explore the foundation of money supply and demand, examining if it truly achieves economic goals or leads to failure. Umer Chapra offers a profound monetary perspective, considering the demand and supply of money in the Islamic monetary system that aims for justice. This study aims to examine MMT's money demand and supply from Chapra's viewpoint, incorporating its economic goals. Employing a qualitative approach based on library research, this study finds that the endogenous MMT money demand model requires revision within Chapra's framework. To avoid misallocation and achieve economic objectives, the study suggests adopting Chapra's recommendations, such as eliminating bank interest in credit allocation and controlling unproductive and speculative money demand. This ensures that the MMT idea of endogenous money functions properly. However, further research is needed to address the techniques for avoiding money demand in the speculative sector, an area where Chapra's work lacks detail. Collaboration among Muslim economists can fill this gap and enrich the discussion. By bridging this gap, this study contributes to the ongoing discussion on monetary policy and provides valuable insights for policymakers and economists.
    Keywords: Modern Monetary Theory (MMT), Money Demand, Money Supply, Endogenous Money, Islamic Monetary System
    Date: 2023–12–12
  4. By: Hartley, Tilman
    Abstract: Today's ecological and political instability has stimulated interest in how similar problems have arisen in the past - and how they have been resolved. But this research has long been divided along different research traditions. I draw together five broad research strands: neo-institutionalism, socio- ecological systems, demographic-structural theories, world-systems approaches, and revolutions research. I begin by establishing that each of these five traditions proposes to explain state crisis, in the sense of a decisive turning point from which the state might not emerge in its current form. But each of the five strands proposes a slightly different set of central hypotheses, and draws on a slightly different set of cases in support. Systematizing these hypotheses, I draw attention to a neglected distinction between crises that take place in different ecological-economic conditions. This is because crises that occur in conditions of worsening scarcity are hypothesized to have very different causes and trajectories to crises that occur in conditions of sufficiency. But beyond this fundamental scarcity/sufficiency distinction, I find no other contradictions between different hypotheses. Systematizing these theories of state crisis thus establishes a framework for testing these competing, but compatible, hypotheses.
    Keywords: demographic-structural theory, institutions, revolutions, socio-ecological systems, state crisis, worldsystems analysis
    Date: 2023
  5. By: Iqbal, Nabeel
    Abstract: Using three examples, this opinion piece argues that introductory economics can provide an effective context in which to introduce university students to interdisciplinary learning and thinking. The first example illustrates how input-process-output diagrams can be used to stimulate interdisciplinary thinking in classrooms when teaching the concept of production. The second and third examples illustrate how elasticity and the concept of circular economies, respectively, can be introduced using an interdisciplinary approach. These examples are suitable for introductory economics classrooms in which students gain a foundation of basic scientific and mathematical concepts.
    Keywords: teaching economics; interdisciplinary approach; teaching elasticity; teaching production; teaching circular economies; teaching introductory economics
    JEL: A20 A21 A22
    Date: 2023–03–08
  6. By: Yeboah, Samuel; Boateng Prempeh, Kwadwo
    Abstract: This systematic review explores the role of environmental finance in advancing sustainable development in developing countries through the implementation of green growth strategies. Environmental finance involves the allocation of financial resources to support projects aimed at mitigating environmental challenges and promoting a transition towards a greener economy. The review examines various sources of environmental finance, including public, private, and international funding mechanisms, and assesses their effectiveness in funding initiatives that address climate change, conservation, and sustainable economic growth. The study also highlights challenges and opportunities associated with mobilizing environmental finance in developing nations, emphasizing the need for innovative financing mechanisms, capacity building, and international collaboration. By analysing empirical evidence and case studies, this review contributes to a comprehensive understanding of how environmental finance can play a pivotal role in shaping the sustainable development trajectory of developing countries.
    Keywords: Environmental finance, green growth strategies, sustainable development, developing countries, funding mechanisms, climate finance, renewable energy, sustainable agriculture, international cooperation, financial innovation
    JEL: O16 O44 Q56
    Date: 2023–06–12

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