|
on Post Keynesian Economics |
| By: | Glötzl, Erhard; Glötzl, Florentin; Richters, Oliver; Binter, Lucas |
| Abstract: | For more than 100 years economists have tried to describe economics in analogy to physics, more precisely to classical Newtonian mechanics. The development of the Neoclassical General Equilibrium Theory has to be understood as the result of these efforts. But there are many reasons why General Equilibrium Theory is inadequate: 1. No genuine dynamics. 2. The assumption of the existence of utility functions and the possibility to aggregate them to one “master” utility function. 3. The impossibility to describe situations as in “Prisoners Dilemma”, where individual optimization does not lead to a collective optimum. This book aims at overcoming these problems. It illustrates how not only equilibria of economic systems, but also the general dynamics of these systems can be described in close analogy to classical mechanics. To this end, this book makes the case for an approach based on the concept of constrained dynamics, analyzing the economy from the perspective of “economic forces” and “economic power” based on the concept of physical forces and the reciprocal value of mass. Realizing that accounting identities constitute constraints in the economy, the concept of constrained dynamics, which is part of the standard models of classical mechanics, can be applied to economics. Therefore, it is reasonable to denote such models as General Constraint Dynamic Models (GCD-Models) Such a framework allows understanding both Keynesian and neoclassical models as special cases of GCD-Models in which the power relationships with respect to certain variables are one-sided. As mixed power relationships occur more frequently in reality than purely one-sided power constellations, GCD-models are better suited to describe the economy than standard Keynesian or Neoclassic models. A GCD-model can be understood as “Continuous Time”, “Stock Flow Consistent”, “Microfounded”, where the behaviour of the agents is described with a general differential equation for every agent. In the special case where the differential equations can be described with utility functions, the behaviour of every agent can be understood as an individual optimization strategy. He thus seeks to maximize his utility. However, while the core assumption of neoclassical models is that due to the “invisible hand” such egoistic individual behaviour leads to an optimal result for all agents, reality is often defined by “Prisoners Dilemma” situations, in which individual optimization leads to the worst outcome for all. One advantage of GCD-models over standard models is that they are able to describe also such situations, where an individual optimization strategy does not lead to an optimum result for all agents. In conclusion, the big merit and effort of Newton was, to formalize the right terms (physical force, inertial mass, change of velocity) and to set them into the right relation. Analogously the appropriate terms of economics are economic force, economic power and change of variables. GCD-Models allow formalizing them and setting them into the right relation to each other. |
| Keywords: | Stephen Smale, Problem 8, macroeconomic models, constraint dynamics, GCD, DSGE, out-of-equilibrium dynamics, Lagrangian mechanics, stock flow consistent, SFC, demand shock, supply shock, price shock, intertemporal utility function |
| JEL: | A12 B13 B41 B59 C02 C30 C54 C60 E10 |
| Date: | 2023–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:118314&r=pke |
| By: | Nick Harkiolakis |
| Abstract: | A representation of economic activity in the form of a law of conservation of value is presented based on the definition of value as potential to act in an environment. This allows the encapsulation of the term as a conserved quantity throughout transactions. Marginal value and speed of marginal value are defined as derivatives of value and marginal value, respectively. Traditional economic statements are represented here as cycles of value where value is conserved. Producer-consumer dyads, shortage and surplus, as well as the role of the value in representing the market and the economy are explored. The role of the government in the economy is also explained through the cycles of value the government is involved in. Traditional economic statements and assumptions produce existing hypotheses as outcomes of the law of conservation of value. |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2308.07185&r=pke |
| By: | Jubril Animashaun (Department of Economics, The University of Manchester, UK); Ada Wossink (Department of Economics, The University of Manchester, UK); Katsushi S. Imai (Department of Economics, The University of Manchester, UK and Research Institute for Economics and Business Administration, Kobe University, JAPAN) |
| Abstract: | This paper tests the hypotheses that (1) European colonization indirectly hinders the development outcomes, namely GDP per capita growth, by lowering institutional quality and encouraging corruption in colonized oil-rich countries, and (2) better macro institutional quality mitigates the historically-rooted resource curse. We constructed the instrumental variable by categorizing countries based on the evidence of settlers' mortality and the persistence of European colonial languages as official post-independence languages in oil-rich non-western countries. Also, we isolate the effect of giant oil discoveries with the depth of oil fields because of the plausible relationship with the geological characteristics of oil formation. We estimate a 2-Step GMM model that controls the lagged moments of GDP per capita using the data for 69 countries with at least a discovery of giant oil fields from 1960 to 2015. We show that oil-rich countries without colonial experience have better institutions, which translates to improving GDP per capita and reducing the corruption index. Our findings highlight the importance of historical factors associated with state origin when formulating policies to address the resource curse. |
| Keywords: | Resource Curse; Colonialism; Institutions; Petroleum-resources |
| JEL: | F54 E02 O43 Q35 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2023-19&r=pke |
| By: | Laura Moscoviz (Center for Global Development); David K. Evans (Center for Global Development) |
| Abstract: | Following the outbreak and spread of COVID-19 in 2020, schools around the world closed for significant periods of time. Many scholars provided projections of the likely impacts on educational outcomes, with potentially dire impacts on learning loss and—especially in low-income contexts–dropout rates. Now, two years after schools began shutting down, we identify 40 empirical studies directly estimating student learning loss (29 studies) or dropout rates (15 studies) for students in pre-primary, primary, or secondary school in countries at any income level. Most estimates of average learning loss are negative, although–especially in low- and middle-income countries–this is not always the case, and average losses are not as significant as some models predicted. Furthermore, learning loss was consistently much higher among students with lower socioeconomic status in high-, middle-, and low-income countries, even in contexts with little or no average learning loss. In other words, the pandemic consistently boosted learning inequality. Dropout rates ranged dramatically, from under 1 percent to more than 35 percent, with much higher rates for older students, suggesting that pandemic school closures–together with other pandemic-related shocks–may have curtailed many adolescents’ schooling careers. In some countries (e.g., Kenya and Nigeria), girls are at higher risk of dropping out. The vast majority of studies report results for students of primary school age (83 percent of studies), with fewer reporting results for students of secondary school age (45 percent) and even fewer studies (8 percent) for younger students. |
| Keywords: | COVID-19, learning loss, review, dropout rates |
| JEL: | I14 I15 I20 I24 I25 O15 |
| Date: | 2022–03–14 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:609&r=pke |