nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2023‒11‒20
five papers chosen by
Karl Petrick, Western New England University

  1. How to pay for saving the world: Modern Monetary Theory for a degrowth transition By Olk, Christopher; Schneider, Colleen; Hickel, Jason
  2. An Extended Goodwin Model with Endogenous Technical Change: Theory and Simulation for the US Economy (1960-2019) By Cajas Guijarro, John
  3. Trilemma or Trinity? The Nexus of Economic Growth, Circular Economy and Net Zero By Basu, Parantap; Jamasb, Tooraj; Sen, Anupama
  4. Taking Forward IMF’s Gender Mainstreaming Strategy at the Country Level By Rishi Goyal; Ratna Sahay
  5. Experiences in Latin America and the Caribbean with mainstreaming biodiversity in the productive, economic and financial sectors By Alvarado, Víctor; Tambutti, Marcia; Rankovic, Aleksandar

  1. By: Olk, Christopher; Schneider, Colleen; Hickel, Jason
    Abstract: Degrowth lacks a theory of how the state can finance ambitious social-ecological policies and public provisioning systems while maintaining macroeconomic stability during a reduction of economic activity. Addressing this question, we present a synthesis of degrowth scholarship and Modern Monetary Theory (MMT) rooted in their shared understanding of money as a public good and their common opposition to artificial scarcity. We present two arguments. First, we draw on MMT to argue that states with sufficient monetary sovereignty face no obstacle to funding the policies necessary for a just and sustainable degrowth transition. Increased public spending neither requires nor implies GDP growth. Second, we draw on degrowth research to bring MMT in line with ecological reality. MMT posits that fiscal spending is limited only by inflation, and thus the productive capacity of the economy. We argue that efforts to deal with this constraint must also pay attention to social and ecological limits. Based on this synthesis we propose a set of monetary and fiscal policies suitable for a stable degrowth transition, including a stronger regulation of private finance, tax reforms, price controls, public provisioning systems and an emancipatory job guarantee. This approach can support broad democratic mobilization for a degrowth transition.
    Keywords: degrowth; ecological macroeconomics; fiscal policy; job guarantee; Modern Monetary Theory; universal public services
    JEL: J1
    Date: 2023–12–01
  2. By: Cajas Guijarro, John
    Abstract: This paper extends the two-dimensional Goodwin model of distributive cycles by incorporating endogenous technical change, inspired on some insights originally formulated by Marx. We introduce a three-dimensional dynamical system, expanding the model to include wage share, employment rate, and capital-output ratio as state variables. Theoretical analysis demonstrates an economically meaningful and locally stable equilibrium point, and the Hopf bifurcation theorem reveals the emergence of stable limit cycles as the mechanization-productivity elasticity surpasses a critical value. Econometric estimation of model parameters using ARDL bounds cointegration tests is performed for the US economy from 1965 to 2019. Simulations show damped oscillations, limit cycles, and unstable oscillations, contributing to the understanding of complex capitalist dynamics.
    Keywords: Goodwin model, endogenous technical change, Hopf bifurcation, ARDL, numerical simulations
    JEL: C61 E11 E32 O33 O41
    Date: 2023–10–15
  3. By: Basu, Parantap (Department of Economics, Durham University); Jamasb, Tooraj (Department of Economics, Copenhagen Business School); Sen, Anupama (Smith School for Enterprise and the Environment, University of Oxford)
    Abstract: How can economies achieve economic growth without causing negative environmental externalities? There are two aspects to the long-standing debate on 'sustainable growth'. A first-best solution is for economies to replace fossil fuels with renewable energy sources, mitigating carbon emissions. A second-best solution is for economies to also adopt efficient waste management, recycling residual waste and pollutants (including hard-to-abate carbon) from production (circular economy). We establish a simple growth model that integrates three fundamental pillars of economics: (i) the net-zero carbon target in environmental economics (ii) the circular economy, dealing with waste management in resource economics, and (iii) sustainable growth, in growth economics. We argue that growth, circularity and net zero emissions present a trinity of solutions to the sustainable growth problem, showing that the circular economy is a necessary condition for achieving net zero. We show that an economy with 'active' environmental policy achieves net-zero faster than one with 'passive' policy, and also eliminates carbon.
    Keywords: Net zero; Growth; Circular economy; Pollution; Capital; Recycling
    JEL: O44 Q43 Q52 Q55 Q58
    Date: 2023–10–17
  4. By: Rishi Goyal (International Monetary Fund); Ratna Sahay (National Council of Applied Economic Research)
    Abstract: The International Monetary Fund’s 2022 Strategy to Mainstream Gender calls for an intentional and systematic approach to integrating gender into macroeconomic policies to foster strong, sustainable, and inclusive growth. This Note argues that the IMF is filling a critical gap in its mandate by mainstreaming gender into its work. It makes the case that (i) closing gender gaps is macrocritical because they go hand-in-hand with higher economic growth, greater financial stability, and lower income inequality. Not doing so would lead to underdevelopment, underutilization, and misallocation of productive human resources; and (ii) applying a gender lens to macroeconomic, financial, and structural policy design can help to narrow gender gaps and result in improved economic outcomes. This Note provides an overview of gender gaps in opportunities, outcomes, and representation; takes stock of how these gaps impact macroeconomic and financial outcomes; and identifies polices to narrow these gaps. It explains how narrowing gender gaps can benefit societies and outlines steps countries can take to unleash the economic gains from gender equality.
    Keywords: Macroeconomics, Gender Studies, International Monetary Fund
    JEL: J16 O11 F66
    Date: 2023–09–03
  5. By: Alvarado, Víctor; Tambutti, Marcia; Rankovic, Aleksandar
    Abstract: The severity of cascading global environmental, climate, economic, social and health crises is such that they sometimes seem insurmountable. ECLAC has therefore compiled a set of best practices, drawing from cases in Latin America and the Caribbean that can serve as models to promote comprehensive structural change and improve socioeconomic and environmental well-being. This study addresses challenges, opportunities and lessons learned as to how mainstreaming biodiversity in the agriculture, fisheries, forestry, financial, manufacturing, infrastructure and tourism sectors is a catalyst for the transition towards comprehensive development, in line with the 2030 Agenda, and a fundamental tool for the implementation of the new post-2020 global biodiversity framework. The cases, implemented at varying scales, in diverse ecosystems and with different approaches, show that the shift towards environmentally-friendly production and development patterns is under way in various sectors of the region and that initiatives can be replicated and scaled up.
    Date: 2022–12–09

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