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on Post Keynesian Economics |
| By: | Sasaki, Hiroaki; Sonoda, Ryunosuke |
| Abstract: | This study investigates how the income redistribution policy affects economic growth, employment, income distribution, income inequality, and asset inequality in the context of "secular stagnation." The income redistribution policy is defined as one that imposes capital taxation on capitalists and redistributes it to workers. For this purpose, we construct a Kaleckian model in which, in addition to capitalists, workers own capital stock through savings. Depending on the relative size of workers' and capitalists' saving rates, we obtain the Pasinetti equilibrium, in which both classes coexist, and the dual equilibrium, in which only workers own capital stock, whereas capitalists do not. In the Pasinetti equilibrium, raising the tax rate for capitalists drives an increase in workers' assets and income shares. Simultaneously, economic growth and employment rates increase when the short-run equilibrium is wage-led growth whereas they decrease when the short-run equilibrium is profit-led growth. Hence, the income redistribution policy is effective in reducing inequality and promoting economic growth and employment when the short-run equilibrium is wage-led. |
| Keywords: | workers' saving, income equality, income redistribution policy, growth, employment |
| JEL: | E11 E12 E64 J53 |
| Date: | 2025–03–24 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124081 |
| By: | Giovanni Dosi |
| Abstract: | There are at least three existential challenges to contemporary societies, as we know them namely first, the complete rupture of the social pact which characterized Glorious Decades after WWII in most of Western societies; and second, the deepening of the patterns of informatization and "intelligent" automation with the associated modifications in labour relations and mechanisms of social control. All that, third, is coupled with a climate crisis that might have well reached a tipping point toward a global ecological disaster. Here I shall briefly discuss the first, and even more briefly the second one, ending with some urgent policy implications. |
| Keywords: | Social Conflict, Social Pact, Inequality, Artificial Intelligence and Labour Processes, Environmental Crisis, Policy Objectives |
| Date: | 2025–04–14 |
| URL: | https://d.repec.org/n?u=RePEc:ssa:lemwps:2025/15 |
| By: | Leiashvili, Paata |
| Abstract: | The book Symmetric Model of Economic Equilibrium: Dialogue with Artificial Intelligence is a unique experiment that blends economic theory with cutting-edge technology. It consists of a record of dialogues between the author and the artificial intelligence system Grok 3, with the central theme being the exploration of the Symmetric Model of Economic Equilibrium. This model introduces a novel perspective on the economy as a self-regulating system, where micro- and macro-levels are interconnected through cyclical flows and feedback loops, ensuring its integrity and adaptability. The book includes chat sessions in which the AI evaluates the model‘s mathematical rigor, economic logic, and practical significance. It examines the model‘s advantages over traditional approaches and its potential applications in economic policy and the development of analytical tools. The dialogue underscores the value of an interdisciplinary approach, integrating economic theory, dialectics, second-order cybernetics, and the capabilities of artificial intelligence. It illustrates how engaging with AI can enhance the understanding of complex economic processes and provide fresh momentum for further research in this field. The book is aimed at economists, AI researchers, and anyone interested in innovative directions for the advancement of economic science. |
| Keywords: | economic theory, methodology, second-order cybernetics, general economic equilibrium model, pricing, economic cycles, self-regulation, nonlinearity in the economy, economic policy |
| JEL: | A10 D50 E31 E32 E60 E66 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124088 |
| By: | Fix, Blair |
| Abstract: | As billionaires dance in the halls of the second Trump administration, it’s haunting how well Plutarch’s two-thousand-year-old words describe the state of American politics. It’s a barren landscape of plutocratic insatiability. *** How did it get this way? *** One way to tell the story is to look at the battle between the ruling class and everyone else — a battle which elites are obviously winning. But another way to understand the struggle is to look at the war between factions of the ruling class — a battle that plays out largely within partisan politics. *** On this partisan front, the historical backdrop is that for forty years, Republicans have been playing a political shell game. As Jay Michaelson puts it, Republicans “appear populist … but act plutocrat”. What’s disorienting is that this shell game has worked. Although Republicans have historically governed for the benefit of the rich, they have recently rebranded themselves (successfully, it seems) as the party of the working class. *** Is this new Republican messaging sincere? Or is it gaslighting? Well, Trump’s billionaire-stacked administration is quickly answering the question for us. However, this essay is not primarily about Trump, nor is it focused on the future. Instead, it’s a journey into how the partisan politics of the past have shaped the American plutocracy of today. *** The essay consists of a deep dive into the realm of US state politics. The story will be simple and repetitive. Across states, I will measure the degree to which Republicans control each state’s legislature. Then I will observe, in a statistical sense, the policies and social outcomes that follow. That’s it. Of course, I’ll add commentary along the way. But the goal is to let the evidence speak for itself. And what leaps from the data is this: Republican control of state legislatures is systematically associated with the rich being (and becoming) richer. In short, American plutocracy seems to be a quintessentially Republican affair. *** And that’s not all. *** As we journey into the depths of US state politics, the plot will thicken. We’ll find striking partisan differences in the language used in state bills. We’ll see the many ways that Republicans help the rich and hurt workers. We’ll see the impact partisan politics have on the population as they work longer hours with less security. We’ll see the toll that Republican control takes on human welfare. And we’ll study the ways that Republicans gain power, despite enacting policies that are self-evidently bad for the majority. And we’ll reflect on the reasons that plutocracy can become self-reinforcing. *** Think of the evidence that follows as a case study in how the machinery of democracy can be used to benefit the few and harm the many. It’s a warning from the past about tactics that will no doubt be intensified by Trump and his posse of plutocrats. |
| Keywords: | capital as power, bankruptcy, crime, Democratic Party, differential accumulation, distribution, dominant capital, health, inequality, mortality, political parties, Republican Party, sabotage, states, tax, Trump, unions |
| JEL: | P1 P12 P14 D72 D6 D3 I1 H2 J5 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:313121 |
| By: | Francesco Lamperti; Giovanni Dosi; Andrea Roventini |
| Abstract: | Climate change stands as one of the most formidable challenges in the twenty-first century. Despite this, our understanding of the unfolding and interconnection of climate-related physical and transitional risks, and their implications for socioeconomic dynamics along various transition pathways, remains insufficient. This deficit of understanding echoes throughout the formulation of effective climate change policies. In this context, our chapter emphasizes the need for a comprehensive and interdisciplinary approach to address climate change. Such an approach must (1) credibly encompass the immense risks that global warming exerts on the Earth system; (2) account for the intricate processes of technical change and technology diffusion that are at the core of the low-carbon transition; (3) allow the percolation of risks and opportunities across sectors and regions; (4) account for behavioral change in consumption dynamics; and (5) allow testing of a wide range of climate policies and their robustness. Complex-systems science offers distinct vantage points for framing the intricate climate challenge. While outlining current research gaps, we argue that the current generation of climate-economy models rooted in complex systems provides a promising starting point to fill these gaps. We delve into a series of findings that evaluate the material impact of climate risks on economic and financial stability and explore alternative trajectories for policy implementation. Our analysis underscores the ability of complex-systems models to account for the extreme costs of climate change and the emergence of critical tipping points, wherein unmitigated emissions lead to free-falling declines in long-term growth and catalyze financial and economic instability. Given such findings, we argue that a complex-systems perspective on climate change advocates for stricter and earlier policy interventions than do traditional climate economy models. These policies can transform the seemingly antithetical objectives of decarbonization and economic growth in standard models into complementary ones. We assert that a combination of regulation and green industrial policies can nurture eco-friendly investments and foster technological innovation, thus steering the economy onto a zero-carbon sustainable growth pathway. These results challenge conventional precepts in the realm of cost-benefit climate economics and offer the building blocks for a more robust and realistic framing of the climate challenge. |
| Keywords: | climate change, complex system, agent-based modeling, decarbonization, climate risk |
| Date: | 2025–04–14 |
| URL: | https://d.repec.org/n?u=RePEc:ssa:lemwps:2025/16 |
| By: | Gardner, Leigh; Husain, Tehreem |
| Abstract: | In 1924, John Maynard Keynes complained about the fact that Southern Rhodesia, which he described as “a place somewhere in the middle of Africa”, was able to raise loans on the London market on the same terms as a large English borough. Existing literature on the “empire effect” has contended that investors did not discriminate between the bond issues of different colonies, either because they adopted similar economic and financial policies or because they were considered to be subsidiary governments to metropolitan states. However, archival records suggest that this was not the case and that African bonds were particularly unpopular. Contemporaries stressed that maintaining low borrowing costs for African colonies required considerable behind the scenes interventions by the Crown Agents using reserve funds they held on behalf of other colonies. This paper presents preliminary data on the financial connections between colonies created by this practice, which it calls the “sinews” of empire, and examines the implications for debates about imperialism and financial globalisation. |
| Keywords: | sovereign debt; empire; Africa; colonialism |
| JEL: | H00 G10 |
| Date: | 2025–03–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127544 |
| By: | Uquillas, Carlos Alfredo |
| Abstract: | This article examines how economic narratives, such as those emerging from business communication, the media, and economic authorities, affect economic behavior and agents' decisions. Based on Keynes' theory of "animal spirits" and Robert Shiller's work on the influence of narratives, a model is proposed in which narratives can directly influence macroeconomic variables such as consumption, investment, and income. Through an applied approach, it suggests how to integrate narrative variables into IS-LM and DSGE models to better understand their effects on the economic cycle. The article also discusses how "confidence" and other narrative expectations affect economic activity and how authorities could incorporate this concept into their analysis and policy formulation. |
| Keywords: | Narrative Economics, Economic Confidence, Economic Cycle, IS-LM Model, DSGE Model, Expectations, Narrative Contagion, Animal Spirits, Narrative Hysteresis, Rational Expectations. |
| JEL: | D83 E32 E44 E50 |
| Date: | 2025–02–12 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124040 |